Gold World News Flash |
- GoldSeek.com Radio: Charles Goyette, David Morgan, The International Forecaster, and your host Chris Waltzek
- International Forecaster February 2011 (#6) - Gold, Silver, Economy + More
- Gold Market Update
- G-10 minutes from 1997 show central bankers conspiring about gold
- George Washington paperwork
- Crude Rises on Supply Worries, Gold Nears $1400 on Middle East Tension
- Silver Default Looms?!
- Ongoing Overnight Short Squeeze Takes Silver To Fresh 31 Year High
- The Future of Silver Mining
- Gold Market Update - Feb 20, 2011
- Buying T-Bonds for Dummies
- Silver Market Update - Feb 20, 2011
- 18 Sobering Facts Which Prove That The Middle Class Is Not Being Included In This “Economic Recovery”
- Zero Hedge notes GATA's partial victory over the Fed
- Weekly precious metals review at King World News
- ‘Fisher' at G-10 gold meeting was likely NY Fed market rigger Peter Fisher
- Silver in a Clear Uptrend
- Precious Metals Rise to New Heights as Turmoil Spreads in the Middle East
- Priced in Gold, Stocks Continue to Struggle
- Graham Summers’ Free Weekly Market Forecast (Gold Breakout Edition)
- Silver Market Update
- Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 2% and 7% on the Week
- How Fear of Economic Shock Drove China’s State Control and Forex Hoarding
- I coined the term Silver and Gold vigilantes, so yes, they have taken over for the reasons I gave five years ago
- NYSE to Merge with Deutsche Boerse
- Jewelry Drives the Gold Love Trade
- As part of GATA's ongoing crusade against the Fed's gold price manipulation efforts, the organization recently succeeded in extracting some novel clues on how and why the Fed views its sworn duty as keeping the price of gold low.
- Jay Taylor on Inflation Vs. Deflation, the Possibility of a Gold Standard
- The US Today: What Happens When You Let Investment Bankers Run a Country
- Gold and Silver Prices Strengthen as the USD Weakens
- Zero Hedge notes GATA's partial victory over the Fed
- Does A Surging Gold Price Mean The Fed Will Be Forced To Sell Treasurys?
- “At first I thought metals were already in a bubble and that the economy thing would blow over in a few years, now I see things are even worst than I realized.”
- Did you know that . . . Bahrain's banking sector is far and away the biggest (relative to GDP) of any country in the region so that a collapse could cause a global bank run?
- “I'm hereby officially subscribing to the SLA and GLA.”
- Should I buy the Mar 11 SLV 30 call?
- "Massive Collapse" For Angela Merkel Following Today's Hamburg Election As Germans "Just Say No" To More European Bail Outs
- Bargains Scarce, but New Vulture Bargain Named
- A Look At The Week Ahead: Little Economic Data With All Eyes On The Libyan Revolution
- Budget Deficits, Pension Plans, and the Seeds of Rebellion
- Dual Mandate Quagmire
- China becomes World's Largest Producer of Gold
- SILVER: A No Brainer
- Silver Bankers May Be Sitting on Huge Derivatives Losses and the Fed May Be Funding Them
- The ecstasy of gold: Ennio Morricone
- On Rick Santelli's "Meet The Press" Appearance, A $113 Trillion Future Rounding Error, And The Metamorphosis Of The American Dream To A Nightmare
- Gold and Silver Options Expiration At the Comex This Week
- Gold Uptrend Lacks Enthusiasm
- Gold Rally About to Reverse to the Downside Again
- Silver Showing Amazing Strength
| Posted: 21 Feb 2011 04:00 PM PST 1st Hour: Headline news & the Market Weatherman Report. Spotlight Stock Picks. Host Chris Waltzek & Bob Chapman, The International Forecaster discussion and answer listener's questions. 2nd hour: David Morgon, Silver-investor.com Charles Goyette, The Dollar Meltdown
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| International Forecaster February 2011 (#6) - Gold, Silver, Economy + More Posted: 21 Feb 2011 04:30 AM PST The Fed tells us there is no inflation. Somewhere down the road we are told interest rates will be allowed to rise. After nine months of monetary injections employment is yet to really improve. The concept of an exit strategy seems to have been lost in the shuffle. It isn't mentioned anymore. As a result of these failures QE2 continues and talk of QE3 is heard on Wall Street. After three years of QE1, QE2 and stimulus all that has been accomplished is the bailout in the financial sectors of the US and Europe and the purchase of Treasury and Agency securities.
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| Posted: 21 Feb 2011 04:00 AM PST Gold and silver have reversed to the upside and advanced substantially exactly as predicted in the last updates posted on 30th January, and now the majority of commentators are raving bullish again, but the internal technical condition of the sector following this rally suggests that it is about to reverse to the downside again, although longer-term the outlook remains strongly bullish.
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| G-10 minutes from 1997 show central bankers conspiring about gold Posted: 21 Feb 2011 03:05 AM PST Western government and central bank officials discussed coordinating their gold market policies at a private meeting of the G-10 Gold and Foreign Exchange Committee in April 1997, according to minutes of the meeting released to GATA today by the Federal Reserve Board upon the order of a federal court. The minutes also quote a U.S. delegate as warning that a rising gold price would increase the U.S. government's debt burden.
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| Posted: 21 Feb 2011 02:00 AM PST A friend asked me this week, in a roundabout way, if there's any mathematical limit to how high silver and gold could go under a hyperinflation outcome. Math and economic geek that I am, Zimbabwe and Weimar, Germany immediately came to mind. Hyperinflation so ravaged their bankster paper money, in the end, it only had value as heating fuel and, eventually, collector value on eBay.
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| Crude Rises on Supply Worries, Gold Nears $1400 on Middle East Tension Posted: 20 Feb 2011 06:01 PM PST courtesy of DailyFX.com February 20, 2011 08:51 PM Both crude oil and gold are rising notably as unrest in the Middle East and Africa spreads and intensifies. Commodities – Energy Crude Rises on Supply Worries Crude Oil (WTI) - $87.30 // $1.10 // 1.28% Commentary: Crude oil prices are kicking off the week to the upside as unrest in the Middle East and Africa intensifies. Clashes in Libya have turned violent, with some predicting that Muammar Qaddafi’s regime would soon fall; the country produces 1.6 million barrels a day. Riots have also broken out in Bahrain, an inconsequential oil producer, but one that neighbors oil giant Saudi Arabia. Protests have also continued in Iran, but the government there has been quite successful in squashing the opposition movement. As long as the situation in this key oil-production region of the Middle East and North Africa remains so volatile, expect prices for the commodity to remain supported. And while unrest ...
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| Posted: 20 Feb 2011 04:15 PM PST (It's about time!) Silver Stock Report by Jason Hommel, Feb 20th, 2011 I apologize in advance that this essay is entirely without humor, completely sober, and deadly serious. As I write on Sunday evening, Feb. 20th, silver prices are up another 40 cents to $33.10, another 30 year high, going back to the previous high of $50 from Jan. 1980. In the last two trading days, last Thursday and Friday, silver prices increased about a dollar per day. What's going on? As I read on the blogs, about 53,000 silver contracts for 5000 oz. each are nearing the first delivery day on Feb. 28th. At that time, each contract must be fully funded to await delivery in the following 30 days, or sold before then. By the way, 53k x 5k = 265 million oz. http://tfmetalsreport.blogspot.com/2011/02/wow.html The crazy thing is that the four COMEX approved warehouses have only about 100 mi...
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| Ongoing Overnight Short Squeeze Takes Silver To Fresh 31 Year High Posted: 20 Feb 2011 03:58 PM PST
Silver takes out $33.10, hitting a fresh 31 year high, as the relentless short squeeze leads to more body bags, and the only flight to safety currency is now the non-dilutable one (with gold on the verge of $1,400). Only $20 more to go until the all time Hunt Brother record is smashed - one/two more revolutions should do it; even better: hopefully the CME hikes margins next week: that would bring $40 silver 24 hours later. And on a more somber note, please join us for a moment of silence in remembrance of the great, the legendary, the soon to be departed Blythe Masters whose most recent zero margin, infinite PM short contraption has just sang its swan song.
