saveyourassetsfirst3

---

• Turk - Silver Backwardation for Years, Possible Hyperinflation
• Warsh, who confirmed gold swaps, to leave Fed next month
• Analyzing a Basket of Miners
• How to Play a Muni Bond Rebound
• TSX/LSE Merger Sheer Madness for Small Caps
• Mubarak Steps Down, Oil and Gold Names Follow
• update 11/02/2011
• A Look at Domestic U.S. Silver Producers
• Silver Bullion Backwardation Suggests Supply Stress
• Inflation Scorecard: Inching Up Again
• Debunking the 'Debunking Myths of U.S. Collapse' Post
• Get your B MASTERS doll with optional Kitchen Sink Accessories
• Return of the Egyptian crisis: Oil up... global stocks down
• Top Chinese economist: Dump U.S. gov't bonds NOW
• Gold guru Turk: $8,000 gold may still be too cheap
• Dictators and Transports
• Gains in Gold
• Interview With Cazenove Capital Management's Robin Griffiths
• Dutch Central Bank: pension fund must sell gold
• Gold Miners Index May Be Warning Us…
• Shocking New IMF Report: The U.S. Dollar Needs To Be Replaced As The World Reserve Currency And SDRs “Could Constitute An Embryo Of Global Currency”
• Clear Cut Physical Buy Smoke Signals Everywhere on Silver Bullion
• A Bird in the Hand
• Problems in Egypt Intensifies/gold and silver raid fail/ Feb silver standing for delivery rises big time
• Increasing Government Debt to Produce Economic Growth
• The Worst Possible Investing Mistake
• Gold Miners Index May be a Warning
• $8,000 Gold by 2013-2015 May be Too Cheap
• Metals Little Changed as Gold at Resistance
• Silver Backwardation for Years, Possible Hyperinflation
• Decoding the Truth About Inflation
• Gold Seeker Closing Report: Gold and Silver End Slightly Lower
• Vulture Rules of the Road, Part 1
• The Anti-PM crowd

Turk - Silver Backwardation for Years, Possible Hyperinflation Posted: 11 Feb 2011 05:41 AM PST

Warsh, who confirmed gold swaps, to leave Fed next month Posted: 11 Feb 2011 05:04 AM PST

Analyzing a Basket of Miners Posted: 11 Feb 2011 04:54 AM PST This is the sequel which I promised readers following my previous piece, "The Bullion Bulls Basket". Before I get further into this, I want to remind readers that this is not an exercise in pointing readers toward particular companies, but rather in teaching/explaining to readers how to select and invest in these companies on their own. As I pointed out in the first commentary, we have been left with little choice when it comes to handling our investments. First, the vast majority of financial advisors demonstrated (via the Crash of '08) that they were utterly clueless as to the level of vulnerability they had created for their clients. Following that ugly episode, these "experts" (on a near-unanimous basis) pronounced that "buy and hold is dead" – this being the strategy which they had consistently recommended to these same clients in previous years.  As I also observed, warning their own clients that they could no longer trust the investments which these experts chose for them (over any length of time) is nothing less than an admission of their own incompetence. Telling an investor to "buy something", and then whispering in his ear "…but don't hold it for too long" is not financial advice which inspires confidence. Having thus been forced to take responsibility for our own investments, the obvious question to ask is "how can we possibly justify paying trading commissions to these incompetent middle-men?" For those who are unable to come up with a good answer to that question, we offer investors guidance in becoming their own "financial advisor". The hypothetical, five-company "basket" of miners which the three members of our "team" each selected for the original piece is obviously not meant to be a comprehensive strategy in itself. Five companies is simply not a large enough number to provide the optimal degree of balance and diversity. Added to that equation is our own individuality: we all have different investment parameters and different levels of tolerance for risk. Thus, we chose our example-baskets to start the thinking process for readers/investors, rather than attempting to do their thinking for them. What could you add to those "baskets" to make them more balanced/diversified? What would you change in those baskets, to make them more suitable for your own portfolio? My most important objective in the original piece was simply to get people to start to look at these companies. This installment is dedicated to arming investors with the right questions to ask, as they examine individual companies as potential investments in accumulating their own baskets. However, before getting into specifics, those pondering self-investing must always adhere to 'The Golden Rule' for all would-be investors: know thy self. An investor can spend dozens (hundreds?) of hours pouring over these companies, and construct a "perfect" basket of miners for himself – and still end up self-destructing. Deciding on the appropriate level of risk (and stock-selection) for one's portfolio is not merely a function of age, income, and long-term investment strategy. Equally important in that "mix" is being honest about one's own psychology. Deciding that an "aggressive strategy" which incorporated a "moderate level of risk" is most suitable for your own portfolio is not an advisable plan if you are not able to cope with the high degree of volatility which such a strategy implies. Specifically, those investors who take on a level of risk which is higher than what they can be comfortable with are (by far) the most likely investors to self-destruct. They are more likely to dump their stocks in a "panic", and also more likely to "chase" stocks when the market surges. We all know that we are supposed to "buy low" and "sell high". However, investors who take on too much risk always end up being ruled by their emotions, and a century of market history shows us that "emotional investors" spend most of their time buying high and selling low. Thus, first we must pick an overall strategy which suits our personalities, then we adopt a particular "plan" to fit that general strategy into our individual financial parameters, and then (finally) we can start to select the right companies to execute that plan. Once investors reach that stage, here are some of the key criteria/questions which they should be examining as they evaluate these mining companies – and create a "diversified" basket of miners.

