saveyourassetsfirst3 |
- Gold Mining Stocks Trendpower
- Are Gold and Silver Still a Buy? Absolutely – & Here's Why
- A Trading Strategy for the Gold Correction
- Crossing the Golden Rubicon
- Toyota Gets a Brake (Pun Intended)
- Silver Lease Rates Rise Sharply – Bond Yields in Portugal Rise to Record
- Ted Butler's Latest: The Rarest Earth
- China, Euro and the Dollar Indicating Short Term Bottom for Gold
- The last raid by EE
- Perth Mint Out of 100 Ounce Silver Bars for at least 6 Weeks
- Chris Waltzek- 2.10.11 – GoldSeek Radio
- Trader alert: The best way to play gold now
- Response to Gold Question
- Platinum?
- 1-2-3 REVERSAL
- Technical Analysis DOES Work For Gold
- Bernanke Policy
- Drill Baby Drill
- How Much More Demand Can Silver Handle?
- How to profit during monetary crisis
- China may increase gold reserves beyond Fort Knox level – Hale
- Perth Mint Out of 100 oz. Silver Bars for at least 6 Weeks
- Billionaire Fund Manager Thomas Kaplan on Gold
- Municipal Bond Shock Could Ignite Silver Charts
- Pennsylvanias Ice Mine And the Lost Silver
- Pricing the World in Gold: 4 Charts
- Gold Miners Index May Be Warning Us…
- Is Ben Bernanke A Liar, A Lunatic Or Is He Just Completely And Totally Incompetent?
- GFC? What GFC?
- Benjamin Lies again, Silver COMEX warehouse a debacle
- When the Unemployed Lose Faith in the System
- Blowing Bubbles
- Global Silver Exploration
- Precious Metals Unfazed by Bernanke Testimony
- The World Priced in Gold
- The Violent Declines the Follow Overbought Rallies
- Chart Focus: Submerging Markets
- Gold Seeker Closing Report: Gold and Silver Close Slightly Higher
- Vulture Bargain Note for Subscribers
| Posted: 10 Feb 2011 07:00 AM PST
| ||
| Are Gold and Silver Still a Buy? Absolutely – & Here's Why Posted: 10 Feb 2011 05:43 AM PST After the impressive run in precious metals last year that saw gold rise 29.6% and silver rise 83%, the question on many investors' minds is whether there is still any run left in these commodities. [Read on for a clear understanding of what we can expect for gold and silver - and why.] Words: 1027 | ||
| A Trading Strategy for the Gold Correction Posted: 10 Feb 2011 05:28 AM PST seekinGold submits: In the bigger picture we expect gold make new highs this year mainly due to the devaluation of currencies but in the near term, in our opinion, the current correction could take the metal much further down. Shares of big miners like Goldcorp and Agnico Eagle are technically facing strong resistance. Based on this prediction, this is the trading strategy that we are taking. If in the mean time fundamentals change, we will revise our plan. 1. Hold on to the core positions and sell the underperformers and stocks in other industries that are over bought to secure cash [seen Lululemon (LULU) lately?]. 2. Buy 1/3 at $1,260 to $1,290 area. This is the old resistance level to 200 day moving average (that is rising). 3. Buy 1/3 at $1,200 the psychological support. 4. Buy 1/3 at $1,150. This is the Fibonacci retracement level that also corresponds to the support for the July 2010 rally.
(Click to enlarge) If prices go below $1,150 we will look at Options. The metal may not hit our buying targets and keep climbing up to make a new high, we get in once it crosses $1,450 to ride with the trend. Therefore, the $1,300 to $1,450 is a no trading zone. What Complete Story » | ||
| Posted: 10 Feb 2011 04:19 AM PST
There was a very interesting piece of news this week that has not seen much discussion. J.P. Morgan, the second largest U.S. bank by assets — and arguably the most powerful by other key measures — has announced it will accept gold as transaction collateral. Via the Wall Street Journal:
Those who look favorably on the yellow metal have always viewed gold as money. Their case for doing so stretches back thousands of years, to the Lydian gold coins of sixth century B.C. But this event is a milestone in that, for the first time, the global financial elite are conferring a stamp of legitimacy on gold. No longer just a "barbarous relic," one can now post the stuff up for margin.
Why did JPM do this? As the WSJ piece suggests, there is most likely a simple business opportunity at hand. Given all the gold on clients' books, why not make use of it to fuel a little more leverage? The logistical implications of gold as collateral (for other financial transactions) could also be an investment game changer. For the longest time, gold has been considered an inert asset: No yield, no cash flows, no intrinsic rate of return. This in fact may be the detractors' best case, particularly among those who say "gold is not an investment." So, in the eyes of a certain crowd, buying gold is seen as a foolish move… tying up one's capital without some calculable rate of return (othern than hoped-for price apprecation). But now, gold buyers can have their cake and eat it too: They can purchase gold as a form of insurance and inflation hedge… and then, rather than having their capital tied up in such purchases, they can use those holdings as collateral to make other bets. Welcome to the new carry trade. And welcome to a whole new dynamic for both 1) the potential popularity of gold in the event of a serious inflation outbreak, and 2) a whole new source of liquidity in respect to facilitating monetary velocity if and when inflation heats up. One could ask further questions of the House of Morgan: Do they hope to accumulate even more gold in their vaults? Is this a means of offsetting other transactions in darker corners of the bank? Is this a sign the financial oligarchy is preparing in advance for a wave of devastating inflation, knowing it to be the inevitable end result of the self-dealings they have wrought? And with the JPM announcement coming a mere six months prior to the 40 year anniversary of Nixon shutting the gold window, has the yellow metal's status undergone a new and permanent phase transition? Has the longstanding fiat money system — a mere four-decade blip in history's grand sweep — crossed some sort of Rubicon? Things that make you go hmmm….  | ||
| Toyota Gets a Brake (Pun Intended) Posted: 10 Feb 2011 04:15 AM PST Wall Street Strategies submits: By David Silver As I was preparing to write this piece, I googled the crash back in October 2009 that started one of the largest automotive recalls in the history of the industry, and I found an audio taping of the 911 call of the family before they crashed. It was chilling to hear it again; it is rather cold in New York City, but that call gave me more chills than walking around the canyons of Wall Street ever could. That crash initiated the recall of Toyota (TM) vehicles for sticky accelerator pedals and floor mats that caused the accelerator to get stuck and cause unintended acceleration. 12 million vehicles and about 16 months later Toyota still hasn't completely emerged from the shadow. Tuesday, the Department of Transportation released a report that was a step in the right direction for Toyota (and the auto industry as a whole) that said the electronics were not to blame for the unintended acceleration. NASA scientists participated in the study to see if it was a mechanical or electrical problem that caused these unintended accelerations. While the study says it is not likely that the electronic system caused the problem (apparently they couldn't recreate a similar defect), it does not completely absolve Toyota either as it doesn't prove that it wasn't the electronic system. So everyone who drives a Toyota should feel a little safer behind the wheel; however, they are mass produced machines so of course there are going to be recalls. Complete Story » | ||
| Silver Lease Rates Rise Sharply – Bond Yields in Portugal Rise to Record Posted: 10 Feb 2011 02:52 AM PST | ||
| Ted Butler's Latest: The Rarest Earth Posted: 10 Feb 2011 02:44 AM PST The Rarest Earth By: Theodore Butler -- Posted 9 February, 2011 | Share this article| Discuss This Article - Comments: 0 Source: SilverSeek.com Those who keep up with business news will have no doubt read about the recent developments in the category of minerals known as rare earth elements (REE's). These are minerals that are vital to modern industrial applications, ranging from lasers, batteries, alternative energy, and superconductors to all sorts of important high-tech applications. There are 17 minerals classified as REE's with exotic names like scandium, yttrium, lanthanum, cerium, and praseodymium. Don't worry, this is not a technical discussion and this will probably be the only time I write about rare earth elements. Actually, these minerals are not all that rare, in the strictest sense of the word. Many are quite abundant in the earth's crust. What makes them rare is that they are generally not concentrated in ore bodies offering economically feasible extraction. The first rare earth mineral was discovered around 1800, in a village in Sweden named Ytterby, and several REE's are named after that village. Up until about 1950, most rare earth production came from India and Brazil. In the 50's, South Africa was a big producer, then California took the lead from 1960 through the 1980's. Then, China came to be the dominant producer by far, and currently produces 97% of world production. Due to booming world demand, production has strained to keep pace. This was recently exacerbated by China's new export restrictions, due to falling ore reserves and environmental concerns. This sent the price of rare earth elements soaring by hundreds of percent, prompting a world-wide effort to ramp up production. However, you just don't flip a light switch and begin new mine production. It can take years to develop a mine and begin production. In the meantime, industrial consumers must compete for available supplies by bidding up the price. This is the essence of the law of supply and demand. Since I'm not a REE expert why am I writing about them? The answer has to do with silver. Silver shares many characteristics with the rare earth elements and there is a lot to learn from them in our analysis of silver. In fact, the purpose of this article is to make the case that silver is the