Gold World News Flash |
- GoldSeek.com Radio Gold Nugget: Charles Goyette & Chris Waltzek
- Cordillera del Condor
- Why You Should Be Using Gold to Buy Your Groceries
- Backwardation: What Everyone is Missing
- The Fed's New Slogan: Where M-Raising Happens
- In The News Today
- Gold Seeker Closing Report: Gold and Silver End Mixed and Near Unchanged
- Global Strategy Smack Down Between OptionMonster’s Pete Najarian and the Mad Hedge Fund Trader
- A Very Critical Bank Of America On The Fed's Third Mandate, And Why BofA Is Not Bullish But "Bubblish"
- Martin Armstrong vs. His Model vs. Fractal Gold
- These Indicators Suggest Stock Markets Have More Upside - and Gold Some Uncertainty
- What Is Wrong With The U.S. Economy? Here Are 10 Economic Charts That Will Blow Your Mind
- How Much More Demand Can Silver Handle?
- Bob Casaceli: Cordillera del Condor
- “Inflation is Very, Very Low”…For Now
- Gold Daily and Silver Weekly Charts, and a Tribute to Blythe Masters
- Guest Post: How Much More Demand Can Silver Handle?
- Gold, Silver, Copper, Nickel and the Slow Death of Money
- $1,380 Holds Stiff Resistance For The Gold Price, Once Gold Breaks Through It Will Sprint For $1,420
- As WTI Stockpiles And Spreads Hit Record, ConocoPhillips Obstinately Refuses To Reverse Seaway Pipeline
- Bernanke Distances Himself from Rising Food Prices
- Gold ends flat but Mideast tensions underpin
- Guest Post: The $500 Billion Dollar Bailout That You Never Heard About
- The Collapse of America's Labor Force
- Silver is Approaching Stage Two of its Bull Market
- Two Investment Conclusions Regarding the Food Crisis
- Investors Accumulate Gold but Be Cautious on Silver
- Market Commentary From Monty Guild
- An Aggravating Factor
- Bank Run In Ivory Coast
- Gold or Gold Miners?
- Liberty Mutual CEO says U.S. policymakers ‘debase the dollar'
- OMG!!!! Man throws his Silver Maples into the Ocean . . . WTF!!!
- Egypt Welcomes the New Boss, Same as the Old Boss
- Accumulate Gold but Be Cautious on Silver
- Soros Raises Gold Holding 0.5% in Fourth Quarter
- Couple Of Quickies Today (More On Housing (sorry))...
- Deferring Recession: A Short History of the “Age of Bubbles”
- Gold Slips Ahead of 61.8% Retracement
- LGMR: Gold "Dragged Higher" by Surging Silver, UK Inflation-Forecast Jumps
- Deferring Recession: A Short History of the “Age of Bubbles”
- Matt Taibbi's Latest: " Why Isn't Wall Street In Jail?"
- Gold turns higher on Iran war ships report
- Gold, oil advance after reports on Iran's warships
- WaveStrength PowerSignal Calls Pop in Gold Prices
- Chinese Demand: Which Is a Better Short, Gold or the Miners?
- Obama Administration calls for 5% royalty on gross proceeds of mines
- Norseman Gold raises new cash and sets sights on production targets
- Why Silver Sales Demand Excitement
- ATB 5-Ounce Silver Bullion Coin Prices Decline
| GoldSeek.com Radio Gold Nugget: Charles Goyette & Chris Waltzek Posted: 16 Feb 2011 07:02 PM PST
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| Posted: 16 Feb 2011 06:03 PM PST The Cordillera del Condor region, located on the contentious Ecuador-Peru border, has proven to be rife with precious metals and political risk. In this exclusive interview with The Gold Report, Geologist Bob Casaceli delves deep beneath the earth's crust to explain why this dynamic region's formation points to further discoveries in the area.
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| Why You Should Be Using Gold to Buy Your Groceries Posted: 16 Feb 2011 06:02 PM PST Immediately, I can feel the beginnings of another Wild Mogambo Outrage (WMO) stirring within me, building into a raging anger at the Federal Reserve for creating so much money, and thus so much inflation, that the currency of my country has been so ruined that it contains a lousy 2 cents – 2 cents! – of buying-power left of that original 1913 dollar, which had (as I surmise) 100 cents of buying power.
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| Backwardation: What Everyone is Missing Posted: 16 Feb 2011 05:59 PM PST Prudent investors make wise markets: this should be the quote above every trading desk. The enemy of the hedged investor is not wild markets, nor bearish markets; it is their own emotions. With silver prices reeling to highs we haven't seen since the 1980s, every piece of information has earned some urgency. Immediately, the world attempts to decipher new developments and information as if there is some sort of end of the world scenario looming below. While we subscribe to the view that the silver market is being manipulated, backwardation cannot be immediately interpreted as a symptom of such manipulation. For that to be the case, we would have to reason that the majority of investors know about the excellent investment that is silver, as well as the market dynamics that make it so greatly undervalued. That simply isn't the case. Instead, backwardation is a very clear signal, and it is not inherently a tip of the hat to a shortage in silver. In fact, econ...
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| The Fed's New Slogan: Where M-Raising Happens Posted: 16 Feb 2011 05:49 PM PST
The market rose again today (which is actually the new permanent opening line for Money McBags' daily column so if you want to save yourselves five minutes, just add references to unemployment, inflation, Fermat's last theorem, and Malene Espensen, then rinse, spit, and consider the column finished). That said, the market didn't just rise because it is Wednesday, it rose because the FOMC said things are picking up just enough to keep QE2 going (because apparently making sure the dip is bought is in the Fed's charter along with keeping inflation in check and acting like a bunch of asshats), Iran is moving warships in to the Suez Canal (though they claim it is just a sight seeing mission as the crew is short one of those Jerusalem snow domes to complete their collection), and people at the playboy mansion continue to fall ill (and note to Hef, that is what happens then you invite Corey Feldman over one time too many) with the illness being blamed on a mystery bug (perhaps it was a Katy(Marie)did or a headwig).
Oh wait, those are all reasons for the market to go down, because the need for fiscal stimulus and the unrest in the Middle East are about as positive for the ponzeconomy™ as googling "Santorum" is for Rick Santorum's election campaign (and the awesomeness of this being the top result for that search might be reason enough to give Al Gore whatever is greater than a Nobel Prize for creating the internet), but as always, just buy the fucking rip.
Anyway, the big news today was that the FOMC's minutes were out from their last meeting and we learned that the Fed will be keeping QE2 in place because the economy remains somewhat shitty. That said, the headlines for the minutes had more spin than a drunken lepton as the media ran with things like "Recovery on Firmer Footing" (perhaps footing even firm enough for Rex Ryan) and focused on the Fed raising their GDP growth expectations to 3.4% to 3.9% growth this year, from their previous guess of 3.0% to 3.6% while ignoring the fact that <4% growth doesn't do a shit ton for getting the ponzeconomy™ back to healthy levels and the jobless rate will remain elevated through at least 2012 (unless the Fed can continue to push that pesky labor force participation rate down).
In the minutes we also learned that there was some debate about slowing down QE2 until dissenters were reminded that doing nothing is tantamount to admitting their jobs are meaningless, the Fed is disappointed in the pace of job creation (no fucking shit, you know who else is disappointed? The ~18MM people not working and Pam Anderson's agent), the cockposterous rise in commodity prices will not cause inflation (mainly because the B(L)S will just keep rejiggering the weights of core CPI until the only thing it measures is the number of people who spell "Kocherlakota" correctly on their first try as that will never be an elevated number), and Janet Yellen is really pissed that Charles Evans keeps forgetting to leave the toilet seat down in the Fed's private bathroom.
But Money McBags' favorite part of the minutes was when the fed shrugged off rising commodity prices by saying "the factors affecting the ability of businesses to pass through higher prices to consumers were viewed as complex and hard to monitor in real time." First of all, cry Money McBags a fucking river that your job is "complex" and "hard," seriously you want a real hard and complex job try being the asshole that has to write dick jokes about this shit every fucking day instead of the fuckrods who just set the policies, big difference in the degree of difficulty. But guess what, you are getting paid to do that hard and complex job so would a bonus of "shut the fuck up" help." And secondly, um, you know this is already monitored in real time so what is so hard and complex about clicking on a link? And these people are in charge. Ugh.
In macro news, core PPI rose .5% which was highest rate in more than two years as apparently R. Kelly went on a drinking binge and aimed for the head (trust Money McBags there is a really bad pun in there). The number was above the .2% guessed at by economists and foreshadows the build up of inflationary pressures in the economy about as subtly as Michael Chabon foreshadows anything in his writing (and there is a reason Money McBags doesn't read modern novels) or as subtly as Charlie Sheen foreshadows his intentions on a new hooker's first trick.
In other macro news, housing starts were up 14,6% which makes as much sense as Keith Olbermann joining something called Current TV (because Money McBags is pretty sure the award winning When Genius Prevailed gets more traffic than whatever the fuck Current TV is) or Melissa Archer not having a better career, because shouldn't the weather have affected the numbers since it supposedly wreaked havoc on anything else having to do with going outside such as shopping, working, and dickflashing. That said, permits for future home construction dropped sharply after they were pulled forward last month to get ahead of tax code changes in three states (with the largest of those states being the state of despair).
As for the market, DELL beat guesses and jumped ~11% thanks to a surge in business hardware and something about people no longer having enough money to buy Macs. DELL earned $.53 per share which was up from $.28 per share and well ahead of guesses of $.37 per share and the company guided to 5% to 9% growth, though stripping out warranty replacements, growth will be closer to flat.
In other earnings news, Deere's profit doubled thanks to sales of large high-margin machines and price increases (inflation inshmation) and the company raised their full year guidance. Deere said rising prices of food commodities like corn, wheat, soybeans, and Trustex flavored condoms (and Money McBags hears the Strawberry is mouth tingling good) have boosted farmers' investments in new equipment and are helping Deere's topline. Also, Officemax was down 10% after returning to profitability but announcing that increased promotions, the fuck awful economy, and the fact that their stores look like homeless shelters, will continue to pressure results.
In retail stocks, Family Dollar was up ~21% after it was announced to be going private in a $7.6B transaction (which is just $1B below the price of going for Brooklyn Decker's privates) and Abercrombie and Fitch was up after a strong Q thanks to sales in Europe where the douchebag look is just coming in to style.
And finally RIMM was up ~5% after C upgraded it to a buy from a sell and boosted its price target to $80 a share from $56. When asked for the reason behind the upgrade, the analyst cited RIMM potentially benefitting from the Nokia-Microsoft smartphone partnership and cited the fact that he hadn't printed research in a while and needed to get something out so funds would trade with C and thus boost C's commission revenue.
Money McBags has a bit more at the award winning When Genius Prevailed where he talks small cap stock and Izabel Goulart. So if you have another few minutes to spare from your tough work day (and yes that was sarcasm), feel free to click over as all it costs is your dignity. And if you didn't get today's headline, Money McBags can assure you it is a clever and funny pun on the NBA's "Where Amazing Happens" marketing campaign.
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| Posted: 16 Feb 2011 05:14 PM PST
Jim Sinclair's Commentary The gold equation revolves around debt. Federal deficit on track for a record this fiscal year President Obama's budget, released Monday, was conceived as a blueprint for future spending, but it also paints the bleakest picture yet of the current fiscal year, which is on track for a record federal deficit and will see the government's overall debt surpass the size of the total U.S. economy. Mr. Obama's budget projects that 2011 will see the biggest one-year debt jump in history, or nearly $2 trillion, to reach $15.476 trillion by Sept. 30, the end of the fiscal year. That would be 102.6 percent of GDP — the first time since World War II that dubious figure has been reached. And the budget projects the government will run a deficit of $1.645 trillion this year, topping 2009's previous record by more than $230 billion. By contrast, 2007's deficit was just $160 billion altogether. Still, amid the other staggering numbers in the budget Mr. Obama sent to Congress on Monday, the debt stands out because Congress will need to vote to raise the debt limit later this year, and because the numbers are so large. In one often-cited study, economists Carmen Reinhart and Ken Rogoffhave argued that when a nation's gross debt passes 90 percent it hinders overall economic growth. The government measures debt several ways. Debt held by the public includes the money borrowed from Social Security's trust fund.
Jim Sinclair's Commentary Did you get you satellite phone yet with international web connection? Kill Switch' Internet bill alarms privacy experts SAN FRANCISCO — A raging debate over new legislation, and its impact on the Internet, has tongues wagging and fingers pointing from Silicon Valley to Washington, D.C. Just as the Egyptian government recently forced the Internet to go dark, U.S. officials could flip the switch if the Protecting Cyberspace as a National Asset legislation becomes law, say its critics. Proponents of the bill, which is expected to be reintroduced in the current session of Congress, dismiss the detractors as ill-informed — even naive. The ominously nicknamed Kill Switch bill is sure to be a flashpoint of discussion at the RSA Conference, the nation's largest gathering of computer-security experts that takes place here this week. The bill — crafted by Sens. Joseph Lieberman, I-Conn.;Susan Collins, R-Maine; and Tom Carper, D-Del. — aims to defend the economic infrastructure from a cyberterrorist attack. But it has free-speech advocates and privacy experts howling over the prospect of a government agency quelling the communication of hundreds of millions of people. "This is all about control, an attempt to control every aspect of our existence," says Christopher Feudo, a cybersecurity expert who is chairman of SecurityFusion Solutions. "I consider it an attack on our personal right of free speech. Look what recently occurred in Egypt."
