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- Why is the gold price going down?
- Silver Futures COT 2
- Gold Ends Worst Month Since Dec. 09, Investment Case "Unchanged" as US Inflation Doubles
- Is Egypt Becoming a Major Geopolitical Event?
- Gold drop due to one futures trader
- Euro Slides on Long Liquidation, ECB Noises
- A Bumper Day for Silver Producers
- You Can’t Eat Gold
- Twenty warning signs that "stagflation" is returning
- Pimco's Bill Gross: Debt limit fight could cause a bond market crisis
- Forget gold... One of America's favorite commodities is headed to all-time highs
- Jim Rogers: Inflation is raging worldwide
- SIR #14: Three Retail Stocks Ripe For Decline
- Interview with Jim Rickards
- Wall Street’s Collapse to Be Mystery Forever
- The Red Dragon’s Golden Breath
- Will the Gold Rush Continue?
- Small Gold Trader Makes Big Splash
- JPMorgan et al Keep Pounding Away
- Everybody’s Got To Eat!
- Real gold makes way for imitation in India
- Correction In Gold Nears a Key Target
- Gold Slips Again But Zero US Rates "Positive for Investment…
- The Anti-Gold Gospel according to Kaletzky
- Warning Signs
- January Largest Monthly Negative Money Flow for SLV
- Gold Downtrend Confirmed
- Paper Gold = Paper Tiger
- Will Gold Respond to the Feds Pledge to Keep Printing?
- Still Waiting for the Bottom of the US Housing Market
- Remember this month? Any correlation?
- Sucker’s Delight
- Precious Metals Plunge as ETF Investors Flee
- The Gold Sell Off Accelerates
- Over the Hedge? Apparently
- Will Gold, Silver and Oil Prices Soar on Middle East Unrest?
- Mythbusting Gold’s Volatility
- Fall of Saudi Arabia to End Dollar Reserve System?
- Huge raid on gold and silver/large silver deliveries/entering February gold delivery month:
- A Simple Shake Could Set Silver Free
- Inflation to Help the Less Fortunate?
- Why Gold and Silver have declined
- Gold Seeker Closing Report: Gold and Silver End Lower
- Gold Mining Stocks Trendpower
- Sudden shift in euro catches traders off guard
| Why is the gold price going down? Posted: 28 Jan 2011 04:41 AM PST | ||
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| Gold Ends Worst Month Since Dec. 09, Investment Case "Unchanged" as US Inflation Doubles Posted: 28 Jan 2011 04:16 AM PST
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| Is Egypt Becoming a Major Geopolitical Event? Posted: 28 Jan 2011 03:21 AM PST Wow. From the Wall Street Journal:
This could be the real deal. Via Reuters, "two thirds of Egypt's 80 million people are under 30, and many of them have no jobs." Take that angry youth dynamic, mix in 21st century organizational capabilities via twitter and Facebook, and then season with the high cost of food. Tunisia, Algeria, Yemen, Egypt… where next? A historically unstable region in which "strong men" have ruled with iron fists for decades is now an angry youth powder keg… As I write I'm listening to Hillary Clinton drone on as the United States tries to extricate itself from overly close association with Mubarak. Our short book is lighting up and gold and silver are surging. We had already taken partial profits on our short gold and silver plays and closed out the rest (also at a profit) on this morning's move. Along with all the other risks to consider, Middle East geopolitics just took center stage… | ||
| Gold drop due to one futures trader Posted: 28 Jan 2011 02:45 AM PST So it is being reported. See jsminset or zero hedge for details of Mr Shak removing his 81000 contracts this week, normally 3000-5000 contracts average trade. Unbelievable one guy could cause this much damage. Maybe someone can post the links to the comments about this trade (Norcini, ZH). | ||
| Euro Slides on Long Liquidation, ECB Noises Posted: 28 Jan 2011 02:44 AM PST Marc Chandler submits: Liquidation of the euro is leading the dollar advance today. The pace of the euro's decline seems to confirm what the option pricing had warned of, namely that longs were getting increasingly concerned. The precipitating factor is not clear. Some are linking the move to social tensions in Egypt. There is talk, unsubstantiated of SNB intervening to slow the franc's appreciation. Complete Story » | ||
| A Bumper Day for Silver Producers Posted: 28 Jan 2011 01:32 AM PST We’ll kick off with a quick look at the table below, where we can see that some very nice gains were made yesterday, notably, First Majestic Silver Corporation (AG) up 12.52%, Alexco Resource Corporation (AXU) up 9.18% and Endeavour Silver Corporation (EXK) up 7.71%. Many other silver producers also had a good day on the back of a bounce-back by silver prices, which gained $0.78 or 2.91% to close at $27.59/oz. (Note: Chart below includes the Canadian ticker symbol, (FR), for First Majestic.) Complete Story » | ||
| Posted: 28 Jan 2011 01:07 AM PST by Phil Flynn of PFGBEST The Energy Report for Friday, January 28, 2011 You Can't Eat Gold In Egypt they are calling it a day of rage as discontent rages across North Africa and the Middle East. Discontent that is being driven due in part by poor economic conditions, soaring food prices, lack of freedom and government reform. This outpouring of rage began over the Martin Luther King Jr. holiday weekend as protesters overturned the government in Tunisia. Now with the success of the ouster of Tunisian President Zine al-Abidine Ben Ali, hungry, frustrated people are rising up against tyranny and high food prices. When food prices go up and people get hungry, they get cranky are ready to topple governments. This is not being lost on Tunisia's neighbors. Algeria, Tunisia's neighbor to the north, watched the unfolding events with abhorrence and quickly moved to the market place, dipping into the government coffers to buy massive amounts of grain. Algeria purchased 600,000 metric tons of wheat in a desperate attempt to cool food prices and hot tempers. It's clear that governments will sell gold in favor of food because you cannot feed your people gold and its better you spend it on food or see how much you can fit into your suitcase before you flee the country. Egypt, the world largest wheat importer, apparently did not buy enough. Egypt's poverty and repressive government, not to mention a new government in Tunisia, has given hope to the hungry masses that change is possible. Now you can't say that Egypt wasn't warned. While Egypt has been a staunch ally of the United States, President Bush scolded Hosni Mubarak about the lack of freedom in his country. He warned that it would come to no good. Now as Egypt cuts off the internet, the best tool of free speech, the world now prepares for an event that may change the face of the Middle East forever. Other leaders across the Middle East and North Africa are sweating this out and preparing to buy more food to try to keep prices down. US friends and foes are at risk, particularly our staunch ally King Abdullah the second of Jordan. Jordan bought 150,000 metric tons of wheat yesterday and is in the market for more. The outcome of the events in Egypt will be on his mind. King Abdullah has promised reforms in government and has opened the door for more freedom yet it may be too little too late. The mood of the people may be best expressed by a Jordanian that spoke to the AP who said, "The government buys cars and spends lavishly on its parties and travel, while many Jordanians are jobless or can barely put food on their tables to feed their hungry children." Other countries are taking drastic steps to get their hands on food to keep prices down. Bloomberg News reported that Bangladesh, South Asia's biggest rice buyer, doubled its import target for this year to cool domestic prices that surged to a record in December as consumers and farmers hoarded supplies. The import target was raised to 1.2 million metric tons for the year ending June 30, from 600,000 tons set in November. That's triple the U.S. Department of Agriculture's estimate of 400,000 tons. "The reason for the increase is panic-buying," Hasan said in a phone interview from Dhaka yesterday. "There's a sense of insecurity among the public. People who usually need 10 kilos buy more than 20 kilos. When farmers need to sell, they withhold their stocks" expecting a windfall as prices advance, he said. Libya is also worried. Not only did they buy 100,000 tons of wheat they set up a 24 billon dollar fund that will focus on providing housing to cool home prices and find shelter for its growing population. For oil the market is taking a wait and sees approach to these events. Obviously change can be good or it may end up being bad. If militant governments unfriendly to the U.S. take over then it may become a nightmare. Yet if true democracy takes hold it could be a God send to the world. If democracy takes hold in these countries in this part of the world, it will be a major victory on the war on terror. Terror is born of ignorance and repression and freedom for all is the best weapon we have in this on-going battle. The calls for $100.00 barrel oil have been silenced for the moment. Now the market is wondering if we can hold $85.00. The global dynamic for oil is changing as well as Brent crude trading at a record premium over West Texas Intermediate widening to a record $11.86 a barrel. As Asia grows as fast as supply at Cushing Oklahoma it seems WTI is in the back seat. Record cold in Europe as well as North Sea production problems are exasperating the situation. May sure you are getting the best in business news on the Fox Business Network where yu can see me every day! Also sign up for a trial to my trade levels for options and all the major commodities. Just call me at 800-935-6487 or email me at pflynn@pfgbest.com. http://insidefutures.com/article/212...at%20Gold.html | ||