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| Posted: 20 Feb 2011 03:53 PM PST By Jeff Nielson, Bullion Bulls Canada In my previous piece to this, I focused upon the definition of a "silver mine", in order to expose the biggest myth about silver: that having most of the world's silver produced as a "byproduct" of other mining is a normal state of affairs. What I demonstrated conclusively (through simple arithmetic) is that the only reason that most of the world's silver production doesn't come mostly from "primary" silver mines is purely a function of the price of silver (i.e the extremely low price). More specifically, I pointed out how it was the relentless manipulation of the price of silver – which was kept far below its "fair market value" – that resulted in the "silver mine" becoming an "endangered species". In this commentary, I intend to build upon that analysis, by explaining the implications of that analysis with respect to the creation of new silver mines. To start this process, it is first helpful to examine the gold mining industry, given the many and obvious parallels between the two metals. With respect to the gold market, knowledgeable investors are well aware that this metal has also been subjected to decades of price manipulation. While the manipulation of the gold price can be seen as "extreme" relative to the pricing of other metals, the manipulation of silver was "extreme" in relation to the price of gold. To understand this market-manipulation better, it's instructive to look at the history surrounding the "bottom" of the gold market. In this respect, there is no better place to start than with the observations made at that time by our good friends at GATA – the Gold Anti-Trust Action committee. On May 25, 1999; Bill Murphy had this to say, in a piece titled "Bottom in, bull market begins": Gold continues to make 20-year lows led by the unending barrage of selling in the physical market by Goldman Sachs…Goldman Sachs has been relentless in its selling since right before the Bank of England's announcement and has not let up since…We told you two weeks ago that the word was out in London that Goldman Sachs has a 1,000-tonne short position on its books… The "spot" price of gold on that date was $270/ounce, while the price of silver was just over $5/oz. The "announcement" which Bill Murphy alludes to is the infamous decision by future Prime Minister Gordon Brown to dump more than half of the UK's gold reserves onto the market at the absolute bottom (to bail-out Goldman Sachs?), costing his country billions of pounds. At this price, the world's gold-mining industry was decimated. Well over 90% of the world's gold mines were forced to shut-down, as only the world's absolute "richest" deposits could even be mined on a break-even basis at that price. Indeed, this reality alone is conclusive proof of that manipulation. What is important to note, however, is that at no time has the world's gold production ever been produced primarily as a "byproduct". In other words, that industry was never destroyed to the same degree as silver mining. In fact, Bill Murphy was slightly premature. The price of gold would actually decline to as low as $253/oz (approximately 6% below his call of a "bottom"), before rocketing upward more than 500% in the nearly 12 years since. My guess is that those investors who bought at $270/oz have forgiven Bill for being a little "early". The absolute "bottom" of the silver market occurred much sooner, back in 1992, with the price briefly going as low as $3.65/oz, and it averaged an amazing $3.95 throughout that year. Why is this "amazing"? Because that price represented a 600-year "low" for the silver market. More articles from Bullion Bulls Canada….
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| Gold Market Update - Feb 20, 2011 Posted: 20 Feb 2011 03:53 PM PST Clive Maund Gold and silver have reversed to the upside and advanced substantially exactly as predicted in the last updates posted on 30th January, and now the majority of commentators are raving bullish again, but the internal technical condition of the sector following this rally suggests that it is about to reverse to the downside again, although longer-term the outlook remains strongly bullish. On the 8-month chart for gold we can an array of factors pointing to a probable reversal to the downside here. In the first place it has rallied up to the strong resistance at the boundary of the Distribution Dome shown that has capped rallies for many months now. Secondly, the 50-day moving average is still in unfavorable alignment, indicating that it is too early for a sustainable uptrend to get started - this indicator looks like it first wants to drop down closer to the 200-day moving average before a major uptrend can begin, which would be normal. Thirdly, the uptrend ...
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| Posted: 20 Feb 2011 03:49 PM PST I was somewhat staggered when I saw that Total Fed Credit shot up by an incredible $31 billion dollars last week, which (in the history of new Fed Credit) is right up there with "the biggies." Another biggie was that the Fed created the money to buy $28.3 billion in US government securities! All of this in One Freaking Week (OFW)! Of course, the money went through a lot of middlemen, like the Fed banks so that they can get a little piece of this "monetizing-the-debt" action, and financial-services industry got a taste to handle the transaction since the Fed is, so they say, prohibited from dealing directly with the Treasury Department, which is issuing the deluge of bonds and desperately needs somebody really, really stupid to buy them. Since really, really stupid people with lots of money to invest is about as rare as a good 50-cent taco, nobody in their right mind is going to buy T-bonds at such high prices (and thus low yields) when the despicable Federal Reserve is creating So Freaking Much Money (SFMM), because all that new money inflation means high rates of price inflation, meaning that bond prices should fall precipitously, and especially those bonds that were already so highly-priced that they end up (in precise mathematical terms) with yield = squat, so that from then on, everybody would point at them on the street, and laugh at them, and say, "There's that doofus-goofus that bought all those high-priced government bonds at insanely-low yields when the Federal Reserve was creating So Freaking Much Money (SFMM) that only an idiot like ol' doofus-goofus here would buy them! Hahahaha!" Enter (sound of heavy footsteps) the Federal Reserve. I assume that Doug Noland was commenting about this whole nasty Federal Reserve thing, too, when he writes, "First, it was the Federal Reserve. After working studiously to create one, the Fed tossed its vaunted 'exit strategy' right into the scrapheap. They were to have moved to reduce holdings and liquidity operations that had ballooned during the 2008 financial crisis. Our central bank abruptly reversed course and instead chose to significantly expand stimulus – even in a non-crisis environment," so that now "Fed Credit has inflated $189bn in the past 14 weeks, with market perceptions of 'too big to fail' and moral hazard being further emboldened." I am perfectly delighted by Mr. Noland's use of the sophisticated phrase "further emboldened," and suddenly realize what all those people meant when they said to me, "Why don't you write like Doug Noland instead of that Stupid Mogambo Crap (SMC) you write, which makes you sound like a mental defective yammering, yammering, yammering about the same damned thing; buy gold, silver and oil when the Federal Reserve is creating so much money so that the end-result must be a hyperinflationary collapse, where all is in ruins, and bitter wailing is heard as a woeful chorus echoing across the bare, blighted, blackened, beleaguered land, except for gold and silver, which soar in value, as evidenced by that very result happening every time in the last 4,500 years when some dirtball government borrowed and spent its way into un-payable bankruptcy, and especially when using a worthless fiat currency?" Mr. Noland makes no mention of my delicious phrase "bitter wailing is heard as a woeful chorus echoing across the bare, blighted, blackened, beleaguered land," which constitutes my valiant effort to wax lyrical, as he does with his memorable "further emboldened," responding, as is my wont, to the use of massive firepower with 16 words to his pathetic 2, unless you are weighting the scoring towards brevity, and then I'm screwed again! Damn! Damn! Damn! I hate this! Now you can see how everybody is out to get me, making me look ridiculous and showing off about how smart they are and how stupid I am. I mean, how long do I have to take this crap all the time? Mr. Noland does not wade into my Mogambo Swamp Of Paranoia (MSOP), and instead goes on, "There was also a popular movement to rein in extraordinary fiscal stimulus. Well, there has been talk and bluster and, what do you know, additional stimulus – and no exit anywhere on the horizon." Well, to be fair, I can see how the whole idea of reining-in fiscal stimulus is ridiculous, as the whole idea behind fractional-reserve banking was predicated on the dismal, inescapable fact that once you start allowing the banks to create and loan massive, unbelievable multiples of every dollar deposited, you can't stop. And the reason is simplicity itself: if you borrow $1 and promise to pay back $1.05, it is one thing, but if everyone borrows $1 and promises to pay back $1.05, then it is quite another! Obviously, a lot of people are going to have to borrow $1.10 to pay back the $1.05, and then they have to borrow $1.16, then $1.22, then $1.28, all the time getting worse and worse and worse. And now that government (local, state and federal) spending comprises HALF of all spending in the USA, the system has hideously mutated into a giant corrupt cesspool that is totally dependent on borrowing to support government spending. It seems all very complicated, of course, but thankfully all one needs to know is to buy gold, silver and oil when the Federal Reserve is creating so much excess money! Whee! This investing stuff is easy! The Mogambo Guru Buying T-Bonds for Dummies 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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| Silver Market Update - Feb 20, 2011 Posted: 20 Feb 2011 03:47 PM PST Clive Maund Silver has shown amazing strength in recent weeks, surprising even its staunchest advocates by making light work of recovering the ground lost in the January reaction, and even went as far as to break out to new highs late last week, hugely outperforming gold in the process, which not unnaturally has silver bugs cock-a-hoop. We were looking for a big rally in the last update posted at the end of January and we have not been disappointed. The breakout to new highs last week was undoubtedly a very bullish development and it makes an advance towards $50 a reasonable objective for later this year. However there are signs, principally in the behaviour of gold and Precious Metals stocks, including the volume patterns in individual silver stocks, that silver is first going to react back before it continues much higher. On its 8-month chart we can see the bullish engulfing candlestick pattern that was a factor enabling us to predict the rally, and as we had also e...
