Gold World News Flash |
- Imagining the Unimaginable
- Asian Metals Market Update
- Crude Oil Rebounds after Inventories Plunge Yet Again, Gold Falls for a Third Day as
- Jim Rickards - Gold Standard Coming, Fed’s Hoenig Correct
- The Master Speaks
- Gold Seeker Closing Report: Gold and Silver Fall A Bit More
- In The News Today
- The Gold Price Dropped to $1,373.40, Where Does That Leave Gold Against It's Moving Averages?
- EU plans for bondholder haircuts unsettles debt markets
- Kansas City Fed president calls gold standard 'very legitimate'
- Kansas City Fed president calls gold standard 'very legitimate'
- Brazil says it won't let U.S. 'melt the dollar'
- Brazil says it won't let U.S. 'melt the dollar'
- To Bee Or Not To Be?
- Harley Bassman's Model Portfolio For 2011, And Why "It Is Just A Matter Of Time" Before The Fed Creates Inflation
- Guest Post: Money And The State
- Payroll Data Dims Outlook for Gold
- A Golden Issue - January 5, 2011
- Verbosity is the Soul of Financial Fury
- Playing Chicken with Debt Limits: Obama as a Senator vs. Obama the Hypocrite President Today
- John Embry - Gold Over $2,000, Silver Above $50 in 2011
- Guest Post: How High Will Gold Go in 2011?
- Will Food Prices Continue to Rise in 2011?
- “America’s Top Crisis”
- Gold Decline is Impulsive
- Signs Of The Times
- Hourly Action In Gold From Trader Dan
- Improvement In Preliminary Jobs Report Misleading
- WEDNESDAY Market Excerpts
- Gold Daily and Silver Weekly Charts
- Gold remains precious to the Eurosystem
- How High Will Gold Go in 2011?
- Race to Debase – 2010
- Ben Bernanke Loses More Money In One Day Than All Of LTCM Ever Did... Doubled
- Mike Niehuser: Precious Metals Investment Strategy for 2011
- Why So Much Risk for that Pittance of a Reward?
- Three December Details You Hopefully Haven't Forgotten
- The Best Currency You’ve Never Heard Of
- Big Media Finally On The Case Of The Amazing "Value Deflation" Inflation
- Precious Metals Investment Strategy for 2011
- The Five Stages of Gold
- World food price index hits record high
- Gold Breaks 50-Day Moving Average
- Sprott fund found it hard to get silver, Embry tells King World News
- Midterm Trade in Emerging Gold Miner Gammon
- Alasdair Macleod: This is the year money starts to die
- Why Gold Still Has a Long Way to Run
- Fake Breakout On Gold Signals Caution
- Finance Explained In 69 Easy Sketches
- Will Angela Merkel Make or Break the Euro?
| Posted: 05 Jan 2011 06:01 PM PST Cam Fitzgerald posted the following essay in the Rick's Picks forum, but I am presenting it as a guest commentary because it discusses the all-too-real implications of America's economic crisis so bluntly. Many of you, even the pessimists, will be troubled by this grim jeremiad, and some will disparage its conclusions. But four years into what has come to be known, probably euphemistically, as the Great Recession, it is time we asked ourselves whether a collapse indeed looms that could prove equal to what we have imagined in our most troubled moments.
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| Posted: 05 Jan 2011 06:00 PM PST Copper has been supporting all commodities. Copper rose despite gains in the US dollar. The rise in copper is supporting silver. Had copper fallen then silver would have fallen like a pack of cards. Higher base metal prices will prevent commodities from falling and they will be de linked from movements in the currency markets.
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| Crude Oil Rebounds after Inventories Plunge Yet Again, Gold Falls for a Third Day as Posted: 05 Jan 2011 05:25 PM PST courtesy of DailyFX.com January 05, 2011 10:51 PM Crude inventories continued to plummet, sending benchmark crudes closer to $100. Meanwhile, gold continued lower as rate expectations ticked higher. Commodities – Energy Crude Oil Rebounds after Inventories Plunge Yet Again Crude Oil (WTI) - $90.29 // $0.01 // 0.01% Commentary: Crude oil added $0.92, or 1.03%, to settle at $90.30, reversing earlier losses that took the commodity as low as $88.10. The news flow for the day was across the board positive. U.S. ISM Non-Manufacturing Composite for December came in at 57.1, above the 55.7 expected and at the highest level since 2006. We also received the ADP estimate for growth in the labor force for December and it came out at a record level of 297K. Most market participants aren’t buying that figure since the ADP has been way off the mark from the government nonfarm payrolls report in the past. Most economists expect about a 170K increase to be reported on ...
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| Jim Rickards - Gold Standard Coming, Fed’s Hoenig Correct Posted: 05 Jan 2011 04:30 PM PST  Fed Governor Hoenig shocked many observers yesterday when he stated, "The gold standard is a very legitimate monetary system...We're not going to have fewer crises necessarily. You will have a longer period of price stability or price level stability, but I don't know that you'll have lower unemployment, I don't know that you'll have fewer bank failures." King World News immediately interviewed Jim Rickards who has worked with both the Fed & US Treasury, and who also has a background in national defense as well as consulting with government directorates around the world.
This posting includes an audio/video/photo media file: Download Now | |
| Posted: 05 Jan 2011 04:17 PM PST John Embry – Gold Over $2,000, Silver Above $50 in 2011 Share this:
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| Gold Seeker Closing Report: Gold and Silver Fall A Bit More Posted: 05 Jan 2011 04:00 PM PST Gold climbed as much as $6.45 to $1384.55 in Asia before it fell all the way back to $1364.09 in midmorning New York trade, but it then rallied back higher in the next few hours of trade and ended with a loss of just 0.28%. Silver fell almost a dollar to as low as $28.584 before it also rallied back higher, but it still ended with a loss of 1.29%.
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| Posted: 05 Jan 2011 01:45 PM PST Jim Sinclair's Commentary This should make a good read for those CIGAs that have been rattled by the recent reaction. John Embry – Gold Over $2,000, Silver Above $50 in 2011 With a sharp two day correction in gold and silver taking place, King World News today interviewed John Embry, Chief Investment Strategist at Sprott Asset Management. When asked about the quick decline Embry stated, "This may be the best opportunity you're going to get at least from a price sense to buy gold and silver in the next few days. I think when this correction however long it will last is over, it will probably mark the lows for the year which will then be the liftoff to the eleventh consecutive year of higher gold prices." John Embry continues: "The returns over the last 10 years, gold returned over 18% and silver close to 24% annually. These are spectacular returns and we haven't seen anything yet, we're not even close to the third leg which is the blowoff. As you know we started the Sprott Phyiscal Silver Trust about about 3 months ago. We still haven't got all of our silver in yet, we're close, we've almost got every last bar. But it's taken the better part of 2 1/2 months to get it in, so the suggestion that this physical market is tight probably isn't a strong enough suggestion, it's really tight! You and I were buying this morning John personally, you probably bought for the fund as well, but I know we were personally buying. You have to have conviction in order to buy during these dips, and you have to know the companies…You had one company that was dipping 10%, you stepped in and were a buyer, it's already recovered I think.
Jim Sinclair's Commentary This is the most telling of events. It stirs my concerns over statistics. If Roosevelt had controlled the media would there have been a Great Depression? What we are in front of is the Great Inflation based on currency induced cost push inflation. Even this event will be MOPEd. Exclusive: Volcker to step down from White House panel (Reuters) – Former Federal Reserve Chairman Paul Volcker plans to leave his role as head of a panel of experts advising President Barack Obama on the economy, sources familiar with the decision said on Wednesday. The departure of Volcker, 83, as head of the President's Economic Recovery Advisory Board is among a series of changes under review at the White House. The decision to leave the board was Volcker's. A source close to him said he was ready to continue to advise Obama on an informal basis as often as the president would like. Volcker, who became a legendary figure on Wall Street when as Fed chief he broke the back of double-digit U.S. inflation in the early 1980s by sharply raising interest rates, began advising Obama during his 2008 presidential campaign and has wielded clout on issues ranging from financial regulation to fiscal policy. The White House declined to comment on Volcker's exit. The formal announcement of Volcker's departure is likely to come on Friday when Obama is expected to make a number of announcements regarding his economic team.
Jim Sinclair's Commentary John Williams of www.shawdowstats.com says the following: "- Employment and Unemployment Increasingly Should Disappoint Recovery Expectations." The meat of this report is contained in the essay "No. 343: Updated December Jobs Report Outlook"
Jim Sinclair's Commentary The Banksters rule. This however does tell you what these crappy mortgages carried on many financial entity balance sheets are worth. That amount is NOTHING. When is enough, enough? The public is thrown out of their houses and jobs while the Banksters go from super richer to super richer. BofA Freddie Mac Putbacks Resolved for 1¢ on $ Bank of America settled numerous claims with Fannie Mae for an astonishingly cheap rate, according to a Bloomberg report. A premium of $1.28 billion was paid to Freddie Mac to resolve $1 billion in claims currently outstanding. But the kicker is that the deal also covers potential future claims on $127 billion in loans sold by Countrywide through 2008. That amounts to 1 cent on the dollar to Freddie Mac. Imagine if you had a $500,000 mortgage, and you got to settle it for $5,000 — that is the deal B of A appears to have gottem from Freddie Mac. B of A also paid $1.52 billion to Fannie Mae to resolve disputes on $3.1 billion in loans (~49 cents on the dollar). They remain liable for $2.1 billion in repurchase requests, as well as any future demands from Fannie Mae. My biggest complaint about the GSEs post government takeover is that they have been used as a back door bailout of the banks. This latest deal reconfirms that view. Its a wonder B o A didn't rally further than the 6.7% it surged yesterday . . .
Jim Sinclair's Commentary CIGA Joe sends in the following: Sorry ADP, Not Everyone Believes the Economy Created 297,000 Jobs That big positive surprise this morning from the ADP jobs report was nice while it lasted — which was all of about 30 seconds by market standards. Unfortunately, a number of traders and economists aren't willing to take seriously the report that ADP and Macroeconomic Advisors put out suggesting the economy created 297,000 jobs over the past month. A quick straw poll this morning showed a lot of disbelief in the ADP numbers, and the report did virtually nothing to move the stock market, though futures pared some losses immediately after the release. Equities meandered through morning trading, though other markets did react. In particular, bonds showed a strong reversal of earlier gains, while the dollar gained more than 1 percent and in turn pressured commodities priecs. But don't expect many major revisions for Friday's Labor Department report, expected to show nonfarm job increases of 140,000 jobs and an unchanged unemployment rate of 9.7 percent.
