Gold World News Flash

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• International Forecaster February 2011 (#4) - Gold, Silver, Economy + More
• Losing Faith in Paper Money
• Goldrunner: The golden parabola
• SILVER BULL
• Chairsatan Bernanke - Meet President Paul?
• Alasdair Macleod discusses gold and silver with James Turk
• If Everybody Is Importing Inflation... Then Who Is Exporting It?
• James Turk: Watch the gold/silver ratio
• Weekly precious metals review at King World News
• Ron Paul wins presidential poll at conservative conference
• Law Suits, Timmy’s Bank and the “Po’s” Dough
• [OTE96] On the Edge with Catherine Austin Fitts
• The Reason For Mubarak's Power Hand Off Delay: Plundering The Gold
• Fed's Losses Since The Start Of QE2: $76,814,152,246.00
• Vietnam’s fourth devaluation in 15 months to curb the trade deficit and narrow the gap between official and black-market exchange rates runs the risk of spurring inflation from almost a two-year high.
• Obama on Auto-Defrosting Refrigerators
• Modern Monetary Theory: The Sophistry of the US Dollar
• What Are The Tightest Correlations In FX Land?
• Our Worst Nightmares Unfolding
• Watch the Gold/Silver Ratio
• When Is The Market Going to Top Out?
• If Japan Lost Two Decades From Its Bubble Popping, How Many Decades Should The US Expect To Lose?
• Gold is as Good as Cash and Wields More Power
• U.S. Dollar Gains on Global Political Uncertainty
• Your Pension-Pot Warranty
• Gold, the Mother of All Bull Markets
• Why Gold Is The Currency Of The Free Lecture

International Forecaster February 2011 (#4) - Gold, Silver, Economy + More Posted: 13 Feb 2011 05:00 AM PST The discontent and seeds of rebellion existed for a long time in Egypt as it has in many other countries. The major powers of the world were content with Mr. Mubarak, especially the US, which gave him $60 billion over 30 years and allowed him to move $70 billion over that period into secret bank accounts in England, Switzerland and Europe, while Egyptians lived on the edge of starvation over that time frame. Both the US and UK never saw a dictator they didn't like.

Losing Faith in Paper Money Posted: 12 Feb 2011 06:02 PM PST I was planning to go into a bizarre and irrational rant against JP Morgan for its obvious scam of manipulating the silver market by massive naked-short positions, and including in my Loud Mogambo Diatribe (LMD) the scumbag government and "regulators" who are supposed to keep this kind of fraud out of the commodities markets.

Goldrunner: The golden parabola Posted: 12 Feb 2011 04:53 PM PST Parabolic Rise in Gold*to $1860 (or Even Higher)*Likely by June Gold is in an historic Bull Market because most nations are printing their paper currencies like they are going out of style (and maybe they are) as each nation tries to battle off the massive deflationary backdrop of debt that has permeated most of the world. This surge of debt monetization – this devaluing of the U.S. Dollar for one – *has set the scene for a likely parabolic rise in $Gold to $1860, or even more, over the coming months before an intermediate-term correction takes place. Let me explain. Words: 2056 So*says**Goldrunner (www.GoldrunnerFractalAnalysis.com)*in*an article* which Lorimer Wilson, editor of www.munKNEE.com, has reformatted*and edited* below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.)*Goldrunner*goes*on to say: *Just today, I read that the Fed has ann...

SILVER BULL Posted: 12 Feb 2011 02:59 PM PST I've pointed out in the past how consolidation size is usually predictive of how large a move will be once a breakout occurs. I thought I would take a quick look at the silver bull today using that criteria. As most people know I'm mostly interested in silver during this bull market. I really doubt that I will ever buy another oz. of gold again. So let's start by taking a look at the long term chart of silver. As you can see the consolidation principle works perfectly in the silver market. So far we've had three major consolidations and each one as been followed by a powerful rally driven by the size of the preceding consolidation.  The relevant fact is that the longest consolidation has also produced the biggest breakout. If that continues to hold (and I think it will) then the current rally is probably only half over. A meager 46% breakout is way too small for a 30 month consolidation. If I had to guess I would say silver might be in the process of forming a triangle consolidation pattern, especially if gold has one more drop down into a final intermediate cycle low.  Ultimately I expect this breakout to launch silver to somewhere between $43 and $50 before the next consolidation phase begins.  This posting includes an audio/video/photo media file: Download Now

Chairsatan Bernanke - Meet President Paul? Posted: 12 Feb 2011 12:34 PM PST An important advance indicator of leading conservative frontrunners for the presidency was won by Criminal Reserve archnemesis Ron Paul. The Washington Times reports: "Texas Rep. Ron Paul  has won the Conservative Political Action Conference (CPAC) 2012 presidential preference straw poll of 3,742 activists, the chairman of the huge annual gathering of conservative activists announced on Saturday. The Republican lawmaker, long a favorite of the party’s libertarian wing, took 30 percent of the votes cast, followed by Massachusetts Gov. Mitt Romney with 23 percent. New Jersey Gov. Chris Christie, who has said he will not be a candidate in 2012, and New Mexico former Gov. Gary Johnson tied for third, with 6 percent of the vote. Former GOP House Speaker Newt Gingrich followed with 5 percent. Tied at 4 percent were Minnesota Rep. Michele Bachmann, Indiana Gov. Mitch Daniels and former Minnesota Gov. Tim Pawlenty. Trailing them was former Alaska Gov. Sarah Palin, who garnered just 3 percent of the vote." Now since the mere prospect of "President Paul" sends shivers of mortal terror down the spine of every self-respecting member of the criminal Wall Street syndicate, does this mean that in order to guarantee 4 more years of Teleprompting, JPM and GS will send the Russell to 36,000,000, the unemployment rate to -15%, and the labor participation rate to -100%, just to make sure that the peasantry is content enough and chooses 4 more years of unmitigated dollar debasement and what is rapidly becoming a weekly iPad cadence? With the popularity of American Idol plunging to record lows, the mission to brainwash America for 4 more years may be just that more difficult. Add 15% inflation and the vassals may actually stirs for once. From the Wash Times: The poll, sponsored this year for the first time by The Washington Times, is seen as one of the earliest tests of grassroots popularity among the party’s dominant conservative wing, and Mr. Paul, who ran unsuccessfully for the nomination in 2008, has traditionally done well in the CPAC voting. Asked in the survey if they were generally happy with the field of GOP contenders lining up to challenge President Obama next year, 56 percent of CPAC voters said they were generally satisfied with the current crop of candidates, while 43 percent said they were not. The announcement of the vote came at the end of the third and final day of the CPAC gathering in Washington. This year’s event attracted a record attendance of over 11,000, and more than 3,700 attendees participated in this year’s straw poll — up more than 1,300 from a year ago. One thing is certain: the only man in Washington who actually understands what is really going on, and is a firm believer in a return to the gold standard, has about a snowball's chance in a tokamak of taking over the country under the current status quo, where the corruption, the cronyism and the corporatism begin and end with the judicial, the legislative and the executive branches of government.

