saveyourassetsfirst3 |
- GATA Honcho Bill Murphy interviwe
- JP Morgan and the Massive Silver Short
- “Alternative Currency” Claims for Gold Called “Overblown” as Chinese…
- Silver : the faboulous story of Cobalt, Ontario
- Why Silver will outperform gold 400% & how you can join the party
- GEAB N°49 is available! Warning Global systemic crisis – First quarter 2011: Breach of the critical threshold of global geopolitical dislocation
- Friday ETF Wrap-Up: BIV Continues Slide, JJC Jumps Higher
- China Ready to Enter Global Gold ETF Market
- Exploration Techniques Hint at Possible Gold Company Successes
- Growing or Sweeping
- Protecting Your Portfolio From Inflation
- Direxion Adds Leverage to Market Vectors Gold Miners
- The Times, They Are Expensive
- "Irrational exuberance" has returned to the Nasdaq
- Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Almost 2% on the Week
- This chart says the gold mania is coming
- COT Silver Report - December 10, 2010
- Something’s Wrong in the Silver Pit: But It’s Much Bigger than J.P. Morgan
- Something’s Wrong in the Silver Pit: But It’s Much Bigger than J.P. Morgan
- These Charts Suggest Gold and Equities Going Higher into 2011
- Investors Hold Biggest Commodity Positions On Record; Viral Nonsense About Silver
- “Alternative Currency” Claims for Gold Called “Overblown” as Chinese & Indian Demand
- Euro Gold Consolidates and Targets EUR1,100/oz on Euro Survival Risk
- The Double-Barreled Silver Issue
- Gold “Capped” by Surging Bond Yields…
- Another Look at Still Cheap Gold Stocks
| GATA Honcho Bill Murphy interviwe Posted: 11 Dec 2010 04:16 AM PST Good info, especially for noooooobs.... | ||
| JP Morgan and the Massive Silver Short Posted: 11 Dec 2010 02:06 AM PST Two interesting articles on silver or the JPM silver non-story. Kid Dynamite's World Friday, December 10, 2010 JP Morgan and the Massive Silver Short - The Greatest Story Ever Told http://fridayinvegas.blogspot.com/20...ver-short.html MISH'S Global Economic Trend Analysis blog Friday, December 10, 2010 6:45 PM Viral Nonsense About Silver (about halfway down the page) http://globaleconomicanalysis.blogspot.com/ ... and also on Mish's blog below the "Viral Nonsense" part, Mish continues with Addendum 2: My friend "HB" at the Acting Man blog chimes in with these thoughts: This stuff people are putting out about JPM's silver short is really a pile of crap. The biggest problem JPM might have could relate to the term structure of their shorts and offsetting longs. The OTC longs where they are counterparties to miner forwards have delivery schedules stretching out to up to 10 years, while they can only hedge at COMEX in the front month contract (due to other contracts not having enough liquidity) and have to roll that over. So if someone were to ask for huge deliveries like the Hunts did, then there could really be a problem - alas, absent the Hunts, it just doesn't happen. Note also, no one has as of yet reported any big losses in silver, which would have happened some time ago if the commercial shorts were 'naked'. I find it far more likely that there will one day be a problem involving unallocated gold accounts. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | ||
| “Alternative Currency” Claims for Gold Called “Overblown” as Chinese… Posted: 10 Dec 2010 05:15 PM PST
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| Silver : the faboulous story of Cobalt, Ontario Posted: 10 Dec 2010 05:00 PM PST Mining.Ca | ||
| Why Silver will outperform gold 400% & how you can join the party Posted: 10 Dec 2010 04:30 PM PST The Money Changer | ||
| Posted: 10 Dec 2010 10:41 AM PST As the LEAP/E2020 team anticipated in its open letter to the G20 leaders published in the international edition of the Financial Times of 24 March 2009, on the eve of the London Summit, the question of a fundamental reform of the international monetary system is central to any attempt to solve the current crisis. But sadly, as was demonstrated again at the failure of the G20 summit in Seoul, the window of opportunity for achieving such a reform peaceably closed at the end of summer 2009 and will not open again before 2012/2013 (1). The world is indeed in the throes of the global geopolitical dislocation that we had announced as beginning at the end of 2009 and which can be seen, less than a year later, in the proliferation of movements, the economic woes, the fiscal deficits, the monetary disagreements, all setting the scene for major geopolitical shocks. With the G20 summit in Seoul, which signalled to the planet in its entirety the end of US domination of the international agenda and its replacement by a generalised mood of "every man for himself", a new phase of the crisis has begun, prompting the LEAP/E2020 team to issue a new warning. The world is about to breach a critical threshold in this phase of global geopolitical dislocation. And as with every breach of threshold in a complex system, this will generate, as from the first quarter of 2011, a suite of non-linear phenomena: developments that do not conform to the usual rules and the traditional projections, be they economic, monetary, financial, social or political. In this GEAB N°49, in addition to the analysis of the six main steps marking the breach of this critical threshold of the global geopolitical, our team presents numerous recommendations to help cope with the consequences of this new phase of the crisis. They address, for example the currency/interest rates/gold and precious metals group; wealth preservation and the replacement of the US dollar by another measure of net worth; the bubbles in asset classes denominated in US dollars; and the stock markets and the most vulnerable corporate categories in this phase of the crisis. The LEAP/E2020 team also presents