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| Posted: 20 Feb 2011 03:45 PM PST
This article by Michael is filled with despair and presents evidence that the recovery in the stock market is more like the price of bread in Zimbabwe than a real recovery. - Ilene 18 Sobering Facts Which Prove That The Middle Class Is Not Being Included In This “Economic Recovery”Courtesy of Michael Snyder, Economic Collapse
But just like Zimbabwe's stock market was artificially pumped up with "funny money" that was rapidly being devalued, so is ours. All of the "quantitative easing" that the Federal Reserve has been doing is pumping plenty of money into the financial markets and is helping to inflate a false stock market bubble, but it is doing very little to alleviate the suffering of the U.S. middle class. In fact, when you take a closer look at the numbers you quickly find out that the suffering of the middle class is getting even worse. According to Gallup, the unemployment rate is now over 10%. The number of Americans that have given up looking for work recently set a new all-time record. The number of mortgages in foreclosure tied a record high during the fourth quarter of 2010. Gas and food prices are rising rapidly. The number of Americans on food stamps continues to increase every single month. Yes, right now the economic situation is not in free fall like it was a couple years ago. We should be thankful for that. Periods of relative stability such as we are enjoying now will be few and far between in the years ahead. This "bubble" of economic calm is a great opportunity that we should all be taking advantage of. However, those that are hoping that this is an economic "turning point" and that things will soon be back to "normal" are going to be greatly disappointed. This is about as "normal" as things are going to be ever again. Even during this time of relative economic stability, the U.S. middle class is still being ripped to shreds. If there are those among your family and friends that are somehow convinced that the U.S. economy is recovering nicely, you might want want to show them the following 18 very sobering facts.... #1 According to Gallup, the U.S. unemployment rate is currently 10.3 percent. When you add in part-time American workers that want full-time employment, that number rises to 20.2 percent. #2 According to the U.S. Bureau of Labor Statistics, the number of job openings in the United States declined for a second straight month during December. #3 There are currently more than 4 million Americans that have been unemployed for more than a year. #4 The number of Americans that have become so discouraged that they have given up searching for work completely now stands at an all-time high. #5 Gasoline prices in the United States recently hit a 28-month high. #6 During the 4th quarter of 2010, 4.63 percent of all U.S. home loans were in foreclosure. That matched the all-time high, and it was up significantly from 4.39 percent in the 3rd quarter. #7 It is estimated that there are about 5 million homeowners in the United States that are at least two months behind on their mortgages, and it is being projected that over a million American families will be booted out of their homes this year alone. #8 Almost 14 percent of all credit card accounts in the United States are currently 90 days or more delinquent. #9 The average credit card rate in the United States had increased to a whopping 13.44 percent at the end of 2010. #10 Americans now owe more than $890 billion on student loans, which is even more than they owe on credit cards. #11 Average household debt in the United States has now reached a level of 136% of average household income. In China, average household debt is only 17% of average household income. #12 U.S. life expectancy at birth is now three years less than Canada and four years less than Japan. #13 New home sales in the state of California were at the lowest level ever recorded in the month of January. #14 43 percent of all mortgages in south Florida are currently underwater. #15 Prior to the most recent economic downturn, there were usuallysomewhere around four to five million job openings in America. Today there are about 3 million. #16 When you adjust wages for inflation, middle class workers in the United States make less money today than they did back in 1971. #17 One out of every seven Americans is now on food stamps. #18 One out of every six elderly Americans now lives below the federal poverty line. You know things are bad when articles start popping up in the mainstream news instructing us how to interact socially with the hordes of unemployed Americans that are out there today. A recent USA Today article entitled "What not to say to someone who is unemployed" listed some of the things that you should not say to someone that does not have a job. The following are some of their suggestions on what NOT to say.... "Hey, have you found anything yet?" "How's the search going?" "You just have to pound the pavement." "Something will turn up." "It's tough out there." "Other people are going through the same thing." "Maybe you're asking for too much money." "Maybe you should go back to school." "There are plenty of jobs out there." I am sure most of us have heard things like this at one time or another. It can be a soul-crushing thing to have others look at you in pity because you don't have a job and you can't pay the mortgage and feed your family. Most unemployed Americans are not lazy. The vast majority of them desperately want jobs. But the U.S. economy is not producing nearly enough jobs today. As noted above, the U.S. economy currently has about 3 million job openings, but approximately 20 percent of the workforce wants to find a full-time job. The demand for jobs is far, far, far greater than the supply. Unfortunately, this is the legacy of decades of bad economic decision-making. The U.S. economy should be able to provide work for every single person that wants it, but because of the choices that have been made that will never be the case again. The middle class in America is being ripped to shreds right in front of our eyes and very little is being done to stop it. Desperation is rising across the nation. More Americans slip into poverty every single day. It is almost as if a cloud of gloom and despair has descended upon the U.S. economy and every single month the situation only seems to get darker. So what about you? How has this economy affected you and your family? Please feel free to leave a comment with your thoughts below....
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| Zero Hedge notes GATA's partial victory over the Fed Posted: 20 Feb 2011 03:36 PM PST 5:52p MT Sunday, February 20, 2011 Dear Friend of GATA and Gold: Zero Hedge today took note of GATA's partial victory over the Federal Reserve in U.S. District Court in Washington, the Fed's court-ordered release of minutes of the secret meeting of the G-10 Gold and Foreign Exchange Committee on April 7, 1997, in which Western central bank and treasury representatives conspired and colluded to unify their policies toward gold with an eye to suppressing its price. The Zero Hedge commentary is headlined "Does a Surging Gold Price Mean the Fed Will Be Forced to Sell Treasurys?" and you can find it here: http://www.zerohedge.com/article/does-surging-gold-price-mean-fed-will-b… CHRIS POWELL, Secretary/Treasurer Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: http://www.gata.org/node/16
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| Weekly precious metals review at King World News Posted: 20 Feb 2011 03:36 PM PST 9:33a MT Saturday, February 19, 2011 Dear Friend of GATA and Gold (and Silver): The weekly precious metals review at King World News finds Bill Haynes of CMI Gold and Silver reporting that retail participants were selling silver throughout the week until the price spike Friday. Haynes wonders how some analysts can say silver is plentiful when the futures market is in backwardation and the Sprott physical silver trust and others can't get metal promptly. And JSMineSet.com's Dan Norcini (also writing now at http://traderdannorcini.blogspot.com) notes that silver is back above its moving averages and says he doesn't see much imminent price resistance. The interviews together are about 22 minutes long and you can listen to them at King World News here: http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/2/19_KWN_W… CHRIS POWELL, Secretary/Treasurer Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: http://www.gata.org/node/16
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| ‘Fisher' at G-10 gold meeting was likely NY Fed market rigger Peter Fisher Posted: 20 Feb 2011 03:36 PM PST 2a MT Saturday, February 19, 2011 Dear Friend of GATA and Gold: A well-informed friend notes that the "Fisher" quoted in the minutes of the April 1997 meeting of the G-10 Gold and Foreign Exchange Committee, dispatched to you yesterday, was almost certainly Peter R. Fisher, then head of open market operations and foreign exchange trading for the Federal Reserve Bank of New York, not Richard W. Fisher, lately president of the Federal Reserve Bank of Dallas, as first suspected. This makes wonderful sense, since the office Peter Fisher held at the New York Fed in 1997 was essentially the Fed's primary market-rigging office, and Peter Fisher's work was inadvertently brought under suspicion the following year in an admiring but later notorious profile published by The Wall Street Journal, which reported that he "swaps intelligence and rumors with traders and dealers from his office in the Fed's 10th-floor executive suite that overlooks the trading floor he runs." Of course there was then and is now no more important market for the Fed to rig than the gold market, and when the G-10 Committee on Gold and Foreign Exchange met in April 1997 to discuss "coordination" of Western central bank policy on gold, Peter Fisher would have been a vital participant. The Fisher identification has been corrected in yesterday's dispatch in the GATA archive here: And here: CHRIS POWELL, Secretary/Treasurer Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: http://www.gata.org/node/16
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| Posted: 20 Feb 2011 03:36 PM PST Marco G. submits: Precious metals have been in bull mode since last summer's spark of the FOMC meeting minutes, in August, 2001, when it was stated that "the Fed retains the means and tools necessary to take additional action to liquefy credit markets and/or stimulate the U.S. economy". This was interpreted as monetary inflation by the markets and precious metals rose accordingly. Then, with the mid-term elections, a further boost occurred in the November 3, 2010 FOMC announcement of the purchasing of $600 billion in Treasuries. However since this new year started, the S&P 500 has just been continually chugging along in a vigorous growth mode, but there has been a serious backing-off correction of the precious metals. So just where are we at in the precious metals
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| Precious Metals Rise to New Heights as Turmoil Spreads in the Middle East Posted: 20 Feb 2011 03:36 PM PST Jeb Handwerger submits: We are constantly being advised that the Egyptian military has the situation under control. As the situation develops it's becoming increasingly apparent that there is something wrong with this picture. The military and the media assure us that the morganatic wedding between the generals and the masses will proceed as scheduled. As the old song goes, "It's time to wind up the masquerade… the piper must be paid." The billion dollar question: Will the power vacuum lead to an anti-Western Islamist government? In Russia, the czar was overthrown only to be replaced by a small minority party called "The Bolsheviks." In Germany it was the "Nazis" that replaced the Weimar Republic. The Iranian Revolution gave us the "Mullahs" instead of the Shah. The recent elections in Lebanon gave us the terroristic Hezbollah. What is to be the future role of a military that has for the past 30 years played
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| Priced in Gold, Stocks Continue to Struggle Posted: 20 Feb 2011 03:36 PM PST Dr. Duru submits: Over the past two days, I have crowed about silver, pondered whether gold will catch up, and marveled at the doubling in the S&P 500 from the March, 2009 lows. Yet, I failed to put the stories together into one chart for proper context: The S&P 500 priced in gold. Click to enlarge: Of course, almost every gold bull knows this chart. Gold bears may see a bottoming process in this chart. Regardless, this chart reminds us that the "real" value of the S&P 500 has continued to decline ever since the tech bubble burst in 2000. The two bull markets since then have merely been able to forestall further declines in the stock market. Little real value has materialized. The close-up below shows that instead of a doubling in price, the S&P 500 is up more like 33%
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| Graham Summers’ Free Weekly Market Forecast (Gold Breakout Edition) Posted: 20 Feb 2011 03:32 PM PST Graham Summers' Free Weekly Market Forecast (Gold Breakout Edition)
On January 24 I published an edition of my FREE weekly market forecast telling investors to view the corrections in Gold and Silver as buying opportunities. At that time I wrote: I want to be clear here. I am SUPER bullish on both precious metals in the long-term. But right now, both are posting extremely ugly, bearish technical patterns. However, rather than seeing this as something to worry about, I view it as phenomenal buying opportunity for both assets.