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| The Gold Price Dropped to $1,373.40, Where Does That Leave Gold Against It's Moving Averages? Posted: 05 Jan 2011 01:36 PM PST Gold Price Close Today : 1378.50 Change : (44.10) or -3.1% Silver Price Close Today : 29.492 Change : (1.604) cents or -5.2% Gold Silver Ratio Today : 46.74 Change : 0.993 or 2.2% Silver Gold Ratio Today : 0.02139 Change : -0.000464 or -2.1% Platinum Price Close Today : 1730.50 Change : -25.70 or -1.5% Palladium Price Close Today : 774.40 Change : -1.60 or -0.2% S&P 500 : 1,270.20 Change : 6.36 or 0.5% Dow In GOLD$ : $175.80 Change : $ 5.93 or 3.5% Dow in GOLD oz : 8.504 Change : 0.287 or 3.5% Dow in SILVER oz : 397.49 Change : 1.29 or 0.3% Dow Industrial : 11,722.89 Change : 31.71 or 0.3% US Dollar Index : 80.26 Change : 0.814 or 1.0% The GOLD PRICE moved sideways, testing support with its foot at $1,364 a little before midday, leaving a V-bottom behind, and trading range bound between 1372 and 1380 afterwards. No doubt y'all will recall -- since y'all are not IRS agents testifying on the stand to something that might help the defendant, which questions mightily debilitate their memories -- that in December Gold posted its low at $1,362.30 (intraday). Gold dropped $5.10 and came to rest on Comex at $1,373.40. Where does that leave gold against its moving averages? Below the 20 ($1,390.06) and below the 50 ($1,379.73). Decidedly negative. But give it a day or two and it ought to work up at least a dead-cat bounce. I'm simply not sure that gold has finished this move, despite all the evidence. The SILVER PRICE had lost 31.9c when Comex closed at 2917.3c Yesterday it lost 5.2%, so today looked right calm. Patter mirrored gold's, mostly sideways with a V-spike before noon. If silver doesn't fall below 2930 tomorrow, that will begin to look like a temporary bottom. Today's low was 2859c. Before y'all start running for the hills, remember H.L. Hunt's wisdom: "Never get really elated in victory; when times are tough, never get down." Silver and gold have had a magnificent 26 month run, from 880c to 3109.6c (up 3.53 times) and from $705 to $1,422.60 (up 2.02 times). A reasonable person expects markets to zig and zag. You got the zig, now you have to live with the zag a while. Bull market remains alive, well, robust, and vigorous, and will run three to ten more years. Relax, be thankful for the gains so far, and look forward to more in good time. Let's stroll down Mem'ry Lane a while and see what we can find under the leaves. What ho! When the GOLD/SILVER RATIO bottomed on 19 April 2006, it wasn't the silver price high. That came on 11 May 2006, but only 2.3% higher. In the first two days after the high, silver lost 10.8%. In the first five trading days, 16.2%. At the ultimate correction low silver had lost 35.4% of its peak value. And today stirred yet another mem'ry beneath my balding but still slightly attractive (to my wife) pate. The Dow Jones Industrial Average today closed at 11,722.89. Coincidentally, at the bull market high on 14 January 2000, it closed at 11,722.98. It didn't reach that level again until nearly 7 years later, on 30 October 2006. And my curiosity nagged, wondering what the inflation-adjusted value of 2000's 11,722.98 was. Tom's Inflation Calculator says the Dow would have to be at 15,446.90 today to equal 2000's value. John Williams Shadow Stats, which throws out all the government's inflation-hiding "adjustments," says that to equal the 2000 value the Dow would have to be at 30,425.10. But what do I know? I'm just a natural-born fool, too stupid to believe what his government tells him. Y'all already know that the Dow closed 11,722.89 today, up 31.71. S&P500 rose 6.36 to 1,276.56. My opinion hath not wavered: in the delicatessen of investing, stocks are the superannuated liverwurst with four-day old sliced onions. THE US DOLLAR INDEX leapt 81.4 points or 1.05%, clearing 79.50 resistance AND 80 resistance. That takes the dollar back to 80.40 resistance, and aims for 80.80 and higher. Today's leap carried the buck up through its 20 DMA (80.02). Now it has bounced off its 50 DMA (79.21) and cleared its 20 DMA. Dollar will go higher. Soon. Today is "Twelfth Night," the 12th night of Christmas and eve of the Epiphany, celebrating the appearance of Christ to the Gentiles represented by the three kings. During the Twelve Days of Christmas (Christmas thru Epiphany, 6 Jan) our office will be working only four hours a day. Please be patient, leave a voice mail or send us an email at helpdesk@the-moneychanger.com. Thanks for your understanding. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com Phone: (888) 218-9226 or (931) 766-6066 © 2010, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't. 
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| EU plans for bondholder haircuts unsettles debt markets Posted: 05 Jan 2011 01:01 PM PST By Ambrose Evans-Pritchard Michel Barnier, the single market commissioner, will publish a "consultation paper" outlining ways to shield taxpayers from banking crises. It is the first stage of what will almost certainly become a binding law. … Fears that this could evolve into a crusade against bondholders set off fresh jitters on EMU debt markets yesterday, pushing yields on 10-year Greek bonds to a record 12.59pc. … Credit Default Swaps on Irish bonds jumped 16 points to 620 after Switzerland's central bank said it would no longer accept Irish debt as collateral. … The Commission paper refers only to bank debt, unlike Germany's proposals for sovereign "haircuts". Mr Barnier hopes to restrict burden-sharing to future debt only, fearing that a catch-all approach risks setting off a fresh EMU crisis. However, Brussels may lose control once the process is unleashed. A populist backlash is gathering strength in most EU states, and regional elections in Germany may sharpen demands for retribution against cossetted monied elites. [source] RS View: Wealth-preservation-minded bondholders will increasingly look to gold to provide their portfolios with that aspect of reliability which bonds fail to deliver.
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| Kansas City Fed president calls gold standard 'very legitimate' Posted: 05 Jan 2011 12:43 PM PST From Reuters http://www.reuters.com/article/idUSTRE7044L620110105 KANSAS CITY, Missouri -- A gold standard that forces countries to back their currency reserves with bullion is a "legitimate" monetary system, though it would not prevent financial crises, Kansas City Federal Reserve President Thomas Hoenig said on Wednesday. "The gold standard is a very legitimate monetary system," Hoenig said, adding: "We're not going to have fewer crises necessarily. You will have a longer of period of price stability or price level stability, but I don't know that you'll have lower unemployment. I don't know that you'll have fewer bank failures." ADVERTISEMENT Prophecy Receives Permit To Mine at Ulaan Ovoo in Mongolia VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY, OTCQX: PRPCF, Frankfurt: 1P2) announces that on November 9, 2010, it received the final permit to commence mining operations at its Ulaan Ovoo coal project in Mongolia. Prophecy is one of few international mining companies to achieve such a milestone. The mine is production-ready, with a mine opening ceremony scheduled for November 20. Prophecy CEO John Lee said: "I thank the government of Mongolia for the expeditious way this permit was issued. The opening of Ulaan Ovoo is a testament to the industrious and skilled workforce in Mongolia. Prophecy directly and indirectly (through Leighton Asia) employs more than 65 competent Mongolian nationals and four expatriots. The company also reaffirms its commitment to deliver coal to the local Edernet and Darkhan power plants in Mongolia." The Ulaan Ovoo open pit mine is 10 kilometers from the Russian border and within 120km of the Nauski TransSiberian railway station, enabling transportation of coal to Russia and its eastern seaports. Thermal coal prices are trading at two-year highs at Russian seaports due to strong demand from Asian economies. For the complete press release, please visit: http://prophecyresource.com/news_2010_nov11.php Join GATA here: Yukon Mining Investment e-Conference http://theyukonroom.com/yukon-eblast-static.html Vancouver Resource Investment Conference http://cambridgehouse3.com/conference-details/vancouver-resource-investment-conference-2011/15 Cheviot Asset Management Sound Money Conference Phoenix Investment Conference and Silver Summit Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going: GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
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| Kansas City Fed president calls gold standard 'very legitimate' Posted: 05 Jan 2011 12:43 PM PST From Reuters http://www.reuters.com/article/idUSTRE7044L620110105 KANSAS CITY, Missouri -- A gold standard that forces countries to back their currency reserves with bullion is a "legitimate" monetary system, though it would not prevent financial crises, Kansas City Federal Reserve President Thomas Hoenig said on Wednesday. "The gold standard is a very legitimate monetary system," Hoenig said, adding: "We're not going to have fewer crises necessarily. You will have a longer of period of price stability or price level stability, but I don't know that you'll have lower unemployment. I don't know that you'll have fewer bank failures." ADVERTISEMENT Prophecy Receives Permit To Mine at Ulaan Ovoo in Mongolia VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY, OTCQX: PRPCF, Frankfurt: 1P2) announces that on November 9, 2010, it received the final permit to commence mining operations at its Ulaan Ovoo coal project in Mongolia. Prophecy is one of few international mining companies to achieve such a milestone. The mine is production-ready, with a mine opening ceremony scheduled for November 20. Prophecy CEO John Lee said: "I thank the government of Mongolia for the expeditious way this permit was issued. The opening of Ulaan Ovoo is a testament to the industrious and skilled workforce in Mongolia. Prophecy directly and indirectly (through Leighton Asia) employs more than 65 competent Mongolian nationals and four expatriots. The company also reaffirms its commitment to deliver coal to the local Edernet and Darkhan power plants in Mongolia." The Ulaan Ovoo open pit mine is 10 kilometers from the Russian border and within 120km of the Nauski TransSiberian railway station, enabling transportation of coal to Russia and its eastern seaports. Thermal coal prices are trading at two-year highs at Russian seaports due to strong demand from Asian economies. For the complete press release, please visit: http://prophecyresource.com/news_2010_nov11.php Join GATA here: Yukon Mining Investment e-Conference http://theyukonroom.com/yukon-eblast-static.html Vancouver Resource Investment Conference http://cambridgehouse3.com/conference-details/vancouver-resource-investment-conference-2011/15 Cheviot Asset Management Sound Money Conference Phoenix Investment Conference and Silver Summit Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going: GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