Jim Sinclair's Commentary This is why QE must go to infinity. When your major buyers turn sellers, the Federal Reserve Bank becomes the only buyer for your debt. China and Russia sell US Treasuries China has sold billions of dollars in US Treasury bills for the second month in a row, even as strong buying from other foreign investors countered Beijing's move to reduce its holdings. A Treasury report on Tuesday showed net foreign demand for long-term US securities, including bonds and equities, was $41.8bn in December, versus $64.5bn in November. Monthly net Treasury International Capital flows rose to $48.2bn in December, up from $35.6bn in November and $17.2bn in October. The rise was driven by private investors, while official accounts, or foreign central banks, sold US assets for the second successive month. Foreign private investor demand for US long-dated government debt remained solid in December and US Treasuries with maturities of more than a year recorded inflows of $55bn. But, short-term bills suffered a $37bn fall, after November's $32bn drop. Alan Ruskin, strategist at Deutsche Bank, said the mixed flows reflected foreign interest in longer-term Treasuries as yields rose. China, for example, bought $5bn of bonds and notes in December, but sold $9bn of Treasury bills. "The negative take for the bond market is that China reduced its overall Treasury holdings, but they have increased their exposure to US interest rates by buying longer-term Treasuries," said David Ader, strategist at CRT Capital. "It is an important distinction." Russia also pared its Treasury holdings for the second month, down to $106bn from $122bn. But the UK continued to drive demand for Treasuries with a rise to $541bn, up from $512bn in November and $208bn in January last year. That increase, according to analysts, reflected the UK's status as a financial centre where Treasuries are bought by investors who are not domiciled in the country.
Jim Sinclair's Commentary The Armstrong Reaction is starting to be significantly challenged. China gold demand growing at "explosive" pace: ICBC SHANGHAI (Reuters) – Demand in China for physical gold and gold-related investments is growing at an "explosive" pace and its appetite for the yellow metal is poised to remain robust amid inflation concerns, said an Industrial and Commercial Bank of China (ICBC) executive. ICBC (1398.HK)(601398.SS), the world's largest bank by market value, sold about 7 tonnes of physical gold in January this year, nearly half the 15 tonnes of bullion sold in the whole of 2010, said Zhou Ming, deputy head of the bank's precious metals department on Wednesday. "We are seeing explosive demand for gold. As Chinese get wealthy, they look to diversify their investments and gold stands out as a good hedge against inflation," Zhou told Reuters. "There is also frantic demand for non-physical gold investments. We issued 1 billion yuan worth of gold-price-linked term deposits in 2010, but we managed to sell the same amount over just a few days in January this year," Zhou said, adding that such deposits would easily exceed 5 billion yuan ($759 million) this year.
Jim Sinclair's Commentary And so it starts in the US. Of course the mining state legislators are going to go wild. The world's premier mining and mining investment website Obama Administration calls for 5% royalty on gross proceeds of mines – POLITICAL ECONOMY President Obama's Fiscal Year 2012 proposed budget calls for charging a 5% royalty on the gross proceeds of hardrock minerals mined on public lands including silver, gold and copper. The President is proposing a number of new royalties and fees on both hardrock and coal mining, along with reductions on oil and gas subsidies, which he says will save the country $3 billion over the next 10 years. The Office of Management and Budget (OMB) said the President's budget "provides a better return to taxpayers from mineral development." "A number of recent studies by the Government Accountability Office and DOI's Inspector General have found that taxpayers could earn a better return through more rigorous oversight and policy changes, such as charging appropriate fees and reforming how royalties are set," the OMB said.
Jim Sinclair's Commentary I have had a reasonable number of polite questioning of why I do not believe that there is a spontaneous breakout of democracy in the Middle East. The following are but a few of the answers. This course of events in the Middle East has nothing to do with democracy. I firmly believe that Jeffersonian Democracy is the best system for Western culture. What we call democracy today is NOT democracy in the Jeffersonian sense. No universal political system will ever work. Do you not see the weakness of democracy as it is practiced in today's world? Democracy fails when the elected representatives pander to the crowd to keep their jobs. By the Way, Moses did not have democracy as one of the commandments. The 12 Apostles did not live in a democracy. If you believe in a God, he does not believe in democracy. Certain cultures do much better under other methods of government. Oman is a paradise under the beneficent rule of the Sultan. Saudi, Jordanian Columnists Attack U.S. Policy in Middle East Al-Hayat: Thanks to America's Foreign Policy, Iran Can Achieve Hegemony Even Without Nuclear Weapons "What derailed Mubarak's foreign policy and caused it to fail was this blind following [of the U.S.]. One of the ludicrous aspects of America's foreign policy is that while urging the Arab countries to rally against Iran, it has helped to overthrow [Arab] regimes and to weaken countries that played a balancing role in the region – starting with Iraq, which has been handed over to Iran, and continuing with Pakistan and Afghanistan, and now also Egypt, which is suffering the birth-pangs of a new regime of unknown character… "America is present at the birth and the death [of regimes], and the funny thing (or perhaps the sad thing) is that in all cases it serves [the interests] of Iran, which needs nothing more than America's foreign policy in order to achieve hegemony [even] without possessing nuclear weapons… Those who bought into America's foreign policy in the region must bear the consequences. Those who put their hand in America's should not be surprised to find themselves without a hand, and perhaps also without a head, which has been replaced with another." Saudi Al-Watan: US Policy in the Middle East Has Failed "…America's abandonment of the Egyptian leadership was as complete as it was swift… Jordanian Broadcasting Authority Director: "The American president's hasty statements did not win the favor of Egypt or its people, [but, on the contrary,] enraged them and led them to reject [his words] and all outside intervention in their domestic affairs… In light of all this, there is nothing left to say to the Americans but what 'Abd Al-Rahman Al-Dakhil [founder of the Umayyad Emirate of Córdoba in Andalusia in eighth century CE], said when asked why the Umayyad [empire] had collapsed: 'You abandoned your friends and lost them; you tried to curry favor with your enemies but failed to win them over.'
Jim Sinclair's Commentary This is how a democracy starts? What are you smoking? 'Many Egypt protesters still missing' Human rights groups says hundreds of Egyptian people have gone missing in the recent popular revolution that toppled former president Hosni Mubarak. A leading human rights group said on Tuesday that some people were being held by the armed forces. "There are hundreds of detained, but information on their numbers is still not complete … The army was holding detainees," AFP quoted Gamal Eid, a lawyer who heads the Arabic Network for Human Rights Information, as saying. The group says it was still receiving "information relating to the disappearances of many youths and citizens." Eid urged the military to publish a list of detainees' names and to guarantee their rights. Reports say at least 500 people were arrested in the recent popular protests that toppled the ruling regime. But an estimated 17,000 political prisoners were already locked up in Egyptian prisons, which are notorious for the use of torture.
Jim Sinclair's Commentary Who knows, but the timing being just before a major having financial statements signed off on looks bad. A day later, mystery still surrounds Howard Atkins' exit at Wells Fargo As expected, investors in Wells Fargo & Co. were not happy about the unexpected — that is, the largely unexplained departure of Howard Atkins as chief financial officer. Wells Fargo shares fell 97 cents, or nearly 3%, to $33.13 on Wednesday, a day after the bank abruptly disclosed that Atkins, generally well-regarded on Wall Street, was retiring. The big San Francisco bank waited until after stock markets closed Tuesday to announce that Atkins had taken an unpaid leave. Wells Fargo explained only that it was for personal reasons, not because of problems with the bank's finances or financial reporting. Wells said Atkins, 59, would quit altogether in August, his 10th anniversary with the bank, when his retirement benefits vest fully. It said the company's chief administrative officer, Timothy Sloan, had been named CFO effective immediately. The mysterious event generated waves of speculation and warnings from analysts that the stock would likely be under pressure at least until Sloan signs off on the bank's official annual financial report in a few weeks.
Jim Sinclair's Commentary For the simple reason that to get a mortgage today, or a refinance, you need St. Jude as your broker. For those that might not know, St Jude is the patron Saint of impossible causes. Refinance Demand Lowest Since Summer of 2009 Mortgage application volume slipped 9.5 percent on a seasonally adjusted basis during the week ending February 11, according to the latest weekly survey from the Mortgage Bankers Association. On an unadjusted basis, the home loan application index was off 7.9 percent compared to one week earlier. The refinance index plummeted 11.4 percent to its lowest level since the week ending July 3, 2009, while the seasonally adjusted purchase money mortgage index decreased 5.9 percent. The unadjusted purchase index fell 0.9 percent from the previous week and was 18.2 percent lower than the same week last year. That pushed the refinance share of mortgage activity to 64 percent of total applications, down from 66.6 percent a week earlier. It was the fourth successive decline in refinance share, despite a slight easing in mortgage rates. The popular 30-year fixed mortgage dipped to 5.12 percent from 5.13 percent, and the 15-year fixed increased to 4.34 percent from 4.29 percent. Mortgage points (including loan origination fee) increased to 0.85 percent from 0.84 percent on the 30-year, and fell to 0.85 percent from 1.02 percent on the 15-year. The mortgage rates above are good for mortgages at 80 percent loan-to-value – but pricing adjustments can lower or raise your actual interest rate. Keep in mind the MBA's weekly survey covers more than half of all retail, residential loan applications, but does not factor out duplicate or rejected apps, which have surely risen since the mortgage crisis got underway a few years back.
Jim Sinclair's Commentary Rolling Stone does it again. Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them Why Isn't Wall Street in Jail? Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer. "Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that." I put down my notebook. "Just that?" "That's right," he said, signaling to the waitress for the check. "Everything's fucked up, and nobody goes to jail. You can end the piece right there." Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.
Jim Sinclair's Commentary John Williams' ShadowStats.com is an essential service. - PPI Was Gain Stronger than Expected with Mounting "Core" Problems, Yet Increase Was Muted by Revised Seasonal Factors
Jim Sinclair's Commentary This is not democracy breaking out all over. Violent protests break out in Libya Protesters have clashed with police and government supporters in the eastern Libyan city of Benghazi, reports say. Demonstrators gathered in the early hours of Wednesday morning in front of police headquarters and chanted slogans against the "corrupt rulers of the country", Al Jazeera's sources said. Police fired tear gas and violently dispersed protesters, the sources said without providing further details. The online edition of Libya's privately-owned Quryna newspaper, which is based in Benghazi, said the protesters were armed with petrol bombs and threw stones. According to the newspaper, 14 people were injured in the clashes, including three demonstrators and 10 security officials. In a telephone interview with Al Jazeera, Idris Al-Mesmari, a Libyan novelist and writer, said that security officials in civilian clothes came and dispersed protesters by using tear gas, batons and hot water.
Jim Sinclair's Commentary What would it mean if your business lender no long wanted your paper? That is what China has said here. The Chinese are not captive by the US dollar. They could pare with vigor and not hurt themselves. Don't kid yourself. China is totally dollar hedged by all the dollar deals they have done for minerals and other business entities in the past six years. I know because I am doing business with Chinese corporations that are both publicly and government owned. Expenses and operating capital are in dollars. The difference with what you read here is that we are doers, not simply commentators. We are on the front lines in all subjects of your interest. China pares U.S. Treasury holdings in December HONG KONG (MarketWatch) — China reduced its holdings of U.S. Treasury securities for a second straight month in December, though it maintained its position as the largest holder of U.S. government debt, ahead of Japan. China's holdings of Treasurys in December totaled $891.6 billion, compared to $895.6 billion in November, according to the Treasury International Capital report, released Tuesday. The drop is the second straight month China has reduced its holdings from October's recent high of $906.8 billion. Japan, the second-largest holder of U.S. government debt, raised it holdings of U.S. government debt to $883.6 billion in December from $877.2 billion in November.
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| Gold Seeker Closing Report: Gold and Silver End Mixed and Near Unchanged Posted: 16 Feb 2011 04:00 PM PST Gold climbed to $1377.78 in Asia before it fell back to $1367.65 by a little after 10AM EST and then jumped to a new session high of $1381.90 by early afternoon in New York, but it then fell back off into the close and ended with a gain of just 0.04%. Silver climbed to as high as $30.962 by a little after noon EST, but it also fell back off in the last hour of trade and ended with a loss of 0.42%.
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| Global Strategy Smack Down Between OptionMonster’s Pete Najarian and the Mad Hedge Fund Trader Posted: 16 Feb 2011 02:59 PM PST
Global Strategy Review With OptionMonster’s Pete Najarian. Please join John Thomas, The Mad Hedge Fund Trader, and OptionMonster’s Pete Najarian for a free live webinar on Thursday, February 17 at 12:00 noon EST. It will be a no holds barred, mano a mano, smack down where we will debate the future of every major global asset class. Is the stock market rally coming to an end, or is there more to go? Should we be buying dips or selling rallies in gold and precious metals? Is the commodities boom a yearlong or decade long phenomenon? Which sectors on the international landscape will be the winners or losers? Are the agricultural plays getting tired, or is it time for a second helping? Will the collapse of the bond market or a spike in oil prices bring the party to an end? Pete Najarian is a former linebacker for Tampa Bay Buccaneers and the Minnesota Vikings who graduated to the pits of Chicago’s volatile, and occasionally dangerous, commodity trading pits. With his brother, Jon, he developed a proprietary computer program called Heat Seeker ® which monitors no less than 180,000 trades a second to give him an early warning of moves that are about to hit the stock, options, and futures markets. To give you an idea of how much data this is, think of downloading the entire contents of the Library of Congress, about 20 terabytes, every 33 minutes. His firm maintains a 10 gigabyte per second conduit that transfers data at 6,000 times the speed of a T-1 line, the fastest such pipe in the civilian world. Pete then distills this ocean of data into the top movers of the day, which he puts up for free on his website, and offers much more detailed analysis through a premium subscription product. “As with the NFL,” says Pete, “you can’t defend against speed.” The system catches big hedge funds, pension funds, and mutual funds shifting large positions, giving subscribers a peak at the bullish or bearish tilt of the market. It also offers accurate predictions of imminent moves in single stock and index volatility. Pete still has a handshake that’s like a steel vice grip, and I am still undergoing physical therapy for the last time I did so six months ago. To participate in the webinar, please click here at https://optionmonster.webex.com/mw0306lc/mywebex/default.do?nomenu=true&siteurl=optionmonster&service=6&in_url=https://optionmonster.webex.com/ec0605lc/eventcenter/event/eventAction.do%3FtheAction%3Ddetail%26confViewID%3D747729836%26siteurl%3Doptionmonster%26%26%26 . For those who miss the live show, I’ll try to post an MP3 file for replay on Hedge Fund Radio later in the day at http://www.madhedgefundtrader.com/hedge-fund-radio-archives . To learn more about OptionMonster, please visit their site by clicking here at http://www.optionmonster.com/ .