How to Play a Muni Bond Rebound Posted: 11 Feb 2011 04:21 AM PST Investment U submits: By Alexander Green In my last Investment U column, I made the case that fears of cash-strapped cities, counties and states causing a near-term collapse of the municipal bond market are overdone. Yes, there will be defaults, perhaps 100 or more this year in small municipalities. That’s big in a market where the historical default rate is just .07%. But it won’t cause a domino effect or drive rates sharply higher. (Although rates could rise for other reasons.) Why will the much-predicted municipal bond crisis fail to occur? With Muni Bonds, Falling Supply Props Up Prices You’ll notice that the most dire predictions always begin with the words, “If nothing is done …” But of course, things will be done. Listen to New Jersey Governor Chris Christie and Ohio’s Governor John Kasich. They’re telling the public employee unions and others, with their hands outstretched, that the money simply isn’t there to fund their laundry lists. And there hasn’t been any political backlash. Their poll numbers are rising. In addition … Revenue for U.S. municipalities is increasing in this recovery, not falling. That’s putting many on a sounder footing. Because Obama’s Build America Bond program ended in December, municipal bond issuance will drop by 10% to 20% this year. Falling supply firms up prices. Tax-free munis now yield more than taxable Treasuries. Bargain-hunters will eventually swoop in to take advantage. The extension of the Bush taxes cuts will end in December next year. Does anyone seriously believe – with our federal Complete Story »

TSX/LSE Merger Sheer Madness for Small Caps Posted: 11 Feb 2011 04:20 AM PST Mark McQueen (Wellington Financial) submits: According to my morning paper, Canadian large-cap CEOs and their Bay Street lawyers love the idea of the TSX merging with the London Stock Exchange. Got it. But the vast majority of folks in the Canadian capital markets don’t fit that profile. If you are a small-cap company without a tinge of rocks or black gold associated with your story, the idea is sheer madness. According to Kevin Cowan, TSX Markets president, the announced deal “brings exciting possibilities for Toronto Stock Exchange and TSX Venture Exchange.” I definitely agree that the possibilities are exciting for TSX shareholders, and that is appropriately the primary concern of the TSX’s Board of Directors, but no one in the real world of capital-raising can buy the spin of some market-watchers about this deal being “good for Canada." The daily trading market share of the TSX versus Pure versus electronic trading platforms is irrelevant to a Canadian based/listed software company with $70 million of annual revenue. TSX shareholders have reason to be concerned about cost compression and other changes in the industry, but that’s what can happen when you invest in a utility. There will always be investment risk that some smart gal/guy will find an angle to chip away at your dominance. That’s usually referred to as the free market at work, even when you’re protected by a regulatory moat. This is exactly what Complete Story »

