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- Alka Singh: Gold Equities Upside Greater than Gold
- Is Gold Buying in India Slowing Down?
- Silver Outperforms Gold - Profit! Silver Underperform Gold - Profit Again!
- Long-Term Treasury Yields in 2011
- Gold No Longer Leading the Parade
- What to Expect From Gold Prices in 2011
- Fed Extends USD Swaps Through Summer 2011
- Betting on a Chrysler Rebound
- Roundtable Gold Predictions
- Gold and Dow: Liquidity Flows For 2011
- Changes on the General Stock Market - Will Silver Decline?
- The U.S. gov't is dumping money into some of the craziest and most frivolous things imaginable
- This is why America is broke
- Taking Internet Silver Conspiracies with a Grain of Salt
- African Gold Rush Kills Children as Miners Find Lead Dust
- "$2 Trillion debt crisis threatens to bring down 100 US cities
- The Beginning of the End of Dollar Hegemony
- Temporary Suspension of 2011 10-oz and 5-oz Silver Bullion Coins
- Gold, Silver Could Go Ballistic By Year-End
- Gold Stocks vs. the NYSE for 2010
- Russia's Central Bank Purchases 300,000 Ounces of Gold in November
- Baltic Shipping Rates
- Director of United States Mint Resigns
- The Triumph of Gold
- Why Gold is About To Power Higher to Complete a Big Rally
- Gold Buoyed by "Safe Haven" Status as Stocks Shrug Off Korean Tensions…
- Are U.S. metal-shorting banks moving to hide their positions outside the country?
- Government Waste: 20 Of The Craziest Things That The U.S. Government Is Spending Money On
- GEAB N°50 is available! Global systemic crisis: Second half of 2011 - European context and US catalyst - Explosion of the Western public debt bubble
- The Parity Party Continues
- US Wealth Distribution: Where Zombies Go to Feast
- The Half-Truth and Nothing But the Half-Truth
- Gold's 2011 Outlook Positive on Debt Concerns
- Why Gold is about to Power Higher
- Sensing trouble inside the silver comex
- Gold Seeker Closing Report: Gold and Silver Gain About 0.5%
- Go Down Blazin’
- $2tn debt crisis threatens to bring down 100 US cities
| Alka Singh: Gold Equities Upside Greater than Gold Posted: 21 Dec 2010 05:57 AM PST | ||
| Is Gold Buying in India Slowing Down? Posted: 21 Dec 2010 05:45 AM PST | ||
| Silver Outperforms Gold - Profit! Silver Underperform Gold - Profit Again! Posted: 21 Dec 2010 05:32 AM PST In our earlier essay, we saw how the silver-gold pair is ideal to bet on for mean reversion. We also saw how to make use of the mean reverting properties of any ratio. Continuing on that topic, we will investigate whether mean reversion holds true for the gold-silver ratio in particular. We will examine variables one should watch over when looking at regime changes (points where the mean is set to new values). We will also explore a simplistic trading strategy on the ratio based on some core parameters that determine entry and exit points. | ||
| Long-Term Treasury Yields in 2011 Posted: 21 Dec 2010 05:13 AM PST John M. Mason submits: In a post yesterday, I attempted to lay out how I thought 2011 would play out in terms of the value of the United States dollar. I argued that the general outlook for United States monetary and fiscal policy was more of the same policy stance that the government had taken for the last 50 years: Credit inflation. (For more on this, see the Financial Times/ Goldman Sachs business book of the year, Fault Lines by Raghu Rajan.) The year 2011 will follow the pattern of large fiscal deficits and monetary ease, and this will carry into the foreseeable future. As a consequence, the long term direction of the value of the U.S. dollar will be downward. I focus on this initially because it sets the stage for how financial market participants view the actions of the United States. Complete Story » | ||
| Gold No Longer Leading the Parade Posted: 21 Dec 2010 04:53 AM PST Hard Assets Investor submits: By Brad Zigler The leading edge of the commodity bull market was, for a long time, the price of gold. Note the word was. Now, I'm not saying bullion's story has been written for the decade, but clearly gold's been overtaken in the Great Commodity Race. Complete Story » | ||
| What to Expect From Gold Prices in 2011 Posted: 21 Dec 2010 04:42 AM PST StreetAuthority submits: By David Sterman As gold flirts with all-time (non inflation-adjusted) highs, many investors wonder whether it can surge yet higher, or if we're merely in a bubble. Although we lack a crystal ball on that question, we do know some basic facts that help to explain just how far from a baseline value that yellow metal has come. Complete Story » | ||
| Fed Extends USD Swaps Through Summer 2011 Posted: 21 Dec 2010 04:37 AM PST Cullen Roche submits: The Fed announced this morning that they will be extending U.S. dollar liquidity swaps through summer of 2011. This is basically their way of saying that they’re worried about the risk of a dollar funding crisis still. That’s not unreasonable given the elevated risks in Europe (it’s nice to see a more proactive Fed), however, it does expose the USA to a risk that it should never have – foreign denominated debt risk. They issued this useful primer on swaps along with the announcement: Complete Story » | ||
| Posted: 21 Dec 2010 04:26 AM PST Wall Street Strategies submits: By David Silver This morning, TD Bank announced it will buy Chrysler Financial, the automaker's lending arm, from private equity firm Cerberus Capital. Cerberus bought Chrysler from Daimler (DCX) back in 2007 (not such a good move), but this morning it is getting most of its investment back. TD is said to be paying Cerberus $6.3 billion, which compares to the $7.4 billion paid back in 2007 by Cerberus. Complete Story » | ||
| Posted: 21 Dec 2010 04:20 AM PST | ||
| Gold and Dow: Liquidity Flows For 2011 Posted: 21 Dec 2010 04:17 AM PST | ||
| Changes on the General Stock Market - Will Silver Decline? Posted: 21 Dec 2010 01:54 AM PST Summing up, the long-term outlook for the white metal is bullish although the short-term appears unclear and very much mixed at this time - with a slight bearish bias. As the saying goes "when in doubt, stay out". Any speculative positions in silver should be opened only by the most risk-tolerant Traders. | ||
| The U.S. gov't is dumping money into some of the craziest and most frivolous things imaginable Posted: 21 Dec 2010 12:50 AM PST From The Economic Collapse: You're not going to believe some of the things that the U.S. government is spending money on. According to a shocking new report, U.S. taxpayer money is being spent to study World of Warcraft, to study how Americans find love on the Internet, and to study the behavior of male prostitutes in Vietnam. Not only that, but money from the federal government is also being used to renovate a pizzeria in Iowa and to help a library in Tennessee host video game parties. These are just some of the examples in a new report on government waste from... Read full article... More government stupidity: The next massive bailout will happen here This little-known mistake is pushing America toward collapse OUTRAGEOUS: New York City spending huge amounts of money to stop trash thieves | ||
| Posted: 20 Dec 2010 11:12 PM PST From Mish's Global Economic Trend Analysis: Explaining why America is broke is rather simple. All we have to do is look at two separate and distinct problem areas: public unions and defense spending, then generalize the problem. Let's start with a look at defense spending. Here's an article on Foreign Affairs magazine by William Pfaaf making a solid case how... Read full article... More government stupidity: The gov't just implemented another disastrously stupid policy This little-known mistake is pushing America toward collapse If you're under 30 years old or have children, you've got to see this | ||
| Taking Internet Silver Conspiracies with a Grain of Salt Posted: 20 Dec 2010 10:06 PM PST Taking Internet Silver Conspiracies with a Grain of Salt COMMENTARY - ProspectingJournal.com – December 16, 2010 – Earlier this month a video titled JP Morgan Silver Manipulation Explained hit the internet, and was an instant sensation among silver buffs and conspiracy theorists alike. Within a few days, the talking cartoon animals set us ablaze with misguided hope and anger. With large claims including how we the people could crash JP Morgan on account of a huge gaffe caused by a naked short order that they couldn't cope with, many went charging into battle. Now, don't get me wrong. I'm a hobby conspiracy theorist myself, and am always open to debate over a drink with any of my friends on topics from everything including the Fed, to fractional reserve banking to the entire Bre-X debacle that all started from an office in my hometown of Calgary. But, this one was a head scratcher. How could a cheaply animated video complete with corny insults and funny noises and poop jokes capture so much attention? Why did this need to be debunked? Well, first off, the claims are self-serving and preposterous at best. Why would buying silver coins from a website sink the giant ship that is JP Morgan? Why would JP Morgan leave a ventilation shaft opening the size of a womprat for Luke Skywalker to fire his laser torpedoes at? It didn't add up. So a little more attention to the matter, and the story quickly evaporates. Using basic supply and demand theories, we can see that this isn't such a simple task that we can all take part in just because we're buying silver. I've been doing that for years, and I don't see how just buying more will topple the giant. Even if it could, there would be plenty of time for JPM to stabilize itself and hedge buy taking the ETF route. Look, there's a REAL lawsuit pending against JP MorganChase and HSBC for silver manipulation. This isn't even mentioned by the talking dog in the video. Why not? Probably because it needed to get to the main point in the first place, which was a plug for the website it was promoting. Next is the $500 per ounce claim, which has been perpetuated by Max Keiser of RT fame. Likeable as he may be, this talk is ludicrous. Even at a gold to silver ratio of 1 to 17, which was seen after the Hunt brothers took a stab at manipulating the silver supply, and we're still only at a silver price in the range of $82. Where do we have to go as an entire economy to a $500 range? We're talking a shift of more than just a decimal place in the price they're wanting us to believe. Couple that message with the riled up feelings that a good old fashioned conspiracy starring the bad guys at JP Morgan, and our suspension of disbelief is in the hands of the video makers. We are better than that. I like silver. I like conspiracy theories. But this kind of misdirection can be dangerous if taken too seriously. As always, take the free advice anyone gives with a grain of salt. Including my own. G. Joel Chury Editor in Chief ProspectingJournal.com -- DISCLOSURE: No fee has been paid for the production and distribution of this article and as such should be viewed in the context of a commentary. http://www.prospectingjournal.com/co...gansilver.html | ||