| Twenty warning signs that "stagflation" is returning Posted: 28 Jan 2011 12:06 AM PST From The Economic Collapse: Do you see all the warning signs flashing all around you? These days it seems like there is more bad economic news in a single week than there used to be in an entire month. 2011 is already shaping up to be a very dark year for the world economy. The price of food is shooting through the roof and we have already seen violent food riots in countries like Egypt, Algeria, and Tunisia. World financial markets are becoming increasingly unstable as the sovereign debt crisis continues to get worse. Meanwhile, the number of Americans applying for unemployment benefits is up, foreclosures are up, and poverty continues to spread like a plague throughout the United States. What we are starting to see around the globe is a lot like the "stagflation" of the 1970s. All of the crazy money-printing that has been going on is overheating prices for agricultural commodities and precious metals, but all this new money is not doing much to help the average man or woman on the street... Read full article... More on the economy: Porter Stansberry: You must prepare for a crisis NOW Must-see video reveals the real costs of U.S. central planning Shocking admission from Tim Geithner: U.S. on the brink of catastrophic collapse | ||
| Pimco's Bill Gross: Debt limit fight could cause a bond market crisis Posted: 28 Jan 2011 12:02 AM PST From Newsmax: The world's largest bond investor says the fight over raising the country's borrowing limit threatens to throw the debt market into a tailspin. "It's the wrong way to do it," says Bill Gross, manager of the $241 billion Pimco Total Return Fund, the largest mutual fund. "Obviously, I'm all for a move to a balanced budget over time. But this is like imposing the death penalty for shoplifting." In arguments over lifting the federal government's $14.3 trillion debt limit, both sides have used bond investors as a bogeyman. Congressional Republicans say bond investors will set off a Greek-style financial crisis in the U.S. if the national debt grows. They've promised not to raise the limit without... Read full article... More from Bill Gross: Bond King Bill Gross: U.S. dollar set to get smashed Bill Gross: What investors should fear more than anything else right now Bond WARNING: Pimco's Bill Gross changes rules, begins buying stocks | ||
| Forget gold... One of America's favorite commodities is headed to all-time highs Posted: 27 Jan 2011 11:33 PM PST From Bloomberg: The U.S. cattle herd probably shrunk to the smallest size since 1958, and the drop in beef supplies may boost prices to a record, analysts said. Ranchers held 92.211 million head of cattle as of Jan. 1, down 1.6 percent from a year ago, according to the average estimate of seven analysts surveyed by Bloomberg News. That would be the smallest herd in 53 years, said Ron Plain, a livestock economist at the University of Missouri in Columbia. The government releases its semiannual report on the cattle herd at 3 p.m. today in Washington. "Cattle producers are being squeezed by tough finances and a soft economy," Plain said. "The supply is just shrinking. Beef prices are likely to be record high in 2011, and it should be a record that will last." Wholesale choice beef has jumped 23 percent in the past year to $1.731 a pound, and costlier meat may spur restaurants and grocery stores to pass along costs to consumers. The highest price was $2.0118 on Oct. 16, 2003, according to Bloomberg data from the government dating back to 2001. Shoppers may pay as much as 3.5 percent more for beef this year, the government has forecast. McDonald's Corp. said this week that the company's U.S. commodity costs may rise as much as 2.5 percent this year, including a "substantial increase" in beef. Earlier this month, Texas Roadhouse Inc. said it plans to boost menu prices. 'Multiyear Process' Cattle ranchers in the southern Plains made an estimated $52 per cow last year, following losses of about $32 in 2009, said Jim Robb, the director of the Livestock Marketing Information Center, a researcher funded by the industry and government. Producers aren't ready to expand because most of the profit wasn't made until the fourth quarter, he said. "It's a multiyear process," Robb said in a telephone interview from Denver. "Just one year's return in the cattle business does not necessarily lay the foundation to increase the number of breeding animals." Calves have nine-month gestation periods and take 20 months to reach slaughter weight, according to Plain of the University of Missouri. U.S. beef production may be 26 billion pounds (11.8 million metric tons) this year and drop to 25.2 billion pounds in 2012, Robb said. Both would be the smallest since 2005, he said. The U.S. Department of Agriculture forecasts output at 25.66 billion pounds this year. Consumer beef prices will be the highest ever this year and probably will climb further in 2012, Robb said. Surging prices for corn, the main ingredient in cattle feed, discouraged livestock producers from expanding. The grain has jumped 82 percent in the past year. Retail prices for ground beef were 8.8 percent more expensive in December than a year ago, government data show. The cost of meat this year will rise faster than total food inflation, the USDA projects. Cattle futures for April delivery fell 0.1 cent to $1.12175 a pound yesterday on the Chicago Mercantile Exchange. The price has climbed 26 percent in the past year. On Jan. 18, the commodity reached $1.166, the highest for a most-active contract since futures began trading in 1964. To contact the reporter on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net. To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net. More on agriculture: Inflation grabs a hold of food prices... A "perfect storm" is setting up in these essential commodities Porter Stansberry: Food crisis looming... prices set to skyrocket... | ||
| Jim Rogers: Inflation is raging worldwide Posted: 27 Jan 2011 11:28 PM PST From Zero Hedge: "I see more inflation and more currency turmoil as we go forward. There are huge debt imbalances in the world. U.S. is the largest debtor nation in the world and all the assets are in Asia. The largest creditors in the world are China, Korea, Japan, Taiwan, Hong Kong, Singapore – this is where the assets are and the debts are in the West. "Those imbalances have to be resolved. They frequently lead to more currency turmoil. We’ll see more inflation, we’ll see more governments fall. We just saw Tunisia fall – more are coming because the world is going to continue to have these problems, and especially inflation that is going to cause more social unrest." So said investing legend Jim Rogers when he spoke recently with ChrisMartenson.com about the inflationary pressures rising dramatically around the globe, despite some governments' best efforts to downplay them. Jim shares his "outside in" perspective on U.S. monetary and fiscal policy, and how international players find themselves forced to react. He sees a lot of fundamental imbalances that need to be corrected, as well as shortages of... Read full article... More from Jim Rogers: Jim Rogers: Gold is "overdue" for a fall Jim Rogers: The only assets you must own today Jim Rogers: Silver is one of the few safe refuges left | ||
| SIR #14: Three Retail Stocks Ripe For Decline Posted: 27 Jan 2011 09:09 PM PST This report was sent to subscribers on January 26, 2010. Join our free mailing list to receive actionable SIR information 48 hours before it is posted for the public… EXECUTIVE SUMMARY:
• Higher prices for key staples like food and energy leaves less room for discretionary purchases. • Retail stock prices have accounted for recovery expectations, but do not reflect employment and discretionary spending risks. • Three vulnerable retail chains are beginning to break down – with plenty of runway for trading profits:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The retail sector has set up nicely with some very compelling short opportunities in the weeks ahead. Revenue and earnings growth is flagging out (or turning negative in many cases), profit margins are under pressure, and the US consumer (along with consumers across key international markets) are holding tightly to their wallets. Despite these looming risks – which have been obvious for some time now – Wall Street has pushed shares of retailers higher for months. Optimism surrounding the Fed's liquidity injections, rising prices for commodity and paper assets, and levitating investor confidence has supported retail stock prices. But the market is now beginning to turn, and issues that were once overlooked are quickly boiling to the surface. The Mercenary Portfolios have begun building short exposure in the sector – with a number of key positions on-deck and waiting for inflection points to be breached. In a moment we will hit the short case for today's retail targets. But first, a quick review of the dangers for the retail sector… Employment Is Worse Than It Looks The official US rate of unemployment clocked in at 9.4% in December. Of course this number represents a significant drop from the November reading of 9.8% but the "improvement" is basically just a mirage. Even Ben Bernanke had to admit that the environment is less appealing than it may seem on the surface.