Mubarak Steps Down, Oil and Gold Names Follow Posted: 11 Feb 2011 04:07 AM PST The Egypt situation is, as they say, "fluid." With the latest news that Mubarak is stepping down after all, crude oil is again dropping like a hot rock, a "risk on" profile has returned to markets in general, and gold stocks have turned tail to give up all previous gains on the day. Now that the strongman is out, so are we — of our profitable basket of gold stocks that is. With the transports confirming and merger Monday coming up, an extension of the relief surge could weigh on the yellow metal here.

update 11/02/2011 Posted: 11 Feb 2011 03:49 AM PST Thank you mirco pulze from Italy! This posting includes an audio/video/photo media file: Download Now

A Look at Domestic U.S. Silver Producers Posted: 11 Feb 2011 03:03 AM PST Mark Thomas submits: When the market gets too giddy on the upside, I like to be a contrarian and take some profits. So When I made my sale Monday of my remaining 10% position in of Endeavor Silver (EXK) for a very nice almost 25% gain, I intended to leave that 10% of my portfolio in cash for some time. There is some takeover chatter about the miners but that is always suspicious. What I sense though is just a general and building tightness in the physical silver market. I have heard that customers who became net sellers of physical and ETF silver holdings in the recent correction, have quickly switched back to being solid net buyers. While institutional investors won’t be attracted to the silver sector again until it demonstrates enough momentum for their short-term thinking, individual investors are definitely buying silver on any pullbacks. I will explain more in this weekend’s newsletter some new facts I have recently collected about the tightness in physical silver and help build the case for why I’m predicting over that over the next three to five years silver prices will double, triple and even more. We could possibly be close to a new move back to recent highs above $30 in spot silver prices. That is starting to reoccur very much sooner than I envisioned just a couple of weeks ago. For now though I want to just inform you I’m making another purchase in the silver mining sector of Hecla Mining (HL) on Tuesday. Complete Story »

Silver Bullion Backwardation Suggests Supply Stress Posted: 11 Feb 2011 02:52 AM PST

Inflation Scorecard: Inching Up Again Posted: 11 Feb 2011 02:45 AM PST Hard Assets Investor submits: By Brad Zigler This week, the Swiss franc reversed course vs. bullion, giving up 3.9 percent to gold. Other reserve currencies also yielded to the metal. The yen lost 3.3 percent while the euro and sterling slipped 2.9 and 2.3 percent, respectively. The U.S. dollar continued on its reflationary course this week as well. As of Thursday: London morning gold fixes finished 2.0 percent higher at $1,359 after averaging $1,354; COMEX spot gold settled at $1,362 for a 0.7 percent gain; average daily COMEX volume tumbled 41.8 percent to 142,417 contracts; open interest inched 652 contracts lower to 462,396. COMEX gold inventories rose by 19,954 ounces (0.6 tonnes) to 11.398 million, covering 24.7 percent of open interest; immediate demand for COMEX bullion could amount to as much as 94,300 ounces; 2.883 million ounces are now in a deliverable position. Bullion assets of the SPDR Gold Trust (GLD) fell 3.8 tonnes (120,597 ounces) to 1,225.5 tonnes. The average cost of protective gold puts fell another 23.6% percent while projected volatility, measured by the CBOE Gold ETF Volatility Index (GVZ), declined to 15.1 percent. One-year gold lease rates rose 6 basis points (0.06 percent) to an average of 0.29 percent. Junior miners fell out of favor this week, reflected in the 1.8 percent decline in the share price of the Market Vectors Junior Gold Miners ETF (GDXJ); gold producers, proxied by the Market Vectors Gold Miners ETF (GDX), fared better with only a 1.0 percent loss; in contrast, the S&P 500 Composite Complete Story »