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| Brazil says it won't let U.S. 'melt the dollar' Posted: 05 Jan 2011 12:30 PM PST By Robin Yapp http://www.telegraph.co.uk/finance/currency/8241635/Brazil-pledges-to-st... SAO PAULO, Brazil -- Brazil has sounded a new note of warning in the international "currency war" by pledging not to allow the United States to "melt the dollar." Guido Mantega, the Brazilian finance minister, raised the prospect of introducing greater controls on short-term flows of speculative capital into his country. The Brazilian real has risen more than 35 percent against the dollar since early 2009, leading some economists to label it the most overvalued currency in the world. There is widespread concern about the effects of a weaker dollar on the competitiveness of emerging markets, many of which have seen foreign investment send their currencies soaring. ... Dispatch continues below ... ADVERTISEMENT Opportunity in the gold coin market Swiss America Trading Corp. alerts GATA supporters to an opportunistic area of the gold coin market. While the gold bullion market has been quite volatile lately and as of November 29 gold has risen only $7 per ounce over the last month, the MS64 $20 gold St. Gaudens coin has risen about 10 percent in the same time. The ratio between the price of these coins and the price of gold is rising. If you'd like to learn more about the ratio and $20 gold coins, Swiss America can e-mail you a three-year study of it as well as other information. Swiss America also can provide a limited number of free copies of "Crashing the Dollar," a book written by Swiss America's president, Craig Smith. For information about the ratio between the $20 gold pieces and the gold price and for a free copy of "Crashing The Dollar," please call Swiss America's Tim Murphy at 1-800-289-2646 X1041 or Fred Goldstein at X1033. Or e-mail them at trmurphy@swissamerica.com and figoldstein@swissamerica.com. "We're not going to allow our American friends to melt the dollar," said Mr Mantega, who views the US government's move to pump $600 billion into its economy as an unfair attempt to help exports "There are infinite measures that we can take. One of them is to manage the entry of speculative capital in the short-term." His comments came after Chile's central bank announced a plan to buy $12 billion on international markets on Monday in an attempt to stem its own currency appreciation. The Chilean peso has gained by more than 17 percent against the US dollar since June, fuelled by increases in the price of copper, which is Chile's biggest export. It was Mr Mantega who coined the term "currency war" last year as he voiced concerns that Brazilian exports were being damaged. In October he tripled the tax on foreign investments in some bonds to 6 percent, a measure he said had since been "effective." Brazil plans to make "considerable" cuts in government spending, which would help weaken the real and allow interest rates to be cut at some point from the current level of 10.75 percent. The "currency war" has been of particular concern to Brazilian manufacturing companies, which have suffered due to booming demand for cheap imports from China, which has been accused of keeping its currency artificially weak. Join GATA here: Yukon Mining Investment e-Conference http://theyukonroom.com/yukon-eblast-static.html Vancouver Resource Investment Conference http://cambridgehouse3.com/conference-details/vancouver-resource-investment-conference-2011/15 Cheviot Asset Management Sound Money Conference Phoenix Investment Conference and Silver Summit Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy Drills 71.17 Metres of 0.52 percent NiEq Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit: http://prophecyresource.com/news_2010_nov29.php
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| Brazil says it won't let U.S. 'melt the dollar' Posted: 05 Jan 2011 12:30 PM PST By Robin Yapp http://www.telegraph.co.uk/finance/currency/8241635/Brazil-pledges-to-st... SAO PAULO, Brazil -- Brazil has sounded a new note of warning in the international "currency war" by pledging not to allow the United States to "melt the dollar." Guido Mantega, the Brazilian finance minister, raised the prospect of introducing greater controls on short-term flows of speculative capital into his country. The Brazilian real has risen more than 35 percent against the dollar since early 2009, leading some economists to label it the most overvalued currency in the world. There is widespread concern about the effects of a weaker dollar on the competitiveness of emerging markets, many of which have seen foreign investment send their currencies soaring. ... Dispatch continues below ... ADVERTISEMENT Opportunity in the gold coin market Swiss America Trading Corp. alerts GATA supporters to an opportunistic area of the gold coin market. While the gold bullion market has been quite volatile lately and as of November 29 gold has risen only $7 per ounce over the last month, the MS64 $20 gold St. Gaudens coin has risen about 10 percent in the same time. The ratio between the price of these coins and the price of gold is rising. If you'd like to learn more about the ratio and $20 gold coins, Swiss America can e-mail you a three-year study of it as well as other information. Swiss America also can provide a limited number of free copies of "Crashing the Dollar," a book written by Swiss America's president, Craig Smith. For information about the ratio between the $20 gold pieces and the gold price and for a free copy of "Crashing The Dollar," please call Swiss America's Tim Murphy at 1-800-289-2646 X1041 or Fred Goldstein at X1033. Or e-mail them at trmurphy@swissamerica.com and figoldstein@swissamerica.com. "We're not going to allow our American friends to melt the dollar," said Mr Mantega, who views the US government's move to pump $600 billion into its economy as an unfair attempt to help exports "There are infinite measures that we can take. One of them is to manage the entry of speculative capital in the short-term." His comments came after Chile's central bank announced a plan to buy $12 billion on international markets on Monday in an attempt to stem its own currency appreciation. The Chilean peso has gained by more than 17 percent against the US dollar since June, fuelled by increases in the price of copper, which is Chile's biggest export. It was Mr Mantega who coined the term "currency war" last year as he voiced concerns that Brazilian exports were being damaged. In October he tripled the tax on foreign investments in some bonds to 6 percent, a measure he said had since been "effective." Brazil plans to make "considerable" cuts in government spending, which would help weaken the real and allow interest rates to be cut at some point from the current level of 10.75 percent. The "currency war" has been of particular concern to Brazilian manufacturing companies, which have suffered due to booming demand for cheap imports from China, which has been accused of keeping its currency artificially weak. Join GATA here: Yukon Mining Investment e-Conference http://theyukonroom.com/yukon-eblast-static.html Vancouver Resource Investment Conference http://cambridgehouse3.com/conference-details/vancouver-resource-investment-conference-2011/15 Cheviot Asset Management Sound Money Conference Phoenix Investment Conference and Silver Summit Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy Drills 71.17 Metres of 0.52 percent NiEq Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit: http://prophecyresource.com/news_2010_nov29.php
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| Posted: 05 Jan 2011 12:28 PM PST
Bees – upon which the entire human food chain rests – are suffering a sharp decline. As the Guardian pointed out Monday:
As the Guardian notes, bees are essential for human food production:
The Guardian notes that bees are not the only pollinators which are declining:
The Guardian points to some of the potential causes of bee decline:
As Fast Company pointed out last month:
The EPA is still allowing the use of Clothianidin to this day. And see this. And as I’ve previously pointed out:
There is also evidence that genetically modified crops might be killing bees … or at least weakening them so that they are more susceptible to disease. See this, this, this, this, this and this. And as Agence France-Presse notes, inbreeding may be weakening the bees. (On a side note, no one has yet asked whether silver iodide or other compounds used in weather modification affect bees. They may not, but someone should test the bees for such compounds and their metabolites so that we can rule out them out as a cause of colony collapse.) Albert Einstein reportedly said:
That might have been a slight exaggeration, but Einstein was right: If we kill off the bees, we will be in big trouble. There are also reports of birds and fish mysteriously dying world-wide. While these may or may not be connected with the collapse of bee populations, it is a sign that all is not right with the world. As I wrote two years ago:
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| Posted: 05 Jan 2011 12:08 PM PST
Harley Bassman, who used to head Merrill's RateLab, and who was one of the most erudite sellside voices on rate matters, and doubly so on mortgage issues, and subsequently moved to Merrill's prop side, has kept a low profile recently. Which is why we are happy to present his model portfolio for 2011. Bassman is a firm believer in inflation (synthetic or real), and we for one would pay good money to see the redux of the Rosenberg vs Grant debate in 2011 be Rosenberg vs Bassman. Bassman's conclusion, even though obtained in a circuitous way to our own, is comparable to the Zero Hedge thesis that the Fed will have no choice but to eventually create inflation. "In a nutshell, the FED (with the help of the Govt), is going to engineer some type of Inflation to reduce the value of both our Private and Public Debt. Since Inflation is the only solution, it will happen; it is just a matter of time. Since the entire G-7 is in the same boat, trading in Euro or Yen is purely a short-term speculation since all these currencies will be heading south." Where Zero Hedge and Bassman, however, differ, is that we are certain that the Fed will be unable to contain said inflation once it has finally been unleashed, resulting in a complete wipeout of all assets that are directly or indirectly a rate derivative (ref: a very notable reparation paying, post-WW1 central European state), which means all fiat derivatives, leaving only hard assets in the wake. Bassman's Model Portfolio for 2011 1a) Long "Big Oil" + "Big Pharm" + "Big Tobacco" + etc equities. I am precluded from making naming names, but you know what I like. Mega Cap international stocks with patent and pricing power. P/Es of 13ish (an earnings yield of 7 1/2%) and Dividend of 2 1/2% to 4 1/2%. FED will encourage Retail to reverse out of Bonds and into Stocks. 8) And of course, CMM vs CMS for 6 months, now offered at 59 3/4bps h/t First Last
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| Guest Post: Money And The State Posted: 05 Jan 2011 11:51 AM PST
The next in a continuing series (most recently: Positively Wrong: Positivism, That Is) Money and the State by Free Radical It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. – Henry Ford Once the domain of society – of the cooperative interaction that is its natural mode of economic organization and integration – the control of money has been usurped by the state and accordingly monopolized. Moreover, the monopolization is now a fait accompli due the state’s abandonment of gold, or any other commodity, as the monetary standard. Money has been positivized, in other words, in that it is now created not by “voluntary agreement between the parties immediately affected” but by the authoritarian degree of a third party. And it is because of this positivization that society’s money has effectively been stolen from it, toppling the first of civilization’s twin pillars. How could this happen? How could the state get away with stealing society’s money? Moreover, as the government’s money metastasizes, so do its laws. And were the people to understand that the latter are no less fraudulent than the former, they would run from legal positivism as fast as they will soon be running from monetary positivism. So to legal positivism we turn in my next submission: “Law and the State” Bruce L. Benson, The Enterprise of Law, Pacific Research Institute for Public Policy, 1990, p. 12. Ludwig von Mises, The Theory of Money and Credit, LibertyClassics, p. 277. Online at The Mises Institute here. Ibid., p. 53. Ibid., p. 19 Ibid., p. 62 Ibid., p. 54. Ibid., p. 72. Karl Marx and Friedrich Engels, The Communist Manifesto, 1848, Washington Square Press, 1964, p. 94. Eustace Mullins, Secrets of the Federal Reserve, Kasper and Horton, 1952, p. 202. Congressman Charles Augustus Lindbergh, Sr., arguing against the Federal Reserve Act after its passage in 1913, as quoted by Eustace Mullins in Secrets of the Federal Reserve, p. 15. Ibid., p. 118.
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| Payroll Data Dims Outlook for Gold Posted: 05 Jan 2011 10:09 AM PST Emerging Money submits: With U.S. companies adding 297,000 jobs last month, it looks like the American economy is ready to join the global party. This is great for the dollar and not good for gold. The monthly ADP employer services survey has become a closely watched indicator because it gives traders an advance sense of what Friday’s more comprehensive numbers from the Department of Labor are going to reveal about the job market. Complete Story »
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| A Golden Issue - January 5, 2011 Posted: 05 Jan 2011 10:01 AM PST A Golden Issue - Casey's Daily Dispatch [LIST] [*]Sign Up Now! [*]| [*]RSS Feed [*]| [*]Print this [*]| [*]Visit the Archives [*]| [*]Email to a Friend [*]| [*]Back to All Publications [/LIST] January 5, 2011 | [url]www.CaseyResearch.com[/url] Dear Reader, Yesterday's sell-off in the commodity markets was particularly interesting - and not because of the actual price movement. Gold's rise has been riddled with similar retreats only to return higher again. What surprises me most is the reaction of the financial press. The consensus seems to say, "Don't worry. Commodities were doing almost t...