rarest of all the rare earth elements. One of the common characteristics between silver and the rare earth elements is that many REE's are mined in conjunction with other minerals, the same as silver with its by-product mining profile. Mining for both tends to concentrate on the easiest to exploit properties first. Consequently, the remaining properties tend to be lower-grade and more expensive and difficult to develop. Both silver and REE's have seen the emergence of China as the chief producer of each. (In the case of silver, the production reliance includes the processing of scrap material not mined in that country.) Silver production from China is nowhere near 97% of world production, as it is in the rare earth elements, but it still is significant. Environmental issues and restrictions inhibit the production of both silver and the REE's. And with both, higher prices don't automatically guarantee immediate new production. For instance, last year on an 80% increase in silver price, the mine production of Peru (the world's largest miner) declined 7% or 12 million ounces. That's a million silver ounces less per month than from a year earlier. Recently, the price of REE's skyrocketed, due to China's sharply curtailed exports. Should any major silver producing country sharply restrict the export of silver, the price would soar. In most industrial applications, there is a small, but necessary amount of silver and rare earths used which is resistant to substitution. The chemical properties of silver and rare earth elements are usually unique in the specialized industrial applications which mandate their use. Generally, the consumption of silver and rare earth elements is price-inelastic, meaning sharply increasing prices of each do little to discourage consumption, due to the lack of substitutes. As was seen recently in the rare earth elements, the industrial users panicked when the supply was curtailed. This will also happen in silver, as I have long predicted. Where do I get off with the statement that silver is the rarest earth element of them all? This point is the easiest of all to make and should prompt you to rush out to buy silver immediately. What separates silver from the REE's is the one stark factor which is unique to only silver. You can actually buy and hold silver in its purest elemental form, unlike other rare earth elements. Try calling some dealer to invest in pure yttrium, or promethium or gadolinium. And if by some miracle you can find someone to buy from, try to imagine how you could possibly sell or determine a fair price? The thing that separates silver from all other REE's is that you can invest in it directly. Sure, you can buy stocks in companies that mine silver or REE's, but only silver has the dual role of basic investment asset and industrial material. That's what makes silver the rarest of the rare. What separates silver from any other natural resource is thousands of years of primal attraction, held by man as a form of wealth, and simultaneously a vital and strategic industrial material necessary to modern life. It's just not practical for the average investor to buy a pound of a rare earth, a barrel of oil, or a bushel of corn for investment purposes. I suppose a case can be made about investing in platinum or palladium, both important industrial metals, but there has never been any evidence of a world-wide rush to buy these metals as there has been in silver. Buying or selling an ounce or a pound of actual silver is as easy as falling off a log. The United States Mint sells Silver Eagles by the millions of ounces every month. And while many invest in gold, it doesn't have that investment asset and industrial material dual role unique to silver. That's what makes silver so rare. The amazing thing is how few of the world's potential investors appreciate the uniqueness of silver's rare dual role. The ease of investing in silver is taken for granted by the world. Just a few decades ago, silver was in common coinage. This explains why people have difficulty comprehending how such a formerly abundant material could be considered rare today. How many people know that world silver stockpiles are down 90% since 1940? That's precisely what creates the investment opportunity of a lifetime – seeing something before the crowd. It seems preposterous that a material like silver, which the common man carried in his pocket for bus fare or a newspaper could somehow transform itself into a rare material about to enter into a profound shortage. That shortage is virtually guaranteed by silver's unique dual role. The coming rush into silver by investors seeking profits and industrial users looking to stockpile a vital manufacturing component makes a shortage almost certain. There is no way production can ramp up nearly as quickly as the combined force of investment and user demand. For all intents and purposes, silver has been the best investment over the past decade. Those investors who studied the facts objectively and bought silver, have reaped multiples of their original investment. Silver will likely be the best investment of the next decade as well. Those who study the facts and act on them by buying silver will be generously rewarded. There is no way anyone can turn the clock back to single digit silver. Those days are long gone. But in some ways, the more exciting time lies ahead. Ten years ago, it was difficult to convince people to buy silver. The stock market was flying high and real estate was just entering a major bull market. Crude oil was sliding towards $20/barrel and most commodities were flat. Silver was under $5, gold under $300, and the term rare earth was mostly unknown. Anyone investing in natural resources needed to have their heads examined. Even though silver was in a deficit consumption pattern, there was little interest in buying it as an investment. Today, things are different. Natural resources are more widely appreciated, in light of burgeoning world populations and the growth in living standards. Now it is a question of which natural resource will experience the next supply and demand crunch, rather than will there be any crunches. In the last decade, silver rose due to the cumulative effect of a 60 year deficit and the start of net investment demand. This decade, it will be investment demand driving silver higher, along with the end of the short selling manipulation. This termination appears underway. Thanks to great price performance, more investors will be drawn to silver. Thanks to the Internet, a great manipulative force that restricted the price cannot last much longer. While it may be hard to achieve the 7-fold increase in price from the extreme lows of ten years ago, the gains will still be spectacular and should come quickly. At some point the buying momentum will overwhelm those shorts trying to hold back the tide. The big shorts look tired of the manipulation and appear ready to stand aside on the next big rally. How many neighbors and friends and relatives and fellow citizens do you know that have made a serious investment in silver? I doubt you can discover one in a hundred, or one in a thousand. Despite the impressive price gains over the past 5 or 10 years, silver is still vastly under-owned and under-appreciated. The investment flows into silver, compared to any other investment class, have been tiny. However, the amount of real silver available for investment is so small that the small investment flows to date have been sufficient to power silver higher. As more investors become aware of the silver story, the money coming into silver will only increase, propelling the price to levels once thought impossible. Importantly, the money flowing into silver appears to be for physical buying and not margin. Bubbles only occur when people are so enamored of an investment that they recklessly borrow to buy as much as possible. We're a very long way from that in silver. That's yet to come. There are now $2 trillion in assets in hedge funds (the pre-financial crisis levels). This is hot money that comes into any promising investment theme in a flash. It is big money, always on the prowl for a good investment idea. To my knowledge, there has been no rush yet into silver by the hedge fund sector. Remarkably, silver recorded an 80% gain last year and a 170% gain over the past two years with no visible participation from the biggest and hungriest investors of all. There is no doubt in my mind that before the silver price saga is finished, the hedge funds will have come into silver in a big way. If silver can climb 80% and 170% without them, what can it climb with them knocking down the doors to get in? The silver story is just getting out. Please take the time to study the facts and act before the big surge. (For subscription information to Ted Butler's private newsletter, please go to www.butlerresearch.com) | ||
| China, Euro and the Dollar Indicating Short Term Bottom for Gold Posted: 10 Feb 2011 01:00 AM PST
| ||
| Posted: 10 Feb 2011 12:40 AM PST They can try and paint charts patterns, throw paper at the spot price, and pretend to withdrawal physical from SLV, but the one thing they will not be able to do is print a stack of ASE's and Maples when 300 million people demand it on the same day. Turn your Spot price monitor off, watch for my metals report tonight, that's all that matters anymore. The rest is NOISE. Found an old picture | ||