the "three simple reflexes" to adopt to understand and anticipate better the new world taking shape. Also in this issue, our team describes the double Franco-German electoral shock in store for 2012/2013. And we also present an excerpt from the Manual of Political Anticipation, written by the president of LEAP, Marie-Hélène Caillol, and published by Anticipolis in French, English, German and Spanish. Trade balances of the G20 countries (forecast for 2010) - Source: Spiegel, 11/2010 In this press release for the GEAB N°49, our team chose to present three of the six steps that characterise the critical threshold that the world is about to breach. The crisis that we are experiencing is characterised by developments on a planetary scale, taking place at two levels that, while correlated, are different in nature. On the one hand, the crisis is symptomatic of the profound changes to our world's economic, financial and geopolitical reality. It accelerates and amplifies the underlying trends that have been at work for several decades, trends that we have described regularly in the GEAB since its launch at the beginning of 2006. On the other hand it reflects the steadily increasing collective awareness of those changes. This growing awareness is in itself a phenomenon of collective psychology on a global level and it influences the way the crisis develops and triggers sharp bursts of speed in its evolution. Several times in recent years, we have anticipated "inflexion points" in the crisis, corresponding to "sudden leaps" in this collective awareness of the changes under way. And we consider that all the pre-requisites for "rupture" crystallised around the G20 summit in Seoul, enabling a crucial advance in collective awareness of the global geopolitical dislocation. It is that phenomenon that led LEAP/E2020 to identify the breach of a critical threshold and to issue a warning about the consequences of that breach as from the first quarter of 2011. Around the date of the G20 summit in Seoul, LEAP/E2020 identified a build-up of events likely to lead to "rupture". Let us examine the main events concerned (2) and their chaotic consequences. Concluding the quantitative easing: the Fed placed under "house arrest" The Federal Reserve's decision to launch "QE2" (by purchasing USD 600 billion of US Treasuries from now to 2011), triggered an outcry, for the first time since 1945, amongst almost all the other global powers: Japan, Brazil, China (3), India, Germany, the ASEAN countries (4), …(5) It is not the Fed's decision that marks a rupture: it is the fact that for the first time, America's central bank had its ears boxed by the rest of the world (6), and in a very public and determined manner (7). This is certainly not the cosy atmosphere of Jackson Hole and the central bankers' meetings. It seems that Ben Bernanke's threats to his colleagues, conveyed to our readers in GEAB No. 47, did not have the effect that the Fed's chairman had hoped. The rest of the world made it clear in November 2010 that it had no intention of letting the US central bank continue printing US dollars at will in an attempt to solve America's problems at the expense of every other country on the globe (8). The dollar is now getting back to being what every national currency is supposed to be: the currency and thus the problem of the country that prints it. In fact, in these last weeks of 2010, we have witnessed the end of an era where the dollar was the currency of the US and the problem of the rest of the world, as John Connally put it so neatly in 1971, when the US unilaterally terminated the convertibility of the dollar into gold. Why? Simply because from now on the Fed must take into account the opinion of the outside world (9). It is not yet under guardianship, but it is under "house arrest" (10). According to LEAP/E2020, we can already anticipate that there will be no QE3 (11) regardless of the US leaders' opinions on the subject (12); or it will take place at the end of 2011 to the tune of major geopolitical conflict and the collapse of the US dollar (13). U.S. Federal Reserve's Assets (2008-2010) – Sources: Federal Reserve of Cleveland / New York Times, 10/2010 European austerity: spread of social resistance movements; mounting populism; risk of fostering radicalism in rising generations; higher taxes From Paris to Berlin (14), Lisbon to Dublin, Vilnius to Bucharest, London to Rome,… the protest marches and strikes are spreading. The social dimension of the global geopolitical dislocation is clearly visible in the Europe of end-2010. While these events have not yet managed to disrupt the austerity programmes planned by the European governments, they point to a significant collective development: public opinions are emerging from their torpor at the beginning of the crisis, suddenly aware of its duration and cost (social and financial) (15). So the next elections should prove costly for all the current political teams who have forgotten that without fair treatment, austerity will never win popular support (16). In the meantime, the teams in office are still applying the recipes of the pre-crisis period (i.e. neo-liberal solutions based on tax cuts for the richest households and an assortment of higher indirect taxes). But the rise in social disputes (inevitable according to LEAP/E2020) and the policy changes that will emerge in the next national elections, country by country, will lead to a questioning of those solutions; and a dramatic strengthening of the populist and extremist parties (17): Europe is going to get politically "tougher". In parallel, in view of what looks increasingly like an unconscious desire on the part of the baby-boomers to have younger citizens shoulder their costs, we can expect to see an increase in violent