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| Verbosity is the Soul of Financial Fury Posted: 05 Jan 2011 10:00 AM PST I have to admit that I get awfully tired of people writing to me and asking, "Are you as stupid as you look and sound?" mostly because I have truthfully answered "Yes" to this question so, so many times that I thought it was, you know, common knowledge by this time. I mean, people usually refer to me as "stupid" all the time, as in, "Shut up, stupid!" and, "Get out of my way, stupid!" which is not to mention all the times I overheard my wife telling one of the kids, "Tell your stupid father that dinner is ready." I liked it better when my parents used to look at me and shake their heads in disapproval over something I did, and they would exasperatedly ask, "For the thousandth time, what in the hell is wrong with you, boy?" and I would reply, "The same thing that was wrong with me the other 999 times you asked me that question, I assume! What in the hell is wrong with you that you ask me the same question a thousand times, when it's obvious I don't know the answer?" Well, I never did find out what is "wrong" with me, although there are a lot of theories besides stupidity, and mostly in the vein of genetic mutation, hormone imbalance, iron-poor blood, or "spawn of Satan" types of diagnoses. So, perhaps subconsciously looking for clues, I was recently going through some old Mogambo Guru pieces that I wrote, but never used, and I ran across a nice synopsis done by Atimes.com on one of my columns. I saved it because it was so good, in that pithy, "brevity is the soul of wit" sort of way that I hope to one day master, although it won't be anytime soon because I can never seem to be brief, in that the outrageous over-creation of money by a destructive, idiotic Federal Reserve and the outrageous deficit-spending of that over-creation of money by an idiotic, corrupt Congress makes me wax Loud And Long (LAL) about how we are doomed – doomed, I tells ya! – by the inflation in prices that all of this new money will cause – and is causing! – and how there will be rioting in the streets by the starving poor and the erstwhile middle-class people who had all their wealth tied up in ridiculous dollar-denominated assets which lost their market value when the dollar went to crap thanks to the despicable Federal Reserve creating so much excess money that the buying power of each of their dollars was lost and now they are Freaking Wiped Out (FWO), and angry that they did not listen to The Wisdom Of The Mogambo (TWOTM) and bought gold and silver. See? I told you I couldn't be brief! You thought I was fooling? In contrast, Atimes.com distilled my whole essay down to, "The great secret to being poor is to believe that a money-creating government, like the present one in Washington, is going to preserve the value of your income, pension and savings. The secret to being rich in such circumstances is steadily but surely to accumulate gold!!" Exactly! Perfect! And, I notice with satisfaction, correctly punctuated with double exclamation points, too! Wow! I did not realize that it could be done! Thanks, Asia Times, for showing me how! And right next to that piece, The Financial Times, apparently anxious not to be outdone, printed the letter of a reader who pointed out, in a "letter to the editor" on July 6, 2010, that George Bernard Shaw said "You have to choose between trusting the natural stability of gold and the natural stability of the honesty and intelligence of the members of the government. And with due respect for these gentlemen, I advise you…to vote for gold." And with that kind of great advice, and with the ease with which you can buy gold and silver ("Here's my money, give me gold and silver!"), sometimes it takes rummaging around in old Stupid Mogambo Guru Crap (SMGC) to remind oneself that, "Whee! This investing stuff is easy!" The Mogambo Guru Verbosity is the Soul of Financial Fury originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Playing Chicken with Debt Limits: Obama as a Senator vs. Obama the Hypocrite President Today Posted: 05 Jan 2011 09:49 AM PST President Obama is very concerned that Republicans might "Play Chicken" with the debt ceiling. The president is so concerned his aids are sending out dire warnings about dollar defaults and "catastrophic impacts" to the economy. Read More...
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| John Embry - Gold Over $2,000, Silver Above $50 in 2011 Posted: 05 Jan 2011 09:42 AM PST With a sharp two day correction in gold and silver taking place, King World News today interviewed John Embry, Chief Investment Strategist at Sprott Asset Management. When asked about the quick decline Embry stated, "This may be the best opportunity you're going to get at least from a price sense to buy gold and silver in the next few days. I think when this correction however long it will last is over, it will probably mark the lows for the year which will then be the liftoff to the eleventh consecutive year of higher gold prices." John Embry continues: "The returns over the last 10 years, gold returned over 18% and silver close to 24% annually. These are spectacular returns and we haven't seen anything yet, we're not even close to the third leg which is the blowoff. As you know we started the Sprott Phyiscal Silver Trust about about 3 months ago. We still haven't got all of our silver in yet, we're close, we've almost got every last bar. But it's taken the better part of 2 1/2 months to get it in, so the suggestion that this physical market is tight probably isn't a strong enough suggestion, it's really tight! You and I were buying this morning John personally, you probably bought for the fund as well, but I know we were personally buying. You have to have conviction in order to buy during these dips, and you have to know the companies...You had one company that was dipping 10%, you stepped in and were a buyer, it's already recovered I think. 
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| Guest Post: How High Will Gold Go in 2011? Posted: 05 Jan 2011 09:37 AM PST
Since CNBC has been issuing a non-stop barrage of its own version of reality vis-a-vis gold and other precious metals, it may be time for some counterpoint. For all those who believe that the drop in gold from levels which were virtually all time highs on Monday, is the equivalent of the apocalypse, we urge that you sell: volatility will be a key part of the game, and it may be prudent for timid elements to run into the levered safety of 5x beta stocks, trading at 100x forward P/E multiples, which are guaranteed to never go down. It will also likely shake out the weak hands, and certainly provide some cheaper entry points (something which we are confident Cramer's endless prattling on gold will do on its own sooner or later). That said, here are some amusing observations by Jeff Clark of Casey Research on how high gold could go in 2011. Keep in mind that just as all the program content on CNBC, this is nothing but pure abject speculation. In a world of central planning, none can predict the future with any does of certainty. By Jeff Clark, Casey Research How High Will Gold Go in 2011? After stellar years for both gold and silver, what prices will precious metals hit in 2011? Here's an analysis based strictly on their price behavior in the current bull market. First, take a look at the annual percentage gains that gold has registered since 2001 (based on London PM Fix closings):  Excluding 2001, the average gain is 20.4%. Tossing out the additional weak years of '04 and '08, the average advance is 24.8%. So we can make some projections based on what it's done over the past 10 years. From the 12-31-10 closing price of $1,421.60, if gold matched…
As you can see, silver had its biggest advance in 2010. The average of the decade, again excluding 2001, was 27.5%. And also tossing out the '08 decline, the average gain is 34.3%. So, from the 12-31-10 closing price of $30.91, if silver matched...
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| Will Food Prices Continue to Rise in 2011? Posted: 05 Jan 2011 09:25 AM PST "Food inflation will become America's top crisis," in 2011 reads one of the top 10 forecasts issued by the National Inflation Association (NIA) this morning. "Americans can cut back on energy use," the NIA surmises, "by moving into a smaller home and carpooling to work. They can cut back on entertainment, travel and other discretionary spending. "However, Americans can never stop spending money on food. "The days of cheap food in America are coming to an end," the forecast continues. "The recent unprecedented rise that we have seen in agricultural commodity prices is showing no signs of letting up." Indeed. You've already seen sugar futures at a new 30-year high. Coffee futures reached a new 13-year high last week. Orange juice, corn, soybeans and palm oil have all stretched to near three-year highs in the past week or so. Last month, global food prices surpassed their mid-2008 records, according to a report out this morning from the United Nations Food and Agriculture Organization (FAO). The FAO's food price index clocked in at 214.7 in December – up 4.2% in just a month, and breaking the previous record of 213.5 in June 2008. "It will be foolish to assume this is the peak," says FAO senior economist Abdolreza Abbassian. He calls the situation "alarming," but dutiful bureaucrat that he is, he won't call it a "crisis." Heck, even the Super Big Gulp ain't what it used to be:
7-Eleven has surreptitiously shrunk its famous beverage container from 44 ounces to 40. Seems people started noticing it last summer…but only this week did the lid get blown off (so to speak) with a column in the Austin American-Statesman. An alert reader compared the Super Big Gulp with a true 44-ounce container from a competitor…and it came up four ounces short. 7-Eleven confirmed it did make the change. But pressed for an explanation, a hapless PR flack could merely say, "We don't have announcements; we just have information, so I'm not sure if we ran an announcement or not." "This is called short sizing," says Resource Trader Alert editor Alan Knuckman, who has almost single-handedly propped up 7-Eleven's Big Gulp business in recent years. "And it could have come from two different commodity-related angles… "First, maybe because corn prices have rallied so much in the past 12 months, this is indicative of a rise in the price of corn syrup. "Or second, maybe – since the cost of the cup is worth more than the soda inside – this was an energy saving technique in the face of higher energy prices. Either way, they're clearly shrinking the size of a beverage to increase margins. "But!" Alan continues. "This may not be the only place we'll see a change. If 7-Eleven is REALLY watching their commodity prices closely, they'll soon realize that the price of coffee has nearly doubled since last year. "The best way to make this whole short sizing debacle a nonissue" according to Alan, "is to simply profit from the same forces that are shrinking our servings. In 2011, as always, it will all come back to commodities!" Addison Wiggin Will Food Prices Continue to Rise in 2011? originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Posted: 05 Jan 2011 09:24 AM PST by Addison Wiggin - January 5, 2011
 "Food inflation will become America's top crisis," in 2011 reads one of the top 10 forecasts issued by the National Inflation Association (NIA) this morning.We begin today's 5 with an ongoing look at what you might expect as an individual investor in 2011. We pick on the NIA because they happen to be echoing sentiments we expressed in Apogee last year. And have followed up with a few more forecasts that are curiously in line with our own. "Americans can cut back on energy use," the NIA surmises, "by moving into a smaller home and carpooling to work. They can cut back on entertainment, travel and other discretionary spending. "However, Americans can never stop spending money on food. "The days of cheap food in America are coming to an end," the forecast continues, "The recent unprecedented rise that we have seen in agricultural commodity prices is showing no signs of letting up." Indeed. You've already seen sugar futures at a new 30-year high. Coffee futures reached a new 13-year high last week. Orange juice, corn, soybeans and palm oil have all stretched to near three-year highs in the past week or so.  Last month, global food prices surpassed their mid-2008 records, according to a report out this morning from the United Nations Food and Agriculture Organization (FAO).The FAO's food price index clocked in at 214.7 in December -- up 4.2% in just a month, and breaking the previous record of 213.5 in June 2008. "It will be foolish to assume this is the peak," says FAO senior economist Abdolreza Abbassian. He calls the situation "alarming," but dutiful bureaucrat that he is, he won't call it a "crisis."  Heck, even the Super Big Gulp ain't what it used to be: |  |
7-Eleven has surreptitiously shrunk its famous beverage container from 44 ounces to 40. Seems people started noticing it last summer... but only this week did the lid get blown off (so to speak) with a column in the Austin American-Statesman.
An alert reader compared the Super Big Gulp with a true 44-ounce container from a competitor... and it came up four ounces short. 7-Eleven confirmed it did make the change. But pressed for an explanation, a hapless PR flack could merely say, "We don't have announcements; we just have information, so I'm not sure if we ran an announcement or not."
"This is called short sizing," says Resource Trader Alert editor Alan Knuckman, who has almost single-handedly propped up 7-Eleven's Big Gulp business in recent years. "And it could have come from two different commodity-related angles..."First, maybe because corn prices have rallied so much in the past 12 months, this is indicative of a rise in the price of corn syrup.