| Perth Mint Out of 100 Ounce Silver Bars for at least 6 Weeks Posted: 10 Feb 2011 12:20 AM PST Perth Mint Out of 100 Ounce Silver Bars for at least 6 Weeks King World News has verified with the Perth Mint that they have run out of 100 ounce silver bars and they are not slated to be available again until the end of March. As of the close Thursday, 100 ounce silver bars were still unavailable at ScotiaMocatta as well. KWN also reached out to one of the largest dealers in Australia where Peter August of ABC Melbourne stated, "Pamp was just approached by an unnamed Swiss bank and solicited for their entire one kilo silver production ongoing. They said, "Because of the high demand, we'll take everything you've got in one kilo silver bars ongoing." Peter August went on to say, "We already have a month's wait for the silver we are buying and it's getting much harder to find." August also remarked, "Gold is starting to get a lot scarcer. Apparently at one point Hong Kong basically ran out of physical gold for sale two weeks ago. We were told that there was no physical gold available for sale in Hong Kong with no timeline given as to when more would be available. Mitsui ran out and the large dealers in Hong Kong were short of physical gold as well. Wether that was just a one time situation remains to be seen, but cracks are starting to appear in the physical market. Multiple sources around the world have been confirming tightness in the precious metals markets. So far the market has reacted with higher prices. Silver is within striking distance of multi-decade highs, it will be interesting to see how it trades the next couple of weeks. Eric King KingWorldNews.com http://kingworldnews.com/kingworldne...t_6_Weeks.html | ||
| Chris Waltzek- 2.10.11 – GoldSeek Radio Posted: 10 Feb 2011 12:00 AM PST Chris Waltzek discusses Gold Seek Radio and his book:
| ||
| Trader alert: The best way to play gold now Posted: 09 Feb 2011 11:57 PM PST From Gold Scents: While I don't think gold is likely to head back down and make a lower low, I'm going to lay out a simple strategy to protect against getting caught, in case it does. It's likely we may see our first reaction against the new uptrend. This is the No. 2 test of the lows in a 1-2-3 reversal... Read full article (with charts)... More on gold: Why you should be prepared for a gold price collapse WARNING: Traveling with gold just became much more dangerous This startling Chinese gold development has "stunned" precious metals traders | ||
| Posted: 09 Feb 2011 10:33 PM PST A question from reader Kent: On the topic of gold, if one believes it is the future, what is best way to own it? Is GLD a safe way to invest? Do you have to own the physical gold? There are a lot of concerns about the integrity of the market. There are several ways [...] | ||
| Posted: 09 Feb 2011 10:11 PM PST Someone came into where my wife works with what he claimed was a roll of platinum wire. He wanted to know if anyone knew where he could sell it. Somehow the people in the office thought my wife might be able to find out from me. Without seeing what he was holding or not really knowing the content of the wire I wouldn't have a clue of its worth. Does anyone know where this guy might be able to sell this wire? I am thinking a jeweler might be a place to start. Failing that, I said a scrap yard, but they would probably scalp him. Not even sure, possibly this guy stole it and is trying to unload it, but that would be prejudging him. He left his name and phone # with my wife. Pretty sure he wasn't trying to pick her up :cool2: | ||
| Posted: 09 Feb 2011 09:26 PM PST While I don't think gold is likely to head back down and make a lower low I'm going to lay out a simple strategy to protect against getting caught in case it does. It appears likely that we may see our first reaction against the new uptrend. This is the #2 test of the lows in a 1-2-3 reversal.  If gold then reverses and breaks through the pivot it will complete the 1-2-3 reversal and it will have begun a pattern of higher highs and higher lows.  That would be the signal that the down trend has been broken and one could add in full positions or leverage (don't get carried away) as they see fit. The downside is of course one will lose some profit potential waiting for confirmation and if gold reverses the early morning weakness you will just have to immediately buy back. The action would be to lock in some profits this morning and then wait for the pattern of higher highs and higher lows to complete before putting positions back on.        This posting includes an audio/video/photo media file: Download Now | ||
| Technical Analysis DOES Work For Gold Posted: 09 Feb 2011 08:50 PM PST | ||
| Posted: 09 Feb 2011 08:37 PM PST Here Is The Bernanke "Muddled" Doctrine for Global systemic Failures. -Wikopedia "Bernanke emphasized that Congress gave the Fed responsibility for preserving price stability (among other objectives), which implies avoiding deflation as well as inflation. He states that deflation is always reversible under a fiat money system. Where currency is under a monopoly of issuance, or where there is a regulated system of issuing currency through banks, which are tied to a central bank, the monetary authority has the ability to alter the money supply and thus influence the interest rate (to achieve monetary policy goals). Bernanke asserted that the Fed "has sufficient policy instruments to ensure that any deflation that might occur would be both mild and brief In order to combat deflation, Bernanke provided a prescription for the Federal Reserve to prevent it. He identifies seven specific measures that the Fed can use to prevent deflation." The list follows. 1) Increase the money supply (M1 and M2). "The U.S. government has a technology, called a printing press, that allows it to produce as many dollars as it wishes at essentially no cost." 'Under a paper-money system, a determined government can always generate higher spending and, hence, positive inflation.' Editor: Printing money with no gold or serious assets behind it creates dilution and destruction-Germany 1921-1922. 2) Ensure liquidity makes its way into the financial system through a variety of measures. "The U.S. government is not going to print money and distribute it willy-nilly …"although there are policies that approximate this behaviour." Editor: First he says he won't then he says he will. Printing money is the road to perdition. 3) Lower interest rates – all the way down to 0 percent. Bernanke observed that people have traditionally thought that, when the funds rate hits zero, the Federal Reserve will have run out of ammunition. However, by imposing yields paid by long-term Treasury Bonds, "a central bank should always be able to generate inflation, even when the short-term nominal interest rate is zero …(this is the) more direct method, which I personally prefer, would be for the Fed to announce ceilings for yields on all longer-maturity Treasury debt." He noted that Fed had successfully engaged in "bond-price pegging" following the Second World War. Editor: Benny does not consider the response of free markets and the rules of un-intended consequences. Example, when money is free (0 interest) the carry trade gets busy arbbing the spreads and skewing results. 4) Control the yield on corporate bonds and other privately issued securities. Although the Federal Reserve can't legally buy these securities (thereby determining the yields); it can, however, simulate the necessary authority by lending dollars to banks at a fixed term of 0 per cent, taking back from the banks corporate bonds as collateral. Editor: Do not kid yourself. The U.S. Treasury and Federal Reserve (Big global bankers (private) are handmaidens in the money, credit bonds scam. They print and produce cash and credit to suit themselves not the Sheeple. The bond game is rigged on both price and yield. 5) Depreciate the U.S. dollar. Referring to U.S Monetary Policy in the 1930s under Franklin Roosevelt, he states that: "This devaluation and the rapid increase in money supply … ended the U.S. deflation remarkably quickly." Editor: No this is wrong. World War II shifted economics not currency and credit monkey business. The war put millions to work producing war materials and filled armies with millions of men for jobs. 6) Execute a de facto depreciation by buying foreign currencies on a massive scale. "The Fed has the authority to buy foreign government debt ..this class of assets offers huge scope for Fed operations because the quantity of foreign assets eligible for purchase by the Fed is several times the stock of U.S. government debt." Editor: Many of the foreign currencies are worse than a failing fiat US Dollar. Creation of cash out of thin air to buy foreign fiat currencies is beyond the pale and ridiculous to the extreme. 7) Buy industries throughout the U.S. economy with "newly created money" In essence, the Federal Reserve acquires equity stakes in banks and financial institutions. In this "private-asset option," the Treasury could issue trillions in debt and the Fed would acquire it, still using newly created money. Editor: Buying private industries and propping private banks with publicly stolen money is criminal and communistic. This will fail along with most everything else when our national and international bond markets crash. It's not if or when; its underway now as we speak, as investors flee bonds in droves. Federal Reserve's Name Should Be Private Global Banker's Cabal. In 2007 and early 2008, the financial press had begun discussing the Bernanke Put, as new Federal Reserve Board chairman, Ben Bernanke continued the practice of reducing interest rates to fight market falls. The decision by the Fed to lower short-term interest rates to 50 basis points (0.5%) on October 8, 2008, and there after a range from 0.00-0.25% rate in December, 2008 suggests attempts to create a Bernanke put similar to the Greenspan put. New steps in quantitative easing further illustrate the Fed's attempt to repeal the private business cycle. The quick recovery of U.S. stock markets from historically notable lows and surging prices for precious metals to record highs suggests that the monetary policy "put" strategy has been successful in moderating asset deflation and has helped advert further erosion of the U.S. economy beyond the business cycle low. Editor: Temporary economic repairs kick the can down the road. At the end, it's many times worse in a depression. The previous statement is nonsense and is media fodder to fool the Sheeple. We got a temporary reprieve but the next moves will be implosive tragedies ripping economies apart.         This posting includes an audio/video/photo media file: Download Now | ||
| Posted: 09 Feb 2011 08:34 PM PST
Mercenary Links Roundup for Wednesday, Feb 9th (below the jump).