| African Gold Rush Kills Children as Miners Find Lead Dust Posted: 20 Dec 2010 09:42 PM PST African Gold Rush Kills Children as Miners Find Lead Dust By Alan Katz - Dec 20, 2010 6:01 PM CT Members of a lead-removal team wear surgical masks to clear lead-contaminated dirt outside homes in Sunke, northern Nigeria. Photographer: Shawn Baldwin/Bloomberg Dec. 21 (Bloomberg) -- Bloomberg's Alan Katz reports on his visit to northern Nigeria where he spoke to families affected by the worst lead-poisoning crisis in modern medical history. At least 284 children under the age of five have died from lead poisoning in eight villages in Nigeria's Zamfara state, according to the government. The deaths are an unintended consequence of a 21st century gold rush when villagers sought a better life by gathering gold from hills they didn't know were also loaded with lead. (Source: Bloomberg) http://www.bloomberg.com/video/65426198/ Umoru Musa, aged 40, who lost his 1-year-old daughter to lead poisoning, holds his sick son Ibrahim, aged 6 months, inside the family home in Sunke, northern Nigeria. Photographer: Shawn Baldwin/Bloomberg A mother and child from an area affected by lead poisoning wait for testing and treatment at the Medecins Sans Frontiers clinic at Anka hospital, northern Nigeria. Photographer: Shawn Baldwin/Bloomberg Lead-contaminated dirt is removed from Umoru Musa's family compound in Sunke, northern Nigeria. Photographer: Shawn Baldwin/Bloomberg Women and children from a lead-contaminated villages rest on mattresses during testing and treatment for lead poisoning in a Medecins sans Frontiers ward at Anka hospital, northern Nigeria. Photographer: Shawn Baldwin/Bloomberg Children play near a grinding machine which was used to break up rock ore containing gold and high levels of lead in Dareta, northern Nigeria. Photographer: Shawn Baldwin/Bloomberg In Dareta, villagers began gold mining in earnest after the arrival of a group of Chinese miners, according to village chief Mohammed Bello. Photographer: Shawn Baldwin/Bloomberg In Dareta, the first village to be decontaminated, soil samples in three family compounds revealed high lead levels again in October indicating they'd gone back to grinding ore there. Photographer: Shawn Baldwin/Bloomberg Even if all lead could be removed from the villages, health problems will plague the communities for years to come. Photographer: Shawn Baldwin/Bloomberg Half of the children who visited clinics with symptoms of lead poisoning died in the first months until the lead-treatment drug succimer reached Zamfara region. Photographer: Shawn Baldwin/Bloomberg Besides tin roofs, the gold profits afforded people motorcycles and other luxuries. Photographer: Shawn Baldwin/Bloomberg The motorcycles villagers bought helped get the gold to traders in Gusau. Photographer: Shawn Baldwin/Bloomberg Gold fever brought death to Umoru Musa's nine-family compound in Sunke, a mud-brick village in northern Nigeria. Five of the 25 children, including Musa's 1-year-old daughter Nafisa, lost their lives in May after villagers ground ore from nearby hills they didn't know were also loaded with lead. Rising prices for gold promised a windfall. Instead, they helped unleash the deadliest lead-poisoning crisis in modern medical history. As the adults pulverized rocks with their grain grinder, they spewed lead dust across the ground where their children played and poultry grazed. They spread more of the material, lethal to children in high doses, around the communal well where they washed the ore to sift out the gold. "This gold cost us a lot," Musa, 40, said in the open-air courtyard of his home last month as a clean-up team in white respirator masks cleared away lead-laden dirt. "There is nothing God can give that is better than a human being." At least 284 children under the age of five have died from lead poisoning in eight villages in Nigeria's Zamfara state as a result of small-scale gold mining, according to government officials. An additional 742 are being treated for high levels of lead in their blood, a number which may rise to 3,000 by the end of next year, according to Medecins Sans Frontieres, also known as Doctors Without Borders. Brain Damage Health effects from lead poisoning, including brain damage and miscarriages, will plague the area for years, said Joseph Graziano, professor of environmental health sciences at Columbia University's Mailman School of Public Health in New York. The deaths are an unintended consequence of a 21st century gold rush. Villagers turned en masse to mining over the past two years, spurred on by more frequent visits from gold-buying middlemen. During that time, investors drove bullion prices up 58 percent in London as they sought a haven from the aftermath of the financial crisis. Gold reached a record $1,431.25 an ounce in London on Dec. 7. In Nigeria, soil from 29 villages has shown unsafe lead levels for children, according to preliminary tests by the U.S. Centers for Disease Control and Prevention. The crisis is "unprecedented" for the number of deaths and the amount of lead found in the children, according to Atlanta-based CDC, which has helped set up testing and treatment in the area. Some cases were measured at about 15 times the level that calls for immediate treatment, said Medecins Sans Frontieres, an international humanitarian organization often referred to as MSF. 'Morbid Novelty' "I'm stunned to learn of an epidemic of this severity and magnitude at a time when lead poisoning in the developed world is truly diminishing," said Graziano, who with two colleagues discovered the lead-treatment drug now being used in Nigeria. "This has a morbid novelty of poor people trying to find a source of income only to encounter this massive exposure." In June, Nigeria's federal government banned all mining in Zamfara state, which is in the country's northern Muslim area. Yet lead levels found in a few compounds in October show that some families were grinding the ore in their homes again, according to aid workers and local officials. Blacksmith Institute, a New York-based charity working on the cleanup effort, has a total budget for the project of about $950,000, most from the United Nations Children's Fund, known as Unicef, said John Keith, Blacksmith's head of operations in Nigeria. Costly Cleanup Blacksmith is seeking an additional $2 million to extend the efforts to more contaminated villages and provide long-term training to help Nigerian agencies deal with the problems. "It would be a lovely and appropriate response to find that people who have profited very much so from this run-up looked to give back a little," said Richard Fuller, Blacksmith's president. Nigeria's small-scale miners "are just trying to pull themselves from the very bottom of the poverty rung and artisanal mining is one of the best ways of increasing local economic development, all over the world," he said. In Sunke, the mud-brick village where the 1-year-old girl died, her father, Musa, says he got the idea of grinding ore for gold from the nearby village of Dareta. Residents there made enough income to roof 36 structures with corrugated metal, replacing the traditional thatch or earth and keeping the rainy season from eroding layers of their mud-brick walls each year. $100 a Day Soon Musa was in business, buying 50-kilogram (110-pound) bags of ore to process in the compound. The family could earn the equivalent of $100 on a good day by grinding and processing five bags. Musa would make the three-hour trip by motorcycle to Zamfara's capital, Gusau, to sell the gold mix to dealers. The compound earned enough to buy a metal roof of its own, a motorbike and breeding cows. A few months later, Musa said he realized that the chicks and ducklings that pecked about the grounds were disappearing. Then nine-month-old Nazifi became gravely ill, convulsing violently. He died a few days later. Four other children rapidly showed similar symptoms, and were dead within about a week, he said. With the cause of the deaths a mystery, he said he kept processing gold though he was overcome by grief at times. "It was very silent, very emotional," Musa said in his native Hausa. "When I was grinding the rock, sometimes my heart would begin to ache so much that my head would start to pound and I would have to stop." Shutting Down Once doctors linked the deaths to the gold operation, Musa said he shut it down. The cleanup team found the ground around the compound's well contained more than 100 times the lead limit in the U.S. for public areas such as playgrounds. "We only grind grain now," Musa said, pointing to the blue grinder hooked up to a generator just outside his compound door. Small-scale gold mining creates work for 10 million people worldwide, according to Kevin Telmer, an associate professor at the University of Victoria in Canada and executive director of the Artisanal Gold Council. For most of them, "this is the best opportunity they have of escaping poverty," he said. Small-scale miners start by beating rocks into gravel with a mortar and pestle or an iron bar, then grinding it. The resulting sand is washed over a ridged board to remove the lighter particles. Villagers who do the processing themselves, such as Musa in Sunke, then use mercury to extract the gold. 