Gold World News Flash |
- GoldSeek.com Radio Gold Nugget: Gerald Celente & Chris Waltzek
- Mythbusting Gold’s Volatility
- Why Gold and Silver Have Declined
- Fiscal Policy Setting Stage for a New Bubble
- The Troubling Doubling of Money Supply
- Hourly Action In Gold From Trader Dan
- What Gold Really Reflects
- Crude Oil Rises as Equities Hit 29-Month Highs, Gold Bounces off Support
- Is It Time To Collapse The WTI-Crude Spread?
- Gold Seeker Closing Report: Gold and Silver End Higher After Late Rally
- American Cowards!
- FCIC Finds Majority Of Revenues In Goldman's Most Profitable FICC Division Came From Derivatives
- In The News Today
- Does it make a difference if a Central Bank buys local production or on the international market?
- A Brief History of Oil Pt 2: From the Silliman to the Crazy Colonel
- 65 Leading Analysts Predict Gold Price of $1,450 for 2011
- *NEW* USAGOLD Video RoundTable
- Former Goldman Insider's Take On Obama's Speech And The Massive Pink Elephant In The Room
- World Gold Council Report Shows Gold Price in 2010 Driven by Recovery in Key Markets
- Gold Price Jumped $11.00 in the After Market to Meet the $1,345 Resistance
- “The Dollar has now broken below three preceding lows, a bearish situation.”
- WEDNESDAY Market Excerpts
- Fiscal Policy Setting Stage for a New Bubble in a Series of Asset Classes
- Gold Comment
- Grandich Client Silver Quest Resources
- US Unemployment and Other Data Not Indicative of “Recovery”
- Gold Nearing October Pivot Low
- Marshall Auerback: Fiscal Policy Setting Stage for a New Bubble
- The Politics of Finance
- Vulture Bargain Roundup for January/February
- Gold Daily and Silver Weekly Charts
- Cold-Hearted Research
- China Plays Europe Card, Ramifications of Chinese Dollar Swap Facility
- Extreme Daily Changes in Gold’s Open Interest are Bullish Events in Market History
- What Difference if Central Banks Buy Gold Local Production Or On the International Market?
- China Plays Europe Card
- Wheat Futures At 29 Month High As Developing Country Demand Surges In Aftermath Of Tunisia Revolution
- Obama Says: "SoU is Strong" - Phil Says: "Bottom 99% SoL"
- Time to Buy Gold Stocks…Again
- Wage Inflation Rampant In China As More Provinces Plan Minimum Salary Hikes
- Celente on the State of the Union as Political Theater
- Top 15 Most Undervalued Gold Stocks by Analyst Target Price
- Set the Bar High
- New Addition to Tracking List
- Why the Smart Money is Trading Dollar Bills for Hard Assets
- New World Order: Food Price Inflation; House Price Deflation
- Will Commodity Issues Follow Equity Strength or Commodity Weakness?
- Gold to Benefit as Currency Woes Continue
- The Secret Behind Gold's $100 Collapse
- US Panel Blames Banks for '08 Meltdown... Tunisia Promotion Now Failing?
| GoldSeek.com Radio Gold Nugget: Gerald Celente & Chris Waltzek Posted: 26 Jan 2011 07:02 PM PST
| |
| Posted: 26 Jan 2011 06:09 PM PST Gold is a volatile asset class. This is why we tell investors to put no more than 5-10 percent of their portfolio in gold, and split that among the bullion itself and those companies tasked with exploring for and producing gold. However, when compared to other commodities last year, gold looks relatively calm. This chart from the World Gold Council (WGC) shows the annualized daily volatility for selected commodities such as copper, silver, tin and others.
| |
| Why Gold and Silver Have Declined Posted: 26 Jan 2011 06:07 PM PST Silver and gold are being PUNISHED – in a macro sense – in early Jan - from a commodity index re-weighting point of view – PRECISELY because they outperformed so much last year. This explains why silver is getting creamed so much more than gold – it way outperformed gold on a relative basis last year. It's my understanding that this rebalancing window effectively closes with the expiration of Jan. Options [Wed]. If I'm correct in my thinking / analysis – this sell off is likely done and we are going to SCREAM HIGHER in both gold and silver.
| |
| Fiscal Policy Setting Stage for a New Bubble Posted: 26 Jan 2011 06:03 PM PST Marshall Auerback, corporate spokesperson for Toronto-based Pinetree Capital, is a so-called "hedge fund" strategist. He believes that deficit spending is not bound by anything other than inflation, which, he says, is of limited consequence right now. Marshall believes the U.S. government's main goal should be to reduce unemployment, and he predicts the gold price is likely to remain rangebound from $1,100–$1,400/oz. in 2011. However, his long-term outlook for precious metals remains rosy given that "casino capitalism" is setting the stage for a new bubble. In this Gold Report exclusive, Marshall explains why he fears for the global economy.
| |
| The Troubling Doubling of Money Supply Posted: 26 Jan 2011 06:02 PM PST James Turk of GoldMoney.com says that silver is in backwardation, meaning that, as I understand it, the spot price is higher than the price of the commodity future contract, when the reverse is usually the case, or the reverse is the usual case, I am not sure which.
| |
| Hourly Action In Gold From Trader Dan Posted: 26 Jan 2011 05:16 PM PST View the original post at jsmineset.com... January 26, 2011 11:38 AM Dear CIGAs, Widespread buying across the entire commodity complex was the order of the day today with the foods leading the charge higher once again. The grains were very strong with wheat charging above $8.60 as it reached its highest level since August 2008. Cotton prices continue to trade just off a 140 year high. Sugar and coffee were both sharply higher today as were the meats. Platinum, palladium and copper were all higher today as well and even crude was able to move north. That buying lifted gold from off its worst levels as it once again moved down towards support near $1320 and held. Instead of the move lower attracting strong selling, it instead attracted a decent amount of buying. The buying was not enough to push it up significantly on the day but it was enough to reject the lower support level which is a friendly development on the price chart. Momentum to the downside is drying up for now in gold. ...
| |
| Posted: 26 Jan 2011 05:16 PM PST View the original post at jsmineset.com... January 26, 2011 10:39 AM Dear CIGAs, There is no top in gold. Tops in gold are vertical, full of flame and fury, and generally double the price in a matter of weeks. Do you remember the Head and Shoulders in gold that broke down into a bear trap? We have seen so many bear tops in gold that turned out to be bear traps since $248 I have lost count. When you comment on Martin Armstrong keep in mind he publish an article titled "Gold $5000" The feel good Dow has many convinced we are headed into good business We are not. The equities market is driven by the liquidity of QE2. The same thing that will drive gold ballistic will also drive equities, and that is the sum total of all QEs. It is not business that gold reflects. It is debt. If you have my handbook on gold this is a good time to re-read it. The dollar is trading quite sadly. In the end the relationship with gold and the dollar is inverse. Someday people will consider selling into...
| |
| Crude Oil Rises as Equities Hit 29-Month Highs, Gold Bounces off Support Posted: 26 Jan 2011 04:40 PM PST courtesy of DailyFX.com January 26, 2011 07:51 PM Crude oil rose back toward recent highs, following the bullish move in U.S. equity markets. Gold rose for the first time in five sessions as bargain hunters bought on a key support level. Commodities – Energy Crude Oil Rises as Equities Hit 29-Month Highs Crude Oil (WTI) - $87.42 // $0.09 // 0.10% Commentary: Crude oil rose on Wednesday, with WTI advancing $1.14, or 1.32% to settle at $87.33, while Brent added $2.66, or 2.79%, to settle at $97.91. The WTI-Brent differential reached -$10.58, just shy of the record of -$10.67. U.S. equity markets reached a 29-month high after New Home Sales reached an 8-month high. Separately, the Federal Open Market Committee kept rates unchanged and maintained an extremely dovish stance on monetary policy. Overall, economic data and corporate earnings have been very supportive of risk assets, including equities and commodities. This surge in asset prices of the pas...
| |
| Is It Time To Collapse The WTI-Crude Spread? Posted: 26 Jan 2011 04:27 PM PST
Recently there has been much speculation about the nature of the notable divergence between WTI and Brent. Explanations range from the now traditional Cushing syndrome, to Hess attempting to corner the BFOE, to correlation desks blowing up, to the ludicrous, which includes HFT (as much as it is trendy to blame parasitic HFT for everything, is not responsible for correlation trades, especially not in markets that do not have endogenous liquidity at least 1,000 times above that needed for HFT to actually add value). Probably the best explanation to date comes from JPM's Lawrence Eagles who in a just released note asks "Is Brent-WTI wide enough." His lede: "Brent and WTI have been trading increasingly as entirely separate commodities in recent weeks, driven by decidedly different fundamentals. Yet this is an important spread, which tells us a lot about regional Midwest and international crude economics and will, over time, drive investment that will ‘normalize’ price discrepancies." In other words, it is not the spread's wideness that is the outlier: it is the fact that it was overlapping for so long that is peculiar. In time, Eagles claims, speculation may drive the spread so wide that the economic incentive to close the gaping infrastructure holes will be large enough and the discounting of this act will bring the spreads back to parity. In the meantime, the spread will likely persist. Not only that, but he also believes that the 2012 calendar dated differential, currently trading at a far more reasonable $2.50, will likely also diverge, as two years is insufficient time for the required changes to transpire. Furthermore, the last straw that convinces us that it is likely early to bet on a convergence, is Goldman's just released commodities report which has a WTI target $2 above Brent. By now everyone should know what they say about trading Goldman recommendations... The complete explanation from JPM:
And there you have it: nothing more than a question of medium-term supply/demand imbalance, and one likely without an immediate catalyst that will bring the spreads to parity. Then again, the cliffhanger is, of course, that this is a JP Morgan report... about commodities. And there is hardly a firm that has perfected the art of manipulation in that particular space better than JPM: not even Goldman. Which is why at the end of the day we wouldn't be surprised if it were to come out that it was not Hess but rather the House of Dimon that was currently cornering the Brent market. Unfortunately, for the time being no incremental information is available. Suffice to say: those who believe that a compression trade between the spot curves is a slam dunk: be very careful.
| |
| Gold Seeker Closing Report: Gold and Silver End Higher After Late Rally Posted: 26 Jan 2011 04:00 PM PST Gold rose $5.35 to $1338.15 in Asia before it fell back off in London and early New York trade to see a loss of $7.90 at as low as $1324.90 by a little after 11AM EST, but it then rallied back higher in late trade and ended with a gain of 0.06%. Silver climbed 34 cents to $27.16 in London before it fell to see a $0.159 loss at $26.661 by late morning in New York, but it then surged back higher in afternoon trade and ended near its new last minute session high of $27.22 with a gain of 1.12%. Both metals have also risen to new highs in after hours access trade at the time of writing in reaction to the fed's statement.
| |
| Posted: 26 Jan 2011 03:36 PM PST (Like me!) Silver Stock Report by Jason Hommel, January 26th, 2010 If Americans are going to exercise their right to own real personal wealth like silver and gold, they also need to take personal responsibility to protect it. One way is with a vault, bolted down. But in America, things are bad now. Police confiscate cash on sight, charging the cash itself with the crime of being "drug money", and the cash can't fight back. If they can do that with cash now, they can take your silver, unless we let them know we won't tolerate such unlawful behavior from our public servants. The ultimate way to protect your wealth, is with a gun. But gun rights are under constant attack, and I'm shocked to see how far they have destroyed our gun rights in this country. How can there be over 25,000 different kinds of "gun laws" across the land when the second Amendment contains the clear words, "shall not be infringed"? There are T-Shirts and Bumper stickers t...
