Gold World News Flash |
- Time for some morning Joe
- Global Market Commentary From Russ Certo
- Gold, Silver Signaling That the Flight From Paper Money Is Now Accelerating
- The Great Depression and The New Depression
- Silver and Gold Just ot REALLYt Serious
- In The News Today
- COMEX Commercials Nowhere Near Record Short Positions in Gold, Silver
- Moody's Changes Japan's Aa2 Rating Outlook To Negative From Stable
- Unrest In Libya boosts Oil, Gold and Silver Prices
- Mike Krieger's Latest Interview With Max Keiser
- Paper gold and silver markets are 'nonsense,' Hathaway tells King World News
- Bailout Bubble Blues
- Growing Industrial Demand Buoys Silver Outlook
- Gold, Silver and Oil Stocks on Fire
- Grandich Client Spanish Mountain Gold
- Graham Summers’ Free Weekly Market Forecast (Gold Breakout Edition)
- The BIS Recognizes the Problems With the US Dollar…Finally
- “When Money Dies”
- Gold Continues to Rally
- Brien Lundin: Look to History to Profit from Gold
- Parabolic Flight To Silver, As April Crude Touches $98.48, Irrelevant Dollar Unch
- The BIS Recognizes the Problems With the US Dollar…Finally
- Bottlenecks in Bullion
- Caterpillar And The Dollar
- Equities Rising on "Rivers of Blood"
- “When Money Dies”
- Precious Metals Breakout on Middle Eastern Turmoil
- Investing Around the Chaos in the Arab World
- Oil Goes Berserk In Electronic Trading As WTI Passes $98
- Get a Crash JP Morgan Buy Silver rubber stamp on eBay
- Rally pushes gold past $1,400
- The Box of Money
- Financial Voyeurism - Why You Can't Beat Fast Money
- UPDATE: Funding breaks 17% level first day of offer . . . Brand New Project on PMF: GATA – The Movie! The story of Gold suppression (why Gold and Silver are going MUCH HIGHER!!!)
- Imported Inflation Hits US Consumer Prices
- “What I strongly believe is that the amount of paper we are seeing traded in both gold and silver on the Comex and in the derivatives market is nonsense. Something in the order of 100 to 1.”
- SLA (Silver Liberation Army) has forced Silver into historic and mind-bending backwardation. They hate Blythe and will wipe her out.
- Sino Silver and Gold Sales Soar
- Bubble Butt
- LGMR: Silver Jumps 4.7% as Gold Unwinds New Year's Drop
- Report: Libya Air Force Bombs Protesters Heading For Army Base?
- Silver Buoyed by Growing Industrial Demand
- Silver moves past old high and heading much higher
- Gold and Silver's Daily Review
- Silver Jumps 4.7% as Gold Unwinds New Year's Drop, US Dollar Misses "Safe Haven Bid"
- Silver and Gold
- 0% Interest Rate = Worthless Dollar
- John Hathaway - Silver Breaks Out, Paper Market is Nonsense
- GoldMoney’s James Turk interviews GATA’s secretary/treasurer
| Posted: 21 Feb 2011 06:00 PM PST MK: When this gets posted, we'll be headed to the airport for our flight to Beirut where we'll be shooting the next "Keiser Report." I hope to spread the word on Crash JP Morgan Buy Silver to the various revolutions already in progress. Share this:
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| Global Market Commentary From Russ Certo Posted: 21 Feb 2011 05:41 PM PST
From Gleacher's Russ Certo Good morning. The investment thesis for this comment advocates a barbell. Long quality flight "insurance" Treasury bonds (despite 3 leg 2yr, 5yr, and 7yr auctions in shortened Holiday week), short complacency, and long energy/geopolitical plays. The upshot is that markets will be dominated by geopolitical risk which I don’t feel is valued properly at the moment. This is a departure from an extended period of catalysts to investment performance dominated by a chronology of sovereign and Club Med imbalances, QE light and QE2 ruminations, midterm election/budget austerity leanings, and earnings recovery/growth prospects contributions to valuations. Until ever so late the marketplace hasn’t had the liberty of focusing on simple mundane economic fundamentals, and I suggest that fundamentals may be put aside again in light of tidal wave of hearts and minds of peoples versus regimes. Petty domestic partisan budgetary and ideological spats will play second fiddle to a global stage littered with toxins that possess the potential to re-arrange global allocation of physical and human resources. The stakes are high and any investment theses must aspire to handicap risk premium of potentially explosive re-arranging of deck chairs of all things political GLOBALLY. Hey, but the S&P 500 index is up an eye popping 100% from its low of 2009. But energy was the undisputed leader given Mid-East wranglings posting returns north of 3% on the week. The marriage of flows related to exogenous events can be seen by investors pouring some $4.5 billion into domestic exchange traded funds in the latest week, nearly ten times the amount allocated to foreign stock ETFs. Hot monies searching to preserve alpha and a return of capital versus returns on capital have fled emerging frontiers and these and asset allocations have underpinned a $9 billion outflow from emerging market ETFs, the new quick and efficient proxy for investment expressions, in merely the last four weeks. Just last week over $3 billion left emerging ETF funds not to mention the sister managed fund variety. By contrast the U.S equity funds have taken in an average of $5 billion a week in last six weeks. The S&P has closed higher in 12 consecutive sessions. Moreover, since November the S&P 500 has shimmied up 10% returns while broad emerging {EEM equity There is a linkage of international and domestic experience and flows at the moment. Despite the above flows, on Friday China hiked reserve requirements for the eighth time since 2010. And Shanghai and Guangzhou joined China’s capital, Beijing, in announcing restrictions on home purchases over the weekend, aimed at preventing housing bubble. Further, China may force banks to set up crises-handling procedures, kind of like the corporate finance evolution of CoCos which aspire to convert capital for banks in times of duress. And this may begin to resonate with risk asset complex. Across the pond ECB executive board member Lorenzo Bini Smaghi, I just enjoy saying his name and used it as an alias a few times this weekend in Vermont and you should have seen the reactions, suggested the bank must monitor rising price pressures more vigilantly. The Euro actually rallied despite the decidedly risk off Middle Eastern developments and afore-mentioned USD beneficial capital flight. This ascent of the Euro was also impressive despite the ECB saying on Friday that bank borrowing from the ECB’s emergency lending facility rose to its highest level in 19 months on Friday by $22 billion and at a prohibitive 1.75% rate. Other measures, like the Euro Overnight Index Average, don’t really confirm the confusion but money talks and doesn’t sleep, so, one should take interest in these iterations. http://online.wsj.com/article/SB10001424052748704900004576151633523373102.html. Some suggest the ECB engineered the move as a sign and indication of tighter policy. Some of our contacts suggest that the borrowing may be necessitated due to the auction sale of Anglo Irish and Irish Nationwide’s deposits. We all should take a look at interbank funding and some extremely interesting activity this week. Not only have Libor/Ois ticked up recently but most short term rate tenors have been on the move HIGHER in rate lately. In addition, talking about a block trade, someone apparently (sent earlier) aggressively sold 100,000 contracts of the March Eurodollar future. Again, for us to decide what is the intuition behind such maneuvers. There is clearly a pro-growth camp that is extrapolating food and energy inflation run-ups and moving the needle forward in terms of the chronology of rate tightening or otherwise and may be behind these creeping short term rates. Again, the Euro was stronger despite Middle Eastern volatility, possibly on perceptions of tighter policy. A concept which may be worth considering at the moment is that central bankers may begin to conveniently and coincidently exude a hawkish lean in light of Agra-food and commodity price pressures. Just like the Fed is supposed to take away the punch bowl as the party is getting started, a bevy of central banks may consider the unintended adverse consequences of their easy policies, namingly higher prices for countries feeding their populations and the consequent associated uprisings and unrest. Simply, the illusion or reality of tighter policy in the form of saber-rattling the froth out of an across the board inflated complex may be the new self serving implicit policy prescription at the moment, rather than the real teeth threat of ACTUAL action. Not to mention player’s expectations of other removals of liquidity starting to creep into the price structure of forward rate curve in recent weeks. The irony is that the byproduct of the unrest could be market driven asset allocation flows which benefit the rate space despite the veneer of central banks communicating otherwise. And this may be the frustration in trading in markets or making asset allocation or investment decisions based on traditional metrics like economic fundamentals like DEFICITS. As death tolls mount in the Gulf, talks of cutting microcosmic domestic deficits stumble or are being hotly debated. The bantering of prospective caps on discretionary spending or the canary in the coal mine ENTITLEMENT spending, which we all know is the only relevant part of this union’s fiscal footprint going forward. http://online.wsj.com/article/SB10001424052748703803904576152693403847716.html. It seems so pedestrian how Wisconsin Democrats skip town and the debate of how private industry workers benefits compare to state and local government workers. See the comparisons and weigh in for yourself. http://online.wsj.com/article/SB20001424052748704900004576152320132834818.html. This epic debate of entitlement and country budget ledgers arguably pales in comparison to Egyptian, Bahrain, Iranian, Libyan, Jordanian, Algerian, Israeli ….but a $137 million Wisconsin deficit and asking 5,500 state workers to keep their jobs by contributing 5.8% of their income towards their pensions and 12.6% towards health insurance, the national average contribution polarizes the country and is the order of the day. But what is at stake for all stakeholders? Like the Suez stake for all global stakeholders? Illinois pension is an academic lesson in accounting for All to learn. The smoothing of market value of assets masks underfunding. And the discount liability calculations which underrepresented the liability. Please read. http://online.wsj.com/article/SB10001424052748704900004576152211301687384.html. The order of the day as Barron’s chimes in on spending cuts and tax increases versus paying interest on national debt. Even by the highly optimistic calculations of the Office of Management and Budget, interest on the national debt in 2015 will be more expensive than all of the domestic non-security programs Congress was debating last week. Lawmakers fussed over all things non-discretionary 15% while a 100% cut in these programs would be needed for the next seven years to offset increased national debt interest expenses. For the first time since 1983 Social Security payouts exceeded Social Security taxes last year. http://online.barrons.com/article/SB50001424052970204424804576150610087975184.html?mod=BOL_twm_fs. Meanwhile, retiring boomers with 401k accounts have less than one quarter of what is needed to maintain its standard of living in retirement according to the Federal Reserve. Estimates suggest Social Security will provide as much as 40% of pre-retirement income or $35,000 a year, leaving the 39,000 from other sources like 401ks. The median 401k plan has $150,000 and would generate just 9,000 a year for a couple. Just 8% of households approaching retirement have $650,000 or more in their 401Ks. Since housing and financial markets began to collapse, about 39% of all Americans have been foreclosed upon, unemployed, or are underwater on a mortgage or behind more than two months on a mortgage according to weekend. Quite factual and is a harbinger of public and private allocations of resources, budgets, entitlements and fiscal and monetary policies. http://online.wsj.com/article/SB10001424052748703959604576152792748707356.html. Many see the economy improving, but not for them as most Americans think unemployment will decline and than business conditions have improved but they do not see their own finances getting better compared with a year ago. And see what they think about their income prospects and ability to keep up with inflation over the coming year, from the NYT. http://www.nytimes.com/2011/02/19/business/economy/19charts.html. The evolution of these developments both domestic and abroad will impact investment philosophies.