02-09 Wednesday
| ||
| How Much More Demand Can Silver Handle? Posted: 09 Feb 2011 08:26 PM PST Perth Mint Out of 100 oz. Silver Bars for at least 6 Weeks. Sunshine Mint quotes 90-day delivery on all investment-size silver bars. China may increase gold reserves beyond Fort Knox level...and much more. ¤ Yesterday in Gold and SilverAfter Tuesday's excitement, there isn't much to report regarding Wednesday's gold trading day. Gold's New York high of $1,368.20 spot was at 10:20 a.m...which was immediately followed by gold's new York low [$1,357.20 spot] at precisely 11:30 a.m. Eastern. The gold price recovered from that...and closed virutally unchanged from Tuesday. Here's the New York Spot Gold chart on its own, as what happened elsewhere yesterday isn't worth looking at. The 11:30 a.m. on-the-button low is the standout feature...and I would bet serious coin that it wasn't random market forces at work here.
The silver price action was slightly more interesting than gold's on Wednesday. A rally that went vertical just before the Comex open was dealt with in the usual manner by the bullion banks. The silver price held most of those gains for the next couple of hours, but then sucumbed to the same 'market forces' that drove the gold price into the dirt at 11:30 a.m. in New York. Every subsequent rally attempt, no matter how tiny, ran into a determined seller...and silver closed down about 17 cents on the day. Here's the New York Spot chart for silver...and you can see where every rally attempt got sold off.
The dollar opened around the 78 cent mark...and held in there until 11:00 a.m. in London before gravity took over. Seven hours later, at precisely 1:00 p.m. Eastern, the dollar hit its nadir around 77.53...and closed the New York trading session almost on that low. There was no sign that the dollar's activities yesterday had any influence on the gold price at all. If you can see any correlation, please let me know.
The gold stocks opened in positive territory, but didn't stay there long. And, despite the fact that the gold price recovered after it's 11:30 p.m. low, the gold shares continued to get sold off...and the HUI closed down 1.75%...just off its low of the day. Most of the silver stocks didn't do well, either.
Wednesday's Daily Delivery Report from the CME showed that 50 gold and 87 silver contracts were posted for delivery on Friday. The link to that action is here. The GLD ETF showed another decline yesterday...this time it was 68,297 troy ounces. And there was no reported changes in SLV. The U.S. Mint reported selling another 4,000 ounces of gold eagles yesterday, which brings the February total up to 24,000 ounces of gold eagles sold. Silver eagles sit at 897,000 for the month so far. There was a fair amount of in/out activity at the Comex-approved depositories on Tuesday. They reported receiving 797,177 ounces of silver...and shipping out 621,340 ounces...for a net change of up 177,837 troy ounces. The link is here. Before getting into my stories for today, here's a graph that was sent to me by Washington state reader S.A. It shows the S&P price action plotted against QE1 and QE2. It should be no shock to anyone that the equity markets are doing well, as Bernanke has made no secret of the fact that he wants the equity markets higher...and it's obvious that the primary dealers are doing his bidding.
¤ Critical ReadsSubscribeJob openings fall for second straight monthMy first two offerings of the day are courtesy of reader Scott Pluschau. The first one is an AP story that's posted over at finance.yahoo.com. The headline reads "Job openings fall for second straight month". Employers posted fewer jobs in December, the latest evidence that businesses are not ready to step up hiring. The link is here.  Foreclosures ramp up as 30% of mortgages are underwaterScott's second piece is a cnnmoney.com story that's also posted over at finance.yahoo.com. The headline here reads "Foreclosures ramp up as 30% of mortgages are underwater". Sometime, somehow, the foreclosure crisis will ease. But probably not anytime soon...as home prices dropped 2.6% nationwide during the last three months of 2010, pushing more borrowers underwater, according to a quarterly real estate market survey from Zillow.com. This is definitely worth the read...and the link is here.  How to profit during monetary crisisReader Peter Handley is up to the plate next with this story that's posted over at investmentpostcards.com...and is headlined "How to profit during monetary crisis". It's Judge Andrew Napolitano interviewing Jim Rogers on Fox News. In the clip, Jimmy discusses gold, silver and the Fed. All his comments are well worth listening to...and the link is here.  Portuguese 10-Year Bond Yield Hit Fresh Lifetime HighsWe now head overseas for the remainder of today's stories. The first on is zerohedge.com posting courtesy of Australian reader Wesley Legrand. The headline of this article reads "Portuguese 10-Year Bond Yield Hit Fresh Lifetime Highs". It's only a couple of paragraphs...and the graph speaks volumes. The link is here.  Bundesbank chief Axel Weber throws ECB presidency into doubtNext is a story from The Telegraph that was sent to me by reader Roy Stephens. It originally started life out as a Bloomberg piece...and the headline reads "Bundesbank chief Axel Weber throws ECB presidency into doubt". Bundesbank president Axel Weber may not seek reappointment when his current term expires next year, a central bank official said, calling into question the future of a policy maker tipped by some economists to take over the European Central Bank (ECB). "This is pure chaos," said Carsten Brzeski, senior economist at ING Group in Brussels. "Europe has already made a mess of the sovereign debt crisis, are we going to make a mess of the succession of Jean-Claude Trichet? This mess needs to be cleared up very quickly." The link to the story is here.  WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on pricesWashington state reader S.A. has another story for us today. This one is from the Tuesday edition of The Guardian out of London...and the headline reads "WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices". The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show. This is not rocket science, or a surprise, as Matt Simmons book Twilight in the Desert pretty much spelled that out about six years ago...and the link to this must read story is here.  Egypt's Warning: Are You Listening?My last non-precious metals related story was sent to me by reader U.D...and it's another posting from over at zerohedge.com. It's a guest post by Chris Martenson that's headlined "Egypt's Warning: Are You Listening?". And, like the previous story, has a lot to do with oil...peak Egyptian oil to be exact. This is a longish read, with some great graphs as well. It's also a must read...and the link is here. If you only pick one story out of my column today, this is the one you should pick.  China may increase gold reserves beyond Fort Knox level – HaleI only have three precious metals-related stories today...and the first one is courtesy of Nick Laird of sharelynx.com fame. It's filed from Capetown...and is posted over at the miningweekly.com website. The headline reads "China may increase gold reserves beyond Fort Knox level – Hale". China's central bank is being advised to increase its gold holdings nearly ten fold to a level greater than the world's biggest bullion depository, the US's Fort Knox. Various officials in China have proposed the central bank should increase its gold reserves to 10,000 tonnes, which would give China larger gold reserves than Fort Knox. The link to the story is here. | ||
| How to profit during monetary crisis Posted: 09 Feb 2011 08:26 PM PST Image:  Reader Peter Handley is up to the plate next with this story that's posted over at investmentpostcards.com...and is headlined "How to profit during monetary crisis". It's Judge Andrew Napolitano interviewing Jim Rogers on Fox News. In the clip, Jimmy discusses gold, silver and the Fed. All his comments are well worth listening to...and the link is here. | ||