'Desperate Situations' The health risks come more often from the mercury, which can damage the central nervous system, according to the findings of the United Nation's Global Mercury Project. Telmer described the Zamfara crisis as a "perfect storm": poor miners working with toxic ore in the home, and using a dry grinding process that spreads the toxic dust. When prices rise, no matter the commodity, people start pushing into places that otherwise wouldn't be economical, said Ian von Lindern, the chief executive officer of TerraGraphics Environmental Engineering Inc., a Moscow, Idaho-based consulting company that is providing the technical direction for the cleanup. "A lot of those are desperate situations," he said. The state government in Zamfara has called for the mining ban to be lifted. It's impossible to stop people from mining who have gotten used to a new way of life, according to Alhaji Sadiq Abubakar, special assistant to Zamfara's governor. It's better to educate them on how to mine safely, he said. Helping Miners If the ban is lifted, the state plans to set up processing areas near mines and provide water to the miners in the area, said Zubairu Mohammed, the district head of Anka, the local government area that encompasses Sunke. Officials would also supply registered miners with tools, training and micro loans, he said. Nigeria, Africa's most populous country, is best known for its oil resources in the Niger Delta. The country exported tin, coal and gold in the 1930s and 1940s, when it was under British rule. It gradually turned away from mining, and in the late 1950s began to focus on oil, which accounted for 85 percent of exports in 2009. In 2007, the western African nation passed a new mining law and encouraged foreign companies to invest there. Zamfara State invited teams of surveyors from China, the U.S., Australia and elsewhere in May and August 2009 to assess levels of gold, copper and other minerals, said Abubaker Maru, the state environment commissioner. Mining in Earnest In Dareta, villagers began gold mining in earnest after the arrival of a group of Chinese miners, according to village chief Mohammed Bello. They dug neat square holes in a dry riverbed two kilometers (1.2 miles) out of town. Neither Bello nor other local officials were able to say who employed the Chinese workers. Mining picked up after the discovery last year of a rich vein of gold a few kilometers from Sunke in an area contaminated with lead, Maru said. Many families established ore grinding operations in or near their homes for the first time. The lead spread far from its original sources as couriers on motorcycles took the rocks to villages across the region for processing. Besides metal roofs, the gold profits afforded people motorcycles and other luxuries. In rural Zamfara, 85 percent of the population lives on less than $1 a day, a higher proportion than for the country as a whole, according to the most recent survey funded by the World Bank. Nationally, 37 percent of Nigerians living in rural areas have access to safe water, according to Nigeria's National Bureau of Statistics' Social Statistics Report, 2009. 'A Good Thing' Kabiru Sani, 25, a former cow-herder with no income, shifted to gold about two years ago when he saw people wearing new clothes paid for by mining proceeds. "My instinct was that it was a good thing to try," says Sani, who wore green khakis and a t-shirt with SKELETON written across the back. He dug ore from mines around Sunke and ferried bags of it to a nearby processing area on his Honda motorcycle that's adorned with a pink seat cover and a decal of crossed AK- 47s on the headlight. He says he was able to earn as much as 50,000 naira a week, or $323, at the height of the gold rush this year. The motorcycles villagers bought helped get the gold to traders in Gusau. From there, gold was further refined and driven to Benin, on Nigeria's western border, to be turned over to dealers working with wholesale buyers from Europe and Dubai, according to interviews with several traders. "We have very big wholesalers coming here to buy gold and they always want more," Jibril, a dealer in Cotonou, the main port city of Benin, said by phone. He declined to provide his last name because he said he operates in the black market. Kulu's Son Kulu Rabiu watched as other women earned cash from crushing ore in her village of Tungar Daji before asking for her own bags in February. Pounding rocks into gravel with a mortar and pestle netted her 500 naira, or about $3.23, for three days work --more money than she had ever had, she said. Now her 2-year-old son Imrana shows signs of permanent brain damage: crying, biting his mother and hitting her, according to Medecins Sans Frontieres doctors treating him at a hospital in Anka. He became sick in May, crying inconsolably at night. By July, when the symptoms worsened, the rainy season had filled local riverbeds cutting off the roads to the hospital. Observing Symptoms "He was a boy who moved so much, so active, now he just lies here," Rabiu, 30, said, her hand on Imrana's head as he slept next to her on a hospital mattress. "What will he do even if he lives? He can't walk or think right." Rabiu recently was released and is being treated at home, according to MSF. Doctors from Medecins Sans Frontieres on a tour to encourage meningitis vaccines in the region were dismayed when they started seeing the heavy metal-poisoning symptoms in March. Nigeria has a high child mortality rate from illnesses such as malaria, meningitis and measles. About 186 children in 1,000 die in Nigeria before the age of five, compared with 8 in the U.S., according to Unicef figures from 2008. Dr. Anyaji Prince Chinedu said five families brought in small children who were convulsing and vomiting on his first day at the Yargalma town dispensary. He and the lone nurse could treat only one at a time. Some lost consciousness while waiting to be examined and one child died, he said. Chinedu, just two years out of medical school, returned to the MSF base in Gusau that night feeling helpless and broke down crying to his coordinator, he said. 'Scenario is Horrible' "Please don't send me there again," he recalls saying. "The scenario is horrible. They were all little, little kids." He did go back and he's now treating children in the lead work of a hospital in Anka. Nearly half the children who visited clinics with symptoms of lead poisoning died in the first months until the lead- treatment drug succimer was approved by the Nigerian government and reached Zamfara in June, according to Antonio Neri, medical epidemiologist at the CDC. Danish drugmaker H. Lundbeck A/S is providing succimer to MSF free through its U.S. unit. A 19-day course for a young child normally costs $308, the company said. Some children in Nigeria are on their sixth course of the drug. Succimer, which binds to the lead and then is expelled from the body with urine, has lowered lead levels in the children who have taken it, said Ellen van der Velden, who served as MSF's emergency coordinator for Nigeria from July through November. However, the level shoots higher when they stop taking the drug, indicating they either have large amounts of the metal stored in their bones or are being re-contaminated, she said. "We have no idea how long it will take for these children to be cured," she said. Cleanup Progress To eradicate the lead, cleanup teams scrape off about 5 centimeters of topsoil, bag it, and deposit it in landfills with a high proportion of clay. The scraped areas in the village are topped by new soil. The landfill is marked off so villagers won't dig or plant crops there. By the end of January, seven villages will have been completed, said Blacksmith's Keith. The charity also has enough money to cover about a quarter of the cleanup required in Bagega village. The mining ban has reduced the amount of gold coming from the region to traders in Gusau by about 80 percent, according to Abdul Wahid Halidi, a dealer who has been in the business for a quarter century. At a lake by Bagega, as many as 200 people used to gather to wash their ground ore and separate gold. Lead-Filled Bricks It was mostly quiet on a Sunday in November. Four boys ran leftover ore across a washboard looking for specks of gold missed in prior washings. A dozen blue Viking-brand grinders sat unused on the land above the lake. One was being cleaned by Mohammed Sani, who said he planned to take it to Niger to process gold there. Ore deliveries had slumped to almost nothing from a peak of as much as 30 bags day, he said. That doesn't mean the crisis is over. In Bagega, hundreds of mud bricks made from the lead-tainted, red-brown sand left over from processing ore lay drying in the area between the grinders and the lake. Built into houses, they will poison residents for years, as pieces flake off to be inhaled or eaten by children, Keith said. "Welcome to lead poisoning in action," he said. 