Since that time, Gold has rallied 3% while Silver has EXPLODED 18% higher. Indeed, Gold is now testing resistance and on the verge of a serious breakout:
If Gold breaks above this level this week, we're going to new highs in short order. This is the current scenario I'm favoring given how strong Gold was during its recent correction. The precious metal didn't break into the gap below with any conviction. And it didn't get anywhere NEAR major support at $1,250.
The same story is playing out for Silver in an even more dramatic fashion. Indeed Silver not only bounced at one of its closest lines of support, but has since broken through multiple lines of resistance to new highs:
There is a potential inverted Head and Shoulder pattern here, though it's not an especially clean one. However, since we've already broken the "neckline" I'd like to mention that the target for this pattern is roughly $35 or so.
And if the US Dollar doesn't start rallying soon, Silver (and Gold) could go a whole heck of a lot higher than that:
As you can see, the US Dollar has dropped AGAIN and is on its way to test its multi-year trendline. We are literally approaching the "bounce or die" moment for this currency. If the US Dollar breaks below this line it's GAME OVER for the currency. We will be seeing an inflationary collapse followed by potential hyperinflation. The one thing which could potentially reverse this situation right now is the political elections in Europe. When we talk about "solvent" Europe we're largely talking about Germany which is currently in the process of seven state elections. If the first, in Hamburg, is anything to go by, the German people are sick of both the bailouts and the European Union and want to ditch the Euro entirely. Indeed, current German Chancellor Angela Merkel's party got completely trounced in the first election in Hamburg over the weekend taking in only 20% of the vote. Merkel now has a choice, stick with the Euro and commit political suicide or ditch the Euro/ demand the less solvent members leave. If Merkel opts for the second choice, then the Euro in its current form is finished and a collapse will begin. Seeing as the Euro currently accounts for over 50% of the US Dollar index, a collapse there could result in a sharp US Dollar rally, NOT because the US's financial position improved, but simply because it's the Euro's turn to collapse first. However, once that process ends, it will be the US Dollar's turn on the chopping block. The markets are already preparing for this with inflation hedges exploding higher across the board. The most popular ones such as Gold and Silver have rallied strongly. However, others which are less well known to investors are up even more. I'm talking about inflation hedges such as the three I outlined in Part 1 of my Inflationary Storm special report back in mid-December. Since the end of January these three picks have EXPLODED 13%, 25%, and 29% respectively. As I've stated several times already, the Inflationary Storm Pt 1 is completely sold out and no longer available to the public. However, these aren't the only INCREDIBLE inflation hedges I've got up my sleeve. Indeed, I'm just putting the finishing touches on Part 2 of the Inflationary Storm. In it, I'm detailing three inflation hedges that are even LESS well known than the three first detailed in the Inflationary Storm Pt 1. Indeed, these three investments are all INSANELY undervalued, trading at prices that mean BIG GAINS are coming soon from investors catching on OR buyouts.
Let me give you an example. One of these investments is based on the single BEST inflation hedge of the last 50+ years. That's right, this investment has outperformed Gold, Silver, Real Estate, Stocks, and even Bonds since the 1950s. And one of my inflation hedges owns a TON of it. In fact, it's one of the largest owners of this investment on its CONTINENT. And that's just one of the three investments I'm detailing in Part 2 of the Inflationary Storm. I'm making only 250 copies of this report available to the public. That's IT. After 250 reservations are made, I'm closing the doors on this report and won't be mentioning it again. As I write this, the orders are already pouring in. It's not surprising given the success of my first three INCREDIBLE inflation hedges (they're already up 13%, 25%, and 29%). So if you're looking to get your hands on a copy of the Inflationary Storm Pt 2, you better move now, because I fully expect all 250 copies will be gone before the report goes out. To reserve a copy, all you have to do is take out a "trial" subscription to my paid newsletter, Private Wealth Advisory. Do this, and you'll receive a copy of the Inflationary Storm Pt 2 as soon as it's complete, as well as FOUR (4) additional Special Reports. To take out a "trial" subscription Private Wealth Advisory and reserve a copy of the Inflationary Storm Pt 2… Good Investing! Graham Summers PS. About those other Special Reports...Three of these are devoted to preparing you for the return of systemic risk to the financial system. Together I call them the Phoenix Investor Personal Protection Kit. However, individually, they're titled Protect Your Family, Protect Your Savings, and Protect Your Portfolio.
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| Posted: 20 Feb 2011 03:27 PM PST Silver has shown amazing strength in recent weeks, surprising even its staunchest advocates by making light work of recovering the ground lost in the January reaction, and even went as far as to break out to new highs late last week, hugely outperforming gold in the process, which not unnaturally has silver bugs cock-a-hoop. We were looking for a big rally in the last update posted at the end of January and we have not been disappointed.
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| Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 2% and 7% on the Week Posted: 20 Feb 2011 03:27 PM PST Gold climbed $4.69 to $1388.39 in Asia before it fell back to $1381.25 in London, but it then climbed to a new session high of $1391.75 in New York and ended with a gain of 0.3%. Silver saw modest gains in Asia and London before it accelerated markedly higher in New York and ended near its late session high of $32.86 with a gain of 2.76% at a new 30-year high.