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| Posted: 16 Feb 2011 02:13 PM PST
Ever since the advent of QE2, few if any, sellside analysts employed by Too Big To Fail banks have dared to voice a negative opinion of the Chairman's third mandate, that of raising stock prices (for obvious reasons: nobody will bite the hand that feeds them trillion in taxpayer bailout money). Which is why we continue to believe the BofA credit strategist Jeffrey Rosenberg is one of the few men standing who dares to call it how it is. In his latest piece, Rosenberg lays out what is the most harshly (yet diplomatically) worded criticism of QE we have read to date. "In our view, the longer term problem with such a strategy is that in delaying the adjustment to the root causes of the credit crisis, namely excessive leverage in the economy and financial markets, the essential vulnerabilities from that excessive leverage remain. What triggers their realization again is the inflationary shock leading to an interest rate shock that undermines the cheap cost of that debt that currently enables its maintenance." As for the implicit assumption that savings and wealth are inversely correlated, Rosenberg points out the glaringly obvious: "Inflation erodes the value of those savings and decreases their standard of living." The only option left: "Lowering the value of savings creates a powerful incentive to take on investment risk to maintain the real purchasing power of those savings." And while everyone getting aboard the investment ship at the same time is a horrible idea when it happens in one country, it is a guaranteed disaster waiting to happen when it occurs at the global level. Which is precisely what has happened: "Today, we see that same pattern again at play. But this time, it’s not limited to just the US Fed policy. Globally, central banks are pursuing coincident easy money policies. And even in Emerging Markets where the inflation fears stand most acute, the policy rate increases are just keeping up with inflation increases. The result: global negative or zero real policy rates." The entire global "economy", which really means stock market, is now one timebomb, just waiting for the first central banker error-induced 'crack' to appear in the windshield, following which the destruction will be unprecedented. From Jeffrey Rosenberg:
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| Martin Armstrong vs. His Model vs. Fractal Gold Posted: 16 Feb 2011 12:59 PM PST Martin Armstrong has stated his expectations for Gold and the PM Sector to fall into the June period and to continue to correct into October based on his Economic Confidence Model. The fractal work that I do off of the 70's Precious Metals ... Read More...
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| These Indicators Suggest Stock Markets Have More Upside - and Gold Some Uncertainty Posted: 16 Feb 2011 12:38 PM PST A variety of technical analyses all clearly indicate that the S&P 500's run is by no means over. Here are some charts and an analysis of what they mean for the markets, the U.S. dollar and gold. Read More...
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| What Is Wrong With The U.S. Economy? Here Are 10 Economic Charts That Will Blow Your Mind Posted: 16 Feb 2011 12:21 PM PST
What Is Wrong With The U.S. Economy? Here Are 10 Economic Charts That Will Blow Your MindCourtesy of Michael Snyder at Economic Collapse The 10 economic charts that you are about to see are completely and totally shocking. If you know anyone that still does not believe that the United States is in the midst of a long-term economic decline, just show them these charts. Sometimes you can quote economic statistics to people until you are blue in the face and it won't do any good, but when those same people see charts and pictures suddenly it all sinks in. What is great about charts is that you can very easily demonstrate what has been happening to the economy over an extended period of time. As you examine the economic charts below, pay special attention to what has been happening to the U.S. economy over the last 30 or 40 years. The truth is that what is wrong with the U.S. economy is not a great mystery. All of the economic problems that we are experiencing now have taken decades to develop. Hopefully the charts in this article will help people realize just how nightmarish our economic problems have become, because until people start realizing how incredibly bad things have gotten they will never be willing to accept the dramatic solutions that are necessary to fix our financial system. The sad fact of the matter is that we have been living in the biggest debt bubble in the history of the world over the last 40 years. All of this debt has purchased a wonderful standard of living for the vast majority of us, but all of this debt has also destroyed the economic future of our children and our grandchildren. Someday future generations will look back on what we have done in absolute horror. The 10 economic charts posted below are meant to shock you. Most Americans today need to be shocked before they will be motivated to take action. Please share these charts with as many people as you can. Hopefully we can wake enough people up that something will be done about all of these problems while there is still time. 1 - Government spending is expanding at an exponential rate. As you can see from the chart below, federal spending is almost 18 times higher than it was back in 1970. Now Barack Obama has proposed a budget that would increase U.S. government spending to 5.6 trillion dollars in 2021. Just imagine what the following chart would look like if that happens....
2 - U.S. government debt is absolutely exploding. The U.S. national debt is currently $14,081,561,324,681.83. It is more than 14 times larger than it was back in 1980. Unfortunately, the national debt continues to grow at breathtaking speed. In fact, the Obama administration is projecting that the federal budget deficit for this year will be an all-time record 1.6 trillion dollars. Can we afford to continue to accumulate debt at this rate?....
3 - Unless something changes right now, the outlook for U.S. government finances in future years is downright apocalyptic. The chart posted below is from an official U.S. government report to Congress. As you can see, it is projected that interest on our exploding national debt is absolutely going to spiral out of control if we continue on the path that we are currently on....
4 - Household debt has soared to almost unbelievable levels over the last 30 years. The sad truth is that it is not just the U.S. government that has a massive debt problem. U.S. households have also been accumulating debt at a staggering rate. Total U.S. household debt did not pass the 2 trillion dollar mark until the mid-1980s, but now total U.S. household debt is well over 13 trillion dollars....
5 - The total of all debt (government, business and consumer) in the United States is now well over 50 trillion dollars. For the past couple of years this figure has been hovering around a level that is equivalent to approximately 360 percent of GDP. This is a debt bubble that is absolutely unprecedented in U.S. history....
6 - As tens of thousands of U.S. factories get shut down and as millions of our jobs get shipped overseas, the number of unemployed Americans continues to go up and up and up. As you can see from the chart below, there has been a long-term trend of increasing unemployment in the United States. In fact, there are about 3 and a half times as many unemployed workers in the United States today as there were when 1970 began. These jobs losses are going to continue as long as we allow our corporations to pay slave labor wages to workers on the other side of the globe. All of the major trends in global trade are very bad for the U.S. middle class. For example, the U.S. trade deficit with China for 2010 was 27 times larger than it was back in 1990. How long will our politicians stand by as our nation bleeds jobs?....
7 - The median duration of unemployment in the United States is in unprecedented territory. For most of the post-World War 2 era, when the median duration of unemployment in America reached 10 weeks that was considered a national crisis. Well, today competition for jobs is so intense that the median duration of unemployment is now well over 20 weeks....
8 - Since the Federal Reserve was created in 1913, the value of the U.S. dollar has declined by over 95 percent. One of the reasons given for the existence of the Federal Reserve is that the Fed helps control inflation. But that is a huge lie. The truth is that the United States never had consistently rampant inflation until the Federal Reserve took control. In particular, once the U.S. totally went off the gold standard in the 1970s inflation really started escalating out of control....
9 - Now the Federal Reserve says that the solution to our current economic problems is to print even more money out of thin air. The games that the Federal Reserve is playing with our money supply are simply inexcusable. Just look at what the Federal Reserve has done to the monetary base since the beginning of the recession....
10 - All of this new money is creating tremendous inflation. In particular, the price of oil is now ridiculously high. A high price for oil is very, very bad for the U.S. economy. Our entire economic system is based on being able to use massive quantities of very cheap oil. Unfortunately, that paradigm is starting to break down and the consequences will be very bitter. Back in mid-2008, the price of oil hit an all-time record of $147 a barrel and subsequently the world financial system imploded a few months later. Well, the price of oil is on the march again and that is very bad news for the U.S. economy....
Needless to say, if the economic trends documented by the charts above continue the U.S. economy will be totally wiped out. The U.S. economy as it currently exists is unsustainable by definition. It is only a matter of time before we slam into an economic brick wall. We have developed an economy that cannot function without debt, and at this point it seems like almost everyone is drowning in red ink. The federal government is massively overextended, most of our state and local governments are massively overextended, most of our major corporations are massively overextended and the majority of U.S. consumers are massively overextended. The only way that the game can continue is for the Federal Reserve to print increasingly larger amounts of paper money out of thin air and for everyone in the economic food chain to go into increasingly larger amounts of debt. But no debt spiral can go on forever. At some point this entire house of cards is going to collapse. When that happens, there is going to be economic pain that is greater than anything that this country has ever seen before. Someday we will all desperately wish that we could go back to the "good times" of 2011. A great economic collapse is coming, and all of us had better get ready.
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| How Much More Demand Can Silver Handle? Posted: 16 Feb 2011 11:49 AM PST By Jeff Clark, BIG GOLD The numbers for silver demand are starting to make some market-watchers nervous. The U.S. Mint sold over 6.4 million silver Eagles in January, more than any other month since the coin’s introduction in 1986. China’s net imports of silver quadrupled in 2010, to 122.6 million ounces, roughly 13.7% of global production. Meanwhile, mine production can’t meet worldwide demand; the only way demand gets fulfilled is from scrap supply. That is some very hungry demand. Which raises the question, how long can this pace continue? This is important for various reasons, starting with how demand contributes to price. If demand falls off, our investments could, too. While I’ve discussed the concern regarding the lack of supply before, which has its own implications for the silver market, let’s focus on investment demand. Frankly, is there room for it to continue to grow? After all, how long can investors continue to s...
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| Bob Casaceli: Cordillera del Condor Posted: 16 Feb 2011 11:47 AM PST Source: Brian Sylvester of The Gold Report 02/16/2011 The Cordillera del Condor region, located on the contentious Ecuador-Peru border, has proven to be rife with precious metals and political risk. In this exclusive interview with The Gold Report, Geologist Bob Casaceli delves deep beneath the earth's crust to explain why this dynamic region's formation points to further discoveries in the area. The Gold Report: Bob, it seems like everyone knows you. How did you get your start in this business? Bob Casaceli: I first became interested in geology through mountain climbing, which was an offshoot of my ski-racing career at the University of Colorado. My ski teammates would take me to areas to learn technical rock climbing, and I would study the geology of those areas. I was always intrigued by the Andes. In graduate school, I was very interested in the mineralogy, tectonic origins and lithochemistry of the ore deposits. I studied isotope geochemistry as a methodology of...
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| “Inflation is Very, Very Low”…For Now Posted: 16 Feb 2011 10:30 AM PST "We do not now have a problem…. Inflation made here in the US is very, very low" When inflation is rising, it is necessary to take matters into ones' own hands, or, get crushed. Those who remain whole during inflationary periods act early. What follows are summaries of recent quarterly earnings reports. Most of these companies have headquarters in the United States, although they buy and sell worldwide. The key take-away is that inflation is a major burden. As such, the key question investors must ask themselves is, "How imminent and pervasive is the threat of resurgent inflation." Bernanke says inflation is "very, very low." Corporate America begs to differ. Numerous quarterly reports from large multi-national companies indicate very clearly that inflationary pressures are building. Here's a representative sample: DuPont & Co. – Fourth quarter sales rose 15%; net profits fell 15%. "DuPont forecast raw-material and freight costs to be some 4% to 5% higher this year than last, moderating from the 6% rise seen in 2010. [Executives] were confident they would be able to pass these on to end users. Ethane, chlorine, solvents, and pigments were seen as the key areas of cost pressure." Procter & Gamble – Sales rose 2%; net profits fell 25.5%. "P&G, which sells everything from Tide detergent to Olay skin-care products, said its commodities bill will cost $1 billion for the fiscal year that ends in June, more than double what it had expected." Colgate-Palmolive – "Colgate's profit fell [in the fourth quarter] 1%…squeezed by higher commodity costs and money paid to promote its products." 3M Company – Fourth quarter sales rose 10%; net profit fell 0.7%. "Margins declined under rising material costs and weakening sales in the company's health care and graphics businesses… 3M said it intends to recover higher material expenses through price increases, which include Scotch tape, Post-It notes, furnace filters, sand paper, automotive components, and thousands of other household and industrial items." Pepsico – [Pepsi-Cola, Frito-Lay, Quaker, Tropicana, Gatorade] – Full-year reported earnings per share increased 4%; fourth quarter earnings per share declined 6%. CEO Nooyi was pleased with the results, but acknowledged she is "mindful of three realities: (1) A weak consumer landscape given the poor macroeconomic picture, especially the high level of unemployment in key developed markets; (2) High levels of cost inflation for the coming year, driven by broad and pronounced commodity inflation; and, (3) A potentially difficult competitive pricing environment, particularly in beverages." Hugh Johnson, Pepsi's CFO, talked about cost inflation of 8% to 9.5%: "That type of inflation has a pretty strong impact." Goodyear – [tires, blimps] Net fourth quarter sales rose 14%; with a $177 million fourth quarter loss. "Raw material prices costs are likely to rise 25% to 30% in the first quarter of 2011 and rubber prices have risen 40% since October [2010]." Whirlpool – [Maytag, Kitchen Aid] Fourth quarter sales fell 1%; profits fell 61%. It is "seeking to offset cost increases for such items as steel, copper and plastics…" Electrolux – [refrigerators, washers] "Operating income in North America and Europe declined as the company was hit by higher costs for raw materials and lower sales prices." "The costs for our most important raw materials continue to increase," Electrolux CEO Mr. McLoughlin, said in a statement. "In addition to increased costs for steel, we also see considerable increases in resins (used in plastics) and base metals." In light of these firsthand accounts from the business world, Bernanke's QE2 campaign is succeeding all too well. Inflation is on the upswing, just as he planned. But once this genie emerges from the bottle, there's no telling what will happen next. Before long, the genie makes the rules; not the Federal Reserve Chairman. And often, the rules the genie makes are ones that punish the prudent and reward the reckless. "Inflation is a means by which the strong can more effectively exploit the weak," Federal Reserve Governor Henry C. Wallich, declared in a 1978 commencement address at Fordham University. "[Inflation] introduces an element of deceit into our economic dealings… [T]he increasing uncertainty in providing privately for the future pushes people who are seeking security toward the government." Wallich went on to tell the Fordham graduating class of 1978 that, during inflationary periods, contracts are no longer made to "be kept in terms of constant values." By definition, one party to the contract understands this reality better than the other. The one who understands that tomorrow's values will be much lower than today's values is the one who benefits. In other words, as inflationary pressures build, the forward-looking individual will want to prepare in advance. But that means the forward-looking individual will also want to ignore all the assurances from Washington and Wall Street that "everything is under control." The latest testimony from the titans of global commerce demonstrates very clearly that Bernanke's "very, very low" inflation has already become uncomfortably high. Prepare accordingly…or you might get crushed. Regards, Frederick J. Sheehan "Inflation is Very, Very Low"…For Now originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.