Debunking the 'Debunking Myths of U.S. Collapse' Post Posted: 11 Feb 2011 02:15 AM PST Chris Ridder submits: This is a short response to another post I recently read, "Debunking Myths of U.S. Collapse," which was a follow up to the article "The End of America? Not Quite." This post had various and numerous flaws, in my opinion, which I thought had to be addressed. I have unfortunately recently undergone shoulder surgery, so I will not be able to provide as comprehensive response as I might hope; but I will provide some basic arguments and thoughts that rebut or refute the statements given in the "Debunking" post. First, under the heading "Printing Money Does Not Create Wealth," in which the author attempts to refute this statement, there is this line of reasoning: "How will the 'wasted' money get into the hands of the wealth creators? If the new ear pickers go into their communities and spend it at local businesses, the printed money goes from useless employees, into the accounts of productive businesses (of course the producers get less after layers of tax bites). So the act of spending printed dollars itself will get those dollars into the hands of businesses who are able to create wealth." Quickly, I will point to Japan, which has tried this over 20 years and seems not to have created much wealth as measured by the Japanese stock market. On the face of it this is a Keynesian solution and one source to explain the Keynesian fallacies, and provide logic for its arguments, is the book, "The Failure of the New Economics: Complete Story »

Get your B MASTERS doll with optional Kitchen Sink Accessories Posted: 11 Feb 2011 12:32 AM PST A new derivatives company has issued a limited JP Masters doll, the only accessories options are a kitchen sink, most likely because they are throwing everything, but the kitchen sink at Silver today. SLV options expiry today. Egypt on fire. I wouldnt sell this stuff going into this weekend. And a weekly candle close at $30...? Part 4 out near 5 pm. Enjoy. Embrace. Get excitedly mad.

Return of the Egyptian crisis: Oil up... global stocks down Posted: 11 Feb 2011 12:13 AM PST From Bloomberg: Stocks fell for a third day and U.S. index futures declined while the dollar and oil rose after Egyptian President Hosni Mubarak defied calls for his resignation and corporate earnings disappointed investors. The MSCI World Index lost 0.3 percent at 8:45 a.m. in New York. Standard & Poor's 500 Index futures sank 0.3 percent, after slipping as much as 0.7 percent. The dollar strengthened against all 16 of its most-traded peers, while the yield on the 10-year Treasury note slipped five basis points to 3.65 percent. The cost of insuring Egypt's debt against default jumped the most in two weeks. Oil gained as much as 1.1 percent in London. Mubarak handed day-to-day powers to Vice President Omar Suleiman while reiterating plans to stay on until elections in September, prompting U.S. President Barack Obama to urge Egyptian authorities to take further steps to resolve the crisis. The number of companies beating earnings estimates has slowed, with 56 percent of the firms in the MSCI World that have reported fourth-quarter results since Jan. 10 topping projections, down from 61 percent in the previous quarter. "These latest developments in Egypt will be negative on sentiment for the market," Kelvin Tay, Singapore-based chief investment strategist for UBS Wealth Management, said in a Bloomberg Television interview. Nokia, L'Oreal The Stoxx Europe 600 Index slid 0.2 percent, after dropping as much as 0.8 percent. Three companies fell for every two that rose in the benchmark gauge. Nokia Ojy tumbled 9.3 percent after saying it's forming a partnership with Microsoft Corp., highlighting the depth of its challenge in taking on Google Inc. and Apple Inc. L'Oreal SA, the world's largest cosmetics maker, fell 4.7 percent after fourth-quarter sales and profitability missed estimates. ThyssenKrupp AG slid 2.9 percent after saying profit fell. The MSCI Asia Pacific Index excluding Japan sank 1 percent. Newcrest Mining Ltd., Australia's biggest gold producer, dropped 1.4 percent after first-half earnings missed estimates. The decline in U.S. futures indicated the S&P 500 may trim its weekly advance. Expedia Inc. slumped 12 percent in Germany after posting earnings that trailed forecasts. Kraft Inc. lost 1.5 percent after lowering its full-year profit forecast because of rising commodity costs. The U.S. trade deficit widened 5.9 to $40.6 billion in December, in line with the $40.5 billion median forecast in a Bloomberg survey, as the cost of imported oil climbed, Commerce Department data showed. At 9:55 a.m., the Thomson Reuters/University of Michigan consumer sentiment index may show confidence climbed this month, a survey of economists showed. Dollar, Aussie The dollar appreciated 0.6 percent against the euro and climbed 0.4 percent versus the yen. The Australian dollar fell below parity with the U.S. currency for the first time in more than a week, depreciating 0.5 percent, after the country's central bank Governor Glenn Stevens said policy makers judged it "sensible of late" to leave interest rates unchanged. German 10-year bunds rose, with the yield falling three basis points to 3.27 percent. Greek 10-year bonds fell for the seventh day, the longest run of declines since Nov. 5. The yield on Egypt's dollar bonds due 2020 jumped to 6.77 percent, the highest in almost two weeks. Credit-default swaps on Egypt soared 42 basis points, according to CMA prices for. Global depositary receipts for Orascom Construction Industries, the country's biggest publicly traded builder, tumbled fell 4.8 percent in London, declining 14 percent in four days. The stock exchange in Cairo has been shut for two weeks amid the protests. More Protests The Egyptian army's supreme military council said today it will guarantee the implementation of the measures announced by Mubarak, including an end to the emergency law once the situation permits and the amendment of the constitution. The army will guarantee the peaceful transition to free and fair elections within the set timetable, according to the statement. Protesters vowed to hold their biggest demonstrations so far, saying they'll assemble in the capital's Tahrir Square today after Muslim worshippers attend Friday prayers. Speculation that unrest may curb oil flows through Egypt's Suez Canal and spread to other oil-producing nations in the Middle East has kept Brent crude prices above $100 a barrel for most of the past two weeks. Brent for March delivery rallied 93 cents to $101.80 a barrel on London's ICE Futures Europe. "The crisis in Egypt may take on a more menacing tone, increasing the risk of interruptions to the Suez Canal and Suez-Mediterranean pipeline," JBC Energy, a Vienna-based research company, wrote today in a report. Cotton led gains in commodities, rising 2.7 percent to a record $1.9263 a pound. The S&P GSCI index of 24 raw materials advanced for a fourth day, increasing 0.5 percent. To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net. To contact the editor responsible for this story: Stuart Wallace at swallace@bloomberg.net. More on Egypt: Why every investor needs to keep an eye on Egypt What Egypt can teach you about preparing for social unrest BUSTED: Violent Egyptian protesters are actually police officers and government-hired thugs