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| How Fear of Economic Shock Drove China’s State Control and Forex Hoarding Posted: 20 Feb 2011 03:15 PM PST In an interview by The Browser discussing Yasheng Huang's book, Capitalism with Chinese Characteristics: Entrepreneurship and the State, Northwestern University political economist Victor Shih looks inside the searing-hot, state-controlled economy. He notes the consolidation of economic control first got underway as state leaders grew increasingly fearful of financial crises and the potential turmoil that could ensue. The policies that resulted, as he describes them, were to provide a cushion for any economic shock by shoring up a substantial base of foreign exchange reserves. China's government managed to achieve moderate stability and maintain accelerated growth… but at what cost? From The Browser's interview: "[Victor Shih:] There was a period of healthy organic growth in the 80s, driven by the de facto private sector. Many township and village enterprises were collectives or owned by the local government. But in reality they were private enterprises. This changed in the mid-90s, especially with the adoption of the 'grasping the large and letting the small go' policy that circumvented the special interests in the state sector. When Deng Xiaoping was alive, his executive vice premier, Zhu Rongji, wanted to bankrupt or merge many of the smaller state-owned enterprises into larger ones. It was a political tactic to further reform. And it worked. "The problem was that it created these giant, state-owned enterprises. Recent statistics reveal the state sector made a profit of 2 trillion renminbi last year, of which the 122 largest SOEs made 1.35 trillion. They have combined assets of over 10 trillion dollars and have become an enormously resourceful and powerful interest group. Their CEOs have numerous ties with top political leaders and sit on the party's central committee. Most bank loans, issued bonds and stock-listing proceeds in the system go to these conglomerates. There's still a private sector but it has been squeezed tremendously, especially in the last two years. "Yasheng does a great job of explaining the genealogy of this process. He shows us the evidence on a national basis and in terms of Shanghai. People think of Shanghai as this dynamic, market-oriented city that symbolises the future of China. But Yasheng points out – and I know this because I've done fieldwork in the city – that the largest enterprises in Shanghai are state-owned. From energy, steel and car manufacturing to taxi firms and newspaper stands, the state dominates." The problem, as Shih explains, is that the state is failing to allocate capital very efficiently. Because, as he puts it, "it's not their money, after all. That's what you see in China: a lot of wasted money." Much of the infrastructure that has wowed the world as emblematic of China's ascent, for example the Olympic stadium in Beijing, includes expensive projects that have yet to find ordinary and consistently productive use. Shih provides several other examples and many more details in his interview with The Browser on how China's blazing economy may find uncertain times looming. Best, Rocky Vega, How Fear of Economic Shock Drove China's State Control and Forex Hoarding 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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| Posted: 20 Feb 2011 02:48 PM PST
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| NYSE to Merge with Deutsche Boerse Posted: 20 Feb 2011 02:43 PM PST & Update on The Gold & Silver's Bull Market Mark J. Lundeen [EMAIL="Mlundeen2@Comcast.net"]Mlundeen2@Comcast.net[/EMAIL] 18 February 2011 NYSE to Merge with Deutsche Boerse The Associated Press just announced the approval of the merger of the New York Stock Exchange and the Frankfurt Stock Exchange, which is owned by Deutsche Boerse. The Deutsche Boerse will get 60% of the new company, while the owners of NYSE will receive only 40%. New York Senator Charles Schumer's major concern is that the name "New York Stock Exchange" should come first in the new company's title. Mine is the stated reason for the merger: "The deal is expected to lead to $400 million in savings for the companies, mainly from technology and clearing costs. It will also give the combined company a larger footprint in the "lucrative business of trading in futures and options contracts." As an outsider with no knowledge about the details of this deal, this story struck some odd chords with ...
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| Jewelry Drives the Gold Love Trade Posted: 20 Feb 2011 02:35 PM PST By Frank Holmes CEO and Chief Investment Officer U.S. Global Investors This week, the World Gold Council (WGC) confirmed something we’d already suspected: 2010 was a remarkable year for gold. Overall demand grew by 9 percent to reach a 10-year high on increased jewelry demand, strong momentum in key Asian markets and a paradigm shift in the official sector, the WGC says. Demand for jewelry was the biggest contributor to gold demand, accounting for 54 percent of the total. That’s a 17 percent rise despite gold prices jumping 26 percent in many currencies. Gold demand for technology increased 12 percent. Surprisingly, investment demand declined 2 percent as investment in gold ETFs dropped 45 percent. Even with the drop, 2010 was the second-highest year on record in terms of investment demand. India led the world in gold jewelry demand with more than 745 tons. China was a distant second at just under 400 tons and the U.S. third at 128 tons. While the pa...
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| Posted: 20 Feb 2011 02:28 PM PST Does A Surging Gold Price Mean The Fed Will Be Forced To Sell Treasurys? Share this:
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| Jay Taylor on Inflation Vs. Deflation, the Possibility of a Gold Standard Posted: 20 Feb 2011 02:26 PM PST ... and Why the West Is Failing Sunday, February 20, 2011 – with Anthony Wile The Daily Bell is pleased to present an exclusive interview with Jay Taylor (left). Introduction: Jay Taylor is the editor of J Taylor's Gold, Energy & Technology Stocks newsletter. Throughout his career Mr. Taylor worked as first a commercial and then as an investment banker. Most recently, he worked in the mining and metals group of ING Barings in New York. Prior to that he was involved in the first gold loan made in modern times in the U.S. to Amax Minerals, a 250,000 oz. loan facility led by Citicorp. In 1997 he resigned from ING Barings to devote himself full time to researching mining and technology stocks, writing about them in his newsletter, and assisting companies in raising venture capital. Daily Bell: Thanks for spending some time with us again. Let's jump right in. Are we done with price deflation yet or do we have a ways to go? Jay Taylor: Certainly we ...
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| The US Today: What Happens When You Let Investment Bankers Run a Country Posted: 20 Feb 2011 01:16 PM PST
If you’re like me, you’ve probably looked at the US recently and wondered what has happened to your country. I’m not talking about the GOP/ Obama situation nor am I referring to capitalism vs. socialism…
I’m simply talking about basic common sense items like: stay out of debt, don’t do anything if it doesn’t make sense, do you homework before signing a contract, etc.
Indeed, the American government (I’m including the Federal Reserve in this category) began charting a strange course as a country when the Financial Crisis first accelerated with Bear Stearns’ collapse in February ‘08.
Granted we’d flirted with government intervention several times before (Chrysler in the ‘70s, Long-Term Capital Management, etc.). But we’ve since taken it to a whole new level. The basic risk of capitalism (failure) has been removed from the equation for most major US businesses. However, this risk was removed at the expense of increasing the US’s debt load and putting the dollar at risk.
Pushing to remove risks so you can pursue insane business practices? Crazy deals that offer little benefit to the parties? Doing things quickly without actually considering the consequences?
Sounds a lot like investment banking doesn’t it?
Investment banking as an industry runs almost completely contrary to wealth creation since it thrives on fees rather that capital appreciation. Investment banking is about making DEALS (any deals) regardless of whether the deals make sense or benefit both parties (after all, the advisors to the deals, the investment bankers, get paid based on commission and free stock).
Indeed, investment banking is one of the few industries on the planet in which you can get rich by creating debt for others to pay off. Goldman Sachs, as you know, is an investment bank. And this financial crisis is riddled with former Goldman Sachs and other Wall Street execs.
Indeed, you can see the “investment banking” stamp everywhere. Consider the major deals the Feds have created and consider the actual benefit they offer to the parties involved:
§ Bear Stearns/ JP Morgan § The US taxpayer/ Fannie Mae and Freddie Mac § The US taxpayer/ AIG (and all of its counterparties) § Merrill Lynch/ Bank of America
All of these deals were terrible. All of them were rushed through. And all of them were allowed because of lax regulation/ poor analysis. To this day no one in the mainstream media seems to have adequately analyzed these deals in a way that includes actual numbers. Instead we get dopey adages like “it’s about stemming the tide,” it’s important to “stop the bleeding,” “it’s about saving the system.”
You can also see the “investment banking” stamp on the Federal Reserve. Three years ago give or take, the Fed balance sheet was just $800 billion worth of Treasuries. Today, its balance sheet contains $2.5+ trillion worth of assets, and with only $53 billion in capital, the Fed is leveraged at 47 to 1!
Tons of junk assets that aren’t properly valued? Refusal to reveal the real worth of your balance sheet? Leveraged to the hilt?
Sounds like investment banking!
To me this financial crisis is nowhere near over for one simple reason: we continue to perpetuate the VERY same business practices that created it in the first place. It’s like a junkie getting clean by continuing to use dope. In the US government’s case, it’s just that the junkie has super clever explanations and jargon to explain why this is a good idea. The reality is that it’s not. And it’s going to end very, very badly.
Be Safe,
Graham Summers
PS. If you’re getting worried about the future of the stock market and have yet to take steps to prepare for the Second Round of the Financial Crisis… I highly suggest you download my FREE Special Report specifying exactly how to prepare for what’s to come.
I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).
Again, this is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com and click on FREE REPORTS.
PPS. We ALSO publish a FREE Special Report on Inflation detailing three investments that have all already SOARED as a result of the Fed’s monetary policy. You can access this Report at the link above.
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| Gold and Silver Prices Strengthen as the USD Weakens Posted: 20 Feb 2011 12:24 PM PST Friday was another super day for silver prices with a 3.66% jump to hit a new three decade high. The pull back was less severe than it could have been as shortages continue to dominate the news. Read More...