Alasdair Macleod discusses gold and silver with James Turk Posted: 12 Feb 2011 12:28 PM PST 8:30p Saturday, February 12, 2011 Dear Friend of GATA and Gold (and Silver): Economist and former banker Alasdair Macleod, editor of the Finance and Economics Internet site (http://financeandeconomics.org/), whose incisive essays are often noted in GATA Dispatches, was interviewed for 15 minutes the other day by GoldMoney founder James Turk. Their conversation dealt substantially with gold price suppression and the overwhelming and naked short position in the precious metals, which Macleod thinks will end in defaults and cash settlements. You can watch the interview at the GoldMoney Internet site here: http://www.goldmoney.com/video/macleod-turk.html CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf Join GATA here: Phoenix Investment Conference and Silver Summit Renaissance Glendale Hotel and Spa Friday-Saturday, February 18-19, 2011 Glendale, Arizona http://cambridgehouse3.com/conference-details/phoenix-investment-confere... Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Prophecy Resource Spins Off Platinum/Palladium Venture: World-Class PGM Deposit in Yukon Company Press Release, January 18, 2011 VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy. PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding. Following the transaction: -- Prophecy will own approximately 90 percent of PCNC. -- PCNC will consolidate its share capital on a 10 old for one new basis. -- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp. -- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings. Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000. For the complete announcement, please visit: http://prophecyresource.com/news_2011_jan18.php

If Everybody Is Importing Inflation... Then Who Is Exporting It? Posted: 12 Feb 2011 11:50 AM PST Recently, some have started to ask a very pertinent question when it comes to the global Current Account: with every developed and developing country supposedly seeing a surge in exports, just who is it that is doing all the importing? Sean Corrigan from Diapason takes this question, and flips it on its head, as regards the printing of money and the "trade balance" of inflation: if every central bank continues to excuse itself from taking responsibility from what is now a global money printing pandemic, claiming it is merely importing inflation... then who is doing all the inflation exporting? Read on for some brilliant observations... From Sean Corrigan of Diapason Securities In his recent Congressional testimony, our dangerous monetary Dr. Moreau was forthright in defence of his latest wild experiment in inflationism, saying that the rate of the fall in the value of people's money was "expected to persist below the levels that Federal Reserve policymakers have judged to be consistent with their mandate." Obviously, the Chairman has not been to the gas station recently, nor has he popped out to the supermarket to restock his larder or he might have noticed that, as AP reported at about the time he was speaking, "Some food makers... began selectively raising prices within the past few quarters. Those higher prices have begun filtering into stores. Supermarkets have resisted price increases for some time, hoping to hold onto their cost-conscious customers in the tough economy. But chains such as Kroger now also say higher prices are coming..." As the article goes on to note, such notables as Kellogg, Sara Lee, Smucker, Tyson Foods, and McDonalds are well on the way to taking steps to defend their margins with overt price rises while many companies have already moved to disguise the adjustment by changing portion sizes or switching to lower grade ingredients. Cotton prices have, meanwhile, more than doubled in the past 5 months — potentially pushing up apparel costs across the board — an escalation which has not been seen in a like period for at least half a century. While Bernanke is trying to blame such inconveniences on demand in the emerging markets (without inquiring too closely into what it is that such demand is predicated upon), the disinterested observer might note that it is not entirely a coincidence that this latest resurgence has occurred as he and his colleagues have done their best to make good on the cart-before-the-horse, Jackson Hole doctrine of raising inflation expectations in order to lower hypothetical real yields in some corner of the de Wittian multiverse (incidentally, a source of obvious contradiction when he now attempts to deflect his critics with the claim that such expectations have remained gratifyingly 'stable') Indeed, as the next figure shows, the rate of increase of proper (Austrian) money supply this past semester is in excess of trend to its greatest degree since the immediate LEH-AIG, core meltdown SCRAM and lies in the 96th percentile of the last three decades' range. Moreover, as the graph appended in large format at the end of this article makes plain, the implementation of QE-II via the programme of buying Treasury bonds has been mirrored in a surge in commodity prices no less strikingly than did their rebound from the post-Crash lows correspond to that of QE-I. But, as one TV anchor challenged me earlier this week, "isn't a little bit of inflation a price worth paying for an increase in employment" to which the answer is unequivocally, "No!", not least because of the eternal temptation to try to avoid ever paying it. More fundamentally, this whole issue of using monetary and fiscal 'stimulus' to repair a slump which has been typically brought about through previous, ill-judged attempts to steer 'policy' has at its heart a dirty little secret. Because of the entrenched factional interests of the Entitlement State — often, but not always, reinforced by labour union militancy — the same Fabian elite whose bankrupt, Tooth Fairy wishfulness has cost far too many souls their livelihoods perennially despairs of anyone ever regaining employment by facing up to the tough but inescapable fact that the man giving them a job has to earn his living, too. Thus our leaders routinely quail before the political and presentational difficulties of telling those who have misleadingly become accustomed to a better standard of living in the Boom than their input into the productive process actually merits that they must now face a less comfortable reality and temporarily accept less reward for more effort while the economic structure reorders itself in a more sustainably fashion. Ultimately, the so-called Keynesian miracle is based on the shallow deceit that if Mohammed will not go to the mountain of lower unit, nominal wages, the mountain must be transported to Mohammed using the machinery of inflation to reduce the real value of those same wages. The only problem with this nostrum is that it fails — in typical aggregationist fashion — to see that what counts for each individual employer (the idiosyncratic human atom who helps constitute the featureless, mathematical abstraction called 'employment') is that the monetary value of the sales of his particular goods or services must rise faster than the sums he expends on the workers who give rise to them — i.e., that the value of their marginal product exceeds once more their marginal cost, or else there is no point hiring them. Even that is not the end of the story, for our businessman also needs to pay for all the other inputs which go into his endeavour — raw materials, plant, equipment, components, capital means, rent, taxes, and levies such as mandatory health-care, carbon taxes, unemployment 'insurance', and pension contributions (the last, you will notice, thoroughly amenable to alleviating political action of a far more beneficial kind). It should be obvious that, once the authorities begin monkeying with the volume of money in the system, it rapidly becomes almost a matter of happenstance that any one company finds itself in the favourable position that its costs will inflate more slowly than its revenues: it should be even more apparent that it is an outright impossibility that this can be the case for everyone, all at once [see the succeeding figure for a very broad brush illustration in the case of the UK]. Further complications arise from the consideration that the very fact there has even been a Bust proves that an inordinate number of people had previously been lured by the economy-wide Ponzi scheme of the Boom into lines of work which have now been shown to be either sub-marginal, or completely unviable. Part of the reason for this is that the Boom has introduced a progressively wider and more pervasive disparity between what people do to acquire their own purchasing power and what they choose to spend it on (whether that takes the form of end-goods or debt service payments). Given this reality, what do you suppose are the chances that the renewed inflationary tide will not only lift all boats equally — that there will somehow arise absolutely no differential injection, or Cantillon, effects - but that it will preferentially refloat the seabed wrecks of those which have foundered amid the Bust and so miraculously restore employment and income levels to their former, febrile heights? Beyond even this, a further malign feature of inflation is that it makes the reading of the underlying balance of supply and demand - not just for specific goods, but for all goods in their ever- shifting, near-infinite matrix of interrelations - even more difficult than usual because it corrupts the signals inherent in their relative, even more than in their absolute, prices. Think of the transmission of money in the act of exchange as the sending of a communique describing some essential features of what took place in that transaction and why. Now imagine that the text of the message is arbitrarily and unpredictably altered — sometimes with the addition of characters, sometimes with their deletion - and also that the time taken to deliver such missives is expanding and contracting in what may be a quasi-random fashion. Contemplate the difficulties which also arise because of the time-varying nature of the inflation. Because the inflation is an extraneous act of political will (or financial caprice) — and so is subject to sudden stops, starts, and redirections — it represents a dangerous aggravation of the normal entrepreneurial hazards inherent in organizing profitable production on into an uncertain future in a constantly-evolving economy. At the very least, this confusion should serve to heighten actual business risk even if ostensible risk premia are being artificially suppressed by the weight of new money acting on the financial market - a combination which is all too likely to lead an entirely new fleet of White Star liners on to the rocks of the inevitable Bust to come.   If there is not yet much hope that an inveterate 'output gapologist' like Mr. Bernanke — or, for that matter, Mr. King — will be persuaded of the foregoing, there are clear signs that — somewhat belatedly, perhaps — some of those in office in the emerging market power houses have begun to waken to their peril. In Brazil, official rates have been raised four times for a total of 250bps and there is a great deal of expectation that another 50bps is in the pipeline. India, for its part, has moved the repo rate up in seven stages for a cumulative 175bps with, again, another 50bps thought likely to materialize over the next couple of months. China, of course, has so far only managed to steel itself to deliver three hikes of 25bps in an interval in which the annual CPI could well have accelerated more than three times as fast. That said, the latest editorial in the official People's Daily mouthpiece was fairly uncompromising on the interpretation which it hoped would be put upon the latest of these rises. "To sustain sound and stable economic growth, Chinese policymakers must take more measures to prevent inflation from escalating further... The timing of the announcement, at the very end of the lunar New Year holiday, displays an extraordinary sense of urgency. Had the pressure of accelerating inflation not been so huge, Chinese central bank officials would not have needed to break their holiday to take action..." Just in case we were in any doubt of his inflationary intent, Chairman Bernanke had the gall to express an open disapproval of the move — branding it as 'surprising'. Given that he blames China for rising food prices, this may seem just a little too cute, but his incoherence was only compounded by his remarks that instead of interest rates, the Chinese should revalue the currency and so redirect exports to meet internal demand. Well, over the long run, that does makes sense for the ordinary Chinese, but it completely misses one or two obvious, interim objections, namely that: (a) since capital and labour is heterogeneous, Ben - as we discussed above - a painless reallocation would be impossible to engineer outside of a Harvard eco department spreadsheet and (b) even if, by some miracle, domestic consumers did manage to take up all the redirected, former export goods (and at a profitable price for their makers), pressure on world resources would hardly abated by the cessation of Chinese saving this involved (however inequitably 'forced' much of this may currently be). For their part, the Chinese were quick to shoot back at their decrier that:- "In addition to such domestic factors as rising food prices and labour costs, the super-loose monetary policies that major developed economies have adopted to inflate their way out of recession are also undermining the country's efforts to curb inflation by driving a large amount of capital flows into emerging economies including China." "...[Bernanke's] remarks indicate that the United States is far from even recognizing the danger of too much cheap money, which, to a certain extent, led the world into the worst global financial crisis in more than 70 years in the first place, and now threatens to fuel runaway inflation in many emerging economies." What a funny old world it is: all this 'imported' inflation everywhere we look and, seemingly no-one to be found anywhere who is actually responsible for 'exporting' it.