"Or second, maybe -- since the cost of the cup is worth more than the soda inside -- this was an energy saving technique in the face of higher energy prices. Either way, they're clearly shrinking the size of a beverage to increase margins.
"But!" Alan continues. "This may not be the only place we'll see a change. If 7-Eleven is REALLY watching their commodity prices closely, they'll soon realize that the price of coffee has nearly doubled since last year.
"The best way to make this whole short sizing debacle a nonissue" according to Alan, "is to simply profit from the same forces that are shrinking our servings. In 2011, as always, it will all come back to commodities!"
And Alan's readers know the refrain well. Right now, they're sitting on gains of 109% on heating oil... and 112% on soybean meal. If you want to play the "Millionaire's Market," here's where to start.
"Investors have yet to anticipate how bad conditions will get for grocers," Strategic Short Report's Dan Amoss wrote in this space on Dec. 22, highlighting what he expected would be a "margin squeeze" at the retail level caused by rising food costs. Yesterday, Bank of Montreal downgraded a couple of grocers, and cut its forecast for a couple more. The stocks tumbled anywhere from 2.1% to 7.4%.
Even that august body the Federal Reserve recognizes commodities prices are causing a "margin squeeze" for retailers. Tucked into otherwise-meaningless minutes from the Fed's Dec. 14 meeting released yesterday, we caught this intriguing bit:"Although the prices of some commodities and imported goods had risen appreciably, several participants noted that businesses seemed to have little ability to pass these increases on to their customers, given the significant slack in the economy."
As our resident stock market vigilante, Dan targeted two grocers last year for a big fall. His thesis is starting to play out... and it's not too late to start applying his strategy to play the trend. His trades could potentially double your money... and help you cover your own food bills on the rise.
How do you make it work? That's where the Strategic Short Report comes in handy. Check it out here.
Still, grocers make up just one segment among retailers. Across the board, "U.S. retailers will report declines in profit margins and their stocks will decline" another of the NIA's top 10 forecasts for 2011 suggests."Although most analysts on Wall Street believe retailers will report a major increase in holiday season sales over a year ago, NIA believes any top-line growth retailers report will come at the expense of dismal bottom-line profits.
"Retailers have been selling goods at bargain-basement prices in order to generate demand. Americans, being flush with newly printed dollars from the Federal Reserve, have been eager to buy up supplies of goods at artificially low prices. However, shareholders will likely sell off their retail stocks on this news.
"As share prices of retail stocks decline, retailers will begin to rapidly increase their prices by mid-2011."
Stocks today are down a bit after a flat day yesterday and a barnburner on Monday. Traders were unimpressed by a phenomenal hiring report from ADP, the payroll firm. It indicated 297,000 new private-sector jobs in December -- the highest number in the report's 10-year history.The question is how much of that was temp hiring for the holidays? Hard telling from this data... but we see 270,000 of those hires were service sector, just 27,000 goods-producing.
A stronger indicator may come on Friday with the Labor Department's monthly nonfarm payrolls, the agency's notorious statistical fudging notwithstanding. We'll be here as always sifting through the layers of dried excrement.
Gold is languishing again today after yesterday's beat-down. Right now, it's at $1,370, close to a 30-day low.Unlike yesterday, most of the move today appears related to dollar strength. The dollar index is up more than 1% and sits firmly above the 80 level.
Silver's taking it on the chin, too -- the current spot price is $28.99.
During 2011, "the Dow/gold and gold/silver ratios will continue to decline" suggests the last of the NIA forecasts we like today.Last year, the group forecast major declines in both indicators, and got both right. "The Dow/gold ratio was 9.3 at the time and finished 2010 down 15%, to 8.1. The gold/silver ratio was 64 at the time and finished 2010 down 28%, to 46.
"We expect to see the Dow/gold ratio decline to 6.5 and the gold/silver ratio decline to 38 in 2011. Later this decade, we expect to see the Dow/gold ratio bottom at 1 and the gold/silver ratio decline to below 16 and possibly as low as 10."
We agree. Especially with respect to Dow/gold, we expect the trend will lead us back to the lows of 1932 and 1980... both of which coincided, more or less, with major stock market bottoms.
"I find myself worrying that Big Pharma is going to pull the trigger too soon," writes our tech/biotech specialist Patrick Cox as he looks into his own crystal ball for 2011. Specifically, Patrick is thinking about a phenomenon he calls "premature acquisition" -- when a tiny company sitting on world-changing discoveries gets bought out."Unfortunately," says Patrick, "often the people who make decisions for big pharmaceuticals are not even scientists. They're lawyers and accountants. Therefore, you can't ‘know' how they're going to deal with a truly revolutionary new therapy."
And yes, Patrick has two of his Breakthrough Technology Alert recommendations in mind. "These two companies both own brand-new and completely disruptive sciences with truly remarkable potential to save lives and make investors rich."
It's a good problem to have, and it comes with the territory.
Patrick's December 2008 recommendation Medarex was bought out by Bristol-Myers Squibb just seven months later for a 235% gain. Patrick would rather these companies stay independent and multiply your money dozens of times over. (One of his recommendations is up 1,089%... which he considers merely a good start.)
If you'd like to learn about five companies with the best chance of delivering life-changing gains -- "wealth quakes," Patrick calls them -- his full 2011 outlook is here. Just know that with two of them, you run the risk of a buyout and merely tripling your money.
"Regarding Laissez Faire Books," a reader writes, "is there any possibility that you may offer these great books electronically?"The 5 is great, BTW. Keep up the good work."
The 5: Indeed, there is.
And we believe our timing is about right, too. Borders, the once mighty brick-and-mortar rival of Barnes & Noble began "holding talks with publishers" today, according to DealB%k at NYTimes.com, "seeking to convert delayed payments into interest-bearing debt as part of a plan to refinance its debt." Borders has been lagging in the race to get online, and book sales through strip mall outlets don't appear to support a viable business model any longer.
As a niche publisher, our goal with Laissez Faire Books is to reignite enthusiasm for books on classical liberal economics through a vibrant (and economical) community online. Delivering fresh ideas through eBooks seems like a given, despite our own love of hard copy.
Our team is on the case right now. In fact, we can use some assistance. The only formats that are currently supported by all eReaders are .txt and .pdf files. (For the unhelpful plethora of eBooks formats available, take a look at this Wikipedia citation. Which means, for now the eBook world is equivalent to buying a TV directly from the erstwhile "must-see" TV network NBC, but only being able to watch reruns of Seinfeld and Friends, with the occasional Law & Order: SVU or Dateline: To Catch a Predator thrown in for good measure.
If you're in the market for eBooks, tell us how you'd like to see them delivered. If you're in the business of delivering them and would like to lend us some insight, please, by all means, give us a shout: 5minforecast@agorafinancial.com
[Ed note. Our first eBook will be a recast of The Case For Gold written by Ron Paul and Lewis Lehrman co-published in a joint venture with the Ludwig von Mises Institute. We just looked at cover art. Looks splendid... even electronically. We'll keep you posted as we move forward. As always, any other suggestions you have will be greatly appreciated.]
"As a new subscriber," writes another, somewhat confused, "I am somewhat confused as to what the $39.00 subscription fee is paying for. I was under the impression I was paying for your professional advice/opinion on quality 'penny stock' picks.
"It appears from what I read in yesterday's 5 I have to pay another fee/subscription in order to get that information. Looks like/sounds like a bait-and-switch program. Correct me if I'm wrong."
The 5: If you're already a paid subscriber to Penny Stock Fortunes, here's the website where you get all your recommendations and subscriber alerts. Just log in with your account number and enjoy.
The "service" we were describing is an all-access pass to everything we publish at Agora Financial for a "one-time-only, lifetime-access" fee. A service we affectionately call the Reserve. Unfortunately, our invitation to join the Agora Financial Reserve closed yesterday.
Still, you should be getting your Penny Stock Fortunes (PSF) recommendations by email as soon as they're released, too. If you're not, please call Andrea Michinski at 1-800-708-1020 or e-mail her at customerservice@agorafinancial.com. She can help you with any difficulties you may be having.
"With all due respect to Chris Mayer," writes a third respectful reader, "I subscribed to his newsletter, bought into the uranium argument with Cameco and promptly got stopped out, losing somewhere south (say, around Paraguay) of 20%.
"I like Chris, I like his writing, even his logic, but don't like the losses."
The 5: Alas, no one likes the losses, least of all your publisher. Still, Chris Mayer replies: "I am grateful for the reader's kind comments about my work. But with all due respect to the reader, that loss is his own. I NEVER said sell Cameco. Never.
"I don't recommend using stop losses -- selling a stock after if falls a certain amount -- for exactly this reason. Stop losses seem like a good way to limit risk, but it is a crazy way to be.
"When something I know is cheap gets cheaper, why sell it? If anything, I think about buying more. All the great investors think this way -- Buffett, Lynch, Klarman, Greenblatt, Berkowitz, et al. The market is there to take advantage of, not to tell you what to do.
"Stop losses would've taken you out of many winning Capital & Crisis recommendations in 2010," Chris concludes.
Looking over a spreadsheet of Chris' Capital & Crisis portfolio... Cameco is up 51% from his initial recommendation just 10 months ago. Among the nine recommendations he made during 2010, the average gain is 39%. And we're actually low-balling that because we're not including a brand-new spinoff from an earlier recommendation that's up 161% in just two weeks.
If you're not already a reader and you'd like to review the portfolio yourself, we suggest a subscription to Capital & Crisis for 2011. Here's a direct link to the order form -- no "long-winded" or "plodding" presentation, if that's not your bag. Check it out.
"The Deepwater Horizon disaster," writes a fourth reader, "sinking of the rig and the failure of the blowout preventer resulted in roughly 5 million barrels of oil being released into the Gulf of Mexico over a three-month period and was proclaimed as the greatest environmental disaster ever."
The 5: Uh, thanks for pointing out the obvious. We'd call you a jackass right now, but we've been scolded by readers in past for being so uncouth.
Byron's attending a presentation in Washington by the American Petroleum Institute today where he is no doubt conspiring with industry insiders to further foul our waterways.
But if he were here, he'd be the first to tell you the Macondo incident was a true disaster. He was one of The Washington Post's go-to sources in weeks after the blowout, and he said straight up it happened because of a "failure of imagination."
"The industry says it never had a blowout," he told the paper, and as a result, the oil "industry is not going to spend good money on problems that it says aren't there."
"The BP oil spill left quite a mess -- ecological and human -- with long-term implications that will play out over many years," he wrote Outstanding Investments readers just last week.
But all the same, "U.S. offshore energy policy is a total mess. The nation will endure offshore energy-production problems for many years into the future, courtesy of the BP blowout and the ham-fisted government reaction to it."
Byron continues today to investigate the moratorium and its aftermath today. If you're truly interested in understanding what's happening, rather than offering knee-jerk political reactions, please stay tuned.