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| Gold, Silver Signaling That the Flight From Paper Money Is Now Accelerating Posted: 21 Feb 2011 05:17 PM PST Graham Summers submits: It's official, the flight from paper money has entered a new, dramatic stage. As you know, yesterday I wrote an article saying gold and silver were about to breakout. However, even I didn't expect we'd see the explosive rallies that hit the futures markets while the stock markets were closed yesterday. As you can see, silver positively erupted yesterday, taking out first $33 and then $34 per ounce in short order. Similarly, gold took out $1,400 and is on its way to test its recent highs: This Complete Story »
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| The Great Depression and The New Depression Posted: 21 Feb 2011 04:30 PM PST A worldwide economic depression began in 2008. This New Depression was caused by the same factors as the Great Depression and followed exactly the same pattern. Thus far, however, the New Depression has been milder than the Great Depression because the policy response this time has been completely different. Both depressions were caused because governments began creating money. The Great Depression originated with the collapse of the gold standard in 1914. The New Depression had its origins in the 1971 breakdown of the Bretton Woods system. In the earlier period, the gold standard collapsed because the European nations created more credit to finance World War I than could be supported by their gold reserves. Similarly, the Bretton Woods system broke down because the United States created more credit to finance the Vietnam War abroad and social welfare spending at home than could be underwritten by American gold reserves. In both instances, a great economic boom was brought about by an explosion of credit creation; and in both instances the boom turned to bust when that credit could not be repaid. At that point, a systemic crisis brought down the international banking system. Immediately thereafter international trade collapsed. The Great Depression & The New Depression 1. Gold Standard Breaks Down (1914) = Bretton Woods Breaks Down (1971) 2. Credit Boom: The Roaring Twenties = Credit Boom: Global Economic Bubble 3. Boom Leads to Bust When The Credit Can't Be Repaid (1930 and 2008) 4. Banking Collapse (1930 and 2008) 5. International Trade Collapses (1930 and 2008) During the 1930s, the forces of creative destruction, largely unimpeded by government intervention, ravaged the global economy as the excesses produced by the credit boom bankrupted a civilization unable to repay its debts. This time governments have intervened and, in effect, taken over the management of the economy to prevent market forces from correcting the imbalances brought about by the paper money-induced credit bubble. The commanding heights of global finance have been nationalized or bailed out, either openly or furtively, while the broader economy is sustained by government life support. Thus far, these measures have greatly mitigated the pain of the New Depression. However, the policies introduced to date have not resolved the causes of this crisis or even targeted them. Moreover, government resources, while vast, are finite. Government spending will not be able to carry the economy forever. Policymakers must aim to do more than simply perpetuate the existing global economic disequilibrium. So far, there is little indication they understand the origins of the crisis, much less how to permanently end it. Regards, Richard Duncan P.S. For more perspective from Richard Duncan you can visit his blog on economics in the age of paper money at www.richardduncaneconomics.com. The Great Depression and The New Depression 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 and Gold Just ot REALLYt Serious Posted: 21 Feb 2011 02:32 PM PST Silver and Gold Just Got REALLY Serious It's official, the flight from paper money has entered a new, dramatic stage. As you know, yesterday I wrote an article saying Gold and Silver were about to breakout. However, even I didn't expect we'd see the explosive rallies that hit the futures markets while the stock markets were closed yesterday.
As you can see, Silver positively erupted yesterday, taking out first $33 and then $34 per ounce in short order. Similarly, Gold took out $1,400 and is on its way to test its recent highs:
This is a MAJOR warning that all is not well in the financial system. The Middle East is literally imploding as I write this. Riots are spreading from one country to the next by the day. One of the more interesting items to note is that ALL of the world leaders who flee their countries are doing so with MASSIVE amounts of Gold. NOT cash, but GOLD. And then the Fed claims that inflation is under control. Make no mistake, Gold and Silver are both signaling that the flight from paper money is now accelerating. It's only a matter of time before the US Dollar collapses. Indeed, the most popular inflation hedges such as Gold and Silver have all 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. All told, these reports contain over 50 pages of detailed information on how to protect these three areas of your life from another "2008-type event." On top of this, you also get Part 2 of my Inflationary Storm Report. Its 18-pages are devoted to showing, in painstaking detail how inflation will soon erupt in the US... and which three investments stand to profit from it the most. So that's an additional 70 PAGES of hard-hitting content ON TOP of your annual subscription... all for the price of $180. And these reports are yours to keep... even if you choose to cancel your subscription during the first 30 days. To get your copies today...
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| Posted: 21 Feb 2011 01:27 PM PST Dear Friends, See? Mother was right. My money hand itched big time, and gold went up $17. You're welcome. Regards,
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| COMEX Commercials Nowhere Near Record Short Positions in Gold, Silver Posted: 21 Feb 2011 12:32 PM PST As silver reacts with gold higher given very unsettling news out of the Middle East, particularly out of Libya, it is interesting to note some of the changes in large commercial futures trader positioning as of last Tuesday. On Friday afternoon the Commodity Futures Trading Commission (CFTC) issued its weekly commitments of traders report (COT) which captured a snapshot of trader positioning as of the close on February 15....
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| Moody's Changes Japan's Aa2 Rating Outlook To Negative From Stable Posted: 21 Feb 2011 12:12 PM PST
Moody's Investors Service has today changed the outlook on the Government of Japan's Aa2 rating to negative from stable.
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| Unrest In Libya boosts Oil, Gold and Silver Prices Posted: 21 Feb 2011 12:07 PM PST As unrest escalated today in Libya the pressure was felt in the oil world with WTI up $2.17 to $97.50, Brent Crude up $2.26 to $108.00. Gold prices gained $17.50 to close in London at $1406.60/oz, with silver prices adding a huge ... Read More...
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| Mike Krieger's Latest Interview With Max Keiser Posted: 21 Feb 2011 11:45 AM PST
Just because it is appropriate that the two guys who came up with the "Crash JPM, Buy Silver" meme should get some exposure tonight. In this edition of Press TV's On the Edge with Max Keiser, Max, as usual, highlights the bad conditions the US economy is in. He says the fall of the dollar is imminent and ties the latest events in the Middle East to the US economic policies. His guest, Zero Hedge regular Michael Krieger, believes that the unrest will spill over to the US as the world economy is "co-centric." He further elaborates on the competition between the US and the giant China which is taking over the rest of the world and is expected to turn the next superpower. Enjoy the show. Part 1: Part 2: Part 3:
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| Paper gold and silver markets are 'nonsense,' Hathaway tells King World News Posted: 21 Feb 2011 11:41 AM PST 7:30p ET Monday, February 21, 2011 Dear Friend of GATA and Gold (and Silver): John Hathaway, manager of the Tocqueville Gold Fund, today tells King World News that the paper markets for gold and silver are "nonsense" and a short squeeze seems to be developing. You can find excerpts from the interview at the King World News blog here: 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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| Posted: 21 Feb 2011 11:39 AM PST They have to go further and further into forbidden territory all the time now to keep our bubble economies inflated. Increasingly, and like a junkie, because the establishment will not allow for a real correction (slow down) in our fiat currency economy(s), more and more artificial stimulus must be added into the equation every day now because the patient is a walking zombie, devoid of natural and sustainable life. Because if they didn't do this, the economy would collapse like an exhausted doper whose been too high for too long, never to be the same again, if not dead. That's the way the geniuses in charge of our financial institutions and their puppet politicians who have been bought and paid for manage the economy and financial markets today, hoping the party can last until the next guy is on the hook.
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| Growing Industrial Demand Buoys Silver Outlook Posted: 21 Feb 2011 11:34 AM PST Irrespective of the concerns over financial tightening, talks of a gold bubble and economical weakness, gold marked its tenth straight annual gain in 2010. Not only gold, other members of the precious metal group such as silver and platinum were also up last year. At this juncture, last year's bull run appears to be running out of steam. However, both technicals and fundamentals indicate improved investment options in precious metals, particularly silver, if you have a long-term investment horizon.
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| Gold, Silver and Oil Stocks on Fire Posted: 21 Feb 2011 11:29 AM PST Threats of further violence from the son of Quadaafi is having rather exactly the opposite effect that the toppling dictatorship had hoped. With defections among army and government to the side of democratic protesters, the fate of the Quadaafi government is as good as sealed.
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| Grandich Client Spanish Mountain Gold Posted: 21 Feb 2011 11:23 AM PST The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! February 21, 2011 02:32 PM Register for Report [url]http://www.grandich.com/[/url] grandich.com...
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| Graham Summers’ Free Weekly Market Forecast (Gold Breakout Edition) Posted: 21 Feb 2011 11:18 AM PST
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.
Prepare NOW!
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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| The BIS Recognizes the Problems With the US Dollar…Finally Posted: 21 Feb 2011 11:12 AM PST Naturally, I was aghast that things have gotten so bad that even the Bank for International Settlements (the infamous BIS) finally got around to noticing that the results of three decades of central banks creating more and more money is not, as they thought, A Truly Wonderful Thing (ATWT). They write that "drastic action" is now needed, and that "the fiscal problems currently faced by industrial countries need to be tackled relatively soon and resolutely." Instantly I jump to my feet and shout, "Whereas yesterday, nothing needed doing, nor was there any need for any action at all, except to idly sit by as things got worse and worse as central banks created more and more money so that governments could deficit-spend? But now we need drastic action, you BIS morons?" Nobody notices my rude objections, and the BIS blithely goes on that "Failure to do so will raise the chance of an unexpected and abrupt rise in government bond yields at medium and long maturities, which would put the nas...