| |
| FCIC Finds Majority Of Revenues In Goldman's Most Profitable FICC Division Came From Derivatives Posted: 26 Jan 2011 03:21 PM PST
Frequent readers know that when it comes to Goldman Sachs, Zero Hedge has consistently claimed two things: i) that in the peak bubble days, the firm regularly commingled flow and prop traders on its trading floor(s), thereby allowing prop traders to either front run the firm's flow accounts, or trade alongside them in real time; and ii) that when it comes to OTC derivative trading, Goldman Sachs is the de facto Wall Street monopoly, a status made even more acute following the annihilation of Bear and Lehman, thereby cementing the firm's undisputed role as primary fixed income/OTC derivative market maker. Whereas yesterday we received indirect confirmation of the former, when we learned that Merrill was slapped on the hand with a token $10 million fine for doing precisely what we alleged, and which we are certain will soon be reconfirmed transpired at all other major banks in the 2003-2007 period, Goldman most certainly, and probably profitably, included, tomorrow it will be made clear that Goldman was an effective monopolist within the derivative space, with a bulk of its revenues in its highest margin, FICC group, coming from derivatives. When tomorrow the FCIC releases its long-awaited 545-page report exposing a tiny fraction of the criminality on Wall Street, we will discover that "Derivatives accounted for 70 percent to 75 percent of revenue in the firm’s commodities business from 2006 to 2009, and “half or more” of revenue from interest rates and currencies, the firm estimated, according to a report by the Financial Crisis Inquiry Commission. From May 2007 to November 2008, about 86 percent of $155 billion in trades made by the firm’s mortgage business involved derivatives, the FCIC said." A breakdown of the firm's "activity" by segment was provided by Goldman recently. As can be seen when it comes to FICC, the firm's perpetually most profitable group, which combines both prop and flow, derivatives accounted for a majority (50%-55%) of the revenue:
And since revenues are obviously not profit or pre-tax net income we present a recent breakdown showing that when it comes to actual margins, FICC, both prop and flow, generate by far the highest firm-wide margins:
In other words, derivatives have long been the driver behind the bulk of the revenue of the firm's most profitable group, in a time when the banking lobby (read Goldman) does everything in its power to prevent the collapse of OTC trading margins, and thus compromise the firm's second to none monopolistic position in the space. We are confident that when the FCIC report is released tomorrow, much more information on Goldman's activities will be gleaned. In the meantime, Bloomberg has the following additional disclosure:
But wait, there's more... Also as part of tomorrow's FCIC disclosure, we will discover that "Wells Fargo & Co. aimed to take advantage of a change in tax law that occurred two days earlier when revising a 2008 offer for Wachovia Corp. and trumping a bid by Citigroup Inc., the Financial Crisis Inquiry Commission said." BusinessWeek reports on the latest act of criminal impropriety by the then-administration, not to mention the complicity of the IRS, and the executive branch:
Basically what happened for those who are confused, is that the tax law was changed in the last minute to prevent Citi, which Paulson et al thought may fail, from buying Wachovia.
Who thought central planning started off so early in America's two year non-stop centrally planned market meltup. But wait, there's even more... None of this really matters you see, because as Goldman president Gary Cohn said in Davos today today "the drive to impose more regulation on banks could cause the next crisis by pushing risky activities towards hedge funds and other lightly supervised entities."
So why not just let sleeping dogs lie, and let the banks resume being totally unregulated. After all, who knows just how mutually assured the destruction will be if instead of the TBTFs, which as we all know by now will not be allowed to fail until the Keynesian Frankenstein monster is aborted, handling risk, we left those parties who actually are not protected by the ubiquitous Bernanke put proceed without regulation. Because the Fed has bailed out so many hedge funds: who can possibly trust those evil, evil funds with 3x leverage, when the ultra safe banks struggle to make ends meet with $100 million year end bonuses, and revel in the knowledge that nothing bad can ever happen to them? The crisis is over. And it all now forgotten: time to give banks back their 50x leverage, and restart the securitization machine. Because Netflix at $200, Apple at $400, and BofA at $15 (which these days are the market) said so. And lest we forget, we need to raise another $100 trillion in debt in the next 9 years. That isn't going to happen if we don't all place our trust in the House Of Lloyd immediately if not sooner.
| |
| Posted: 26 Jan 2011 02:00 PM PST Jim Sinclair's Commentary It has to be the Mini Ice Age.
Jim Sinclair's Commentary Only if they are lucky and the books are cooked. CBO: this year's budget deficit to hit $1.5T Washington (AP) — A new estimate predicts the federal budget deficit will hit almost $1.5 trillion this year, a stunning new record. The latest figures from the Congressional Budget Office are up from previous estimates because Congress and President Barack Obama teamed up in December on bipartisan legislation to extend Bush-era tax cuts that were due to expire. The new estimates will only add fuel to a raging debate over cutting spending and looming legislation that's required to allow the government to borrow more money. The nonpartisan budget agency predicts the deficit will drop to $1.1 trillion next year. Legislation passed in December to extend tax cuts, unemployment benefits for the long-term jobless and provide a 2 percent payroll tax cut this year adds almost $400 billion to this year's deficit.
Jim Sinclair's Commentary More significant snow is predicted for this evening under a winter storm warning. Snow is expected to continue until Saturday.
Jim Sinclair's Commentary The real question is who is going to take over New York? The headline should read "Nassau County Broke," but that would violate the rules of MOPE. This says no problem, New York has taken them over a slightly troubled Nassau County. Sell Gold anything? Hell No! New York State Takes Control of Nassau's Finances UNIONDALE, N.Y. — A state oversight board has seized control of Nassau County's finances, saying the wealthy and heavily taxed county had nonetheless failed to balance its $2.6 billion budget despite months of increasingly ominous warnings. The 6-0 vote here on Wednesday afternoon by the Nassau County Interim Finance Authority gives it veto power over the county's budget, labor contracts, borrowings and other major financial commitments. The board cited a deficit that reached nearly $350 million at one point last year but that was not fully closed, it said, despite assurances to the contrary by the county executive, Edward P. Mangano, a Republican. It was only the second time a county had been taken over by New York State. The first was Erie County, the state's 24th wealthiest county, where the median household income is half that of Nassau's, New York's richest county. The control period in Erie ended in 2009. The move effectively puts the finance authority board, a six-man panel of state-appointed financial experts and other professionals, at the bargaining table opposite Nassau's civil servants, police officers and other labor unions.
Jim Sinclair's Commentary This is a dark hole that few people have looked into. Sell your gold anything? Hell No! Bondholders Left in the Dark Investors and regulators are growing increasingly concerned about the quality and timeliness of information that state and local governments are disclosing about their finances. The Securities and Exchange Commission is inquiring about public statements Illinois made about its pension funds amid the agency's increased scrutiny of the municipal-bond market, a representative for the governor said. Amid governments' financial woes, meanwhile, angry investors are finding themselves blindsided by bad news. Those concerns are reflected in a forthcoming study that shows that public issuers routinely file information about their financial health well beyond the date they promise to bondholders, if at all. This weak disclosure is raising anxiety in the $2.9 trillion market, where investors withdrew more than $20 billion from municipal bond funds in recent weeks. Federal regulators' power in this realm is limited because municipal borrowers are unregulated. But they are trying to crack down on the disclosure issue.
Jim Sinclair's Commentary I believe you were informed a long time ago about each of these manoeuvres used to make billions in OTC derivatives. Notice how all the officers and board of director members have been hiding now for years? Their silence is deafening. E-mails Suggest Bear Stearns Cheated Clients Out of Billions Lawsuit alleges the bank took extreme measures to defraud investors, and now JPMorgan may be on the hook Former Bear Stearns mortgage executives who now run mortgage divisions of Goldman Sachs, Bank of America, and Ally Financial have been accused of cheating and defrauding investors through the mortgage securities they created and sold while at Bear. According to e-mails and internal audits, JPMorgan had known about this fraud since the spring of 2008, but hid it from the public eye through legal maneuvering. Last week a lawsuit filed in 2008 by mortgage insurer Ambac Assurance Corp against Bear Stearns and JPMorgan was unsealed. The lawsuit's supporting e-mails, going back as far as 2005, highlight Bear traders telling their superiors they were selling investors like Ambac a "sack of shit." News of internal whistleblowers coming forward from Bear's mortgage servicing division, EMC, was first reported by The Atlantic in May of last year. Ex-EMC analysts admitted they were sometimes told to falsify loan-level performance data provided to the ratings agencies who blessed Bear's billion-dollar deals. But according to depositions and documents in the Ambac lawsuit, Bear's misdeeds went even deeper. They say senior traders under Tom Marano, who was a Senior Managing Director and Global Head of Mortgages for Bear and is now CEO of Ally's mortgage operations, were pocketing cash that should have gone to securities holders after Bear had already sold them bonds and moved the loans off its books. Mike Nierenberg, who ran the adjustable-rate mortgage trading desk at Bear and is now the head of mortgages and securitization for Bank of America, was a key player ensuring the defaulting loans Bear was buying would move off their books right after they bought them, with little concern for the firm's due diligence standards. He was joined in this scheme by Jeff Verschleiser, his peer and Senior Managing Director on the mortgage and asset-backed securities trading desk and head of whole loan trading. He is now an executive in Goldman Sachs' mortgage division. According to the lawsuit, the Bear traders would sell toxic mortgage securities to investors and then sell back the bad loans with early payment defaults to the banks that originated them at a discount. The traders would pocket the refund, and would not pass it on to the mortgage trust, which was where it should have gone to be distributed to the investors who owned the bonds. The Marano-led traders also cut the time allowed for early payment defaults, without telling the bond investors. That way, Bear could quickly securitize defective loans, without leaving enough time for investors to do their own due diligence after the bonds were sold and put-back any bad loans to Bear.
Jim Sinclair's Commentary What OTC derivatives do not do to the international banking houses, litigation will. Now it is getting so common that it may not go to settlement. BofA simply cannot settle this one. BofA's Countrywide sued for 'massive fraud' NEW YORK — Bank of America Corp's Countrywide mortgage unit has been sued by investors claiming they were victimized in a "massive fraud" when they bought mortgage-backed securities. The lawsuit was filed on Monday in a New York state court by 12 plaintiffs including the TIAA-CREF fund family, New York Life Insurance Co and Dexia Holdings Inc. According to the complaint, the investors bought hundreds of millions of dollars of Countrywide securities from 2005 to 2007 that they thought were "conservative, low-risk investments." The investors said Countrywide misrepresented the securities' safety in offering documents and elsewhere, and compromised their investments by ignoring its underwriting guidelines. As a result, the complaint said, most of the securities now carry "junk" credit ratings rather than the "triple-A" ratings they once had, resulting in "significant losses."
Jim Sinclair's Commentary This is very sad. The fraud moves on. The can is being kicked down a dead end road. All the paper and spit laid on the broken backs of Western financial entities must dissolve into a bust in confidence, resulting in a dollar lower than anyone anticipated. FASB Backs Off Fair-Value of Loans Proposal After Opposition The Financial Accounting Standards Board backed off from its plan to make banks use market values to calculate how much the loans on their books are worth. The panel, which sets U.S. accounting standards, today approved a change to its proposal that will allow banks to report some financial instruments on their balance sheets at amortized cost, as they currently do, rather than at fair value. The biggest U.S. banks and the American Bankers Association had opposed the original plan. FASB's planned rule would have forced lenders to mark deposits and loans to market values as they already do for traded securities. Not all changes in the values of assets and liabilities would affect net income, since some fair-value adjustments can be recorded in what's called "other comprehensive income," a balance-sheet item added or deducted from equity. "The vote today is a reflection of our due process at work and how important input from our constituents is in decision making," said Neal E. McGarity, a spokesman for Norwalk, Connecticut-based FASB. The original proposal, which prompted 2,814 comment letters to FASB since its May release, was opposed by lenders including Wells Fargo & Co. and Regions Financial Corp. and former Federal Deposit Insurance Corp. Chairman William Isaac, now chairman of Cincinnati-based Fifth Third Bancorp, Ohio's largest lender.
| |
| Does it make a difference if a Central Bank buys local production or on the international market? Posted: 26 Jan 2011 01:00 PM PST China currently produces 340 tonnes of gold annually. This may increase by up to 100 tonnes a year or more. It imported 210 tonnes in 2010. The demand for gold is increasing in China and this is likely to continue in line with the growth of the Chinese Middle classes. We do not know for sure how much the People's Bank of China took into its reserves and are only likely to know in two years time. Russia produces around 250 tonnes of gold per annum. It increases its reserves by 152.4 tonnes by January 1st 2011. These two nations present different requirements from the local and international gold markets, but does it make a difference where the gold is bought?
| |
| A Brief History of Oil Pt 2: From the Silliman to the Crazy Colonel Posted: 26 Jan 2011 12:54 PM PST
This is a continuation of a series of essays on the development of the oil industry.
The group settled on Edwin L Drake (E.L. Drake to his friends). A former railway conductor, Drake had absolutely no experience in drilling, oil, or anything even peripherally involved with Bissell and cohorts’ project. However, he was unemployed, looking for work, and nuts enough to do the job, which were enough qualifications given the circumstances.