Regards,
Addison Wiggin
The 5 Min. Forecast
P.S. The Nasdaq composite lost ground yesterday, but one of the exchange's best-known issues -- semiconductor giant Qualcomm -- hit a two-year high, just ahead of news it was buying out a smaller competitor. The move sent one of Steve Sarnoff's Options Hotline plays to a new high -- up 223% in just four months.
Steve racked up 14 "multipliers" -- recommendations that gained at least 100% -- during 2010. And that's nothing unusual. Options Hotline readers have gotten used to a dozen or so multipliers every year, going back more than a decade. You can join them in 2011 here.
P.P.S. If you haven't viewed "Meltup" - the National Inflation Association's video documentary of the financial crisis—we recommend you do so here.
Posted: 05 Jan 2011 09:21 AM PST
Posted: 05 Jan 2011 09:18 AM PST
Hourly Action In Gold From Trader Dan
Posted: 05 Jan 2011 09:12 AM PST
Improvement In Preliminary Jobs Report Misleading
Posted: 05 Jan 2011 09:12 AM PST
Posted: 05 Jan 2011 09:01 AM PST
Gold pares losses on bargain hunting
The COMEX February gold futures contract closed down $5.10 Wednesday at $1373.70, trading between $1364.00 and $1385.20
January 5, p.m. excerpts:
(from Marketwatch)
Gold futures settled at their lowest in nearly three weeks but trimmed much steeper losses as investors bought on the recent selloff. Gold spent most of the session in the red after a private-sector jobs report showed the U.S. economy adding jobs at a faster clip. Meanwhile, the dollar rose and other commodities prices remained under pressure, but the lower prices piqued some interest. "You have some investors looking to buy this pullback," noted Matt Zeman, trader at LaSalle Futures Group…more
(from Dow Jones)
Investors continued shedding some of their fear from a fretful 2010 after Automatic Data Processing Inc. and consultancy Macroeconomic Advisers said U.S. employers added 297,000 private sector jobs last month, much stronger than the 100,000 jobs analysts forecast. The data also boosted the dollar, further pressuring dollar-denominated gold by making it more expensive for buyers using other currencies, crimping demand. Shortly after gold closed, the ICE Futures U.S. Dollar Index was up 0.9%…more
(from Reuters)
U.S. February gold futures settled down $5.10 at $1,373.70. But gold still looks likely to be firmly underpinned by factors such as concerns over sovereign risk, threats to U.S. economic stability and the prospect of rising inflation in the fast-growing developing world, analysts said. "I don't think this marks a turnaround from what has been and continues to be bullish sentiment toward gold and hard assets in general," said Credit Agricole analyst Robin Bhar…more
(from TheStreet)
On the fundamental front, recent inflationary indicators might prove helpful for gold. On top of the eurozone's larger-than-expected 2.2% inflation reading for December, the Financial Times reported that food costs in the U.K. rose 5.5% in the past year, well above their high but tolerable 3.3% inflation rate. The mounting inflation news is putting governments in a bind. With economic growth still anemic, raising interest rates to fight inflation might not be a practical solution…more
see full news, 24-hr newswire…
Gold Daily and Silver Weekly Charts
Posted: 05 Jan 2011 08:44 AM PST
Gold remains precious to the Eurosystem
Posted: 05 Jan 2011 08:38 AM PST
The European Central Bank today published the year-end consolidated financial statement for the Eurosystem. This weekly procedure carries extra significance four times throughout the year when they correlate with the quarterly mark-to-market revaluation of assets, and none more so than the year's final MTM snapshot. (That being due to technical accounting considerations regarding the final treatment of excess unrealised losses (if any, on a per item basis) upon the profit/loss account.)
As dictated by the Eurosystem's harmonised accounting rules, all gold, foreign exchange, security holdings and financial instruments of the ECB and euro-member national central banks comprising the Eurosystem will be revalued at market rates and prices at the end of each quarter; specifically that the revaluation is done on an item-by-item basis for securities, interest rate swaps, futures, forward rate agreements and other interest rate instruments, and such that foreign exchange holdings are revalued on a currency-by-currency basis. In the accounting and reporting, gold and all other valuations are carried, naturally, in terms of the domestic monetary unit — the euro.
These MTM revaluations were taken and entered into the books on the closing business day (Dec 31st) of 2010, and therefore as far as the Eurosystem's year-end balance sheet (and through the current quarter) is concerned, the dip in the price of gold these past two days is of no consequence at all. It's like taking the official family Christmas-card photograph on a pristine day — a week before your precious toddler takes a tumble whereupon examining his black eye in the bathroom mirror decides to shave some of his own hair with daddy's razor. Sure, the kid is a frightful sight at the moment, but you know he'll grow out of it — and meanwhile you really don't care because the Christmas card looks as good as you desired and is already in the mail.
To the point:
Eurosystem gold reserves are now valued at a record €1055.418/ounce, thus bringing its 348.1 million ounces up €33 billion on the quarter — up €100.5 billion on the year — to a total valuation of €367.5 billion.
Over the past twelve-year lifespan of the Eurosystem, when coupling gold's rise from the January 1, 1999 euro-launch price at €246/oz along with MTM revaluation accounting methods, the gold reserves of the Eurosystem have elevated from €99.6 billion, even in light of a weighty 56moz net decline from 404 million ounces owing largely to CBGA-related reallocation of Eurosystem gold reserves.
This growth in gold reserves makes a stark contrast when compared to the initial net position in foreign currency held in 1999 (€227.4 billion) that has undergone a significant shrinking to the net position in foreign currency today at €180.1 billion.
Within this positional admixture*, gold's role has gained musculature from a mere 30.5% proportion to it's current dominance now at 67.1%.
Meanwhile, due to the woefully outdated paradigm established by the U.S. Congress for gold held by the Treasury Department, the gold reserves of the United States are effectively anemic and bedridden upon the books of The Federal Reserve System, where they exist only in certificate form — valued at a static $42.22/oz., forming a paltry $11 billion stake.
R.
_______________
*Here I have used the sum of gold reserves plus the net position in foreign currency. Whereas older conventions of forex reseves have typically emphasized simply gross claims denominated in foreign currency, the hard experience of various international currency crises and contagion has pointed up the significant threat posed by liabilities denominated in foreign currency. For that reason, CBs have become more mindful of the denomination of liabilities, and accordingly forex liabilities do not play a large role in trimming the overall Eurosystem's forex position. Still, it is the net position that I feel to be most significantly informative, hence it's use here. (Just for the record, against the sum of reserves using unadjusted forex assets, gold's percentage has grown from 30.2% to 62.1% — similar to the net figures as noted above.)
How High Will Gold Go in 2011?
Posted: 05 Jan 2011 08:36 AM PST
Posted: 05 Jan 2011 08:35 AM PST
Take a moment to examine how gold and silver crushed their paper currency competition in 2010.
In US dollar terms gold was up 29.6% on the year. Beginning the year at $1097, gold showed a steady pace reaching $1421 to close out the year.
Silver absolutely dominated the field with a flurrying finish rounding out an 83% gain for the year. Amazing!
Silver lapped four fiat currencies of the more than 75 we tracked in 2010.
The white metal also threatened to lap seventeen other paper notes with above a 90% appreciation against such names as the euro, the Denmark kroner, and the Vietnamese dong… to name a few.
The Venezuelan bolivar was the ultimate loser against the price of gold and silver with much of this due to the country's double currency devaluation within a year's time! It seems dollars are hard to find in Venezuela and they are currently fetching upwards of 8 bolivar per dollar in the black market (almost twice the official rate of 4.3 bolivars per dollar).
So what happens when the dollar begins to have its upcoming currency crisis? If the reserve currency of the world suffers devaulations, what then is the world's monetary flight to safety?
That's right, 5000 years running, gold and silver have been mankind's ultimate money and safe haven. 2010 was no exception to this rule:
< Click here to see a table of the results>
Ben Bernanke Loses More Money In One Day Than All Of LTCM Ever Did... Doubled
Posted: 05 Jan 2011 08:28 AM PST
The ongoing collapse in bond prices is making John Meriwether blush with envy at the wholesale wanton destruction of capital undertaken by Ben Bernanke. Keep in mind LTCM - the organization which proved definitively that Nobel prizes in economics are given only to the most consummate destroyers of value, logic, reason and humility - lost "just" $4.6 billion from its peak before it became the biggest systemic risk in the world back in 1998 and had to be rescued by a consortium of banks. The bottom line: with about $10 billion in SOMA losses today alone, Ben Bernanke has generated more than double the losses that nearly destroyed western finance 13 short years ago. And nobody cares.
John Lohman explains:
Chairman Top Tick continues to crash and burn, losing $7.2 billion in Treasury and Agency paper in today’s bloodbath alone. Adding a rough estimate for the MBS holdings would put the session’s losses well over $10 billion. Indeed, a baker’s dozen of John Meriwethers couldn’t destroy this much capital in such a short period of time.
And with all of the usual caveats that accompany a simple modified duration analysis (ignoring convexity, assuming instantaneous parallel shifts, etc.), the table below estimates the Fed’s losses for various upward interest rate shocks. Again, keep in mind this does not include the massive MBS portfolio, which is extending in duration with every uptick in rates.
Mike Niehuser: Precious Metals Investment Strategy for 2011
Posted: 05 Jan 2011 08:27 AM PST
Why So Much Risk for that Pittance of a Reward?
Posted: 05 Jan 2011 08:26 AM PST
Three December Details You Hopefully Haven't Forgotten
Posted: 05 Jan 2011 08:25 AM PST
The Best Currency You’ve Never Heard Of
Posted: 05 Jan 2011 08:12 AM PST
We begin today's reckoning with a trivia question: how many möngös are there in a tugrik?
If you guessed 100, congratulations! If you didn't know, don't worry. The Mongolians probably don't care either way. The tugrik, their national currency, may not be much discussed outside the world's strangest-sounding capital city, Ulaanbaatar, but it was still the world's best performing currency of 2010. Well, the best paper currency, anyway.
The tugrik rallied 15% against the greenback between New Year's Days, narrowly pipping the Aussie dollar, which advanced a none-too-shabby 13% on the world's "preferred" currency, for top spot. The Japanese yen came in at number three.
So what do 2010's two leading coinages have in common that lends them such purchasing power gusto? Well, for one, they are both not the US dollar. Neither are they the euro, widely considered to have turned in the worst performance of the major currencies for the last year, having lost considerable ground against all its fiat contemporaries – the USD, JPY, GBP, CHF, AUD, and CAD.
So that's what they are not. What these two currencies are, however, is perhaps more interesting. Both mediums of exchange are, ipso facto, resource-backed currencies. That is, they derive a good deal of their oomph from the underlying value of the vast endowments of natural resources so abundant in both countries.
It is not surprising that other resource "backed" currencies also faired strongly against Bernanke's faith "backed" helicopter money. The Canadian loonie, for example, closed out 2010 at a 30-month high against the greenback. Even more impressive was Brazil's real, which, after having surged a whopping 37% in 2009, added another 4.4% last year.
Of course, that's not to say that these particular fiat monies are impervious to central banker enthusiasm. Indeed, the pages of monetary history are littered with the charred remains of would-be gold replacements. Even during the Roman Empire, when gold and silver were used for money, coin-clipping meddlers couldn't keep their shears in their tunics.
