Gold World News Flash |
- Economic Outlook in "Stick Figures" that Anyone Can Understand
- Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Less Than 1% on the Week
- US No Longer the World Reserve Currency?
- The coming flood of Yuan and Chinese Gold Demand
- Are Gold Pool Accounts Safe?
- Gold ETFs Sliding - Now What?
- Bull vs. Bear on What's Next for Silver
- Hourly Action In Gold From Trader Dan
- (a) Is liquidity okay? – (b) A “fun” end to Student Loans?
- Correction for Silver and Gold Price. Will Gold Reach $1,300 or Lower? and Silver $26.50?
- Is Gold's Climb Coming to an End?
- Catherine Austin Fitts on Gold, Silver and the ‘Crash JP Morgan’ Idea
- Inflation and the Damage Done
- As West's gold paper price falls, metal gets scarce in Asia
- Why Gold Is Still a Good Investment
- Sean Rakhimov: Silver Going Mainstream in 2011
- FRIDAY Market Excerpts
- COMEX Commercials Short Covering for Gold
- Gold Daily and Silver Weekly Charts
- “The CFTC’s actions have succeeded in allowing the JPM’s suppression of precious metals markets to continue indefinitely, yet all its actions have really done is to provide a short-lived lower cost basis for the precious metals as there is no indica
- Damn the tuxedos! Buy! Buy! Buy!
- BullionVault.com Runs Out Of Silver In Germany
- COT Gold, Silver and US Dollar Index Report - January 14, 2011
- Predictions for 2011: Gold, Silver and the Economy
- Is Inflation Finally Here?
- Guest Post: JP Morgan Wins: CFTC Position Limits Do Not Apply (To Them)
- Former CEO Of Failed Iceland Bank Landsbanki Arrested
- … buy and hold gold
- Cash Or Gold?
- The Rendezvous Date for Junior Uranium Miners in Wyoming
- Gold Road Map: Volume Rules
- Sleeping Easy Despite Moody’s Downgrade Threat
- The Average Gold Timer is Cautious...a Good Sign: Mark Hulbert
- Silver ETF Impact 2
- More China Real Estate Bubble: Ghost Mall Edition
- The Coming Flood of Yuan
- "End of America" is Nigh
- "End of America" is Nigh
- Signs the "End of America" Is Nearing
- Illinois is No Peter Pan
- Gold & Silver: Consolidation, Correction or Worse?
- Corporate Leverage Goes Option ARM As Floating Rate Debt Sees Largest Fund Flow In History
- Guest Post: The Fed, Housing and Stocks: The Chimera of Middle Class Assets
- U.S. Dollar, Gold, and Silver Were Down on Thursday - Really?
- Could be a Friday Double Payday – CFTC Position Limits
- World Bank makes case for new reserve currency
- Silver SLV ETF Impact
- LGMR: Gold Drops 5% for Week vs. Euro, Rising-Rate Fears Threaten "New Crises"
- How Far Does Gold Drop?
- U.S. Dollar, Gold, & Silver Were Down on Thursday – Really?
| Economic Outlook in "Stick Figures" that Anyone Can Understand Posted: 14 Jan 2011 04:32 PM PST Jason Leach, Director of Research and Portfolio Manager for Cravens Brothers sent me an interesting link to a book of pages he wrote, done with stick figures, to help explain "The Age of De-Leveraging", the "Botox Economy" and the "Accordion-Shaped Recovery", terms he coined about a year ago. Page Two - Home Prices Collapse in "The Great Recession"  Page Six - European Sovereign Debt Whack-a-Mole "PIIGS"  Page Eight - Questions the Thesis "China Leads the Recovery"  Those are pages Two, Six, and Eight out of 12. Inquiring minds will want to read the entire "book". It may take a while (20 seconds or so) to load. More Here.. 
This posting includes an audio/video/photo media file: Download Now |
| Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Less Than 1% on the Week Posted: 14 Jan 2011 04:00 PM PST Gold steadily fell throughout most of world trade and ended near its late morning New York low of $1354.90 with a loss of 1.9%. Silver followed a similar pattern and ended near its noontime low of $28.097 with a loss of 3.38%.
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| US No Longer the World Reserve Currency? Posted: 14 Jan 2011 02:45 PM PST It was the most startling of warnings. If the US does not get its finances in order "we will have a European situation on our hands, and possibly worse", claimed Paul Ryan, the new Republican chairman of the House of Representatives budget committee. The consequences of not tackling the country's mounting debt burden would be dire, he last week told an audience of leading budget experts and economists at a gathering in Washington. "We will have the riots in the streets, we will have the defaults, we will have all of those ugliness problems," he said, referring to "French kids lobbing Molotov cocktails at cars, burning down schools because the retirement age will be moved from 60 to 62". As it stands today, the US borrows about 40 cents of every dollar it spends. Curbing the budget deficit has been the stated mission of Mr Ryan, a rising Republican star, for several years. But such calls for action have multiplied in Washington in recent months, igniting what some say is the fiercest debate over fiscal and budgetary policy in decades. 
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| The coming flood of Yuan and Chinese Gold Demand Posted: 14 Jan 2011 01:00 PM PST While China is taking a greater portion of our financial attention on a daily basis, it seems to us that the sheer size of China and its continued growth has not been factored into the world economic perspective, even now. One of the consequences of profit driven capitalism in the past was the relocation of manufacturing from high-cost, developed countries to the lower cost country of China.
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| Posted: 14 Jan 2011 12:47 PM PST http://www.caseyresearch.com/editorial/3991?ppref=TBP207ED0111C One of the cheapest ways to buy and store physical gold and silver is with unallocated (or pool) storage. With unallocated storage, a dealer holds metal that is owned by its customers, but without identifying any particular piece of metal belonging to any particular customer. The advantages of this method are considerable: you avoid [...]
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| Posted: 14 Jan 2011 12:37 PM PST Tom Lydon submits: Ever since gold ETFs hit highs last month, it’s been choppy going. With today’s tanking prices, you might be asking yourself whether it’s time to sell. In the absence of economic news that sends investors running for the hills, gold is struggling to hang on to its record levels. If you’re among the many gold owners, this kind of drop after a long and prosperous run can be dizzyingly confusing. Do you stay in and hope for a turnaround? Or do you sell and look for other areas that are doing more? Complete Story »
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| Bull vs. Bear on What's Next for Silver Posted: 14 Jan 2011 12:16 PM PST Hard Assets Investor submits: By Laura Crigger For our first "Bulls & Bears" 2011 feature on Hard Assets Investor, we turn to a hot topic over the past few months: silver. Although gold nabs most of the headlines, it's silver that has truly outperformed — the metal's price soared an astonishing 84 percent last year, beating 30-year highs and sparking questions about a possible impending bubble. Complete Story »
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| Hourly Action In Gold From Trader Dan Posted: 14 Jan 2011 12:01 PM PST View the original post at jsmineset.com... January 14, 2011 11:09 AM Dear CIGAs, Once again we have a front row seat in the battle between China and the US when it comes to the Federal Reserve's global inflationary policy, aka, Quantitative Easing 2. With the Fed persisting on conjuring "wealth" into existence and working to manipulate and deliberately distort the long end of the yield curve, China is fighting to contain the effects of excess liquidity coming its way. It is almost as if Bernanke has uttered the command to: "Release the Kraken", in this case the terrible Titan being the inflation monster. The Chinese authorities have good reason to fear the rise of this beast as it, perhaps above all things at the current moment, has the single greatest potential to create unrest and social disorder in their nation. The Fed has been exporting inflation around the globe and nowhere is that showing up more forcefully than in the rising cost of food. Yes, basic material costs are soari...