I want to take a moment here to stress just how outlandish Bissell et al’s drilling plans were. Mankind had known that oil could burn for millennia (the Greeks were pouring burning asphalt on their enemies as early as the Trojan siege). Moreover, the concept of burning oil as a light source was not totally unprecedented: several Eastern European countries were already doing this by the time Bissell et al decided to give it a whirl; indeed, European-style lamps capable of burning oil-based kerosene were sold in the US before Bissell et all even began their venture.
However, the notion of drilling for oil, with the hopes of producing vast quantities of it, was completely non-existent and considered totally, and I mean TOTALLY insane.
Indeed, James Townsend, President of New Haven Bank and partner in Bissell’s venture was repeatedly told he was insane for getting involved in the venture, right to his face.
This prejudice was both a psychological AND literal obstacle to the project’s success. E.L. Drake, who was dispatched by Bissell and Townsend to start drilling in Titusville, Pennsylvania (using the fake moniker “Colonel” which Bissell created to make Drake sound important), found it almost impossible to begin drilling due to the simple fact that every driller in town thought he was a lunatic and wanted nothing to do with him.
Insane or not, Drake started drilling in 1859 with the help of a local blacksmith who built drills (no driller would actually work for Drake) and his (the blacksmith’s) son. The project took much longer (18+ months) and cost much more than Bissell and his investors hoped. If not for an emergency infusion of capital from Townsend, the “insane” banker, the project would have closed up in 1858. However, even Townsend’s $1,000 (roughly $25K in today’s money) only added another 12 months to the project.
In fact, Drake’s assistants actually struck oil on a Sunday, two days before a letter from Bissell arrived telling him to close down the operation and sell the tools in a desperate attempt to recoup some of the losses. On Saturday August 27 1859, the oil well hit something and closed down for the day. On Sunday, Drake’s assistants returned to the well to discover oil seeping upwards. And by Monday, when Drake opened the letter from Bissell, the well had already produced enough black gold to fill every container his assistants could find.
And thus, oil’s ascent as the dominant economic force in the world was funded by a lawyer and banker, given scientific credibility by a Silliman, and put into action by an “insane” fraud.
Rags, Then Riches, Then Rags Again All in One Year
Drilling for oil became a credible prospect with Drake’s success on August 27, 1859. Yergin, in The Prize, notes that by 1860 annual oil production in Western Pennsylvania (the region in which Drake had first drilled) stood at 450,000 barrels. Two years later it was three million barrels. The first boom had begun.
Entire towns exploded and collapsed based on where oil was discovered. One area only 15 miles from Titusville, Pennsylvania (where Drake first discovered oil) went from being unnoticeable on the map to a booming metropolis of 15,000 people and back again in one years’ time (the fifty hotels and other businesses that sprang up in that time were all gone within 24 months). Parcels of land went from a few dollars in value to $2 million and back again in less than a decade.
The speculation was completely out of control. Yergin notes that due to demand, at one point whiskey barrels cost twice as much the oil they contained. Similarly, before the introduction of pipelines to the oil industry, the cost of transporting a barrel of oil from a well through the muddy country roads to the railroad via horse carriage was greater than the cost of shipping the same barrel via train from Philadelphia to New York.
However, amidst this chaos, order began to appear. Oil began trading on informal exchanges (essentially hotels and railroad stations where representatives from various wells and refineries met to trade). Yergin points out that this marked the beginning of oil speculation as an investment strategy: oil was traded on “spot” prices (meaning immediate delivery), “regular” prices (meaning the deal must be closed within 10 days), and “futures” (meaning a set amount of oil would be bought or sold at a set price at a set date in the future. This final transaction marked the beginning of oil futures trading in which investors traded oil without ever intending to actually own the stuff.
However, while oil trading began to form some semblance of order, the refining and production aspect of the oil business remained largely a chaotic mess. This messiness resulted in many problems. Some of them were personal: oil quality varied from region to region and bad oil could explode when used in lamps (5,000 to 6,000 deaths were annually caused by this in the 1870s).
On a more social level, oil discoveries transformed towns into booming messes. Every new discovery was met with a rush of speculators flocking to the area along with all of the social “issues” surrounding greed, avarice, and fast money. It also meant total destruction of the area’s roads, as the massive influx of horse carriages transformed the roadways into muddy messes.
Other oil-related problems were economic in nature. Dominated by the “rule of capture” (basically whoever extracts the oil owns it, regardless of whether the deposit is also under someone else’s land), oil producers focused on producing oil as quickly as possible. This, in turn, resulted in violent swings in the price of oil as supplies hit the market or disappeared depending on when a new well struck black gold. Indeed, between January 1861 and September 1863, the price of oil went from $10 a barrel to $0.50, to $0.10, then $4 and back up $7.25. Talk about volatility.
One man brought order to this chaos, systematically organizing the oil industry over the course of 25 years. At the age of 26, he took over his first oil refinery. By the time he retired from business at age 57, he’d not only completely revolutionized the oil industry, he’d actually transformed the US corporate landscape, forever changing the way people structured and managed their businesses.
During the 30 years in between he amassed a fortune equal to $192 billion in today’s dollars, making him the first billionaire and the richest American together.
I am, of course, referring to John D. Rockefeller.
More to come in the third and final article on the history of the oil industry in the US.
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.
| |
| 65 Leading Analysts Predict Gold Price of $1,450 for 2011 Posted: 26 Jan 2011 11:56 AM PST by James West Precious metals are expected to build on a stellar 2010 this year as risk aversion and persistently low interest rates boost their allure, a Reuters poll showed on Tuesday. Expectations for gold’s performance have risen sharply, with the survey of 65 leading analysts, traders and fund managers predicting gold will average $1,450 (U.S.) an ounce this year, well above its record high of $1,430.95 an ounce. They predict an average of $1,420 in 2012. A similar poll in July found most respondents expected gold to average $1,228 an ounce in 2011. Last year the average LBMA gold fixing was $1,225.60 an ounce. For silver, they expect a 2011 median price of $29.83, falling to $27.90 in 2012. Below are a selection of comments from respondents to the survey. All prices are in U.S. dollars per ounce. JAMES STEEL, ANALYST, HSBC “We believe that gold will continue to attract safe-haven buying from risk-averse investors this year, as European Union soverei...
| |
| *NEW* USAGOLD Video RoundTable Posted: 26 Jan 2011 11:45 AM PST Discussion Topic: Has Anything Really Changed? Trends to Follow in 2011 — The World Economic Forum is set to meet this week in Davos, Switzerland to discuss the state of the global economy. A mantra of exuberance has already been noted, suggesting that a mere doubling of global credit by another 100 trillion over the next decade would fuel a global super cycle. This course of action, if taken, carries with it obvious implications. Continued fueling of credit bubbles will perpetuate and perhaps magnify the boom/bust cycles we've grown accustomed to over the past decade. It does, however, mark a noted return of market euphoria, which, coupled with a reduced risk of a sovereign debt default in Europe due to Chinese support in the credit markets, has eroded the risk premium in the gold price, and is perhaps linked to gold's recent pullback. However, in analyzing the technical picture, gold's pullback is quickly nearing vital support areas. The 200-day moving average for gold sits at $1285, with the last assault on the 200-day moving average taking place in mid-July 2010. Interestingly enough, that same pullback coincided with options expiration for the August gold contracts. Today, Wednesday January 26th, also is options expiration date for February contracts. This is significant because option expiration dates have often been associated with reversals in the gold price, as witnessed last July. Add to this the possibility of an enhanced inflation trade for the gold market, and this pullback looks to be an excellent buying opportunity.
| |
| Former Goldman Insider's Take On Obama's Speech And The Massive Pink Elephant In The Room Posted: 26 Jan 2011 11:41 AM PST
From Nomi Prins Obama's Speech and America, Inc. Watching Obama deliver his State of the Union Speech last night, reminded me of all the rah-rah quarterly meetings that we had to attend as Managing Directors at Goldman, where senior management would remind us all of how great we were, and if there were any areas of competitive weakness relative to our adversaries at other banks, all we had to do was step up our game, innovate and globalize (or something like that.) Obama wasn't delivering a summary of what has, or is, going on for most Americans last night, no such negative status report. And, if you didn't expect him to, he gave good speech - full of reminders of how it is America's destiny and the American dream to be great and powerful, "robust democracy" that we are. There was a massive pink elephant in the room called reality though. So, when he waxed proud when he said, "We are poised for progress. Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing." I had a different reaction. My reaction was wtf? Two years after the worst recession? After? Really? What about the 26 million people unemployed or underemployed in the country? What about the 4.4 people applying for every job, compared to the 2.9 people per job after the 2000s recession? What about the 4.4 million jobs that should have been added, just accounting for a population coming of job age alone, forget any kind of growth, compared to the fact that instead, the job pool declined by a quarter of a million people in the past two years, because the time required to get a job is at record highs? What about the nearly 8 million FAMILIES that have been foreclosed upon because of the reckless investment bank race to create $14 trillion dollars worth of toxic assets in the five years leading up to the financial crisis and leave them to shatter lives and the non-stock market evaluated economy? What about the fact that the government fiscally stimulated the banking system by a multiple of 20 times more than it stimulated its citizens, with nary a fight from the politicians our democracy is so lucky to have as representation? What about all that warm, cuddly multi-trillion dollar support from the Fed and the Treasury Department on our country's way to Sputnikian economic greatness? "The rules have changed," said Obama. Yes, they certainly have. Businesses can offshore jobs because it is in their best profit and shareholder and stock value interest to do so, with no federal incentive to alter this strategy - that's why corporate profits and CEO salaries are up, whereas the average median employee salary on a comparative basis is stuck somewhere in the 1970s. That's why staring at the abyss of potential bankruptcy in the fall of 2008, Goldman Sachs and Morgan Stanley got the Fed's blessing to become federally subsidized bank holding companies. And we, taxpayers, are still on the hook for the Fed's $29 billion of backing of Bear Stearn's assets taken over by JPM Chase in a government sponsored merger in the Spring of 2008 and coming with a bunch of still-being-wrangled lawsuits, not to mention gleeful federally backing of the further consolidation of the banking system to fewer, more powerful, more obtuse, more risky players. All of which, though technically not a result of changing rules, but rules staying the same and working for the reckless, were still rubber stamped by the Obama administration (yes, and Bush too, and Clinton's deregulatory team, etc.) and its financial king's, Tim Geithner, until recently Larry Summers, and incoming JPM Chase's Bill Daly and GE's Jeffrey Immelt as job czar. (GE and JPM Chase, having been happy bailout recipients, of course.) Small businesses can't hire as many people, because they can't afford their financing, even if banks will give them usefully sized loans, they don't get the 0.25% interest money the banks get from the Fed when they need it. Individuals got hosed, meanwhile, by shady home loans and shadier modifications and higher fees on all sorts of credit, from cards to student loans (a record $884 billion of which are outstanding to students whose tuitions rise as their job and loan-payback prospects fall). We're not talking just about steel mill job eliminations over the years, we're talking about the solidification of the administration's decision to ignore the mistakes and devastating consequences of Big Finance and Obama suggesting last night, that people consider becoming teachers, with a smile. No disrespect to teachers, of course, they work much harder and make do with much less than traders, but you don't see Vikram Pandit, Citigroup CEO rushing out the door to become one, no you see him getting approved for a RAISE, of the sort a teacher can only dream about, from a base salary of $1 million to $1.75 million this year, after Citigroup's survival was ensured only because of massive government stimulus. Why? Because he is now valued at a 75% pay increase, that Washington, and Obama would like to believe is due to his hard work, and not to a government handout. America at its best. There were some useful elements to his otherwise CEO like speech (you department heads sitting out there - you work together so America, Inc. can be the best it can be.) They included adopting a fair immigration policy that doesn't chuck people out of the country because the path to being here is so laden with decade long bureaucracy and cost, keeping some elements of an otherwise insurance-company gift of a health care reform bill that the GOP House just repealed and that doesn't reform the cost of health care - such as covering pre-existing conditions and people up to the age 26 under their parents' plan (if their parents have a plan, that is) even though Obama backed off from even trying to convince the room to consider full coverage for all without egregious premiums, and wanting to increase the spread of clean energy initiatives (that he said will create 'countless jobs' as opposed to the countable 5 million he said it would create during is campaign.) But, in the end, Obama's practiced eloquence in delivery, peppered with a few American success stories - who can deny the hero behind the Chilean mine worker rescue his due? - and the now-debated investment over spending word choice, belied a strong dose of something akin to condescension. If you don't have a job, it's because of the Internet, not the banks hoarding $1 trillion that we gave them at the Fed. If we're falling behind China in education, it's because bad teachers should be removed, good ones rewarded and parents (who apparently aren't doing as good as job as they could of this) are not focusing on the education process more at home. If America, has the 'most prosperous economy in the world' for its corporations and financial insitutions, its because we all share a common, attainable dream. So, just go out and innovate and compete and get it. We'll be here watching the banks' backs.