'Hopeless Case' In Dareta, the first village to be decontaminated, soil samples in three family compounds revealed high lead levels again in October, indicating they'd gone back to grinding ore there, Keith said. With the price of gold being what it is, it seems inevitable that some mining will continue, said Columbia University's Graziano. "If they can't stop the exposure, it's a hopeless case," he said. Even if all lead could be removed, health problems will plague the communities for years to come, he said. As girls now aged 6 to 15 marry and become pregnant, their bodies will release lead stored like calcium in their bones, causing miscarriages, and children exposed to such high lead levels will have reduced brain function of some form, Graziano said. "We do know they will be left permanently impaired," Graziano said. Bitter Moments Musa said that while he still has bitter moments, the pain is fading and the village has come to life again. Children are singing again and they dance around. He sent one of his brothers to fetch Naziru Haruna, a 1- year-old who has been to Anka hospital three times for lead treatment. Sitting tall in his fathers' arm, Naziru smiled, laughed and grabbed at a hand as it came up to pat him on the back. "Now we have hope," Musa said. A week later, the lead poisoning had appeared again. Musa's six-month-old son Ibrahim started vomiting and losing his hair. Musa took him to the lead ward at the Anka hospital where doctors asked that Ibrahim and his mother stay for treatment. MSF said Ibrahim's condition improved, he recently was released, and is now under treatment at home. To contact the reporter on this story: Alan Katz in Paris at akatz5@bloomberg.net. To contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.net. http://www.bloomberg.com/news/2010-1...lead-dust.html | ||
| "$2 Trillion debt crisis threatens to bring down 100 US cities Posted: 20 Dec 2010 08:52 PM PST Image:  The next story is courtesy of reader R. Bentley and is from yesterday's edition of The Guardian in London. The headline reads "$2 Trillion debt crisis threatens to bring down 100 US cities"... Overdrawn American cities could face financial collapse in 2011, defaulting on hundreds of billions of dollars of borrowings and derailing the US economic recovery. | ||
| The Beginning of the End of Dollar Hegemony Posted: 20 Dec 2010 08:52 PM PST Image:  Along with one of the above graphs, Washington state reader S.A. has provided this story from the Friday edition of Barron's. The author, Randall Forsyth, writes that "The demand for dollars from the rest of the world has been of inestimable benefit to the U.S. economy." It has allowed it to live beyond its means for decades... and as the dollar continues to decline... "America will have to start picking up the tab for what had been a free lunch." The headline reads "The Beginning of the End of Dollar Hegemony"... | ||
| Temporary Suspension of 2011 10-oz and 5-oz Silver Bullion Coins Posted: 20 Dec 2010 08:52 PM PST Image:  I've got three precious metals-related stories for you today... and the first one is this 'news report' from the Perth Mint last Friday. The headline reads "Temporary Suspension of 2011 10-oz and 5-oz Silver Bullion Coins". Sales and Marketing Director Ron Currie said the supply of metal was not an issue. "Before anyone suggests we're running out of metal – simply not true. It's manufacturing capacity that is the issue here," he wrote. I thank Australian reader Wesley Legrand for the story... | ||
| Gold, Silver Could Go Ballistic By Year-End Posted: 20 Dec 2010 08:52 PM PST Image:  In new commentary for Investor's Digest of Canada, Sprott Asset Management Chief Investment Strategist John Embry talks back to U.S. Treasury Secretary Tim Geithner and Warren Buffett's business partner, Charles Munger, and predicts that precious metals will surge shortly. Embry's commentary is headlined "Gold, Silver Could Go Ballistic By Year-End" and you can find it posted over at sprott.com. I stole this preamble from Chris Powell's GATA release... and I thank Florida reader Donna Badach for being the first one through the door with the story... | ||
| Gold Stocks vs. the NYSE for 2010 Posted: 20 Dec 2010 08:52 PM PST Image:  The second graph is the Gold Stocks vs. the NYSE for 2010. This is another chart where words aren't necessary. I thank Washington state reader S.A. for sharing it with us.
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| Russia's Central Bank Purchases 300,000 Ounces of Gold in November Posted: 20 Dec 2010 08:52 PM PST Big silver withdrawal from Switzerland'sZürcher Kantonalbank last week. Australia's Perth Mint has 'production' problems. Baltic Dry Index looks pretty ugly. John Embry talks about gold. Jim Rickards speaks... and much more. ¤ Yesterday in Gold and SilverThere's not much to talk about in gold market action for Monday's trading session. The price started out strongly at the start of trading in the Far East... and held on to its $10 gain right up until the Comex opened in New York at 8:20 a.m. Eastern time. The low of the day... $1,375.30 spot... occurred moments before 10:30 a.m. in New York... and then recovered all its losses before the trading day ended at 5:15 p.m. Volume was light.
Silver had gained about two bits by the time trading began in Hong Kong yesterday morning... but lost all those gains by the New York open... and then got smacked [just like gold] between 9:45 a.m. and 10:28 a.m. Eastern time. The low price of the day was $28.77 spot. Silver also recovered its New York losses in short order... and spiked to $29.55 spot [its high of the day] in electronic trading minutes after 2:00 p.m. Needless to say, silver's price didn't close anywhere near that value... but still finished in the plus column. Volume in silver was also pretty light.
Between 9:45 a.m. and 10:30 a.m. Eastern time yesterday, the dollar spiked by about 30 basis points. This partly explains the sell off [$11 in gold... and 45 cents in silver] that occurred during that time period. Now let's fast-forward to 8:00 p.m. in New York last night... which is 9:00 a.m. in Hong Kong on Tuesday morning. As you can see from the chart below... in the space of about ninety minutes, the dollar cratered to the tune of 35 basis points. Gold and silver's gains on that dollar price drop were only a small fraction of the price drops they experienced when the dollar gained less than that amount in New York during Monday's trading day. It's my opinion that the bullion banks in New York capitalize on these moments of dollar strength to drive the precious metals lower than they would normally go... and also prevent the precious metals from rising higher than they normally would, when the dollar falls. We've seen this sort of counter-intuitive price action before... and this is just another example of that.
The gold stocks bottomed about 15 minutes before the gold and silver prices hit their respective lows of the day... and then pretty much followed the gold price action for the rest of the New York trading session. The HUI finished up 1.01%... which is a much better performance than the rest of the equity markets. Most of the silver stocks... and a lot of the juniors... did far better than that.
Monday's CME Delivery Report showed that 13 gold and 109 silver contracts were posted for delivery on Wednesday. In silver, JPMorgan was the only issuer, with 105 of those contracts issued from its client account... and the Bank of Nova Scotia was the big stopper at 87 contract in their proprietary [house] trading account. The link to the activity is here. There were no changes reported in either the GLD and SLV ETF. Over at Switzerland's Zürcher Kantonalbank for the week that was, they reported an increase of 31,420 ounces in their gold ETF... but a huge 1,635,017 ounces of silver withdrawn. Somebody obviously needed a large amount of silver in a hurry. As always, I thank Carl Loeb for those numbers. The U.S. Mint had a sales report on Monday. They sold another 8,500 ounces of gold eagles, along with another 325,000 silver eagles. Month-to-date sales in gold eagles is 51,500 ounces... and silver eagles is 1,747,000. There was a lot of activity over at the Comex-approved warehouses on Friday. By the end of the day, they had shipped another 372,075 ounces of silver out the door. The big withdrawal was from the Delaware depository... and the link to all the action [which is worth a look] is here. Well, the Central Bank of the Russian Federation updated their website for November yesterday. They added another 300,000 ounces of gold to their official reserves... which now stand at 25.2 million ounces. The graph below is a brand new one from Nick Laird over at sharelynx.com. The person who used to made up the old graph every month [thanks Susan!] is no longer able to do so... and I asked Nick if he could whip one up... and he stuck this one together in just a couple of days.
¤ Critical ReadsSubscribeBaltic Shipping RatesI'm going to start today's stories off with a couple of graphs as well. The first is one of the Baltic Shipping Rates... and is, once again, courtesy of Nick Laird. This is a pretty gruesome looking chart... and if I had to bet a dollar, I know how I'd bet it.
 Gold Stocks vs. the NYSE for 2010The second graph is the Gold Stocks vs. the NYSE for 2010. This is another chart where words aren't necessary. I thank Washington state reader S.A. for sharing it with us.