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| Posted: 21 Feb 2011 11:12 AM PST I didn't come up with the phrase, "when money dies," though I like it a lot. The phrase captures an important idea. It is that money – I refer to that paper kind issued by governments – has a finite life. At some point, it becomes worthless, or dies. The death of a currency is often a protracted affair. It often takes decades. And as it unfolds, the people who experience it hardly believe it. That is the tale told by Adam Fergusson in his book When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany. First published in 1975, it had been out-of-print for years and much sought after. A used copy on Amazon cost $300 recently. The book is a history of the death of the German mark in the 1920s. It is also a scary reminder of the devastating effects of inflation and, therefore, a cautionary tale for US central bankers and politicians who play so fast and loose with US Dollar. If you don't know what happened to the German mark, here's what you ...
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| Posted: 21 Feb 2011 10:50 AM PST courtesy of DailyFX.com February 21, 2011 07:53 AM Weekly Bars Prepared by Jamie Saettele Gold’s rally has exceeded the 78.6% retracement of the decline from the top and new highs look likely. Trading to a new high would shift focus to the next big round figure at 1500. Keep an eye on resistance lines as well (there are 2 lines – one extended from the December 2009 and December 2010 highs and one extended from the February 2009 and December 2009 highs)....
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| Brien Lundin: Look to History to Profit from Gold Posted: 21 Feb 2011 10:21 AM PST Source: Brian Sylvester of The Gold Report 02/14/2011 Gold in the Carolinas? "Absolutely," says Jefferson Financial President and CEO Brien Lundin, who also publishes the Gold Newsletter. It's just one region where historic discoveries, ignored when gold prices were low, are now being re-examined with modern exploration techniques. The results, he says, are promising. Learn more about his take on the economy, the seasonal effect on gold prices and the "frothy" metals market in this exclusive interview with The Gold Report. The Gold Report: When we last talked in September, you said there were "very good arguments for significantly higher gold prices." Have those arguments changed? And, if so, how? Brien Lundin: They have changed a bit. Back then, the investing environment was tough because it was so uncertain. There weren't any clear trends. We didn't know if the economic recovery was really taking hold. At this point, we've firmly established that the economy is in a...
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| Parabolic Flight To Silver, As April Crude Touches $98.48, Irrelevant Dollar Unch Posted: 21 Feb 2011 10:13 AM PST
There was a time, long ago, when the dollar was a flight to safety instrument. Those days are gone. DXY barely budging as the overnight session begins, while silver has already put $34 in the dust. Last: $34.26 and parabolic.
April Crude lieterally flying off the shelves. All those who thought the 4 pm price was a misprint and shorted... our condolences.
Time to announce 10 emergency POMOs tomorrow... or else
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| The BIS Recognizes the Problems With the US Dollar…Finally Posted: 21 Feb 2011 10:00 AM PST Naturally, I was aghast that things have gotten so bad that even the Bank for International Settlements (the infamous BIS) finally got around to noticing that the results of three decades of central banks creating more and more money is not, as they thought, A Truly Wonderful Thing (ATWT). They write that "drastic action" is now needed, and that "the fiscal problems currently faced by industrial countries need to be tackled relatively soon and resolutely." Instantly I jump to my feet and shout, "Whereas yesterday, nothing needed doing, nor was there any need for any action at all, except to idly sit by as things got worse and worse as central banks created more and more money so that governments could deficit-spend? But now we need drastic action, you BIS morons?" Nobody notices my rude objections, and the BIS blithely goes on that "Failure to do so will raise the chance of an unexpected and abrupt rise in government bond yields at medium and long maturities, which would put the nascent economic recovery at risk." Well, duh! Let me write this down! Higher interest rates will put the economy at risk, but creating so much money, for so long, by so many central banks, to accommodate so much more government and government spending, to keep nominal interest rates at literally zero and real, inflation-adjusted interest rates negative, will not? Hahaha! Well, perhaps I am being scornful and disrespectful only out of the long habit of being scornful and disrespectful of all central banks, including the execrable BIS, which is so worthless that it has created its own fiat currency, the SDR! I mean, how low can you go? On the other hand, they seem to understand that high interest rates cause slowdowns in the economy, so maybe there is hope that they will say something else intelligent! No such luck. The very next sentence from these incompetent, neo-Keynesian, fiat-currency loving morons is that failure to take "drastic action" to cut government spending "will also complicate the task of central banks in controlling inflation in the immediate future and might ultimately threaten the credibility of present monetary policy arrangements." Hahahaha! You can tell that I am upset by the way my fists are clenched into Mogambo Fists Of Rage (MFOR), an action seemingly at odds with how I laugh – Hahahaha! – the dreaded Mogambo Laugh Of Scorn (MLOS) in a perfect demonstration of Utter Mogambo Contempt (UMC): Monetary policy has no credibility, you morons! None! Zero! In fact, it makes me chuckle and shake my head in dismay to consider how in the hell can any half-witted, leftist, neo-Keynesian, econometric idiot, like these BIS idiots, possibly think that the Federal Reserve would have any, any, ANY credibility after achieving Total Freaking Failure (TFF)? Again I laugh the Mogambo Laugh Of Scorn (MLOS)! Hahaha! If they wanted respect and credibility, the bankers would have insisted upon re-instituting the gold standard, or actually stabilizing the money supply as if we were on a gold standard! And then we would not have any of these catastrophic economic problems, and the sun would shine, and somewhere men would laugh, and somewhere children shout, but, until then, there is no joy in Mudville, the Bernanke has struck out. But those betting against Bernanke and the Federal Reserve by buying gold and silver will see the sun shine, and men will laugh, and children will shout, "Whee! This investing stuff is easy!" The Mogambo Guru The BIS Recognizes the Problems With the US Dollar…Finally 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: 21 Feb 2011 09:46 AM PST Gold and Silver Bullion supplies have hit bottleneck trouble, but only as underlying demand leaps...
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| Posted: 21 Feb 2011 09:36 AM PST
This article originally appeared in The Daily Capitalist. Caterpillar, Inc. (CAT) came out with an outstanding sales report for the quarter ending January 31, 2011. Sales are through the roof: up 48%. This caps off nine straight rolling three-month periods of growth. Per region sales were: Asia-Pacific: January +38%, December + 47%, November +51%. North America: January 58%+, December +48%, November +53%. Europe, Africa and the Middle East: January +46%, December +37%, November +43%. This is an outstanding report. Caterpillar is the biggest manufacturer of heavy equipment in the world. But why? Are all these economies booming while we aren't? China has been experiencing a boom for years based on its turn to capitalism in 1979. But ... the current reason is that the People's Bank of China has been flooding its economy with fiat money creating another false housing boom. Now some of China's growth is real, but it is difficult to tell since their data is not transparent nor does it account for dictates from Beijing to banks to lend specific sums for a given period. But they buy a lot of heavy equipment with those dollar they have accumulated. The rest of the world, including the U.S. is engaging in monetary and fiscal stimulus as well. It is difficult to assess real versus fiat money based growth, but flood an economy with enough cash and credit and it will be spent. Which gets us back to the dollar. I made this chart comparing the price of Caterpillar's stock to the rise and fall of the dollar. For the most part, they have been the beneficiary of a declining dollar, courtesy of the Fed. That is, concerns by holder of dollars about the level of our deficit and the willing of the Fed to monetize it, have depreciated the value of the dollar relative to other currencies. A cheap dollar is good for exporters and bad for US consumers. One of the reasons we are seeing price increases here is due to the decline of the dollar which makes imported goods more expensive. This is a complicated story because the Chinese yuan (RNB) is tied to the dollar, so there is some parity there. But ... So what is bad for consumers is good for multinationals like Caterpillar. Which are you? Consumer or Caterpillar employee or shareholder?
NB. The reason Cat didn't decline in price during the eurozone crises which saw a flow of capital into the dollar, is that world economies other than the eurozone were seen by investors as improving and that Cat's future would be rosy.
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| Equities Rising on "Rivers of Blood" Posted: 21 Feb 2011 09:05 AM PST
Equities Rising on "Rivers of Blood"Courtesy of Phil of Phil's Stock World
The picture on the left is not Moamer Kadhafi (he wishes he still looked that good) or Saif - it's Vigo the Carpathian, who also promised "rivers of blood" but only actually managed to produce rivers of slime before the Ghostbusters put him back in the painting. Did Kadhafi steal his speech from the 1989 Ivan Reitman film or, perhaps, did he lift it from arch-conservative Enoch Powell's speech? Powell warned that if the UK were to allow immigrants to have ordinary rights, that the streets of London would look like the set of Ghostbusters (I am paraphrasing slightly).
Libya boarders Egypt, Tunisia and Algeria - three more of the biggest African oil producers - and all with rioting citizens who are offended that they are beginning to starve while the top 1% of their country continue to live lives of wealth and splendor. What the people do not realize is that, even if their leaders wanted to help them - they really can't. The inflation that Ben Bernanke is shoving down the throats of the World (in place of food) is more than any government that can't print money can handle. Take poor Hosni Mubarack, for example. It is reported he stole $70Bn from the Egyptian people over 30 years - that's $2.3Bn per year or what Lloyd Blankfein would call "Mid-year bonuses" but, rather than getting invited to the White House to set economic policy, poor Mubarack is shown the door by his people. Even if Mubarack wanted to stay in power and even if he wanted to give back all $70Bn to Egypt's 80 Million people, that would only work out to $875 per person or 13% of their $6,347 per capita GDP. That does not really help much when food inflation is running close to 40% - does it? That would make it irrational for Hosni to do anything but take the money and run because what's broken in Egypt can't be fixed - even if he wanted to. Libya is in the same predicament, as is Sudan, Algeria, Nigeria, Angola... What happens when people are starving while they see their leaders living lives of luxury? They get pissed! They demand CHANGE. So Global leaders have the choice of step down or fix the problem. There are really only two choices available to leaders who want to stay in power and address the situation where there is less money for food than there are citizens and that is A) Increase the amount of money the citizens have to buy food or B) Decrease the amount of citizens. When A is impossible (we can't even do it in this country) then why do we vilify Kadhafi for choosing B?