The lower unemployment rate is much more a function of a contracting labor pool than an indication of an improving labor market. A declining number of workers is certainly not good news for the retail sector. And looking beneath the headlines, the picture becomes even more disconcerting. The rate of unemployment is significantly higher for the lower-skill, less-educated workforce. Of course, this may not sound surprising at all, but considering these workers actually spend the majority of take-home pay each month, a higher unemployment rate in this demographic becomes even more problematic. And then of course, there is the problem of "underemployment." These workers don't get picked up in the standard unemployment figures – and at times even pad the statistics. But a head-of-household moving from a six figure income, to making ends meet with a low-income or part-time job is still bad news for the economy – and specifically for retail sales. Up to this point, liberal unemployment benefits have helped to mask the real problem. Benefit extensions have allowed some unemployed to continue to receive extensions – collecting checks for up to two full years. This acts as an additional liquidity injection, putting cash in the pockets of consumers and helping to cushion the affect of unemployment for many retail outlets. But with major political shifts underway, the federal government is expected to begin to tighten budget strings, and at the same time most state and local budgets are already in poor shape. While various government entities may not actually cut the number of weeks available for unemployment, new extensions are much more unlikely. So as workers roll off these benefit extensions, dollars available for discretionary spending (or even just necessities) will begin to contract. Stealth Inflation Competes for Dollars As prices for energy and food commodities rise, emerging markets have been hit very hard. Countries as diverse as China, Brazil and Russia are facing the potential for social unrest as food costs soar. In China, a real estate bubble has increased the pain, leaving some working families without the means to provide both food and shelter. In developed nations, the issue of food and energy inflation may not be causing riots. But it is certainly affecting spending habits. Consumers are now paying more for gasoline and groceries – which decreases the amount of cash flow available for clothing, furniture, entertainment, electronics etc. Even though the headline inflation numbers show a very small rise in prices, once again these numbers can be deceiving. Usually, inflation is reported "ex food and energy" which is all well and good for consumers who don't eat, or drive cars, or heat their homes. But considering the fact that these are necessities for the majority of consumers – and the fact that wage inflation remains low to nonexistent, cash available for spending on other items is slowly contracting month-by-month. A Turning Tide
Even in recent days the Dow Jones Industrial Average has climbed to recovery highs, and the S&P 500 index has appeared quite strong. But if you take a look at the S&P Retail Index chart, it's clear that the sector has begun to show weakness. As traders, we spent the summer watching the retail rally with interest. While the fundamental picture had plenty of embedded risk, it didn't pay to fight the trend and lay out short positions. But as momentum begins to turn, the opportunities are popping up. Initially, we saw the weakness hit restaurant stocks as higher food costs compressed margins. Now a number of niche retail companies trading at "growth stock multiples" are beginning to roll over. Many have a client base that will struggle to maintain spending levels. And as analysts start to revise their targets for 2011 and beyond, investor optimism is giving way to the harsh reality of a challenged consumer. Below are three actionable retail shorts for trading in the near term: Limited Inc. (LTD)
• Hefty debt burden adds to financial risk and reduces business flexibility. • Chart price action signals exit point for momentum traders and should invite short traders to take a shot. • Upcoming earnings report could provide further catalyst for selling. Limited Brands operates a number of well known and successful franchises. The company's focus on lingerie gives LTD an estimated 25% market share of the US "intimates market" and the Victoria's Secret brand has grown to represent the majority of revenue for the company.
Success for Victoria's Secret also calls future growth into question as the brand already dominates developed markets, and may find expansion into emerging markets more challenging. Over the last five quarters, LTD has grown earnings by tremendous percentages – which is more a function of weak comparable quarters than it is actual company expansion. Still, the numbers are impressive and have been instrumental in pushing shares higher. Revenue growth, on the other hand, has been more challenging. After a stretch of declining quarterly revenue, LTD has strung together four quarters of revenue growth averaging less than a 10% improvement year-over-year. So it is clear that the company's earnings growth is much more a function of cost cutting than actual expansion in its customer base. One major concern for the company is the heavy debt load – a debt to equity ratio of 125%. As long as Limited continues to generate enough operating profit to service this debt, all is well. In a healthy economic environment, this kind of leverage can boost earnings and finance robust growth. But considering the challenges that consumers are facing this year, the high level of debt represents significant risk. After a bullish run into December, 2010, traders have started to unload their positions ahead of this week's earnings announcement. The stock is now solidly below the 50 EMA and has broken through the low of a recent consolidation. This is a potential sell signal for momentum traders who now have little in the way of "bullish trends" to justify long exposure. With support clearly broken and a weakening consumer, LTD could easily test its 2010 low, simply based on a contracting PE multiple and stagnant growth.
Under Armour Inc. (UA)
• Stock is priced to perfection – more than 30 times earnings expectations. • With positive trend lines broken and increasing competition, momentum and growth investors should make a quick exit. Under Armour has come a long way since its IPO days of 2005. The maker of tight moisture-wicking athletic apparel has expanded its product line to include footwear, athletic gear and equipment, along with plenty of accessories. Despite a setback in 2008 and 2009, the company is a true "growth stock" – complete with rising revenue and earnings, and an investor base that expects more of the same… When UA reports fourth quarter earnings on Jan 27th, analysts expect 2010 earnings to have grown by 36% over the previous year. This will be a record level of EPS after earnings peaked in 2007, and the expectation is for additional growth of 26% earnings growth next year. But with an annual revenue base of roughly $1 billion, UA is not as nimble as it used to be. The company will need to more aggressively expand into new markets (new geographic areas as well as building exposure in new sports) in order to keep growth rates intact. Any expansion into new markets implies a certain amount of risk. Companies like Nike, Reebok, Mizuno, Asics, and Russell have strong positions in sports like baseball, running, golf, and soccer. The competitors have ample marketing and product development budgets, and will certainly focus on defending their turf. So while UA's business is rebounding nicely, to assume that growth will be smooth and uneventful in the next few years appears a bit naive. Under Armour's stock is currently trading near 33 times analyst estimates for 2011. Compared to current earnings, the multiple is actually above 40. Once again, this kind of pricing makes sense for a young expanding operation in a strong market. But in an environment of questionable economic growth – with competitive and scale issues mounting – this premium pricing carries significant risk. The company will report fourth quarter earnings before the market opens on January 27th. As we approach the announcement, investors are bailing out of positions, sending the stock below the 50 EMA and breaking bullish trend lines. If fundamental concerns are a good indicator of broad risk, the technical weakness offers a timing perspective for a short trade. Of course the earnings announcement bears a certain amount of uncertainty (we could see a quick positive or negative movement). But the path of least resistance points lower, and the announcement could serve as yet another catalyst for declining prices. A drop down to the mid-$30′s is a reasonable target as this area represents a consolidation level from last summer, and a still premium PE in the low 20′s. Of course if the company's growth initiatives backfire, the decline could extend much further.
 Coach Inc. (COH)
• Aggressive growth is necessary to justify the premium stock price. • Brand erosion may create tension with loyal customer base. • Coach is relying on China to fuel future growth – even as China growth estimates are called into question. • Shares of COH dropped after a strong earnings release, a sign that bullish sentiment is waning. For years, Coach has been the model for top quality when it comes to luxury handbags. Shares of the company offered a tremendous return in the early 2000′s with the stock rallying from a split-adjusted $2.50 in 2001 to above $54 in just over six years. But while the early part of last decade offered investors a steady, bullish trend, the last four years have been a wild ride. As consumers reined in spending due to the financial crisis, COH shares lost 80% of their value, and management took dramatic steps to stem the bleeding. Part of the company's recovery strategy was to offer discounted bags through secondary channels such as outlet store locations. While this move certainly helped to boost revenue, the discounts were less than pleasing to some of the brand's more loyal customers. Buying a Coach handbag as a status symbol is a little less appealing when the status is more easily reached by the masses… At this point, Coach has managed to rebuild its sales channels and generate significant sales growth. Over the last three quarters, revenue has grown by an average of 20% year-over-year. This indicates that at least for now, luxury shoppers still have plenty of cash available for discretionary spending. But looking forward, growth may be much more difficult to generate. The market in the US and Europe is relatively saturated, and Coach is relying heavily on emerging markets to expand revenue. China is the primary growth vehicle right now. But considering the issue that Coach has with knockoffs – not to mention China's uncertain economic future – the longevity of this growth channel is uncertain at best. This week, Coach announced second quarter earnings (the company's fiscal year end is June 30) and the numbers were above Wall Street estimates. Despite the earnings beat and a $1.5 billion dollar announced share repurchase, the stock still fell. One has to wonder what would have happened if the company had simply reported in-line with expectations. Whenever investors (retail and professional) become too convinced that a company will beat expectations quarter after quarter, the environment becomes ripe for disappointment. COH is trading at 18 times expected earnings for fiscal 2011, despite the fact that long-term growth rates are contracting. This week's reaction to the announcement is very telling, and any further weakness could be a high-quality sell signal. Risk levels can remain tight as any rally from this breakdown would call our timing into question. But if the earnings disappointment generates more selling, COH could quickly drop more than 30% to test August support levels.