Top Chinese economist: Dump U.S. gov't bonds NOW Posted: 10 Feb 2011 11:52 PM PST From Zero Hedge: Add one more pill to the daily Oxycodone consumption by the Chair Central Planner. In what is about to become the latest headache for Bernanke, popular Chinese economist Lu Zhengwei, a senior economist at China's Industrial Bank Co., has advised that China should promptly sell its GSE holdings on concerns that continued "blank check" writing by Congress to the GSEs will be "almost impossible" as well as fears that as soon as QE2 ends, the entire U.S. bond complex will see a major sell off. In other words, welcome to the world of game theory defection: He who sells first, loses the least. From Dow Jones: A popular Chinese economist on Thursday said China should be aware of risks in its holdings of debt issued by U.S. government-controlled mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC), and suggested that China sell... Read full article... More on China: Chinese president: It's time to dump the dollar Donald Trump: China is "looking to strip us of everything" Peter Schiff: Why Americans MUST pay attention to China

Gold guru Turk: $8,000 gold may still be too cheap Posted: 10 Feb 2011 11:47 PM PST From MineFund: Speaking at Mining Indaba conference in Cape Town, James Turk forecast that gold could reach $8,000 per ounce by 2013-2015. He added that that may be too conservative. Turk, the founder of digital gold currency GoldMoney, said individuals should own bullion not as an investment, but as a wealth preserver. "Gold is not a commodity. It is not volatile. It is not an investment. Gold is money," Turk told an audience of nearly 1,000 delegates. He illustrated gold's ability to retain its purchasing power by comparing the price of oil in British pounds, U.S. dollars, German marks, euros, and gold. Only gold had maintained its purchasing power since 1950, with massive losses for the currencies, especially the pound. "Gold is a form of money that holds its value over time," Turk said, adding, "Capital is a precious resource that is best preserved with gold." He explained gold's fundamentally different character as a tangible asset that was accumulated, or saved, rather than consumed. Its value derives from... Read full article... More on gold: Casey Research: Why gold is falling today This country is becoming a "mecca" of junior gold mining This startling Chinese gold development has "stunned" precious metals traders