 The Case Against Floating CurrenciesMy first story today is courtesy of reader U.D... and it's from yesterday's edition of The Wall Street Journal. It's a piece written by Manuel Hinds. Mr. Hinds is the former finance minister of El Salvador and the co-author of Money, Markets and Sovereignty, which won the Manhattan Institute's 2010 Hayek Prize. This op-ed piece is adapted from Mr. Hinds' remarks upon receiving it. The headline from this rather short piece reads "The Case Against Floating Currencies". It's certainly worth your time... and the link is here.  "$2 Trillion debt crisis threatens to bring down 100 US citiesThe next story is courtesy of reader R. Bentley and is from yesterday's edition of The Guardian in London. The headline reads "$2 Trillion debt crisis threatens to bring down 100 US cities"... Overdrawn American cities could face financial collapse in 2011, defaulting on hundreds of billions of dollars of borrowings and derailing the US economic recovery. Nor are European cities safe – Florence, Barcelona, Madrid, Venice: all are in trouble. The link is here.  The Beginning of the End of Dollar HegemonyAlong with one of the above graphs, Washington state reader S.A. has provided this story from the Friday edition of Barron's. The author, Randall Forsyth, writes that "The demand for dollars from the rest of the world has been of inestimable benefit to the U.S. economy." It has allowed it to live beyond its means for decades... and as the dollar continues to decline... "America will have to start picking up the tab for what had been a free lunch." The headline reads "The Beginning of the End of Dollar Hegemony"... and the link is here.  Crisis Dominoes Start Falling With Lehman AuditorHere's reader U.D.'s second offering of this column. It's a Matt Taibbi piece from Rolling Stone magazine datelined yesterday. The headline reads "Crisis Dominoes Start Falling With Lehman Auditor". It appears that New York State Attorney General Andrew Cuomo is about to file civil fraud charges against Ernst and Young for the work it did helping Lehman cook its books during 2007 and 2008. Matt also links a zerohedge.com piece [also posted yesterday] that goes much further than this short piece. The story contains Matt's usual 'pithy prose' at times... and not only is it worth the read... but the background story linked at zerohedge.com to which Taibbi refers... is also worth your time. The link to 'all of the above' is here.  Newly Built Ghost Towns Haunt Banks in SpainMy first international story today is courtesy of 'Charleston Voice'... and is an article out of the Friday edition of The New York Times. As you aware, the real estate situation is not only horrid in the U.S.A... but in Spain as well. Most of you have seen the photos of the ghost towns in China... well, they have them in Spain, too. The headline reads "Newly Built Ghost Towns Haunt Banks in Spain". Here is one of the many reasons why Spain will be the next of the PIIGS nations to fail. The link is here.  Zimbabwe Health Care, Paid With PeanutsZimbabwe hasn't had a national currency for a couple of years... getting by on a whatever foreign currency they can get their hands on... after they hyper-inflated their own fiat currency into the ground. Here's a piece that was sent to me by Casey Research's own John Grandits. It's from the Saturday edition of The New York Times... and bears the headline "Zimbabwe Health Care, Paid With Peanuts". A lot of rural [and probably urban] business is still being done on the barter system. The link to the story is here.  Korea crisis: Yeonpyeong war games increase tensionBoth Russia and China are saying that the situation on the Korean Peninsula is "extremely precarious, highly complicated and sensitive."... and crisis talks were held at the U.N. on Saturday. The story I have on this is courtesy of yesterday's Ki | ||
| Posted: 20 Dec 2010 08:52 PM PST Image:  I'm going to start today's stories off with a couple of graphs as well. The first is one of the Baltic Shipping Rates... and is, once again, courtesy of Nick Laird. This is a pretty gruesome looking chart... and if I had to bet a dollar, I know how I'd bet it.
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| Director of United States Mint Resigns Posted: 20 Dec 2010 07:21 PM PST Director of United States Mint Resigns Moy Will Depart for Position in Private Sector Washington, DC-Director of the United States Mint Edmund C. Moy announced today that he has submitted his resignation to President Barack Obama. He also informed Secretary of the Treasury Timothy Geithner and Treasurer of the United States Rosie Rios of his resignation, effective January 9, 2011. Moy has accepted a position in the private sector. Moy was sworn in as 38th Director of the United States Mint in September 2006 after being appointed by President George W. Bush for a five-year term. Prior to assuming his duties as Director of the Mint, Moy was a Special Assistant to President Bush for Presidential Personnel. In his remarks to all Mint employees about his departure, Moy praised their performance during his tenure. "I'm proud of the progress we've made over four and a half years. The Mint is a better place and delivering more value to the American taxpayers. The foundation has been rebuilt and the work is now in your capable hands," he said. "Please know that I will always remember my being Director of the United States Mint as a special time in my life." Prior to his public service in the White House and Mint, Moy spent eight years working with venture capital firms and entrepreneurs. From 1989 to 1993, he served President George H. W. Bush as a political appointee at the federal Health Care Financing Administration at the U.S. Department of Health and Human Services. He has also served as a sales and marketing executive for Blue Cross Blue Shield of Wisconsin. Moy graduated from the University of Wisconsin in 1979 with a triple major in economics, international relations and political science. He and his wife Karen have a daughter, Nora. Link to U.S. Mint Press Release 20DEC10 | ||
| Posted: 20 Dec 2010 04:30 PM PST Mises.org | ||
| Why Gold is About To Power Higher to Complete a Big Rally Posted: 20 Dec 2010 04:21 PM PST Market Trend Forecast | ||
| Gold Buoyed by "Safe Haven" Status as Stocks Shrug Off Korean Tensions… Posted: 20 Dec 2010 04:13 PM PST Bullion Vault | ||
| Are U.S. metal-shorting banks moving to hide their positions outside the country? Posted: 20 Dec 2010 01:19 PM PST GATA Director Adrian Douglas, publisher of the Market Force Analysis letter, today published a letter he has sent to U.S. Commodity Futures Trading Commission member Bart Chilton, disclosing that even as the gold and silver short positions of U.S. banks have been declining over the last year, gold and silver short positions lately have been increasing dramatically among banks headquartered outside the United States. | ||
| Government Waste: 20 Of The Craziest Things That The U.S. Government Is Spending Money On Posted: 20 Dec 2010 11:14 AM PST 
It almost seems as though Congress actually enjoys inventing new ways to waste U.S. taxpayer money. It seems nearly inconceivable that anyone could keep a straight face while trying to justify spending money on many of the things in the list below. At a time when the U.S. national debt is closing in on 14 trillion dollars, government waste just seems more out of control than ever. The following are 20 of the craziest things that the U.S. government is spending money on.... #1 A total of $3 million has been granted to researchers at the University of California at Irvine so that they can play video games such as World of Warcraft. The goal of this "video game research" is reportedly to study how "emerging forms of communication, including multiplayer computer games and online virtual worlds such as World of Warcraft and Second Life can help organizations collaborate and compete more effectively in the global marketplace." #2 The U.S. Department of Agriculture gave the University of New Hampshire $700,000 this year to study methane gas emissions from dairy cows. #3 $615,000 was given to the University of California at Santa Cruz to digitize photos, T-shirts and concert tickets belonging to the Grateful Dead. #4 A professor at Stanford University received $239,100 to study how Americans use the Internet to find love. So far one of the key findings of this "research" is that the Internet is a safer and more discreet way to find same-sex partners. #5 The National Science Foundation spent $216,000 to study whether or not politicians "gain or lose support by taking ambiguous positions." #6 The National Institutes of Health spent approximately $442,340 to study the behavior of male prostitutes in Vietnam. #7 Approximately $1 million of U.S. taxpayer money was used to create poetry for the Little Rock, New Orleans, Milwaukee and Chicago zoos. The goal of the "poetry" is to help raise awareness on environmental issues. #8 The U.S. Department of Veterans Affairs spent $175 million during 2010 to maintain hundreds of buildings that it does not even use. This includes a pink, octagonal monkey house in the city of Dayton, Ohio. #9 $1.8 million of U.S. taxpayer dollars went for a "museum of neon signs" in Las Vegas, Nevada. #10 $35 million was reportedly paid out by Medicare to 118 "phantom" medical clinics that never even existed. Apparently these "phantom" medical clinics were established by a network of criminal gangs as a way to defraud the U.S. government. #11 The Conservation Commission of Monkton, Vermont got $150,000 from the federal government to construct a "critter crossing". Thanks to U.S. government money, the lives of "thousands" of migrating salamanders are now being saved. #12 In California, one park received $440,000 in federal funds to perform "green energy upgrades" on a building that has not been used for a decade. #13 $440,955 was spent this past year on an office for former Speaker of the House Dennis Hastert that he rarely even visits. #14 One Tennessee library was given $5,000 in federal funds to host a series of video game parties. #15 The U.S. Census Bureau spent $2.5 million on a television commercial during the Super Bowl that was so poorly produced that virtually nobody understood what is was trying to say. #16 A professor at Dartmouth University received $137,530 to create a "recession-themed" video