Of course, Boehner's Republican House isn't the only group of top 1%'ers who are turning their backs on the poor and taking their money and running - but they are the only ones who are doing it in an actual Democracy (in theory --- the Democracy, that is, not the way they are screwing over the bottom 90% to benefit the top 1% - that's more like a fact). As the Times points out this weekend in "Empire at the End of Decadence":
What does the Times mean by this? Well, that can best be illustrated by the accompanying chart, which very clearly documents America's rapid and ongoing plunge from first to worst in a host of categories including, amazingly, our own level of Democracy - which has fallen, according to our own CIA, down to 8.18 out of 10 - just behind the Czhech Republic (8.19) and slightly ahead of Slovenia (7.69):
(Click on chart to enlarge, h/tip Michael Panzner, Seeing Red) One thing America does excel at producing though, is prisoners! This country already creates more prisoners per capita than any two other countries on that list and, without France and their recidivist ways (still half of ours), we would be bigger than the next three on the list! Why does America have 7.2M citizens in prison or on probation while China, with 1Bn more citizens than we have, has only 1.5M? India has just 313,000 prisoners in a nation of 1.1Bn and Pakistan (population 169M) has just 87,000 inmates? In case you think it's "an Asian thing," consider that Germany (81M) has 75,000 prisoners, England (61M) has 78,000 prisoners and the Netherlands, where drugs are legal, have one of the lowest rates of incarceration, with just 16,930 of their 16,531,294 citizens in jail. For a "freedom-loving" people, we sure do seem to lock a lot of people up, don't we? Fortunately, prisoners are not included in American Quality of Life surveys and they are not considered unemployed. In fact, we kind of employ them in the $37Bn US prison industry - and that's not counting hundreds of Billions of Dollars spent each year in the legal system by citizens who are trying to stay out of jail facing off against the hundreds of Billions of Dollars the state spends to try to put them there. Aside from deciding who goes to jail and who doesn't becoming one of our nation's biggest "free" enterprises, prison labor itself is a huge business as all sorts of jobs are done by prisoners, who earn about 50 cents an hour for their labor. Who says we can't compete with Vietnam? The Pew Center's findings in March 2009 report that 1 in every 31 adults in America is under some form of correctional control (about 32 per 1000). Bureau of Justice statistics in their "Key Facts at a Glance" of correctional populations, estimates the total number of all persons on probation, parole, in prison and jail in 2008 to be at 7,308,200, or about 20 per 1000. By contrast, in 1980 when the Drug War was starting to get off the ground, the same figure was 1,842,100, or about 6 per 1000 - the same as most "civilized" countries. For comparison, at the height of slavery in America there were less than 4M slaves. With over 5M additional Americans "just saying no" to freedom since Nixon first declared a "War on Drugs" in 1971 to keep those dollars flowing at the same time our War on (whatever it was we were supposed to be doing in Vietnam) was winding down - it's a little surprising that the $15Bn a year we spend keeping our citizens in jail and the who the Hell knows how much we spent arresting 1.7M people on drug charges last year (as well as the court costs) - is not even a topic of discussion in the budget talks.
Isn't it funny how the story always comes the Sheriff of Nottingham (Boehner) vowing that he will protect the people by stopping that awful Robin Hood (the budgeted agencies) who dare oppose his will by attempting to bring justice to the oppressed and redistribute the wealth of the top 1%? What else is falling under the Republican axe?
Last year, my 2010 outlook predicted "A Tale of Two Economies" and there was no point in changing that outlook for 2011 because, clearly, we are just getting more of the same as the polarization of rich vs. poor becomes even more extreme. I did believe, in December of 2009, that the Democratic Party would recover from their slow start and get on with doing that which they were elected to do - which was balance the budget by repealing tax cuts we can't afford and investing in Infrastructure, R&D and Education which would put this country back on the road to prosperity. Boy was I wrong about that! Instead we got the clearest indication since Boss Tweed that the Democrats are every bit as much a tool of Big Business interests as the Republicans. US citizens are now being ground into poverty and repressed to such a level that ONLY Singapore and Hong Kong have a greater wealth disparity than the United States - AND THE PROGRAMS THAT ATTEMPT TO REDRESS THIS ISSUE ARE THE ONES THEY WANT TO CUT! 43% of the people in our country are not "thriving" - which means they do not have enough money to meet their basic needs of food, clothing and shelter without going further into debt. 9% of our people are "officially" unemployed but, if we counted our unemployed the way Spain does, we would have the same World-leading 20% level that Spain does. We are THE WORST country in the World - tied with Korea in the level of "food insecurity," with 16% of the people in this country not having had enough money to buy food in the past 12 months. Don't forget - we're not even counting the prisoners! So do not fool yourself into thinking "it can't happen here." That goes for my European Readers as well - as Angela Merkel's party found out this weekend in their crushing defeat. We will be exploring some additional highly leveraged Disaster Hedges today in Member Chat (we already have two key hedges and our $25,000 Portfolio is STILL bearish as it's short-term. As I noted in the weekend post, which charted and reviewed our current situation and as summarized excellently in Stock World Weekly, which also gives us a nice Global perspective on the markets - it's a very unstable situation and, as I said to Members over the weekend in Chat as we discussed the issues in greater detail - even China is now having protests - it doesn't make sense not to hedge our risks of staying in the markets at this point. If 2011 is still a tale of two economies - we'd better play for both of them. I'll give the final word to the great Glenn Beck, who explains how the United States can completely fall apart in just 15 days - enjoy! - Phil
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| Posted: 21 Feb 2011 09:00 AM PST I didn't come up with the phrase, "when money dies," though I like it a lot. The phrase captures an important idea. It is that money – I refer to that paper kind issued by governments – has a finite life. At some point, it becomes worthless, or dies. The death of a currency is often a protracted affair. It often takes decades. And as it unfolds, the people who experience it hardly believe it. That is the tale told by Adam Fergusson in his book When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany. First published in 1975, it had been out-of-print for years and much sought after. A used copy on Amazon cost $300 recently. The book is a history of the death of the German mark in the 1920s. It is also a scary reminder of the devastating effects of inflation and, therefore, a cautionary tale for US central bankers and politicians who play so fast and loose with US Dollar. If you don't know what happened to the German mark, here's what you need to know from When Money Dies: "In 1913, the German mark, the British shilling, the French franc and the Italian lira were all worth about the same. Four or five of any of these would buy you a US Dollar." By 1923, you could exchange one shilling, franc or lira for up to 1 billion marks. "Although," Fergusson writes, "in practice, by then, no one was willing to take marks in return for anything. The mark was dead, one million-millionth of its former self. It had taken 10 years to die." How did that happen? The short answer is that post-Imperial Germany found itself with a crushing load of debt. Raising taxes or cutting spending is politically difficult in any age. And so it was in Germany. To deal with these debts, Germany chose the path of least resistance. It printed lots and lots of money. Sounds like the fiscal position the US government finds itself in today. Bleeding deficits with no end in sight. Piling on debt and entitlements with no end in sight. The solution so far? Why, "quantitative easing." In a new introduction, Fergusson writes: "Money may no longer be physically printed and distributed in the voluminous quantities of 1923. However, 'quantitative easing,' that modern euphemism for surreptitious deficit financing in an electronic era, can no less become an assault on monetary discipline." But back to Germany… Eventually, prices started to rise as the mark lost purchasing power. One of the great strengths of the book is the on-the-ground view you get from the people who lived through it. It gives you an unsettling look at German society as it starts to dissolve and as inflation starts to wreak havoc. It started slowly, with commodity prices starting to rise everywhere. But as the years wore on, prices kept going up in big steps. Soon the damage was remarkable. In just eight years since 1913, the price of rye bread rose 13-fold. Beef rose 17-fold. Sugar, milk, pork and potatoes went up 23-28-fold. Butter went up 33-fold! And these were official prices. As a practical matter, real prices were often a third higher. It's hard to fathom. All this brought out the worst in people. Germany became an ugly society, looking for blame. As Fergusson writes: "They picked upon other classes, other races, other political parties, other nations." There was a long list of villains: "the greed of tourists, or the peasants, or the wage demands of labor, or the selfishness of industrialists and profiteers, or the sharpness of Jews or the speculators making fortunes in the money markets." Erna von Pustau, who lived through it, described what it was like: "My allowance and all the money I earned were not worth one cup of coffee. You could go to the baker in the morning and buy two rolls for 20 marks; but go there in the afternoon and the same two rolls were 25 marks. The baker didn't know how it happened… His customers didn't know… It had somehow to do with the dollar, somehow to do with the stock exchange – and somehow, maybe, to do with the Jews."