Dictators and Transports Posted: 10 Feb 2011 10:34 PM PST In recent weeks bears have pointed out a lack of bullish confirmation in the transports (IYT, $TRAN). A multi-week consolidation period also suggested pending breakdown. Count that as an argument no longer. The transport pattern (as shown via IYT) had a clearly bullish resolution on Thursday. On the less sanguine side, Middle East uncertainty is ratcheting up once again. Via the Wall Street Journal: The defiant tone taken by Egyptian President Hosni Mubarak—and widespread confusion about the meaning of his speech—had White House officials stumbling for their next step in a crisis that was spinning out of their control. Egyptian officials said Mr. Mubarak gave the Obama administration much of what it wanted: the delegation of presidential powers to the vice president, Omar Suleiman. They said Mr. Mubarak had all but been rendered a figurehead leader, precisely the formulation set out by U.S. officials over the weekend. But Mr. Mubarak's language and refusal to yield to what he called the intervention of foreigners left protesters furious, the scene in Cairo precarious and the White House seemingly unable to influence events… Opposition leader Mohamed El Baradei has further contributed via twitter that "Egypt will explode… Army must save the country now." We aren't all that surprised. As noted in last week's GMN, "Deeper Implications of Middle East Turmoil," geopolitical surprises — and amplified fear premiums — are a new feature of the landscape now. WTI crude has been relatively weak given the circumstances. But if Egypt heats up again sooner rather than later, gold is one asset that could benefit.

Gains in Gold Posted: 10 Feb 2011 08:49 PM PST Gold's Biggest Gain in 12 Weeks Signals End of Market Capitulation.   "The 'capitulation' in gold that drove the metal to its worst January in 14 years may be ending as escalating violence in northern Africa spurs demand for a haven and after a key technical indicator held." "Futures traded on the Comex exchange in New York jumped +1.7% on January 28, the most since November 4, as thousands of people took to the streets of Egyptian cities to protest the 30- year rule of President Hosni Mubarak. Gold earlier rebounded off its 150-day moving average, an indication the metal may surge +21% to a record by the end of June, according to technical analysis by the Hightower Report." "The capitulation is over,' said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago, who correctly predicted in September that the metal would keep rallying to $1,350 an ounce after reaching a record. 'The liquidation has washed out the weak trades and put gold at a point that looks attractive to new buyers." "While futures fell as much as -8.1% this month, they are still 24% higher than a year ago. The metal has risen for 10 consecutive years in London trading, the longest winning streak in at least nine decades. That's attracted investors including John Paulson's Paulson & Co. and George Soros's and Soros Fund Management LLC. Paulson has denominated some share classes of his funds in gold, something that at least doubled their gain last year relative to the dollar-denominated shares, according to a performance report sent to clients this month." "Gold's rebound from the 150-day moving average of about $1,306 is a sign that prices are poised to rally, said David Hightower, the president of the research firm based in Chicago. The metal may climb to $1,630 by the end of June, he said. Prices rebounded from the 150-day moving average three other times in the past year, data compiled by Bloomberg show. The last time gold traded near the average was in late July. Since August 1, prices have advanced +13%. They touched a record $1,432.50 on December 7. The metal has not fallen below the average since January 2009." "People take these longer moving averages as a key measure of confidence," said Hightower, who correctly forecast that gold would rally above $1,400 last year. "Gold has respected the 150-day average in the past. By repelling from that level, it suggests that gold has value, and that the bull camp was not scared and forced out of their positions." "On January 28, gold futures for April delivery rose $21.90 to $1,341.70 on the Comex in New York as stocks worldwide plunged the most since November because of the violence in Egypt. Earlier, the most-active contract touched $1,309.10, the lowest since October 1. Gold fell this month as hedge funds cut their bets on higher prices. In the week end January 25, three days before prices rebounded on the violence in Egypt, net-long positions dropped -3.6% to 129,664 contracts on the Comex, the lowest since May, 2009, U.S. Commodity Futures Trading Commission data show. It was the fourth consecutive weekly drop, the longest decline since November." "Investors in exchange-traded products backed by gold also reduced their bets. Combined holdings across ETPs from 10 providers were at 2,033.8 metric tons by January 28, the lowest since June, according to data compiled by Bloomberg. That's still more gold than all but four countries' official reserves, data from the World Gold Council in London show. The metal's decline this month is "a healthy break," Hightower said. "Gold has cleaned up its act and washed out the weak hands." Editor: Big gold shorts got killed and covered going long. "The short-term negative sentiment in gold will be dramatically curtailed," said Jon Spall, a product manager for precious metals at Barclays Capital in London, who expects the commodity to reach $1,700 this year. "Gold is a great hedge against financial uncertainty," Spall said. "Nimble money gets in and out, but there are still plenty of people with long-term interest in gold." -Pham-Duy Nguyen and Yi Tian Bloomberg.net 1-31-11 Capitulation by big gold shorts: They stopped selling, and began buying as the CFTC is investigating. This posting includes an audio/video/photo media file: Download Now