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| (a) Is liquidity okay? – (b) A “fun” end to Student Loans? Posted: 14 Jan 2011 11:43 AM PST
I’m listening to some “pundit” guy on tv talking about the equity market. Among the eight or ten things that he thought were “constructive” was the fact that bond prices have stabilized and as a result there was one less thing to worry about. The absence of a negative being a strong positive. 
----------------------------------------------------- Student loans are bullet proof. Or so they say. There’s no way out. Bankruptcy does nothing for these loans. Think of it this way; Student Loans (“SL”) are debtors prison. The flip side is if bankruptcy were a ticket out of SLs, there would be no SLs. So the rules aren’t going to change. ‘Bankruptcy Tourism’ under the EC Regulation on Insolvency Proceedings: A View from England and Wales
An automatic and generous discharge of bankruptcy debts. The scope of the discharge is generous, extends to tax debts and is subject to few exceptions.
The only substantive eligibility requirement that debtors must satisfy before petitioning for bankruptcy in England and Wales is that they are unable to pay their debts.
The only procedural requirements that have to be met are the filing of the petition and statement of affairs together with the payment of the court fee. It is common for debtors to make an appointment to attend court, complete and file the paperwork and obtain a bankruptcy order all on the same day.
One German debt expert based in Kent said that he was helping management consultants, doctors, accountants, dentists and lawyers to discharge their bankruptcy.
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| Correction for Silver and Gold Price. Will Gold Reach $1,300 or Lower? and Silver $26.50? Posted: 14 Jan 2011 11:24 AM PST Gold Price Close Today : 1,360.40 Gold Price Close 7-Jan : 1,368.50 Change : -8.10 or -0.6% Silver Price Close Today : 2830.9 Silver Price Close 7-Jan : 2866.1 Change : -35.20 or -1.2% Gold Silver Ratio Today : 48.06 Gold Silver Ratio 7-Jan : 47.75 Change : 0.31 or 0.6% Silver Gold Ratio : 0.02081 Silver Gold Ratio 7-Jan : 0.02094 Change : -0.00013 or -0.6% Dow in Gold Dollars : $ 179.11 Dow in Gold Dollars 7-Jan : $ 176.35 Change : $ 2.76 or 1.6% Dow in Gold Ounces : 8.665 Dow in Gold Ounces 7-Jan : 8.531 Change : 0.13 or 1.6% Dow in Silver Ounces : 416.38 Dow in Silver Ounces 7-Jan : 407.34 Change : 9.04 or 2.2% Dow Industrial : 11,787.38 Dow Industrial 7-Jan : 11,674.76 Change : 112.62 or 1.0% S&P 500 : 1,293.24 S&P 500 7-Jan : 1,271.50 Change : 21.74 or 1.7% US Dollar Index : 79.066 US Dollar Index 7-Jan : 81.141 Change : -2.08 or -2.6% Platinum Price Close Today : 1,811.40 Platinum Price Close 7-Jan : 1,735.80 Change : 75.60 or 4.4% Palladium Price Close Today : 793.00 Palladium Price Close 7-Jan : 751.90 Change : 41.10 or 5.5% Th GOLD PRICE rallied to $1,377.80, about 1:00 a.m. New York time. From there gold ground down the entire day, excepting for a larger fall-off-the-cliff down to $1,355.42. After that gold moved in a sideways chastened pattern, oscillating around $1,360. Comex GOLD lost 26.50 to $1,360.40, after failing to break through $1,386 resistance yesterday. Now call to mind that earlier this week gold broke that old $1,362 low and touched $1,353. Yesterday it rallied, but today returned to close beneath the old low. This strongly suggests that gold will move lower, say, to $1,330 or $1,300.00. The SILVER PRICE took a whuppin' twice as bad as gold's this week -- no surprise that, since smaller market silver is always more volatile than gold. Overnight silver traded to 2895c, but ground down toward the New York open. A little bump carried it up from 9 to 11, and then silver gave up again and sank to 2811c. Comex closed down a massy 94.3c at 2830.9c. Behold, the chart! Silver has established a down trend with lower highs. One more lower low confirms that downtrend. Today's tumble carried silver below its 50 Day Moving Average (28.44), so momentum is, for the nonce, down. Aww, put up your handkerchiefs! Markets never move in straight lines, and every party leaves a hangover. Silver and gold remain in a primary uptrend (bull market), and will be for several more years. Y'all got right by buying silver and gold back when everybody else through you were crazy. Now, sit tight. By the way the GOLD/SILVER RATIO behavior also argues that on 3 January we saw tops in silver and gold. The ratio has definitely turned up, which signals a correction for silver and gold. No doubt gold will reach $1,300, maybe lower, and silver $26.50. Be patient, lift up your eyes to the hills. That's where the horizon is, and where you get your bearings. In spite of a dead-cat bounce (rally) this week, silver and gold continue downward. Ditto the US dollar index. Appears that stocks will, for the nonce, gain a bit against silver and gold. After the magnitude of the plunges, it's about time. Picture in thy mind a rectilinear box. Now place it on the US DOLLAR INDEX chart. Since 1 December the Dollar Index has traded within that box, bounded on the top by 81.30 and on the bottom by 78.80. The dollar index today once again reached the bottom of that box. Boxes or consolidation patterns will break out eventually, but don't give much clue which way. This week the dollar has been driven -- down -- by a successful sale of sorry, scrofulous Portuguese bonds. Although this only pushed off the inevitable day of reckoning, speculators took it as a sign that the European sovereign debt crises (plural number) are fixed. This is the selfsame optimism that a six year old boy shows when he straps on a pair of cardboard wings and jumps off the barn. All the same, this groundless enthusiasm has driven the Euro up and the buck down. Whether it will push the dollar out of that box on the chart and back down to the November low at 75.63, or whether the dollar next week will rebound and clean the silly Euro-ites' clock, remains to be seen. Not that I am any fan of the scabby US dollar and the crooks who manage it, but in truth it is not subject to the same centrifugal stresses as the Euro, where nations whose spending cannot be controlled are yet bound by a common currency. Since those nations have spent, oh, say, 100 years financing government by inflation and stealing from gullible bondholders, they don't easily change their habits. Thus the euro stands a somewhat better chance of blowing up before the dollar. Maybe my natural born fool's brain has come unsynchronized from the market, but I still expect the dollar to rally further, although my expectation has grown weak as a radio broadcast from Pluto. US dollar today lost 12.5 basis points to stop at 79.066. STOCKS rose today, proving that both P.T. Barnum and H.L. Mencken were right. One guesses that the euro-enthusiasm has infected stock-buying optimists with visions of economic recovery dancing in their heads. Veritas filia temporis. Noteworthy today was the Dow in Gold Dollars, which measures stocks' performance in gold, broke through its 200 DMA. Recall that the DiG$ topped 25 August 1999 at G$925 (44.75 oz) and has been falling ever since, to G$179.11 (8.665 oz), by 79%. In down- trending market a rally to the 200 DMA occurs from time to time, just before the market begins falling again. Same thing is occurring in the Dow In Silver Ounces, now 415.56 oz. Could rally to 515, or could collapse next week. Stocks remain the brown lettuce in the crisper of the great refrigerator of investments. 'Tis worth noting and pondering that stocks have diverged from their sometime movement in the same direction with silver and gold. I'm not sure what that means, but it seems like something to wonder about. Y'all enjoy your weekend. 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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| Is Gold's Climb Coming to an End? Posted: 14 Jan 2011 10:47 AM PST Carlos X. Alexandre submits:c As gold pulls back the question lingers as to whether this is the beginning of the end, and some hardcore believers find themselves looking to the heavens for answers. As the background delivers a weaker dollar and higher inflation (but not core), the usual arguments to own gold and the commodity’s price movements are hard to consolidate with the economic data and long held beliefs. As I have pointed out before in an article on October 1, 2010, “... isn’t gold a hedge against inflation? Never was and will never be. It’s a hedge against instability.” As of now the perception is building that the world is becoming very stable, and the successful, although temporary, resolution of European financing in the short-term is removing the underlying impetus for the commodity. Complete Story »
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| Catherine Austin Fitts on Gold, Silver and the ‘Crash JP Morgan’ Idea Posted: 14 Jan 2011 10:24 AM PST MK: Since launching the CJPMBS campaign on 11/11/10 – when Silver was at $26.50 (after 5 years of promoting Gold and Silver: cost basis around $9 for Silver not for political purposes; but as protection against insanity) there have been two schools of thought on this campaign (while up 42% on an annualized rate of [...]