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| Zero Hedge notes GATA's partial victory over the Fed Posted: 20 Feb 2011 11:57 AM PST 5:52p MT Sunday, February 20, 2011 Dear Friend of GATA and Gold: Zero Hedge today took note of GATA's partial victory over the Federal Reserve in U.S. District Court in Washington, the Fed's court-ordered release of minutes of the secret meeting of the G-10 Gold and Foreign Exchange Committee on April 7, 1997, in which Western central bank and treasury representatives conspired and colluded to unify their policies toward gold with an eye to suppressing its price. The Zero Hedge commentary is headlined "Does a Surging Gold Price Mean the Fed Will Be Forced to Sell Treasurys?" and you can find it here: http://www.zerohedge.com/article/does-surging-gold-price-mean-fed-will-b... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Resource Spins Off Platinum/Palladium Venture: Company Press Release, January 18, 2011 VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy. PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding. Following the transaction: -- Prophecy will own approximately 90 percent of PCNC. -- PCNC will consolidate its share capital on a 10 old for one new basis. -- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp. -- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings. Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000. For the complete announcement, please visit: http://prophecyresource.com/news_2011_jan18.php Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
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| Does A Surging Gold Price Mean The Fed Will Be Forced To Sell Treasurys? Posted: 20 Feb 2011 10:10 AM PST
As part of GATA's ongoing crusade against the Fed's gold price manipulation efforts, the organization recently succeeded in extracting some novel clues on how and why the Fed views its sworn duty as keeping the price of gold low. While much of the requested documents demanded by GATA in a lawsuit with the Fed have been exempt from disclosure under the law, one that was made public consists of the minutes of a private meeting of the G-10 Gold and Foreign Exchange Committee in April 1997. And while we will leave it up to our readers to parse through the bulk of the comments (attached below), we would like to draw attention to one, attributed to Peter R. Fisher, head of open market operations and foreign exchange trading for the Federal Reserve Bank of New York, or in other words the equivalent of our very own Brian Sack. Fisher's comment relates to what would happen to the Fed's securities portfolio should there be a sudden or gradual revaluation in the price of gold. His conclusion is that in order to keep the Fed's balance sheet stable, an (acknowledged) surge in the price of gold would lead to a forced selling in Treasurys. Of course, that would mean that the Fed would have to actually value gold at its actual market price, instead of that relic price of $42.22 per ounce. Which means that valuing gold at fair market value would result in dumping over $300 billion in Treasurys, something the Fed can not afford to do at a time when it is engaged in purchasing $100+ billion each month. To wit:
To an extent we agree with GATA's summary of the implication of this statement: "This seems to be as candid an acknowledgement as any of the U.S. government's profound interest in suppressing the price of gold." Yes and no. While this is in fact indicative of the Fed's desire to keep gold price low, it is the case in a world in which the Fed were to see gold as priced at $1,390/ounce. Not at the fake price of $42.22/ounce (perhaps the Fed can sell us some gold at that price?) Now keep in mind that the Fed discloses the value of its gold stock as $11.041 billion in each weekly H.4.1. If the Fed were to value gold at FMV, the asset side of the Fed's balance sheet would suddenly balloon by just over $350 billion, as the fair value of the 8,133.5 tonnes of gold allegedly in possession by the US is valued at $361.8 billion. Which of course also means that to account for the surge in paper assets by $350 billion, the Fed would either have to sell a like amount of Treasurys or increase the liabilities side of its balance sheet, by either increasing the Currency in circulation or the Excess bank reserves by a like amount, a result which would increase inflationary expectations by a massive percentage. Both are obviously outcomes that the Fed will fight to the death to avoid. As for the question of how much of this unauditable gold tonnage is actually there, that's a different matter entirely. So yes, thank you JP Morgan for continuing your sworn duty of doing all you have to do, to maintain the Fed's 4th mandate of suppressing the price of gold, and preserving the myth that there is no inflation in the US. The people of this truly great and democratic nation applaud your efforts. Full declassified disclosure released to GATA - link.
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| Posted: 20 Feb 2011 10:04 AM PST To: KeiserReport@RTTV.ru Date: Fri, 18 Feb 2011 18:05:46 -0800 (PST) Subject: Wow! And I'm curious! I am curious what got you so passionate about gold and silver and the issue with the economy. I saw a clip of you with Mike Maloney and you were all over the place! I looked you up on Russia [...]
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| Posted: 20 Feb 2011 09:55 AM PST The Simple Reason A Bahraini Revolution Could Trigger A Brand New Financial Crisis Share this:
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| “I'm hereby officially subscribing to the SLA and GLA.” Posted: 20 Feb 2011 09:34 AM PST To: The Keiser Report Date: Sat, 19 Feb 2011 11:31:40 -0800 (PST) Subject: Thanks Hello Stacy, Max, I have decided a while ago not to put any more money in my savings account but rather to start purchasing gold and silver instead (I have a safe at my bank). I wanted to thank you for [...]
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| Should I buy the Mar 11 SLV 30 call? Posted: 20 Feb 2011 09:32 AM PST To: Date: Sat, 19 Feb 2011 21:30:50 +0000 Subject: silver options Hi Max, Love your show, I hear people in mainstream media referring to your material often, so they're subscribing to the alternative media but they can't admit it because their shows are financed by mainstream mobsters! Should I buy the Mar 11 SLV 30 [...]
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| Posted: 20 Feb 2011 08:37 AM PST
As the results of the first of seven German regional elections hits the wire, the German people are heard loud and clear: "no more bail outs." The outcome of the Hamburg election is nothing short of a disaster for Angela Merkel and her ruling (for now) CDU party. Bloomberg reports that "Chancellor Angela Merkel’s party lost control of Hamburg, Germany’s richest state, in the first of seven state votes this year that threaten to limit her scope to respond to Europe’s debt crisis, television projections show." Merkel’s Christian Democratic Union took 20.8 percent in today’s election, its worst result in the port city since at least World War II, ARD television projections showed. The Social Democrats, the main national opposition party, took 49.8 percent, enough to end the CDU’s 10-year rule in Hamburg and form a majority government without need of a coalition partner. The CDU suffered “a massive collapse of support in this booming city that must set off hand-wringing in Berlin,” said Hans-Juergen Hoffmann, managing director of Hamburg-based pollster Psephos. “Merkel will surely be concerned now that this disaster won’t be repeated in upcoming state elections.” To their great chagrin, the young participants on the FRBNY's OMO desk will have to be absent from their President's Day NYU mixers overnight as they are urgently needed by JC Trichet: the reason - buying up every single Portuguese bond as soon as the market opens tomorrow: "There’s a risk to peripheral bonds if Germany is seen not to be displaying support for the countries that are in trouble,” said Orlando Green, assistant director of capital- markets strategy at Credit Agricole Corporate & Investment bank in London. “The market would have been hoping that a deal would have been struck already” before the elections." And while German people are just modestly more civilized than their North African peers, what has happened in Germany is nothing short of a revolution to the existing status quo. The attempt to cover up European bail outs with endless rhetoric is over. If Merkel continues the course she is on, she is history... and she knows it too well. Time to be less than bullish on the EUR's prospects. From Bloomberg:
As Zero Hedge pointed out two weeks ago, and as was widely ignored by the FX markets, the European forward calendar in the cruellest month of March will be a blast...alas, not in the party sense. As a reminder, here is what lies in store: March Madness -Political Risk Is High and Rising
Showing this visually:
More on what the first prediction of many coming true means for Europe:
And just to make the calendar even more problematic, Ireland (which itself is facing a critical election on February 25) opposition party Sinn Fein said it would seek a referendum on the euro rescue deal, which would put the entire banker rescue operation codenamed "Dublin" in jeopardy.
Yep. March will sure be exciting and likely to conform to our expectations that the Fed policy tool known as the Russell 2000 will peak in March/April. Full European forward calendar from Knight Capital. Perhaps more will pay attention to it this time.
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| Bargains Scarce, but New Vulture Bargain Named Posted: 20 Feb 2011 08:20 AM PST HOUSTON – From the trader's notebook this week: Silver on a roll. The Little Guys (our pet name for the smaller resource company miners and explorers) in high form. Our long-held belief that the gold/silver ratio would return to its historic relationship to gold beginning to gain acceptance; zero contango and historic backwardation in New York silver futures; spectacular Asian demand for physical precious metals, especially silver; China raising rates again, trying to reign in high and rising inflation (a precursor to price inflation here? We have already had the monetary kind); formerly stable kleptocracies falling like dominoes in the Middle East where so much of the world's oil comes from – who is next? Yemen, Libya, Syria, Bahrain? It won't be Iran with one execution of a dissident or "political blasphemer" every eight hours … will it? Let's hope they really don't have a nuclear WMD there as the region "hots up."