As we know what would happen later in Germany, her comments are particularly chilling. Each year, people thought it couldn't get worse. "And yet things always did, from bad to worse, to worse, to worse," Fergusson writes. "It was unimaginable in 1921 that 1922 could hold any more terrors. They came, sure enough, and were in due course more than eclipsed, with the turn of the following year." Germany plunged into hyperinflation. The price changes get ridiculous to talk about – the numbers so large that they are practically meaningless. Who can imagine paying 500 billion marks for a dozen eggs? It's also interesting to see how society dealt with this breakdown in the currency. The idea of real wealth became very important. Not the kind of wealth denominated in abstract printed marks, but real wealth that one could use. People bought things. Hugo Stinnes, an industrialist, bought factories, mines, newspapers. The man on the street bought what he could trade. Fergusson ends with a powerful observation: "In war, boots; in flight, a place in a boat or a seat on a lorry may be the most vital thing in the world, more desirable than untold millions. In hyperinflation, a kilo of potatoes was worth, to some, more than the family silver; a side of pork more than the grand piano." Despite the awful experience of the 1920s, Germany would repeat its errors again and again. In the 1930s, Hitler would crank up the money presses. By 1948, the reichsmark (which replaced the old mark) died. So Germany created the deutsche mark. Yet it wasn't much better. It lost two-thirds of its purchasing power by 1975. Such is the fate of all paper money. I will leave it to you to decide how much relevance Germany's experience has to the US today. I find many alarming parallels. I would point out, too, that the US dollar has lost 95% of its purchasing power since 1913. And the US dollar is among the best currencies of the last hundred years. That says something about paper currencies, doesn't it? It's also why staying ahead of inflation is one of the chief tasks of investing. The monetary puppet-masters at the Fed will have you believe inflationary pressures are inconsequential or a far off mirage. Don't believe it for a second… QE2 is humming along with the prospects of a QE3 right around the corner ready to pump untold billions into an already cash-flush banking system. Now is the time for investors to take action and protect capital from the inflationary pressures building up in our economy. Regards, Chris Mayer, "When Money Dies" 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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| Precious Metals Breakout on Middle Eastern Turmoil Posted: 21 Feb 2011 08:53 AM PST This is an excerpt of what my premium readers received Friday Morning 2-18-11. 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." Is Iran sailing through the Suez sending a message of who may be trying to gain power during this chaos? There is a great hunger in the land. The people have access to Facebook and the faces they see increase their rage. They see generals, unnamed and anonymous, promising to give them bread and democracy. However, they see that the truth is otherwise. They are well aware, as we may not be, that the Egyptian military runs beach resorts, banks and bread factories. Their subsidiaries manufacture automobiles, televisions, furniture, washing machines and other myriad necessities. They even have the hubris to control the bottle water industry. The brand is named "SAFI" after one of the general's daughters. From this gigantic conglomeration of businesses, the generals pay no taxes, use drafted workers and buy real estate on advantageous terms. They are not responsible to report anything to the Egyptian people or to the legislature. The ousting of Hosni Mubarak was merely a placebo to attempt to cover up the fact that the generals have been the power behind the government. Their names are unknown except for the leader, Field Marshall Tantawi, who has often been referred to as "Mubarak's poodle." They have established marshal law, dissolved Parliament and cleared Tahrir Square with the carrot stick of eventually permitting democratic elections. Still unanswered are the protesters with the release of thousands of political prisoners. Such brazen exercise of authority might be justifiably interpreted as a conflict of interest. However, the masses in Egypt as well as the rest of the Middle East are growing increasingly restive. The old games of propping up despots such as Baptista and Trujillo are in this age where internet is accessible to the men on the street and the students in the universities, is growing increasingly thin. 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 a crucial behind-the-scenes role in preserving its own vast business interests? With Iran moving ships through the Suez the situation remains in flux. This a test of the Egyptian military. The cards have been dealt and Egypt, allowing the Iranian boats through the Suez, will show Israel the military's hand and whose side they are truly on. This morning the newspapers said that the military has already "begun taking steps to protect the privileges of its gated economy, discouraging changes… that are crucial if Egypt is to emerge as a stable and prosperous country. Protecting its businesses from scrutiny and accountability is a red line that the military will draw… And that means there can be no meaningful civilian oversight." Some other disturbing headlines in today's papers are: "Battle Lines Harden Across the Mideast as Rulers Dig In" "Dozens Reported Killed in Libyan Crackdown" "Yemen Protesters Face Off for the 8th Day" "The Committee Formed to Protect Journalists Fights Attacks" "Egypt Disappearances Raise Concerns About the Military" What does all this turmoil, restlessness and upheaval mean to us as investors? The message can not be clearer: Precious metals will assume a more salient role as time goes by. It is interesting to note that when tyrants depart they make sure that the gold they stole has preceded them. In Tunisia, the ousted leader Ben Ali made sure that he looted the government gold coffers before he left. In Egypt, Mubarak's son Gamal was reported to have carried off large amounts of gold. We do not have to be weathermen to determine which way the winds of change are blowing in the Middle East. Precious metals will remain a viable store of wealth and a quasi-currency, especially if these riots turn violent. Already there are reports that protesters were fired upon in Bahrain. See the video below. Silver has broken out of a six-week consolidation into new highs and is currently showing incredible relative strength. This morning iShares Silver Trust (SLV) made an ascending triple-top breakout on the point and figure chart at $31. I believe we can start seeing another major leg higher and acceleration of the trend in precious metals. The physical demand is increasing in silver and it could continue its rapid rise higher because it's in new high territory. Gold is showing similar strength as it broke the 50-day moving average to the upside. Gold and miners reached oversold levels in January not seen in more than a year and that is exactly where we went long in my premium service. This interview was recorded at the end of January on thestreet.com. Now many of the bears who sold out and expected a steeper correction will be returning, pushing gold, silver and mining stocks into new high territory. This is the perfect storm for precious metal investors. The buy signal on January 25 has proven to be a short-term turning point and the break into new highs may look to be one of the best buying opportunities in years. Investors who did not trust the two-year trendline made a major mistake and sold out into the fear. Those times where fear reaches an extreme turn out to be the best opportunities. Important Developments are occurring, get ahead of the curve and sign up for my free 30 day trial to my daily analysis and video updates by clicking here.
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| Investing Around the Chaos in the Arab World Posted: 21 Feb 2011 08:15 AM PST The mainstream media is playing this as some sort of "democracy" revolution, where the hip, savvy, tech-head youngsters want to challenge the authority of the old princes and emirs, etc. Soon, the Middle East will be run just like Madison, Wisconsin…or something like that. Not to be too flip, but that's way too tame. Nope, this is religion and demographics boiling over. The Facebook folks might be part of it…but that's not the key to the story. We need to assemble the pieces of this puzzle, and be prepared for what it may show…a civilization in open conflict and likely collapse. Back in the 1990s, I spent a fair amount of time in Bahrain. Bahrain is about 70% Shiite, and 30% Sunni. The Sunnis run things, as in… government, industry, business, banking, commerce. Which is another way of saying that the Shiites are consigned to the other side of the camel-tracks. I recall driving (and walking, too!) around Bahrain, and encountering these surly-looking groups of under-employed young men – mostly Shiites, locked out of the economy. Nothing to do but smoke cigarettes, make a few dinar in the underground economy (as in, hauling 100-lb bags of stuff on their shoulders, loading trucks and such)… and nurse grudges against the guys on top. It always struck me that Bahrain was a pot – one pot among many on the stove – that would boil over, sooner or later. I guess we're there…. Across the Middle East, we're watching a large-scale earthquake occur within Arab-Muslim culture. Different elements in different places, of course. In Bahrain, the lines are between the Shiite majority and the Sunni bosses, who lord it over. This aspect of Arab religious feudalism is falling apart. My bet is that the Bahraini bosses have dusted off the Chinese playbook from Tien an Minh Square. Elsewhere (Egypt, maybe Libya?) we're seeing the end of the secular-military bosses running things – Egypt's 1952 coup that spawned "Col." Nasser, and the subsequent ruling junta – Gens. Sadat & Mubarak. And Libya with its 43 year rule by "Col" Khadafi. (I guess he let it get too public that he's hanging out with that buxom Ukrainian babe who goes everywhere with him.) Now the "rule by colonels" is giving way to a rising desire for rule by clerical principles – in lands where there's little in the way of a real economy to support what's coming. As to that last item, at least in Iran, post-1979, they were exporting 5 million barrels of oil per day. That kind of oil money can subsidize a lot of utter stupidity. So what to do? Here in the West, we've seen nations collapse… Germany, Japan after WWII. We've seen empires collapse – USSR. We've seen upheaval in global relationships – the 1990s, as the "Soviet Bloc" unwound. We've never seen a civilization in upheaval – like now across that North African & Middle East arc. We're looking at the past 75 years or so of the "basic assumptions" about the Arab world breaking down in front of us. Even when China had its war & civil war (1920s through 1940s) – it was contained within China. What happened in China stayed in China. China had no key, crucial exports for the world. And the Chinese worked it out internally – not pretty, but they worked it out. We've never seen something like what's about to happen in the Arab world. We in the West had better batten down the hatches for this one. And do our best to invest around it. Byron King Investing Around the Chaos in the Arab World 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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| Oil Goes Berserk In Electronic Trading As WTI Passes $98 Posted: 21 Feb 2011 08:11 AM PST
As Zero Hedge advised in early January when the severity of the Maghreb revolution was made all too clear to anyone not willing to stick their head in the CNBC sand, oil could well be the buy of a lifetime ahead of a downward spiral of unprecedented geopolitical proportions. Sure enough, today alone, WTI (April) has surged from $90 yesterday to over $98 in electronic trading (see below). Either this is some computer gone haywire in the closed session, or when America wakes up tomorrow we may be on the verge of another flash crash. As for Brent, it passed $108.50. As a reminder, and people forget this all too readily, each dollar jump in crude wipes out $100 billion in US GDP. That means that at face value, today's move in the commodity complex, may have taken out as much as 5% of annualized GDP when fully processed through the economy! WTI (per netdania):
Brent:
And some crude observations from an otherwise calm Reuters: Brent crude oil prices hit $108 a barrel for the first time since 2008 on Monday on fears that spiraling violence in Libya could lead to wider supply disruptions from the OPEC member. U.S. oil prices led the rally to jump by more than $5, the most in over two years, as traders also rushed to cover short positions in the key Brent/WTI spread, which had blown out to a record $16 a barrel. The April spread narrowed to $10 during the day, but widened to over $12 in after-hours trade. The focus was on deadly clashes in Libya, where one oil firm was shutting down some 100,000 barrels per day (bpd) of production and others evacuated staff. The leader of the Al-Zuwayya tribe threatened oil exports to the West would be cut off unless authorities stopped violence. "The market is on edge about the potential for Middle East and North Africa supply disruptions," said Mike Wittner, head of commodities research, Americas, at Societe Generale. "If you've got reports that actual disruptions are starting to occur, it's going to have a supportive impact. A lot of it is high-quality crude and that is important as well." The increasingly violent protests that appeared to put Muammar Gaddafi's four decades of rule in jeopardy were the realization of weeks of mounting concerns that Egypt-inspired unrest would seep into nearby oil producers. Brent oil futures, which have climbed more than $10 this year largely due to the increasing geopolitical risk premium, jumped $3.22 a barrel, or 3.2 percent, to settle at $105.74 a barrel. They jumped another $2 to trade as high as $108 in after-hours dealing, the highest since September 4, 2008. The March U.S. crude oil contract, which expires on Tuesday, surged $5.22 a barrel to trade at $91.42 a barrel in late-afternoon activity -- the highest in two weeks. Overall trading volume was less than one-third the 30-day average due to the U.S. Presidents Day holiday, and the U.S. market won't issue an official settlement until Tuesday. The more-active April contract jumped as much as $5.75 to a high of $95.47 a barrel, at one point narrowing the Brent/WTI contract by nearly $3 to $10 a barrel as traders covered short positions built up as the spread ballooned from about $3 in January to a low of $16 last week. Brent's after-hours rally forced the spread back out to $12.40 a barrel. LIBYA UNSETTLES In Libya, scores were killed in anti-government protests as one of the region's bloodiest revolts hit Tripoli for the first time, while army units defected to the opposition and Gaddafi's son vowed to fight to the last man standing. On Sunday, Shaikh Faraj al Zuway, the leader of the Al-Zuwayya tribe in eastern Libya, told Al Jazeera: "We will stop oil exports to Western countries within 24 hours" should the violence not stop. Ninety percent of Libyan oil exports come from the eastern region of Cyrenaica, epicenter of the revolt, and unrest there could pose a graver threat to oil supplies than in other nations if separatists target infrastructure and look for a bigger slice of revenues, analysts say. "Libya is a significant producer and exporter of good quality crude oil, and threats by the tribal leader to stop production are worrisome," said Christophe Barret, an oil analyst at Credit Agricole Corporate and Investment Bank.