Not content with burning down his own capital city, Nero lit the tinder under his empire's currency back in 58 A.D., setting the tone for a litany of pyromaniac emperors to follow. By the time Claudius II Gothicus had ascended to the throne (268-270 A.D.) the amount of silver in a (supposedly 100%) silver denarius had wasted to just .02%.
Central bankers, determined to avoid learning the lessons of history, went out of their way to repeat the mistakes of the past throughout much of the 20th century. No doubt the introduction of more combustible paper money aided their cause. From Angola's novo kwanza (AON) to Zimbabwe's doomed dollar (ZWD), more than two-dozen fiat currencies perished amid the fiery lashes of hyperinflation during that period.
In 1923, Germany's Wiemar Republic suffered under inflation that saw prices double every two days. But central bankers were just beginning to sharpen their skills. By 1946, prices of goods denominated in Hungarian Pengos doubled in that country every 15 hours. Then, by 2008, the inflation rate had soared to such troubling levels in Zimbabwe that economists were having trouble just figuring out how to measure it. Finally, after wearing out a few calculators, no doubt, Prof. Steve H. Hanke managed to come up with a figure. Prof. Hanke's HHIZ measure indicated that inflation had peaked at an annual rate of 89.7 sextillion percent (89,700,000,000,000,000,000,000%) in mid-November 2008. Gideon Gono, the Governor of the Reserve Bank of Zimbabwe, had achieved a feat that Nero himself could not have imagined possible.
During this time, gold sat more or less on the sidelines. Nobody's liability, Mr. Midas watched as currencies rose and fell, ebbed and flowed. Some grew stronger, more tended weaker. Indeed, the one thing all fiat currencies have in common, both the weak and the strong, is that they are not gold. They are a liability, an act of faith, a commitment to that peculiar, enduring characteristic of the human spirit that refuses to listen to history or to learn her lessons.
The tugrik and the Aussie are strong for now. But they win by default. Gold, on the other hand, rallied almost 30% in dollar terms last year, handily beating out both of these paper money "winners." In other words, even the strongest paper fell against the precious metal. It might be fairer to say, then, that the Aussie and tugrik were simply the smallest losers.
Joel Bowman
for The Daily Reckoning
The Best Currency You've Never Heard Of originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
Big Media Finally On The Case Of The Amazing "Value Deflation" Inflation
Posted: 05 Jan 2011 08:08 AM PST
Two months ago Zero Hedge first touched upon the topic of relative "value deflation" whereby prices for products are kept constant, even as the actual product provided is far less. Back then we recalled the experience of one Walmart shopper who shared the following story: "I noted with interest that the Wal-Mart I shop at had cleared the shelves of "Great Value" brand coffee in 39 oz cans for about 2 weeks. Today the new can appeared, with the following differences: 1.) Can is now 33.9 oz, down from 39 oz. Also conspicuously missing is the conversion of 2lb, 7oz therefore no comparison in pounds is easily made. 2.) Price for this smaller can is up from $9.88 to $10.48, by my rustic math an approximate 20% increase! 3.) Contents of can are no longer 'Premium Columbian' Decaffeinated. Now labeled '100% Classic Decaf'." Indeed, for people attuned to change in prices much more than to changes in amounts, this is the best, if most despicable, way to mask what is rapidly becoming an accelerating inflation problem (and with food prices now officially at their highest levels ever merely compounding the problem). Today, with the traditional two month delay, the mainstream media finally draws attention to this increasingly more troubling development.
While at just two minutes, the following ABC segment is better than nothing, and should provide a sufficient alert to the peasantry just how much less their raped and ravaged dollar goes these days, even if on a relative basis it is actually outperforming the European continent's own one-ply infinitely dilutable piece of toilet paper in the past month or so.
d
Precious Metals Investment Strategy for 2011
Posted: 05 Jan 2011 08:02 AM PST
Posted: 05 Jan 2011 07:58 AM PST
I recently read an article that tried to claim that by Niall Ferguson’s definition, Gold is not a bubble – and that if it is a bubble, one should keep buying because we are most likely in the early stages. I was unfamiliar with Niall Ferguson’s definition, but upon closer review, I think that by his definition one could conclude that gold most likely is a bubble.
In his book, The Ascent of Money, Niall Ferguson distills the formation of bubbles into five stages:
Complete Story »
World food price index hits record high
Posted: 05 Jan 2011 07:46 AM PST
By Catherine Hornby
Reuters
Wednesday, January 5, 2011
http://www.reuters.com/article/idUSLDE7040LX20110105
ROME -- Global food prices rose in December, with the FAO Food Price Index at a record high, the U.N Food and Agriculture Organisation said on Wednesday, past 2008 highs when rising food prices sparked riots in a number of countries.
Up for the sixth month in a row and fuelled by surging sugar prices and rises in cereals and oils, the index was the highest since records began in 1990, in nominal terms, and topped the high of 213.5 in June 2008, during the food crisis of 2007-8.
... Dispatch continues below ...
Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property
Company Press Release, October 27, 2010
VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:
-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.
-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.
-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.
Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.
"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."
For the company's full press release, please visit:
http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
The index, which measures monthly price changes for a food basket composed of cereals, oilseeds, dairy, meat, and sugar, averaged 214.7 points last month, up from 206.0 points in November.
The FAO's Sugar Price Index soared to a record high of 398.4 points from 373.4 points in November.
Its Cereals Price Index, which includes prices of main food staples such as wheat, rice, and corn, rose to an average of 237.6 points in December, the highest level since August 2008 and up from 223.3 points in November.
The Oils Price Index also jumped to 263.0 points in December from 243.3 points in November.
* * *
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Prophecy Drills 71.17 Metres of 0.52% NiEq
(0.310 % Nickel 0.466 g/t PGMs +Au and 0.223% Copper)
from surface at Wellgreen Project in the Yukon
Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit:
http://prophecyresource.com/news_2010_nov29.php
Gold Breaks 50-Day Moving Average
Posted: 05 Jan 2011 07:43 AM PST
Hickey and Walters (Bespoke) submit: 
For the first time in 100 trading days, the price of gold (using the front month futures contract) dropped below its 50-day moving average. This ends the third longest streak of trading above its 50-day that the commodity has had since 2000. The prior two streaks ended back in 2002 (124 trading days) and 2008 (143 trading days). As shown in the charts below, in each of those periods the price of gold took some time before rebounding to prior highs.
Complete Story »
Sprott fund found it hard to get silver, Embry tells King World News
Posted: 05 Jan 2011 07:38 AM PST
3:36p ET Wednesday, January 5, 2011
Dear Friend of GATA and Gold (and Silver):
Interviewed today by Eric King of King World News, Sprott Asset Management's chief investment strategist, John Embry, made eye-popping price predictions for gold and silver in 2011 but may have been more interesting for his remarks about the difficulty encountered by the Sprott Physical Silver Trust in getting hold of real metal. Excerpts from the interview are headlined "Gold Over $2,000, Silver Above $50 in 2011" and you can find it at the King World News Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Prophecy Receives Permit To Mine at Ulaan Ovoo in Mongolia
VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY, OTCQX: PRPCF, Frankfurt: 1P2) announces that on November 9, 2010, it received the final permit to commence mining operations at its Ulaan Ovoo coal project in Mongolia. Prophecy is one of few international mining companies to achieve such a milestone. The mine is production-ready, with a mine opening ceremony scheduled for November 20.
Prophecy CEO John Lee said: "I thank the government of Mongolia for the expeditious way this permit was issued. The opening of Ulaan Ovoo is a testament to the industrious and skilled workforce in Mongolia. Prophecy directly and indirectly (through Leighton Asia) employs more than 65 competent Mongolian nationals and four expatriots. The company also reaffirms its commitment to deliver coal to the local Edernet and Darkhan power plants in Mongolia."
The Ulaan Ovoo open pit mine is 10 kilometers from the Russian border and within 120km of the Nauski TransSiberian railway station, enabling transportation of coal to Russia and its eastern seaports. Thermal coal prices are trading at two-year highs at Russian seaports due to strong demand from Asian economies.
For the complete press release, please visit:
http://prophecyresource.com/news_2010_nov11.php
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Sunday-Monday, January 23-24, 2011
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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property
Company Press Release, October 27, 2010
VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:
-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.
-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.
-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.
Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."
For the company's full press release, please visit:
http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
Midterm Trade in Emerging Gold Miner Gammon
Posted: 05 Jan 2011 07:32 AM PST
Complete Story »
Alasdair Macleod: This is the year money starts to die
Posted: 05 Jan 2011 07:22 AM PST
3:20p ET Wednesday, January 5, 2010
Dear Friend of GATA and Gold (and Silver):
Economist and former banker Alasdair Macleod writes today that 2011 will be the year when money starts to die as government bond prices and currency values fall and the precious metals break out from the government price suppression schemes. Macleod's commentary is headlined "2011: The Year When Money Starts to Die" and you can find it at his Internet site, Finance and Economics, here:
http://www.financeandeconomics.org/Articles%20archive/2011.01.05%20Money...
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Opportunity in the gold coin market
Swiss America Trading Corp. alerts GATA supporters to an opportunistic area of the gold coin market. While the gold bullion market has been quite volatile lately and as of November 29 gold has risen only $7 per ounce over the last month, the MS64 $20 gold St. Gaudens coin has risen about 10 percent in the same time. The ratio between the price of these coins and the price of gold is rising. If you'd like to learn more about the ratio and $20 gold coins, Swiss America can e-mail you a three-year study of it as well as other information.
Swiss America also can provide a limited number of free copies of "Crashing the Dollar," a book written by Swiss America's president, Craig Smith.
For information about the ratio between the $20 gold pieces and the gold price and for a free copy of "Crashing The Dollar," please call Swiss America's Tim Murphy at 1-800-289-2646 X1041 or Fred Goldstein at X1033. Or e-mail them at trmurphy@swissamerica.com and figoldstein@swissamerica.com.
* * *
Join GATA here:
Yukon Mining Investment e-Conference
Wednesday-Thursday, January 19-20, 2011
http://theyukonroom.com/yukon-eblast-static.html
Vancouver Resource Investment Conference
Vancouver Convention Centre West
Vancouver, British Columbia, Canada
Sunday-Monday, January 23-24, 2011
http://cambridgehouse3.com/conference-details/vancouver-resource-investment-conference-2011/15
Cheviot Asset Management Sound Money Conference
Guildhall, London
Thursday, January 27, 2011
http://www.gata.org/files/CheviotSoundMoneyConferenceInvite.pdf
Phoenix Investment Conference and Silver Summit
Renaissance Glendale Hotel and Spa
Glendale, Arizona
Friday-Saturday, February 18-19, 2011
http://cambridgehouse3.com/conference-details/phoenix-investment-confere...