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| A Look At The Week Ahead: Little Economic Data With All Eyes On The Libyan Revolution Posted: 20 Feb 2011 08:01 AM PST
Via Goldman Sachs Week In Review It is tough to put a finger on one key theme in FX markets last week with many items on the radar screen – from inflation, to the EM/DM rotation, to the Middle East, to wider European Peripheral spreads. While Chinese inflationary pressures were lower than anticipated in January, year-on-year inflation in January was still higher than in December and the Chinese authorities opted to tackle the problem through a resumption of CNY appreciation, measures to cool the property market in Beijing and finishing the week off with a 50bps RRR hike. The EM/DM rotation remains a focus of attention, arguably the resumption of foreign buying of Asian equity through last week suggests that this theme may be starting to play itself out. It will be interesting to see if the Chinese RRR hike changes this tentative trend. The week ahead is light on data releases with probably the key prints at the start and the end of the week. On Monday, the focus will be on the flash PMIs out of Euroland and the German IFO. On Friday we will pick apart the Korea balance of payments to discover the BBoP position in light of the foreign selling of Korean assets through January. Japanese CPI will be important in light of our Japan-related top trades and the US Q4 GDP print will be watched for revisions. Thailand GDP (Q4): We expect 4Q2010 GDP to grow 4.0% yoy, down from the 6.7% yoy rise in 3Q2010. This would imply an annualized qoq growth of 4.9%, after two quarters of qoq contraction. Consensus expects a rise of 4.1%yoy Malaysia CPI (Jan): Consensus expects a rise of 2.4% after 2.2% previously. Euroland flash PMIs (Feb): Consensus expects the manufacturing PMI to remain unchanged at 57.3, as do we and the service PMI to rise from 55.to 56.3. We expect 56.2 on the latter. German IFO (Feb): Consensus expects110.5 after 110.3, which would be yet another record high. We expect a slight easing to 110. Mexico GDP (Q4): Consensus expects 3.2% after 5.3% previously. US Consumer Confidence (Feb): We expect a rise to 63.0 from 60.6 previously. The Consensus expects 64. Taiwan Industrial Production (Jan): Previous was 18.2%yoy. Hong Kong GDP (Q4): We expect 4Q2010 GDP to grow 5.2% yoy, down from the 6.8% yoy rise in 3Q2010. This would imply sequential growth of 3.4% qoq, ann. Consensus expects a rise of 5.3%. Singapore CPI (Jan): We expect a similar month-on-month rise to that in December which was 0.9%mom. The last year-on-year reading was 4.6%. Consensus expects a rise of 4.4%yoy. Bank of England Minutes: The minutes are unlikely to give much new information after the Inflation Report last week. The vote is likely to remain a three way split. US Durable Goods Orders (Jan): We expect a reading of 4% after -2.5% on the past report. Consensus expects 3.0%. Korean Balance of Payments (Jan). We will be paying close attention to the BBoP given the foreign selling of Korean assets through January. The previous current account surplus was $2114mn. Japanese CPI (Jan): Consensus expects -0.1%yoy after flat previously. Singapore IP (Jan): Consensus expects a rise of 6.9%yoy. Previous print was 9.0%yoy. UK GDP (Q4 P): The consensus expects an unchanged print from the initial -0.5%qoq reading, which was much weaker than expected. German CPI (Feb): Previous print was 2.0%yoy. US GDP (Q4 A): Consensus expects an upwards revision to 3.3% from 3.2%. We expect a decline to 3.0%. US Uni. Mich Survey (Feb): Consensus expects a revision from 75.4 from 75.3. Irish General Election: Polls suggest that the Fianna Fail-led government will be replaced by a Fine Gael/Labour coalition. Italy: BTP auction. A reopening of BTP Nov13/Sep21.
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| Budget Deficits, Pension Plans, and the Seeds of Rebellion Posted: 20 Feb 2011 07:34 AM PST "Is the world finally cracking up?" we wondered aloud in these pages earlier this week. From the look of events unfolding across the volatile Middle East and North Africa region, it certainly seemed so. Governments are toppling, buildings are ablaze and protesters are "speak-to-tweeting" their way to freedom…of a sort. But what about closer to home, back in the belly of the empire? It's one thing for far-flung outposts to collapse, for the "uncivilized," "unwashed" masses beyond the gates to storm their capital buildings and raise hell. But surely that couldn't happen here, could it? Of course it could. The existence of the state virtually guarantees it! With this in mind, we issued the following words of caution to our Fellow Reckoners on Wednesday: "Warning: Riots may be closer than they appear." We didn't know it at the time, but tens of thousands of public sector workers and disgruntled union activists were at that very moment on the verge of storming the Capitol building in Madison, Wisconsin, to protest proposed cuts to their retirement and health benefits. At one point there were as many as 40,000 aggrieved banner-wavers in and around the building, stomping up and down and chanting, "Kill the bill! Kill the bill!" As far as we can tell, the whole thing is really a kind of sideshow. There's a much bigger circus in town. For one thing, people in Madison are fighting over money that doesn't exist. It's already been spent, in other words. The bill to which they were referring was one introduced by Wisconsin Gov. Scott Walker and his fellow state republicans. At best, according to their own calculations, it would scrape $300 million from the state's budget deficit. Most of that will come out of state workers' pockets. That may sound like a lot…until you look at the numbers. Walker proposes they pay $3,300 more for their health care and pensions, a move that would reduce the average public sector salary from $48,000 to $44,700. But Wisconsin faces a $3.6 billion budget deficit. Walker and his ilk would have to increase the size of their cuts eleven-fold in order to balance the budget. That means lowering the average wages of public servants to about $12,000 per year. Good luck! One report we saw puts the average yearly compensation for a Milwaukee public school teacher – including salary and "fringe benefits," at $100,005 in 2011. It ain't gonna happen, in other words. As events in the Middle East have recently demonstrated, revolution is a catchy tune. One state starts whistling it and, pretty soon, next-door neighbors start getting all sorts of funny ideas in their heads. "Hey, maybe we should overthrow our own government," says one man. "Maybe we'll storm our Capitol building too," says another. From the Mid East to the Mid West, rebellion is catching on. We don't have any problem with a little old-fashioned uprising. It's what keeps things entertaining. As far as we can tell, one side is just as bad as the other. Politicians are well employed to beat each other over the heads. We just wish they'd do it harder, with more lasting effects. In any case, we can expect a whole lot more of this kind of shenanigans. Republicans now hold five of seven governorships in Minnesota, Wisconsin, Iowa, Illinois, Indiana, Michigan, and Ohio. Last year, they held two. Look for more lip-service budget-"balancing" policies from the one side…and more stampedes from the other. But again, as we said, this is just the sideshow. States from coast to coast are facing budget shortfalls of a magnitude heretofore unseen, unfathomable, even. More than 40 states are in the red for a combined budget shortfall of $125 billion for fiscal year 2012. California is the worst, with a $25.4 billion hole to fill, more than seven times Wisconsin's gap. Illinois comes in next with a $15 billion shortfall, followed by Texas with $13.4 billion, New Jersey at $10.5 billion and New York at $9 billion. How did it come to this? As it turns out, the state is almost as costly as it is unnecessary. Monopolizing entire sectors of the economy with increasingly expensive, terminally inferior products and services is an expensive hobby, one that drains billions from the productive, private sector in the process. Still, like any boozehound looking for his next drop, it's never enough to slake the state's thirst. Ever larger and ever more costly does it grow. According to figures from the Bureau of Labor Statistics, 22.5 million Americans, comprising 17% of the entire workforce, now work for the government. The average government employee makes $47,000 per year, while private sector workers pull down an average of $45,000. The average public sector employee pays $3,600 for healthcare. Construction workers, for comparison, pay an average of $4,100. Those in the services and retail industry pay $4,200. Only 20% of workers in the private sector have what are known as "traditional" retirement plans, compared with 79% in the public sector. And, while most private employees don't get health insured benefits in retirement, 87% of public workers do. As it expands, the state consumes more and more of the economy's productive capacity, adding more and more to its debt load as it eats. And the fatter it grows, the more voters there are who have a vested interest in feeding the beast. Of course, this can't go on indefinitely. In the end, it comes down to a simple question: your money…or your state? Cheers, Joel Bowman Budget Deficits, Pension Plans, and the Seeds of Rebellion 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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| Posted: 20 Feb 2011 07:24 AM PST
Newest edition of the Stock World Weekly Newsletter: Dual Mandate Quagmire. Your feedback is appreciated. - Ilene Click on Stock World Weekly here.