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| Posted: 14 Jan 2011 10:22 AM PST The Mogambo Stupidity Prize (MSP) is a not-so-rare honor bestowed to highlight the laughable kind of stupidity about inflation that is so prevalent these days that I find myself screaming at the radio, the newspaper and the TV, wildly ranting, arms akimbo like some kind of demented old man, about how inflation is the Worst Thing That Can Happen (WTTCH), working myself into a fit of uncontrolled anger that goes beyond "outrage" and into some dark, dangerous place in my heart where enemies, both real and imagined, are rounded up and thrown into a hellish prison, and I reign victorious in abolishing the Federal Reserve, reinstalling the gold standard for the US dollar, thus abolishing inflation forever and becoming a national hero whose courageous victory will live forever in the hearts of the people and in the history of the United States and the world, which quickly realized the beauty and simplicity of the gold standard in delivering stable prices and higher standards of living for everyone, instead of the grinding misery and suffering of inflation under a standard of expanding a fiat currency. Thus, I will be loved and revered by everyone, except possibly my kids, who will probably still be insisting that they will hate me forever unless I let them go to Disney World with a guy they know as Dave, and his girlfriend, Krystal, who is a professional-pole dancer. Naturally, I replied, "Disney World? Pole dancer? Sure! But only if I can come, too!" They rudely said, "No" and made disgusting gagging noises. So I, indignantly, said, "No!", too, but with an exclamation point to show them I was serious and my feelings were hurt. Ergo, the aforementioned "hate unto death" pour moi. But that is not important, if a cataclysm of inflationary horror that will destroy the USA is not important, because we were originally talking about the Mogambo Stupidity Prize (MSP), but somehow veered off into another of my rambling harangues about the Federal Reserve destroying the purchasing power of the dollar with their relentless, ruinous, catastrophic over-creation of money, which seems important to me in that "You are soon going to be killed. Do you want to know why?" way, which seems to satisfy a basic human hunger, as evidenced by a lot of movies showing a guy dying of a gunshot wound, and he says to his killer, "Before I die, I want to know your name!", which is pointless because he will be brain-dead in a few minutes and he will forget whatever name he hears. Moron. Abruptly, I now veer BACK to the subject, which is to announce that The Financial Times is this week's winner of the MSP in recognition of their winning entry in a January 8 editorial where they wrote, "Higher prices are not something to be scared of. Indeed, they are a necessary precondition to make supply catch up with demand." Hahaha! Higher prices are not something to be scared of? Hahaha! You know that this is stupid AND funny because of the way I laughed "hahaha!" each time I wrote it, which was, at last count, two! Well, as you knew I would, I have some Hot Mogambo News (HMN) for these Financial Times weenies: Higher prices ARE something to be "scared of" because it is exactly tantamount to saying, "Getting a bad, debilitating disease is not something to be scared of. Instead, it is a precondition to making advances in medicine catch up with demand." Hahaha! I wonder how these Financial Times morons would like to suffer from disease until production of curative medicine increases in response to the demand for cures, in the meantime suffering more and more, and then more and more suffering every month, suffering and suffering until, hopefully one day, the supply of medicine catches up with demand, and their disease is cured, although they will suffer a permanent decrease in health from the damage done. They surely must like it as much as they like inflation, paying higher and higher prices for food until production of food increases in response to the shortage causing the higher prices, paying higher prices, and then more higher prices, and then more and more, every month, higher and higher, and then the prices of everything else go up in price, too, higher and higher, month after month, businesses being pressured to raise the "wage" part of that important land, capital and labor triumvirate, as are sellers of land and credit, even though your income will surely not increase along with prices, meaning that you will have spent so much money on subsistence rather than investment that you will have suffered a permanent decrease in financial health from the damage done. As for me, I choose not to suffer inflation at all, and merely buy gold, silver and oil, which is so easy that I cannot help but exclaim in a giggly kind of rapturous glee, "Whee! This investing stuff is easy!" Inflation and the Damage Done 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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| As West's gold paper price falls, metal gets scarce in Asia Posted: 14 Jan 2011 10:08 AM PST Gold Prices Buoyed by China Demand By Jack Farchy http://www.ft.com/cms/s/0/ecd524fe-200e-11e0-a6fb-00144feab49a.html#axzz... A spike in gold buying by Asian investors has created a scarcity of investment-grade gold bars in the region, supporting prices even as Western investors trim their holdings. Traders said that gold sales to China had jumped 30 to 50 per cent since Christmas, driving the cost of kilo bars in Hong Kong more than $3 per ounce above the market price of gold, the highest level since 2008 and an indication of the tightness in the physical market. "Physical demand has rocketed in China at the start of the year," said Walter de Wet, head of commodities research at Standard Bank. The wave of Asian buying has propped up gold prices at about $1,360 a troy ounce, traders and analysts said. ... Dispatch continues below ... ADVERTISEMENT 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 metal's price has dropped 4.6 per cent from its December record price of $1,430.95, trading at $1,364.10 on Friday, as optimism about prospects for U.S. growth has led Western investors to turn their attention away from gold to other commodities and equities. "We have a balanced situation where one part of the world is buying and the other part is selling," said a senior trader in Hong Kong. Chinese and Indian investors are increasingly turning to gold to protect savings against sharply rising food prices. Investor buying of gold bars jumped 80 per cent to a record 144 tonnes last year in India, according to GFMS, the precious metals consultancy, while across east Asia bar hoarding was up 125 per cent at a 15-year high. In another sign of the booming investment demand for gold in the region, China's first exchange-traded fund to offer exposure to physical gold, launched last month by Lion Fund Management, announced this week that it had already achieved its target of raising $500 million. The tightness in the Asian market is likely to persist until the end of the month, traders said, as some refiners have booked out production until February and Chinese demand remains robust ahead of the new year holiday. However, some warned that the gold market could lose its main support when China shuts down in the first week of February. Edel Tully, precious metals strategist at UBS, said that next month, "if investors are intent on selling, gold will not have the buffer it had in January." 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 Prophecy Drills 71.17 Metres of 0.52% 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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| Why Gold Is Still a Good Investment Posted: 14 Jan 2011 09:51 AM PST Bill Bonner View the original article. January 14, 2011 10:03 AM Nothing much in yesterday's market news…so we turn to a remarkable article that appeared in MONEY magazine, proving that MONEY doesn't know anything about money. (MONEY Magazine) – Can you tell when a boom has turned into a bubble? One clue: When pop culture starts paying attention. The housing bubble, for example, brought both the TV show Flip This House and a rival on another network, Flip That House. So if you own a lot of gold, you might regard a recent episode of Saturday Night Live as your first warning. In the opening skit, Bill Hader as China's President Hu Jintao declares that Glenn Beck was right and that "my government should have bought gold. Unfortunately, all our assets were tied up in US Treasury bills." Back in the real world, gold is trading at about $1,400 an ounce, up from less than $500 five years ago. That's a 23% annualized return, far outstripping the gains on stocks (1.1%) or bonds (6....