James Turk: Watch the gold/silver ratio Posted: 12 Feb 2011 11:23 AM PST 7:19p ET Saturday, February 12, 2011 Dear Friend of GATA and Gold (and Silver): GoldMoney founder, Free Gold Money Report publisher, and GATA consultant James Turk says the gold/silver ratio is on the verge of breaking out, confirming the bull market in the precious metals and heralding a short squeeze that just might take silver nearly back to its historic monetary conversion ratio to gold. Turk's commentary is headlined "Watch the Gold/Silver Ratio" and you can find it at the Free Gold Money Report Internet site here: http://www.fgmr.com/watch-the-gold-silver-ratio.html CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Prophecy Resource Spins Off Platinum/Palladium Venture: World-Class PGM Deposit in Yukon Company Press Release, January 18, 2011 VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy. PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding. Following the transaction: -- Prophecy will own approximately 90 percent of PCNC. -- PCNC will consolidate its share capital on a 10 old for one new basis. -- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp. -- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings. Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000. For the complete announcement, please visit: http://prophecyresource.com/news_2011_jan18.php Join GATA here: Phoenix Investment Conference and Silver Summit Renaissance Glendale Hotel and Spa Friday-Saturday, February 18-19, 2011 Glendale, Arizona http://cambridgehouse3.com/conference-details/phoenix-investment-confere... Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf

Weekly precious metals review at King World News Posted: 12 Feb 2011 11:13 AM PST 7:13p Saturday, February 12, 2011 Dear Friend of GATA and Gold (and Silver): The weekly precious metals market review at King World News has Bill Haynes of CMI Gold and Silver remarking that retail buying in silver is far outpacing that in gold as the silver story becomes better known, and JSMineSet.com's Dan Norcini discussing the value of the commitment of futures traders reports. The review is 18 minutes long and you can listen to it here: http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/2/12_KWN_W... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf Join GATA here: Phoenix Investment Conference and Silver Summit Renaissance Glendale Hotel and Spa Friday-Saturday, February 18-19, 2011 Glendale, Arizona http://cambridgehouse3.com/conference-details/phoenix-investment-confere... Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Prophecy Resource Spins Off Platinum/Palladium Venture: World-Class PGM Deposit in Yukon Company Press Release, January 18, 2011 VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy. PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding. Following the transaction: -- Prophecy will own approximately 90 percent of PCNC. -- PCNC will consolidate its share capital on a 10 old for one new basis. -- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp. -- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings. Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000. For the complete announcement, please visit: http://prophecyresource.com/news_2011_jan18.php

Ron Paul wins presidential poll at conservative conference Posted: 12 Feb 2011 10:56 AM PST From The Associated Press via Yahoo News Saturday, February 12, 2011 http://news.yahoo.com/s/ap/20110212/ap_on_el_ge/us_conservatives_straw_p... WASHINGTON -- Texas congressman Ron Paul won the straw poll at the Conservative Political Action Conference for the second straight year Saturday and former Massachusetts Gov. Mitt Romney finished second. Paul got 30 percent, while Romney got 23 percent of the votes of those attending the conference in Washington. Others were grouped far behind. Former New Mexico Gov. Gary Johnson had 6 percent along with New Jersey Gov. Chris Christie. Former House Speaker Newt Gingrich got 5 percent. Former Minnesota Gov. Tim Pawlenty, Minnesota Rep. Michele Bachmann, and Indiana Gov. Mitch Daniels were at 4 percent. Former Alaska Gov. Sarah Palin got 3 percent and former Arkansas Gov. Mike Huckabee got 2 percent. Palin and Huckabee are two high-profile Republicans who did not attend, while many potential candidates made speeches at the conference. Paul is a hero to libertarians and has a fiercely loyal following. The straw poll was co-sponsored by CPAC and The Washington Times. ADVERTISEMENT Prophecy Resource Spins Off Platinum/Palladium Venture: World-Class PGM Deposit in Yukon Company Press Release, January 18, 2011 VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy. PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding. Following the transaction: -- Prophecy will own approximately 90 percent of PCNC. -- PCNC will consolidate its share capital on a 10 old for one new basis. -- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp. -- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings. Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000. For the complete announcement, please visit: http://prophecyresource.com/news_2011_jan18.php Join GATA here: Phoenix Investment Conference and Silver Summit Renaissance Glendale Hotel and Spa Friday-Saturday, February 18-19, 2011 Glendale, Arizona http://cambridgehouse3.com/conference-details/phoenix-investment-confere... Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf

Law Suits, Timmy’s Bank and the “Po’s” Dough Posted: 12 Feb 2011 09:10 AM PST Agency Lawsuit A few interesting lawsuits going on in mortgage land. One of interest to me is directed at Fannie and Freddie. The accusation is that these entities made false statements in order to avoid paying required realty transfer taxes to states and municipalities. I’m not sure of the merits of these cases, but they are moving forward. A description of the case being brought in Massachusetts: TAUNTON, Mass. (CN) - Massachusetts and 14 of its counties claim Fannie Mae and Freddie Mac conspired to duck property transfer taxes by falsely claiming to be government agencies. The commonwealth and its counties claim the defendants are corporations - not governmental bodies - and owe money for tens of thousands of property transfers and conveyances. A similar suit has been filed in Nevada. A link to the court filings is worth a look. Consider the defendants that are listed. Basically the Whose Who of finance. (PDF Link) The claim is that the banks and Fannie/Freddie avoided state transfer taxes. The suggestion is that Fannie lied and claimed that it was a government agency and therefore exempt from the taxes. From the filing: Fannie Mae used those false records and/or statements to conceal and/or avoid its obligations to pay or transmit money owed to the State for payment of taxes upon the conveyance or transfer of title to real estate in the State by intentionally misrepresenting to the State that defendant Fannie Mae was a government agency exempt from conveyance or transfer taxes. The law suit(s) covers a period prior to the take over/conservatorship by Treasury. It will be interesting to see how Fannie defends itself. They have two choices. Either they fold their cards and pay monster amounts of old transfer fees to many States, or they defend their original position that they were in fact government agencies prior to August of 2008. This would seem to put Fannie/US Treasury in a lose-lose position. If these lawsuits go against them they are going to lose a bundle. Every state will follow the MA and NV lead. Billions are involved. The flip side is that if Fannie prevails and actually convinces the Judges that they were government agencies back in 2002-2008 it creates an interesting problem. If Fannie/Freddie were legally determined to have been "government agencies" for all those years then the government has to be held liable for the consequences of their actions. About $60 billion of common shareholder value was wiped out, another $25 of Preferred equity had a similar fate. If Fannie wins this lawsuit thousands of shareholders of the busted common and Pref are going to file lawsuits. I have always felt that the government would be held liable for a portion of F/F’s shareholders losses. There is no doubt in my mind that this lawsuit (if and when it comes) would have some merit. The facts are clear. Congress is partially responsible for the demise of F/F. The MA/NV suits are worth watching as they progress. The pref and common of these dogs are trading in the “Pinks” at next to no value at all. That is a fair price given the losses at F/F. Unless of course they were government agencies all along.... ****************************************** On FFB The Federal Financing Bank (“FFB”) is an arm of Treasury. So I call it Timmy’s Bank. There was some year-end stuff at this bank that I thought was interesting. On December 22 FFB made a bunch of new loans to private sector companies totaling $437mm. A nice Christmas present from our pal Tim. Here's the breakdown from the December FFB report. Note the month to month changes: At a time when the country is pushing its own legal debt limit and markets are waking up (and quaking) to the realities of massive funding requirements in front of us I find it interesting that Timmy’s Bank can dole out an extra $437mm on Christmas Eve. After all, the last I heard was that Ford never got a government handout……. **************************************** More on Po Dough I wrote on Jan 30 that the die had been cast for Mubark and his hidden billions. When Ali was deposed in Tunisia the Swiss government waited about 90 seconds before seizing his money. When Mubark finally announced that he was calling it quits it took the Swiss a somewhat more polite hour to freeze the money and make a public announcement. Something important about the press release from the Swiss and Murbarak’s cash stash. It came out at 6 PM Friday night in Bern. No one working for the Swiss government is around at that time. This press release was written days ago. It was all set to go, waiting for the last words from Hosni. These facts will not be lost on the other Potentates who have big holdings with Swiss Banks. The facts are very clear. If you are a Potentate and lose your “Po” you will lose your dough. I just ask the readers to put yourselves in the Potentate’s position. What would you do if you were faced with losing your Po and dough? You would do everything in your power to get some of it to a place that actually couldn’t be touched. That would exclude traditional financial assets that can be so easily traced and can’t be made to “disappear”. Gold and diamonds (and a few other things) can be made to disappear. The amounts involved with all of the Po’s are so very large that I am wondering if we don’t see some effect on prices of physical "stuff" (+) and paper assets (-).

[OTE96] On the Edge with Catherine Austin Fitts Posted: 12 Feb 2011 09:02 AM PST Stacy Summary: Max interviews Catherine Austin Fitts. They talk revolution, Ben Bernanke and the US dollar being a unit of war. Share this:

The Reason For Mubarak's Power Hand Off Delay: Plundering The Gold Posted: 12 Feb 2011 08:55 AM PST It's official: as Egypt was burning, Mubarak was stealing the gold. When we reported, presumably jokingly, two weeks ago that the Egyptian Central Bank may have been plundered, it turns out we were pretty much accurate once again. For all those wondering why Mubarak was refusing to hand over power for the past two weeks as hundreds of people were dying, we now have the answer - it was all just to make sure he transferred his assets, especially gold, to safe regimes (in the process paying tens of millions in commissions to that most noble of jobs - the banker class). The Telegraph reports: "A US official told The Sunday Telegraph: "Hosni Mubarak used the 18 days it took for protesters to topple him to shift his vast wealth into untraceable accounts overseas, Western intelligence sources have said...There's no doubt that there will have been some frantic financial activity behind the scenes. They can lose the homes and some of the bank accounts, but they will have wanted to get the gold bars and other investments to safe quarters. The Mubaraks are understood to have wanted to shift assets to Gulf states where they have considerable investments already – and, crucially, friendly relations. The United Arab Emirates and Saudi Arabia have frequently been mentioned as likely final destinations for Mr Mubarak and possibly his family."As usual, we remind readers that according to the World Gold Council, Egypt had 75.6 tonnes of gold at the end of 2010. Should this number not be reduced following Mubarak's plundering, we will know just how pervasive Tungsten is in the world central banking cartel. From Telegraph: The former Egyptian president is accused of amassing a fortune of more than &ound;3 billion - although some suggest it could be as much as &ound;40 billion - during his 30 years in power. It is claimed his wealth was tied up in foreign banks, investments, bullion and properties in London, New York, Paris and Beverly Hills. In the knowledge his downfall was imminent, Mr Mubarak is understood to have attempted to place his assets out of reach of potential investigators. On Friday night Swiss authorities announced they were freezing any assets Mubarak and his family may hold in the country's banks while pressure was growing for the UK to do the same. Mr Mubarak has strong connections to London and it is thought many millions of pounds are stashed in the UK. But a senior Western intelligence source claimed that Mubarak had begun moving his fortune in recent weeks. "We're aware of some urgent conversations within the Mubarak family about how to save these assets," said the source, "And we think their financial advisers have moved some of the money around. If he had real money in Zurich, it may be gone by now." Perhaps Goldman Sachs can take a proactive PR step and disclose to the population that the flow trade-frontrunning hedge fund had nothing to do with facilitating the transfer of Mubarak's billions in stolen wealth from point A to point B. And perhaps all other banks can follow suit. Either that, or we can all just wait for Mubarak's sworn deposition when he is put on trial for crimes against the Egyptian people some time in 1-2 months. Doing text searches for "Goldman" in those thousand page PDFs will be breeze...