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| Gold Daily and Silver Weekly Charts, and a Tribute to Blythe Masters Posted: 16 Feb 2011 10:24 AM PST | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Guest Post: How Much More Demand Can Silver Handle? Posted: 16 Feb 2011 10:21 AM PST
From Jeff Clark of Casey Research How Much More Demand Can Silver Handle? The numbers for silver demand are starting to make some market-watchers nervous. The U.S. Mint sold over 6.4 million silver Eagles in January, more than any other month since the coin’s introduction in 1986. China’s net imports of silver quadrupled in 2010, to 122.6 million ounces, roughly 13.7% of global production. Meanwhile, mine production can’t meet worldwide demand; the only way demand gets fulfilled is from scrap supply.
The largest silver ETF, iShares Silver Trust, has net assets of $9.6 billion (as of February 4). This pales in comparison to the more popular stocks trading in the U.S. In fact, SLV has roughly 3% the market cap of Apple. It would have to grow over 43 times to match Exxon Mobil.
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| Gold, Silver, Copper, Nickel and the Slow Death of Money Posted: 16 Feb 2011 10:00 AM PST A huge opportunity to hedge against both inflation and deflation is lying out there in the open. There are no transaction costs and right now there's even a built-in discount. But most people will never realize any of this. In 1933 President Franklin Delano Roosevelt signed Executive Order 6102, which made it illegal for U.S. citizens to hold gold bullion. Prior to that, the $20 bill was essentially a warehouse receipt for a one-ounce gold coin. Prior to the Federal Reserve Act of 1914, the $20 bill actually told you this. After Executive Order 6102, $20 notes weren't allowed to be exchanged for gold anymore. Americans couldn't legally own or trade gold as money and savings, only as jewelry or collectible coins. A year after making monetary gold ownership illegal, FDR revalued gold from $20.67 per ounce to $35 an ounce with the Gold Reserve Act. The Act also required all gold and gold certificates to be turned over to the Treasury. The dollar was debased. A chunk of the...
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| $1,380 Holds Stiff Resistance For The Gold Price, Once Gold Breaks Through It Will Sprint For $1,420 Posted: 16 Feb 2011 10:00 AM PST Gold Price Close Today : 1374.70 Change : 1.10 or 0.1% Silver Price Close Today : 30.630 Change : (0.063) cents or -0.2% Gold Silver Ratio Today : 44.88 Change : 0.128 or 0.3% Silver Gold Ratio Today : 0.02228 Change : -0.000064 or -0.3% Platinum Price Close Today : 1829.30 Change : -0.80 or 0.0% Palladium Price Close Today : 840.65 Change : 3.05 or 0.4% S&P 500 : 1,336.32 Change : 8.31 or 0.6% Dow In GOLD$ : $184.78 Change : $ 0.80 or 0.4% Dow in GOLD oz : 8.939 Change : 0.039 or 0.4% Dow in SILVER oz : 401.18 Change : 2.02 or 0.5% Dow Industrial : 12,288.17 Change : 61.53 or 0.5% US Dollar Index : 78.25 Change : -0.324 or -0.4% The GOLD PRICE spake out of both sides of its mouth today. Overnight it traded up to 1378, but when New York opened it traded down-up-down to $1,368.3 about 10:00 a.m. From there it staged an impulsive rally that reached $1,381.90 by 12:15, but just as sharply fell off and went limp around $1,375. After all that sound and fury, Comex closed up only $1.10 at $1,374.70. Now that is not the first half of a key reversal (break into new high ground with a lower close), but it doesn't miss it by much. GOLD is also bumping right along its top Bollinger Band, which usually foretells a fall. On the mitigating hand, $1,380 holds stiff resistance, and momentum indicators are positive and have plenty of room to rise. If gold breaks through $1,380, it will sprint for the old high above $1,420. Yet the early harbingers whisper that tomorrow will be a down day. The SILVER PRICE came under attack from the opening bell and was driven back to 3025c. From that depth it launched a heroic rally to 3097c, the very doorstep of 3100c and the last high, but it spent no time meditating there. It dropped back to 3055c by 1:00 and barely traded the rest of the day. On Comex it closed down 6.3c at 3063c. Technically that is the first half of a key reversal, but must be confirmed confirmed by the second half, a lower close tomorrow. Silver remains a scootch below its top Bollinger Band, but a little scootch. Relative Strength Indicator is working its way into nosebleed territory, but isn't quite there yet. Histogram looks to be rounding down, but but MACD has a plenty of room to rise. All of which jargon says that SILVER PRICE had better clear 3100c tomorrow or pack a parachute. Life ain't easy, is it? I reckon if it was, everybody would do it. If you think we had an 18-wheeler load of bewilderment yesterday, wait till you run your eye over today. First of all that old crack-head the US DOLLAR INDEX ran plumb crazy. Look at the five day chart: it looks like two W's drawn by a drunk. No pattern, no consistency. Dollar dropped below 78.50 today by 32.4 basis points and landed at 78.249. This is not the world's end, and doesn't gainsay the dollar's uptrend or upside-down head and shoulders reversal. But one wonders in vain why it would have made a higher high than yesterday's, along with a lower low. I thank heaven I am not in the pit trading dollars. Okay, tomorrow: dollar index has walzed sideways and up and down quite enough, and must not close below 78. Otherwise, it will be calling for more downside. Best argument for the dollar is the euro, which is locked in a confirmed and nasty downtrend. Canceling out their downtrend of the past two days, stocks rose today, pushing the last high a bit higher. Today's peak came at 12,303.16, but the close backed off to 12,288.17, up 61.53. S&P also rose to 1,336.32, up 8.31. Could rise more, but I don't want to ride with it. Fall will hurt too much. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com Phone: (888) 218-9226 or (931) 766-6066 © 2011, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't. 
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| Posted: 16 Feb 2011 09:44 AM PST
Today, WTI spreads continued their blow out, making the lives of all Goldman clients who expect the spread to collapse a living hell (with ever louder rumors of pending or already transpired energy fund blow ups). The spread between April-delivery WTI futures and Brent, the basis for European and West African crudes, widened $1.63 to $15.70 a barrel at 12:16 p.m. in New York. And since in addition to Brent, there are roughly 100 other grades, here is how WTI has been trading compared to some of the more illiquid varieties: Light Louisiana Sweet premium increased 30 cents to a record $20.10 while Heavy Louisiana Sweet premium widened 30 cents to $20. Mars Blend’s premium to WTI strengthened 40 cents to $14 a barrel, while Poseidon increased 30 cents to $14.30 over the benchmark. Southern Green Canyon’s premium widened 40 cents to $13. Thunder Horse’s premium to WTI strengthened 5 cents to $19.20. West Texas Sour’s discount narrowed 35 cents to $6.40. Syncrude’s premium widened 50 cents to $8.50 a barrel. The discount for Western Canada Select widened $1.25 a barrel to $21 a barrel. Yet despite all these divergence dynamics, it is the WTI that is of critical importance due to its prevailing liquidity and utilization in the US. Luckily for Ben, the WTI glut just hit a record, allowing the Fed to continue pretending that the real price of oil is not well over $100. Per Bloomberg: "Stockpiles at Cushing, the delivery point for futures traded on the New York Mercantile Exchange, rose in the week ended Jan. 28 to 38.3 million barrels, according to the Energy Department. That was the highest level in records begun in 2004. Last week TransCanada Corp. started deliveries to the hub from its Keystone pipeline, which connects Alberta and Cushing." What is more interesting is recent speculation that ConocoPhillips may reverse its Seaway pipeline to relieve the Cushing excess. This would make economic sense for Conoco, yet for some odd reason the company refuses to proceed. Per Bloomberg:
Without getting conspiratorial, there is only one entity that would benefit from a market mispricing and a supply glut keeping prices lower, thereby not spooking US drivers into seeing surging gas prices. This is certainly a story worth following: should Conoco do the right thing for its shareholders and reverse Seaway, look for the various WTI spreads to collapse overnight. And since the US now lives in a mispriced energy world too, below is a chart of gasoline prices in the EU, where gas is about 100% more expensive than in the US to begin with. Look for transportations protests in Europe shortly, as drivers say "basta a Bernank."
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| Bernanke Distances Himself from Rising Food Prices Posted: 16 Feb 2011 09:30 AM PST Is the world finally cracking up? It certainly seems so…at least in that fiery patch of land claimed by the world's three major monotheistic religions. This is serious stuff. Are you paying attention, Fellow Reckoner? Are you looking at the situation closely? In any case, here's a freebie: "Warning: Riots may be closer than they appear." Every day we sit down at the computer to read stories of chaos, government overthrow and "anarchy" (as incorrectly defined by the news media) breaking out across the Middle East and North Africa (MENA) region. Here are a few headlines the Associated Press led with this morning: "Egypt: Death toll put at 365 as strikes continue…" "Anti-government protests spread to Libya…" "Thousands of police confront protesters in Yemen…" "Bahrain protesters urge more pressure…" What are these people so angry about? So they're oppressed, under the thumb of the state and barely able to earn enough to feed themselves. But so what? Tunisia's ousted thug, Ben Ali, held sway over his countrymen for some twenty-three years before finally being given the proverbial boot. In Egypt, the poor, unwashed masses endured three decades of Hosni Mubarak's disastrous policies. In fact – and perhaps not coincidentally – Egypt was the birthplace of the state. A dubious accolade, indeed. For 6,000 years they've suffered the experiment of state-sponsored aggression. So why rise up now? What makes 2011 so special? Well, for one thing, it's getting more and more expensive to live from hand to mouth, as the overwhelming majorities in these countries do. More than 40% of the Egyptian people live on $2 per day or less. A whopping 70% rely on food subsidies and handouts. A few percent increase in the price of milk and honey may not break the bank for the average American or European (at least, not yet)…but for those living in Egypt and her surrounding states, it's the difference between eating and going hungry. These people, it may fairly be said, are quite literally starving for change. "Global food prices are rising to dangerous levels and threaten tens of millions of poor people," World Bank chief Robert Zoellick announced yesterday. "It's poor people who are now facing incredible pressure to feed themselves and their families." Chimes Addison Wiggin in today's edition of The 5-Minute Forecast, "The World Bank's latest data on food prices reveals an overall 15% increase from October through January. Its index now sits just 3% below the 2008 record, although a separate index maintained by the UN's Food and Agriculture Organization has already surpassed 2008 levels." According to the World Bank's own data, global wheat prices have doubled between June and January. The price of corn – which is used to feed the cattle, hogs and chickens that populate the meat shelves at your local grocery store – has surged 73% in the same period. Prices for sugar and edible oils have also risen "sharply," the bank said. "Zoellick acknowledges rising food prices were 'an aggravating factor' behind the downfall of dictators in Egypt and Tunisia," writes Addison. But the story doesn't stop there. Not even close. And here comes our second free tip of the day: "Warning: Inflation may be closer than it appears." In fact, according to some measures, it may be so close it's already here. Back in the good ol' US of A, continues Addison, "Wholesale prices jumped 0.8% in January, according to the Bureau of Labor Statistics. The producer price index has now jumped 3% over the last four months. And no, that's not an annualized figure. "Note that the PPI headline number is for 'finished goods' – stuff that's ready to be sold direct to consumers. In the category of 'crude goods,' the figures are far worse – up 3.3% in January, and up a staggering 15.8% over the last four months." For his part, the man printing all the money chasing these commodities, Fed Chairman Ben Bernanke, flatly denies any wrongdoing. The trillions of dollars he has injected into the world's economy have nothing to do with the escalating price of commodities, he contends; commodities coincidentally priced in those very same dollars. Instead, Bernanke blames the "two-speed recovery" – where emerging markets are, shall we say, "out-recovering" developed economies – and a failure of these emerging markets to tackle their own inflation. To blame the increase in dollar supply for the soaring prices of items measured in dollars is "entirely unfair," complained Bernanke. Again, are you listening to all this, Fellow Reckoner? Are you paying attention? We wonder how long it will be before we wake to read news of uprisings and riots at the source of the world's central fiat currency supply. Can't be long now… Joel Bowman Bernanke Distances Himself from Rising Food Prices originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.