| China may increase gold reserves beyond Fort Knox level – Hale Posted: 09 Feb 2011 08:26 PM PST Image:  I only have three precious metals-related stories today...and the first one is courtesy of Nick Laird of sharelynx.com fame. It's filed from Capetown...and is posted over at the miningweekly.com website. The headline reads "China may increase gold reserves beyond Fort Knox level – Hale". China's central bank is being advised to increase its gold holdings nearly ten fold to a level greater than the world's biggest bullion depository, the US's Fort Knox. Various officials in China have proposed the central bank should increase it | ||
| Perth Mint Out of 100 oz. Silver Bars for at least 6 Weeks Posted: 09 Feb 2011 08:26 PM PST Image:  The second one is a blog about silver that Eric King over at King World News slid into my in-box in the wee hours of this morning. It's headlined "Perth Mint Out of 100 oz. | ||
| Billionaire Fund Manager Thomas Kaplan on Gold Posted: 09 Feb 2011 05:19 PM PST C/O of GATA, here are some of Thomas Kaplan's thoughts on Gold. Pay special attention to the bold: Even today, as the gold rally has reached the 10-year mark (following a 20-year bear market), the metal represents a mere 0.6 per cent of total global financial assets (stocks, bonds and cash). This is near the all-time low (0.3 per cent) reached in 2001, and significantly below the 3 per cent it accounted for in 1980 and the 4.8 per cent it was in 1968. However, there are changes afoot. After a lengthy absence, some asset managers and central bankers are readmitting gold back into the group of prudent asset classes. Assessing the devastation of financial industry and government balance sheets, fiduciaries have been reminded that one of the principal reasons to hold gold — that it is the only major financial asset that does not represent someone else's obligation to repay — is not the arcane concept it once appeared. I believe the renewed appreciation of risk management is in its infancy and that gold, like stocks and bonds, will recover its relatively small, but significant historical position in the world's investment funds. Considering the tiny size of the gold market, the implications of a potential return of gold into the world's largest portfolios are enormous. For, unlike stocks and bonds, whose supply can increase to meet demand, there is not enough gold to go around at today's prices. According to International Strategy and Investment Group (ISI), if gold ownership rose from 0.6 per cent of total financial assets to only 1.2 per cent, still less than half its 1980s level, this would equate to an additional 26,000 tonnes, or 16 per cent of aggregate gold worldwide. This represents 10 years' worth of current production. Is such a momentous development likely? I suggest it is more likely than not, as the metal is set up for a "perfect storm" from a supply/demand standpoint. At a time when mining companies can barely find enough gold to replace their reserves and production growth is anaemic, central banks have not only stopped selling their gold but are now aligning with investors to accumulate it. As it dawns on the wider market that the bull market in gold is real, the impact on gold mining equities will probably be dramatic. Until recently, in spite of their theoretical leverage, miners have lagged behind the metal's performance. This should not be so surprising. As most analysts haven't changed the long-term pricing of their cash-flow models to reflect a sustained bull market in gold, the shares have underperformed amid assumptions that are outmoded. This disconnect is similar to the experience of energy equities in the early 2000s. Even as oil surged, it was not until investors accepted that oil might not stay low forever and started to factor in higher prices that the equities were revalued. With the total market capitalisation of all gold mining companies only fractionally higher than that of Apple, any move by investors to capture the inherent leverage of these equities could drive stock prices substantially higher.
| ||
| Municipal Bond Shock Could Ignite Silver Charts Posted: 09 Feb 2011 05:01 PM PST Less than 45 days into 2011, it appears that this just may be the year of the paper recovery, but that doesn't mean that lingering problems have been wiped away. At center stage now is the municipal bond market, which having grown tremendously as investors fled to safe havens in 2009, may soon find itself in a perilous situation. | ||
| Pennsylvanias Ice Mine And the Lost Silver Posted: 09 Feb 2011 04:30 PM PST | ||
| Pricing the World in Gold: 4 Charts Posted: 09 Feb 2011 03:30 PM PST | ||
| Gold Miners Index May Be Warning Us… Posted: 09 Feb 2011 02:21 PM PST The past couple weeks I have been keeping a close eye the price of gold and the gold miners index. I check to see if its pointing to higher or lower prices in the near future using inter-market analysis, price and volume, along with technical analysis. At this time the charts are still pointing to lower prices in the coming days or weeks. Taking a look at the daily chart of Gold As you can see it has formed a bear flag with declining volume and the price has drifted up into a resistance level. This combination typically leads to lower prices. With international fears floating around and the fact that inflation has started does make me a little weary of shorting gold but one thing I have learned over the years is that trading on fundamentals and news clips seen on TV is not a reason to pass on a setup if one forms in the coming days. The only thing that pays in the stock market is when the price action goes in your favor. This is why I focus on price, volume and momentum while avoiding what others are saying elsewhere. Trading is a numbers game and I put my money on the table when the odds are clearly favoring one direction. Unfortunately I am trading trades against what the masses think and feel is the right thing to do.  Gold Miner stocks are forming much of the same pattern as gold bullion but today (Wednesday) the chart actually put in a possible reversal candle. If this is correct then we should see gold and most likely silver follow suit tomorrow by moving lower and possibly even start a correction. Gold Swing Trading Conclusion:
| ||
| Is Ben Bernanke A Liar, A Lunatic Or Is He Just Completely And Totally Incompetent? Posted: 09 Feb 2011 01:29 PM PST 
Bernanke's track record of failure is absolutely stunning. Before discussing some of his most recent comments, let's review some of the pearls of wisdom that Bernanke has shared with us in recent years.... 2005: "House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals." 2005: "We've never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don't think it's gonna drive the economy too far from its full employment path, though." 2006: "Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise." 2007: "At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency." 2007: "It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions." 2008: "The Federal Reserve is not currently forecasting a recession." So should we believe anything that Bernanke is saying now? Of course not. Obviously Bernanke has been feeding us all a whole bunch of nonsense for a very long time. So what conclusion should we come to about Bernanke at this point? Well, as I see it, there are three primary alternatives.... 1 - Bernanke knows that what he is telling us is wrong and he is purposely trying to deceive us. That would make him a liar. 2 - Bernanke actually believes what he is saying because he is completely delusional. That would make him a lunatic. 3- Bernanke actually believes what he is saying because he simply does not understand economics. This would make him completely and totally incompetent. In any event, someone with Bernanke's track record should not still have such a high level job. He should have been asked to resign long, long ago. But instead, Obama nominated him for another term and he was approved by our incompetent Congress. It is a crazy world in which we live. So what is Bernanke saying now? Let's take a look at some of his main points..... Bernanke Says That One Of The Main Goals Of Quantitative Easing Is To Reduce Long-Term Interest Rates During one interview about QE2, Bernanke made the following statement....