| |
| World Gold Council Report Shows Gold Price in 2010 Driven by Recovery in Key Markets Posted: 26 Jan 2011 11:35 AM PST The World Gold Council (WGC) released its Q4/EOY 2010 Gold Investment Digest (GID) report. The report shows that the price of gold rose for the tenth consecutive year in 2010, reaching US$1,405.50/oz by the end of December on the London PM fix, a 29 percent increase from last year's levels. China saw increased investment activity, driven in part by innovative new gold investment vehicles offering improved access to the gold market, while jewellery consumption recorded a rebound in India. Globally, investors remained concerned about uncertainty in the macro-economic environment and turned to gold to hedge against weakness in the US dollar and rising inflation in many economies. Also on the Homepage > World Gold Council site is a brief video of Investment WGC Research Manager Juan Carlos Artigas discussing the highlights of the report that I think you and your readers will be interested in viewing, which can be found here: http://gold.org/video/play/gold_investment_digest_q...
| |
| Gold Price Jumped $11.00 in the After Market to Meet the $1,345 Resistance Posted: 26 Jan 2011 10:59 AM PST Gold Price Close Today : 1333.00 Change : 0.70 or 0.1% Silver Price Close Today : 27.132 Change : 0.321 cents or 1.2% Gold Silver Ratio Today : 49.13 Change : -0.562 or -1.1% Silver Gold Ratio Today : 0.02035 Change : 0.000230 or 1.1% Platinum Price Close Today : 1811.60 Change : -14.90 or -0.8% Palladium Price Close Today : 813.00 Change : -5.05 or -0.6% S&P 500 : 1,296.63 Change : 5.45 or 0.4% Dow In GOLD$ : $185.87 Change : $ 0.05 or 0.0% Dow in GOLD oz : 8.991 Change : 0.002 or 0.0% Dow in SILVER oz : 441.75 Change : 0.25 or 0.1% Dow Industrial : 11,985.44 Change : 8.25 or 0.1% US Dollar Index : 77.76 Change : -0.242 or -0.3% The GOLD PRICE today rose a meager 70 cents by Comex close at $1,333.00, but right after the close somebody gave meth to the entire market, and it jumped up $11.00, to reach once more the threshold at $1,345 resistance. The SILVER PRICE rose a respectable 32.1c to close at 2713.2c, bringing it to the barrier at 2760c. This was a good bounce off yesterday's 2650, but leaves silver in limbo, hanging between 2800c resistance and 2650c support. My inclination is to expect a couple day's rise, followed by more downside. Premiums on 90% silver coin is rising, rising, and spread is narrowing, which points to higher prices. However, time and price drop from the 3 January peak don't seem great enough yet to qualify as a bottom. But on any given day, I have a 50% chance of being right, and the person opposite me has a 50% chance. I just have to try to hold on to what the historical statistics and the chart patterns seem to say. Let's see if silver can close above 2800c and gold above $1,445 tomorrow. US DOLLAR INDEX dropped again, 24.2 basis points to end up at 77.76. Its fall's momentum is slowing, and forming a falling wedge, which presages an upward break. However, MACD and RSI remain pointed firmly earthward. Could get a turn any time, or no turn at all, but that wedge argues something will happen soon. STOCKS rose today, Dow up 8.25 to 11,985.44 and the SY_500 to 1,296.63, up 5.45. 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. 
| |
| “The Dollar has now broken below three preceding lows, a bearish situation.” Posted: 26 Jan 2011 10:18 AM PST Richard Russell – Get Out of Your Dollar Assets Now! Share this:
| |
| Posted: 26 Jan 2011 09:35 AM PST Gold price rises after FOMC statement The COMEX February gold futures contract closed up $0.70 Wednesday at $1333.00, trading between $1324.30 and $1337.70 January 26, p.m. excerpts: see full news, 24-hr newswire…
| |
| Fiscal Policy Setting Stage for a New Bubble in a Series of Asset Classes Posted: 26 Jan 2011 09:16 AM PST Marshall Auerback, corporate spokesperson for Toronto-based Pinetree Capital, is a so-called "hedge fund" strategist. He believes that deficit spending is not bound by anything other than inflation, which, he says, is of limited consequence right now. Marshall believes the U.S. government's main goal should be to reduce unemployment, and he predicts the gold price is likely to remain rangebound between $1,100 and $1,400 an ounce in 2011. However, his long-term outlook for precious metals remains rosy given that "casino capitalism" is setting the stage for a new bubble. In this exclusive interview with The Gold Report, Marshall reveals some of Pinetree Capital's precious metals holdings and explains why he fears for the global economy.
| |
| Posted: 26 Jan 2011 09:01 AM PST The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! January 26, 2011 01:47 PM Gold $1,334 – A Buy or Good-Bye? Despite greatly outperforming stocks and bonds, gold continues to get no respect from the general investment community and much of the media that follows it. In fact, I believe it's fair to say it's actually hated by this lot. It's understandable why they dislike it since much of what makes gold desirable makes financial assets undesirable. Since ninety-something percent of the financial community and the media that follows it lives or dies on the back of stocks and bonds, one should never, ever, ever expect to see any real love for gold from them. I've stated that gold is in the "mother" of all bull markets. I've noted $1,500 as a target for 2011 and $2,000+ before any long term end to the rally. The bullish factors that have led gold into 2011 are all intact and what we've experience...
| |
| Grandich Client Silver Quest Resources Posted: 26 Jan 2011 09:01 AM PST The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! January 26, 2011 01:41 PM You can have 9 companies going through the roof and hardly a peep (I've thankfully experienced that), but have one hitting the skids and……* Such is the case for yours truly. Silver Quest Resources (SQI-TSX-V $.48) has given up most of the gains it achieved in 2010. Last Friday's after the market close release didn't help (and client or not, I don't care for such releases because any thought that time and day lessens any blow is foolhardy). The shame of that release is it came after some decent news in the days beforehand. Let's cut to the chase. Knowing hindsight is always 20-20, the perception is SQI prospected by drilling too early. Just like saying the Jets should've never handed the ball to LT to score at the goal line last Sunday, SQI drilled too early in the Yukon. But I understand why they did as if they did get...
| |
| US Unemployment and Other Data Not Indicative of “Recovery” Posted: 26 Jan 2011 09:00 AM PST There are two legs to American household wealth – jobs and housing. Here's the latest on housing from The New York Times: The long-predicted double-dip in housing has begun, with cities across the country falling to their lowest point in many years, data released Tuesday showed. Prices in 20 major metropolitan areas fell 1 percent in November from October, according to the Standard & Poor's Case-Shiller Home Price Index. The index is only 3.3 percent above the low it reached in April 2009 and has fallen fell 1.6 percent from a year ago. Prices in Atlanta and Chicago fell more than 7 percent, exceeding even the drops in the perennially troubled Detroit and Las Vegas. Housing is still going down. If you don't mind, we'll repeat what we said yesterday: "House prices expected to decline for a fifth successive year," says The Financial Times. Foreclosures are rising and will continue to rise until March of 2012, according to the projections in the FT, wiping out possibly trillions more in household wealth. Sales are at a 13-year low. Houses are Americans' most important asset. And the average house is down about 25% since 2006. But that's in terms of dollars. In terms of gold, the loss is over 60%. Okay… Well, it looks like households are hopping on one leg. Now, let's look at the good leg, employment. Whoa… What's this? WASHINGTON (AP) – The unemployment rate rose in 20 states last month as employers in most states shed jobs. The Labor Department says the unemployment rate rose in 20 states and fell in 15. It was unchanged in another 15 states. That's nearly the same as in November, when the rate rose in 21 states, fell in 15 and was the same in 14. The report is evidence that the job market is barely improving even as the economy grows. Most economists expect hiring to pick up this year, although the unemployment rate will likely remain high. Employers in most states didn't add any net new jobs last month. The number of jobs on employer payrolls fell in 35 states in December, the department said. Only 15 states reported gains. Layoffs have slowed dramatically in the past year, but hiring has yet to pick up. This is not good news. Two gimpy legs. Household wealth is going to fall down. But what do you expect? This is a Great Correction, isn't it? If you listen to the financial media, the State of the Union, or the stock market you'll get a very different impression. Or just re-read the article above. It says "…the job market is barely improving." In fact, it's not improving at all. It's getting worse. The population is growing. If employers don't add new jobs, it means more people out of work. Housing? Same story. It's not "barely improving." Houses are still losing value. We could ask sarcastically: "So, where's the recovery?" But why bother? You know as well as we do that there is no recovery. And there's not going to be a recovery. Instead, the economy has to move on…to something new. If the financial and political authorities suddenly came to their senses, we could imagine that a couple of rough years of bankruptcies and losses would be followed by a long period of new growth. But we weren't born yesterday. This is not a dream. It's reality. And if our new theory is correct, the authorities are not going to come to their senses. Because they're paid not to. Ben Bernanke has to believe his crackpot activism will pay off. Otherwise, he'd have to renounce the whole project…and admit that he's been a fool. He'd also be out of a job – because neither the bankers nor the politicians would allow the chips to fall where they may. Hey – they own those chips! But couldn't the feds all get a Ron Paul makeover and come to see that their interventions were actually making thing worse – by adding even more debt and delaying the necessary adjustments? Nope. Not gonna happen. Remember, a government is the result of natural selection, not rational thought. Its primary objective is to survive. And it does so by protecting its niche – at all cost. Peter Orzag, writing in The Financial Times: Most fundamentally it is difficult to see how the medium-term federal deficit can be reduced to sustainable levels without additional tax revenues from those earning less than $250,000 a year. And yet it is equally difficult to see the political system embracing that reality without being forced to do so by the bond market. The feds cannot suddenly stop rigging the system for the benefit of their favored groups and supporters. A flesh-eating dinosaur can't suddenly become a vegetarian. The elite, the privileged, the parasites and the zombies are the feds' base of power. Lose them and the government is out of business. Regards, Bill Bonner US Unemployment and Other Data Not Indicative of "Recovery" 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."
| |
| Gold Nearing October Pivot Low Posted: 26 Jan 2011 08:40 AM PST courtesy of DailyFX.com January 26, 2011 07:29 AM Weekly Bars Prepared by Jamie Saettele Gold is falling and is now testing a multiyear support line. A break below 1317.10 (10/22 low) would put 1270.30 (June high) in play. 1352 is short term resistance and price should remain below 1379....
| |
| Marshall Auerback: Fiscal Policy Setting Stage for a New Bubble Posted: 26 Jan 2011 08:36 AM PST Source: Brian Sylvester of The Gold Report 01/26/2011 Marshall Auerback, corporate spokesperson for Toronto-based Pinetree Capital, is a so-called "hedge fund" strategist. He believes that deficit spending is not bound by anything other than inflation, which, he says, is of limited consequence right now. Marshall believes the U.S. government's main goal should be to reduce unemployment, and he predicts the gold price is likely to remain rangebound between $1,100 and $1,400 an ounce in 2011. However, his long-term outlook for precious metals remains rosy given that "casino capitalism" is setting the stage for a new bubble. In this exclusive interview with The Gold Report, Marshall reveals some of Pinetree Capital's precious metals holdings and explains why he fears for the global economy. The Gold Report: Marshall, let's talk macroeconomics. You, like Economist Warren Mosler, believe that government spending is not limited to how much a government can tax the population...
| |
| Posted: 26 Jan 2011 08:26 AM PST "My business is writing for corporations (mostly Microsoft)," writes a reader, "so I pay close attention. "Even though I agree with your politics, I prefer not to see anyone's political views in my financial newsletters." Our reader goes on to suggest these reasons why we should omit politics from our writing: * Including political views instantly loses you half your potential readers. And it doesn't really endear you to the rest * Including political views panders to your political preference, and curries favor. That's uncomfortable and patronizing. "Worst of all," says our reader "it makes me wonder if you ever unconsciously – God forbid, consciously! – shade your financial advice to conform with my political views. "You make me doubt your veracity and research. Do you ever give me financial advice you think I emotionally want to hear, rather than giving me your best, coldhearted financial research?" Ahh to provide coldhearted research. We humbly submit… Politics are the problem, and you ignore them at your peril. Exhibit A: The "Republican response" by Rep. Paul Ryan (R-WI). "Just take a look at what's happening to Greece, Ireland, the United Kingdom and other nations in Europe… Their day of reckoning has arrived. Ours is around the corner. That is why we must act now." We couldn't agree more. We published the first edition of Financial Reckoning Day in 2003. Two months before a Republican Congress passed a Republican president's plan to create a vast new entitlement program called Medicare Part D. Which, according to the Medicare Trustees has exceeded its projected $1 trillion price eightfold, adding $9.4 trillion to the pile of US government's unfunded liabilities. It passed with the enthusiastic support of Rep. Paul Ryan.