reactions from the rising generations (18). According to our team, they will probably become more radical if they feel that the situation is hopeless, unless a compromise can be reached. But without an improvement in tax receipts, the only compromise credible in their eyes would be cuts in existing pensions, rather than higher education costs. Today is always a compromise between yesterday and tomorrow, particularly when it comes to taxes. And the most likely fiscal consequences of these developments are higher taxes on high earnings and capital gains, a new bank tax and a new, community-wide drive to protect the borders (19). The EU's trade partners should take rapid note (20). Selected governments' borrowing needs (2010-2011) - Sources: FMI / Wall Street Journal, 10/2010 Japan: the latest efforts to resist China's power For several weeks now Tokyo and Beijing have been locked in a diplomatic dispute of rare intensity. Under various pretexts (a Chinese trawler about to enter Japanese territorial waters (21), massive Chinese purchases of Japanese assets, causing the yen to appreciate) the two powers exchanged harsh words, suspended their high-level talks and appealed to international public opinion. To the countries in the region, the international visibility of this Sino-Japanese spat is especially revealing because of a glaring absence –that of the US. While these quarrels clearly illustrate Beijing's growing determination to be recognised as the dominant power in East and South-East Asia and Japan's bid to oppose that regional Chinese hegemony, there is no denying that the power supposed to dominate in this region of the world since 1945, namely the US, is strangely absent from table. We can therefore assume that what we are witnessing is a real-life test on China's part to measure its new influence on Japan; and on Japan's part to evaluate how much scope for action the US still has in Asia, faced with China. The events of recent weeks have shown that, hampered by political paralysis and its economic and financial dependence regarding China, Washington prefers not to get involved. No doubt throughout Asia this spectacle serves to accelerate the awareness that a new milestone has been passed in terms of regional order (22); and that in Japan, mired in an endless recession (23) the economic interests linked to the Chinese market have not been strengthened by the experience. Global changes under way – massive growth in world port traffic, benefiting Asia (1994-2009) - Sources : Transport Trackers / Clusterstock, 10/2010 In conclusion, this accumulation of events, centred round a G20 summit that was patently incapable of resolving the sources of economic, financial and monetary tension between its principal members, contributed to a decisive advance in the world's collective awareness of the process of global geographic dislocation under way. And in its turn, this increased awareness will, as from the beginning of 2011, accelerate and amplify the changes affecting the international system and our various societies, generating non-linear, chaotic phenomena such as those described in this issue of GEAB and previous issues. As we emphasised in September 2010, we focus on the fact that chief among those phenomena will be the entry of the US into an austerity phase, beginning in spring 2011. But we also bear in mind that one of the surprises of the next eighteen months could simply be the announcement that the Chinese economy had overtaken the US economy as from 2012 as the Wall Street Journal of 10/11/2010 indicates in its report of the Conference Board's analysis. http://www.leap2020.eu/GEAB-N-49-is-available-Warning-Global-systemic-crisis-First-quarter-2011-Breach-of-the-critical-threshold-of-global_a5458.html - Public announcement GEAB N°49 (November 16, 2010) -  | ||
| Friday ETF Wrap-Up: BIV Continues Slide, JJC Jumps Higher Posted: 10 Dec 2010 10:12 AM PST Michael Johnston submits: Another choppy session for equities on Friday gave way to a solid afternoon surge as markets rose to close out the week on a positive note. The Dow jumped by 40 points while the S&P 500 and the Nasdaq surged by 0.6% and 0.8%, respectively. While equities climbed higher, commodities slumped in Friday trading as gold and oil were both off marginally and grains and softs also retreated. In the Treasury market, T-Bills continued their slide as yields surged by close to 0.10% for the five, seven, and ten year bonds while the short-term market saw a slight decrease in yields for the day. Today’s moves came as a result of mixed data from the federal government as the budget deficit rose to $150.4 billion for November, a 25% increase from the November 2009 deficit. This report called into question the wisdom of extending tax cuts, especially considering that if the pact is passed it will result in a $1.5 trillion deficit for the 2011 fiscal year. Despite this bad news, markets managed to rally on news that the U.S. trade balance declined sharply for the month of October, falling from $44.6 billion to $38.7 billion. Sentiment was also buoyed by a strong report out of the University of Michigan consumer confidence figure, which showed a surprising rise to 74.2. These data points helped to balance out the ongoing U.S. budget troubles and send markets into a nice late session rally to close out the week. Complete Story » | ||