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| Sean Rakhimov: Silver Going Mainstream in 2011 Posted: 14 Jan 2011 09:23 AM PST Source: Brian Sylvester of The Gold Report 01/14/2011 Never mind the correction in the price of silver, says Silver Strategies Editor Sean Rakhimov; better things are ahead. "It may be volatile; it may be steep; but it should be short-lived," he says, adding that he expects silver to rise well above its 2010 high at some point in 2011. Some of that price support could come from governments entering the silver market. Find out all the reasons for this and read about some of Sean's favorite silver plays in this exclusive interview with The Gold Report. The Gold Report: Sean, it seems that among commodities, silver is getting the biggest headlines. The price of silver hit a 30-year high in late December. Silver was up 83% in 2010. And a high-profile lawsuit was launched by a significant silver investor against JP Morgan for allegedly manipulating the silver market. It seems that silver has, for the time being, wrested the spotlight away from gold. What sort of things do ...
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| Posted: 14 Jan 2011 09:07 AM PST Gold price slips as risk-appetite returns The COMEX February gold futures contract closed down $26.50 Friday at $1360.50, trading between $1354.60 and $1377.80 (from Reuters) see full news, 24-hr newswire…
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| COMEX Commercials Short Covering for Gold Posted: 14 Jan 2011 09:06 AM PST If the COMEX Big Sellers saw today's pullback for gold ahead of time, they sure didn't position as though they saw it coming. ...
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| Gold Daily and Silver Weekly Charts Posted: 14 Jan 2011 08:32 AM PST |
| Posted: 14 Jan 2011 07:59 AM PST BullionVault.com Runs Out Of Silver In Germany Share this:
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| Damn the tuxedos! Buy! Buy! Buy! Posted: 14 Jan 2011 07:49 AM PST MK: JP Morgan are lazy good-for-nothings who’d rather game the system; the CFTC, the SEC and the rest – than actually put in an honest days work. It makes the job of Eric Sprott and the Silver Vigilantes harder, but more rewarding. Some have asked is it morally questionable to take down a company like [...]
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| BullionVault.com Runs Out Of Silver In Germany Posted: 14 Jan 2011 07:42 AM PST
With the US Mint selling silver at an unprecedented pace, it was only a matter of time before the silver shortage would be spotted across the Atlantic, where distributors ran out of both gold and silver on a daily basis during the first time Europe became insolvent some time in early May 2010. Sure enough, BullionVault.com has announced that it has run out of silver in Germany "due to high demand." In the meantime, the CFTC's actions have succeeded in allowing the JPM's suppression of precious metals markets to continue indefinitely, yet all its actions have really done is to provide a short-lived lower cost basis for the precious metals as there is no indication demand is subsiding. At some point the margin calls will come. Then not even Gary Gensler will be able to bail out JPM (we wish we could say the same about Ben Bernanke to whom JPM's role as head of the tri-party repo clearing market is irreplaceable in maintaining an orderly shadow liquidity market).
Translation:
h/t Oldeurope
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| COT Gold, Silver and US Dollar Index Report - January 14, 2011 Posted: 14 Jan 2011 07:35 AM PST COT Gold, Silver and US Dollar Index Report - January 14, 2011
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| Predictions for 2011: Gold, Silver and the Economy Posted: 14 Jan 2011 07:29 AM PST Kenneth J. Gerbino Kenneth J. Gerbino & Company Posted Jan 14, 2011 As a hedge fund manager one lives between the realms of market volatility/mass paranoia and an unending stream of data collection. The main objective of the exercise is to know that no matter how right you may be on your analysis of value and expected future returns you are operating in an arena (investment markets) that can become irrational at any moment. The future is an unknown. But something that can be known is value. Therefore with value correctly analyzed (especially in the mining sector) one has some assurances of the future worth of an investment even after market drops. It is also important to have an understanding of basic economic truths which do exist! There are reliable cause and effect relationships that over some period of time eventually determine stock and bond market behavior. Let’s start with some basic facts that are obvious,...
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| Posted: 14 Jan 2011 07:27 AM PST
This article originally appeared in The Daily Capitalist. Inflation is occurring but it is not what you think it is. There were a number of articles Thursday commenting on the producer price index (PPI) numbers saying that "inflation" is upon us because prices are rising. I think we are on the verge of experiencing true inflation, but the PPI is mostly revealing supply and demand factors rather than price inflation.
The month-over-month increase of 1.1% is high (13.2% annualized) but it is a result of food and oil prices increasing internationally because of demand, temporary supply shortages, and OPEC manipulation. This shows up in the year-over-year index as well, at 4.1%. But again, the core Y-o-Y is 1.4%. Monthly core prices are up only 0.2%. The Consumer Price Index for December mirrored the PPI:
So where is the price inflation everyone is talking about? In a true inflation all prices go up. Here we are seeing supply and demand issues and many commentators confuse the two. Inflation, again, is an increase in the supply of money, and one of the impacts of inflation, among others, is price increases. So are we also experiencing inflation? I believe we are and the core PPI increase of 1.4% is an example of price inflation when you consider real estate price and rent declines, and things like retail "deflation" found in small packaging, both considerable headwinds against price inflation. Since inflation is the expansion of money supply, is that increasing? Money supply continues to expand. As Michael Pollaro shows in his True (Austrian) Money Supply data (see The Contrarian Take), money supply has been increasing and is likely to increase further this year. In his December Money Watch he argues for higher money supply growth in 2011:
This is the reason I part with the deflationists on inflation versus deflation. You have to look at money supply growth to determine what is happening. It is growing, but will it explode in 2011? While Pollaro also makes a good argument (above) for credit expansion through banks buying securities, I believe it will take bank credit (loans) to make explosive money growth and dramatic price inflation happen. Pollaro believes that loan volume, and thus money growth through credit expansion, is increasing. I too have been following bank loans and they have been growing, but the activity is primarily at the large banks. I believe that bank loan expansion has been rather modest. Pollaro looks at the chart of total loans and leases of all commercial banks (LOANS), based on a scale of percentage change from a year ago, and gets a chart that shows an apparent dramatic increase in loans:
While true, I prefer what I believe is a more realistic view of the same chart (LOANS) but measured by the volume of loans being made. And that view shows loan volume continues to be weak:
Pollaro also notes, correctly, that bank excess reserves (EXCRESNS) have been declining, something I have also pointed out. But as I see it, the decrease has been modest. The economic assumption behind the decrease is that this vast hoard of money the Fed "printed" has been sitting in banks vaults and not being lent out. I put "printed" in quotes because the Fed didn't really "print" money. Remember this isn't money base (currency), but rather an extension of credit the Fed made to banks during the early stages of the collapse to provide liquidity to the system, and it was created out of thin air, or by a keystroke, if you will. Bankers woke up the next morning and saw the Fed credited their accounts at the Fed with almost limitless credit. Banks create more money through credit expansion because the rules only require them to keep 10% or less on reserve (multiplier effect). The Fed's dilemma was and still is that banks didn't lend and thus expand the money supply as they wished. They believe, falsely, that money supply expansion will create economic growth. Thus an indication that banks have started lending again will support the argument that we are headed for price inflation. Lending is starting to loosen up, and is expanding the money supply. But bank lending is far from rapidly expanding. Latest Fed numbers show loan activity still contracting--for the third straight quarter. The big banks just broke even on their lending activity (i.e., loans made and loans retired were equal). Activity is still shrinking at the small banks. I still see substantial problems in the economy that would not lead me to conclude that businesses will start borrowing again as in a normal post-recession recovery, nor do I see banks lowering loan underwriting standards to accommodate marginal borrowers who need the money to stay afloat. Look for steady improvements but nothing dramatic in 2011 on this front. I think quantitative easing (mostly QE I) has been the major factor in money supply expansion (see Pollaro's True Money Supply's data), and that QE II will further increase money supply this year. It is likely that because of long-term problems underlying our capital structure that economic growth will remain stagnant. As unemployment continue to remain high, the Fed is likely to engage in more quantitative easing in 2011, as the Administration pressures them to "do more." This is why I think the deflationists and the hyper-inflationists are wrong. This is why we will have stagflation.