game entitled "Layoff". #17 The National Science Foundation gave the Minnesota Zoo over $600,000 so that they could develop an online video game called "Wolfquest". #18 A pizzeria in Iowa was given $60,000 to renovate the pizzeria's facade and give it a more "inviting feel". #19 The U.S. Department of Agriculture gave one enterprising group of farmers $30,000 to develop a tourist-friendly database of farms that host guests for overnight "haycations". This one sounds like something that Dwight Schrute would have dreamed up. #20 Almost unbelievably, the National Institutes of Health was given $800,000 in "stimulus funds" to study the impact of a "genital-washing program" on men in South Africa. In light of all this, is it any wonder why the approval rating of Congress recently hit another new record low? According to the most recent Gallup poll, only 13 percent of Americans approve of the job that Congress is doing. Just think about that - only 13 percent! Our politicians seem very confused about why there is so much anger in the country today. Well, there are certainly a lot of reasons for it, including the fact that the U.S. economy is on the verge of collapse, but it certainly doesn't help that our government is basically flushing our tax dollars down the toilet and spending them on some of the most wasteful things imaginable. It would be bad enough if the federal government was swimming in money, but the truth is that all of this waste is being committed at a time when the U.S. government is nearing bankruptcy. Over the last 30 years, the U.S. national debt has gotten 13 times larger. We have accumulated the largest debt in the history of the world and there is no end in sight. In fact, we are rapidly running out of people to borrow money from. According to the Wall Street Journal, in order to repay maturing bonds and finance the exploding budget deficit, the U.S. government will have to borrow 4.2 trillion dollars in 2011. Eventually the rest of the world is going to lose confidence in the ability of the U.S. government to repay all of this debt. Once confidence in U.S. Treasuries is totally gone, and there are already signs this is starting to happen, the game will be over and the U.S. financial system will collapse. But the U.S. Congress just continues to act like it is "business as usual" and the wasteful spending just continues to get worse. Someday historians will look back and think that we must have been a nation full of idiots and morons. For decades our politicians have been spending us into oblivion, yet we keep sending the vast majority of them back to Washington D.C. every time an election rolls around and the mainstream media keeps assuring us that our "respected leaders" know exactly what they are doing and that everything is going to be okay somehow. It is almost as if some sort of collective insanity has overtaken most Americans. The path we are on inevitably leads to national bankruptcy and the destruction of our financial system, but only a small percentage of the population seems to care. Well, in the end we will reap what we have sown. Unfortunately, the economic pain that is coming is going to be devastating for all of us - including those of us who are awake and are trying desperately to change things. | ||
| Posted: 20 Dec 2010 10:47 AM PST The second half of 2011 will mark the point in time when all the world's financial operators will finally understand that the West will not repay in full a significant portion of the loans advanced over the last two decades. For LEAP/E2020 it is, in effect, around October 2011, due to the plunge of a large number of US cities and states into an inextricable financial situation following the end of the federal funding of their deficits, whilst Europe will face a very significant debt refinancing requirement (1), that this explosive situation will be fully revealed. Media escalation of the European crisis regarding sovereign debt of Euroland's peripheral countries will have created the favourable context for such an explosion, of which the US "Muni" (2) market incidentally has just given a foretaste in November 2010 (as our team anticipated last June in GEAB No. 46 ) with a mini-crash that saw all the year's gains go up in smoke in a few days. This time this crash (including the failure of the monoline reinsurer Ambac (3)) took place discreetly (4) since the Anglo-Saxon media machine (5) succeeded in focusing world attention on a further episode of the fantasy sitcom "The end of the Euro, or the financial remake of Swine fever" (6). Yet the contemporaneous shocks in the United States and Europe make for a very disturbing set-up comparable, according to our team, to the "Bear Stearn " crash which preceded Lehman Brothers' bankruptcy and the collapse of Wall Street in September 2008 by eight months. But the GEAB readers know very well that major crashes rarely make headlines in the media several months in advance, so false alarms are customary (7)! Net cash outflows from Mutual Funds investing in « Munis » (2007-11/2010) (in USD billions) - Withdrawals were higher than in October 2008 - Source: New York Times, 11/2010 In this GEAB issue, we therefore anticipate the progression of the terminal crash of Western public debt (in particular US and European debt) as well as ways to protect oneself. Furthermore, we analyze the very important structural consequences of the Wikileaks revelations on the United States' international influence as well as their interaction with the global consequences of the US Federal Reserve's QE II programme. This GEAB December issue is, of course, the opportunity to assess the validity of our anticipations for 2010, with a of 78% success rate for the year. We also develop strategic advice for Euroland (8) and the United States. And we publish the GEAB-$ index that will now allow us to synthetically follow the progress of US Dollar against major world currencies every month (9). In this issue, we have chosen to present an excerpt of the forecast on the explosion of the Western public debt bubble. Thus, the Western public debt crisis is growing very rapidly under the pressure of four increasingly strong limitations: . the absence of economic recovery in the United States which strangles all public bodies (including the federal state (10)) accustomed to an easy flow of debt and significant tax revenues in recent decades (11) . the accelerated structural weakening of the United States in monetary, financial as well as diplomatic (12) affairs which reduces their ability to attract world savings (13) . the global drying up of sources of cheap finance, which precipitates the crisis of excessive debt in Europe's peripheral countries (in Euroland like Greece, Ireland, Portugal, Spain, ... and the United Kingdom as well (14)) and is starting to touch key countries (USA, Germany, Japan) (15) in a context of very large European debt refinancing in 2011 . the transformation of Euroland into a new "sovereign" that gradually develops new rules for the continent's public debts. These four constraints generate varying phenomena and reactions in different regions / countries. The European context: the price of the path from laxity to austerity will be partly paid for by investors From the European side, we have thus witnessed the difficult, but ultimately incredibly fast, transformation of the Eurozone into a sort of semi-state entity, Euroland. The delays in the process weren't only due to the poor quality of the political individuals concerned (16) as the interviews of the "forerunners" such as Helmut Schmidt, Valéry Giscard d'Estaing or Jacques Delors hammered on at length. They themselves never having had to face a historic crisis of this magnitude, a little modesty would have done them good. These delays are equally due to the fact that current developments in the Eurozone are on a huge political scale (17) and conducted without any democratic political mandate: this situation paralyzes the European leaders who consequently spend their time denying that they are really doing what they do, i.e. namely, building a kind of political entity with its own economic, social and fiscal constituent parts, .... (18) Elected before the crisis erupted, they do not know that their voters (and the economic and financial players at the same time) would be largely satisfied with an explanation about the decisions being planned (19). Because most of major decisions to come are already identifiable, as we analyze in this issue. Finally, it is a fact that the actions of these same leaders are dissected and manipulated by the main media specializing in economic and financial issues, none of which belong to the Eurozone, and all of which are, on the contrary, entrenched in the $ / £ zone where the strengthening of the euro is considered a disaster. This same media very directly contributes to blur the process underway in Euroland (20) even more. However, we can see that this adverse effect decreases because between the "Greek crisis" and the "Irish crisis", the resulting Euro exchange rate volatility has weakened. For our team, in spring 2011, it will become an insignificant event. This only leaves, therefore, the issue of the quality of Euroland's political personnel which will be profoundly changed beginning in 2012 (21) and, more fundamentally, the significant problem of the democratic legitimacy of the tremendous advances in European integration (22). But in a certain fashion, we can say that by 2012/2013, Euroland will have really established mechanisms which will have allowed it to withstand the shock of the crisis, even if it's necessary to legitimize their existence retrospectively (23). Comparison of yields on Euroland 10 year government bonds - Source: Thomson Reuters Datastream, 11/16/2010 In this regard, what will help accelerate the bursting of the Western public debt bubble, and what will occur concomitantly for its US catalyst, is the understanding by financial operators of what lies behind the "Eurobligations" (or E-Bonds) (24) debate which has begun to be talked about in recent weeks (25). It is from late 2011 (at the latest) that the merits of this debate will begin to be unveiled within the framework of the preparation for the permanent European Financial Stabilisation Fund (26). Although, what will suddenly appear for the majority of investors who currently speculate on the exorbitant rates of Greek, Irish,... debt is that Euroland solidarity will not extend to them, especially when the case of Spain, Italy or Belgium will start being posed, whatever European leaders say today (27). In short, according to LEAP/E2020, we should expect a huge operation of sovereign debt transactions (amid a government debt global crisis) which will offer Euroland guaranteed Eurobligations at very low rates in exchange of national securities at high interest rates with a 30% to 50% discount since, in the meantime, the situation of the entire Western public debt market will have deteriorated. Democratically speaking, the newly elected Euroland leaders (28) (after 2012) will be fully authorized to effect such an operation, of which the major banks (including European ones (29)) will be the first victims. It is highly likely that some privileged sovereign creditors like China, Russia, the oil producing countries,... will be offered preferential treatment. They will not complain since the undertaking will result in their sizeable assets in Euros being guaranteed. Charts at link  | ||