| China Ready to Enter Global Gold ETF Market Posted: 10 Dec 2010 09:32 AM PST ETF Daily News submits: Today, Lion Fund Management Co. becomes the first company in China to create a fund allowed to invest in foreign exchange-traded funds (ETFs) backed by gold. Lion Fund Management Co was founded in 2003 and is based in Shenzhen, China. The firm manages mutual funds for its clients and also invests in public equity and fixed income markets. On November 29, Lion Fund won regulatory approval to launch a gold fund under the country’s Qualified Domestic Institutional Investor scheme (QDII), inclusion in which enables the company to invest clients' money outside of China within set quotas. After less than a month, the new fund is set to launch today. Lion Fund has announced that it will invest no less than 80% of its underlying assets in gold ETFs. The fund intends to raise up to 3.3 billion yuan (USD $496 million) which will then be converted into hard currencies to buy gold in the global market. The company is currently in the process of assessing a dozen gold-backed (ETFs) on the global market as potential targets, including the SPDR Gold ETF (GLD). Complete Story » | ||
| Exploration Techniques Hint at Possible Gold Company Successes Posted: 10 Dec 2010 08:26 AM PST Marco G. submits: Do you remember the Aurelian Resources discovery of the Fruta del Norte epithermal gold deposit in the Ecuadorian Andes in 2006? The hidden under overburden, gold discovery in the South American jungle, of 13 million ounces of gold was the most exciting gold discovery story for the last decade. The stock price of Aurelian Resources soared from 60 cents to over $40 over the course of half a year of spectacular drilling results. Aurelian was eventually merged together with Kinross Gold Corporation (KGC) in 2008 for value of $1.2 billion USD. The author has a particular interest in this type of epithermal precious metal deposits. Secret to Finding Complete Story » | ||
| Posted: 10 Dec 2010 08:15 AM PST The best thought of the week will remain unsourced, because your editor lost the link. But here it is paraphrased: "The world is experiencing a two speed economy. Half is growing because they should, and half is busy with their brooms, brushing problems under the carpet." Economist Nouriel Roubini lifts the carpet on Bloomberg TV: "Banks are insolvent, households are insolvent, local governments are insolvent and now sovereigns are insolvent." That about sums things up nicely. But let's dig deeper. SURPRISE! "First-home buyers' loans share shrinks to six-year low" was the headline on The Age website earlier this week. "The share is just over half its peak of 28.5 per cent in May 2009." What a surprise. Who could have seen this coming? Perhaps those who knew that first homebuyer grants merely bring forward demand. And that future demand thus has to fall. But rather than gloat, let's laugh: ''You can almost say first-time buyers are finding it quite difficult to get into the market,'' said JP Morgan chief economist Stephen Walters." Hahaha! "Almost"! Then Mr. Walters gets serious: "It means activity is coming from churners - those selling and buying and selling and buying again. It's probably a negative for house price growth overall. If first-time buyers aren't there and investors are starting to pull back a little bit, it implies a bit of softness for house prices." Uh oh. All those first time homebuyers who were lulled into the market by the government will be the first to feel the pain, as their loans haven't been paid down at all. They have less equity. Plus, if they sell out, they will have to realise the loss. Perhaps they should sue the government for that loss? Government is not the solution Nobody can solve problems with more, or different, government, no matter how skilful a politician or policy advisor you are. It's just too complex. Only the free market can solve problems. And predicting what the market will do is pretty darn difficult. The point is that only less government is a solution. But when you get government meddling, things become a bit more predictable. If the governments want to make housing more affordable, house prices will rise. If the government wants to help the poor by introducing a minimum wage, the poor will lose their job. If the government wants to avoid a recession, it will cause a depression. These are all inescapable. No matter what means are used for the ends. And yet, despite the inherent failure in government policies, those who criticise whatever politician happens to be in office always suggest a different policy solution. As though they could do a better job than the Premier or Prime Minister. It sickens your editor to his toes. Even the famed housing bubble prognosticator, Steve Keen, is guilty of faith in government policy. He has suggested laws limiting lending amounts relative to the property's rental income. It sounds good. But it will just cause another unintended consequence. Why not just leave lending alone? Hope, Hopeful, Hopeless
To add to Obama's long list of achievements, you can add the following: Lower approval ratings than George W Bush. That is quite an accomplishment considering Bush is one of two presidents in the past 50 years to have higher disapproval ratings than approval. Still, it's not difficult to understand why Obama is in political strife. And we're not just talking about political blunders like the wishy washy "pay freeze" you may have heard about. This is a politician's version of a pay freeze, which means that regular pay increases continue. Only cost of living adjustments aren't going to be made. (Going by the core CPI, they would probably be minor anyway.) And we're not just talking about the complete bungle of healthcare legislation that Obama championed ... before having to hand out 222 waivers. Recently to the likes of, the International Brotherhood of Trade Unions Health and Welfare Fund, the Social Service Employees Union and a bunch of different United Food and Commercial Workers Unions. (From memory, these are the types of organisations that wanted the healthcare change.) No, we're talking about the real economy. Perhaps Obama's most troubling issue.