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| Gold ends flat but Mideast tensions underpin Posted: 16 Feb 2011 09:26 AM PST By Frank Tang Israel's comment gave a further safe-haven boost to gold, already underpinned by geopolitical tensions as anti-government protests inspired by revolts that toppled rulers in Tunisia and Egypt gain pace around the Arab world. … Analysts said technical buying continued to support bullion after it breached key resistance at its 50-day and 100-day moving averages on Tuesday. … The U.S. gold contract for April delivery settled up $1 at $1,375.10 … "There are a number of conflicting signals for what is usually driving gold," said Peter Fertig, a consultant at Quantitative Commodity Research. "This is currently leading to a bit more sideways trading." U.S. data showed housing starts and the producer price index for January came in above expectations. Core wholesale prices in the United States rose at their fastest rate in more than two years, raising some concerns about inflation, but economists said the recovery was too weak for a big spike in consumer prices. [source]
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| Guest Post: The $500 Billion Dollar Bailout That You Never Heard About Posted: 16 Feb 2011 08:48 AM PST
Submitted by Taylor Cottam The $500 Billion dollar bailout that you never heard about When George Bush first was informed about the 9/11 attacks, he was reading a children’s story to second graders. The attacks caught him off guard and interrupted his reading of My Pet Goat, and he sat perplexed as to how he should respond. Ben Bernanke was similarly blinded by the crisis even though lawmakers on capitol hill had on many occasions asked him about the possibility of a housing bubble caused by subprime mortgages. Bernanke had his My Pet Goat moment in 2008, where in a panic, he lowered rates all the way down to zero. At least George had a military that he could send out to fight for him. Poor Ben’s options were limited, lower rates and print more money, which he did with the same sense of panic and righteous rage.
The Federal Reserve controls the short term rates that banks give to each other. Then the banks give you, the depositor, the same “good deal” on your money. The money that responds directly to the Federal Funds rate is held primarily in checking, savings and demand deposit accounts. The amount of money in these accounts, which fetch a negative real rate of return, tops 6 Trillion.
But fast forward to today and US banks are insolvent and savings accounts have a negative real return. That mattress looks like a more attractive investment alternative, (at least compared to a bank). 
Theft from other investors Since long-term yields tend to bounce with the short end, if we look at the broader fixed income market, the Benjamins grabbing their ankles in real terms could be many times that. Just to give some perspective, the current US bond market has been estimated by SIFMA to be almost $36 Trillion, which includes corporate, government and agency, municipal, MBS ABS and CDOs. The yield on those investments are also held back by the Fed.
Why does this matter? Pension funds invest heavily in fixed income instruments. Many pension funds have been heading for the hills to escape from fixed income lately because they cannot get sufficiently high returns. They can’t even get the going inflation rate. Via Alta Assets:
Since pension funds payouts are linked to inflation, this compounds our state solvency crisis. Illinois and California, with their gilded retirement pensions, would at least be in a better shape if their fixed income assets would at least keep up with their indexed liabilities. We said that rates need to be well above 1%. Cato’s Steve Hanke has called for short term rates to increase to 2% . If the Fed increases the short term rates to 2%, our deposit returns increase and we get more money in our pockets. You can see below the size of the money supply that directly responds to the Fed’s rate manipulation. The majority of money that would be affected would be savings deposits, but also demand deposits and checkable deposits. Just in 2010, an additional 2 points to the Fed Funds rate would have added $118 Billion into the pockets of depositors. 
The reason it is important is because most people never miss what they never got. But, taking money and opportunity away from savers and investors to give to banks and borrowers destroys value and creates pension shortfalls. Putting a number on the madness helps us grasp the scope of the matter.
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| The Collapse of America's Labor Force Posted: 16 Feb 2011 08:38 AM PST America continues to face a true national tragedy as tens of millions of unemployed people have been literally discarded because of big business outsourcing to China, India, and elsewhere. Worse yet, the unemployment statistics are ... Read More...
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| Silver is Approaching Stage Two of its Bull Market Posted: 16 Feb 2011 08:37 AM PST
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| Two Investment Conclusions Regarding the Food Crisis Posted: 16 Feb 2011 08:24 AM PST Last August, I was a guest on Russian TV, warning of another food crisis. Asked by the host which countries were most at risk, I gave him two: Egypt and Pakistan. Getting Egypt right was easy. It was and remains the world's largest buyer of wheat. Pakistan has a big import bill, too. Over the summer, massive floods destroyed many crops, quadrupling prices for staples like potatoes, onions, squash and tomatoes. There are two investment conclusions I draw. The first is that many emerging markets are on borrowed time. Egypt, for instance, grew 4-6% per year over the last several years, even through the financial crisis. It's hard to imagine anything like that continuing when food prices are where they are. All of the emerging markets deal with suddenly surging prices for many commodities. As they are still in the commodity-intensive phase of their growth curves, this means, at the very least, the arc of their economic growth rates ought to flatten out for a time. At worst, they are vulnerable to social unrest, as most also have large poor populations. The second conclusion is about the unfolding food crisis in the context of the broader sweep of rising commodity prices. Everything from oil to corn seems to be making new highs. The danger is that we have another 2008 situation. Prices got so high that demand dropped. Oil, for instance, hit an all-time high of $147 per barrel in July. Not too many industries can shrug that off. [Note this chart from UBS]:
This table might suggest where commodity prices may still have room and where they may not. All the agricultural commodities, along with copper, seem in danger of running against some kind of wall akin to 2008. Oil and natural gas, on the other hand, still look reasonable compared to the run-up in 2008. Food and energy share a link in that we burn energy to make food. But food prices have made their highs this time without new highs in the price of oil (or fertilizers, for that matter). So while food riots may continue, some commodity prices may well be nearing a short-term peak. Oil and gas, though, seem to have lots of room on the upside yet. Chris Mayer Two Investment Conclusions Regarding the Food Crisis originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.
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| Investors Accumulate Gold but Be Cautious on Silver Posted: 16 Feb 2011 08:11 AM PST Why is Silver continuing to outperform Gold? The Silver/Gold ratio tends to lead or follow the stock market. Risk assets are outperforming. Silver is outperforming Gold as a risk asset. It is not outperforming for monetary reasons. That occurs when both Gold and Silver advance but Silver outperforms Gold. This is one of several reasons why bugs should be wary of Silver in the near-term.
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| Market Commentary From Monty Guild Posted: 16 Feb 2011 08:04 AM PST Dear CIGAs, Boom Times Continue in Asia (Monty Guild is currently travelling in Asia and meeting with economists and analysts. Here's a little of what he's seeing and hearing so far). In Hong Kong right now, commerce is booming. The overwhelming atmosphere here is of pride, opulence, and the desire of people and businesses to display their material wealth. At the airport, Chinese travelers abound, and not just businessmen—tourists as well. In confirmation of this experience, I was told by a source at Cathay Pacific, the large Hong Kong-based airline, that the number of Chinese traveling to the U.S., Europe, Latin America, and throughout Asia has dramatically increased the load factor on the carrier's air fleet. China has not been through the banking wringer like Europe and the U.S., people have money. Profits will surge, and so will the profits of other Asian carriers as the huge Chinese tourist market awakens and explores the world. Accompanying the boom in commerce is inflation in food prices, hotel prices, and other costs associated with doing business. This is not surprising because even though the Hong Kong dollar being pegged to the U.S. dollar, the Chinese Yuan has risen by over 22% versus the U.S. dollar in the last five years. We have written before about the China's increasing openness toward the internationalization and financial convertibility of the Yuan. Many steps have been taken in this direction thus far and many more will come in the months and years ahead. A strong Yuan will help China in its fight against inflation. Another sector that is booming as a result of individual prosperity is Hong Kong real estate. Not only are many businesses here setting up operations further into China, many wealthy mainland Chinese are also buying in Hong Kong. The traffic is heavy in both directions. This week I also travel to Singapore. The economic boom resonates throughout the region. In Singapore, as in Hong Kong, employment is also full and real estate similarly humming. Prices are rising for both office and residential space. As a result, many Singapore companies in the real estate, banking, and manufacturing sector look quite attractive. We plan to reinvest in Singapore as soon as the current correction in Asian markets draws to a close—probably within the next few months. After Singapore, I will visit the beautiful and magnetic Thailand. There, too, I expect to see more growth and more inflation as my U.S. dollars just don't carry the weight they once did. The India Scene In consideration of the other Asian giant, India, we continue to be keen on the country's long-term prospects. The Indian market has fallen by about 15 percent in the last few weeks, making it much less expensive. Strong inflationary pressures have led the government to raise interest rates aggressively and as a result we are not currently recommending Indian stocks. Much of the inflation problem is self-created by India's Fabian socialist history, which has encouraged a policy of subsidizing food and energy at below market prices to some Indian users. This program leads to hoarding and sales into world markets at higher prices than those available in India, and drains important food and energy from the country, creating shortages. Yet, India also has many fast-growing and well-managed companies. The lively entrepreneurial spirit and intelligence of the Indian people will give rise to more great companies, and after inflation is controlled, Indian stocks will provide very good buying opportunities. When prices fall lower, we will definitely buy in the Indian markets. For those of you interested in a detailed account of impactful events taking place in this immense 1.2 billion-person country and its growing role in the global economy, check out the multi-page report in the January 28, 2011 Financial Times here: http://www.ft.com/reports/india-globalisation-2010
Sensex – BSE Sensex 30 Index (February 15, 2010 to February 15, 2011)
Meanwhile, Down Under The Australian summer has witnessed record floods and cyclones, resulting in multiple deaths as well as property damage, soaring into the billions of dollars. In the wake of horrific weather and destruction, Australian resources stocks have moved higher. Investors should continue to look for opportunities in iron ore, energy, base metal, and precious metals stocks in Australia. In Europe, German Support for the Euro In late January, Germany's Chancellor Angela Merkel started campaigning for the rescue of the Euro. The reason is simple: Germany's economic leadership and power is now accepted by the rest of Europe, and consequently Germany is now more willing to consider helping others in the community. With French acquiescence, Germany is open to cooperate under the condition that other European countries meet six specific conditions. As reported in a February 4 New York Times article, those conditions are as follows: 1. Abolition of wage indexation systems, 2. Agreement on mutual recognition of education qualifications, 3. Creation of a common base for assessing corporate tax, 4. Adjustment of the pension systems, 5. Establishment of a national crisis management regime for banks 6. New legal measures to force countries to commit to tough fiscal policies through a 'debt alert mechanism." The Germans, it appears, want to encourage European nations to mimic its economic discipline and emphasis on fiscal responsibility. Frankly, we believe that the strict Germanic approach is not a bad idea at all. The question is: will it fly in countries that have a more laid back culture? There is truth to the adage that it is hard to teach old dogs new tricks, although we don't believe it can't be done. In fact, currently the optimists on European integration outnumber the pessimists. We share in their hope, but recognize that success is not a sure thing. We're watching to see how the ball bounces. What This Means to You Investing in Europe is still profitable, but only wise in companies that can benefit even if the German and French plan comes to naught. Investors should focus on commodity producers and exporters that will benefit from an increase in European inflation. If the Euro comes under pressure again, you will profit by holding European exporters of industrial equipment that benefit from the currency decline. The Grain Gain Most prices of food grains and meats are on the rise. There are many factors involved: hoarding by producers and users, investing by speculators, weather, unwise government policies, and the insatiable demand for better diets by hundreds of millions of consumers. It's not just the food grains either; cotton prices recently breached highs not seen since the U.S. Civil War. The connection between agriculture prices and food prices is intimate. All are used for human consumption and animal feed. Wheat, corn, soybeans, and other grains can be substituted one for another when weather, changes in lifestyle, and government policies (subsidies and price controls) combine to create a huge supply demand imbalance. This is what we now see unfolding throughout the world. Such a food shortage is the son of many mothers; although it is popular these days to point the finger at the quantitative easing (QE) programs unleashed by the U.S. Federal Reserve, and at agencies controlling the purse strings in other nations, the problem is not so simple. We believe that the crisis in food prices has a few more months to run in the developed world, and wise investors will want to participate. For several months, we have held food grains and stocks that benefit from a farm sector trying to grow more grain and produce more meat. Farm equipment makers, fertilizer producers, and other farm suppliers all fit into this category. Bonds Intermediate and long-term bonds are still presenting risk of falling, and we still recommend avoiding them entirely. Gold Still hold gold for long-term investment. Our recommendation of late still holds: we have been bullish since June 25, 2002, when gold was selling at about $325 per ounce. We see gold moving to $1,500 and then higher. Traders should sell spikes and buy dips. Food and Farm-related Stocks These continue as a favorite investment target of ours. We have been bullish on grains and farm-related shares since late 2008. Continue to hold and acquire these industries on dips. The possibility of food crises in Africa, Asia and Latin America is very real. Oil Oil-related investments hold promise. Our bullishness dates back to February 11, 2009, when oil was trading at $35.94 per barrel. Currencies For long-term investment, we do not like the U.S. dollar, Japanese yen, British pound, or the Euro. Since September 14th of last year we continue to favor the Singaporean, Thai, Canadian, Swiss, Brazilian, Chinese, and Australian currencies. Use pullbacks in these currencies as an opportunity to establish long-term positions. They will rise as the U.S. dollar and European currencies fall. Global Stock Selections For stock investments throughout the world we base our recommendations on careful studying of individual companies and industries, always keeping in mind that companies and sectors are at differing stages of growth. In developed countries, technology, precious metals, and commodity producers (food, oil, and base metals) will all benefit from an improving economy and a developing back-to-work trend in the U.S. and Europe. Since September 9, 2010, we have thought U.S. stocks still have enough gas in the tank for further rallying. Money is flowing into them. Liquidity formation through QE is creating demand for many assets, including U.S. stocks. A correction of 5-7 percent could occur at any time, so we suggest using this correction as a buying opportunity. This week we are adding Japan and Australia to our list of recommended stock markets (see our comments on Australia above). As for Japan, in the coming weeks we will discuss in more detail why we think the Japanese stock market has become more attractive. In short, Asia is booming, and Japanese companies are benefitting. Japan is not presently experiencing the same inflation headwinds that have scared investors in other Asian markets. Also, because the yen looks vulnerable to decline, we recommend that investors hedge their currency exposure by shorting the yen while they are long Japanese stocks. AS51 – S&P/ASX 200 Index (February 15, 2010 to February 15, 2011)
NKY – Nikkei 225 (February 15, 2010 to February 15, 2011)
We are bullish on China, South Korea, and Colombia. In Colombia's case, half of our original position remains, and we still see it as an attractive investment. A summary of our current recommendations can be found in the table below:
To view current and past recommendations, and see how we have performed, please go to our Commentary Archive and Recommendation Tracker at www.guildinvestment.com.