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| Posted: 27 Jan 2011 08:36 PM PST Image:  Yesterday in this column I ran a King World News blog with Jim Rickards. Late last night Eric King sent me the link to the entire audio interview which runs about ten minutes. This "Interview with Jim Rickards" is an absolute must listen from beginning to end...and the link is here. Jim spends a lot of the interview talking about gold...plus the possibility that Ireland [and other countries | ||
| Wall Street’s Collapse to Be Mystery Forever Posted: 27 Jan 2011 08:36 PM PST Image:  I have an assortment of stories for you to pick through today. The first is an op-ed piece that was posted over at Bloomberg in the wee hours of this morning...and it's courtesy of Washington state reader S.A. Jonathan Weil is a Bloomberg News columnist..and the headline reads "Wall Street's Collapse to Be Mystery Forever". Jonathan is less than impressed with what's to be found in the report by the Financial Crisis Inquiry Commission that was released yesterday...and doesn't hesitate to says so. The link is read more | ||
| The Red Dragon’s Golden Breath Posted: 27 Jan 2011 08:36 PM PST Image:  Your next read of the day is a very short piece by Casey Research's own Jeff Clark...the editor of BIG GOLD. The headline reads "The Red Dragon's Golden Breath". It's posted in the January 25th edition of Casey's Daily Dispatch...and you have to scroll down a handful of paragraphs to get to the article in question. The link is here | ||
| Posted: 27 Jan 2011 08:36 PM PST Image:  I have three other precious metals-related stories for you today...and all of them quite different. The first is a CNBC interview with the CEO of Newmont Mining in Davos, Switzerland yesterday. He thinks that "we're maybe halfway though the gold cycle"...and he feels that we're going to see less supply and much more demand as time goes on. The interview runs 5:32...and is headlined "Will the Gold Rush Continue?". I thank Russian reader Alex Lvov for sharing it with us...and the link is read more | ||
| Small Gold Trader Makes Big Splash Posted: 27 Jan 2011 08:36 PM PST Image:  Just as I was about to hit the 'send' button...silver analyst Ted Butler sent me this must read story from this morning's edition of The Wall Street Journal. And, as he pointed out on Wednesday, this explains the huge drop in gold's open interest on Monday...as a small hedge fund got caught out. As gold prices started falling this year, a trade by SHK Asset Management, which was a combination of being long and short gold contracts—bets that prices will both rise and fall—started going bad | ||
| JPMorgan et al Keep Pounding Away Posted: 27 Jan 2011 08:36 PM PST Small gold trader makes big waves. GLD and SLV both post withdrawals. Will the Gold Rush Continue?...the CEO of Newmont Mining thinks we've got a long way to go yet...and much more. ¤ Yesterday in Gold and SilverGold's high of the day came shortly after 11:15 a.m. Hong Kong time in Far East trading during their Thursday morning and, it was as they say, all downhill from there. Then, around 11:00 a.m. in New York...either the bullion banks pulled their bids, or someone shorted the gold market...and gold was down another $17 in very short order. The low of the day [$1,309.60 spot] came around 4:00 p.m. Eastern in electronic trading...and closed barely off that low. Needless to say, the gold price on Thursday made a new low for this move down. The 200-day moving average, which seemed totally out of reach 24 hours ago, appears to be firmly in the bullion banks' crosshairs. Can they do it...and how long will it take them...is anybody's guess.
Silver hit its high of the day [around $27.85 spot] about fifteen minutes before gold did on Thursday morning in Hong Kong trading. But, from that point, silver's price action took a somewhat different path than gold's...as silver struggled mightily...and by the time that JPMorgan et al pulled the pin on gold in New York, silver was actually up over a dime on the day. Since the silver price didn't want to fall voluntarily along with the gold price, someone decided to give it a shove...and silver was down 80 cents in about an hour. Then it basically traded sideways for the rest of the New York session...and instead of closing in the plus column like it would have...silver finished down 69 cents on the day. It's low tick of the day was $26.78 spot in New York sometime.
Well, it should be obvious to all and sundry that there was nothing free-market about what happened during New York trading in the precious metals yesterday. This is a crime in progress...and the CFTC won't lifting a finger. But, neither platinum and palladium were spared, either. Gold finished down 2.32%...silver was down 2.50%...platinum 1.38%...and palladium 1.11%. The world's reserve currency was very volatile within a tight range yesterday...and its machinations were of no consequence in the gold market on Thursday. I note they changed the colours on the graph as I was writing this early yesterday evening...as the website was down briefly...and when it came back up, this was the result. It's kind of fetching, don't you think?
With the gold price already in negative price territory by 9:30 a.m. when the New York equity markets opened, it was no surprise that the gold stocks began trading in the red right out of the chute. The bottom came after the big morning sell-off in gold ended...which was 11:30 a.m. Eastern. From there, the gold stocks pretty much traded sideways for the rest of the New York session...and the HUI finished down 2.63%. I note that even though gold and silver got smoked on Thursday...taking back all of Wednesday's gains and then some...the gold and silver stocks didn't give up all their considerable gains from Wednesday. That's a big positive in my books.
The CME's Daily Delivery report on Thursday showed that 2 gold and 2 silver contracts were posted for delivery on Monday. Today is last day for posting deliveries into the January contract for both gold and silver...and first day notice for delivery in the February contract is on Monday. It's a big delivery month for gold...but not for silver. It's next big delivery month is March. The GLD ETF showed another decline yesterday. This time it was 97,580 troy ounces of the stuff. The SLV ETF parted with 683,752 ounces of silver. And, for the fifth business day in a row, there was no sales report from the U.S. Mint But it's almost always busy over at the Comex-approved depositories, as the frantic in/out movements continue almost without a break. By the time they headed home on Wednesday...another 156,749 ounces of silver had removed from their collective inventories. The link to that action is here.
¤ Critical ReadsSubscribeWall Street's Collapse to Be Mystery ForeverI have an assortment of stories for you to pick through today. The first is an op-ed piece that was posted over at Bloomberg in the wee hours of this morning...and it's courtesy of Washington state reader S.A. Jonathan Weil is a Bloomberg News columnist..and the headline reads "Wall Street's Collapse to Be Mystery Forever". Jonathan is less than impressed with what's to be found in the report by the Financial Crisis Inquiry Commission that was released yesterday...and doesn't hesitate to says so. The link is here.  Japan's Credit Rating Cut to AA- by S&P on Debt LoadMy next offering is another Bloomberg piece...and this one's courtesy of reader Scott Pluschau. Japan's credit rating was cut for the first time in nine years by Standard & Poor's as persistent deflation and political gridlock undermine efforts to reduce a ¥943 trillion [US$11 trillion] debt burden. The headline reads "Japan's Credit Rating Cut to AA- by S&P on Debt Load"...and the link is here.  Italy confiscates €20 billion in fake US bondsThe next piece is an AP story sent to me by reader Doug Beiers that's posted over at finance.yahoo.com. For the second time in as many years, counterfeit U.S. bonds have been seized in Italy. It's a very short read that's headlined "Italy confiscates €20 billion in fake US bonds"...and the link is here.  The World from Berlin: 'The Era of Paralysis in Egypt Has Ended'As you are aware, the problems in Algeria and Tunisia have now spilled over into Egypt...and my next three offerings are all on this subject. The first is a piece from the German website spiegel.de that's courtesy of reader Roy Stephens. The headline reads "The World from Berlin: 'The Era of Paralysis in Egypt Has Ended'. It's not overly long...and I feel that it's worth your time. The link is here.  Egyptian Stock Market Plunges Over 11% To Fresh Multi-Year Lows; Is A Suez Canal Transit Halt Imminent?The second Egypt-related story is from Washington state reader S.A...and it's a posting over at zerohedge.com that's headlined "Egyptian Stock Market Plunges Over 11% To Fresh Multi-Year Lows; Is A Suez Canal Transit Halt Imminent?" It's a bit of a read, but well worth it in my humble opinion...and the link to the story is here.  Cables Show Delicate U.S. Dealings With Egypt's LeadersThe last story on this issue is another offering from Washington state reader S.A. This article is posted in yesterday's edition of The New York Times and bears the headline "Cables Show Delicate U.S. Dealings With Egypt's Leaders". All the information in this piece comes from a treasure trove of dispatches made public by the anti-secrecy group WikiLeaks that paints a vivid picture of the delicate dealings between the United States and Egypt, its staunchest Arab ally. There are lots of juicy tidbits in this...and I suggest you run through it if you have the time. The link is here.  Interview with Jim RickardsYesterday in this column I ran a King World News blog with Jim Rickards. Late last night Eric King sent me the link to the entire audio interview which runs about ten minutes. This "Interview with Jim Rickards" is an absolute must listen from beginning to end...and the link is here. Jim spends a lot of the interview talking about gold...plus the possibility that Ireland [and other countries in the E.U.] will default on their debts.  Will the Gold Rush Continue?I have three other precious metals-related stories for you today...and all of them quite different. The first is a CNBC interview with the CEO of Newmont Mining in Davos, Switzerland yesterday. He thinks that "we're maybe halfway though the gold cycle"...and he feels that we're going to see less supply and much more demand as time goes on. The interview runs 5:32...and is headlined "Will the Gold Rush Continue?". I thank Russian reader Alex Lvov for sharing it with us...and the link is here.  The Red Dragon's Golden BreathYour next read of the day is a very short piece by Casey Research's own Jeff Clark...the editor of BIG GOLD | ||
| Posted: 27 Jan 2011 08:14 PM PST Upgrade diets in Asia demand more expensive food. Weather has been totally uncooperative ruining crops throughout the world. The cost of food is rising in all parts of the world. And, at this point, the media has done little to address this dilemma. The USDA has woefully underestimated rising costs of everything from farm land, seeds, fertilizer, water, diesel fuel, and costs of equipment and labor. Trader Tracks is now forecasting rationing of food in certain high-producing agricultural nations.