Source: www.clusterstock.com The chart shows how long it took for employment to recover from the various recessions of the past 70 years. The issue here is that the recessions, in terms of jobs, seem to be getting worse over time. The last four recessions feature the only four which are above average in terms of the time it takes to return to peak employment. And each one of them is worse than the last. And this is exactly the period referred to as the "Great Moderation". Ha! This should not surprise those who think intervention worsens a crisis, as well as causing them. The idea of monetary and fiscal policy is largely to soften recessions. In the process of doing so, they set the scene for the next bubble, as well as drawing out the recession the unemployed are experiencing. None of these things are good. A severe, rapid recession cleans out the economy's malinvestments, which lays the groundwork for the better investments to flourish and employ people faster. You don't cure a hangover by drinking just a little more. As an aside from all this, the broadest measure of unemployment (U6) is currently higher than it was at the end of the last recession. So don't think that things are getting better. Even for governments, things aren't improving. California in particular can testify to that. Its fiscal headache is turning into a tumour. Even Arnold Schwarzenegger can't deny it any longer. "Schwarzenegger on Monday unveiled a plan that relies largely on cuts to health care and social services for the poor. About $7.4 billion of his proposal would come from cuts, include reducing cash assistance to needy families by 15.7 percent in April, then eliminating the entire welfare-to-work program in July." Remember that add California ran on TV a few months ago? "When can you start" was the punch line. Maybe Arnie wants a replacement.
How the Euro will fall Last week we rather briefly insinuated that the conditions of modern Europe carry some similarities to post WW1 Europe. Here is some more on that note, although its pre WW1 this time around. The Austrians are back in the mix: "Austrian Finance Minister Josef Proell objected, telling reporters in Brussels that "countries committed to economic discipline that do the hard work and maintain stability" shouldn't be forced to subsidize the fiscally weak." What a Grinch! So what could trigger the onslaught in bond markets instead of battlefields? Germans will only pay for the fiscal irresponsibility of others for so long. Sadly, as soon as they stop, this will trigger the crisis that countries would have had years ago without German backing. This means it will not be difficult to paint the Germans as the wrongdoers. Sure enough, that has already begun. A New York Times Opinion piece, which it seems no one will put their name to (for good reason) includes this:
"The worst offender has been Angela Merkel, the German chancellor who is showing herself, once again, to be a captive of opinion polls rather than the bold leader of Europe's biggest economy." The Curious Capitalist website echoes the sentiment: "Germany has been at the centre of Europe's mishandling of the euro crisis from the very beginning. Germany is expected to take the lead on policy in the Eurozone, and when dealing with the debt crisis, that leadership has sometimes been lacking. The misplaced reluctance of Chancellor Angela Merkel to support floundering Greece earlier this year allowed the contagion genie out of the bottle and spread the crisis to other weak Eurozone states." And the NY Times is back with a piece by Roger Cohen: "But how shallow, paltry and mean-spirited has this German reaction to the euro crisis been!" And all this is after the Germans have funded bailouts, and before they have actually abandoned the Eurozone's delinquents. No doubt the Germans know they could easily end up mightily unpopular if they do what is sensible and leave the rest of Europe to sort itself out. Angela Merkel, the German Chancellor, has it well figured out. She is likely to tag along with Europe's requests for some time in order to make it look like she tried. In reality, she probably knows the efforts are doomed. That's why she hasn't committed her nation to the bailouts like a good politician should. Kenneth Rogoff, who is quite the expert on these matters, has been working on the odds of debt restructuring for the PIIGS. "Greece will be very lucky to avoid restructuring, Ireland, Portugal -- they're just in denial, saying it can't happen. They really haven't drawn clear lines, they haven't really said what they wanted to do, they haven't really made choices." Here is the interesting part of his quote, as reported by Bloomberg: "Europe has "no credibility" in ruling out debt restructurings." He is spot on. It's not their decision. It's the decision of the markets. That's what governments of the world overlooked when they borrowed so freely to fund their welfare states. It comes at a cost. Now that pound of flesh is coming due But, like Shylock, the bond holders have got themselves in a pickle. The more they demand, the worse it will get for them when the inevitable restructuring occurs. Kibbutz goes Capitalist Believe it or not, collectivism isn't an inherently horrific concept to true free market believers. They just don't want to be part of it. So, if someone were to create a voluntary collectivist system, you wouldn't find any opposition here. As long as people have to explicitly opt in, and can subsequently opt out, it isn't really a problem. The problem is that collectivism inherently fails from within - whether voluntary or not. It needs violence and compulsion to work, which is its ironic undoing. For those of you wondering why on earth anyone would be stupid enough to opt into a voluntary collectivism, you possess a little more foresight than your peers. Anyway, consider the world of the Kibbutz. Not that your editor knows much about them. But according to Ynetnews, Kibbutzes are an attempt at voluntary socialism. They were quite popular and didn't do too badly. Until people figured out that there was various things inherently wrong. Let's take aside the DR's usual beat of finances and ignore the fact that "Kibbutzim groaned under billions of dollars of debt that burgeoned during hyperinflation in the 1980s, driving some to the brink of bankruptcy and forcing most to jettison parts of the communal life." Funding collectivism, as politicians around the world are finding out, is too expensive. Instead, consider this simple observation from a recent Kibbutzee: "I am not built to be so communal." Yes, indeed. Humans are all different. They are individuals. Attempting to treat them as identical robots simply does not work. You cannot collect them in a group and refer to them as such. They are not "workers" as socialists call them. They are all different people. The surprise in all this is that people are apparently returning to Kibbutzes. Why? The subheading reveals they now "embrace decidedly capitalist ways". "As soon as Hulda privatized, that was the thing that made me go back ... I understood I could preserve my quality of life materially and benefit from the community life as well." And there you have it. Bring in some capitalism and even collectivism seems a little more bearable.