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| Get a Crash JP Morgan Buy Silver rubber stamp on eBay Posted: 21 Feb 2011 08:01 AM PST
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| Posted: 21 Feb 2011 07:59 AM PST Gold rose above $1,400 a troy ounce for the first time in six weeks and other precious metals shot higher on Monday as the unrest in the Middle East drove investors out of risky assets. "At the moment safe-haven buying tends to be the way the market is going," said Afshin Nabavi, head of trading and physical sales at MKS Finance, a gold refiner. "It's all because of the Middle East and the situation doesn't look like it is getting better." Gold jumped 1.5 per cent to a peak of $1,408.78 a troy ounce, its highest level since the first week of January. [source] PG View: Liquidity was thin on Monday due to the US and Canadian holidays, but the bid is a strong one.
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| Posted: 21 Feb 2011 07:28 AM PST The most persuasive arguments for buying gold do not reside in musty old economics textbooks or in the minutes of the latest FOMC meeting…They reside in Henry Hackel's "box of money." Henry, as faithful Rude Awakening readers will recall, is the president of R.F. Lafferty, a broker-dealer specializing in options trading and resource stocks. In his 26th floor corner office overlooking the Hudson River sits a non-descript cardboard box – a simple shoebox that contains a powerful message: Buy gold. "Hey Eric, have you ever seen my box of money?" Henry asked one day, wearing an impish grin. "Um…no," your editor replied. "I think I would have remembered that." "You gotta see this… C'mon, follow me," said Henry, as he grabbed the box and marched toward the conference room. After seating ourselves at the conference table, Henry slung the box across the table like a bartender slinging draft beers and said, "Take a look." Your editor peeled back the lid, peered into the box and saw money – lots and lots of money…but all of it worthless. There were rubles from pre-Soviet Russia, 50 million-mark bills from the Weimar Republic period in Germany, pesos from the 1950s government of Cuba's Battista regime, and even a few extinct Brazilian cruzeiros. As your editor sifted through layer upon layer of worthless currencies, he imagined himself a kind of archaeologist, tooth-brushing his way through the ruins of civilizations past – in this case, monetary ruins. The message contained in this "dig" is very clear: The forces of monetary entropy – fueled by politicians and central bankers – continuously erode the value of paper money. One of Henry's favorite "ruins" is an elegant, 1928 10-Franc note. "To think," he says, "at one time, someone held up this note and said 'It's as good as gold'." But of course, the 1928 franc note turned out to be somewhat less good than gold. In fact, not one bill in that box – to borrow a familiar saying – is worth the paper it's printed on. "If the same man who carried around this note in 1928 instead took two and bought a 20-Franc 'rooster' gold piece, it would be worth about $80 today," Henry laments. By comparison, the two 10-franc notes, post multiple devaluations, would be worth no more than a few cents today. "Your box of money is very impressive, Henry," your editor remarked. "But I don't need any convincing about the long-term value of gold… So let's take a shorter time horizon. "How does gold look to you in 2005?" "Well, I think the bottom is in for gold," he answered, "but I can't give you any price targets." "That's fine," your editor replied, "what I really care about most is the primary trend. Do you see any evidence that the bullish trend for gold is gathering strength? What about your coin-dealer buddy in Florida? Is he still selling more Beanie Babies than Krugerrands?" "Yeah, I think so," Henry laughed. "I don't think Beanie Babies are the hottest items in the store anymore." (Three years ago, when gold was still languishing below $300 an ounce and trying to shake off the stigma of a two-decade bear market, Henry related the following anecdote about his coin dealership in Hollywood, Florida: "We offered some 'retired' Beanie babies for sale – a set of three particularly coveted Beanie Babies for $1,100. We put the sets one at a time in the window of the store…people were 'daggering' each other for them. At the same time, an elderly gentleman comes into the store and asks: 'How much is a Krugerrand?' "'$285,' came the reply. "'Forget it,' the old man said. 'Too expensive.' "Imagine that. For an ounce of gold you couldn't even buy one Beanie baby. No interest in gold, but these Beanie Babies were flying out the door. It was amazing.") "So let's return to the topic of gold," your editor continued, mindful of his writing deadline. "Are we heading to $1,000 an ounce?" "Who knows?" said Henry, "But that wouldn't be out of line. That's not a crazy idea at all… Gold's gonna keep moving higher. It's easy to buy now. That's a big difference. Buying gold used to be cumbersome and difficult. But now you just toss in an order for 2,000 shares of GLD and boom, you're long $100,000 worth of gold. Buyers now have a liquid market for gold for the very first time. That could be a big influence on the gold price." "Yeah, I'm with you on that," your editor replied. "Okay Henry, since you won't give me a price target for gold, just tell me this: Are you buying or selling?" "I'm buying," Henry replied without hesitation. "But I'm always buying." Regards, Eric Fry The Box of Money 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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| Financial Voyeurism - Why You Can't Beat Fast Money Posted: 21 Feb 2011 07:00 AM PST
This article originally appeared on Stone Street Advisors website. 45 days after the end of any given quarter financial television programs and bloggers race to be the first to report the holdings of – insert name of big hedge fund here. They analyze the report to see what the hedge fund managers are buying and selling. However, the question remains – is there any real value in these filings for investors on the outside looking in? First, it is important to know what the Form 13F covers. Once a quarter, hedge funds and asset managers with greater than $100 million in assets under management are required to report their holdings. The list includes exchange-traded or NASDAQ-quoted stocks, equity options and warrants, shares of closed in funds shares of closed-end investment companies, and certain convertible debt securities. Short positions are NOT included in the 13F. In addition, managers can request confidential treatment of their filing if they feel that their strategy would be compromised by the disclosure. This includes circumstances where the manager has an ongoing acquisition or disposition program. Confidential treatment can last for three months to one year. Lastly, it is important to note that the 13F must be filed no later than 45 days after the end of the quarter. Most funds wait until the deadline to report, as such they are lagging indicators. Paulson & Co. was known a merger arbitrage fund before he was thrust into the limelight. You may recall, John Paulson famously earned $3.7 billion in compensation during the dark days of the financial crisis. As we all now know, the primary source of the fund’s performance which earned him that princely compensation was his bets against the housing market and the now infamous ABACUS 2007-AC1 CDO. This may come as a surprise to all of those 13F hawks because there was no sign of this investment in 13F filings for Paulson & Co. In fact, Paulson notes that he was not known as an “experienced mortgage investor before 2007” in his recent letter to Limited Partners explaining the ABACUS deal. I took a look a Paulson & Co’s 13F filings from 2006 to 2007 – his reported holdings at December 2006 totaled $4.9 billion and his largest long equity position was Mirant at over $470 million (inclusive of the warrants). This investment turned out to be a winner appreciating 23.5% over the year while the S&P 500 returned a meager 4.2%. However, another of his large investments was Boston Scientific ($412 million). That stock declined 32.3% during that same period based on the December 2007 13F. You may find it strange that a hedge fund with approximately $28 billion in assets only has $4.9 billion in publicly traded equities. There is plenty that the 13F doesn’t reveal about the respective manager’s strategy. By not disclosing short positions, swaps and fixed income securities, outsiders will not be able to fully ascertain the extent to which a hedge fund is, well, hedged. Further, the 13F does not disclose positions in commodities, currencies, futures or other markets. Then there is turnover of some of the “fast money” shops that an outsider may not be able to match. In fact, of the top 10 holdings at year end 2006, only 2 were still there at the end of 2007 (Boston Scientific and Mirant). Further, of the top 10 holdings, only 3 were still there in the March filing. This means from the time the December filing was available to the public on February 16th, the fund was already unloading shares of 7 of the other top 10 holdings. In fact, Alcoa, AG Edwards, Kinross Gold, and Thermo Fisher Scientific were the only other names that lasted beyond just one quarter (of top 10 holdings). Thus, it’s quite likely 13F chasers were buying what the fund was selling over the next month and a half (buyer beware!). Yes, there are insights you may be able to take away from the filings, I don’t dispute that fact. However, the quarterly race to analyze these reports is nothing more than an act of financial voyeurism. You would be better served trolling Schedule 13D’s which must be filed within 10 days of acquiring beneficial ownership of 5% or more of any class of publicly traded securities of a publicly company. For the most part, 13 D filers tend to be longer term holders. Remember, the hype machine is trying to generate page views, not alpha. On Wall Street there are no short cuts – you should do your own homework before blindly chasing stocks that appear in 13Fs.