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| Guest Post: JP Morgan Wins: CFTC Position Limits Do Not Apply (To Them) Posted: 14 Jan 2011 07:18 AM PST
Submitted by Chris Martenson JP Morgan Wins: CFTC Position Limits Do Not Apply (To Them) Speaking of changing the rules... Gold and silver are now down hard over the past two days and the reason may have something to do with the fact that the CFTC utterly caved to JPM in their long-awaited decision on position limits in a 4-1 vote.
While position limits will eventually be set, maybe, someday, the course of action taken by the CFTC grandfathers in JPM's (and HSBC, et al) current outlandish positions. Here's the background (emphasis mine):
The only wiggle room in the Dodd-Frank bill is for "bona fide" hedge positions which, I should state, I think is not a good idea because the exact definition of a 'bona fide hedge' is elusive. For example, you and I could decide to engage in a massive short-hedged position where you short a commodity but buy calls from me. Your 'hedge' is only as good as my credit. Or perhaps you decide that oil and natural gas have enough negative correlation that you are 'hedged' by being equally short and long both substances. What if your correlation blows out? You're not hedged is the answer to that question. Continuing into the meat of the new position limit ruling, we find these discomforting items:
Translation: Only the front month of any contract will be subject to the position limits initially. Later, at some undefined point "early next year", out months will be included. But for now it's just the spot month. Impact: Watch out for crazy out-month behaviors as JPM et al. seek to skirt this rule. Okay, that's not too terrible. But this is:
That's just horrible. For anybody like JPM that has no intent of taking physical delivery, they are prevented from accumulating a position that is 125% of the total deliverable supply. What sort of a limit is that?? That's like trying to limit the damage from auto accidents by limiting freeway speeds to 'no more than' 175 mph. Also, anybody who might want to actually buy the physical is limited to 25%, so any potential Hunt Bros. need not apply. The outer limits of this game have been exclusively reserved for speculators and manipulators. That's not even remotely the outcome I was hoping for. This 'ruling' tantamount to saying "carry on!" And what does 'deliverable supply' mean? Does it refer to COMEX warehouse deliverables in current storage or can special players receive additional preferential treatment by including 'deliverables' available to them via contractual arrangements with the LBMA? Lots of questions are emerging for me here. But it gets worse:
Translation: "JPMs silver position is in complete violation of even these generous new 'rules' so we're just going to let them keep it." Impact: Just check the price behavior of gold and silver for the impact. The gold and silver markets have traded upwards of late in part because of the thought that JPM would finally be forced to play fair and reduce their outlandish precious metals short positions. Nope. Guess not. Once again, all sense of fair play has been abandoned in the interest of giving a special handout to a set of large banks that are reporting near-record earnings. When, I must ask, is enough enough? The message that I receive from this ruling is that US markets are now hopelessly and irrevocably captive to the behind-the-scenes wishes of the banking class, for which "everything and then some" seems to be not quite enough. Worse, an already battered faith in the markets has been kicked again. Here's my prediction: someday the US commodities markets will experience a very painful set of failures, big banks will be caught on the bad end of that experience, and they will simply, once again, lobby to have the rules changed in their favor. To everybody who hopes to make money by being on the opposite side of that trade, good luck collecting your winnings. They will simply be rule-changed right out of your hot little hands. Thank you for playing sir, and sorry about your luck; would you care to try again? The CFTC is now playing the role of Lucy holding the football. If you don't wish to be Charlie Brown in this story, I'd advise that you take delivery. Here's CFTC Chairman Gary Gensler describing the rationale, such as it is, for the CFTC's ruling [with my reactions inserted in-line]:
Let's close with a statement of regret by Bart Chilton who tried very hard to do the right thing, but couldn't get the other four commissioners to see things his (and my/our) way.
Thank you for trying Bart, I am grateful for your efforts. I wanted to give Gary Gensler, the former Goldman Sachs executive, the benefit of the doubt and I did that. All benefit and all doubt now removed. Once a squid, always a squid I guess. I am still trying to get my arms around this ruling and its likely impact on gold and silver prices going forward. Long-term this changes nothing except to reinforce my conviction that I have no interest in playing in rigged markets. Further, given the opportunity to do the right thing in an open and transparent manner, the CFTC, quite predictably, caved to large interests - the same large interests that are helping to shape, if not drive, current fiscal and monetary policy. For more on rule changing, please read yesterday's piece "Don't Worry, They'll Just Change the Rules". I guess I should append the following to that title "...or decline to enforce them.'
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| Former CEO Of Failed Iceland Bank Landsbanki Arrested Posted: 14 Jan 2011 07:03 AM PST
Iceland, which alone in the entire developed world allowed its banking sector to collapse, and which, also alone, has benefited from a recovery that is truly organic courtesy of a devaluation of its currency and a global restructuring of its corporate balance sheet (read wipe outs for its banker class), continues to show the world that it is possible to have at least some semblance of justice in a world captured by fraud and criminal financial interests. After the CEO of failed bank Kaputhing was arrested back in May, today AFP reports that Iceland police has also detained the former CEO and several other executives of the other major Iceland failed bank: Landsbanki. From AFP:
The crimes these people are charged with are like child's play compared with what happened in the US during the great moderation. Which is precisely why no justice will ever be sought after our own former and current bank heads. At least no justice that can be dispensed in a court of law. That said, we still have to see real justice in Iceland: In May 2010, a similar probe was launched into the dealings of the one-time largest bank Kaupthing, and several top executives were briefly taken into custody. Briefly. Then released. It appears that even the country which attempts to appear a safe-haven from global financial corruption, is not immune from the effects of infinite fiat.
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| Posted: 14 Jan 2011 07:02 AM PST by Dan Ferris And you don't have to guess about this, either. Listen to the market. It's trying hard to tell you something very important… Thirty-year U.S. Treasury bonds were yielding as little as 3% in late 2008. Today, they're yielding over 4.5% – an enormous move. If interest rates double in the next year or two, it won't surprise me a bit. Big moves down in U.S. Treasury bond prices aren't supposed to happen. You're not supposed to think of Treasury bonds as risky. They're where you go when you're afraid of risk. It's not just the federal government in trouble. The iShares S&P National Municipal bond fund has collapsed. Every time it looks like it's rebounding, it bounces to a lower step. Its recent 52-week low is 10% below its 52-week high. That's an enormous move for municipal bonds. … All my life, muni bonds were the second safest investment in the world, next to U.S. Treasury debt. Now, they're loaded with risk, and everybody either knows it, or is starting to get wind of it. … Gold, the anti-dollar, has been telling us for 10 straight years that the crisis is coming. Gold was around $252 an ounce in the summer of 1999. It's now around $1,350. Gold is up fivefold against the U.S. dollar. That's not a great statement of confidence in the world's reserve currency. And it's important that we continue to pay attention to it. … With the (allegedly) safest bonds in the world crashing, stocks clearly overvalued, and gold near new all-time highs, it's not hard to figure out what to do. Own gold and silver bullion. … The market is telling you tough times are here. [source] — See source for further commentary and charts.