Mr. Ryan has since scrubbed this press release from his website, but it's still floating in cyberspace. "I am convinced that this is a step forward for Wisconsin seniors," he said at the time, "and that it will help save Medicare for future generations, including the 77 million baby boomers who will begin retiring soon." Sure they "saved" Medicare, but at what cost? The true cost never gets discussed. We wonder… Is pointing this out a political view? For his part, the president offered to freeze "some" discretionary spending that would trim the deficit by $400 billion…over the next 10 years. That met with some applause and approval during the speech. But let's do the math. $400 billion over 10 years is $40 billion per year. The Congressional Budget Office (CBO) announced this morning they project the 2011 deficit to come in at $1.5 trillion. So the cut in discretionary spending works out to just 2.7% of this year's deficit. This proposal will get about as far as the promise he made last year to freeze "some" discretionary spending for three years, saving $250 billion. Is making that observation a political view? The president also threatened to veto any bill with "earmarks." The promise went over well with the "Bridge to Nowhere" crowd, yes, but earmarks typically make up just 1-2% of overall federal spending. Even that's a side note. Eliminating earmarks actually does nothing to cut the overall amount of spending. "Because earmarks are funded from spending levels that have been determined before a single earmark is agreed to," wrote our friend Dr. Ron Paul (R-TX) two years ago, "with or without earmarks, the spending levels remain the same." The president promised to get the infamous 1099 provision of the health care bill repealed. But if it's such a bad idea, why did it pass both houses of Congress and get signed into law in the first place? Too, there's a pledge to cut the corporate tax rate, second-highest in the world behind Japan. It's not the first time the administration has talked about this. These are two good ideas. But what, if anything, is on the table for addressing the deficit? The debt? Unfunded promises to provide security, health care and retirement over the next 75 years? "We know what it takes to compete for the jobs and industries of our time," says the president. "We have to make America the best place on Earth to do business… The first step in winning the future is encouraging American innovation." "Novel concept," wrote our friend Mark Gordon of Odyssey Marine, a true innovator in the use of robotic technology to recover sunken treasure. "The government needs to support American businesses that are creating innovation breakthroughs that in turn will create employment and strengthen our economy!" We can forgive Mark for feeling a little churlish, seeing how both the Bush and Obama administrations sided with the Spanish government in a court case over the $500 million "Black Swan" treasure that Odyssey found in 2007. Some of the WikiLeaks cables released in December reveal the fruits of Odyssey's labor were offered up by the State Department to the Kingdom of Spain in exchange for a painting a wealthy political family from California says was stolen by the Nazis and now hangs in a museum in Madrid. "I know that I sure feel like the beneficiary of that government support!" Mark says. "Our free enterprise system is what drives innovation," the president continued. "Throughout our history, our government has provided cutting-edge scientists and inventors with the support that they need." But what does this really mean? The answer may well lie in something the president didn't even touch on last night. Uncle Sam is getting into the business of developing new drugs. The Obama administration is launching a $1 billion agency called the National Center for Advancing Translational Sciences. Seems someone in the White House has decided the pharmaceutical industry isn't developing new drugs fast enough. "The center will do as much research as it needs to do so that it can attract drug company investment," The New York Times explains. "Nothing good will come from this," says one of Patrick Cox's contacts – a scientist who'd been in charge of new drug approval for a Big Pharma firm. "I'm not telling you his name or the company, however, because everybody lives in fear of the FDA," Patrick says. "If you irritate the gatekeepers to the market, the regulators who control the drug approval process, you are in serious trouble." The "problem" isn't that drug companies are failing to innovate…rather, they have a miserable time running their innovations through the FDA's gauntlet. Example? A weight-loss drug called lorcaserin. "It was denied approval," Patrick explains, "because rats in the test had a minuscule, within the margin of statistical error, increase in cancers. On the other hand, obesity causes huge and verifiable health problems in people, but the FDA decided we can't have lorcaserin. Madness." "The beneficiaries" of the new federal agency "will almost certainly be Big Pharma companies that supported the President's health care plan. They also benefit from the high regulatory barriers because small drug startups can't afford to go through the regulatory process. As a result, they are forced to cut bad deals with Big Pharma." We could go on, but we wouldn't want politics to interfere with our coldhearted research. Addison Wiggin The Politics of Finance 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."
| |
| Vulture Bargain Roundup for January/February Posted: 26 Jan 2011 08:23 AM PST Most people who are not familiar with the underlying fundamentals for silver metal, and therefore probably thought that the price jump last year from $18 to $31 was crazy; most people who haven't heard or have heard but don't believe that a shortage of commercial sized physical bars of silver has developed; most people who witnessed their friends buying into silver at $24, $26 or $28 probably shook their heads and mumbled to themselves something along the lines of: "There is a word for crazy people who get caught up in popular fads and bubbles…" And in their mind would be an image of something like this…
| |
| Gold Daily and Silver Weekly Charts Posted: 26 Jan 2011 08:18 AM PST | |
| Posted: 26 Jan 2011 08:09 AM PST by Addison Wiggin - January 26, 2011
 “My business is writing for corporations (mostly Microsoft),” writes a reader kicking off our State of the Union edition of The 5, “so I pay close attention.“Even though I agree with your politics, I prefer not to see anyone’s political views in my financial newsletters.” Our reader goes on to suggest these reasons why we should omit politics from our writing:
“You make me doubt your veracity and research. Do you ever give me financial advice you think I emotionally want to hear, rather than giving me your best, coldhearted financial research?”  Ahh to provide coldhearted research. We humbly submit... politics are the problem, and you ignore them at your peril.Exhibit A: The “Republican response” by Rep. Paul Ryan (R-WI). “Just take a look at what’s happening to Greece, Ireland, the United Kingdom and other nations in Europe... Their day of reckoning has arrived. Ours is around the corner. That is why we must act now.” We couldn’t agree more. We published the first edition of Financial Reckoning Day in 2003. Two months before a Republican Congress passed a Republican president’s plan to create a vast new entitlement program called Medicare Part D. Which, according to the Medicare Trustees has exceeded its projected $1 trillion price eightfold, adding $9.4 trillion to the pile of U.S. government’s unfunded liabilities. It passed with the enthusiastic support of Rep. Paul Ryan.  Mr. Ryan has since scrubbed this press release from his website, but it’s still floating in cyberspace. “I am convinced that this is a step forward for Wisconsin seniors,” he said at the time, “and that it will help save Medicare for future generations, including the 77 million baby boomers who will begin retiring soon.” Sure they “saved” Medicare, but at what cost? The true cost never gets discussed. We wonder is pointing this out a political view?  For his part, the president offered to freeze “some” discretionary spending that would trim the deficit by $400 billion… over the next 10 years. That met with some applause and approval during the speech.But let’s do the math. $400 billion over 10 years is $40 billion per year. The Congressional Budget Office (CBO) announced this morning they project the 2011 deficit to come in at $1.5 trillion. So the cut in discretionary spending works out to just 2.7% of this year’s deficit. Our 5 Min. Forecast: This proposal will get about as far as the promise he made last year to freeze “some” discretionary spending for three years, saving $250 billion. Is making that observation a political view?  The president also threatened to veto any bill with “earmarks.” The promise went over well with the “Bridge to Nowhere” crowd, yes, but earmarks typically make up just 1-2% of overall federal spending.Even that’s a side note. Eliminating earmarks actually does nothing to cut the overall amount of spending. “Because earmarks are funded from spending levels that have been determined before a single earmark is agreed to,” wrote our friend Dr. Ron Paul (R-TX) two years ago, “with or without earmarks, the spending levels remain the same.”  The president promised to get the infamous 1099 provision of the health care bill repealed. But if it’s such a bad idea, why did it pass both houses of Congress and get signed into law in the first place?Too, there’s a pledge to cut the corporate tax rate, second-highest in the world behind Japan. It’s not the first time the administration has talked about this. These are two good ideas. But what, if anything, is on the table for addressing the deficit? The debt? Unfunded promises to provide security, health care and retirement over the next 75 years?  ”We know what it takes to compete for the jobs and industries of our time,” says the president. “We have to make America the best place on Earth to do business... The first step in winning the future is encouraging American innovation.”“Novel concept,” wrote our friend Mark Gordon of Odyssey Marine, a true innovator in the use of robotic technology to recover sunken treasure. “The government needs to support American businesses that are creating innovation breakthroughs that in turn will create employment and strengthen our economy!” We can forgive Mark for feeling a little churlish, seeing how both the Bush and Obama administrations sided with the Spanish government in a court case over the $500 million “Black Swan” treasure that Odyssey found in 2007. Some of the WikiLeaks cables released in December reveal the fruits of Odyssey’s labor were offered up by the State Department to the Kingdom of Spain in exchange for a painting a wealthy political family from California says was stolen by the Nazis and now hangs in a museum in Madrid. “I know that that I sure feel like the beneficiary of that government support!” Mark says.  “Our free enterprise system is what drives innovation,” the president continued. “Throughout our history, our government has provided cutting-edge scientists and inventors with the support that they need.”But what does this really mean? The answer may well lie in something the president didn’t even touch on last night.  Uncle Sam is getting into the business of developing new drugs. The Obama administration is launching a $1 billion agency called the National Center for Advancing Translational Sciences.Seems someone in the White House has decided the pharmaceutical industry isn’t developing new drugs fast enough. “The center will do as much research as it needs to do so that it can attract drug company investment,” The New York Times explains. “Nothing good will come from this,” says one of Patrick Cox’s contacts -- a scientist who’d been in charge of new drug approval for a Big Pharma firm. “I’m not telling you his name or the company, however, because everybody lives in fear of the FDA,” Patrick says. “If you irritate the gatekeepers to the market, the regulators who control the drug approval process, you are in serious trouble.”  The “problem” isn’t that drug companies are failing to innovate… rather, they have a miserable time running their innovations through FDA’s gauntlet.Example? A weight-loss drug called lorcaserin. “It was denied approval,” Patrick explains, “because rats in the test has a minuscule, within the margin of statistical error, increase in cancers. On the other hand, obesity causes huge and verifiable health problems in people, but the FDA decided we can’t have lorcaserin. Madness.” “The beneficiaries” of the new federal agency “will almost certainly be Big Pharma companies that supported the President’s health care plan. They also benefit from the high regulatory barriers because small drug startups can’t afford to go through the regulatory process. As a result, they are forced to cut bad deals with Big Pharma.”  We could go on, but we wouldn’t want politics to interfere with our coldhearted research. Stocks are inching up this morning -- just enough to push the Dow past 12,000 for the first time since June 2008, which is not exactly the same as saying we’re back to June 2008 levels -- the first time the Dow crossed 12,000 was October 2006.US Airways turned in a strong earnings report: shares are up 10% over the last week… and March call options are up 47%. Penny Momentum Trader editor Jonas Elmerraji recommended both… Not bad for seven days. Learn more about his strategies here. Any big moves likely won’t come until the Federal Reserve makes its next “Big Announcement” at 2:15 p.m. EST. We’ll parse any changes in language from its December statement tomorrow… assuming it makes any difference.  New home sales jumped more than 17% from November to December, totaling 329,000 according to the Commerce Department. That’s the highest monthly figure since the homebuyer tax credit expired in April.Startlingly, 85% of that activity was in the South and West. We realize house hunting isn’t a favorite activity in snowy climes between Thanksgiving and Christmas, but where’s the demand coming from for new homes in regions already saturated with housing? For all of 2010, new home sales were down 14.4% from the dismal year of 2009.  Gold has been languishing at $1,327 an ounce. The spot price of silver is $26.76. The metals are losing ground even as the dollar index also moves lower, currently at 77.9. This can’t be good news: The Chinese government now plans to start stockpiling rare earth elements this year, according to Caijing magazine.The report is thin on specifics… but considering how China controls 97% of world production, and it plans to cut its export quotas 35% this year, it’s clear the Chinese want to ensure a steady supply for years to come. The news is yet more supporting evidence for the non-Chinese rare earths company that’s likely to come into production first… and it’s not any of the familiar names that have already had a substantial run-up. “In my 30-year career as a geologist and researcher,” says Byron King, “I’ve never been more excited than I am about this little-known mining company’s bonanza in a place you’ve most likely never heard of before.” He tells you why here.  Last year, after a trip to Dubai, we wondered what future historians and archaeologists would say about this:
Perhaps, now we won’t have to worry about it. “The World” is -- or was supposed to be -- a series of man-made islands off the coast of Dubai, shaped like the world. Now it’s eroding back into the sea. The navigational channels between the islands are silting up, according to the company that was supposed to provide inter-island transportation. So the firm, like many others, have gotten in line and is suing the state-run developer.  “Small businesses get screwed on a daily basis,” writes a small business owner who read yesterday’s issue, “but that doesn’t stop us from succeeding in spite of all the forces working against us. It is a 48/7 job (yes 48) -- compressing time is a must!“Thankless, but I wouldn’t want to live any other life.”  “I am a daily reader of The 5. Bravo! I just want to add oil on the fire of small business easiness of surviving in the U.S. Here is another major wall: patent cost.“Years ago, the cost of patenting a new utility product was probably around three times lower. We are talking about thousands of additional dollars here. Patent application is an ongoing bill. The patent attorney charges you to answer patent office questions. The patent office charges you for changes to the application. “And now, the patent office charges ‘maintenance fees’ at three, seven and 11 years. Why the maintenance fees? After the patent is approved, what effort do the clerks do? Save the document? Manage the database? Hmm, one more way to suck the last drop of entrepreneur’s blood. “For a small business that wants to protect its uniqueness and market in a competitive world, having to pay $6,000-20,000 to get a patent, plus the maintenance fees of over $4,000, this is expensive. Hey, and this is just for the U.S.! “Imagine that to protect your exclusive market in the U.S. you need 10 or 20 patents: The bill rises to hundreds of thousands of dollars. And to cover your ass worldwide? Did anybody tell Obama that the federal vampire-like debt machine is through the patent office sucking the inventive entrepreneur’s blood?” The 5: After reviewing his speech last night, we’d say probably not. Regards, Addison Wiggin The 5 Min. Forecast P.S.: Seven Florida congressmen are asking the Justice Department to withdraw its support for Spain in Spain’s dispute with Tampa-based Odyssey Marine. As we noted above, the Justice Department filed a friend-of-the-court brief on behalf of Spain. Following the WikiLeaks revelations of the swap offer for the stolen painting, Odyssey has asked the court to strike that brief from the record. We’ll keep you posted.