Fed's Losses Since The Start Of QE2: $76,814,152,246.00 Posted: 12 Feb 2011 07:52 AM PST From John Lohman How do you hedge the interest rate risk of a $2.5 trillion dollar fixed income portfolio that has a modified duration of 4 and is levered 50 to 1? Easy if you’re Chairman VaR-be-damned Burnbanke - just tuck a few sentences inside a routine weekly release which make up new (and one might add illegal for anyone without the magic Gutenberg – best of luck to the auditors at Deloitte) accounting rules which effectively transfer the interest rate risk of the entire $2.5 trillion 50-to-1 levered hedge fund to…the U.S. taxpayer.  So, the Treasury is borrowing from the Fed, which, when it loses money on those loans, will then borrow from the Treasury, which will probably still be borrowing from the Fed. How big could the Fed’s losses be?  In three short months since the first QE2 session began on November 12th, 2010: So, as for Ben’s statement in front of the Budget Committee this week… “at the appropriate time, the Federal Reserve will normalize its balance sheet by selling these assets back into the market” …it’s just a shame that, amid all of the committee’s discussion of the debt ceiling, no one bothered to ask what impact these asset sales might have on, well, the debt ceiling.

Vietnam’s fourth devaluation in 15 months to curb the trade deficit and narrow the gap between official and black-market exchange rates runs the risk of spurring inflation from almost a two-year high. Posted: 12 Feb 2011 06:23 AM PST Vietnam Must Tackle Inflation After Dong's Devaluation, IMF Says MK: Gold, gold, gold, gold . . . Share this:

Obama on Auto-Defrosting Refrigerators Posted: 12 Feb 2011 05:24 AM PST I'm the guy who just last week managed to find a plumber who would increase the water pressure in my entire house, defying government controls and thereby causing all appliances to work better. It's not surprising that this was necessary. Government regulations have made a mess of our daily lives. Whether it is banning effective products or mandating inferior functionality in our appliances and fixtures, government's role here is indisputably to degrade our quality of life. So I was stunned to hear President Obama claim exactly the opposite in a speech to the US Chamber of Commerce. He ridiculed those who predicted disaster from government regulations as far back as 1848. "It didn't happen," he said. "None of these things came to pass." Then he went further to say that government regulations "enhanced" industry and "made our lives better." Regulations "often spark competition and innovation." What immediately came to mind is a picture of a race in which some overlord is clamping shackles on the runner's feet. No, that does not stop the race. The runners develop innovative ways to keep going. Nor does competition stop; it might even become more intense as runners develop new skills they would otherwise not need. All that's true, and yet we wouldn't look to this race as the one that is going to set new speed records. Everyone would be better off without shackles. But Obama's claim really goes further than saying that somehow industry overcame the costs of regulation. He suggested that we are actually better off than we would otherwise be due to regulations. And he gave the specific example of automatically defrosting freezers. He really did. Here is the statement: The government set modest targets a couple decades ago to start increasing efficiency over time. They were well thought through; they weren't radical. Companies competed to hit these markers. And they hit them every time, and then exceeded them. And as a result, a typical fridge now costs half as much and uses a quarter of the energy that it once did – and you don't have to defrost, chipping at that stuff and then putting the warm water inside the freezer and all that stuff. It saves families and businesses billions of dollars. Well, this is a precise claim, and it can be checked out. Thanks to many commentators on the Mises Blog and LvMI's Facebook page, who did some extensive sleuthing, here is what we found. In 1928, the US Patent Office issued a patent for "defrosting of the cooling element or unit of a refrigerating system." Still, invention is one thing and marketing and production is another. It took a very long time for these to be seen in real life. More and more patents were issued all throughout the 1920s and 1930s. Most likely, the innovations occurred before this time and would have sped more quickly into the consumer market without the patents, but regardless, an article in Chain Store Age in 1947 writes as follows: "Auto Defrost," a recently developed electronic circuit for automatically controlling water defrosting of refrigeration coils has been announced by the Bush Mfg. Co., Hartford [founded 1907], Conn. Advantages claimed for this device are its low price, its ease of installation on existing water defrost systems, and it works independently from the refrigeration system. Recall that Obama spoke of how the relevant regulations came about "a couple of decades ago." Well, his timing is off by some 63 years! What's more, these items were already reaching a retail market by 1948. A March 13, 1948, edition of the Billboard posted a story datelined from Oakland, California: Frosted Food O'Mat, Inc., of this city is readying a new ice cream vending machine, designed for grocery stores, super markets, and department stores. Dispenser will be offered both as a coin-operated and a manual device. The vendor will hold up to six flavors, and its makers claim that it has an automatic defroster. By 1951, these items were already being pushed in homes. An advertisement in Popular Science reads as follows: Von Schrader Mfg., Co: Amazing Attachment MAKES OLD REFRIGERATORS INTO MODERN Automatic Defrosters! Thirty Million Prospects. Sell without "selling pressure" on sensational Free Trial Plan. Just plug it in and leave it. Frees women from drudgery and mess of defrosting. Saves electricity. Keeps food longer, better. Gives longer life to refrigerator… Women buying by the thousands! By 1958, it seems like the great innovation was already old news. An advertisement in Life Magazine from 1958, this time from Westinghouse, references a "frost-free, Auto-Defrost Refrigerator" as if it was nearly a standard feature. The main pitch here is that the refrigerator has "cold injector" that chills food faster. It is also styled in the "Shape of Tomorrow." Now, this is interesting to me since I can remember problems with freezers in my own lifetime, so it is not automatically crazy to believe that something happened in the regulatory environment of the early 1970s that would have prompted the universalization of frost-free freezers. During this period there began a government push for energy efficiency, and makers were required by government to meet certain targets, just as the president says. But there is a serious problem. An automatic defroster increases, not decreases, the overall energy use of refrigerators and freezers. As this government report said in 1998: "Refrigerators with automatic defrost have higher occupant consumption (on a label-normalized basis) per unit of occupant activity than refrigerators with manual defrost." In other words, the more straightforward way to meet regulations would have been to take defrosting devices out, not put them in! The devices therefore exist not because of standards but in spite of them. All evidence suggest that the truth is precisely the opposite of what Obama claimed. Frost-free freezers came about in the normal market way. A company found a way to package it as a luxury good available in some markets. Another company saw the advance and emulated it, offering it to still other markets (though the process was likely slowed by the government regulation called the patent). Other companies saw the potential for solving a monstrous household problem and began making them more cheaply and more efficiently, as the target market gradually went from luxury to mainstream. Over time, the improved product was ubiquitous. This is pretty much the story of every innovation in the history of the world. Whether it is the spinning wheel or the smart phone, private companies innovate in order to outdo their competitors in serving the consumer. They all have reason to become ever more excellent in the service of others. They learn from each other and improve on what exists (in the absence of patents). It is hard to imagine the alternative scenario that inhabits Obama's mind. It goes something like this: Private enterprise comes up with a technology that it can fob off on customers and people like it fine but for some maddening problem. Private enterprise doesn't care. So long as the profits are there, the problems persist. No one in the private sector has reason to change anything. Stasis prevails. Government regulators, who are constantly scouring around consumer markets to find ways to innovate and improve products, notice the problem and issue some mandate. After some careful deliberation, they march into manufacturing plants with guns: Listen up: our citizens have a problem with their freezers. They are building up ice. We want you to find a way, some way, to fix this problem. You have until next winter to figure it out. If you do not, you are dead meat. Industry complies under the gun, scrambling to improve products only because government bureaucrats demand it. Under government edict, enterprise makes the thing, and problems go away. This process is repeated for thing after thing and we are gradually made better off, thanks to the central planners and wise public servants who know better than everyone else. Under this model, the entire developing world might be improved in a matter of months! This is of course sheer fantasy. So is the claim of Obama that we should be grateful to regulators for all the blessings that flow to us. How many iPhone apps have bureaucrats invented? Will the president's next claim be that bureaucrats gave us the Wii? Regards, Jeffrey Tucker for The Daily Reckoning Obama on Auto-Defrosting Refrigerators originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.