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| Posted: 14 Jan 2011 07:01 AM PST |
| The Rendezvous Date for Junior Uranium Miners in Wyoming Posted: 14 Jan 2011 06:47 AM PST How did the world-champion chess players take over prime mining land in Wyoming and Texas in a brilliant tactical maneuver? Well, who would've thought it? In broad daylight and without a shot being fired, Russians have taken possession of rich American uranium assets. Figuring out how they managed to do this requires the skills of a mystery-unraveling Sherlock Holmes. A description of the end game follows: About a year ago, the directors of Uranium One, listed on the Toronto Stock Exchange as UUU and on the Nasdaq as SXRZF, were abruptly informed by the Kazakhstan government that their uranium properties were to be expropriated. The directors immediately flew out to the capital for an emergency meeting. What emerged was a deal. Uranium One would be given two Kazakh uranium mines plus a special sweetener dividend of $1.06 a share if they would sell a 52.14% ownership in the company to an entity known as ARMZ. Upon investigation, it turns out that ARMZ is a private company completely in the control of the Russian Federation. Now Uranium One owns mines in Wyoming and Texas. In one brilliant move, the Russian government is the new cowboy in Wyoming and Texas. As a result of this coup, Moscow (ARMZ) has swiftly and brilliantly entered the US through its control of Uranium One, without a shot being fired. The citizens of Wyoming took the case to the Wyoming Supreme Court and all the way up to the president, Tim Geithner, and the Nuclear Regulatory Commission. They were concerned that Russia would control 20% of vital American uranium. Moreover, they feared that somehow US uranium would wind up in Iran's nuclear reactors. They were defeated. Now, in Wyoming, be prepared to translate your "Howdy" into "Pri-vet." The gambit becomes clearer when one realizes that UUU is the fifth-largest uranium company in the world, offering investors huge leverage to spot uranium prices relative to its closest peers such as Cameco (CCJ) andDenison Mines (DNN). Uranium One production is expected to grow substantially over the next five years. Now, it so happens that in addition to the owning of prime uranium properties around the world, Uranium One most recently made a lucrative offer for Mantra Resources in Tanzania. ARMZ (The Russian Federation) is on record that they intend to become the world's second-largest uranium miner within three to five years. In October, I listed the uranium miners close to production in Wyoming. For whom The Nuclear Regulatory Commission has issued draft licenses to three major uranium developers, Uranium One (SXRZF), Ur Energy (URG), and Uranerz (URZ). Many of these shares have already seen huge gains since that article. It doesn't take a Sherlock Holmes to realize the demand from emerging economies that are rapidly developing nuclear reactors. There is a supply fear as Russia will not renew its agreement to supply the US with converted uranium from nuclear weapons. For years the US relied on this cheap uranium as Russia was the major supplier. Now all eyes are on these domestic uranium miners as this agreement terminates. It is important to follow the countries that have a trade surplus, like Russia and China, and to highlight the locations of their strategic investments. They are willing to pay premium prices to acquire new uranium assets. One should follow those mines which have not yet been acquired and have the best production profile. Even though China is bailing out Europe and the US deficits by purchasing debt, behind closed doors and below the radar of the mainstream media, China and Russia have been purchasing major amounts of uranium as prices have recently soared. I don't believe this demand that has pushed the price higher of uranium oxide is coming from major utilities alone, but from the many new reactors being constructed now in India, China, France, Russia, and many other emerging economies. This price increase has a direct effect on the value of these uranium producers, and investors may be in for an exciting 2011 in this sector; it is a sector that protects investors against a dollar devaluation and provides upside on the growing energy demand of emerging economies. Uranium miners that have received their draft licenses in Wyoming have been rising in the past three months as major investors realize the value in these key projects. These stocks have been gaining a lot of enthusiastic interest from investors over the past few weeks. Some of the miners out of Wyoming have made huge percentage gains such as Uranerz, UR Energy, Cameco, and Uranium One, as these mines move closer to producing uranium ore. Expect to hear more news of acquisitions and strategic investments as these uranium miners move closer to production.
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| Posted: 14 Jan 2011 06:41 AM PST Super Force Signals A Leading Market Timing Service We Take Every Trade Ourselves! Email: [EMAIL="trading@superforcesignals.com"]trading@superforcesignals.com[/EMAIL] [EMAIL="trading@superforce60.com"]trading@superforce60.com[/EMAIL] Weekly Market Update Excerpt Jan 14, 2011 Gold and Precious Metals Markets UUP-nyse Chart. (US Dollar Proxy) US Dollar Analysis: [LIST] [*]The Dollar rally has stalled and started a slight pull back on soft volume. That soft volume is a short term positive for the dollar. My Target for UUP is the $24.00 area. I would expect that as price moves into that $24 area, Gold will continue to correct in price and may even accelerate its rate of decline. [/LIST] [LIST] [*]Still this overall rally in the dollar has been met with substantial distribution and that is problematic for the dollar in the long term. It is important to separate the short term bullish action from the intermediate and longer term very bearish action. [/LIST] [LIST] [*]I use cu...
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| Sleeping Easy Despite Moody’s Downgrade Threat Posted: 14 Jan 2011 06:28 AM PST Hmmn… There must have been change in the Matrix. We experienced a major deja vu this morning. It began when we read this headline from The Wall Street Journal: "S&P, Moody's Warn on US Credit Rating." "We have become increasingly clear," the Journal quotes a Moody's statement "about the fact that if there are not offsetting measures to reverse the deterioration in negative fundamentals in the US, the likelihood of a negative outlook over the next two years will increase." Translation: If the boneheads in Washington can't figure out how to raise revenue or cut spending, or both, Moody's is going to write a strongly worded letter. Ooooh, scary. And yet…it sounds so…familiar. Just for the heck of it, we spent three minutes with Google and turned up news articles with Moody's alone issuing warnings on these dates…
What accounts for the six-month dry spell in the second half of last year? We admit we do not know. But a better question might be when do they actually grow a pair and pull the trigger on a downgrade? Who are we kidding? This is the same bunch who just a few short years ago slapped AAA ratings on mortgage-backed securities worth little more than premium toilet paper. "Before I go to sleep at night," John Whitehead, the octogenarian former chairman of Goldman Sachs said during the depths of the Panic of 2008, "I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of US government bonds." Sleep easy, Mr. Whitehead. That'll only happen after the default is complete. Addison Wiggin Sleeping Easy Despite Moody's Downgrade Threat 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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| The Average Gold Timer is Cautious...a Good Sign: Mark Hulbert Posted: 14 Jan 2011 06:16 AM PST "GLD ETF down another 204,951 ounces. The golden wall of worry.Banks repossessed 1 million homes last year — and 2011 will be worse. Momentum Toward Hyperinflation Is Accelerating: James Turk...and much more. " Yesterday in Gold and Silver Thursday's trading activity was another one of those days that made no sense whatsoever...at least no sense in free-market terms. For the second day in a row there was a big decline in the dollar. On Thursday, that decline began at 2:00 a.m. Eastern right on the button...and really began to accelerated to the downside shortly before 7:00 a.m. in New York...with the bottom coming at half past lunchtime on the East Coast. The drop was an eye-watering 120 basis point in the world's reserve currency from high to low. That's 1.5%. Since Monday, the dollar has lost about 2.75% of its 'value'. This is a monstrous decline for any currency...but for the world's reserve currency, it's almost a crash. Since their Monday ...