| |
| China Plays Europe Card, Ramifications of Chinese Dollar Swap Facility Posted: 26 Jan 2011 08:05 AM PST Whether Americans and Westerners in general like it or not, the Chinese have become and will remain the key drivers to many economic and financial market developments, progress, and averted wreckage. The intrepid lapdog US press, loyal to the syndicate, is a critical element to maintain distractions. Of course, China must adapt and react to their own stumbles and accidents, assured since for years they have maintained a tight link in monetary policy. Doing so has linked their asset bubble expansion and bust cycle to the deadly one in the United States, and filled their coffers with US$-denominated toxic debt securities.
| |
| Extreme Daily Changes in Gold’s Open Interest are Bullish Events in Market History Posted: 26 Jan 2011 07:58 AM PST Mark J. Lundeen [EMAIL="Mlundeen2@Comcast.net"]Mlundeen2@Comcast.net[/EMAIL] 25 January 2011 I had to do a double check on gold's open interest numbers for 25 Jan, its open interest collapsed by 82,000 contracts. That's a 14.02% reduction from the day before. THAT'S HUGE! How huge? Here's a chart showing COMEX Gold daily open interest from 1975-2011, day's like yesterday are rare market events. Not since January 2008 as the COMEX seen anything like it. To jog everyone's memory, the huge plunge in open interest from Jan-Dec 2008 seen in the chart above, triggered a 30% decline in the price of gold. Is yesterday's collapse in open interest signaling a similar decline in gold for 2011? Maybe; and then maybe not! Let's dig a little deeper into these numbers. I calculated the 9057 day to day percentage changes in gold's open interest data above, and then sorted them from highest to lowest. The results are displayed below. Interesting, most of th...
| |
| What Difference if Central Banks Buy Gold Local Production Or On the International Market? Posted: 26 Jan 2011 07:52 AM PST China currently produces 340 tonnes of gold annually. This may increase by up to 100 tonnes a year or more. It imported 210 tonnes in 2010. The demand for gold is increasing in China and this is likely to continue in line with the growth of the Chinese Middle classes. We do not know for sure how much the People's Bank of China took into its reserves and are only likely to know in two years time. Russia produces around 250 tonnes of gold per annum. It increases its reserves by 152.4 tonnes by January 1st 2011.
| |
| Posted: 26 Jan 2011 07:50 AM PST by Jim Willie CB January 26, 2011 home: Golden Jackass website subscribe: Hat Trick Letter Jim Willie CB, editor of the "HAT TRICK LETTER" Use the above link to subscribe to the paid research reports, which include coverage of critically important factors at work during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy. Whether Americans and Westerners in general like it or not, the Chinese have become and will remain the key drivers to many economic and fi...
| |
| Posted: 26 Jan 2011 07:42 AM PST
Dow Jones reports that wheat futures just hit a 29-month highs on "strong global demand." Per the newswire, Algeria bought 800,000 tons of milling wheat, with traders estimating the nation's purchases for January at about 1.8M. Turkey and Jordan bought wheat last week after rising food prices helped fuel unrest in Tunisia. "They're saying, 'Boy we've got to eat. We don't know where wheat is going to be in a month,' says PFG Best. CBOT March wheat ends up 18 1/4c at $8.56 1/2 a bushel, while KCBT March climbs 22 1/2c to $9.40 and MGE March jumps 21c to $9.77. The chart below shows the UBS Bloomberg constant maturity Wheat index which confirms the vicious loop of what surging prices and geopolitical instability means to wheat prices. The higher the prices, the greater the scramble by developing (and soon developed) countries to acquire as much wheat as possible and hoard it, hoping to avoid Tunisia's fate, which of course will lead to even greater price surges. And all of this ignores the impact of the Goblin in Chief, whose money printing fetish has earned him, in our books, the adjective 'genocidal'. Once China figures out what is going on, and rice prices finally explode as we fully expect they will, the world will figure out just why...The only silver lining - soon farming will be the most profitable profession in the world. And as bankers only go where the money is, Bernanke's strategy may in fact lead to the first net natural outflow of bankers from Wall Street in history.
| |
| Obama Says: "SoU is Strong" - Phil Says: "Bottom 99% SoL" Posted: 26 Jan 2011 07:38 AM PST
Obama Says: "SoU is Strong" - Phil Says: "Bottom 99% SoL"Courtesy of Phil's Stock World Everything is great! Well, if you are a corporation, that is and that's all the matters in the United Corporations of America, right? I went through the State of the Union Address last night with my commentary. The Cliff Notes of the Cliff Notes are: A 25-year goal of having 80% of America's electricity come from clean energy (another chance to short FSLR!), A proposal to "redouble" our efforts to rebuild infrastructure (zero has been approved so far, we can double that no problem!), A 25-year goal to give 80% of Americans access to high-speed rail (this will be a neat trick with Amtrak's $2.6Bn in funding), A 5-year plan to get high-speed wireless coverage to 98% of all Americans. That one I WOULD trust to private enterprise. Blaming lobbyists for "rigging the tax code" (it's not the voting by Congressmen, it's those darned lobbyists!), Obama says we can lower the Corporate Tax Rate without adding to the deficit. This is actually true, Corporations paid $182Bn in taxes last year, just 1.14% of the GDP while US taxpayers paid $2,000Bn - presumably under the same tax code as Corporations. I have long advocated a VAT tax on business sales as profits are too easy to rig, with over 75% of businesses in America paying no tax at all. It's not complicated - add 10% to all goods and services sold and hand the government $1.5Tn - the consumers will then determine who is passing through fair market costs and capitalism triumphs and our deficit is wiped out. That's my first day in office - anything else need looking at?
The President says his military advisers have identified "tens of Billions" of Defense cuts that can be made. Yeah, I think those were identified about $20Tn ago too. While I have no doubt that $10Bn, even $20Bn can be cut from $1,000Bn in annual spending, I would sure feel better if we had a plan that at least saved enough to make a dent in the $400Bn of INTEREST we're already paying on our Debt rather than showing us how we can reduce our additional annual deficit from $1.8Tn to $1.74Tn. Anyway, there was another few pages of BS and I applaud Paul Ryan for making a respectful rebuttal but, then again, he could afford to be nice as the Tea Party branch of the Republican Party was (literally, I think) foaming at the mouth as she waited to be unleashed. Bachmann had already refused to sit next to a Democrat at Obama's speech, unlike every single other member of Congress - so we kind of knew she wasn't going to be a fan of what he said well before he said it. I'm not going to say anything else about it because I will be accused of picking on her, so watch it yourself - we report, you decide! See, clearly this entire thing is Obama's fault! She even has charts that prove it! I'll just let Jon Stewart and Steve Colbert have fun with this tonight but the greater economic (and investing) point here is that this is not a Congress that is likely to work hand in hand with the President. We can expect, much like we've seen since November, many compromises made on the part of Obama to cut Government oversight, reduce regulations and enforcement - including tax collections on Big Business - while getting not one penny of all that grand "Building America's Future" stuff he was peddling.
In my morning Alert to Members today, I said I liked shorting the Dow futures off the 11,950 line as I'm still not expecting 12,000 to hold on the main index (we already took up short positions) and we'll see what sticks today. As of 8:30, it looks like we may be able to ride the Nasdaq down as well if it slips below that 2,700 mark. For example, the QQQQ Weekly $58 puts are $1.35 with very little premium and we can use that 2,700 line as an on/off switch in a contract with a two-penny spread. Of course it's a Fed day but, as I said earlier in the week - What are they going to do - PAY banks to borrow money? When you knock rates down to 0.25%, there isn't a lot of wiggle room although never say never as the BOJ has gone all the way to 0.1% and their debt to GDP ratio is "only" double ours (so far). The Financial Times notes that $1Tn of loose Western "funny money" is flowing into emerging markets and could overwhelm the capacity of their economies, overheating their markets and over-inflating their currencies as Western investors scramble to convert their free money into something less worthless - even Drachmas.
Oh, silly me! That was what he said in January of 2008. Gosh, how could I have mixed that up? Still, look at that chart! It's the 3rd year of a Presidential Stock Cycle and we're right on track to get back to S&P 1,500 by December - what can go wrong? The Bernank gets to pat himself on the back this afternoon and investors are giving him a 66% approval rating according to 1,000 Bloomberg Readers. What's not to like, this guy has given us (top 1%) $3 Tn in totally free money and it only needs to be paid back by our kids and grandkids WAY down the line and we'll probably be living in the Caymans by then.