In fact, Bernanke elaborated on that point during his remarks on Wednesday....
So how is all that working out? Terribly. The yield on 10-year U.S. Treasury notes has risen from 2.49 percent back in November to 3.65 percent at the close of business on Wednesday. Oops. Long-term interest rates were supposed to go down as a result of quantitative easing, but instead they have increased substantially. Looks like Bernanke was wrong about another one. Bernanke Says That Quantitative Easing Is Not Going To Cause Inflation The price of wheat has roughly doubled since last summer, the price of corn has roughly doubled since last summer and the price of oil is marching up towards $100 a barrel. But oh, there is no inflation so there is no need to worry according to Bernanke. Food riots are breaking out around the globe, but Bernanke says that the inflation in those countries is being caused by their own central banks. Bernanke says that the Federal Reserve has nothing to do with international inflation even though the U.S. dollar is the primary reserve currency of the world. Bernanke says that even though consumers are seeing huge price increases in the supermarket and at the gas pump that we aren't really seeing any real inflation because the fraudulent U.S. consumer price index says so. It is a wonder that anyone still considers this guy to be credible. Bernanke Says That Quantitative Easing Is Helping The Economy Recover And Is Reducing Unemployment During his remarks on Wednesday, Bernanke said that the recent decline in the U.S. unemployment rate was "grounds for optimism". And, of course, he is glad to take part of the credit for the "recovery". Oh really? Things are getting better? As I wrote about a few days ago, the "decline" in the U.S. unemployment rate during January to 9.0% is no reason to celebrate. First of all, the U.S. economy must add 150,000 jobs each month just to keep up with population growth. During January, the U.S. economy only added 36,000 jobs. So why did the unemployment rate go down? Well, the U.S. government said that 504,000 American workers "dropped out of the labor force" in January. Well, isn't that convenient. Let's just pretend a half million unemployed workers are not even there. Yeah, that will make the numbers look better! Sadly, the number of Americans that are "not in the labor force" but that would like a job right now has hit an all-time record high. If you add all of those people into the official unemployment figure it would jump to 12.8%. The truth is that the employment situation in America is not getting any better. In fact, according to Gallup, the unemployment rate actually increased to 9.8% at the end of January. Perhaps Bernanke should reconsider how much "better" things are really getting. Bernanke Says That Now Is Not The Time To Reduce The Deficit When it comes to the national debt, Ben Bernanke is constantly talking out of both sides of his mouth. Bernanke is constantly saying that the exploding U.S. national debt is very dangerous (and he is very right about that point), but Bernanke also says that now is definitely not the time to do anything about it. In fact, recently Bernanke has been purposely stepping into the partisan debate about whether to raise the debt ceiling or not. Bernanke says that Republicans should stand down and that now is not the time to be playing political games with the debt ceiling. Bernanke has been warning that the consequences for not raising the debt ceiling could be catastrophic....
Over and over Bernanke has been saying that the economic recovery is still fragile and that now is not the time be cutting deeply into the federal budget. So when is the right time? Well, with these central bankers it seems like it is never time to address all of this debt. It seems like they always want us to "have a long-term plan" to tackle the debt in the future but to keep borrowing and spending in the present. Well, it looks like that is exactly what the Obama administration plans to keep doing. This year it is being projected that the U.S. government will have the biggest budget deficit ever recorded - approximately 1.5 trillion dollars. Keep in mind that the total U.S. national debt did not surpass 1.5 trillion dollars until the mid-1980s. That means that this year we will accumulate more debt than we did for over the first 200 years that this nation was in existence. Oh, but according to Bernanke we better not do anything to address our out of control debt because that would "harm the economic recovery". In the end, all of this government debt is going to become so monstrous that it is going to swallow us whole. We can try to keep running from it, but we can't hide. Someday the gigantic debt monster that we have created is going to catch up with us. So, yes, there are a whole lot of reasons to be really upset with Ben Bernanke. Perhaps he would be a fun guy to sit down and talk to at a backyard barbecue, but he isn't the type of person that you would want to entrust with any real responsibility, and he most definitely is not someone that should be running the largest economy in the history of the planet. | ||
| Posted: 09 Feb 2011 12:32 PM PST 'Financial crisis a distant memory' reads a headline in today's The Australian. Uh-oh. That seems to be the consensus opinion. The 'GFC' – as it is flippantly referred to in Australia – visited our shores briefly, and then departed…never to return. When you're walking around in the underbrush, the canopy of trees tends to block the light. Only a few slivers make it through. It can be dark and dangerous down there. But that's where bankers and analysts are hanging out. And they're pretty excited about The Commonwealth Bank's (CBA) chunky half-yearly result, announced yesterday. Australia's largest bank made a profit of $3.33 billion in the six months to 31 December. The result represented a 13 per cent improvement (on a cash basis) on last year. Now that sounds pretty good on the surface but it was driven entirely by further falls in bad debt charges, or impairment expense. This time last year CBA incurred bad debt charges of $1.383bn against yesterday's $722m. That's a $661m improvement. Moving back up the profit-and-loss statement though, we find that CBA's operating performance was flat year-on-year. This potentially gives us a sneak preview of what the cash profit growth figure will look like (i.e. flat) at the full year result in August because the big boost to profits from falling bad debt charges is over. This slow growth future was of little concern to investors yesterday. The share price soared. It appeared as though many were expecting a poor result. Either that, or all those nasty foreigners who are betting on a property market collapse in Australia were forced to cover their short positions. CBA has 53 per cent of total assets tied up in home loans (total assets includes foreign assets, so as a percentage of Australian assets it would be much higher) making it a target for short sellers looking to profit from falling property prices. But Aussie property prices will never go down, because: we have China; commodities; a highly urbanised population, coastal living – which is extremely desirable (and therefore more expensive); and oh, yes, an undersupply of housing given our high population growth, which means newly arrived migrants will need to borrow half a million for a shack on the edge of a city… So the short sellers might be off to lick their wounds for a while, but they'll be back. The other major ingredient in Australia's house price miracle is (or rather has been) credit growth. It has slowed down in a big way. If banks are vampires, then credit growth is the blood that sustains them. The only way for banks to increase their assets (and therefore profits) is to increase lending. Your debt – whether business, home or personal – is a bank's asset. According to a recent release from the RBA, credit growth (it sounds better than debt growth) was just 3.4 per cent in the year to 31December. That's far from the halcyon days of around 15 per cent growth just before the credit bubble burst. If the financial crisis is a distant memory, why aren't we seeing resurgent credit growth? It's because the household sector is maxed out. People are saving and paying down debt. The household saving rate is around 10 per cent. CBA boss Ralph Norris might not appreciate this new frugality (his assets have only grown 4 per cent over the past year) but on the other side of the ledger the inflow of savings (in the form of deposits) takes some pressure off funding costs. Domestic deposits now fund around 60 per cent of CBA's assets, meaning the bank has to borrow less from wholesale funding markets, which is a more expensive source of funding. Keep this in mind next time you hear someone squawking about 'cash on the sidelines' just waiting to flow into equities. If everyone takes their cash and buys equities, the banks lose a massive source of funding (assuming those who sell the equities don't put the proceeds back in the bank!) Like it or loathe it though, the banks' profitability is impressive. Return on equity increased to 19.2 per cent, up from 18.9 per cent, for the 2010 financial year. So good in fact that Ralph Norris doesn't really want to talk about it. Instead, he wanted to talk return on assets, which was only around 1 per cent. Of course this ignores the fact that banks are highly leveraged institutions. If return on assets is 1 per cent and return on equity is 19.2 per cent, then you have…leverage, and lots of it. This is why banks are inherently fragile and cause everyone grief when they take too much risk. It's also why they should come under greater regulatory scrutiny. Not because they make 'obscene profits' – that's what they're meant to do. Henry Kaufman (who was a big hitter on Wall Street for three decades before starting his own research firm in 1988) says it best when arguing for stricter bank regulation: '…because financial institutions are entrusted with an extraordinary public responsibility. They have a fiduciary role as the holders of the public's temporary funds and savings. They generally have large liabilities (other people's money) and a small capital base and are involved in allocating the proceeds from these liabilities to numerous activities that are critical to the functioning of our economy.' The only problem is, the regulators haven't a clue what they are doing or what they are trying to achieve. Similar Posts: | ||