| Posted: 20 Dec 2010 10:15 AM PST --First the Aussie dollar reaches parity with the U.S. dollar. Now a new high against the Euro? Is double parity possible? Come to think of it, is there a currency that isn't invited to this Aussie parity party? --Your editor thumbed through the pages of the Internet this morning to find that the Aussie dollar will buy you 75 centimes, or three quarters of one euro. That's an all-time high for the Aussie. Is it commodity-backed strength? Or is the Euro marching toward currency oblivion? For more on the story we head to the Iberian Peninsula. --The latest object of speculation in Europe's debt woes is Spain, both its government debt AND its banks. Ratings agency Moody's put the Spanish government on debt-watch last week. Moody's said Spain would face a "challenging environment" refinancing its debt in a year when so many other countries are putting their hand out for more gruel. --With its banks on notice, the inevitable investigation of Spain's debt bubble will begin. The evidence of the misallocated credit will be splashed across the financial pages. And people will wonder how Europe's sixth largest economy got into so much trouble. It's not that hard to figure out. -- Spain simply has a bit of China and America and Ireland and Iceland in it. In this New York Times article, you'll learn that Spain has its own little ghost towns of empty subdivisions and houses. Artificially low interest rates in Spain caused a borrowing and building boom. You got a lot of real economic activity (building and construction) being driven by fake demand (credit). --But if you're thinking this is more good news for countries that are not in Euopre, it may not be a slam dunk to assume that what's bad for Europe and America is good for emerging markets. Our friend Dr. Marc Faber says to beware of a 20-30% fall in emerging market stock markets. He reckons the worries about Europe are enough to spook investors and put them on the sidelines until the smoke clears. --The trouble with the current economic battlespace is that the smoke never really clears. The fog of the global currency war obscures real values and distorts what you see. Sometimes the wind shifts and it clears the picture up a bit. But right now, there are a lot of obvious losers and not so many obvious winners. --The most obvious "stayer" in the great currency debasement game is gold. Of course it's probably not right to call gold a "stayer" in horse racing terms. Gold isn't moving at all (it's heavy). Everything moves relative to it. If you want to be unmoved, you own gold. --What about our old friend oil? It's been slowly rebuilding its reputation after getting utterly thrashed in the 2008 crash. You can see from the chart below how ugly it got for West Texas Intermediate crude (WTI). From a high of $145.31 it fell to as low as $30.28
--If you're scoring at home, that's a fall of $115.03, or 79.1%. We'll have Murray slap some Fibonacci retracement lines between the high and the low. But just eyeballing the chart, oil is has recovered half of its losses from the 2008 crash. And it's bucking up on $90. It also looks like it's locked in a bit of a trading range, which is another reason we'll have Murray take a look (to see where the Point of Control is). --You wouldn't think higher oil prices are good for anyone's economy (except the OPEC states and maybe Venezuela and Mexico). Of all the commodities, rising oil prices most quickly hit consumer wallets. It's effectively a tax increase that reduces consumption on other goods. --But is it a good investment idea right now? After all, oil is priced in U.S. dollars too. The weaker the dollar gets, the higher oil will go. Would oil prices soar in a dollar crash? And would oil stocks follow? Would Aussie oil producers follow? --This is the question we've taken up in the final monthly report of the year for Australian Wealth Gameplan. All will be revealed soon. The obvious criticism against the argument for higher oil prices is that they are self-limiting. Oil will eventually reach a price that forces people to use less of it. --The best strategy, we reckon, is to take the long view. When you have a chance to buy scare assets that are in a long term bull market, you probably should. You need to be careful what you pay for them, of course. But next year will be all about consolidating a portfolio tangible assets or buying the companies that own them. Dan Denning | ||
| US Wealth Distribution: Where Zombies Go to Feast Posted: 20 Dec 2010 10:14 AM PST A warning... Bad stuff coming! We've come to the warm latitudes for our Christmas holiday. Your editor didn't really want to do so. He travels so much for business, he longed to stay home for Christmas. He imagined himself sitting in front of the fire...happily drinking eggnog and eating fruitcake. Or, cutting down trees and mending fences. It was not to be. He was outvoted. Here we are in Florida...on our way to Nicaragua...where we will spend Christmas not too far from the scene of an incipient border war... We haven't been down there for 2 years. We're going to find out what is going on. First, we have to warn readers. Bad times are coming. Our Indian colleagues alerted us. The Hindu era of Kalyug is beginning. What's Kalyug? It's the "age of bad stuff...about 432,000 years of it!" Whoa. Well, that kind of puts our worries about de-leveraging debt crises into perspective, doesn't it? By our calculation, de-leveraging will end and we'll still have about 431,992 years of Kalyug to get through. Those Hindus really do think long-term, don't they? We Episcopalians are more short-term oriented. We'll worry about things 6 months out. Maybe 24 months. But that's about it. Not much action on Friday. The Dow was down 7. Gold was up $8. What do we see 24 months into the future? Well, you'll probably think we're kidding about this, but we're actually very serious: The zombies are taking over. We're not joking about this zombie thing. Look at what is happening. Here's a report from Bloomberg:
The Washington Post, the zombie paper, gave the news a positive tune: "Area Counties Richest in Nation," was the headline...or something like that. So you see, this "geographical" distribution is really a zombie distribution. If you work for the feds - directly or indirectly - you get more money. Most likely, you're no longer creating wealth; you're consuming wealth that others created. That's what being a zombie is all about. And as a society becomes more corrupt and degenerate, there are more and more zombies and fewer wealth-creating citizens. But wait. There's more...below. And more thoughts... The zombification process runs deep. It changes the nature of what most people regard as "wealth." Instead of wanting to own a profit-making business, or lend to a wealth-increasing enterprise, more of what passes for wealth is actually a claim against the government. It is a promise by sitting politicians to rip off the future on behalf of the present. Let's look at how it works... In an economy like India's, a man who wants to prosper will start a business of his own...or invest in someone else's business. If he wants a decent retirement, he will have to save real money. He'll need real capital...which supports him by producing real interest or real earnings. He has a claim against future increases to the world's wealth. But that is wealth that he helped create...by saving and investing. But in the US, more and more people depend on the government for their retirement financing. The government pledges to take money from future earnings too. But it is a zombie claim; it does not depend on adding to the world's wealth. It merely takes away the wealth of others. If an American wants a good-paying job, he looks to the government itself, knowing that its salaries are higher than those in the private sector, and more reliable. And even if the American invests in a private business, the enterprise is more and more likely to depend on the government for contracts, subsidies, tax breaks, regulatory approval or bailouts. Gradually, "wealth" itself becomes zombified. Insurance policies are backed by government bonds - local or federal. Pensions are heavily dependent on claims against the government. And don't forget that 42 million people in the US depend on government handouts just so they can eat. Food stamps - the breakfast, lunch and dinner of zombies - have never had so many takers. This process is completely predictable. The more you subsidize zombies, the more zombies you get. And as the zombie population grows, it becomes more difficult to support. Finally, the paper zombie claims - US Treasuries/welfare/government employment/the US dollar - fall in value. There are too many of them for the private sector to sustain. PIMCO chief and bond expert Bill Gross says the Fed's purchases of US Treasury bonds "will likely signify the end of the great 30-year bull market in bonds." That's just the way it works. As the parasites grow, the host weakens. The more you borrow, the lower your credit rating. The more women you date, the harder it is to remember their names. *** The poor Irish. Moody's downgraded their debt. Not just one level. Five levels. Irish debt is now rated at the same level as Russian debt. Isn't it obvious that the Irish problem is not just a cashflow crisis? The problem is solvency, not liquidity. Irish banks got in over their heads. Then, the Irish government jumped in the water after them, taking on the debt of the banks. The solution? Simple. Default. But zombification continues in Europe as in America. Claims against profit-making (though reckless) private banks are now claims against the government. And governments can print money as well as lend it. The European Central Bank is doing the same thing the Fed is doing. It is buying up bonds issued by Ireland and other nations - at the rate of about $1 billion per week. Regards, Bill Bonner. | ||