'Food Prices Causing Riots in Africa Stoke Record U.S. Farm Economy Growth.' "The same record food prices causing riots in Algeria and export bans in India are allowing President Barack Obama to combine the biggest-ever U.S. farm exports with the tamest inflation since the 1960s." We are expecting some producing countries to withhold food shipments to ensure they can maintain reasonable homeland reserves. In the poorest nations, this means starvation. The UN has food but they have poor distribution and high rates of theft, graft and bribes. "Global food costs jumped +25% last year to an all- time high in December, according to the United Nations. Countries probably spent at least $1 trillion on imports, with the poorest paying as much as +20% more than in 2009, the UN says. In the U.S., the largest exporter, retail food rose +1.5% last year and will gain as little as +2% in 2011, the Department of Agriculture estimates." (Editor: These numbers are way too low. We have seen numerous food prices more than double year-over-year. Food and energy are +10% above 2009 or more now). "Governments from Beijing to Belgrade are boosting imports, limiting sales or releasing stockpiles to curb food inflation." "Higher prices will push U.S. agricultural exports up +16% to a record $126.5 billion this year, according to a USDA forecast. While U.S. consumers haven't been squeezed so far, grocers from Winn-Dixie Stores Inc., to SuperValu Inc., said they plan increases. Commodities will keep rising, according to a Bloomberg survey of more than 100 analysts and traders." "We are absolutely spoiled," said Jason Britt, president of Central States Commodities Inc., a research and analysis company in Kansas City, Missouri. "We have the luxury that we spend a small percentage on food. But I wouldn't be surprised to see larger bites of our incomes used." "Raw-Material Costs constitute about 19 cents of every dollar spent on food covers raw- material costs in the U.S., so retailers can limit increases by cutting spending on labor or marketing, said Ephraim Leibtag, a food economist at the USDA in Washington. The consumer price index rose +4.2% since the end of 2007, the smallest three-year increase since 1965, Labor Department data show." (Ed: CPI Index is under reported to squash cost of living increased payments for Social Security obligations). "Producer spending for processed foods rose +4.9% in the U.S. last year, while consumer prices increased +1.5%, Labor Department data show. A record 43.2 million Americans received food stamps in October. The jobless rate is running at 9.4%, and Federal Reserve Chairman Ben S. Bernanke said January 7 the labor market may take five years to recover." (Ed: The jobless rate is now 23% headed to 35% over two or more years). 'Corn advanced +52% last year in Chicago, wheat jumped +47% and soybeans gained +34%. Cattle futures touched a record on January 13 in Chicago, a day after coffee reached a 13-year high in New York. Rice futures jumped as much as 3.6% in Chicago today." "Wheat may rise as much as another +16% this year, with sugar, corn, soybeans, coffee and cocoa also gaining, according to the Bloomberg survey of analysts, traders and investors in December." "The farm boom income is aiding Obama's goal of doubling U.S. exports in five years, with this year's shipments accounting for 4% of the $3.14 trillion needed to meet the target." "U.S. farm income last year probably exceeded the 2004 record of $87.3 billion, and cropland values gained as much as +10%, according to Neil Harl, an agricultural economist at Iowa State University and former adviser to the governments of Ukraine and the Czech Republic." 'Moline, Illinois-based Deere & Co., the world's largest farm-equipment maker, will report record profit of $5.47 a share this year, according to the mean of 11 analyst estimates compiled by Bloomberg. Earnings for Plymouth, Minnesota-based Mosaic Co., North America's second-largest fertilizer producer, will more than double to $4.57 a share in the year ending in May, the mean of seven estimates shows." "Northfield, Illinois-based Kraft Foods Inc., the world's second-biggest food company, raised prices of Maxwell House and Yuban coffee in the U.S. three times last year. General Mills Inc., the Minneapolis-based maker of Cheerios and Lucky Charms, said in November it would increase some cereal prices." "Products for supermarkets rose +1.8% in the three months ended September 22, while consumer prices gained +1.6%, Winn-Dixie Chief Executive Officer Peter Lynch said on a November 2 conference call. Some will probably keep increasing to cover costs, and the Jacksonville, Florida-based company has a "relatively good" chance of passing that to consumers, he said." "Starbucks Corp., the world's largest coffee-shop operator, said in September it would raise some prices after the jump in coffee and milk costs. Domino's Pizza Inc., the biggest U.S. pizza-delivery chain, said in October it would charge customers more after a +29% jump in cheese." "Morton's Restaurant Group Inc., a Chicago-based steakhouse chain, is considering its third increase in the past year, Chief Financial Officer Ronald DiNella said at a conference in Dana Point, California, on January 12. Wendy's/Arby's Group Inc., the maker of the 1,360-calorie Baconator Triple burger, said in November it was raising prices in some stores." "Some increases may not stick as companies compete for market share. "Low price is the focus in food," said Bill Simon, president and chief executive of U.S. stores at Wal-Mart Stores Inc., the world's largest retailer." "While the deflation of last year will shift in 2011 to a "slightly inflationary environment" in food, Bentonville, Arkansas-based Wal-Mart expects to provide as much as +20% savings per shopping trip compared with competitors, Simon said on a conference call October 13. "We're not going to get beat." "Wholesale costs in the U.S. rose +1.1% in December from November, the most in 11 months, led by rising commodities including fuel and food, the Labor Department reported January 13. Food rose 0.8% in December from a month earlier, spurred by the biggest gain in soft drinks since January, 2007 and the largest surge in fruit in three years. Energy jumped +3.7%." "The Standard & Poor's GSCI Agriculture Index of eight futures climbed +52% in the last 12 months, led by cotton, corn and wheat, as flooding in Canada, China and Australia and drought in Russia and Europe ruined crops. The UN food index, which tracks wholesale costs of 55 foods, now exceeds levels seen in 2008, when violence erupted from Haiti to Egypt." "Unrest is starting again. Three people were killed and 420 injured in protests over milk and flour costs in Algeria this month. Tunisian President Zine El Abidine Ben Ali tried to end a month of protests by promising lower prices for bread, milk and sugar, before handing over power to his prime minister on January 14 and leaving the country.' "The Serbian government said January 10 it will consider an export duty on wheat to discourage shipments. South Korea said the following day it plans to increase the supply of some food products to help damp prices." "India, home to 1.2 billion people, halted onion exports in December after prices more than doubled in a year. Opposition parties have said they plan nationwide protests. China sold commodities including sugar and corn from strategic reserves last year to contain inflation that reached 5.1% in November, the most in 28 months." "No such problems are emerging in the U.S. for now. Consumer prices will rise +1.5% this year, compared with +1.6% in 2010, according to the median of as many as 61 economists' estimates compiled by Bloomberg. While the USDA is forecasting gains in retail food prices of +2% to 3% in 2011, even at the top of that range the gains would still be below the average over the last decade." (These estimates are far from accurate. Read the one year old commodities prices compared with today's in WSJ charts. Some of the increases are stunning. -Editor) "We are a food-abundant country and the last place where food inflation is going to rise," said Erick Erickson, an economist at the Washington-based U.S. Grains Council, which promotes crop exports. "We have such a rich and robust food-supply situation compared to other countries." -Alan Bjerga and Tony Dreibus Blooomberg.net We suggest Mr. Erickson go shopping with the little people who have real working man and working woman jobs. They don't' live on expense account food.         This posting includes an audio/video/photo media file: Download Now | ||