| Benjamin Lies again, Silver COMEX warehouse a debacle Posted: 09 Feb 2011 11:26 AM PST COMEX NEWS: Gold: -more covering by institutions -48, 500 oz removed from all vaults -1,123, 900 oz still standing in Feb. -2.12 tonnes withdrawn from GLD today (bullish) friends helping friends with physical Silver: -Blythe unable to shake the longs -OI remains the same=bankers could NOT find oz's to satisfy longs -CRIMEX warehouses juggling metal in and out faster than a Jarvis whore -SLV | ||
| When the Unemployed Lose Faith in the System Posted: 09 Feb 2011 10:58 AM PST Dow plus 71 yesterday. Gold plus $15. Everything seems okay, doesn't it? Good, then let's look deeper...at the story behind the story... As we've been saying, elites look out for themselves. But why not? Everyone looks out for Numero Uno. No? Isn't that what you'd expect? Every organization has some people in control of it. Government is no exception. Often, the people with real control are not those who appear to have the reigns of power. Sometimes, the real power is hidden...behind the scenes... Some of the most remarkable and successful societies have been ruled by slaves. No kidding. The Mamluks in Egypt and the Janissaries in the Ottoman Empire. They were captured or bought in Europe. The boys - usually Christian - were taken to special training camps. There, they were converted to Islam and learned the arts of war and administration. They became soldiers. Or bureaucrats. Generals. Governors. They ran things on a day-to-day basis...for the elite powers behind them. Of course, sometimes, like Rome's barbarian troops, they turned on their masters and took over completely... Then, the master became the slave... But that is a long, long story. Even in a complex, modern democracy the government acts first and foremost on behalf of the groups that control it. How? Part bribery. Party larceny. They take from some. They give to others. They keep a lot for themselves. So, it was not at all surprising that in the crisis of '07-'09 the feds immediately bailed out the banks. That was an act of larceny. The big banks have power. They used the power to enrich themselves. Simple, huh? This treachery cost the nation trillions of dollars, but only one out of a 1,000 people really understands what is going on. The other 999 think the feds "saved the economy." They think Ben Bernanke is a hero, not a scoundrel. In a representative democracy, powerful elites have to pretend to act for the good of the "people." So, they pretend that bailouts to Wall Street are necessary. And they provide handouts to the poor, too. Food stamps, for example. People who get food stamps have little real power. But they vote. Food stamps are a cheap way to bribe the electorate. And as more and more people are caught up in the system - as either knave, enabler, or accomplice - the more the system becomes zombified. There are just fewer and fewer people left who are actually producing wealth. The system itself then begins to creak and crumble...and finally falls apart. We're not fool enough to think that this is what really happens. It's just what you'd call an "artist's conception." It's an idealized, simplified theory about the way things work. Real life is always much, much more nuanced...complicated...and infinitely messy. Still, it gives us a way of understanding, imperfectly, the drift of things... For example...the Fed's quantitative easing and the Obama administration's stimulus program. "The US stimulus robbed our grandchildren," writes Darrell Issa, US congressman, in The Financial Times. We were surprised. We didn't think there was anyone in congress - except for Ron Paul - who had any idea of what was going on. Mr. Issa seems to be another exception. He explains that the results from the 4th quarter are now in. They show that the stimulus program "has woefully failed to reach each of its self-imposed targets." Employment is 6.8 million short. And fourth quarter GDP is $400 billion less than promised. "Some 47 out of 50 US states...have lost jobs since the stimulus was passed," he reports. And most of the jobs that were created were zombie jobs - working in the public sector. In other words, the feds spent $814 billion. We got nothing much for it. But the bill will be handed to future generations - who are guilty of neither larceny nor complicity. How does the next generation feel about it? Keep reading... And more thoughts... Now we turn to a strange phenomenon described by BusinessWeek as "The Youth Unemployment Bomb" Here's the report:
The full report is reproduced below. It is important. Remarkably, the author of this report in BusinessWeek does not seem to understand what is going on. But we have seen it first hand. Labor laws bribe the generation of CURRENT voters. They raise the price of labor to the point where it no longer makes sense to hire young workers. Inexperienced workers just aren't worth the money! Young people can't get jobs because older workers have been co-opted. So, the government then tries to bribe the young with subsidies to the universities...the aforementioned food stamps...and other welfare schemes. But then, the feds run out of money. The young are trapped between a rigid labor market that is rigged against them and a welfare system that can't afford to support them. "The older generations have eaten the future of the younger ones," says a former Italian prime minister. The result? See for yourself:
Regards, Bill Bonner | ||
| Posted: 09 Feb 2011 10:57 AM PST For now, the earnings narrative dominates the market. All the big- picture items seem not to matter. Unemployment? Who cares? Debt and deficits at every level of government? Whatever. Companies are turning in good profits and the market is uncorking the champagne. There are reasons to be careful, which I'll get to. First, on the face of it, we've had a great run. The S&P 500's fourth- quarter earnings, at the halfway mark, were 17% ahead of last year's. Importantly, sales were up 9%. So this is no longer a story of cost cutting. Most everyone is doing well, save utilities and health care companies, which have reported declines in profits as a group. Mining and energy companies are doing especially well, with profit growth north of 40%. The media don't get how this earnings picture squares with stubbornly high unemployment. I talked to one reporter recently about this very thing. One simple reason for this disconnect is that some of the best sources of profits for many of these firms has been from overseas operations. Many US firms are still cutting jobs, like Boeing and Lowe's. Profits from emerging markets, meanwhile, grow apace. There are bright spots in the US, too, of course. US manufacturing is getting a boost. Caterpillar will spend $3 billion this year in capital expenditures to add capacity, more than half in the US. And Emerson said it expects US nonresidential investment to grow 8-9%. Eaton, another US manufacturer, actually said it expects its US sales to grow faster than its overseas operations. US new vehicle sales were up 17% in January. We're at a run rate of 12.6 million vehicles, much better than the 10.8 million run rate of a year ago, but well off the 16 million automakers enjoyed pre-crisis. So it's a bit of a muddled cherry. As always, you have to pick your spots, which is what we're all about. A fly in this whole whiskey sour is inflation. It's definitely here and it's having an impact. Rising costs are squeezing some manufacturers. Whirlpool, for example, said it would boost prices 8-10% to cover rising raw material costs. This sort of thing is rippling across all sectors. Prices are going up everywhere. Nalco Holding (NYSE:NLC), a world leader in water purification, recently reported disappointing earnings, largely due to rising raw material costs. The stock sold off on the news. But looking out longer term, the world's need for clean water only grows more acute. Despite the short-term effects of rising raw material costs, Nalco ought to be able to grow core profits at double-digit percentages for years to come. It is