Brazil's inflation is on track to hit 6.5% in 2011, the worst since 2004, when EWZ fell off 33% in the first half of the year. We've been looking at EWZ as a possible play ahead of Obama's trip to Brazil in March but these are some pretty scary numbers! “Policy tightening will not be enough,” Goldman's Paulo Leme said at a panel held by the Brazilian-American Chamber of Commerce. “Something will have to give. What will give will be inflation.” China is taking DRASTIC steps top put a lid on 4.6% inflation (that they admit), setting lending rates at some banks 45% higher than the benchmark 5.81%. For ordinary industries, lending rates are about 30 percent higher than the benchmark, though top clients can still access loans at a 5 percent discount to the benchmark rate, it added. The newspaper also cited a separate bank official as saying that overall lending in January cannot exceed 12 percent of the full-year target, which is said to be about 7.5 trillion yuan. Yi Gang, deputy governor of the central bank, said that the effectiveness of Chinese monetary policy was increasingly limited, the China Securities Journal reported in a separate article on Wednesday. Of course China tightening and The Bernanke (new POMO Explained video here) loosening is doing it's job of ditching the Dollar, which is now down a full 4% since December 10th, when the S&P was at 1,275. Now the S&P is at 1,295 so we are buying 5 S&P points for each 1% decline in the value of our money and all of our dollar-denominated assets. If this trend continues and we make that 1,500 target on the S&P, that should give us a decline in the dollar of another 40% - won't that be special? In conclusion - you'd better be out there making an assload of money because you'll need it to keep up with rising prices for things you buy and declining values of your US assets. We aren't going to be able to afford to retire/run away to the Caymans if we have to count on US dollars to support us unless we have an obscene amount of them! - Phil To try PSW with a 20% discount, click here.
| |
| Posted: 26 Jan 2011 07:30 AM PST It's time to buy gold stocks. Top-down "macro" analysis indicates that the bull market in gold stocks still has a long way to go. And bottom-up analysis tells me that gold stocks are cheap. Buying opportunities in this asset class will be rare, simply because so many institutional investor portfolios remain hugely underweight gold. These investors will keep looking to add exposure to gold because of the dismal state of the private credit markets, government debts and central banks. Western central banks are trashing their own currencies at unprecedented rates, while Eastern central banks are slowly tightening policy and accumulating gold bullion. If current trends in government spending and central banking continue, gold could soar to multiples of its current price. If, under these conditions, central banks continue to inflate, then a hyperinflationary destruction of the monetary system is almost certain. But rather than a total wipeout of the system, I expect we'll eventually see the end (not a reversal) of quantitative easing programs and a re-pegging of the dollar to gold at much higher gold prices. But that won't happen in a day. Inflationary forces need to gather some momentum first. What might that process look like? Well, let's say that the Fed doubles the size of its balance sheet yet again, all while the market's expectation of future inflation steadily rises. The selling pressure on Treasuries would steadily grow, undermining the value of the Treasuries already sitting on the Fed's balance sheet. On a mark-to-market basis, the equity on the Fed's balance sheet would become negative – by several hundreds of billions of dollars. Are we to expect, at that point, that the Fed would start to unwind its Treasury portfolio, selling it back into the hands of the public at much lower prices? If so, such selling of Treasuries (a reversal of QE) would lock in hundreds of billions of losses, requiring taxpayers to recapitalize the Fed (although not if Congressman Ron Paul has enough political influence). Plus, from a technical perspective, the act of dumping Treasuries into an already panicked market would at least temporarily drive prices down (and yields up) even further. Finally, in such an environment a few years out, the $16-18 trillion in US national debt (at that point), which has a short duration, would have to be refinanced at much higher rates. That would put the US government budget in a position similar to that facing the Greek government in 2010: it would have to choose between: 1) Defaulting/restructuring; Now can you imagine how, in the coming years, gold and gold stocks could launch into hyperbolic rallies? Inflation – as long as the bond market tolerates it – remains the most politically popular way of dealing with unaffordable government debts. The market's reaction to radical central bank policies is something we don't see discussed very often. Yet this single factor – the reaction to QE – will be the key driver of financial markets in coming years. Paper currencies rely on confidence, and central bankers only maintain confidence by offering to pay a real rate of interest on deposits. With interest rates currently near zero, the only reason to expect confidence to remain high would be if holders of that currency expected future prices to remain tame. Only after a widespread repudiation of government paper would central banks re-peg their currencies to gold. They wouldn't do this because they want to. Rather, they would re-peg currencies to gold simply to restore confidence in paper money. Most central bankers like to inflate as much as they deem necessary to fill the "output gaps" in their ivory tower models. The notion that monetizing the federal deficit (QE) can lower the US unemployment rate is so ridiculous that only an academic could dream it up; it demonstrates ignorance about how the US economy functions. This is a constantly evolving process. But for right now, I see the most likely macro scenario as follows: a steady rally in gold, a sideways stock market (some sectors up, some down) and falling Treasury bonds (rising yields), as more bond investors look ahead to a future of endless US budget deficits and decide to hit the Fed's "QE2" bid. The Fed's balance sheet will probably double in size again over the next few years, filling up with even more Treasuries. The central banks in China, India and elsewhere are woefully short of gold – and stuffed to the brim with less desirable US dollar assets – so they should continue to trade paper for gold and other real assets at a steady pace. The current ten-year bull market in gold is very rational; it's a reaction to the explosion in the US money supply plus the explosion in US dollar assets overseas (which are a result of seemingly endless US trade deficits). More than an inflation hedge, gold is a hedge against chaos in the monetary system; people flee to gold when confidence in paper money crashes. Today's global monetary system remains chaotic, so demand for gold stocks will remain strong… Twice in the recent past I advised the subscribers of the Strategic Short Report to buy calls on the Market Vectors Gold Miners ETF (GDX)…and I did not neglect to issue profitable "sell" recommendations. Based on the published recommendations the first GDX option trade – from Nov. 2008 to Feb. 2009 – gained about 330%. The second option trade – from April 2009 to Nov. 2009 – gained about 65%. I think it's time to attempt a "hat trick." I suggest buying long-dated call options on GDX. Gold stocks may not be dirt-cheap like they were in late 2008, but they remain relatively cheap. The nearby chart shows the ratio of the HUI index (a basket of 16 un-hedged gold stocks) to the price of gold. Other than the exceptional low of late 2008, the HUI/gold ratio is as low as it's been since 2003. Furthermore, Gold stocks are as cheap (relative to cash profit margins) as they have been since they bottomed in 2001.
Given these factors, along with the continuing chaos in the sovereign debt markets around the world, I would not be surprised to see the gold price rise into new record. Accordingly, I would not be surprised to see the HUI Index double during the next couple of years. Regards, Dan Amoss Time to Buy Gold Stocks…Again 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."
| |
| Wage Inflation Rampant In China As More Provinces Plan Minimum Salary Hikes Posted: 26 Jan 2011 07:29 AM PST
Several days ago we highlighted that wage inflation in China spreading after Shanghai announced it would hike minimum salaries by 10%. Today, through Global Times we learn that this is just the beginning. Or the continuation rather: it seems that 30 provinces had already hiked minimum wages in 2010: "By the end of 2010, 30 provincial-level regions had raised the standard for the minimum wage, with an average increase of 22.8 percent year-on-year., Yin Chengji, spokesman for the Ministry of Human Resources and Social Security (MHRSS), said Tuesday. According to him, 29 provinces have issued the guideline for the minimum wages, and the benchmark line grew about 2 percent. In Shanghai, the local minimum wage was the highest nationwide, totaling 1,120 yuan ($170.2) per month." And 2011 will be even worse: " Also, according to a China Business News (CBN) report Tuesday, in 2011, many areas would continue to raise the standard. A Xinhua News Agency report Wednesday revealed that northern Chinese city of Tianjin is considering raising the minimum working wage by 16 percent this year amid rising inflationary pressure and labor shortages." We are confident America's workers will be delighted to know that Bernanke's massively destructive monetary policies are finally resulting in higher salaries... In China. But wait: this also means US consumer purchasing power is about collapse as since very soon all imported Made in China trinkets are about to get far more expensive as already razor thin margined China producers scramble to raise costs to their primary export market. From Global Times:
Some may remember the wage strikes that crippled Chinese auto manufacturers in late 2009 and early 2010. Many more of those are coming. But not in the US: where Americans are delighted just to have jobs. Even if it means getting a progressively smaller wage, and paying ever more for virtually everything. At least they can console themselves that Core CPI components, such as home prices which is most certainly dropping, are confirming to the Dictator that his policies are working out really well... for the bankers. h/t Allen
| |
| Celente on the State of the Union as Political Theater Posted: 26 Jan 2011 07:28 AM PST In an interview on Russia Today, Gerald Celente, founder and director of The Trends Research Institute, gives his thoughts on President Obama's State of the Union address from yesterday. While the president sought to stir up some of his original hope aura, Celente found the speech long on optimism, short on realism, and riddled with inconsistency. A few highlights are paraphrased directly below, and the actual segment is underneath…
Celente on the State of the Union as Political Theater 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."
| |
| Top 15 Most Undervalued Gold Stocks by Analyst Target Price Posted: 26 Jan 2011 07:24 AM PST Kapitall submits: The following is a list of gold stocks that are deeply undervalued, when comparing the current price to the average analyst target price (used as a proxy for fair value). Complete Story »
| |
| Posted: 26 Jan 2011 07:15 AM PST
The Ups and Downs of Flying I am a very nervous flyer. Whenever there is a little bit of turbulence, I look out the window, see shaking wings, and start to wonder whether they’ll keep holding the plane up. Then my rational self kicks in, and I tell myself that statistically it is safer flying than driving, that the pilot’s incentives are aligned with mine (it is not like he has a private parachute). Eventually the turbulence subsides and I go back to whatever I was doing. That said, I do like flying, as it is probably my most productive time, since there are so few distractions. I put on my headphones and start typing (this is how I think). I wrote two chapters of the Little Book on the plane to Italy this past summer. The iPad made my travel experience even more productive – unlike a laptop, an iPad has a 10-hour battery life. I cannot type on glass, thus I bring an external keyboard. On Monday, my brother Alex and I are flying to the VALUEx conference in Zurich/Davos, then on February 7th I am giving a half-day seminar at the Value Investing Center in Frankfurt. I am not going to be writing another book for a long, long time (if ever), and I don’t have any new thoughts for another article, so to keep my brain cells going I came up with this idea: email me your questions, and I’ll try to answer them while I spend 20 hours in the air (I did Q&A with FT readers last year; it was a lot of fun). I don’t promise to answer all questions, but I’ll give it a try. I’ll post the answers online and will also send them out in my next email. One last thought. The Little Book was light on tables and charts, so I have come up with supplemental tables, charts, and even a spreadsheet of how Tevye valued Golde (sorry, you have to read the big or the Little Book to know what I am talking about), and you can find them here. Set the Bar High The world today is riddled with unique economic, political, and demographic risks. Finding attractively priced assets that will perform well in spite of these challenges is excruciatingly difficult. For investors, though, one segment of the market – the highest-quality stocks – still offers attractive risk-adjusted returns. First, it’s important to understand the risks that make most other asset classes perilous in the current environment. Where to begin? China, the world’s second largest economy, is facing an enormous overcapacity bubble in commercial, industrial, and residential real estate. Japan, the world’s third-largest economy and second-most-indebted nation (Zimbabwe holds that title) is in a debt bubble, addicted to unsustainably low interest rates and able to borrow at rates normally reserved for near-riskless borrowers. However, its significant indebtedness and horrific demographic profile (every fourth Japanese is over 65 years old) should barely qualify it as a subprime borrower. Although the US economy is steadily recovering (unless you are unemployed), the rate of growth in this recovery is unsustainable, as it is propelled by government intervention (such as QE2) and stimulus – neither of which can be relied upon as a long-term driver. These are the top three global economies, and all face huge challenges going forward, which is why I’ve been skeptical about the health of the global economy for a while now (and I haven’t even mentioned Europe being rampaged by PIIGS). It is hard to tell if we’ll have inflation, deflation, or both; but problems in China and Japan will likely lead to higher global interest rates, since they are the largest foreign holders of the US debt, and as their respective bubbles burst they’ll be forced to become net sellers. Over the next few years, global GDP growth will be lower than in previous decades, as consumer deleveraging will be followed by government deleveraging, which will also force higher taxation. There is no safe place to hide; every shelter carries a different