| Real gold makes way for imitation in India Posted: 27 Jan 2011 05:47 PM PST | ||
| Correction In Gold Nears a Key Target Posted: 27 Jan 2011 05:06 PM PST | ||
| Gold Slips Again But Zero US Rates "Positive for Investment… Posted: 27 Jan 2011 04:39 PM PST
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| The Anti-Gold Gospel according to Kaletzky Posted: 27 Jan 2011 04:00 PM PST | ||
| Posted: 27 Jan 2011 03:37 PM PST 
Do you remember what the economy was like in America during the 70s? We had high unemployment and high inflation at the same time. It was horrible. Well, all the warning signs are there for a stagflation repeat. Unemployment is at epidemic levels and it isn't showing any signs of decreasing much any time soon. Meanwhile, the crazy money printing that the Federal Reserve and other central banks have been doing is starting to cause significant inflation. The price of oil is about to cross the 100 dollar a barrel mark and the UN is forecasting that the global price of food is going to increase by 30 percent by the end of the year. So, yes, there are some really, really good reasons to be incredibly concerned about the global economy in 2011. Meanwhile, the only solutions that our global leaders seem to be offering are more money printing, more government debt and more financial control by international organizations. The truth is that we have a real mess on our hands. The following are 20 economic warning signs that should be of great concern to all of us.... #1 Over the past seven days, the price of wheat has risen by 11 percent as concerns about food shortages continue to grow around the world. #2 The price of corn is up a staggering 94 percent since last June. #3 The United Nations is projecting that the global price of food will increase by 30 percent in 2011. #4 According to the U.S. Department of Labor, the number of Americans applying for unemployment benefits rose last week to the highest level since last October. #5 According to the Pew Charitable Trusts, of the 14 million Americans "officially" unemployed in December, 30% of them had been unemployed for one year or longer. #6 Beginning in the month of March, the U.S. Postal Service will begin shutting down up to 2,000 post offices across the United States. #7 In an absolutely stunning move, Standard & Poor's has downgraded Japanese government debt from AA to AA-. #8 72 percent of the major metropolitan areas in the United States had more foreclosures in 2010 than they did in 2009. #9 Approximately 5 million homeowners in the United States are at least two months behind on their mortgages, and it is being projected that over a million American families will be booted out of their homes this year alone. #10 According to the Congressional Budget Office, the Social Security system will run a deficit of 45 billion dollars this year. When the new payroll tax breaks are factored in, the projected "Social Security deficit" for this year swells to 130 billion dollars. #11 The U.S. money supply has been rising at a pace that is absolutely unprecedented. #12 Right now, money is flowing out of bonds at an absolutely staggering pace. #13 The U.S. Bureau of Labor Statistics says that the price of food increased 50 percent faster than the overall rate of inflation during 2010. #14 According to the U.S. Conference of Mayors, visits to soup kitchens are up 24 percent over the past year. #15 During the last school year, almost half of all school children in the state of Illinois came from families that were considered to be "low-income". #16 Those living in the town of Discovery Bay, California will soon not be permitted to use cash to pay for any public services. Could this be another disturbing step in the direction of a cashless society? #17 French President Nicolas Sarkozy says that the IMF should be given the power to enforce new rules that would be designed to prevent "global economic imbalances" from happening. #18 The U.S. government is currently borrowing about 40 cents of every single dollar that it spends. #19 According to the Congressional Budget Office, the U.S. government will have the biggest budget deficit ever recorded (approximately 1.5 trillion dollars) this year. #20 It is being projected that the U.S. national debt will increase by $150,000 per U.S. household between 2009 and 2021. So is there any good news? Well, yes there is. U.S. Representative Ron Paul has introduced a new bill to audit the Federal Reserve. Let us hope that the move to audit the Fed fares better in the 112th Congress than it did in the 111th Congress. It would be wonderful if the American people could actually learn what has been going on inside the Fed all this time. But mostly the news about the global economy is really bad. There have been some people that have been warning for decades that all of this money printing and all of this government debt would eventually catch up with us. Now we have almost reached the moment of reckoning that the doomsayers have been warning about for so long, and it is going to be really painful to go through it. Thanks to the greatest debt bubble in the history of the world, we have been living beyond our means for decades. When "times were good" it was not because either the Republicans or the Democrats were doing something right. The truth is that both political parties have been horribly addicted to government debt. The debt-fueled prosperity that our politicians purchased for us is starting to come to an end, and an economic implosion is coming that most Americans will never see coming. But hopefully most of the readers of this article are much wiser than the average American. The warning signs are there. Now is the time to take action and get prepared. | ||
| January Largest Monthly Negative Money Flow for SLV Posted: 27 Jan 2011 01:30 PM PST LV has shed a net 495.14 tonnes of silver so far in January to 10,426.43 tonnes. Monthly out-flow 130 tonnes larger than next highest silver "get-out" of April 2010. Negative money flow expected by GGR. Look for dip buying to surface soon. HOUSTON – We expected a spate of vigorous January profit taking here at Got Gold Report and repeatedly suggested Vultures (Got Gold Report subscribers) raise a Bargain War Chest in late November and all through December as gold and silver seemed to be straining to mark new highs. Both of our very highly profitable short-term gold and silver trades were recently stopped out as the profit taking correction took out key technical support levels. Both trades proved to be the largest nominal gains for a single trade in our gold and silver trading history. | ||
| Posted: 27 Jan 2011 01:19 PM PST Gold hit 4-month lows today on heavy selling, which is something I've been expecting based on price action as a function of time. The violation of $1320 to the downside signifies a change in trend is upon us. Short-term moving averages are turning down. I am going to sit on my hands until we: 1) recapture $1320, and 2) recapture $1350.