Interview With Cazenove Capital Management's Robin Griffiths Posted: 10 Feb 2011 08:25 PM PST Link:  Interview With Cazenove Capital Management's Robin Griffiths Image:  Next is a King World News audio Interview With Cazenove Capital Management's Robin Griffiths.  Eric said that it's mainly about gold and silver...and runs about 11 minutes or so...and the link is here.

Dutch Central Bank: pension fund must sell gold Posted: 10 Feb 2011 08:25 PM PST Link:  Dutch Central Bank: pension fund must sell gold Image:  Today's first gold-related story was first sent to me by reader 'David in California'...and then ended up as a GATA release later in the day.  The rather disturbing AP story was picked up by Bloomberg with a headline that reads..."Dutch Central Bank: pension fund must sell gold".  I'm sure we'll hear more about this as the days unfold...but I'm not reading a lot into it at the moment. read more

Gold Miners Index May Be Warning Us… Posted: 10 Feb 2011 03:27 PM PST

Shocking New IMF Report: The U.S. Dollar Needs To Be Replaced As The World Reserve Currency And SDRs “Could Constitute An Embryo Of Global Currency” Posted: 10 Feb 2011 11:43 AM PST The IMF is trying to move the world away from the U.S. dollar and towards a global currency once again.  In a new report entitled "Enhancing International Monetary Stability—A Role for the SDR", the IMF details the "problems" with having the U.S. dollar as the reserve currency of the globe and the IMF discusses the potential for a larger role for SDRs (Special Drawing Rights).  But the IMF certainly does not view SDRs as the "final solution" to global currency problems.  Rather, the IMF considers SDRs to be a transitional phase between what we have now and a new world currency.  In this newly published report, the IMF makes this point very clearly: "In the even longer run, if there were political willingness to do so, these securities could constitute an embryo of global currency."  Yes, you read that correctly.  The SDR is supposed to be "an embryo" from which a global currency will one day develop.  So what about the U.S. dollar and other national currencies?  Well, they would just end up fading away. CNN clearly understands what the IMF is trying to accomplish with this new report.  The following is how CNN's recent story about the new IMF report begins.... "The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world's reserve currency." That is exactly what the IMF intends to do. They intend to have SDRs replace the U.S. dollar as the world reserve currency. So exactly what are SDRs? Well, "SDR" is short for Special Drawing Rights.  It is a synthetic currency unit that is made up of a basket of currencies.  SDRs have actually been around for many years, but now they are being heavily promoted as an alternative to the dollar. The following is how Wikipedia defines SDRs.... Special Drawing Rights (SDRs) are international foreign exchange reserve assets. Allocated to nations by the International Monetary Fund (IMF), a SDR represents a claim to foreign currencies for which it may be exchanged in times of need. The SDR is a hybrid.  SDRs are part U.S. dollar, part euro, part yen and part British pound.  In particular, the following is how each SDR currently breaks down.... U.S. Dollar: 41.9% Euro: 37.4% Yen: 9.4% British Pound: 11.3% Now there are calls for other national currencies to be included in the basket. Russian President Dmitry Medvedev has publicly called for the national currencies of Brazil, Russia, India and China to be included in the SDR. In January, the Obama administration said that it fully supports the eventual inclusion of the yuan in the SDR. So yes, it looks like we are definitely moving in the direction of the SDR becoming a true global currency. But is this a good idea? Globalist organizations such as the IMF say that having a true global currency would facilitate world trade, it would make currency wars less likely, it would stabilize the global economy and it would make the rest of the globe less reliant on what is going on in the United States. In fact, there is a lot of discussion in international financial circles that oil should be traded in SDRs rather than in U.S. dollars. In a recent interview, IMF Deputy Managing Director Naoyuki Shinohara even suggested that the IMF may actually consider issuing bonds that are denominated in SDRs.  