Beginning excerpt: On Wednesday, February 16, the Federal Reserve Open Market Committee released the minutes of its most recent meeting. The transcript shows that the Federal Reserve is still unconcerned about inflation, in spite of significant evidence to the contrary. In fact, the Fed is so unconcerned about inflation that it needed to mention “inflation” 49 times in its report. The minutes also revealed that the Fed expects the jobless rate to remain “elevated” at the end of 2012, even though it claimed a rising real GDP might slowly reduce unemployment. Considering the trillions of dollars the Federal Reserve spent continuing its quantitative easing program (the current round being “QE2”), its admission that the jobless rate will remain elevated for the next two years is sobering. The Fed has no means to fix the problem of joblessness, besides trying to stimulate the economy by flooding it with liquidity, or “printing money,” thereby devaluing the Dollar. Devaluing the Dollar is contrary to the Fed’s mandate for price stability. Printing money decreases the value of the Dollar, and makes saving Dollars less desirable. Instead, those Dollars chase assets such as commodities and stocks, driving up their prices. Moreover, quantitative easing has done little to boost employment. Instead of creating jobs, Federal Reserve Chairman Ben Bernanke’s liquidity tsunami is triggering price inflation in necessities such as food and energy and, as Stock World Weekly has been reporting, fueling the stock market’s “Idiot-Maker Rally.” Whether the Fed calls rising commodity and energy prices “inflation” or not, higher prices are higher prices, and hurt lower income people the most. “For more than 30 years, the Fed has been tasked with a so- called dual mandate, which outlines two important goals: keep prices stable and maximize U.S. employment... Some critics are sick and tired of the Fed prioritizing job creation at the risk of rising prices. They say the juggling act of promoting economic growth while staving off inflation has proven ineffective, and has led to a policy of too much cheap money with dangerous consequences for the economy.” (Republicans to Fed: Forget about jobs.) The Fed’s strategy to devalue the Dollar has led to a “backlash among conservatives,” who wish to eliminate the Fed’s mandate to maximize employment. Theoretically, this would allow the Fed to stop pummeling the Dollar, while reining in the price inflation that is wreaking havoc on other countries. With interest rates at effectively zero, the Fed has no plausible options for addressing unemployment in a stagnating economy. The net result is a situation in which the Fed is committed to continuing quantitative easing, at the expense of the Dollar and its mandate for insuring price stability. It has every motivation to diminish any news that indicates inflation is taking off. Acknowledging inflation would mean the Fed would have to put down its only remaining tool. Commenting on the Fed’s minutes, Phil wrote, “It all comes back to inflation. The Fed simply doesn’t believe it exists or, if it does, believes it won’t last. It can’t really lose. The Fed can only be wrong this meeting and then do nothing and wait until next meeting and then ‘reevaluate.’ This is how hyperinflation happens, governments don’t want to deal with inflation. They wait and wait until it is so obvious and terrible that drastic action needs to be taken.” (FOMC minutes with Phil’s commentary are in the bonus section at the end of this newsletter.) Last week, we became more bullish, considering the relentless move up in stocks: “Our market targets, breakout 2 levels, and major breakout levels are providing more bullish fuel to our market thesis.” We pointed out that the U.S. bond markets were reacting to inflationary concerns, resulting in Treasury- bond yields rising and bond prices falling. “With bond yields climbing, rising commodity prices, and rising food prices causing social and political instability, inflation cannot be ignored. It has become a key factor to keep in mind while considering investment and trade ideas.” We noted that the Baltic Dry Index had bottomed around February 4. This week, the Baltic Dry Index continued to rise, while Treasuries, and the Dollar, continued to decline. We also mentioned several trade ideas such as a bullish call spread on Coke (KO) and our “Breakout Defense Part Deux” portfolio. Our bullish positions continue to do well. Coke ended the week at $64.55, putting our bullish spread on KO into the black. We remain concerned about the effect of QE2 on the value of the Dollar, but as Phil wrote on Saturady, “the Fed’s current permanent open market operations (POMO) schedule runs through May and we’ve gotten very clear indicators that The Bernank is in ‘Damn the torpedoes and full speed ahead" mode.’” Stock World Weekly archives here.
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| China becomes World's Largest Producer of Gold Posted: 20 Feb 2011 07:23 AM PST In 2010, China mined the record amount of gold in the world. The production volume of nonferrous metals in China amounted to 340.88 tons, which is 8.57% higher than a year earlier, and continues to grow. In recent years, China has consistently increased the amount of its gold reserves. Nevertheless, experts believe that China has a long way to go to reach the level of the world leading economies.
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| Posted: 20 Feb 2011 07:13 AM PST 
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| Silver Bankers May Be Sitting on Huge Derivatives Losses and the Fed May Be Funding Them Posted: 20 Feb 2011 06:53 AM PST My question is simple. What are bankers like J.P. Morgan and HSBC doing playing in such size in this market? What is the economic and productive benefit? Perhaps there is a good answer. The taxpaying public certainly deserves to know. The CFTC says they have looked into this, but the detailed results of their findings remain less than forthcoming.
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| The ecstasy of gold: Ennio Morricone Posted: 20 Feb 2011 06:28 AM PST
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| Posted: 20 Feb 2011 06:12 AM PST
Today, appearing on Meet The Press, in addition to Susan Rice, Dick Durbin, Lindsey Graham, Jennifer Granholm, Harold Ford, and Ed Gillespie was CNBC's uber contrarian voice, Rick Santelli. The topic: reigning in government spending, a topic which will be with America until its last bond issuance, sometime in the next 5 years. And while Rick was quite subdued this time around (it seems the CBOT voice only sees red when confronted with the likes of Steve Liesman), he did compare the crisis facing America now to the events from 9/11... "I think this is an issue that needs to be put out into the air and see--many, many other states, ultimately, might have--not have the same balance sheet as Wisconsin, but I think, ultimately, collective bargaining, even from a federal level, these are big issues, and these costs need to be put under control. If the country is ever attacked like it was in 9/11, we all respond with a sense of urgency. What's going on on balance sheets throughout the country is the same type of attack." He also noted the critical Illinois muni situation whose alternative is a forced austerity plan (and considering that various Wisconsin politicans received death threats over what is finally being perceived a loss in some entitlement benefits, the outcome of inevitable austerity in America will not be pretty): "Senator Durbin is from my state: $3.7 billion muni issuance that they need to bring to the market. They haven't paid vendors. You know, it has come to the crossroads where if we don't start to make the changes that the governor and the congressman know are going to take time, we will have austerity forced on us, and that type of austerity is going to be much messier. There really isn't much opportunity for debate here. We do need action." But most importantly is the realization that nobody has any idea what to do, and as an article just penned by the Global and Mail screams, "Wake up, Americans. Your economic dream is a nightmare." Luckily, with everyone's head in the sand, nobody really minds. Clip from Meet the Press (and full transript here):
Visit msnbc.com for breaking news, world news, and news about the economy And now for some facts: On February 28, 2001 George Bush said this about his 2002 Budget: “It will retire nearly $1 trillion in debt over the next four years.” Instead, US debt, which at that point was $5.7 trillion, rose to $7.7 trillion. $3 trillion rounding error? Also in the same budget, Bush predicted a $5.6 trillion surplus over the next ten years, which would wipe out all of America's debt by 2011. The latest debt figure was $14.1 trillion. A $14.1 trillion rounding error, or a nearly five fold increase in "rounding errors" in a decade. At this point, the 2021 total debt (including insolvent Social Security) is expected to be $24 trillion. Applying the same rounding error variance to government "projections" means... $113 trillion in debt? Most jarring, total US Debt to GDP will be over 100% in under 6 months. Paging Reinhart and Rogoff... A little more on future rounding errors as per Bill Buckler's latest Privateer:
The surreal nature of watching as this country dissolves into insolvency prompted the Globe and Mail to write the following must read article, "Wake up, Americans. Your economic dream is a nightmare":
Unfortunately, dreamland will soon be nightmareland. And nobody will have seen it coming. Nobody.
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| Gold and Silver Options Expiration At the Comex This Week Posted: 20 Feb 2011 02:22 AM PST |
| Posted: 20 Feb 2011 12:19 AM PST Well, it was up, up all week long for gold. However, there seemed not to be any enthusiasm behind the move and trends do not last long without enthusiasm. Maybe it will enter this coming week.
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| Gold Rally About to Reverse to the Downside Again Posted: 20 Feb 2011 12:11 AM PST Gold and silver have reversed to the upside and advanced substantially exactly as predicted in the last updates posted on 30th January, and now the majority of commentators are raving bullish again, but the internal technical condition of the sector following this rally suggests that it is about to reverse to the downside again, although longer-term the outlook remains strongly bullish.
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| Silver Showing Amazing Strength Posted: 20 Feb 2011 12:07 AM PST Silver has shown amazing strength in recent weeks, surprising even its staunchest advocates by making light work of recovering the ground lost in the January reaction, and even went as far as to break out to new highs late last week, hugely outperforming gold in the process, which not unnaturally has silver bugs cock-a-hoop. We were looking for a big rally in the last update posted at the end of January and we have not been disappointed.
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