Modern Monetary Theory: The Sophistry of the US Dollar Posted: 12 Feb 2011 04:48 AM PST This posting includes an audio/video/photo media file: Download Now

What Are The Tightest Correlations In FX Land? Posted: 12 Feb 2011 04:33 AM PST John Noyce's latest technical packet is out and it's a doozy, guaranteed to provide hours of entertainment for FX chartists. First, a look at the EURUSD. As Noyce points out, "Our bias would be to look for opportunities to enter short positions looking for a larger retracement of the rally from the January lows. The levels which held and the weekly patterns which were subsequently posted (details on the following slide) argue that we’ve seen a significant peak for the time being." The key words in the EURUSD is exhaustion: Last Wednesday’s high at 1.3862 was a little beyond the ideal level at which we had hoped the market would peak; 1.3740-1.3780 - where the 61.8% retrace of the drop from the November ‘10 highs to the January ‘11 lows and the old uptrend from the June ‘10 lows were converged. However, the sharp turn around from just above that level which was accompanied by –ve daily oscillator divergence (something seen at other interim peaks last year) tends to indicate we have set a reasonably significant peak. In terms of strategy from here it essentially looks as though the market is likely to enter a period of range trading bound by 1.3852-1.3947 on the upside (converged old uptrend from the June lows, interim high from last week and the 76.4 retrace of the drop from the November ‘10 highs) and 1.3500 on the downside (interim high from 14th December ‘10). For those who mock Fib analysis, the next chart should present some reason to reevaluate their skepticism. It appears the 76.4 level is the key one that prevents further breakouts: Commentary: While we don’t yet have related level breaks to act as confirmation the price action seen over the last couple of weeks supports this bias, with two points in particular of note on the weekly chart: i. Last week’s high at 1.3862 was only marginally below the 76.4 retrace of the drop from the November ‘11 highs to the January lows at 1.3947. This is the third marginal undershoot of a 76.4 retrace since the market hit the all time highs back in July ’08 (the three instances – i.e. including last week’s – are highlighted by the green, red and pink arrows on the chart). It’s quite rare to see series of near-76.4 holds such as this, but where they are seen following a cycle high (in fact in this case the all time high from July ’08) it tends to be as part of a larger topping structure/process. ii.Last week’s candle pattern was a classic “hammer” or “shooting star”. This pattern being posted where the market rallies sharply in the early part of the week but then drops back sharply later in the week to close approximately where it opened. A very similar pattern was seen at the highs in November. Overall, it’s more evenly balanced, but our bias is still on the negative/bearish side. And while the EURUSD sees resistance in the 76.4, the DXY has found a temporary support base at the same retracement level In short, technicals indicate that Bernanke's quest to destroy the dollar may be challenged for at least a bit: A very clear weekly hammer was posted against important support as a result. As with EURUSD a similar USD +ve weekly candle pattern was posted against the November lows too. Overall, as with EURUSD, we still need further confirmation, but it looks like a significant base could well be in place at last week’s low And if we are indeed about to see a support to the DXY, logically the next move is a jump in short-term rates. While this would be truly wonderful, Bernanke would likely never allow it. Quote Noyce: "we do strongly believe we’ve now got signals which argue that rates in the U.S. are ultimately preparing to move higher, however, following the initial extension above the 55-wma as we’ve seen over recent sessions we may well enter a period of consolidation prior to the real move beginning after quite an extended period. Signals of this pattern beginning to develop are definitely something we’re watching for." Then moving on to other key pairs, we are likely seeing the right shoulder of an AUDUSD head and shoulders formation: A peak in the AUD is certainly not surprising, considering the massive amount of tightening going on in China. First of all looking at AUDUSD the interim high set last Friday at 1.0201 was very marginally above the interim high from 5th November at 1.0183. Both of these peaks were set just below the cycle high from 31st December at 1.0257. While it is very early in the process, it could now be argued that the market is forming an H&S top against the cycle highs. The neckline of the pattern standing at 0.9927, a little below the uptrend from the June ‘10 lows at 0.9950. Daily oscillators are also again close to the top of the range in place over the past 7-months. In conclusion, while it’s too early to categorically say that a significant peak is in place, we should definitely be aware of the risk that a topping structure could be forming against the cycle highs. AUD and NZD overvaluation is also quite apparent when looked at on a swap spread basis. Regarding the chart on the left, here is Goldman's take: This chart shows the AUD/USD 2-year swap spread in green overlaid with AUDUSD spot in blue back to May ‘10. From May to late-November ‘10 the two were very highly positively correlated. However since then they have begun to diverge, with swap spreads moving quite significantly in favour of the USD but AUDUSD remaining relatively close to the top of the range. This theoretically sets quite a favourable backdrop for a bearish AUDUSD theme. As for the right one... NZDUSD is similar if you look over a much longer time frame, the above chart showing the 2-year NZD/USD swap spread in green overlaid with NZDUSD in blue beginning in March ’09. Since late-December a large discrepancy has begun to develop as with AUDUSD, where the swap spread has moved in favour of the USD but NZDUSD spot has remained relatively close to the top of the range. Again this seems to set an interesting backdrop against which to hold a bearish NZDUSD theme. As for those who were drawn to this post based on the title, here is the one correlation to keep track of going forward. With correlation desks dead and largley disbanded across the US, and neither the AUDJPY nor the EURUSD to ES correlations working any longer, the correct pair to watch for (until it gets too heavy) is the Kospi to AUDUSD. On the Kospi-KRW chart: This chart shows the Kospi in green overlaid with the inverse of USDKRW in blue (i.e. KRWUSD). While the directional correlation has remained quite strong over recent months, the Kospi has rallied much further in %age terms. With this in mind, while a correction lower in the Kospi could well lead to some corrective KRW weakness, it’s not the classic tight correlation that existed historically. But the key chart is the AUDUSD-KS11. This chart shows the Kospi in green overlaid with AUDUSD spot in blue, the overall directional fit and turning points are pretty similar. It therefore fits that we’re beginning to see signs of a potential top developing on AUDUSD just as the same happens on the Kospi. Many more charts in the full presentation by John Noyce:

Our Worst Nightmares Unfolding Posted: 12 Feb 2011 04:15 AM PST The Ministry of Truth:  war is peace; freedom is slavery; ignorance is strength.  A complete failure of democracy and Rule of Law is happening in epic Orwellian/Randian proportion as I write this.  The truth of this statement hit me hard when I was reading through the latest economic report by John Williams, which can be procured at http://www.shadowstats.com/.  Caution:  only read his work if you are willing and desire to know what is really going on this country.  After reading through it, I commented to a long-time colleague: "how can you do anything except slit your wrists after reading this? lol." It had occurred to me that the portrait of our system as fabricated by the Government and Wall Street becomes more distorted from reality by the day.  Williams describes meticulously why the recent data on key economic data released by the Government is highly inaccurate. The Government is surely aware of the problems with their data series if an outsider like Williams can figure out the problems.  And yet the Government does nothing to correct the problem. Complete Government deception:  this is one of the crucial aspects of Orwell's dire warning as presented in "Animal Farm." "When the truth is found, to be lies..." Let's look at housing. I almost fell off my chair howling in laughter when I saw that Alan Greenspan gave a speech in which he proclaimed that the value of housing in this country needed to increase by 10% in order for a sustainable economic recovery to happen.  Who slipped him some LSD?  At the same time, a report was issued by Zillow.com, which maintains a comprehensive nationally-based real estate database, which stated that close to 30% of all homes are now underwater vs. the mortgages on them.  What would be even more interesting to see is a breakdown of how much these homes are underwater.  And even more interesting would be to see the true percentage of homes that are underwater using rigorous mark-to-market values for these homes.  For instance, there was a report in the Denver Post two days ago that home prices rose in Denver by over 7% from Jan 2010 to Jan 2011.  I would bet the ranch that the values used to calculate the Jan 2011 are egregiously incorrect.  I can't tell you how many "price reduced" signs have sprouted up on top of "for sale" signs all around the metro-Denver area, and in every neighborhood based on wealth demographics.  Maybe the Denver Post is using the "offered" price to caculate its metric rather than the ultimate "short sale" or "negotiated much lower" actual closing price.  I also know that the now-prolific "closing concessions" from the seller are never factored in to the closing price that is reported.  These include real dollar items like broker fee concessions, money spent on required physical improvements, seller financing deals, etc. The fact of the matter is that the housing situation in this country gets worse by the day, despite the fictitious fabrications of economic vitality ("green shoots") and low inflation ("geez the CPI shows 2% inflation this year, that's too low" - Bernanke) conjured up by our Government, Wall Street and the media - collectively known as our Ministry of Truth.  And to make matters worse, it appears as if this country's largest housing banker, China, is getting ready to pull the plug on its massive holdings of Fannie Mae and Freddie Mac paper.  Get ready for QE3-cubed when the dam holding that flood of worthless garbage breaks. Speaking of inflation, is there anyone reading this who truly believes that inflation is not a problem? That paraphrase above I tributed to Bernanke is actually a paraphrase of a statement he made during his testimony in front of the House Budget Committee last week. And if you read/listen/watch only to the mass media (even NPR for chrissakes), you would believe Bernanke's proclamation. But if you pay attention to what is happening globally across all commodities or see the reports coming from every single sector of the chain of food production and distribution business in this country, you will know that you will soon be experiencing double-digit price increases at the grocery store, in your utility bills and at the gas pump. Actually, my cost of gasoline has already increased close to 10% since November 2010. Cotton, wheat, rice and soybean prices are starting to go parabolic globally.  That's the truth.  The real, true, meticulously calculated jobless rate in this country is likely well over 20%.  That would include the whole pool of employed people working part-time who want to work full-time and the pool of people who have altogether given up looking for work, especially since they can sit for 2 1/2 years and collect jobless benefits or qualify outright for food stamps and other forms of Government largesse.  Let's look at hard numbers:  close to 15% of the population is now getting food stamps and 14% of the labor force (those working plus those not working but supposedly looking) are collecting long term jobless benefits. There is a way to shelter yourself from this brewing economic hurricane if you are fortunate to still have enough money to jump into the game in a meaningful way.  That would be to move as much of your dollar-based wealth into precious metals as possible.  But here's what I said to one of  the largest investors in our fund when he asked me yesterday about safe-havens:  Panama is good. Brazil, Columbia, Argentina, Peru. I don't really know for sure and I'm not sure anywhere really will be safe. Hopefully this takes longer to collapse than we think it might...I've always told people that I can tell them how to get to "the other side of what's coming," but I'm not sure you're going to want to see the other side... That is what I said verbatim.  At this point I'm going to continue accumulating precious metals, enjoy what I can while I can and continue to place faith, ultimately, in the ability of the human spirit and ingenuity to figure out a way to get rid of what we have now and start from scratch using the Constitution as platform.  But until that happens, it's going to get a lot more Orwellian/Randian and brutal in this country.  If you want to see how this unfolding, read/re-read "Animal Farm" and "Atlas Shrugged" and then use the lenses of vision provided in those prophesies to see what is really occuring in our system. I'm going to go skiing for the rest of the weekend with friends and family.  I hope everyone else has plans to enjoy the weekend!  Ciao.

Watch the Gold/Silver Ratio Posted: 12 Feb 2011 03:15 AM PST February 12, 2011 In precious metal bull markets, silver outperforms. Its price climbs at a faster rate than gold's price. The reverse happens in bear markets.

When Is The Market Going to Top Out? Posted: 12 Feb 2011 02:57 AM PST Once again our efforts to pick out a reversal day were foiled.  Each and every time we think "This Is It!!", the market sells off for one day, and immediately, the dip buying monkeys from the Wizard of Oz swoop in and start buying.  Meanwhile, macro traders with a bearish bias sit back, slackjawed in amazement, wonder how the S & P 500 can rally 100% in 2 years with no jobs, no recovery, rocketing commodity prices, and rising interest rates. Let's review the checklist: QQQQ and Russell 2000:  New highs   Retail stocks:  New highs Mohammed "Sugar High" El-Erian looks like he was outgunned by the Red Bull and Monster Energy-chugging mo-mo traders now inhabiting all the "Institutional" trading desks at TIAA-CREF and CalPERs.   Bank stocks:  Still going up, breaking out of a flat base Meridith Whitney might have to cave in and follow Nouriel Roubini by buying a $5.5 million condominum in the East Village.   Cyclical stocks:  New highs I wonder if Frank "I totally missed this rally" Barbera is still hanging out in his bunker in Palos Verdes?   Now look at the transports.  Tim "You Have Been Warned" Wood and Richard "Mother of All Topping Patterns" Russell must be looking at this chart in total shock:   Now let's look at some international indexes.  Did FXI and IFN put in a bottom this week? Peter Schiff and Puru Saxena could use some help here:   Must offer some condolences to the uber-bears on gold, like Dennis "I am not a gold bug" Gartman and poor Tom O'Brien over at TFNN.com.  If the GDX gaps away over the 21-day and takes off, these guys are going to be left in the dust: The clue on this one will be to see if gold can continue advancing in foreign currencies: http://stockcharts.com/freecharts/candleglance.html?$GOLD:FXE,$GOLD:FXY,$GOLD:FXC,$GOLD:FXS,$GOLD:FXA,$GOLD:FXM,$GOLD:FXB,$GOLD:FXF|D And note that the OIH, XLE, and XOP are barely off their highs, while crude is down 8 out fo the last 10 days, and natural gas has plunged to yet another new, world record low when adjusted for inflation.  But no weakness in the oil stocks yet. Oil not quite as strong as gold, but we should get a decision soon one way or another: http://stockcharts.com/freecharts/candleglance.html?$WTIC:FXE,$WTIC:FXY,$WTIC:FXC,$WTIC:FXS,$WTIC:FXA,$WTIC:FXM,$WTIC:FXB,$WTIC:FXF|D And speaking of foreign currency benchmarking, the S & P 500 is breaking out yet again overseas: http://stockcharts.com/freecharts/candleglance.html?$spx:FXE,$spx:FXY,$spx:FXC,$spx:FXS,$spx:FXA,$spx:FXM,$spx:FXB,$spx:FXF|D The only weakness I can see right now is that the Summation Index is crawling up, but it is far away from making new highs.  The only way this can get corrected is if some of the lagging sectors (big cap pharma, shipping, solars) can start playing "catch up". http://stockcharts.com/charts/indices/McSumNYSE.html   So all we can do now is to watch and wait.  There are millions of eyeballs watching the exact same thing I'm watching.  Thousands of hedge funds anxious to "make their year" by nailing the next top and riding the next bear cycle. Meanwhile, Gary Kaltbaum continues to nail this market.  He's been spooked a few times, but for the most part, he's been right on the money on riding the bull trend. http://archives.warpradio.com/btr/InvestorsEdge/021118.mp3 Unfortunately, the "pro traders" over at TFNN.com have gotten it dreadfully wrong this year, fighting the tape the entire way up and losing money had over fist. David White shorted WYNN, HBAN, and STI in the morning and got blasted.... http://www.tigeruniversity.com/mp3/PTH021111.mp3 Larry Pesavento had at least 5 key astro dates turn against him this year: http://www.tigeruniversity.com/mp3/TWS020911.mp3 And poor Tom O'Brien started tweeting a couple of days ago, and the last one I saw was how the Russell 2000 had a "major failure" on Thursday.  That call was good for less than 12 hours... http://www.tigeruniversity.com/mp3/TOS021111.mp3 Phil Grande nailed almost every market top in 2007 - 2008, and heroically rode the market down on the bear side.  This year, a dramatic reversal of fortune: http://www.philsgang.com/media/RadioShow/Fri/RadioShow20110211.mp3 Now that Egypt is "free", stocks are trading at new highs, restaurant stocks are going parabolic, 1997-1999 hookers like ALU and JDSU are re-visting their glory, everyone has now turned their attention to Daytona Beach. Who is going to Bike Week this year?