These corrections tend to drag out longer than people expect, so it is very important to be patient. For quite some time, I have not been too comfortable stepping in on the long side except for very short-term trades. I warned before the start of the year that I didn't think it was time to be too aggressive on the long side. I did not chase gold as it retested its highs. Right now the tape is weak, and one must respect what the tape is saying. In the long run these prices are cheap, but it's still too early to step in. Short-term losses can really build with badly timed trades. Take this correction as a test to see what you have learned from investing in gold. Can you sit on your hands in the early stages of the correction when it appears that gold is presenting value? In the latter stages of the correction when everyone is panicking, can you go against the grain and buy? Can you ignore all the news stories that will be calling the end of the gold "bubble" and focus on long-term value? If you can do these things, you are starting to think like the smart money. Look at the chart above. How can anyone say this price action is reflective of a bubble? Claims of this kind are truly baffling. No bubble I've ever studied ends when the public at large is still sleeping. No bubble I've ever studied ends when the most successful investor of the past 5 years (John Paulson) has troubling raising capital for a gold fund. The burden of proof is on the gold bears to tell us why "this time is different." If your investing time frame is at least 3-5 years, you should be viewing this correction as a gift. The time will come to scale into positions before the next rocket launch higher. I hope you all can pull the trigger when the time comes. Source: Gold Downtrend Confirmed
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| Posted: 27 Jan 2011 12:12 PM PST They just couldn't leave well enough alone. After sitting back and watching the generosity and spirit of Australian's in adversity, the government has decided to pick our pockets some more with a proposed flood levy. Don't they know levees are best installed before the flood? Who knows whether the donations made around the country are enough to cover anywhere near the cost of damage done? Who knows what the final bill will be after insurance is taken into account? The government, apparently. $5.6 billion is the number, of which the one-off levy will contribute $1.8 billion. Those earning between $50,000–100,000 will pay a 0.5 per cent levy while incomes over $100,000 will attract a 1 per cent levy. Now, we're sure most people, when pressed, will not mind paying the levy to help out their countrymen who are doing it tougher than they are. From this perspective it's an easy sell for the government. And there's a certain amount of fiscal responsibility here too. The government could just go to the market and borrow the money (which would be easy considering the amount of liquidity floating around these days). But that would risk even greater tightness in the labour market and put more pressure on interest rates. And if they hadn't blown so much money on building a school revolution and other assorted schemes then they would have the money they're looking to take from you now (because they took it from you before). Instead they have come up with a plan to cut non-essential infrastructure spending and some other programs, and make up the difference with a levy. Labor is paranoid about its 'economic credentials' so when confronted with the choice of a new levy or pushing the budget surplus target out a year or so, they opted for the levy. The problem we have with it is it will have unintended consequences. How do you think the people who have already given generously feel now they will be forced to contribute more? People instinctively like to make their own decisions and contribute in their own way. Cash donations, work-in-kind, clothes, food, manual labour…whatever it may be. The point is it's a decision made free from coercion – it comes from the heart. Now the next time some region or city in Australia experiences a disaster, what will the response be? Instinctively, you will want to contribute. Then you will remember that the government wants to contribute too. But you, the taxpayer, fund the government. So maybe you'll wait 'for the government to do something'. A sense of community and personal generosity is lost. The community of the taxpayer just doesn't have the same spirit. *** We're not exactly North Africa though, and for that we should be thankful. Tunisia and Egypt are turning revolutionary. Not even Ben Bernanke can save Egypt's investors class, although we bet he's working on it…it probably depends on whether J.P Morgan's exposure is material or not. Check out Egypt's stock market crash below. In US dollar terms, it has fallen 25 per cent in a week. With stocks and the currency crashing, it is little wonder that rumours abound of Egypt's ruling family nicking off with gold. Apparently, airport authorities 'intercepted 59 shipments of gold directed for the Netherlands' BEFORE rioting broke out. Would it surprise you to know that Gamal Mubarak, son of President Hosni, is a banker? Talk about a proactive investment strategy.
Notice these fleeing despots (remember the wife of Tunisia's president also swiped some gold from the vaults before heading to Saudi Arabia) are taking physical gold? They're not stashing paper gold in the form of futures or options. That's because physical gold has value, paper gold does not. But the paper gold market is many, many times the size of the physical gold market. The amount of ounces of gold traded through options and futures dwarfs the physical availability of the metal. The gold price is falling at the moment. It's in correction mode. The gold ignoramuses are out in force, with breathless explanations as to why gold is falling. Apparently the US economy is on the mend. Inflationary forces means the Fed will soon raise rates, increasing the allure of the greenback. Markets might make opinions, but that doesn't mean those opinions are right. The gold price is falling because all the action is taking place in the paper gold market. Comex February gold options expired on 26 January while the last day of trading for January gold futures was 27 January (last night). More often than not, there tends to be some pretty explosive action around these times. The fact that most participants are leveraged exaggerates the price movements. To avoid these speculative and paper driven gyrations, you're better off owning physical gold...and relaxing. There are increasing signs of physical shortages in both gold and silver. Both metals are in 'backwardation' up to six months out, a strong indicator of tightness in the physical market. By all means be a spectator in the paper gold market, but don't be a participant. It might force you out of your position, ensuring you miss the best part of the gold bull market, which still awaits us. Similar Posts: | ||
| Will Gold Respond to the Feds Pledge to Keep Printing? Posted: 27 Jan 2011 12:00 PM PST | ||
| Still Waiting for the Bottom of the US Housing Market Posted: 27 Jan 2011 11:24 AM PST We shift our attention to the United Kingdom today. To make a long story short, if a bottle is tossed into the Atlantic off the coast of Maryland, it may eventually wash ashore on the coast of Cornwall. But there is no point putting in a note asking for help. First, let's look again at the latest news from the US: Stocks rose a bit yesterday. Gold was flat. The Great Correction continues: WASHINGTON (AP) – Buyers purchased the fewest number of new homes last year on records going back 47 years.
Neither housing nor employment show any sign of recovery. Nearly 4 years after the collapse of Countrywide – the nation's biggest subprime lender – housing is still going down. How far will it go? Gary Shilling says it will take another 20% drop in housing prices to bring them in line with their historical trend. Housing usually rises with the economy. Not more. Not less. To get back on track with the economy now, house prices have to go down. What about over-shoot? Yes, that's a risk too. Bubble markets don't tend to go back to "normal" levels right away. Instead, they tend to go below normal. At first, homeowners think it is just a temporary break in an upward trend. They hold on...hoping to catch another move to the upside. Then, they gradually resign themselves to a long slump, but still believe that "you can't go wrong on real estate, not over the long term." Then, housing prices continue to sink. More homeowners give up. Some sell. Some default. More foreclosures depress prices even further. The peak in foreclosures is not expected until March of 2012. When it comes – five years after the crisis began – most homeowners will be ready to throw in the towel. "Housing may go up in the long run," they'll say to each other, "but this downturn could last longer than I do." Prices are likely to drop below their historical trend. Homeowners will tell their children: "Don't bother to buy a house. Rent. Housing is a losing proposition. It never goes up." Then, with housing prices perhaps 25% to 40% lower than they are today, the market will have found its bottom. When? Housing markets move slowly. It could happen by 2015...maybe 2020... And more thoughts... Pity the poor English. Here's the latest:
The government blames the weather. Analysts blame the conservative government's austerity measures. They're both wrong. The weather had some effect. But not enough to take a full percentage point off GDP. (The difference between expectations and the actual result.) Cuts in government spending, meanwhile, should reduce GDP – at first. But the cuts haven't even begun yet. It's not the weather. It's not the government. It's the Great Correction, doing its job. In the minds of most economists, any slowdown, whatever the cause, is bad news. They think economies have to run hot all the time in order to provide "growth," jobs and profits. Here at The Daily Reckoning we take a different view. Sometimes economies need to take a rest. They need to check the map. Just racing along is not necessarily a good thing. They need to be sure they're headed in the right direction. But there's the problem, right there. London has the same knuckleheads in the drivers' seat as Washington. Mervyn King, England's answer to Ben Bernanke, said that since he and his colleagues took over, "there has not been a single quarter of negative growth." But that speech was made in 2007. To what did he attribute this grand performance? In a more recent speech, he explained that since "monetary policy is a flexible instrument that can be changed in either direction each month, it is the best tool for managing the economy in the short run." Well, the bank of Mervyn King and the bank of Ben Bernanke are on the same page. Neither government can use fiscal policy – both are out of money. But they still have monetary policy...or to be more exact, they still have the printing press. So, they push down on the accelerator...and head for a ditch. *** Here's an item that helps us understand better how the zombie state works. The New York Times reports: Mortgage Giants Leave Legal Bills to the Taxpayers
See how the zombies do it? The mortgage companies collude with the Fed (artificially low rates) and Congress (deductibility of interest payments, implied federal backing of Fannie and Freddie) to stick Americans with trillions in mortgage debt. Then, when the bubble blows, the feds take over Fannie and Freddie, adding $5 trillion to America's national debt. And the taxpayers get to pay the legal bills too. What's not to like? The lawyers are happy. The feds are happy. Fannie and Freddie's bondholders are happy. All the insiders are happy. It's just the outsiders – the poor schmucks who haven't figured out how to get on the gravy train – who aren't happy. And who cares about them? Regards, Bill Bonner. | ||
| Remember this month? Any correlation? Posted: 27 Jan 2011 11:23 AM PST Remember the heart breaking smash of silver and gold in Oct/Nov/Dec/ 2008? Immediately before the big financial meltdown silver/gold was crashing and giving signals that something big was happening.It turned out every one was broke and selling off the only thing of value they owned-PM's-along came Paulson with the big bail-out.Before the big bail-out,Gold broke $1000 then dived to 720, silver went from 18 down to 9.Should we see the same losses, can it be signalling the next "big one"? Effects of QE 2 repeated as from QE 1? | ||
| Posted: 27 Jan 2011 11:04 AM PST
Mercenary Links Roundup for Thursday, Jan 27 (below the jump).