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| Posted: 21 Feb 2011 06:50 AM PST
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| Imported Inflation Hits US Consumer Prices Posted: 21 Feb 2011 06:25 AM PST The big news at the end of the last week was barely noticed. Inflation – which had been going down for the last 30 years – may have finally bottomed out. It's too early to know for sure. But January showed an up-tick. Prices rose 0.4% during the month, say the number crunchers at the BLS. Last year, the core rate of consumer price inflation in the US was only 0.7%. Nothing, in other words. The feds were desperately adding to the base money supply. But the banks didn't lend. And people didn't have jobs. So the money never got into the consumer economy. It was, after all, a Great Correction. Instead, the hot money went overseas, where it bid for hot foreign stocks and hot "auction-priced" global goods – like food and energy. Commodities soared. Food riots broke out. Cotton just hit a new record high. Oil is trading over $100 a barrel, for Brent Crude. And then what happened? What goes around, comes around. Inflation began leaking back into the US. Inflation went out of the US – courtesy of the feds. Foreign central banks had a hard time keeping up with it. They had to increase supplies of their own currencies to soak up the US dollar liquidity. Pretty soon, the whole world seemed to be bubbling up. But now, the foreigners are re-exporting inflation back to us. How do you like that? Surely there is some congressional committee ready to investigate. Surely there's some member of Congress ready to make a jackass of himself by calling for a ban on it. In the meantime, if you want to buy a food item imported for abroad you'll pay about 30% more than you did a year ago. Or, if you want to buy a barrel of oil, that will cost you about 60% more. And now this imported inflation is raising consumer prices across the USA. Almost every business in America uses imported energy. Every American eats. As far as we know, you can't buy home-grown pineapples or coffee beans – not in the 48 states! And so, what do you know? Prices are going up. In January, core consumer prices – not including food and energy, directly – rose 0.4%. Wait a minute. If that happened every month, it would put the CPI at 4.8% for the year. That would be a lot higher than the 2% maximum allowable CPI that Ben Bernanke will permit. If it gets any higher – he promised on national television – he'll put a plastic bag over its head…just as he would to an aged relative. Of course, we don't know whether disinflation has really bottomed out or not. And we remember the early '80s, when inflation topped out. Nobody knew for sure that Paul Volcker really had the matter under control. It took years before the new trend was clear. Most likely, we'll see the same phenomena again…but distorted, as though reflected, grotesque and absurd, as in a bent-up mirror. This time, we'll find out that Ben Bernanke has lost control completely. He may want to raise rates. But with 30 million people unemployed…will he be able to do so? And let's imagine that this inflation squeezes corporate profits – it's already happening. How long will it take before investors begin to dump stocks? In the early '80s, they slowly, cautiously began to buy stocks…this time they'll be selling. So, Ben Bernanke – guardian of the nation's money, guarantor of full employment, promissor of a bull market on Wall Street – will be in a very uncomfortable position. He'll have the plastic bag in his hands. He'll want to stifle inflation. His hands will shake. His voice will quake. And he won't be able to do it…. But heck, that's still in the future…maybe far in the future. If disinflation has bottomed it could still be years before we're sure of it…and months or years before Bernanke's bluff is called. In the meantime… Bill Bonner Imported Inflation Hits US Consumer 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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| Posted: 21 Feb 2011 06:16 AM PST
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| Posted: 21 Feb 2011 06:09 AM PST
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| Sino Silver and Gold Sales Soar Posted: 21 Feb 2011 05:49 AM PST Marco G. submits: Silver sales in China by the Industrial and Construction Bank of China apparently accelerated 600% for January, 2010. This author is always watching for world news that may affect my investment portfolio. The author spotted this on February 19, 2011. Robert Lenzner's blog on Forbes reports:
Complete Story »
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| Posted: 21 Feb 2011 05:42 AM PST By Warren Bevan, preciousmetalstockreview.com What's taking place now throughout the Middle East, specifically in Libya, is horrifying. It's even been called a massacre. In my opinion the best place to keep updated is through the Al Jazeera news organization. You can view their station on the internet or there is even an app which I use to watch while doing my nightly exercise routine, from my smartphone. This will have far reaching, yet unknown affects. But demonstrations are good in my view, at least the peaceful kind. It's those in power who seem to be initiating violence In comparison to the events in the Middle East, talking about markets seems frivolous, but it is what we are here for ultimately. Markets in the US gained once again in an unprecedented continuation of the cup and handle pattern break in early December 2010. We are certainly climbing a wall of worry here, as the saying goes. I wake up worried everyday, but the beat goes on. I've talked before about my view that markets will rise as precious metals do, but the purchasing power of the US Dollar will fall in effect making the stock market gains all but a mute point. Hopefully metals will rise substantially more, and so far they have which in turn increases their purchasing power. In any inflationary episode, or heaven forbid hyper-inflationary episode, markets soared but then again the populous were burning paper dollars since they were worth less that logs of wood. Protect yourself with physical precious metals. Although inflation is said to be non-existent all you have to do is take a look at a few food manufacturing companies recent numbers or listen to their conference calls. The theme is that their costs are rising quickly and they are having to pass that down to the consumer. Sure you can buy that 52' flat screen for less than last year, but you don't need it. The food on your plate that you do need is more than last year, and I assure you will be much more next year. This is part of what sparked the current crisis in the MIddle East. I like to take a step back sometimes when it seems things perhaps are askew in one way or another, and the older I get the better I am at recognizing these times. Ahh, life is a learning adventure! I read a quote the other day I'd like to share first, from the immortal Bruce Lee. I believe it applies to us all, unfortunately many don't believe that to be true. Bruce said; "If you always put limits on everything you do, physical or anything else. It will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." Never be satisfied, keep pushing no matter what you are doing in life. No regrets!
Enough inspirational jargon for this week, let's do a little fun comparisons. The other three are somewhere between 400% and 450%, very nice indeed. But bubble? I think not. I'll use Silver below in the next chart since it performed slightly better than the rest.
For some reason this chart will only go back to 2006. The chart would be far more skewed if it went to 2000. Anyhow, you can probably guess which line is Silver. Yes it's the red line. The others are a few of my favourite stocks to swings trade. I guarantee you know the green and blue lines name, but the pink line you may not know. And it's not at all a penny stock in fact it trades well over $100 per share! The point of this exercise is to reassure myself, and any other nervous longs out there, that even while Silver is "bustin' a move" like Young MC back in the day, it's far from overbought, or close to popping in a bubble blow-off type of manner. So next time you hear a talking head or passerby mention the precious metals bubble you can use the G, or R rated version of; Bubble my a**/butt! Then show them the chart above. Metals review
Gold rose 2.31% on the week. Not bad, but certainly not explosive. I've mentioned I wasn't nearly as keen on the Gold chart as the Silver chart recently. I remain that way. Gold continues to build a bearish rising wedge, but is now above all the moving averages I show here. It is certainly close to an area I would consider trading it as there are some very cheap ways to profit from it's next big move higher at this time. As always my physical Gold and SIlver hordes are not yet for sale. The GLD ETF saw strong and increasing volume all week as Gold rose higher and higher and above the 50 day moving average. Volume is nowhere near blow-off territory yet though.
Silver rose 8.73% for the week but more importantly hit highs not seen in 30 years. Even more importantly than that is how strong it remained AFTER the CME raised margin requirements. I was watching it tick by tick Friday and literally the second I got the margin news, that was the top for the day. I expected a bit more of a drubbing to ensue quickly, but no such thing occurred. That's strength we have yet to see exhibited in Gold or Silver, until now. Sure, it marked the peak of the day, and week, but Silver only slid marginally. Seeing Silver sit where it is right now on the upper trend-line of an up-trending channel makes me think we are near a real move higher, not just this 8% per week type of child's play. Perhaps 8% a day for a few days in a row or more. I'd really prefer to see Silver hold this channel and head higher at the current astonishing rate, but if we break above it there is no telling what can happen. I hope you've got your physical positions and trading positions locked up already as we have. I always suggest to buy dips and sell the rallies if you are trading. If you want to accumulate physical, just buy the dips. We are rallying hard now. The SLV ETF saw very heavy volume perhaps signifying a short term top here. I'd love to see Silver come back to test the breakout at $31. And if it did it quickly, it wouldn't even violate the uptrend channel. Especially if it did one of it's famous intra-day spikes lower where it violates everything that tells you it's going higher, only to roar back and close the day back in everything is fine and dandy territory.
Platinum gained 1.78% on the week. Platinum is looking great here as it spiked below the uptrend line before moving higher to here. It's having a bit of trouble getting above the two resistance levels here and just above $1,850 but we should move above that this coming week with relative ease. In the bigger picture I don't like the uprising wedge pattern that has been forming. It is bearish, but could not work out, or we could remain in it for well over another month and continue to trend higher. I remain bullish here until the rising wedge is broken. The PPLT ETF volume was highest on Friday and Wednesday which were slight down days. But volume was not heavy enough to tell me anything significant.
Another solid week for Palladium as it floated 3.53% higher. There isn't much I can say here. It's in a bearish rising wedge pattern which may or may not play out. Support lies with the 21 day moving average or the lower line of this rising wedge which are very correlated. Resistance is the upper line. I'd say it may be a little long in the tooth this move as we should correct, but as I've said before an entry near the lower level or 21 day average is a safe enough play as long as a tight stop is employed. The PALL ETF saw similar volume to that of PPLT with Friday and Wednesdays down days seeing the most volume, but nowhere near any type of extreme volume. Fundamental Review Chinese Gold demand is growing at an "explosive" rate. Really, this is something we already knew, but to prove it is another thing altogether. The Chinese are looking to store their wealth in physical Gold as they get wealthier. This has been done for centuries and centuries, it's just that the Western sheeple have been programmed from kindergarten all through University that paper dollars backed by nothing are a good store of value. This flies in the face of all of history. While China is buying Gold, they are dumping US treasuries, along with Russia. Smart as that may be for China and Russia, it's troubling for the US. Even more troubling is the fact that now the Federal reserve owns more US treasuries than anyone else. ANYONE ELSE! There is only one outcome to this, and it's not good. Please, PLEASE, buy physical metals and hide/store them quietly somewhere. And remember, if you're storing them and paying no storage fee, you don't have real metal. India's 2010 Gold demand soared 66% over 2009 to 963.1 tonnes. Global demand rose 9% to 3812.2 tonnes according to the World Gold Council. That's interesting because the world production is only bout 2,500 tonnes. That's quite a lot to make up through scrap and other recycling. But many people are still taking advantage of these currently high Gold prices to cash in their jewellery or old trinkets. A mistake in my view. Please see this link for the week's list of biggest losers. We had four banks fail at the same time as usual, late Friday evening. Obama is calling for a 5% royalty on gross mining proceeds in the US. I've warned before that governments around the world, even western ones, are going to want a bigger slice of the pie. It doesn't mean miners can't make money, or that you can't make money trading and investing in them, it just means it's harder to pick good ones. Producers are a tough bunch since so much can go wrong, but smaller ones with easily increased production numbers are good, as well as exploration companies who are showing good reserves with great potential. The funny thing is that it will only save the government $3 billion over 10 years. That's a lot for the miners but for the governments unending spending, it's a drop in the bucket. It wouldn't surprise me if it cost nearly that much to get the damn bill passed, let alone enforced, the way they leak dollars. Mining and mineral exploration near the Grand Canyon has seen a ban on it recently, which is set to expire this summer, but there is now a proposal in place to reinstate the ban for 20 years. Apparently the area is said to contain quite a lot of uranium. It will need to be mined one day I assure you, but we may as well see it postponed and saved for the US's strategic reserve in a sense. I hope you're enjoying your long weekend, personally I'd rather the markets were open Monday, but that's not up to me. So i'm heading out of town skiing for a couple days I guess. It will be nice to get away and take my mind off the markets. Before I leave you I want to share a truly incredible story with you from days past. It was sent to me on Valentines day, and touched me. No matter how soft or hard your heart is, this story will touch you. It's about Christian the lion, and the short version can be found here. Once you see that short clip, I'm positive you'll make the time to watch the full documentary to which part one can be found here. You can find the rest I'm sure. Until next week take care and thank you for reading. Warren Bevan In my free, nearly weekly newsletter I include many links and charts which cannot always be viewed through sites which publish my work. If you are having difficulties viewing them please sign up in the left margin for free at http://www.preciousmetalstockreview.com/ or send an email to warren@preciousmetalstockreview.com with "subscribe" as the subject and receive the newsletter directly in your inbox, links and all. If you would like to subscribe and see what my portfolio consists of please see here. If you found this information useful, or informative please pass it on to your friends or family. Free Service The free weekly newsletter "Precious Metal Stock Review" does not purport to be a financial recommendation service, nor do we profess to be a professional advisement service. Any action taken as a result of reading "Precious Metal Stock Review" is solely the responsibility of the reader. We recommend seeking professional financial advice and performing your own due diligence before acting on any information received through "Precious Metal Stock Review".