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| Posted: 16 Feb 2011 08:01 AM PST The 5 min. Forecast February 16, 2011 12:57 PM by Addison Wiggin - February 16, 2011 [LIST] [*] World Bank warns of “dangerous” food prices… Chris Mayer with two investment take-aways [*] Inflation red flag: Producer prices up 3% in four months [*] Investors dump gold ETF… but not necessarily gold itself [*] Ray Blanco on how a Big Pharma takeover is a sign of the times… and how to play it to your advantage [*] Readers weigh in on Monopoly money, Chinese inflation, piracy [/LIST] “Global food prices are rising to dangerous levels and threaten tens of millions of poor people,” World Bank chief Robert Zoellick just declared. The World Bank’s latest data on food prices reveal an overall 15% increase from October through January. Its index now sits just 3% below the 2008 record. (A separate index maintained by the U.N.’s Food and Agriculture Organization has already surpassed 2008 levels.) Zoellick acknowledges r...
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| Posted: 16 Feb 2011 07:59 AM PST
Last August, Anthony Ward's Amajaro fund tried, and failed, to corner the cocoa market. He may have been half a year early, as the country may soon let cocoa speculators (at least those on the long side) finally enjoy their day in the sun. After an ongoing political crisis has left the country with two presidents, neither of which is willing to abdicate power peacefully, and technically bankrupt the latest development is the logical: a countrywide bank run. The Globe and Mail reports that the world's largest exporter of cocoa, which has now effectively been isolated by the global banking system, following its technical default on $2.3 billion in bonds, is seeing bank after bank shut down as residents are scrambling to withdraw whatever money is available in the financial system. "A third bank shut its doors Wednesday amid a political crisis in Ivory Coast, as residents in the commercial hub lined up at banks to try to withdraw their savings amid rumours of a cash shortage. British bank Standard Chartered confirmed in an e-mail Wednesday that it had suspended its operations in Ivory Coast, joining two other banks, BICICI and Citibank, and the regional stock exchange. Hundreds of people marched from one bank to the next in downtown Abidjan Wednesday afternoon, trying to find a working bank machine." Well, not really a bank run. More like a bank march. However, unlike Egypt, we don't anticipate the government (one of the two), to start flying in hundreds of millions in currency to placate the mob. From Globe and Mail:
Unfortunately for Ivory Coast citizens, deposed president Gbagbo apparently was unable to plunder enough gold in time, nor to make sure he has a working NetJets fractional share.
Which is not to say that senior level executives are not leaving the country. They most certainly are:
And while we are not certain how likely a spillover effect to regional African nations will be once the country's people finally decide they have had enough and become truly violent, one thing is certain: cocoa, which recently was trading at one year highs, and over 20% YTD alone, is poised for material gains. Bottom line: BTFD in chocolate... if one materializes.
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| Posted: 16 Feb 2011 07:40 AM PST UltraLong submits: I am bullish on gold and view it as a perfect portfolio hedge against all ills ranging from inflation to yet another financial panic. I also have shares of gold miners in my portfolio because they should appreciate even faster than gold itself. Profits of gold miners that do not hedge their output tend to swing much more than the price of gold because their expenses do not have relation to gold price but their profits do. If you are not bullish on gold or you are sensitive to large swings in share price you should not own shares of gold miners. Example: Let's assume a hypothetical gold miner "A" can extract gold from ground with average "cash cost" of $700 per troy ounce of gold Complete Story »
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| Liberty Mutual CEO says U.S. policymakers ‘debase the dollar' Posted: 16 Feb 2011 07:20 AM PST By Noah Buhayar … "We are firmly convinced, and have been for a couple of years, that the monetary and fiscal policy will continue to debase the dollar," said Liberty Mutual Chief Executive Officer Edmund "Ted" Kelly, in a conference call today. "So we are positioning our portfolio and our businesses to respond if inflation emerges." … The U.S. federal deficit for the current fiscal year is forecast to hit a record $1.6 trillion — 10.9 percent of gross domestic product. [source]
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| OMG!!!! Man throws his Silver Maples into the Ocean . . . WTF!!! Posted: 16 Feb 2011 07:05 AM PST "The point was that the silver is not important to him; destroying JPM is" It's irrational to a point, but it is the kind of statement that rallies the troops and scares the hell out of the enemy. . . . .and Jim Puplava. Share this:
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| Egypt Welcomes the New Boss, Same as the Old Boss Posted: 16 Feb 2011 06:30 AM PST The Egyptian people in Liberation Square celebrated, the world leaders weighed in, and the global media parroted the tale of "history in the making." The big bad Hosni Mubarak has "listened to the voices of the Egyptian people" and has bowed to their demands to finally end his 30-year presidential rule. On February 11th, the news came in a brief statement made by freshly anointed Vice President Omar "Egypt is not ready for democracy" Suleiman: "In these grave circumstances that the country is passing through, President Hosni Mubarak has decided to leave his position as president of the republic. He has mandated the Armed Forces Supreme Council to run the state." Following the announcement, Nobel Prize recipient (and the West's favorite opposition leader) Mohamed ElBaradei said it was the "greatest day" of his life and that "the country has been liberated." The "greatest day" was summed up in a USA Today headline: "Mubarak resigns; military takes over in Egypt." Trends Journal subscribers didn't have to wait until February 11th to know the outcome of this "history in the making." In our February 1st Trend Alert we forecast: As we will see in Egypt, military coups will be disguised as regime changes. Already the public is being conditioned to view the Egyptian military as beloved liberators. But in fact they are simply another arm of the autocratic government, no more familiar with democratic ideals than the dictator they replace…who had himself been drawn from the ranks of the military History has not been newly made – it has only been repeated. Since the 1952 Egyptian Revolution, when army officers overthrew King Farouk I, the nation has been run by members of the military…until Friday, by former Air Force General Hosni Mubarak. And now, Omar Suleiman (Egypt's spy chief until Mubarek appointed him to Vice President on January 29) will also serve on the Armed Forces Supreme Council that will run the country, according to Al Jazeera. Suleiman's ascent to VP had been long in the making. According to a 2007 WikiLeaked US diplomatic cable titled 'Presidential Succession in Egypt' – "Egyptian intelligence chief and Mubarak consigliere, in past years Soliman (sic) was often cited as likely to be named to the long-vacant vice-presidential post. Many of our contacts believe that Soliman, because of his military background, would at least have to figure in any succession scenario." In addition to Suleiman being accused of viciously stamping out political opposition and killing, jailing and brutalizing public dissenters during his 17 years as intelligence chief, he was also the "CIA's man in Cairo" for, in part, devising and implementing the US rendition program. Beginning under President Clinton and continuing through the George W. Bush regime, the US, instead of bringing suspected enemies of the state (i.e., "terrorists") to trial, would kidnap them and send them to Egypt, the destination of choice, to be interrogated and tortured. Heading the Supreme Council of the newly "liberated" Egypt is Defense Minister Field Marshal Mohamed Hussein Tantawi, who, according to a WikiLeaked 2008 diplomatic cable, is referred to by mid-level Egyptian officers as "Mubarak's poodle" – incompetent and archaic but intensely loyal to his President. The cable assesses Tantawi as having "opposed both economic and political reforms that he perceives as eroding central government power." Other Council members include Defense Minister Lt. General Sami Anan, chief of staff of the Egyptian army, and Air Marshal Ahmed Shafiq, the new prime minister – all stalwart Mubarak supporters. Yet, despite those in charge being the antithesis of democracy, President Obama proclaimed, "Egyptians have made it clear that nothing less than genuine democracy will carry the day. The people of Egypt have spoken – their voices have been heard and Egypt will never be the same." "It's an Egyptian version of 'Change We Can Believe In,'" reported our man on the scene of the insurrection, John Anthony West, Executive Editor of the Trends Journal. "The people cheer and wave flags, and say exactly the same stupid things except in Arabic. Even the idiot exultation of the press whores sounds the same!" commented West, who arrived in Egypt two days before the protests began on January 25th, and has just returned to the States. Mr. West warns, "Expect something even more dramatic, drastic and long-lasting when the nationwide, inescapable non-change sinks in a few months from now." As with Egypt, in the "Democratic" USA, politicians, media and the nation-at-large put their trust and better judgment in the hands of their glorious, benevolent, military men and their magnificent war machines. Yet, as history has long proven, military rule, (decried as "juntas" in countries the US does not do business with) is invariably brutal and only infrequently does legislative power return to the people. If elections are held they are usually rigged and the only change is a change of clothes – from a tailored General's uniform to a tailored Armani suit. Meet the new boss, same as the old boss. Trend Forecast: Getting rid of one person does not make a revolution. As aptly noted by such infamous "revolutionaries" as Marx, Lenin, and Pol Pot, no revolution can succeed that doesn't replace all members of the former ruling class. In Egypt, the military class still rules and the power of the 18-member Supreme Council of the Armed Forces goes uncontested. The Council's first actions have been a suspension of the Constitution, dissolution of Parliament and imposition of a ban on labor strikes. In what appears to be a concession to protestors, the Council has promised to stay in power only on a temporary basis, and to hold fair and open elections within six month's time…which is essentially the same election timetable proposed by Mr. Mubarak. While no one can predict whether the military rulers will relinquish power and allow free elections, what can be assumed is that they will not willingly forego the estimated $2 billion in annual US aid the Egyptian government receives. Since Mubarak's exit, Beltway policy wonks and political front-men have been urging Washington to funnel funds to "pro democracy" groups in Egypt as part of an effort to influence the shape of the next government, to insure "stability" and support US foreign policy interests. Trend Forecast: The developments in Tunisia, Egypt, and now spreading to Yemen, Algeria and beyond, are the manifestation of a trend long in the making – one we predicted in our "Off With Their Heads 2.0" Autumn Trends Journal. Not confined to North African and Middle Eastern nations, what is now unfolding is a prelude to a series of civil wars that will lead to regional wars, that will lead to the first "Great War" of the 21st century. Regards, Gerald Celente [Editor's Note: The above Trend Alert is available as part of a subscription to The Trends Journal, which is published by Gerald Celente. The Trends Journal distills the ongoing research of The Trends Research Institute into a concise, readily accessible form. Click here to learn more about and subscribe to The Trends Journal.] Egypt Welcomes the New Boss, Same as the Old Boss originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.
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| Accumulate Gold but Be Cautious on Silver Posted: 16 Feb 2011 06:23 AM PST Why is Silver continuing to outperform Gold? The Silver/Gold ratio tends to lead or follow the stock market. Risk assets are outperforming. Silver is outperforming Gold as a risk asset. It is not outperforming for monetary reasons. Read More...
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| Soros Raises Gold Holding 0.5% in Fourth Quarter Posted: 16 Feb 2011 06:15 AM PST "Possibility of Gold Breaking to New Highs: Richard Russell. U.S. Mint's gold eagle sales continue to surge. Interviews with Eric Sprott and Hugo Salinas Price...and much more. " Yesterday in Gold and Silver The pop in the gold price just before the London open yesterday morning was pretty much all the excitement there was on Tuesday. Gold made a brief rally attempt at the Comex open at 8:20 a.m. Eastern...but that was pretty much it for the day. Gold's high price tick was $1,377.90 spot which occurred 8:30 a.m. in New York. The silver spiked up a bit the same time as gold...and from there, silver worked itself slowly higher. The high tick was shortly before lunch in London...which was close to the London silver fix. But, from that high, the silver price came under selling pressure after every rally attempt...and silver finished up less than 20 cents from its Monday close. The dollar swung within a 25 basis point range, both up and down, fr...
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| Couple Of Quickies Today (More On Housing (sorry))... Posted: 16 Feb 2011 06:03 AM PST The Mortgage Bankers Association posted its weekly mortgage applications index today. Applications to purchase homes are absolutely plummeting in free-fall fashion. The non-adjusted/non-manipulated number was down 18.2% from last year. Here's the LINK Deflationism should be dead by now. I just got off the phone with a good friend/colleague who operates a food retailing business. He told me standard non-organic hothouse tomatoes have gone up in price to $51 per case from $25 last week and $42 per case this last Monday. He said he's selling bulk food containers like there's no tomorrow. Here's a nice little quickie on inflation: LINK Finally, I don't normally like to litter my blog with garbage from clusterstock.com, but this is a great guest post that was on there today that nicely summarizes the catastrophic problems which are taking this country down. You just need to look at the graphs, most of which are from the Fed: LINK Make no mistake about it, assuming it is available, your ability to buy food will be protected ONLY if you have plenty of gold and silver - physical gold/silver, not CEF, GLD, SLV, GTU, or even PHYS, unless yo have enough money to buy enough share PHYS shares to convert into gold (about $550k today). Buona giornata/serata a tutti! 