01-27 Thursday
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| Precious Metals Plunge as ETF Investors Flee Posted: 27 Jan 2011 10:00 AM PST Gold plunged $31.92, or 2.37%, to settle at $1,313.93, the lowest level since September. Silver fell along with gold, but held up relatively well, falling only $0.67, or 2.44%, to settle at $26.93. | ||
| Posted: 27 Jan 2011 10:00 AM PST Things are happening so fast in the gold pits that it feels like the clock is on fast forward. The markets were rife Thursday with rumors of margin calls and distressed liquidations by hedge funds and nervous gold bugs alike. | ||
| Posted: 27 Jan 2011 10:00 AM PST Spot bullion dealing opened the final session of the week with a very modest bounce, gaining 90 cents to rise to the $1,315.80 level while the US dollar slipped 0.09 lower to 77.69 on the index, just ahead of the release of US GDP data. | ||
| Will Gold, Silver and Oil Prices Soar on Middle East Unrest? Posted: 27 Jan 2011 10:00 AM PST An unexpected specter is haunting the streets throughout the capitals of North Africa and the Middle East. Although revolution has been quelled for many years, dollar devaluation has caused prices of basic goods to soar in emerging economies like these. | ||
| Posted: 27 Jan 2011 10:00 AM PST Gold is a volatile asset class. This is why we tell investors to put no more than 5-10% of their portfolio in gold, and split that among the bullion itself and those companies tasked with exploring for and producing gold. | ||
| Fall of Saudi Arabia to End Dollar Reserve System? Posted: 27 Jan 2011 10:00 AM PST We don't believe any of this. What if all of this turmoil is in a sense being controlled or guided by Western intelligence? What if the ultimate goal is the destruction of Saudi Arabia and the dollar reserve system? Yes, what if the idea is to break the linkage between the dollar and oil by bringing down the Saudi Sheiks that have proven such faithful allies of the Western power elites and America in particular? | ||
| Huge raid on gold and silver/large silver deliveries/entering February gold delivery month: Posted: 27 Jan 2011 09:52 AM PST | ||
| A Simple Shake Could Set Silver Free Posted: 27 Jan 2011 09:06 AM PST There is no more silver! Really, there isn't any left. There is a danger lurking in the shadows of the COMEX silver market. Prices are (generally) rising, but the supply of silver is falling, and it's falling quickly. Why, you ask? Unfortunately, there has been confusion in the paper and physical metals market…as if silver investors hadn't already noticed. | ||
| Inflation to Help the Less Fortunate? Posted: 27 Jan 2011 09:00 AM PST I almost didn't read the essay by Gary Gibson, the managing editor of the Whiskey & Gunpowder newsletter, because he was talking about Paul Krugman, whom Mr. Gibson refers to as "cheerleader of the state," and for whom I have a much, much lower opinion, probably because of my envy of his career success despite being, as far as I can tell, a complete failure in predicting the bursting messes we are in, or ever warning against them as they were building, when it was obvious to the Austrian economists all along. I mean, as an economist, how bad can you be and not suffer for it, for crying out loud? My problem with it is that "gladly suffering fools" was never popular anywhere I ever worked, as all my employers were very specific in demanding "results" and "competence," which I obviously could not deliver, as my career path of perennially bouncing along the bottom, never really getting past the "trainee" rung of the corporate ladder, so richly attests. Anyway, Mr. Krugman writes that he and his hotshot Democrat buddies view their position as, "It's only right for the affluent to help the less fortunate." So that, in a nutshell, is it! He, apparently speaking for all Democrats, wants to help the "less fortunate," and he is as full as any Democrat with his own self-righteousness and smug self-satisfaction in proudly declaring himself so. Well, I got some Hot Mogambo News (HMN) for Mr. Krugman; everybody wants to eliminate suffering, and the affluent have always helped the less fortunate, to one degree or another, although it has never been enough to satisfy everybody, a tradition of whining carried forward even to today when total government spending is almost exactly half of total spending in the Whole Freaking Country (WFC)! Half! I mean, if spending half of GDP by local, state and federal governments to let them "help" is not enough, how could it EVER be enough? I thought it was actually funny when he ridiculously villainized all others as greedy and irresponsible, with the laughable mischaracterization, "The other side believes that people have a right to keep what they earn, and that taxing them to support others, no matter how needy, amounts to theft. That's what lies behind the modern right's fondness for violent rhetoric: many activists on the right really do see taxes and regulation as tyrannical impositions on their liberty." Hahahaha! "No matter how needy"? Hahahaha! "Violent rhetoric?" "Tyrannical"? Again, hahahaha! But as absurdly silly as this, and he, is, his real comic punch line came with the sublime, "There's no middle ground between these views." Hahahaha! Hahahahaha! Truer words were never spoken! Hahahahahahahacoughcoughcoughhahacough! That was so funny that I was laughing so hard, and so long, that I started coughing, which I notice, now that I see it written out, does not convey the experience as well as I had hoped, but which still, I hope, conveys the Utter, Utter Contempt (UUC) I have for Mr. Krugman and his egregiously bad economic idiocies, the sum of which is always "more spending, more budget deficits, and more taxation of the rich." I say this not because Mr. Gibson says, "Mr. Krugman is unquestionably on the side of evil," which is true, but because the most evil thing that you can do to poor people (and the others in that "less fortunate" category) is to make suffer more! Which they do when they must pay higher prices for the things they need to survive. How cruel! How monstrous! And that – that! – is exactly what Mr. Krugman guarantees – guarantees! – when he urges more monstrous amounts of government deficit-spending, more insane increases in national debt, and an insanely increasing money supply, all thanks to an irresponsible Federal Reserve creating the money necessary to the task. And then, as Mr. Krugman does, to advocate more taxes when he knows these business expenses are always passed on to the ultimate consumer in the form of higher prices, which fall disproportionately high on the poor, and when he knows that raising taxes inhibits economic growth, he seems to be the epitome of insanity! This is madness! This man is, obviously then, truly evil. And he is evil because he advocates deliberately inflicting pain on the poor! He is thus a villain. He is thus a monster. As a guy who has seen a lot of "how things work," I am thus a guy who knows that there is nothing that I can do about horrid people like Paul Krugman, or about Princeton, or about The New York Times, except seethe and bemoan the low quality of public education, so rampant in the American school system, that allows this kind of thing to flourish. And I'm a guy who also knows that having a lot of silver will be both a terrific financial asset to own in terms of capital gains as silver rises in the massive inflation in prices caused by the massive over-creation of money by the Federal Reserve, and I'm a guy who has seen enough movies to know that silver is also a weapon against werewolves, especially when made into a hollow-point magnum bullet, at which point it becomes a defense against everything else, too! Hahaha! Being serious for a moment, except vampires, of course, which I figure probably, explains why The Lone Ranger was famous for his silver bullets, although we'll never know because all the documentary evidence is mysteriously "lost." So while I am not quite sure of the precise utility of silver bullets, either now or in the Old West, I am sure of silver reacting to the sorry economics of Mr. Krugman, as it rises along with, and surely ahead of, the massive rises in other prices caused by the Federal Reserve creating enough money to let the government help the "less fortunate" by making them more miserable. And that is why the decision to buy gold, silver oil is so easy that you happily say, "Whee! This investing stuff is easy!" The Mogambo Guru Inflation to Help the Less Fortunate? 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." | ||
| Why Gold and Silver have declined Posted: 27 Jan 2011 08:15 AM PST | ||
| Gold Seeker Closing Report: Gold and Silver End Lower Posted: 27 Jan 2011 07:11 AM PST Gold continued yesterday's after hours access trade advance and rose $14.35 to as high as $1347.95 in Asia before it fell back off in London and saw a $2.42 loss at $1331.18 by a little before 9AM EST and then bounced around near unchanged for most of the morning in New York, but it then fell of even further in late morning trade and ended near its 11:30AM EST low of $1316.55 with a loss of 1.1%. Silver climbed 69 cents to $27.81 before it fell back to $27.27 a little after 4AM EST and then climbed back to as high as $27.728 by midmorning in New York, but it also fell back off in late trade and ended near its new late morning low of $26.785 with a loss of 0.41%. | ||
| Posted: 27 Jan 2011 07:00 AM PST | ||
| Sudden shift in euro catches traders off guard Posted: 26 Jan 2011 11:48 PM PST Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/07a063c4-2a3d-11e0-b906-00144feab49a.html#ixzz1CL0C1o3n Barely a month ago the euro was sitting at a four-month low against the dollar, with most observers expecting the single currency to lurch lower as the eurozone debt crisis escalated... Read |
• A dramatic decline in earnings growth this year will change investment focus for current holders.
• As UA enters new sports, entrenched competitors will create more challenges.
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