a very strong company that generates a tremendous amount of free cash flow - $185 million last year, to be exact. So if companies as robust as Nalco are feeling the effects of rising prices, run-of-the-mill companies across the country must also be feeling the effects. In fact, I was fascinated recently by a story in The Wall Street Journal titled, "Fearing Inflation, Firms Stocking Up." The story talks about how companies are stockpiling rubber tires, cotton clothing and other goods to insulate themselves from inflation. Anecdotally, McCormick stockpiled some ingredients for its spices, Anton Sport bought more fabric than it needed, and Monro Muffler bought extra tires and oil. These purchases are still a small part of overall purchases, but it's a new trend and something we haven't seen in years. For most of the last handful of years, companies tried to shed inventory, not carry it. But what these actions essentially say is that these firms would rather hold real things than cash. I think we'll see more of the same. While inflation is here and everyone seems to see it, the central bankers of the US and Europe seem unconcerned. Of course, they have every incentive to continue to let the money presses run. According to economists Joshua Aizenman and Nancy Marion, inflation did half the work of cutting US government debt from 122% of the economy to 25% from 1945-1973. So with the US government saddled with debts it can never repay, the way out is to debase the currency. Let those printing presses hum and keep interest rates low. Of course, such money printing also puts in motion great monetary accidents. As the old Austrian economists warned, the new money stimulates investing, but it creates an illusion. It's like giving off signals that there is plenty of gas in the tank when, in fact, it's nearly empty. These easy-money policies helped create the great housing bubble. And the easy-money policies today will create a big bubble somewhere else, which will turn into tomorrow's bust. Regards, Chris Mayer | ||
| Posted: 09 Feb 2011 10:00 AM PST Based on what we already know about this industry's fundamentals, we can gather a general idea of the concentration of efforts. Simply put, there are places in the world where favorable geology and geopolitical climates line up as the most attractive. | ||
| Precious Metals Unfazed by Bernanke Testimony Posted: 09 Feb 2011 10:00 AM PST Gold was little changed on Wednesday, falling $0.38, or 0.03%, to settle at $1,363.65. In a testimony to Congress, Fed Chairman Bernanke defended the central bank's latest quantitative easing program, saying it helped to create 3 million jobs. | ||
| Posted: 09 Feb 2011 09:18 AM PST If gold really was money today, what would equities, housing, commodities and bonds look like...? | ||
| The Violent Declines the Follow Overbought Rallies Posted: 09 Feb 2011 09:00 AM PST I am as skeptical as the next guy about technical analysis, maybe more so, so I was kind of intrigued when Robert McHugh of Main Line Investors wrote an essay titled "Time Analysis of the Coming Market Top." He writes, "We have identified when an extended overbought rally has likely reached its expiration date." And what is this time frame? "Two and a half months," he says. This "two and half months" time frame is particularly intriguing to me, as this is the approximate time it took for my wife to realize that marrying me was the worst mistake of her Whole Freaking Life (WFL). Without showing the usual sympathy that my wife gets from her friends and family, the parallels are eerily obvious when he goes on that "once this condition reaches the 2.5 month age, the rally not only ends, but a sharp, sometimes violent decline begins." Violent declines! That's it! Of course, there are those who say that since she did not actually hit me with anything that she threw at me, it cannot be termed "violent," although nobody is contending that it wasn't a "decline" in our relationship. But this has taught me two valuable lessons. One is that I should never pick her to be on my softball team because she obviously can't throw worth a crap. The other one is that there is perhaps something profound about this "two and half months" thing. And apparently there is, because he goes on, "Guess what? We are inside one of these overbought extended rally periods, which will reach the 2.5 month age over the next week. So, based upon this time analysis, we could be about to see markets drop sharply, perhaps violently." And this "violent drop" in the stock market is when, I assume, people will slap themselves on the forehead and exclaim, "What in the hell am I doing to be risking my entire net worth in the corrupt stock market, when even an idiot can see that, even in a completely honest market, it is impossible for all the people to take more money out of the stock market than they put into it, a dismal mathematical fact that is borne out by the entire last century of seeing the vast majority of people losing money by investing in stocks!" And it is worse than that, as the few who do "make money" actually broke even since the money they took out in "gains" had less buying power than the money they put in! Hahaha! April fools, chumps! If you want to know how accumulating a retirement nest egg really works, it is when people save a fraction of their weekly income by putting it in the bank, whereupon the bank would pay them enough interest on the deposited funds to stay even with inflation. For the more adventurous, investing maybe 10% of their savings in the stock market was considered a "bold move," especially seeing that most people lost most of that money, although there are always enough successes to keep people doing it. Gathering enough successes is the trick! Of course, nowadays, with the despicable Federal Reserve forcing interest rates to zero in a pathetic, desperate, frantic attempt to reverse the calamity caused by its previous incompetence and Keynesian stupidities, saving money in the bank is foolish since they pay the depositors about 0.1%, if that. Certificates of Deposit are now paying an average of 0.41%, which means, with inflation running at more than 6%, that the stupid owner of a Certificate of Deposit is losing 5.59% and ordinary depositors are losing the whole 6%! Hahaha! Suckers! I know what you are thinking. You are thinking, "What in the hell is the point of all this? Do you have a point, or is this just more of you running your Stupid Mogambo Mouth (SMM) until we are sick of listening to you and that is why nobody likes you?" Well, it's a "bad news/good news" thing. The bad news is that I don't know why I run my mouth so much or why people don't like me, which I figure only shows how hateful and stupid they all are, and how those treacherous bastards are always "out to get me," as I always suspected. The good news, on the other hand, is that I do have a point. The point is, to what I assume is your obvious delight, twofold. Firstly, for those of you who are optimistic enough to invest your money in the hopes of a big score, Mr. McHugh seems pretty confident of shorting the indexes. Secondly, buying gold and silver is a guaran-freaking-teed winner of an investment by virtue of 4,500 years of history, massive undervaluation due to decades of governments and markets manipulating their prices to be low, incipient hyperinflation due to the odious Federal Reserve creating So Freaking Much Money (SFMM) and the foul Obama administration deficit-spending almost $2 trillion a year ($6,536 dollars for every man, woman and child in America), and (most importantly) exploding demand for the metals but falling supply. And you can keep gold and silver with you at home, warm and snuggly, and not have to deal with banksters or custodians of any kind, who I assume are, even as we speak, thinking of new ways to screw you Good And Hard (GAH). And since buying gold and silver is so easy ("Here is my money. Give me my metal!"), what can you do except say, "Whee! This investing stuff is easy!" The Mogambo Guru The Violent Declines the Follow Overbought Rallies originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation. | ||
| Chart Focus: Submerging Markets Posted: 09 Feb 2011 07:21 AM PST
| ||
| Gold Seeker Closing Report: Gold and Silver Close Slightly Higher Posted: 09 Feb 2011 07:14 AM PST Gold fell $1.70 to $1361.40 in Asia before it chopped its way up to $1366.90 in midmorning New York Trade and then fell all the way to $1357.80 by about 11:30AM EST, but it then rallied back higher in the last couple of hours of trade and ended near its earlier high with a gain of 0.1%. Silver rallied to as high as $30.51 by about 8AM EST before it fell back to $30.06 by late morning in New York, but it also rallied back higher in late trade and ended with a gain of 0.23%. | ||
| Vulture Bargain Note for Subscribers Posted: 09 Feb 2011 04:57 AM PST Gold and silver appear steady to firm this very cold and icy Wednesday morning. We noted the following from GoldCore.com. |
Gold hasn't reinvented itself as a currency yet. But it is getting closer.
An assortment of briefly annotated charts (below the jump).
| You are subscribed to email updates from Gold World News Flash 2 To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
No comments:
Post a Comment