Support GATA by purchasing a colorful GATA T-shirt:
Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:
http://gata.org/node/wallstreetjournal
Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon:
Help keep GATA going
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
To contribute to GATA, please visit:
Prophecy Drills 71.17 Metres of 0.52 percent NiEq
(0.310 percent Nickel 0.466 g/t PGMs +Au and 0.223 percent copper)
from surface at Wellgreen Project in the Yukon
Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit:
http://prophecyresource.com/news_2010_nov29.php
Why Gold Still Has a Long Way to Run
Posted: 05 Jan 2011 07:06 AM PST
The supply of paper currencies is infinite; the supply of gold is finite. This striking contrast provides an excellent reason to exchange the former for the latter.
The gold supply is limited…very limited. According to one estimate, all the above-ground gold in the world totals between 120,000 and 140,000 metric tons. Let's split the difference and call it 130,000 metric tons (about 4.2 billion troy ounces). If you brought it all together and made it into a gigantic cube, it would measure about 19 meters along each side – about three meters short of the length of a tennis court.
Furthermore, about 20% to 25% of all the gold is stored in the world's central banks as country reserves. So the total amount of gold in private hands is enough for just 14 grams for each living person – that's less than half the quantity of a standard one-ounce coin like a US Gold Eagle or a South African Krugerrand.
At present, only about 2.25% of the world's total wealth – or 4.5% of world's financial wealth – is allocated to gold, including jewelry. But resurgent inflation could raise that percentage dramatically, while raising the gold price dramatically in the process.
To gain perspective, let's examine a brief history of the gold price relative to US inflation. The gold price peaked in January 1980 at $850/oz. But this peak was very brief. Gold jumped 29% alone in the run towards $660. Probably a better reference point for the market top is the average price during 1980 as a whole. This was $615/oz. Since then, the gold price has increased only 125%.
Over the same timespan, however, the government's most widely quoted inflation gauge, the Consumer Price Index (CPI), has increased 185%. Therefore, if the gold price had increased as much as the CPI, it would be selling for $1,753/oz today, not $1,390/oz. But the official inflation figures might not be the real story. Using alternative inflation figures calculated by ShadowStats.com, consumer prices have soared an astounding 789% since 1980, which means that the inflation-adjusted gold price would be $5,467/oz.
Interestingly, if we look at the market bottoms for gold – 1970 and 2001 – instead of the market tops, the ShadowStats data seem to provide a much more accurate inflation gauge than the CPI. For example, in January 1970 – before gold's 10-year bull run – the price of gold was just $35/oz. Thirty-one years later – after soaring to more than $800 an ounce in 1980 – the big bear market in gold bottomed out at $256/oz. And the average price for 2001 was $271/oz.
Therefore, during this 31-year period – through gold's full bull and bear market cycle – the gold price advanced 674%. Over the same timeframe, the ShadowStats inflation measure advanced a nearly identical 688%. By contrast, the CPI increased only 370% during this period. In other words, the cumulative CPI readings from 1970 to 2001 failed to account for all the inflation indicated by the rising gold price. The ShadowStats figures, on the other hand, were pretty much bang on target.
I'm staying conservative, and there's nothing to suggest that just because using the ShadowStats inflation worked for the bear market lows it will work for the bull market highs. But if the ShadowStats figures above are a guide, then maybe they point to a price north of $5,000/oz for gold – or even $7,000 for a short time.
I've just thrown a lot of numbers at you. But the point is this: gold looks like it has plenty of upside. But let's be really clear about one thing. I'm not making a hard prediction or setting a price target here. These figures just provide reference points. We also need to watch out for gold "going mainstream" – when references make their way into TV programs, when taxi drivers start talking to you about gold and when your mother calls to ask how to buy an ounce of the stuff.
I can easily see gold getting into the $2,000/oz to $3,000/oz range in the next few years – maybe higher. And there's a very real possibility that we'll have a short-term spike – a genuine investment bubble – that takes us into the $5,000/oz to $8,000/oz.
None of this is certain. And it most likely won't happen smoothly. There could even be big corrections along the way – like between December 1974 and August 1976 when gold fell 47% before powering ahead again. But I hope I've shown you that there are good reasons to think that gold still has plenty of room on the upside.
Conclusion: If you own plenty of gold already, then hang on for the ride. If not, buy more on the dips.
Regards,
Rob Marstrand
for The Daily Reckoning
Why Gold Still Has a Long Way to Run originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
Fake Breakout On Gold Signals Caution
Posted: 05 Jan 2011 07:02 AM PST
He who fights and runs away
May live to fight another day;
But he who is battle slain
Can never rise to fight again.
– Oliver Goldsmith
Traders entered the new year exiting their commodity positions on fear of growing austerity measures and possible exit strategies out of Central Bank quantitative easing strategies. There has also been a huge move into risky equities from traditional safe havens, but that may end in the next few weeks.
When the conductor desires to lower the volume and tempo of the orchestra, he motions downward. After sometime it is followed by a loud and explosive crescendo. At this time I am navigating readers to be cautious and play defense in equities, gold, and mining stocks. This correction will take some wind out of the sails of latecomers to this precious metals rally who bought when gold and silver were way extended in October and November of 2010, and who are now having to suffer through a possibly quick but painful decline. However, this current shakeout will provide a slew of new mining recommendations and buy signals on gold and silver bullion. Corrections in secular bull markets shake out the weak hands, while the disciplined investors wait for oversold conditions and long-term support to add or enter long positions. Many high-quality mining stocks are creating sound bases and will provide highly probable signals where the odds are more favorable for a significant gain.
I have been counseling defense since October 2010 — when I sold my core bullion positions and moved into uranium, molybdenum, and recently rare earths — and have been making very large gains in the past three months. The gold bullion market has been range-bound and volatile. Our firm's individual miners have acted much better, outperforming gold and the large-cap miners.
Now this consolidation in gold just made a fake breakout for the third time after finding support at the 50-day moving average. There is nothing as bearish as a fake breakout. It was quite important that this most recent attempt to break out from the 50-day should have been successful. That third reversal was quite bearish as institutions came back after the holiday break to sell their gold positions and bid up the US equity market. This signals that the short-term trend has been exhausted and that we could see a quick shakeout in gold and mining stocks. Gold appears to be forming a bearish head-and-shoulders pattern. Further weakness today should confirm this pattern and the selling should intensify.
Gold will again approach our long-term support areas indicated in the blue circles in the chart above, which is when I take a large and aggressive position in bullion and mining stocks. I prefer to buy at support and when fear is high. All markets are volatile with ebbs and flows between euphoria and gloom, including gold. This correction is very healthy for the long-term secular bull market in precious metals. I believe it still has many years to run, but there will be corrections and times to buy when fear is increased and where gold is at key support levels. That is why I have urged readers to lock in profits when stocks have reached targets as they will be able to enter at highly profitable times similar to the end of July 2010. This is a disciplined approach which removes getting caught in the euphoria and gloom of the market. This gold topping pattern needs to be monitored, and during times like this, the quote above from Oliver Goldsmith needs to be reviewed. In the market, one must learn which battles should be fought and when it is better to retreat.
The high volume distribution and failed breakouts into new highs is indicating institutional selling. I choose to fight another day.
Over the past three months, gold has been consolidating, working off overbought levels. I believe this next correction will set up precious metals investors with the next major buying opportunity in bullion like we saw in late July 2010.
There will be profits in miners and precious metals as we have seen in the past. Over the past few weeks it has been hard for me to find sound patterns, and I was reluctant to make new recommendations because of the overall gold bullion market. The recent bounce off the 50-day failure at new highs signals that now traders should wait for further weakness as this will provide the next ideal buying opportunity. The bearish head-and-shoulders pattern coupled with high-volume reversals should signal caution. Instead of getting caught in the hysteria, it is best to try to capitalize on it.
Finance Explained In 69 Easy Sketches
Posted: 05 Jan 2011 06:58 AM PST
Zero Hedge has always believed that one picture is worth ten bullet points, and ten thousand garbled, meandering, somnolent essays. On the other hand, take a picture, add a dose of sarcasm, and convert it into a aphoristic sketch, and the result is priceless, expressed in either fiat or gold. We presenting all you needed to know about finance explained in 69 priceless sketches that not even the Fed's infinite Mastercard debit account can buy.Via Behavior Gap (h/t Nolsgrad)
Will Angela Merkel Make or Break the Euro?
Posted: 05 Jan 2011 06:48 AM PST
Earlier this week I noted that the Euro bounce could likely be a head-fake if the US Dollar rallied. Today, we got precisely that development, with the US Dollar rallying hard off of the bottom trendline in its downward trading channel:
This forecasts a move to 80.5 or so (the current upper trendline). And if we break that then we’re likely going to 83 in short order.
This development has brought the Euro dangerously close to breaking support:
This has been THE support line since August. Take it out and we’re going to at least 127.5 If not 122. Indeed, the big picture remains extremely bearish for the Euro in the intermediate term, suggesting a break below even the June lows of 118:
From a political standpoint, the Euro’s strength into Christmas was somewhat expected. Politicians and their cronies the bankers, will do anything they can NOT to have a Crisis during Christmas (the social response would be brutal given that 99% of people would be on holidays at the time).
Now that the holiday season is over, and the European crisis spreading into Portugal, the question is: how much more will Germany put up with? The “bazooka” has come out and been fired ($1 trillion bailout fund is almost entirely spent). The issue now is whether Germany’s ready to take aim with an even bigger bazooka, or if it’s going to give up on the Eurozone and choose to end the bailouts.
France wants Germany to join its plan to make the EU council a kind of economic government that would oversee all future bailout efforts.
Germany, in contrast, doesn’t want to create any new organizations but simply wants to shift the pre-existing European Financial Stability Facility into a permanent feature that would oversee the ongoing Crisis, removing the European Central Bank from it AND demanding stricter cost-cutting measures from future recipients of bailouts.
How will all of this play out? I don’t know. But one thing I DO know is that German Chancellor Angela Merkel’s political party faces seven state elections in 2011. Losing these could mean no additional term for her in 2013. So Merkel needs to be careful not to further irritate and already outraged German populace (51% of Germans are unhappy with the Euro while 77% say joining the EU has brought them nothing good).
Thus, all eyes should be on the German political arena for clues as to what’s coming for the Euro. If Germany doesn’t go “all in” on the Euro as a currency now, the currency crisis will return in full effect and make last June look like a picnic.
Good Investing!
Graham Summers
PS. If you’re getting worried about the future of the stock market and have yet to take steps to prepare for the Second Round of the Financial Crisis… I highly suggest you download my FREE Special Report specifying exactly how to prepare for what’s to come.
I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).
Again, this is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com and click on FREE REPORTS.
PPS. We ALSO publish a FREE Special Report on Inflation detailing three investments that have all already SOARED as a result of the Fed’s monetary policy.
You can access this Report at the link above.
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![GRS](http://www.theoxengroup.com/">The Oxen Group</a> submits: </strong><p>Today, we are going to look to a Midterm position. The market has pulled back a bit and looks to do it some more this morning, so this appears to be a nice buying place.</p><div><p><strong><img src="http://static.seekingalpha.com/uploads/2011/1/5/saupload_spacer.png" alt="Unknown Object" />Midterm Trade of the Day:</strong> Gammon Gold Inc. (<a href=){kind=link}
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