If Japan Lost Two Decades From Its Bubble Popping, How Many Decades Should The US Expect To Lose? Posted: 12 Feb 2011 02:55 AM PST The Harlem Community Development Corporation and AAREPNY hosted a breakfast symposium on real estate last Thursday in which I was the keynote speaker. The audience consisted of diverse cross section of real estate professionals -bankers, developers, investors, lawyers… the usual fare. I fear I may have rained on the optimism parade with my presentation, but I also feel a few salient points were communicated. I have included portions of the presentation here for the blog readers to peruse. One of the main themes of the presentation was that of “lost decades”. How likely is it that we can have 20 more years of housing price declines? Let’s see if any of this sounds familiar, as excerpted from Wikipedia: The Lost Decade (????10? Ushinawareta J?nen?) is the time after the Japanese asset price bubble’s collapse within the Japanese economy, which occurred gradually rather than catastrophically. The term originally referred to the years1991 to 2000,[1] but recently the decade from 2001 to 2010 is also sometimes included, so that the whole period of the 1990s and 2000s is referred to as the Lost Decades or the Lost Years (????20?, Ushinawareta Nij?nen). The strong economic growth of the 1980s ended abruptly at the start of the 1990s. In the late 1980s, abnormalities within the Japanese economic system had fueled a massive wave of speculation by Japanese companies, banks and securities companies. A combination of exceptionally high land values and exceptionally low interest rates briefly led to a position in which credit was both easily available and extremely cheap. This led to massive borrowing, the proceeds of which were invested mostly in domestic and foreign stocks and securities. Recognizing that this bubble was unsustainable, the Finance Ministry sharply raised interest rates in late 1989. This abruptly terminated the bubble, leading to a massive crash in the stock market. It also led to a debt crisis; a large proportion of the debts that had been run up turned bad, which in turn led to a crisis in the banking sector, with many banks being bailed out by the government. Michael Schuman of Time Magazine noted that banks kept injecting new funds into unprofitable “zombie firms“ to keep them afloat, arguing that they were too big to fail. However, most of these companies were too debt-ridden to do much more than survive on further bailouts, which led to an economist describing Japan as a “loser’s paradise.” Schuman states that Japan’s economy did not begin to recover until this practice had ended... This led to the phenomenon known as the “lost decade”, when economic expansion came to a total halt in Japan during the 1990s Paul Krugman was even mentioned in this Wikipedia article, as follows… Paul Krugman described Japan’s lost decade as a liquidity trap, in which consumers and firms saved too much overall, causing the economy to slow. He explained how truly massive the asset bubble was in Japan by 1990, with a tripling of land and stock market prices during the prosperous 1980s I suggest that Mr. Krugman compares his hometown to that of what he considers to be “truly massive”, he is sure to be shocked! And as for that myth that a booming GDP will lift asset prices, let’s see how well that worked out for Japan over the last 21 years… There’s a lot more to go over, but I’ll let you watch the video to get the gist of it. I suggest that you expand to full screen and the highest resolution that your bandwidth permits in order to see the charts and graphs clearly…   Of course, I have laid out the shadow inventory system for paying subscribers, so they can see what the current (as of December) backlog and supply is, as well as estimates on how long it will take to clear out the excess inventory. Click here to access the online spreadsheet. To subscribe, click here. Related links: Why Is NYC The Only Major Condo Market Increasing In Price? » The Latest Case Shiller Index – Housing Continues Freefall In Aggressive Search For Equilibrium I Warned That Banks Will Soon Be Forced To Walk Away From Homes… Guess What! Monday, January 17th, 2011 Less Than 24 Hours After My Warning Of Extensive Legal Risk In The Banking Industry, The Massachusetts Supreme Court Drops THE BOMB! Monday, January 10th, 2011 As Clearly Forecasted On BoomBustBlog, Housing Prices Commence Their Downward Price Movement In Search Of Equilibrium Scraping Depression Levels Tuesday, December 28th, 2010 The 3rd Quarter in Review, and More Importantly How the Shadow Inventory System in the US is Disguising the Equivalent of a Dozen Ambac Bankruptcies! Wednesday, November 10th, 2010 The Truth Goes Viral, Pt 1: Housing Prices, Economic Sales and the State of Depression Why the Case Shiller Index, Although Showing Another Downturn Coming, is Overly Optimistic and Quite Misleading! Those Who Blindly Follow Housing Prices Without Taking Other Metrics Into Consideration Are Missing the Housing Depression of the New Millennium Pay Attention to the National Association of Realtors and Their Chief Marketing Agent At Your Own Risk! The Robo-Signing Mess Is Just the Tip of the Iceberg, Mortgage Putbacks Will Be the Harbinger of the Collapse of Big Banks that Will Dwarf 2008! Yes, Housing Prices Have Much Farther to Fall. We’re Talking Years… I Told You Housing Was Going to Take a Downturn for the Worse. I’ll Tell You Something Else, We Are in a Housing Depression! It’ll Get Worse Until Market Forces Rule Over Government Bubble Blowing! See www.seminar.ingref.com.

Gold is as Good as Cash and Wields More Power Posted: 12 Feb 2011 02:45 AM PST Gold is now functioning as collateral to compensate for potential losses in the portfolios of financial institutions. One month ago, I proposed there may be an underlying economic basis for gold to reach $4,000 per ounce in the next decade. This scenario is looking more probable given these recent developments.

U.S. Dollar Gains on Global Political Uncertainty Posted: 12 Feb 2011 02:32 AM PST It is a amazing that despite some improving signs on the domestic economy, it is developments in Egypt that have helped prop up the dollar in early Friday (February 11) currency trade. Egyptian President Hosni Mubarak has once again refused demands that he step down in lieu of a political uprising in the country. The uncertainty surrounding developments in Egypt have weighed on global equities, but the greenback has made a slight comeback.

Your Pension-Pot Warranty Posted: 11 Feb 2011 10:59 PM PST At least, that's what this Dutch pension fund calls gold... read more

Gold, the Mother of All Bull Markets Posted: 11 Feb 2011 08:15 PM PST Market commentator and investor Peter Grandich of Grandich.com and Grandich Publications tells The Gold Report that certain plays on surging demand and looming commodity shortages are no-brainers for investors, and he shares a few ideas on how to profit from these conditions. Peter also believes that U.S. monetary policy has been a disaster and that it will "end badly" for the U.S. stock market and economy. He's bullish on China and on base—and especially—precious metals, energy, food and water. Gold and silver are still his big plays.

Why Gold Is The Currency Of The Free Lecture Posted: 11 Feb 2011 11:58 AM PST Lecture based on the essay by Dominic Frisby, 'Why Gold Is The Currency Of The Free'.

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