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| Deferring Recession: A Short History of the “Age of Bubbles” Posted: 16 Feb 2011 06:00 AM PST Bill Bonner View the original article. February 16, 2011 10:34 AM The Dow fell 41 points yesterday…for no particular reason. Gold went up $9…again, for no particular reason. So, we will continue our description of what is really going on…for no particular reason other than curiosity. And self-protection. And personal enrichment. And bragging rights. Future historians, when they finally get a grip on it, will no doubt dub our time as the "Age of Bubbles." The feds created a bubble in the '90s – a bubble in tech stocks. That bubble was driven not just by the US feds…but by the Japanese feds too. The Japanese were in a major correction. They tried to get out of it using the same old tricks – cheap money, deficit spending, massive borrowing and even QE. This led to the "yen carry trade," in which speculators borrowed yen at zero interest rates and invested the money in the hot market of the time – Wall Street! It was the go-go dot.com era. The Dow bubbled up&#...
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| Gold Slips Ahead of 61.8% Retracement Posted: 16 Feb 2011 06:00 AM PST courtesy of DailyFX.com February 16, 2011 07:52 AM 240 Minute Bars Prepared by Jamie Saettele To review, “decline from 1425.40 is in 5 waves, indicating that the larger trend is most likely down. Price is closing in on the 61.8% at 1380.82 and a move above there would shift focus to the 1393.90-1400 region. This area is defined by the 1/13 high, 100% extension (when counting the advance as an a-b-c-x-a-b-c), and 78.6% retracement. A drop below 1344 is needed to suggest that a secondary top is in place....
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| LGMR: Gold "Dragged Higher" by Surging Silver, UK Inflation-Forecast Jumps Posted: 16 Feb 2011 05:45 AM PST London Gold Market Report from Adrian Ash BullionVault Weds 16 Feb., 08:40 EST Gold "Dragged Higher" by Surging Silver as Dollar Rises, UK Inflation-Forecast Jumps THE PRICE OF GOLD rose once again on Wednesday morning in London, touching its best level in almost a month at $1378 per ounce as world stock markets pushed higher together with the US Dollar. Crude oil prices on both sides of the Atlantic also rose, bucking a dip in the broader commodity markets, as the "spread" between Europe's Brent contract and US West Texas Intermediate rose back to last week's all-time records of $16 per barrel – a premium of nearly one fifth. "UK inflation was the catalyst for [gold's] move higher on Tuesday morning," claims one London dealer in a note. "Chinese Jan. Consumer Price Inflation was the main event for the day," says MKS Finance's precious metals team in Geneva. "A surge in US import prices of 1.5% month-on-month during January further fuelled inflationary concerns," reckons...
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| Deferring Recession: A Short History of the “Age of Bubbles” Posted: 16 Feb 2011 05:34 AM PST The Dow fell 41 points yesterday…for no particular reason. Gold went up $9…again, for no particular reason. So, we will continue our description of what is really going on…for no particular reason other than curiosity. And self-protection. And personal enrichment. And bragging rights. Future historians, when they finally get a grip on it, will no doubt dub our time as the "Age of Bubbles." The feds created a bubble in the '90s – a bubble in tech stocks. That bubble was driven not just by the US feds…but by the Japanese feds too. The Japanese were in a major correction. They tried to get out of it using the same old tricks – cheap money, deficit spending, massive borrowing and even QE. This led to the "yen carry trade," in which speculators borrowed yen at zero interest rates and invested the money in the hot market of the time – Wall Street! It was the go-go dot.com era. The Dow bubbled up…and then popped. We thought – wrongly – that the game was over. We expected stocks to go down, down, down…until they finally reached a trough at real values. Then, with the mistakes wrung out of the system, and equities at good prices, a new bull market could begin. Instead, the feds stalled the correction, reversed the bear market, and created an even bigger bubble – this time in housing and finance. The US feds followed the Japanese model. Faced with even a feeble recession, the Fed dropped rates to below the level of consumer price inflation – and left them there for years. The Bush administration, meanwhile, took the budget deep into deficit territory. Do you remember the "Recession that Wasn't"? That was the failed mini-recession of '01. The authorities attacked it with so much new money and credit it was over before it had barely begun. Consumers kept borrowing and spending. Investors went right back into the stock market. Speculators moved on to the next hot market. This time speculators borrowed to buy mortgage backed securities – and derivatives that only the mathematicians seemed to understand. Result: Bubble II. After tracking inflation for nearly 100 years, house prices suddenly doubled. The Dow went over 14,000. Wall Street went wild. This bubble sprang a leak in '07. By '09 it was losing air fast. Once again, the feds got out the pumps. We've been following the story for the last 5 years…and yet another bubble is taking shape. Food prices are rising so fast they are causing riots. Gold is edging back up towards $1,400. Stock prices are still going up too – nearly 2 years after the rally began on March 9th of 2009. David Rosenberg explains (in The Financial Times) what it means for the stock market: Just as the prior bear market rally was built on a shaky foundation of unsustainable credit and house price appreciation, the current bear market rally has been built on an even shakier ground of surreal public sector intervention. But no use telling investors. They go for whatever is hot. And stocks are hot. Commodities are even hotter. Practically everyone believes that the economy is recovering…inflation rates will go up…and that the hot markets will get even hotter. "Don't fight the Fed," they say to one another. And everybody knows what mischief the Fed is up to. It used to be a crime to print money without any backing whatsoever. Now, the Fed is doing it in broad daylight. It's pledged to add $600 billion to the nation's monetary base before the end of June. "If that ain't a guarantee of more inflation," says one investor to another, "I don't know what is." But is it? Has there ever been a bubble that hasn't popped? Not that we've ever heard of. Stick with the program, dear reader…sell stocks on rallies (like this one)…but gold on dips. That was our advice for the last decade. It's still good advice. Or, if you want to move into this decade's advice, here's the formula: Sell Japanese government bonds on rallies, buy Japanese small cap stocks on dips. The bubble in Japanese government bonds will blow up too. When it does, Japanese investors will rush to low-priced equities. Count on it. Okay, so it's a little harder to do. But who said investing was going to be easy? Bill Bonner Deferring Recession: A Short History of the "Age of Bubbles" originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.
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| Matt Taibbi's Latest: " Why Isn't Wall Street In Jail?" Posted: 16 Feb 2011 05:33 AM PST
From Matt Taibbi of Rolling Stone: Why Isn't Wall Street in Jail? Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer. "Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that." I put down my notebook. "Just that?" "That's right," he said, signaling to the waitress for the check. "Everything's fucked up, and nobody goes to jail. You can end the piece right there." Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people. The rest of them, all of them, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted. Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Most of these firms were directly involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses. Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What's more, many of these companies had corporate chieftains whose actions cost investors billions — from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before his unit imploded, to the $263 million in compensation that former Lehman chief Dick "The Gorilla" Fuld conveniently failed to disclose. Yet not one of them has faced time behind bars. Instead, federal regulators and prosecutors have let the banks and finance companies that tried to burn the world economy to the ground get off with carefully orchestrated settlements — whitewash jobs that involve the firms paying pathetically small fines without even being required to admit wrongdoing. To add insult to injury, the people who actually committed the crimes almost never pay the fines themselves; banks caught defrauding their shareholders often use shareholder money to foot the tab of justice. "If the allegations in these settlements are true," says Jed Rakoff, a federal judge in the Southern District of New York, "it's management buying its way off cheap, from the pockets of their victims." To understand the significance of this, one has to think carefully about the efficacy of fines as a punishment for a defendant pool that includes the richest people on earth — people who simply get their companies to pay their fines for them. Conversely, one has to consider the powerful deterrent to further wrongdoing that the state is missing by not introducing this particular class of people to the experience of incarceration. "You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once." But that hasn't happened. Because the entire system set up to monitor and regulate Wall Street is fucked up. Just ask the people who tried to do the right thing. Here's how regulation of Wall Street is supposed to work. To begin with, there's a semigigantic list of public and quasi-public agencies ostensibly keeping their eyes on the economy, a dense alphabet soup of banking, insurance, S&L, securities and commodities regulators like the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC), as well as supposedly "self-regulating organizations" like the New York Stock Exchange. All of these outfits, by law, can at least begin the process of catching and investigating financial criminals, though none of them has prosecutorial power. The major federal agency on the Wall Street beat is the Securities and Exchange Commission. The SEC watches for violations like insider trading, and also deals with so-called "disclosure violations" — i.e., making sure that all the financial information that publicly traded companies are required to make public actually jibes with reality. But the SEC doesn't have prosecutorial power either, so in practice, when it looks like someone needs to go to jail, they refer the case to the Justice Department. And since the vast majority of crimes in the financial services industry take place in Lower Manhattan, cases referred by the SEC often end up in the U.S. Attorney's Office for the Southern District of New York. Thus, the two top cops on Wall Street are generally considered to be that U.S. attorney — a job that has been held by thunderous prosecutorial personae like Robert Morgenthau and Rudy Giuliani — and the SEC's director of enforcement. The relationship between the SEC and the DOJ is necessarily close, even symbiotic. Since financial crime-fighting requires a high degree of financial expertise — and since the typical drug-and-terrorism-obsessed FBI agent can't balance his own checkbook, let alone tell a synthetic CDO from a credit default swap — the Justice Department ends up leaning heavily on the SEC's army of 1,100 number-crunching investigators to make their cases. In theory, it's a well-oiled, tag-team affair: Billionaire Wall Street Asshole commits fraud, the NYSE catches on and tips off the SEC, the SEC works the case and delivers it to Justice, and Justice perp-walks the Asshole out of Nobu, into a Crown Victoria and off to 36 months of push-ups, license-plate making and Salisbury steak. That's the way it's supposed to work. But a veritable mountain of evidence indicates that when it comes to Wall Street, the justice system not only sucks at punishing financial criminals, it has actually evolved into a highly effective mechanism for protecting financial criminals. This institutional reality has absolutely nothing to do with politics or ideology — it takes place no matter who's in office or which party's in power. To understand how the machinery functions, you have to start back at least a decade ago, as case after case of financial malfeasance was pursued too slowly or not at all, fumbled by a government bureaucracy that too often is on a first-name basis with its targets. Indeed, the shocking pattern of nonenforcement with regard to Wall Street is so deeply ingrained in Washington that it raises a profound and difficult question about the very nature of our society: whether we have created a class of people whose misdeeds are no longer perceived as crimes, almost no matter what those misdeeds are. The SEC and the Justice Department have evolved into a bizarre species of social surgeon serving this nonjailable class, expert not at administering punishment and justice, but at finding and removing criminal responsibility from the bodies of the accused. The systematic lack of regulation has left even the country's top regulators frustrated. Lynn Turner, a former chief accountant for the SEC, laughs darkly at the idea that the criminal justice system is broken when it comes to Wall Street. "I think you've got a wrong assumption — that we even have a law-enforcement agency when it comes to Wall Street," he says. In the hierarchy of the SEC, the chief accountant plays a major role in working to pursue misleading and phony financial disclosures. Turner held the post a decade ago, when one of the most significant cases was swallowed up by the SEC bureaucracy. In the late 1990s, the agency had an open-and-shut case against the Rite Aid drugstore chain, which was using diabolical accounting tricks to cook their books. But instead of moving swiftly to crack down on such scams, the SEC shoved the case into the "deal with it later" file. "The Philadelphia office literally did nothing with the case for a year," Turner recalls. "Very much like the New York office with Madoff." The Rite Aid case dragged on for years — and by the time it was finished, similar accounting fiascoes at Enron and WorldCom had exploded into a full-blown financial crisis. The same was true for another SEC case that presaged the Enron disaster. The agency knew that appliance-maker Sunbeam was using the same kind of accounting scams to systematically hide losses from its investors. But in the end, the SEC's punishment for Sunbeam's CEO, Al "Chainsaw" Dunlap — widely regarded as one of the biggest assholes in the history of American finance — was a fine of $500,000. Dunlap's net worth at the time was an estimated $100 million. The SEC also barred Dunlap from ever running a public company again — forcing him to retire with a mere $99.5 million. Dunlap passed the time collecting royalties from his self-congratulatory memoir. Its title: Mean Business. And the conclusion: So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero. The math makes sense only because the politics are so obvious. You want to win elections, you bang on the jailable class. You build prisons and fill them with people for selling dime bags and stealing CD players. But for stealing a billion dollars? For fraud that puts a million people into foreclosure? Pass. It's not a crime. Prison is too harsh. Get them to say they're sorry, and move on. Oh, wait — let's not even make them say they're sorry. That's too mean; let's just give them a piece of paper with a government stamp on it, officially clearing them of the need to apologize, and make them pay a fine instead. But don't make them pay it out of their own pockets, and don't ask them to give back the money they stole. In fact, let them profit from their collective crimes, to the tune of a record $135 billion in pay and benefits last year. What's next? Taxpayer-funded massages for every Wall Street executive guilty of fraud? The mental stumbling block, for most Americans, is that financial crimes don't feel real; you don't see the culprits waving guns in liquor stores or dragging coeds into bushes. But these frauds are worse than common robberies. They're crimes of intellectual choice, made by people who are already rich and who have every conceivable social advantage, acting on a simple, cynical calculation: Let's steal whatever we can, then dare the victims to find the juice to reclaim their money through a captive bureaucracy. They're attacking the very definition of property — which, after all, depends in part on a legal system that defends everyone's claims of ownership equally. When that definition becomes tenuous or conditional — when the state simply gives up on the notion of justice — this whole American Dream thing recedes even further from reality.