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| LGMR: Silver Jumps 4.7% as Gold Unwinds New Year's Drop Posted: 21 Feb 2011 05:33 AM PST London Gold Market Report from Adrian Ash BullionVault Mon 21 Feb., 08:45 EST Silver Jumps 4.7% as Gold Unwinds New Year's Drop, US Dollar Misses "Safe Haven Bid" THE PRICE OF GOLD broke above $1400 per ounce and the silver price jumped above $33.50 in London trade on Monday, extending last week's strong gains on what a growing number of market professionals call "safe haven buying" amid fresh turmoil in the Middle East. "A particularly ominous sign for the Dollar is that there's been no safe-haven demand for the [US currency]," says Steven Barrow, chief forex strategist at Standard Bank in London. Libya, which supplies 10% of Europe's oil, faces "civil war" according to dictator Colonel Gaddafi's son Saif al-Islam, who vowed on state TV yesterday to "fight to the last bullet" after the regime lost control of eastern Libya cities Benghazi and al-Bayda. Brent crude oil today rose above $105 per barrel, but broader commodity markets were unchanged as food and base metal ...
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| Report: Libya Air Force Bombs Protesters Heading For Army Base? Posted: 21 Feb 2011 05:14 AM PST Libyan military aircraft fired live ammunition at crowds of anti-government protesters in Tripoli, Al Jazeera television reported on Monday, quoting witnesses for its information. A Libyan man, Soula al-Balaazi, who said he was an opposition activist, told the network by telephone that Libyan air force warplanes had bombed "some locations in Tripoli". No independent verification of the report was immediately available. The protesters were reportedly heading to the army base to obtain ammunition of their own, but witnesses said the air force bombed the demonstrators before they could get there. More Here.. JP Morgan In Trouble? Silver Comex Default?
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| Silver Buoyed by Growing Industrial Demand Posted: 21 Feb 2011 05:05 AM PST Irrespective of the concerns over financial tightening, talks of a gold bubble and economical weakness, gold marked its tenth straight annual gain in 2010. Not only gold, other members of the precious metal group such as silver and platinum were also up last year. At this juncture, last year’s bull run appears to be running out of steam. However, both technicals and fundamentals indicate improved investment options in precious metals, particularly silver, if you have a long-term investment horizon.
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| Silver moves past old high and heading much higher Posted: 21 Feb 2011 05:05 AM PST A week ago and you could have made a good argument for the silver price being at a double top. And typically after confirming a previous high, a downturn would be in prospect. But not after prices jumped to $32.60 by the end of the week, comfortably placing silver in a fresh stage of upward momentum.
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| Gold and Silver's Daily Review Posted: 21 Feb 2011 05:02 AM PST Gold and silver broke through resistance on Friday at $1,380 and just a business day later sits at $1,397.30 ahead of the London Fix. The dollar is slightly weaker only at $1,3697 leaving gold in the euro at €1,020. Again the dollar is not an issue today. Gold is independent of both right now, walking its own road. While SPDR gold ETF holdings fell half a tonne on Friday it has not affected gold prices. Just ahead of New York's opening the dollar gold price was at $1,386.0.
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| Silver Jumps 4.7% as Gold Unwinds New Year's Drop, US Dollar Misses "Safe Haven Bid" Posted: 21 Feb 2011 05:01 AM PST THE PRICE OF GOLD broke above $1400 per ounce and the silver price jumped above $33.50 in London trade on Monday, extending last week's strong gains on what a growing number of market professionals call "safe haven buying" amid fresh turmoil in the Middle East.
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| Posted: 21 Feb 2011 04:50 AM PST The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! February 21, 2011 08:17 AM What are all the silver and gold shorts, market top forecasters, bubble blowers and weak-knee bulls doing today after seeing latest silver and gold prices? [url]http://www.grandich.com/[/url] grandich.com...
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| 0% Interest Rate = Worthless Dollar Posted: 21 Feb 2011 04:48 AM PST In a recent piece I wrote, 'Suicide Bombers' in the Gold Market?, I strongly asserted that the highly-leveraged spread-trade which 'blew up' – and caused the most recent sell-off in the gold market – was deliberately orchestrated by the anti-gold banking cabal. To briefly summarize the facts, an unknown "trader" was able to leverage a $10 million "fund" (i.e. bet) into an $850 million dollar spread-trade, representing nearly 15% of the entire Comex futures market, while leveraged at an absurd 85:1. It was a "trade" created to fail. Of more relevance (to this piece), I observed that such tactics would likely become commonplace with the banksters, since a mere $850 million was "nothing" to them – in a world where they can get their friend (and fellow, private banker) Ben Bernanke to simply print-up $850 million more in Bernanke-bills, and "lend" it to them at 0% interest. A reader of my previous piece attempted to criticize that commentary by noting that the actual losses on the trade(s) would have been nowhere near $850 – totally missing the point. With the Wall Street bankers able to obtain (and Ben Bernanke willing to print) infinite amounts of Bernanke-bills, "loaned" at 0% interest, this paper has become nothing more than "confetti" to the banksters. Several observations need to be made about the United States' "zero interest rate policy" (ZIRP), observations which (strangely) no one in the mainstream media has been willing/able to make. 1) Calling the $trillions in Bernanke-bills funneled into Wall Street banks "loans" is absurd. Anything "borrowed" with ZIRP never needs to be repaid – since there is literally "zero" penalty for failing to do so. Thus every penny of these "0% loans" is simply another back-door hand-out to the greatest corporate deadbeats in the history of humanity. 2) As a matter of elementary economic fundamentals, a ZIRP economy must drive the value of its currency to zero over time. It is merely simple arithmetic that the long-term value of any/every good which can be obtained at zero cost is zero. Otherwise those with access to this 0% good could literally use the "arbitrage" on this scam to buy-up (i.e. steal) all of the world's assets. 3) The U.S. economy is already so insolvent that (in reality) U.S. interest rates are permanently frozen at 0%. Carrying $60 trillion in total public/private debt, raising interest rates by a mere 1% would drain an additional $600 billion per year out of the U.S. economy – equal (by itself) to nearly a 5% drop in GDP, before factoring-in the severe "multiplier effect" of draining that massive amount of capital from the economy. This means that in practical terms, the U.S. dollar is already worthless. 4) The Federal Reserve has placed absolutely no limits on the amount of 0% funny-money it's willing to funnel to Wall Street. In other words, it is available to these banksters in literally infinite amounts. For reasons previously given, the present value of any/every good which can be obtained in infinite amounts, at zero cost is zero. This means on the basis of simple arithmetic, the U.S. dollar is already worthless. The latter point should be extremely self-evident. If I could "borrow" infinite amounts of money at 0%, I would "borrow" $1,000,000 quadrillion, and "buy" every asset on the planet. I would need at least that much money to buy-up everything, since the moment all that funny-money began circulating in the global economy, it would rapidly drive-up the price of everything (kind of like what is currently taking place in the global economy after "QE2"). |
| John Hathaway - Silver Breaks Out, Paper Market is Nonsense Posted: 21 Feb 2011 04:45 AM PST  With silver trading at a new multi-decade high trading above $34 and gold up almost $20 breaking above $1,400, King World News today interviewed John Hathaway, Senior Managing Director of the Tocqueville Gold Fund. Hathaway stated, "What I strongly believe is that the amount of paper we are seeing traded in both gold and silver on the Comex and in the derivatives market is nonsense. It has to be something in the order of 100 to 1. The fact that the market is moving today when the Comex is closed tells me it is not New York that is doing this, it is physical demand."
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| GoldMoney’s James Turk interviews GATA’s secretary/treasurer Posted: 21 Feb 2011 04:38 AM PST 9:15a MT Monday, February 21, 2011 Dear Friend of GATA and Gold: Last month on the eve of Cheviot Asset Management's Sound Money Conference in London, GoldMoney founder and GATA consultant James Turk interviewed your secretary/treasurer for 33 minutes about government manipulation of the gold market and about GATA's work. Video of the interview has been posted at the GoldMoney Internet site here: http://www.goldmoney.com/video/powell-turk.html 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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While the foundation Powell laid in England became 
This is what we've been saying the Fed's policies would lead up to
What is a topic of discussion in the Republicans "
It goes on and on and it is entirely sickening to see how the Republicans plan to "save" money without cutting a penny of our $1.1Tn military budget and without collecting one dime of additional taxes in our $15Tn economy or any of the other hundreds of Billions of dollars of waste that could be cut instead of these "Liberal" or "Progressive" programs (
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