Economics 101 The US government is copping flack left right and centre for its attempts to devalue the dollar and thus grow the economy by encouraging exports. The Germans and Chinese in particular aren't happy. But instead of justifying it, policy has been to deny any meddling with the value of the dollar. "We will never seek to weaken our currency as a tool to gain competitive advantage or to grow the economy," Treasury Secretary Tim Geithner claimed. Former Central Banker Larry Meyer recently added; "the U.S. is not competitively devaluing its currency, that is total garbage." But only days later, the same guy comes up with a spectacular contradiction on another TV show: "But let's keep clear, there is no other policy for monetary policy. They are following the normal transmission mechanism where they lower rates, that in turn raises equity prices, that lowers the dollar and that is how it stimulates demand. The host jumps of the unabashed admission: "I like that you at least said ... "we lower the dollar, increase exports and that helps the economy", so at least you're acknowledging that that is not just an unintended consequence of QE2, it may be an intended consequence of QE2..." And Meyer continues to contradict his earlier statement: "That's precisely right. You have a choice. Don't ease monetary policy and then you don't affect the dollar. If you want to ease monetary policy, lowering the dollar is one of the ways it works. That's transmission mechanism. That's economics 101 and we need to understand that." Yes, economics 101, which Larry Meyer didn't know only days before. Risk Free!
One of the assumptions of modern finance is that there is a "risk free rate". It is used in everything from options pricing to corporate finance. The proxy used for this risk free rate has been the US Treasury's bonds. The risk free rate should be lower than all other rates, as it is "risk free". But the US treasury's 30 year bond yields went higher than mortgage rates of the same time period. In other words, people perceived American borrowers to be safer than the US Government! Delegating climate change The climate change conference in Cancun has featured record cold temperatures while its delegates signed petitions to ban water. The UK is having to cancel Christmas because of the temperatures it's facing. Apparently the UK is stuck in a "once in a lifetime" cold snap. Others report that it has only been colder once since records began in 1659. We didn't know the English live for hundreds of years. Your editor descends into this European chaos on the 27th December. Perhaps we will be there for the delayed Christmas? Nick Hubble | ||
| Protecting Your Portfolio From Inflation Posted: 10 Dec 2010 08:03 AM PST Brad Case submits: John Waggoner's personal investing column in today's USA Today focuses on building a portfolio to protect against the inflation that, it seems to me, is likely to build up dramatically over the next few years. He highlights four inflation hedges:
I've done my own research on those assets plus commodities as inflation hedges, so I can add a little color to Waggoner's recommendations. Complete Story » | ||
| Direxion Adds Leverage to Market Vectors Gold Miners Posted: 10 Dec 2010 07:55 AM PST Ron Rowland submits: By Ron Rowland Stocks in the gold mining industry are among the most volatile stocks being traded. ETFs tracking them are also volatile. As of Wednesday (12/08/2010), traders can now get leveraged long and short access to this group via Direxion Daily Gold Miners Bull 2x Shares (NUGT) and Direxion Daily Gold Miners Bear 2x Shares (DUST). Complete Story » | ||
| Posted: 10 Dec 2010 07:53 AM PST
12-10 Friday
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| "Irrational exuberance" has returned to the Nasdaq Posted: 10 Dec 2010 07:21 AM PST From Zero Hedge: And for another confirmation that the Nasdaq is now at the same extreme "irrational exuberance" levels last seen during the dot-com crash, we read courtesy of SentimenTrader.com that the Rydex Nasdaq 100 bull/bear ratio is now the highest it has been since just before the dot-com crash. "Traders in the Rydex mutual fund family have poured into the Nasdaq 100 long fund at the expense of the inverse fund on the same index. These traders now have 34 times more money invested in the long fund vs. the inverse fund, which is the highest ratio since the bubble days of 2000 and early 2001." And what is scarier, is that unlike during the dot-com... Read full article... More on stocks: The huge investment trend you cannot afford to ignore How to use sentiment to make better investing decisions... Warning: An important measure of market health is flashing red | ||
| Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Almost 2% on the Week Posted: 10 Dec 2010 07:12 AM PST Gold remained near unchanged in Asia and London before it fell almost $20 in early New York trade to as low as $1372.15 shortly after 10AM EST, but it then rallied back higher in the last few hours of trade and ended with a loss of just 0.55%. Silver fell to as low as $28.038 before it also rallied back higher and ended with a loss of just 0.52%. | ||
| This chart says the gold mania is coming Posted: 10 Dec 2010 06:58 AM PST From Andrey Dashkov in Casey’s International Speculator: With the gold price hitting nominal highs last month, there is a lot of "mania" and "bubble" ranting going on in the gold community. Should we start selling? A bull market typically progresses through three phases: the Stealth Phase, in which early adopters start buying; the Wall of Worry Phase (or Awareness Phase), when institutions begin buying and every significant fluctuation makes investors worry that the bull market is over; and the Mania Phase when the general public piles on, driving prices beyond reason or sustainability. This is followed by the Blow-off Phase, when the bear takes over from the bull and the herd gets slaughtered. Judging by the volume on the TSX Venture Exchange (TSX V), where a lot of gold juniors are listed, we conclude that the next phase of our current gold bull market, the Mania... Read full article (with chart)... More on gold: Casey Research: Four big signs that it's time to sell your gold A Chinese state newspaper just guaranteed gold will go higher Man denied access to his gold at Swiss bank: "The gold was not there" | ||
| COT Silver Report - December 10, 2010 Posted: 10 Dec 2010 06:32 AM PST COT Silver Report - December 10, 2010 | ||
| Something’s Wrong in the Silver Pit: But It’s Much Bigger than J.P. Morgan Posted: 10 Dec 2010 06:09 AM PST
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| Something’s Wrong in the Silver Pit: But It’s Much Bigger than J.P. Morgan Posted: 10 Dec 2010 06:06 AM PST
http://news.silverseek.com/SilverSeek/1292004828.php | ||
| These Charts Suggest Gold and Equities Going Higher into 2011 Posted: 10 Dec 2010 05:57 AM PST MunKnee | ||
| Investors Hold Biggest Commodity Positions On Record; Viral Nonsense About Silver Posted: 10 Dec 2010 05:53 AM PST
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| “Alternative Currency” Claims for Gold Called “Overblown” as Chinese & Indian Demand Posted: 10 Dec 2010 04:52 AM PST | ||
| Euro Gold Consolidates and Targets EUR1,100/oz on Euro Survival Risk Posted: 10 Dec 2010 01:24 AM PST gold.ie | ||
| The Double-Barreled Silver Issue Posted: 09 Dec 2010 08:47 PM PST Silver to $50? Gold Will Move $150 Higher Within 5 weeks...KWN. Morgan rigs bond, gold markets for a desperate Fed. U.S. Mint warns of price gouging. Despite central banks and jewelers, gold has re-monetized itself... and much more. ¤ Yesterday in Gold and SilverIt was a pretty quiet trading day in gold yesterday. The low of the day was shortly after trading began on the Globex system on Thursday morning in the Far East... with the high of the day [such as it was] coming at the London p.m. gold fix at 3:00 p.m. local time... 10:00 a.m. in New York. From there, gold sold off a few bucks... and then traded sideways into the close of electronic trading at 5:15 p.m. Eastern time. Nothing to see here, folks... but gold did finish up $5.70 on the spot market.
Silver traded across a wider price band than gold yesterday... and it's high of the day was also at the London p.m. gold fix [$29.02 spot]... before it, too, got sold off and then traded sideways for the rest of the New York session. Silver gained a respectable 40 cents on the day.
The world's reserve currency spent the second day in a row basically ending up unchanged around the 80.00 cent mark... and it meandered 30-40 basis points either side of that mark during the trading day. The dollar's Thursday high [80.42 cents] came at precisely 11:00 a.m. Eastern time. It's New York low came precisely two hours later at 1:00 p.m. on the button. You would be right in thinking that these are not random market events.
It was no surprise that the gold shares topped out at 10:00 a.m. Eastern time... as that was gold's high of the day. The HUI fell about a percent after that... but managed to climb back to a respectable close... up 0.86%. A few of the major gold stocks that constitute the HUI did not do particularly well... and this certainly had a negative effect on the index. Most smaller companies [especially the silver companies] had a much better time of it.