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| Posted: 14 Jan 2011 06:16 AM PST Silver's massive autumn rally has utterly captivated speculators and investors, their appetite for all things silver is insatiable. Interestingly a major driver of this metal's recent surge was stock-market buying of the flagship silver ... Read More...
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| More China Real Estate Bubble: Ghost Mall Edition Posted: 14 Jan 2011 06:08 AM PST In the video below, Bloomberg's Paul Allen visits the New South China Mall in Dongguan, China, on the southeast coast of the country, roughly midway between Guangzhou and Hong Kong. Once heralded as "the largest mall in the world, bustling with customers," the mall is now overwhelmingly desolate, just "floor upon floor of emptiness." This is even on a Saturday, and even with a fully-operational theme park. The best way to boost foot traffic? Expand another 200,000 square meters, according to the mall's owners. They plan for the development to ultimately reach over one million square meters of residential and retail space. It's already been about six years since the nearly-vacant mall opened… things are bound to turn around any day now. You can see more details in the clip below, which came to our attention via The Mess That Greenspan Made's post on a vast (and empty) shopping mall in China. More China Real Estate Bubble: Ghost Mall Edition 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: 14 Jan 2011 06:06 AM PST |
| "End of America" is Nigh Posted: 14 Jan 2011 06:02 AM PST |
| Posted: 14 Jan 2011 06:02 AM PST |
| Signs the "End of America" Is Nearing Posted: 14 Jan 2011 05:58 AM PST By Dan Ferris, editor, Extreme Value Friday, January 14, 2011 I keep getting subscriber e-mails asking me what good it is to buy stocks when the U.S. dollar will soon be destroyed, taking the value of most equities with it. This question is a better one now than it's ever been in my lifetime. I remember many years ago, in the 1980s and early 1990s, when I started investing on my own. Back then, I often read arguments by various gold bugs and libertarian-leaning economists about how the U.S. dollar was on a path to total destruction. Even then, I was often reminded that all fiat currencies meet the same fate, and that the dollar would be no different. Fast-forward a few years to 1997, when I started communicating that same message for a living. Though I remained more concerned with other things, I kept revisiting this message. I kept thinking the Fed's actions would have dire financial consequences for all of us… but for about 10 years, nothing apocalyptic h...
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| Posted: 14 Jan 2011 05:58 AM PST "I'll never grow up, never grow up, never grow up, Not me!" "I knew Peter Pan and you're no Peter Pan." "Top Illinois Democrats have agreed to push a plan that would temporarily boost income taxes by 75 percent and double cigarette taxes," harked CBS Chicago on January 6, 2011. The proposed plan would increase Illinois' personal income tax rate from 3 percent to 5.75 percent for the next three years. After that, it would drop back to 3.25%. So they say. Illinois is a state in which the legislators have so betrayed the taxpayers that a lifetime on Devil's Island would be too good for them. For instance, the liability of the four state pension plans is calculated at $151 billion or $280 billion, depending on the assumptions used. The $280 billion figure is analytically controversial but deductively compelling given the efforts to deny and confuse bondholders and the public alike respecting the coming collapse of the municipal bond market. Springfield, the capital of Illinois, is a nice town. As state capitals go, it is strikingly uninhabited with a population of 110,000 (and falling, but not as fast as its benefit obligations are rising). Farm country starts about three blocks from the state house. Illinois has more representation in its capital than any other state. The politicians raised pension benefits faster than poker bids in Macau. Presumably, they have boosted their own benefits faster than the state's public servants, who, once they retire, no longer pay one cent for health insurance. Clay ducks would have done better at funding promises than the elected representatives. There are $70 billion of assets to support the $280 billion of pension obligations (See The Liabilities and Risks of State-Sponsored Pension Plans in which Professors Novy-Marx and Rauh lay forth their provocative and engaging argument). Illinois borrows from the bond market each year to pay benefits, a total of $16 billion since 2007. Bondholders have been paid $550 million (on the first $10 billion) for funding this pyramid scheme. In other words: Illinois taxpayers have paid a $550 million late-fee that, if there were justice in this world, would be paid by the Illinois legislators. These legislators – and this is true across the country, not just Illinois – cannot conceive of a time when there will be no buyers of bonds to pay benefits that the politicians failed to fund. By borrowing to meet current payments, the "top Illinois Democrats" have fostered the national charade of limitless taxing authority. State General Obligation (G.O.) bonds are backed by the "full faith and credit" phrase, stamped on their offerings. Wall Street research would have it that a G.O. bondholder can take that phrase to the bank. It is from this precipice that bondholders hang by their fingernails. Goldman Sachs research chips in: "[G]eneral obligation debt is backed by a state or local government's pledge to raise taxes to service that debt if necessary." Barclay's wrote to its California-averse clients that the state is obligated "in good faith to use its taxing power as may be required for the full and prompt payment of debt service." There are four problems here. First, the State of Illinois had accumulated over $5 billion of unpaid bills by the end of 2010. Electricity to the governor's mansion will be cut off if the politicians don't grow up. Second, the authority to raise taxes to meet bond payments often does not work. The most recent instance is the State of Oregon. In early 2010, voters increased tax rates on high earners and businesses to fill a $700 million deficit. Civil servants danced in the streets: "We're absolutely ecstatic," said Hanna Vandering, a physical education teacher from Beaverton and vice president of the statewide teachers union. "What Oregonians said today is they believe in public education and vital services." (The Oregonian, January 26, 2010) On December 16, 2010, the state of Oregon had received one-third less than was expected from windfall tax receipts. Those Oregonians who weren't talking while Hanna Vandering was spouting decided they would rather leave town than contribute to this scandalous love-in between legislators and public unions. Third, the authority and inclination of courts to issue a writ of mandamus (ordering state officials to raise taxes) is not a topic discussed in brokerage firm research. It is hereby suggested to municipal bondholders who are recipients of such reports to ask why this is so. There have been many decisions in which the court concluded it did not have the authority (or inclination: because efforts, such as in Oregon, are generally unsuccessful) to demand tax increases. The decisions are too varied to discuss here. (See, as a start, Tax Increases in Municipal Bankruptcies, Kevin A. Kordana, Virginia Law Review, volume 83, No. 6, pp. 1035-1107.) Readers may recall that states cannot file for bankruptcy. This is true, but an insolvent body that reneges on its obligations to bondholders will sit in the dock. Municipal decisions are the obvious precedents for the courts. Fourth, a Sword of Damocles hovers over all transactions and contracts in the United States today: who still trusts the "full faith" of any government body? And, this is the worst situation of all: politicians who think they can fly. Regards, Frederick J. Sheehan Illinois is No Peter Pan 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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| Gold & Silver: Consolidation, Correction or Worse? Posted: 14 Jan 2011 05:54 AM PST |
| Corporate Leverage Goes Option ARM As Floating Rate Debt Sees Largest Fund Flow In History Posted: 14 Jan 2011 05:46 AM PST
While Zero Hedge already noted that fund flows into bond funds and out of equity funds have once again resumed (a fact that was barely mentioned if at all on CNBC, contrary to the day-long segment on fund flows dedicated to the first equity inflow after 33 weeks of outflows), digging through the actual composition of debt receiving inflows reveals some curious details. EPFR reports a very disturbing development, namely that in the last week, Floating Rate debt saw $859 million inflows which was the largest inflow by dollar amount in history. Implicitly what this means is that bankers are currently pitching another massive round of refi deal to companies (particularly those that are past the non-call window, which in 2011 would mean quite a few of them), one which seeks to replace fixed debt with floating, or debt based on a Libor floor and a fixed margin. And for thousands of corporate treasurers, at a time when the Fed is guaranteeing ZIRP for the next 3 years at least, this is a slam dunk decision: after all why pay even a modest fixed interest when one can part with a modest refi fee, and still pay a fraction of the current interest expense. To some this may seem familiar: after all this is precisely the last push in refis in the housing bubble when everyone was jumping into an adjustable rate mortgage, which had a floating rate in its first 5 or so years. Are we starting to see the Option ARM wave in corporate refinancings? And if so, is this the same top tick indicator in the credit market currently that it was in the housing bubble of 4 years ago? The answer: it all depends on how much longer Ben Bernanke can succeed in defying gravity and the rules of the free market, courtesy of his ponzified central-planning artificial economy. And just like with Paolo Pellegrini, the one who can time the flip properly will be able to retire shortly thereafter. Some comments from Bank of America:
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| Guest Post: The Fed, Housing and Stocks: The Chimera of Middle Class Assets Posted: 14 Jan 2011 05:18 AM PST
Submitted by Charles Hugh Smith from Of Two Minds The Fed, Housing and Stocks: The Chimera of Middle Class Assets On the surface, the Fed's $2 trillion-dollar campaign to prop up housing and equities may look beneficial to (what's left of) the middle class. But that is more perception than reality. Of the 26% of assets in "other," i.e. pensions and life insurance, much of those underlying assets are in bonds and equities--so the middle class wealth is probably roughly 20% in bonds, 33% in equities (stocks, emerging-market mutual funds, etc.) and 26.5% in real estate (those Boomers who still own some equity).