| The Half-Truth and Nothing But the Half-Truth Posted: 20 Dec 2010 10:13 AM PST Transparency is essential in a free market. It enables market participants to make informed investment decisions. Unfortunately, in America's "free market" economy, transparency is a latchkey child. It only sees the light of day when someone breaks down the door and carries it outside. Institutions like the Federal Reserve and the Treasury explicitly and vehemently resist transparency. It is the enemy, they say, of an "independent" monetary policy. During the crisis of 2008-9, the Federal Reserve and Treasury operated as covertly as the CIA - doling out trillions of dollars in bailouts and guarantees to a handful of coddled corporations. Those financial "black ops" produced myriad deceptions in the financial markets. In addition to the Fed's intended deception that insolvent financial firms are as fit as a fiddle, the Fed's meddling also produced numerous knock-on deceptions like: the labor market is recovering, the housing market is bottoming out, the financial sector is reviving and Goldman Sachs never makes a trading loss. The Fed's secret meddling also produced a few very subtle deceptions - the kind that seem victimless...until you dig a little deeper. During the crisis of 2008-9, for example, Ford Motor Company borrowed as much as $7 billion from a lending facility of the Federal Reserve. But the details of these borrowings did not come to light until just three weeks ago. And even now, very few investors - or car-buyers - seem to realize that GM and Chrysler were not the only "Big 3" car companies to receive a helping hand from the government. Ford also cashed a few government checks. On December 3, 2008, Ford Motor Co.'s CEO, Alan Mulally, applauded the assistance the federal government extended to General Motors and Chrysler, while also declaring, "Ford is in a different position. We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government." Two years after this pronouncement, Ford remains "the auto company that did not receive a government bailout." So pervasive is this legend, that tourists in Dearborn, Michigan can be seen wearing T-shirts like these:
Ford relishes this public perception and uses it to its economic advantage. Kudos to Ford. Now let's look at the facts. Just one month before Mulally declared, "We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government," Ford Motor Credit had borrowed nearly $4 billion from the Fed's Commercial Paper Funding Facility (CPFF). And just two weeks after this remark, Ford Motor Credit borrowed an additional $3 billion from the CPFF. In all, Ford borrowed $7 billion between October 27, 2008 and June 17, 2009. Furthermore, shortly after Mulally claimed to be in a "different position" from that of GM and Chrysler, Ford's borrowings from the CPFF placed Ford in a nearly identical position.
The Ford borrowing timeline looks like this: 10-27-08 - Ford Motor Credit borrows $1.980 billion from the CPFF Mulally deserves no blame for availing himself of funding that was freely - if very privately - provided by the Federal Reserve. After all, Mulally's Wall Street counterparts were already busy tapping various credit facilities at the Fed. So can we blame Mulally for thinking to himself, "Hey, I'd like to tap that too!"? Nor does Mulally deserve blame for failing to disclose the assistance. On the 18th page of the business plan Ford submitted to the Senate Banking Committee on December 2, 2008, the document states: "At Ford Credit, and in light of the frozen capital markets, we...are eligible for and are participating in funding programs from the European Central Bank and, more recently, the Federal Reserves Commercial Paper Funding Facility (CPFF)." However, on the second page of that very same document, Ford states that it is "in a different situation from our competitors, in that we believe our company has the necessary liquidity to whether this current economic downturn - assuming that it is of limited duration." The "different situation" disclosure is the one that Mulally nurtured in his public remarks and the one that the public embraced. Mulally wasn't lying; he was posturing. And posturing, as a tactical maneuver, can be brilliant. Certainly, Mulally's posturing served Ford very well during the crisis...and continues to serve it well today. Therefore, Ford shareholders have every right to be pleased with Mulally's public remarks; the champions of free markets and transparency, less so. The point of our tale is not to cast stones at Mulally, but rather to catapult boulders at the Federal Reserve, and by extension at the exalted notion that institutionalized secrecy is an essential component of "guiding" a free market economy... In fact, if we had enough boulders, we would also catapult them at the idea that the economy requires any guidance at all from the Federal Reserve. Thanks to the Fed's secret dealings, companies like Ford could obtain the government's assistance, while appearing to operate without it. That was a very convenient circumstance in the depths of the crisis...both for the bailout recipients and for the officers of bailout recipients. "Bailout" was a very bad word in 2008. And any CEO who asked for a bailout was an unpopular guy, especially if he asked for a bailout and continued to draw a multi-million-dollar salary. Consequently, numerous CEOs offered to "work for a dollar" in order to keep the barbarians at the gate. Very few CEOs wanted to appear to be profiting at the taxpayers expense, although they clearly had no qualms about not appearing to benefit at the taxpayers expense, especially if they could actually benefit without the appearance of it. Mulally found that path. Offer to work for one dollar if Ford ever tapped a $9 billion credit line, but continue to draw a multi-million paycheck while quietly borrowing $7 billion from the Fed. But there's another reason why Mulally might have accentuated the positives about Ford's financial position, while whispering the negatives: it was a good business decision for Ford...if not a great business decision. During the crisis, Ford grabbed market share from its Big 3 rivals. Part of the reason was - and continues to be - the perception that Ford received no help from the government. According to a survey of 1,000 adults, conducted about two months ago by the Rasmussen Reports, "Twenty-seven percent say they or someone they know has avoided buying a GM car because of the bailout and government takeover." "Ford did not seek a government bailout," the Rasmussen Reports states flatly, "and 55% of Americans say they are more likely to buy a Ford car for that reason... In fact, 18% say they or someone they know has bought a Ford car just because the company did not take any bailout funding." Not surprisingly, as the nearby chart illustrates, Ford's market share began increasing very significantly in late 2008...and it continues to increase to this day.
Buying a good car for the wrong reason is not the worst thing someone could do. But why not let the free market and/or Consumer Reports decide which automaker deserves to sell a car? Why should the Federal Reserve play any role whatsoever in this equation? To reiterate, we don't blame Mulally or Ford for taking advantage of an advantageous situation. We blame the Federal Reserve (and the Treasury) for nourishing an environment of preferential treatment, non- disclosure, backroom deal-making and every other form of capricious market manipulation. Our conclusion: Abolish the Fed and let the free markets decide who wins and loses. Regards, Eric Fry, Editor's Notes: Eric J. Fry, Agora Financial's Editorial Director, has been a specialist in international equities for nearly two decades. He was a professional portfolio manager for more than 10 years, specializing in international investment strategies and short-selling. Similar Posts: | ||
| Gold's 2011 Outlook Positive on Debt Concerns Posted: 20 Dec 2010 10:00 AM PST Gold is up slightly after yesterday's 0.5% gain and appears to be consolidating just below $1,400/oz. The yellow metal is being supported by growing energy and food inflation and continued sovereign debt concerns. | ||
| Why Gold is about to Power Higher Posted: 20 Dec 2010 10:00 AM PST Now, we are in the final, fifth wave up pattern to complete an entire five wave move from February of 2010...I'm expecting a pretty strong rally from this recent $1,365 area to at least $1,480 per ounce, and eventually...at $1,525 ranges. | ||
| Sensing trouble inside the silver comex Posted: 20 Dec 2010 09:47 AM PST | ||
| Gold Seeker Closing Report: Gold and Silver Gain About 0.5% Posted: 20 Dec 2010 07:18 AM PST Gold climbed as much as $10.29 to as high as $1388.19 in Asia before it fell to see a $1.85 loss at $1376.05 by about 10:30AM EST in New York, but it then rallied back higher in the last few hours of trade and ended near its earlier high with a gain of 0.55%. Silver rose to $29.38 and fell to $28.76 before it also rallied back higher and ended with a gain of 0.48%. | ||
| Posted: 20 Dec 2010 07:12 AM PST
Mercenary Links Roundup for Monday, Dec 20th (below the jump).
12-20 Monday
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| $2tn debt crisis threatens to bring down 100 US cities Posted: 20 Dec 2010 06:10 AM PST Overdrawn American cities could face financial collapse in 2011, defaulting on hundreds of billions of dollars of borrowings and derailing the US economic recovery. Nor are European cities safe – Florence, Barcelona, Madrid, Venice: all are in trouble More than 100 American cities could go bust next year as the debt crisis that has taken down banks and countries threatens next to spark a municipal meltdown, a leading analyst has warned... Read |
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