It was another busy CME delivery report yesterday with 523 gold and 50 silver contracts posted for delivery on Monday. JPMorgan was the big issuer [516 contracts] in gold... with Deutsche Bank receiving/stopping 377 contracts. Month-to-date, over a million ounces of gold has been delivered... along with 6 million ounces of silver. The link to yesterday's activity is here. The GLD ETF reported another withdrawal yesterday. This time it was 78,108 ounces. There were no changes reported in SLV. The U.S. Mint had nothing to say, either. But over at the Comex-approved depositories on Wednesday, they reported receiving a very chunky 1,284,279 troy ounces of silver, with virtually all of it being deposited at Brink's, Inc. The link to that activity is here.
¤ Critical ReadsSubscribeRon Paul is Head of the Monetary Policy SubcommitteeI have a lot of stories today. The first two are about the same thing. It's now official, Ron Paul is Head of the Monetary Policy Subcommittee. I'm sure 'Helicopter' Ben is not amused. The first story on this is a zerohedge.com piece containing a Fox News video clip that was sent to me by Australian reader Wesley Legrand. The Ron Paul interview starts about 3:25 into the clip... and it's well worth watching. The link is here.  With the right questions now, Paul really might 'End the Fed'The second story is a Bloomberg piece imbedded in a GATA release that Chris Powell headlined With the right questions now, Paul really might 'End the Fed'. This is a far more in-depth analysis of this event than is provided in the Fox News video... and the link to that story is here.  U.S. Home Values Poised to Lose $1.7 Trillion in 2010Today's next offering comes courtesy of reader Scott Pluschau. It's another Bloomberg story, this one headlined "U.S. Home Values Poised to Lose $1.7 Trillion in 2010". That's on top of the $7.3 trillion real estate losses since the 2006 peak. The link is here.  Wall Street's Worst at Least Know MathWashington state reader S.A. was kind enough to share the next story with us, which is also a Bloomberg offering. It's an op-ed piece by Bloomberg journalist Jonathan Weil... and he tees up the Justice Department's "Operation Broken Trust"... and drives it down the fairway. The piece is headlined "Wall Street's Worst at Least Know Math"... and the link is here. You can't make this stuff up!  Food Stamp NationHere's another offering from reader S.A. This is a graph that he stole from agorafinancial.com that is entitled "Food Stamp Nation". No further comments are needed, as the graph says it all.
 Is the Credit Contraction Over?Wesley Legrand has another little something for us today. It's a piece he stole from chief economist David Rosenberg over at the Toronto firm of Gluskin Sheff. In a piece headlined "Is the Credit Contraction Over?"... Dave had this to say... "What do you know! Outstanding U.S. consumer credit expanded $3.3 billion in October after eking out a $1.3 billion increase in September. This is the first back-to-back gain since just before Hank Paulson took out his bazooka in the summer of 2008. Does this mean the credit contraction is over? Hell no. First, the raw not seasonally adjusted data show a $700 million decline. Once again, it was federally-supported credit (i.e.. student-backed loans) that accounted for all the increase last month ― a record $31.8 billion expansion. Commercial banks, securitized pools and finance companies posted huge declines ― to the point where excluding federal loans, consumer credit plunged $32.5 billion, to the lowest level since November 2004 (not to mention down a record 9% YoY). Over the past three months consumer credit outstanding net of federal student assisted loans has collapsed $76 billion — this degree of contraction is without precedent. [Highlighting is mine. - Ed]
 Columbia Alumnus Rebukes School for 'Shocking' Anti-WikiLeaks AdviceHere's a WikiLeaks story that's courtesy of Swiss reader B.G. It's over at the huffingtonpost.com website... and is headlined "Columbia Alumnus Rebukes School for 'Shocking' Anti-WikiLeaks Advice". I'm sure glad that America has people such as this are still willing to stand up to the 'thought police'... and the link to the story is here.  Allied Irish Banks to pay €40m bonuses despite bailoutWhat would this column be like without a contribution from reader Roy Stephens. This is another shocker... and it's posted in Wednesday edition of The Guardian in London. The headline reads "Allied Irish Banks to pay €40m bonuses despite bailout". More piggies at the trough, while Ireland's taxpayers suffer. The link is here.  Tuition fees protesters attack car carrying Prince Charles and the Duchess of CornwallWhile over in the 'old country'... as my grandfather used to say... this next Roy Stephens offering is from yesterday's edition of The Telegraph... and reads "Tuition fees protesters attack car carrying Prince Charles and the Duchess of Cornwall". In the photo that goes along with the article, both of them look horrified as the 'great unwashed' over run their Rolls Royce. The link is here.  | ||
| Gold “Capped” by Surging Bond Yields… Posted: 09 Dec 2010 04:29 PM PST Bullion Vault | ||
| Another Look at Still Cheap Gold Stocks Posted: 09 Dec 2010 10:00 AM PST At their highest levels in history, are gold stocks wildly overbought and doomed to correct hard? Provocatively, a strong case can be made that they actually remain cheap. |
Mercenary Links Roundup for Friday, Dec 10th (below the jump).
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