risk. Bonds will do great if we have deflation, but they will be decimated in case of inflation. Gold is not a cash-generating asset, and nobody really knows what it is worth. (“Higher price” is not a valuation metric.) China is the incremental buyer of industrial commodities (here is a factoid: it is responsible for two-thirds of global demand for iron ore), so even if we have inflation, commodity prices will still decline with plummeting demand when China cuts back. Exposure through bonds or equities to the countries that have fared the best so far – the likes of Canada, Australia, and Brazil – will not protect you in the future, since those countries have been the primary beneficiaries of the Chinese bubble. Before I depress you further, don’t despair and reserve a space in a cave, stocked with canned food and ammo. Instead, this is the time to own high-quality stocks – no, the highest-quality stocks – with strong balance sheets, so higher interest rates will not dent their profitability. Their businesses need to have a competitive advantage and the power to raise prices for their goods or services in case inflation hits, or maintain their prices in case of deflation. And they need to be noncyclical businesses. Let’s pause for a moment, because this point is paramount. For a long, long time, the street yawned at cyclical stocks – they never received high valuations; in fact, the only time they would trade at above-market P/E is when declines in earnings (usually during recession) outpaced declines in price. The street’s indifference was understandable: if the company in question was a commodity producer its fortunes were at the mercy of a very volatile commodity; if it was a capital equipment maker it went through feast-and-famine cycles of the economy. However, in the late 2000s the market perception towards cyclical stocks changed – they had grown earnings at double-digit rates for six years, and even in 2008 – the year the US economy entered the Great Recession – their earnings still went higher. They were not marching to the drum of the US economy, but to the beat of the Chinese drum. They were no longer priced as cyclical stocks, but as secular “growth” stocks. They sported high valuations on top of very high earnings, with profit margins at multi-decade highs. The global financial crisis changed the street’s perception of them briefly; but today, only a few years and a few trillion in stimuli later, these companies are reclaiming their “growth” status, and high valuation that comes with it. I cannot recall a single instance in history when the same bubble was reinflated twice in a row, but this is exactly what has happened to cyclical stocks: the pre-Great Recession bubble is being reinflated today. Coordinated global stimuli will do that. Take Caterpillar, the maker of big tractors and giant earthmovers. CAT is at a higher price today than in 2008. It is trading at 16 times its 2011 earnings of $5.80 a share, the highest earnings in its history, and its profit margins are close to an all-time high. Caterpillar is a great company, but it is not a high-quality stock - It is highly cyclical, has large amounts of debt ($15 billion of net debt), and, like a home builder, the products it sells today have a very long life and compete with tomorrow’s sales. In a slower-growth global economy, or a world in which China will no longer be able to afford to build empty cities, the world will need a lot fewer earthmovers. Suddenly investor will discover that CAT’s earnings power is not $5.80 but $2 or $3, and the stock is not worth $90, but $30. In the past, deeply cyclical stocks like CAT were never considered high-quality stocks, but today they are mistakenly considered as such. For a company to be truly high-quality, its business has to be insensitive to the health of the global economy. Interestingly, historically there was usually a premium built into high-quality company valuations, as investors are willing to pay more for their high returns on capital, strong balance sheets, lower risk, and the certainty of their cash flows. Deeply cyclical stocks have traditionally traded at a discount to the market. Not today – low quality is expensive and high quality is cheap. Dirt cheap! By way of example, what follows are a few companies that I consider to be highest-quality, and I own these stocks in our accounts. The first two are in healthcare. Though the uncertainty that Obamacare brought is behind us and its impact on the industry will be relatively small, healthcare stocks did not get the message. Pfizer (PFE), the largest pharmaceutical company in the world, is trading at less than eight times earnings. It is generating enormous cash flows, pays a 4.5% dividend (which it just raised), and will be debt-free in the not too distant future. Yet the market puts zero value on its enormous pipeline of drugs in development and the $10 billion PFE spends annually on R&D. Medtronic – the maker of pacemakers – is trading at 10 times 2011 earnings. If you look at its stock chart for the last decade, you’d think MDT’s business had stagnated; it has not. MDT has grown sales and earnings 14% a year over the last 10 years. Both PFE and MDT have an enormous tailwind behind them: baby boomers around the world will be consuming more drugs and more medical devices over the next three to five years, no matter what happens in China or Japan. We recently bought Cisco Systems (CSCO) and Computer Sciences (CSC). Cisco – the maker of internet plumbing – disappointed Wall Street, gave lower guidance, and its stock suffered huge losses as a result. Today it is trading at about 11 times next-year’s earnings, or less than nine times if we adjust the price for the $25 billion of net cash it has on its balance sheet. Though there is some cyclicality to Cisco’s business, as we consume more data and video over the Internet, the demand for Cisco’s products will increase more than enough to overcome the business cycle. Finally, the most boring of this bunch is Computer Sciences, an outsourcing company for large corporations and the federal government. It is trading at nine times next year’s earnings, and the company has announced a stock buyback of close to 12% of its shares. It is a very stable and growing business, as the trend toward outsourcing non-core functions continues. CSC has about $1 billion of net debt that it can pay off in about a year if it chooses. CSC is the only public business in its field: due to the attraction of high recurrence of revenues, every public competitor has been bought by someone else – Affiliated Computers by Xerox, Perot by Dell, EDS by Hewlett Packard. Though our CSC purchase will work out without it, in the world of QE2 and (artificially) very low interest rates, CSC becomes an easy acquisition target. I am asking you to see things that have not happened yet, because success in investing comes not from drawing straight lines, but from the ability to see around the corner. Vitaliy N. Katsenelson, CFA, is Chief Investment Officer at Investment Management Associates in Denver, Colo. He is the author of The Little Book of Sideways Markets (Wiley, December 2010). To receive Vitaliy’s future articles by email, click here. Copyright Vitaliy N. Katsenelson 2010. This article may be republished only in its entirety and without modifications.
| |
| Posted: 26 Jan 2011 06:52 AM PST The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! January 26, 2011 10:30 AM I added Great Basin Gold (GBG-Alnet $2.55) to my Tracking List and also think Nevsun Resources under $6 is now attractive [url]http://www.grandich.com/[/url] grandich.com...
| |
| Why the Smart Money is Trading Dollar Bills for Hard Assets Posted: 26 Jan 2011 06:45 AM PST "With each passing day," we observed last week, "inflation seems less and less a theoretical fiction, and more and more a genuine threat… No self-respecting economist or self-aggrandizing central banker is acknowledging any inflationary risk whatsoever," we continued. "But the indifferent data points of real-world prices testify to the contrary." Shortly after airing these remarks we learned that import prices soared 1.2% during the month of December alone – lifting the year-over-year surge in import prices to 4.7%. The following day we learned that producer prices jumped 3.8% year-over-year. A few days after that, the Federal Reserve Bank of Philadelphia announced that producer prices in the Philadelphia region had jumped to their highest levels since July 2008. These data points do not prove that an inflationary threat is stirring, but they do offer compelling testimony. Meanwhile, commodity prices are providing ample corroborating evidence. During the past eight months, the Reuters/Jefferies CRB Index of commodity prices has soared 32% – far outpacing the stock market over that timeframe. The grain complex, in particular, has been on a tear, as the prices of both wheat and corn have nearly doubled since last summer These eye-popping gains may be exceptional, but they are hardly unique. All but one of the 19 commodities in the CRB Index has advanced during the last two years. All the smart folks on CNBC are calling this a bubble. The rest of us are calling it a bull market. The smart folks say, "Sell commodities, especially gold." The rest of us keep buying the stuff because we can't think of anything better to do…and can't think of any better way to protect ourselves from the toxic inflationary plume that is spewing from Ben Bernanke's Marvelous Money Machine. The longer Ben's machine churns out dollar bills, the greater the imperative to trade dollar bills for hard assets…or nickels. Yes, it's true; the value of a nickel is soaring, even as the value of a dollar is slumping. That's because every nickel that rolls out of the US Mint contains about 3.75 grams of copper and about 1.25 grams of nickel. Current metallic value: 6.8 cents per nickel.
We present this illustration merely to underscore the obvious: A small piece of imprinted paper contains less real-world value than a small piece of copper and nickel. Furthermore, as your editor pointed out in an ancient edition of The Rude Awakening, "a US dollar is a poor conductor of electricity and combusts near an open flame. It contains no measurable quantity of any element on the Periodic Table, nor any resource whatsoever that could contribute to any industrial application. Rather, a dollar contains little more than a politician's IOU." The nation that issues both dollars and nickels is the same nation that spends more than it earns, that imports more than it exports and that relies upon massive foreign borrowing to sustain its bizarre breed of prosperity. If current trends continue, a nickel might soon buy more than a dollar. Eric Fry Why the Smart Money is Trading Dollar Bills for Hard Assets 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."
| |
| New World Order: Food Price Inflation; House Price Deflation Posted: 26 Jan 2011 06:14 AM PST You can tell by my bleary, bloodshot eyes, my rumpled appearance, my musky aromas and my overtly hostile attitude that I have been holed up in the Mogambo Armageddon Bunker (MAB), scared out of my mind about the inflation in prices that is surely going to consume us, thanks to the unholy Federal Reserve creating so incredibly much, so stupendously much, so astoundingly much, So Freaking Much Money (SFMM).
| |
| Will Commodity Issues Follow Equity Strength or Commodity Weakness? Posted: 26 Jan 2011 06:10 AM PST This is shaping up to be a very important and a very interesting day for the precious metals and the mining names. With oil inventories putting pressure on U.S. oil prices in general, it remains to be seen if oil's impact presses other commodity prices lower -- in particular, the precious metals. If the mining issues remain bid, and buoyant today, then we could come to the conclusion that they are following the equity market lead, rather than the weakness in commodities. Right now, my technical work argues in favor of price stability followed by potent recovery rallies in Barrick Gold (ABX) and Silver Wheaton (SLW).
| |
| Gold to Benefit as Currency Woes Continue Posted: 26 Jan 2011 06:07 AM PST "GLD ETF has 1.0 million ounce withdrawal...SLV down 977,000 ounces. A decade of gaining 18% a year...some 'relic' - John Embry, Sprott Asset Management...and much more. " Yesterday in Gold and Silver Gold made an attempt to move higher the moment that trading began on the Globex system on Tuesday morning. But, as you can see from the graph, the rally ran into opposition shortly after it developed some legs...and the outcome from that point on was not in doubt. The low of the day came at the London a.m. gold fix, which occurred shortly after 10:30 a.m. local time. From there, gold made many rally attempts, only to get sold off before any one of them could get far. Gold closed down a couple of bucks from Monday's close but, without doubt, if left to its own devices its closing price would have been substantially higher. And you'd be hard pressed to notice many significant differences between yesterday's gold graph...and its silver counterpart. The low...
| |
| The Secret Behind Gold's $100 Collapse Posted: 26 Jan 2011 06:00 AM PST The question many investors are asking themselves today is, just what happened to the price of gold? Did the world change? Did the problems in Europe go away? Did all the states manage to find funding to cover their deficits?
| |
| US Panel Blames Banks for '08 Meltdown... Tunisia Promotion Now Failing? Posted: 26 Jan 2011 05:46 AM PST US Panel Blames Banks for '08 Meltdown, but not Central Banks Wednesday, January 26, 2011 – by Staff Report Financial Crisis Was ‘Avoidable,' Inquiry Panel Finds ... The panel appointed by Congress to investigate the causes and consequences of the financial crisis has found that there is plenty of blame to go around. The Financial Crisis Inquiry Commission's nearly two-year examination of the 2008 crisis lays blame on two presidential administrations, an alphabet soup of regulatory agencies and big players on Wall Street ... The full report is expected to be released as a 576-page book on Thursday. It was based on 19 days of hearings and interviews with more than 700 witnesses. – NY Times Dominant Social Theme: Please don't look behind the curtain. It wasn't excessive monetary stimulation that caused the financial crisis but Wall Street greed. Free-Market Analysis: We've often indicated that one of the dominant social themes of the po...
|
Although the United States has yet to feel inflation's effects, emerging markets as well as the United Kingdom and the European Union have. The U.K. is even talking about raising key interest rates despite the country's anemic growth. In whatever country there is inflation, gold becomes more attractive as an alternative to the local currency. A WGC report showed that gold prices rose in all currencies except the Australian dollar in 2010, outpacing global stock markets as inflation worries increased…
Laszlo Birinyi was the special guest on CNBC at the close and he did a great job of talking up the market despite the earnings misses (DOX, ELY, EWBC, EXAR, NSC, YHOO) that were scrolling along the screen as he said "
Of course, it does pay to keep a little money spread around our favorite tax havens as you never really know how fast it can all hit the fan. 
| You are subscribed to email updates from Save Your ASSets First To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
No comments:
Post a Comment