Source: Wealth, Income, and Power. As we can see in this chart from iTulip.com, the increases in income have also been concentrated in the top 5% and the 15% just beneath that together make up the top 20%: As I reported in Housing and the Collapse of Upward Mobility (April 16, 2010), the vast majority of housing equity resides in the one-third of homes owned free and clear (no mortgage). Here are the updated numbers from the Fed Flow of Funds:
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| U.S. Dollar, Gold, and Silver Were Down on Thursday - Really? Posted: 14 Jan 2011 05:12 AM PST The U.S. Dollar Index Futures have been sold heavily and interestingly enough, gold and silver have not rallied. In fact, gold and silver have sold off while the dollar experienced downward price action as well. How does that whole scenario ... Read More...
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| Could be a Friday Double Payday – CFTC Position Limits Posted: 14 Jan 2011 04:40 AM PST As we write at 10:34 CT it is looking like we are in for a "Payday" on gold and silver, as both have moved below our trading stops. If that continues for an hour or so, or if either of them reaches our "hard stops" within that hour, we haul to the sidelines muy pronto. Having said that, these are valuable trades, not to be tossed overboard lightly, so we will give each of them the full hour's grace, subject to the hard stops. Coincidentally, this downward action for precious metals is occurring the day after the CFTC just voted to put their new position limit scheme for futures, options and some swaps out for public comment. ...
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| World Bank makes case for new reserve currency Posted: 14 Jan 2011 04:24 AM PST by Kevin Carmichael The World Bank is taking a different view. Those who bothered to read to the end of the Washington-based institution's 30-page economic outlook this week stumbled on perhaps the clearest reasoning yet for why Mr. Sarkozy is right to begin discussing whether the world needs a new reserve currency. … "In the long-run a gradual move toward reliance on new or additional currencies is both likely and desirable." The World Bank was moved to this position by the events of last year. The decision of the Federal Reserve to adopt "very loose monetary policy and the depreciation of the dollar may be having impacts on global confidence in the dollar as the international reserve currency, which could have important consequences." The World Bank adds in the report that the situation is exacerbated by Europe's debt woes, which undermines confidence in the euro. Its economists note that over the past several years, the values of the dollar and the euro have oscillated "a great deal, potentially reducing their qualities as a stable store of value that partly explains their use as international currencies." … China is on board and will host a conference on the subject under the G20 banner later this year. [source] RS View: The World Bank has lately emerged as remarkably proactive in this discussion of international monetary reform. You will recall that it was the World Bank's president, Robert Zoellick, who made headlines recently with comments that the world should consider gold serving as a key reference point among currencies in the reform of the international monetary system.
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| Posted: 14 Jan 2011 04:19 AM PST Silver’s massive autumn rally has utterly captivated speculators and investors, their appetite for all things silver is insatiable. Interestingly a major driver of this metal’s recent surge was stock-market buying of the flagship silver ETF, SLV. The larger and more popular this fund grows, the greater its ongoing impact on silver prices. SLV was born in late April 2006, so it is relatively young as far as exchange-traded funds go. Though its birth was shrouded in controversy, SLV has rapidly grown into a smashing success. Now holding $10.2b worth of physical silver bullion in trust for its shareholders, it is already one of the world’s largest ETFs. And as more stock investors get interested in silver exposure, SLV will only continue to grow.
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| LGMR: Gold Drops 5% for Week vs. Euro, Rising-Rate Fears Threaten "New Crises" Posted: 14 Jan 2011 04:15 AM PST London Gold Market Report from Adrian Ash BullionVault Fri 14 Jan., 08:20 EST Gold Drops 5% for Week vs. Euro, Rising-Rate Fears Threaten "New Crises" THE PRICE OF GOLD continued to slip for Dollar investors in London dealing on Friday, trading unchanged from last week's finish as world stock markets also fell. US crude oil contracts pulled back 1% to $90 per barrel, and silver bullion prices gave back the last of this week's 5% rise vs. the Dollar. The Euro extended its rally on the currency markets, spiking to a 4-week high vs. the Dollar of $1.3450 before easing back. Gold priced in Euros dropped almost 5% from Monday's near-record high. "It would appear as the 'long gold' trade is being dented by expectations of rising interest rates," says Stephen Gallo, analyst at Schneider FX in London. Compared to the Dollar or British Pound, "We believe that the European Central Bank and Euro would have the upper hand if the markets began to actively seek out inflation hedges v...
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| Posted: 14 Jan 2011 04:12 AM PST Open any financial website or periodical and you can find plenty to read relative to the price of gold. Why the concerns and selling of gold currently? The short version is it comes down to the economic outlook. The US economy has been gradually improving along with the employment data and that has impacted part of the reason investors were buying gold, an alternative investment. The improving data out of Europe over the last couple of days relative to the sovereign debt issues facing the EU nations has been put to rest temporarily and that is pushing gold prices lower as well.
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| U.S. Dollar, Gold, & Silver Were Down on Thursday – Really? Posted: 14 Jan 2011 04:09 AM PST The U.S. Dollar Index Futures have been sold heavily and interestingly enough, gold and silver have not rallied. In fact, gold and silver have sold off while the dollar experienced downward price action as well. How does that whole scenario make any sense? I do not fancy myself as an expert in the area of reasoning why a stock or commodity rises or falls. I firmly believe that the media is nearly always wrong as to the real reasons stocks and commodities are rallying or falling.
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Gold dropped after China tightened bank reserves to rein in inflation and as safe-haven demand faded on a better economic outlook. U.S. data on Friday showed that underlying inflation remained tame, suggesting the recovery was strengthening modestly with little price pressure building, while sales at U.S. retailers rose slightly less than expected in December. Safe-haven buying also decreased this week after successful euro zone bond sales lessened worries about the bloc's debt crisis…
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