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| Gold turns higher on Iran war ships report Posted: 16 Feb 2011 05:03 AM PST By Claudia Assis Gold had wavered between small gains and losses earlier as tensions in the Middle East, as well as worries about inflation and the European sovereign debt crisis, supported buying, but the metal had felt the pinch of a stronger dollar. The dollar has since turned lower. … "Anything that brings geopolitical instability, that's the signal for investors to buy gold," said Adam Klopfenstein, a senior trading analyst with Lind Waldock in Chicago. Two Iranian warships were making their way through Syria through the Suez canal, Israel's foreign minister was quoted as saying. He described the move as a "provocation" by the Iranian government. [source]
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| Gold, oil advance after reports on Iran's warships Posted: 16 Feb 2011 04:51 AM PST By Claudia Assis … Gold for April delivery added $7.70, or 0.5%, to $1,381.50 an ounce. [source]
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| WaveStrength PowerSignal Calls Pop in Gold Prices Posted: 16 Feb 2011 04:35 AM PST
Earlier this month, when gold prices were trading below $1,330, Adam released this chart of the Market Vectors Gold Miners ETF (GDX:NYSE). Here's what he had to say... The wags have been labeling the recent downward slide in gold prices as the end... a blow-off top... Gold Armageddon... yadda, yadda, yadda. But when you take a look at the charts for Market Vectors Gold Miners ETF (GDX:NYSE), you can see that gold cyclically retraced within its price channel some 15 times over the past 24 months without challenging the integrity of that rising channel in any way, shape or form. Right now we have the exact same stacked buy signals -- support at the bottom of the rising price channel, a Fibonacci retracement marker and the 200-day moving average, a shift to positive momentum and a positive MACD gap -- that have repeatedly yielded upside strokes averaging some 26%. Now, 26% is a nice average, and Adam's chart is already starting to pan out. Since Feb. 4, when WaveStrength PowerSignal readers first got this chart in their inboxes, the GDX has climbed 2%. That means there's still plenty of upside left in this move, and you can find the exact recommendation online, available to all WPS subscribers. Gold prices themselves have indeed moved higher and were trading back above $1,370 yesterday. This bounce higher is perfectly in line with what we've talked about here in Smart Investing Daily. But let's take a closer look at those "stacked buy signals" that Adam talked about. What are they, and what do they mean? (By the way, investing doesn't have to be complicated. Sign up for Smart Investing Daily and let my fellow editor Jared Levy and I simplify the stock market for you with our easy-to-understand investment articles.) Gold Miners ETF Finds SupportAdam talks about the Market Vectors Gold Miners ETF finding support at "the bottom of the rising price channel, a Fibonacci retracement marker and the 200-day moving average." This "node" of support is clearly marked on the chart, not only just before Adam's predicted movement for Market Vectors Gold Miners ETF over the next couple months, but in two other instances that both yielded results better than 25%. These individual supports are powerful in and of themselves, but taken together mark the beginning of a big move higher. Bottom of a Rising Price Channel -- When prices move higher within a channel, it represents the natural price corrections of the company or asset without significant changes to the fundamental value of that company. It's really just investors deciding if the company or asset is overbought or oversold. So long as the asset makes higher highs and higher lows, the integrity of the channel remains strong; and when prices trade down to the bottom of that channel, it can signal a good time to buy. Fibonacci Retracement Marker -- Many technical analysts use something called Fibonacci retracements. These are scales drawn on a specific -- and significant -- price movement... from a bottom to a top, or a top to a bottom. For Market Vectors Gold Miners ETF, the bottom started back in late 2008, and ends at the most recent top in late 2010. This scale is measured from 100% at the bottom to 0% at the top (when using them on a rising price). The purpose is to find specific percentages of the price move that could provide support for prices during a price correction. Fibonacci retracements have four key markers: at 23.6%, at 38.2%, at 50% and at 62.8%. Analysts who use Fibonacci retracements find that when prices correct from a high peak, these percentages offer points of support. The inverse is true when prices have fallen significantly... and the retracement markers become points of resistance. 200-Day Moving Average -- Moving averages show the average price of a stock or asset over a specific time frame. For the 200-day moving average, this shows the average price of the stock over the past 200 days. These averages kind of smooth out the price movements of a stock, which makes it easier for investors to see how much an asset really is moving. Moving averages, particularly when they survey a larger number of days, can be key indicators of support or resistance. In Market Vectors Gold Miners ETF's case, prices climbed quickly between August 2010 and December 2010, which pushed prices farther away from the 200-day moving average. When prices corrected back down to that average, they found support. Investors also use moving averages to gauge momentum. A rising 200-day moving average is more likely to provide support than a falling 200-day moving average, and Adam's mention of rising momentum as a specific indicator itself is another level of support. The convergence of these support points is what Adam calls "stacked buy signals," because all have appeared to have halted the Market Vectors Gold Miners ETF's price decline. These buy signals are then combined with another indicator: MACD. Moving Average Convergence Divergence -- This indicator measures two separate moving averages as compared to a third moving average that functions as "zero." Sound confusing? It is, but it's worth understanding, as MACD can provide investors with key buy and sell points. MACD compares a 26-day moving average to a 12-day moving average. Because of the difference in time frames, the 12-day moving average is more sensitive to price changes than the 26-day moving average. That means these two averages oscillate differently, and the changes in their relationship mean a lot. These two moving averages are then overlaid on a nine-day moving average that becomes a signal line. Its value doesn't change. It essentially becomes zero -- just a way to compare the movement of the 26-day and 12-day averages to something static. Those are the basics... Here's how to interpret those movements. In general, when both moving averages cross above the signal line, it's a bullish signal. When they cross below, it's considered bearish. But the relationship between the two moving averages -- the convergence and divergence -- is even more important. Because the 12-day moving average oscillates faster than the 26-day moving average, when the two meet or cross, it becomes a powerful indicator. When the 12-day moving average converges with the 26-day moving average, it could signal the end of a trend. When the 12-day diverges, it could signal a big price move is in the works. With GDX, the 12-day moving average crossed above the 26-day moving average and was quickly moving higher. That means the immediate downtrend in GDX's prices was over and that investors could expect a big move higher. That this divergence happened at the same time the GDX found support on three different levels with rising momentum is a huge indication that the Market Vectors Gold Miners ETF is headed north. As I said before, the GDX has jumped 2% higher, but could climb as much as 26% higher. This move is just beginning, and Adam and Jared's recommendation on this move could realize even more gains. WaveStrength PowerSignal subscribers can immediately access this alert online. And those interested in joining WaveStrength PowerSignal can learn more about Adam's options-trading service. Article brought to you by Taipan Publishing Group. Additional valuable content can be syndicated via our News RSS feed. Republish without charge. Required: Author attribution, links back to original content or www.taipanpublishinggroup.com. {jtagstpg} {authorstpg} Other Related Sources:
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| Chinese Demand: Which Is a Better Short, Gold or the Miners? Posted: 16 Feb 2011 04:30 AM PST Jeffry Chmielewski submits: The Chinese have an inflation problem because of their dollar peg. Keeping the peg leads to printing of Yuan, but the Yuan stays in the country - the Chinese can't invest anywhere else. They have no choice but to buy hard assets -- real estate, gold, etc. Chinese gold demand increased by 100+ tons in a year for this reason. China is the Hotel California. You can check in, but you can never leave. You can't take your money out of the country, so you buy gold. Or four apartments. Or a new Buick. But China knows this, and they're trying to fix it. Three rate increases since October, increased bank reserves, and talk of allowing investment outside of the country -- all of these are very bearish for Chinese gold demand. The Chinese demand was a one-off scenario in 2010, and it will decline in 2011 as the Chinese Complete Story »
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| Obama Administration calls for 5% royalty on gross proceeds of mines Posted: 16 Feb 2011 04:17 AM PST by Dorothy Kosich The President is proposing a number of new royalties and fees on both hardrock and coal mining, along with reductions on oil and gas subsidies, which he says will save the country $3 billion over the next 10 years. The Office of Management and Budget (OMB) said the President's budget "provides a better return to taxpayers from mineral development."
"A number of recent studies by the Government Accountability Office and DOI's Inspector General have found that taxpayers could earn a better return through more rigorous oversight and policy changes, such as charging appropriate fees and reforming how royalties are set," the OMB said. … Senate Majority Leader Harry Reid of Nevada, a longtime advocate of Nevada's gold mining industry, said, "I'm willing to consider any proposal for mining reform that protects the mining industry, doesn't kill jobs and shares revenue with the state." [source] RS View: The old warning still applies — as gold heads ever higher, expect the ever-hungry government to seek an increasing portion of the abundant natural wealth that miners are tapping into. As a gold-minded investor, the easiest way to dodge this official bite is to choose gold in-hand rather than gold in the ground; i.e., invest your money for the metal instead of the mining operation, thus accumulating the output not the input. Capiche?
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| Norseman Gold raises new cash and sets sights on production targets Posted: 16 Feb 2011 03:51 AM PST View the original article at Stockopedia February 16, 2011 02:33 AM Norseman Gold (LON:NGL) , the AIM-listed and ASX-listed Australian gold producer, has raised £10m in a private share placing priced at 45p per share. Funds from the deal have been earmarked to bring its North Royal open pit into production – the company's fourth mine at its Norseman Gold project in the Eastern Goldfields of Western Australia. The fundraising follows an £11.25m share placing last October, which was also priced at 45p, to pay for work at North Royal. Norseman has been working hard on speeding up the development of the two newest mines – OK Decline and North Royal – because production levels are falling away at the existing Bullen and Harlequin Declines. In today's update, the company said that forecast production for 2010/11 was now 65,000 ounces recovered. That is down substantially on the 105,000 to 110,000 ounces recovered that it was forecasting last October. In addition, the cost of recovery ...
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| Why Silver Sales Demand Excitement Posted: 16 Feb 2011 03:31 AM PST Being a Big Silver Buff (BSB) like I am, I note the ups and downs of silver. Lately, it's been mostly the downs. This strange downtrend in the silver price makes me look like an idiot after I so arrogantly Highly, Highly Recommended (HHR) that people buy silver, buy silver, buy silver all these years, and I'm pretty testy about it, too. I mean, the sheer fundamentals of silver make me giddy with excitement that, thanks to the manipulation of silver prices via the commodity futures since (by one estimate) 1983, the low market price of silver is an unbelievable, unbelievable bargain. And, apparently, a lot of other people think so, too, as in his essay, "Silver Eagle Sales Hit Their Second-Highest Ever", Addison Wiggin, Publisher of The Daily Reckoning reported that "The US Mint sold 6,422,000 Silver Eagles in January 2011 – half again as many as were sold in the previous record-setting month of November 2010." You can see by the way my hands are shaking with excitement that I am titillated by this, which is odd in that I don't ever remember being "titillated" before, and if I had, I probably would not have admitted it because it sounds so weird. But titillated it is! I'm very excited by the fact that in November 2010, a few short months ago, the US Mint sold a record amount of Silver Eagles, and now, fast-forwarding a few short months back to today, they have surpassed that mark by a whopping 150%! Mr. Wiggin says, "There are a few nattering nabobs who say the figures are skewed because the Mint credited some December sales to January. So what? If you add up December and January sales and average them, you still get the second-highest monthly total ever…right behind November 2010." To his eye, the "fact is" that "demand is intense." Of course, he may have been prompted to say this by reading ahead in his own newsletter, The 5-Minute Forecast, to the part where it looks like the supply/demand dynamic is out of whack, where it reads, "After just one week, Canada's biggest bullion bank sold out its limited stock of 100-ounce silver bars. Now ScotiaMocatta has no silver bars to sell in any size. One ounce, 5 ounces, 100 ounces and the kilobars – all gone." All gone! As in zero, zilch, nada! So what does THAT do to the old law of supply-and-demand where price adjusts up or down to clear the market? Hahaha! This is not only very interesting, but is also the subject of today's Mogambo Pop Quiz (MPQ), which involves me finding an obscure fact, proving that you do not know the answer (and thus help you prepare for a lifetime of failure), but that I do know it, the object being both pedantic (in that you will learn something), and also so that everybody will think I am smart to know such an esoteric thing, and then maybe people will stop telling me to shut up all the time and calling me "stupid" and "ridiculous." So, the question for today's MPQ is, "What do you call a thing that has such voracious demand that the marketplace is sold out of it, yet the price goes down, seemingly violating the law of supply and demand, which would say that the price should be rising?" Well, grading your test papers, I see several of you came up with the answer "Giffen good," named after the guy who came up with the term to describe the phenomenon of the poor buying more bread as the price of bread rose, which seemed utterly paradoxical. Paradoxical, that is, until it was shown that prices were rising so high that the poor could increasingly not afford to buy other foods, too, because they were simply unaffordable, and thus the poor increased their consumption of bread to make up for the deficit in their diets. So, this Giffen good answer was a good guess, but actually incorrect. Actually, the correct answer is, "There is no such thing as something whose price falls as demand rises, you morons! And even if there was such a preposterous thing, it would not be a Giffen good, because to be a Giffen good, demand should fall as the price falls, or demand should rise when the price rises, neither of which is happening, as proved in previous paragraphs, which clearly, clearly show that the price is falling even as high demand has cleared the marketplace due to insufficient supply! It's just a weird circumstance of the corruption in the silver market, government and regulatory complicity, and the foul Federal Reserve creating more money to finance the Whole Freaking Thing (WFT)!" Of course, such massive manipulations cannot long continue, which means that if you are not buying gold and silver at every opportunity, then you are probably really stupid, and too stupid to come up with some clever ways to raise money with which to buy gold and silver, like telling your kids that they weren't getting their allowances this week, whereupon you find, to your delighted surprise, that you have a few extra bucks with which to buy gold and silver! Like I always say, "Whee! This investing stuff is easy!" The Mogambo Guru Why Silver Sales Demand Excitement originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.
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| ATB 5-Ounce Silver Bullion Coin Prices Decline Posted: 16 Feb 2011 03:29 AM PST Secondary market prices for the 5-ounce 2010 America the Beautiful Silver Bullion Coins™ are on the decline. While not entirely surprising to all, the news is welcomed by many who have been patiently waiting for the market to correct what they felt were unrealistic price points.
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![clip_image001[5]](http://jsmineset.com/wp-content/uploads/2011/02/clip_image00151.jpg "clip_image001[5]")
This week, I want to do something a little different than just run a guest article... I want to take apart a recent article from WaveStrength PowerSignal editor Adam Lass, with contributions from Jared.
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