Apparently the goal would be to promote the use of the new "currency". But once again, it is important to remember that the IMF does not see SDRs lasting forever either.  Rather, the IMF considers the SDR to be an "embryo" from which a true global currency could emerge. An IMF paper entitled "Reserve Accumulation and International Monetary Stability" that was published last year even proposed that a future global currency be called the "Bancor" and that a future global central bank could be put in charge of issuing it.... "A global currency, bancor, issued by a global central bank (see Supplement 1, section V) would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy. As trade and finance continue to grow rapidly and global integration increases, the importance of this broader perspective is expected to continue growing." In fact, at one point the IMF report from last year specifically compares the proposed global central bank to the Federal Reserve.... "The global central bank could serve as a lender of last resort, providing needed systemic liquidity in the event of adverse shocks and more automatically than at present. Such liquidity was provided in the most recent crisis mainly by the U.S. Federal Reserve, which however may not always provide such liquidity." Yes, unfortunately this is what the IMF really has in mind for all of us.  A one-world economic system with a one-world currency and a one-world central bank. Is that what we really need? A "global Federal Reserve" that dominates the currency and the economy of the entire planet? At least with the U.S. Federal Reserve there is hope that someday the American people can convince Congress to shut it down. A "global Federal Reserve" would not answer to anyone.  Individual nations could attempt to pull out, but then they would potentially be isolated from the rest of the globe and potentially cut off from world trade. That may sound very far-fetched now, but that is the direction we are headed. And shifting away from the U.S. dollar as the reserve currency of the world would be disastrous for the U.S. economy. Right now the fact that the U.S. dollar is the primary reserve currency of the world is one of the only things holding it up.  If you took that support away the U.S. dollar could end up collapsing quite quickly. Let us hope that the American people wake up and start insisting that we have no part in a global currency.  If we ever allow a world currency to start replacing the U.S. dollar to a large extent, we will lose a great deal of our economic sovereignty.  Not that we haven't lost most of it already, but at least if we are still using our own national currency there is a greater chance that we can reclaim it. What the IMF is proposing right now may seem very innocent, but the long-term consequences of going down the road they want to put us on could potentially be absolutely catastrophic. The American people need to send a very clear message to their representatives in Washington D.C..... #1 We do not want a one-world economy. #2 We do not want a one-world currency. #3 We do not want a one-world central bank.

Clear Cut Physical Buy Smoke Signals Everywhere on Silver Bullion Posted: 10 Feb 2011 11:32 AM PST COMEX NEWS: Gold: -Dismal volume (COMEX) shorts not even interested -65,000 magic withdrawal adjustment from yesterday...hummm that's not like bum-ing a cigarette for example -London Gold withdrawals lighting up like a Xmas tree (bullish) -1,125,800 oz left standing for this month (increasing=bullish) Silver: -options Feb expiry through the roof from 83 to 182 -NO ONE rolling March contracts

A Bird in the Hand Posted: 10 Feb 2011 11:11 AM PST 'Forewarned, forearmed; to be prepared is half the victory' Miguel de Cervantes Today's Daily Reckoning is brought to you by the precious metals. There is plenty going on behind the scenes. Let's start with silver. If you were thinking about buying anytime soon, don't knock on the Perth Mint's door. They have run out of 100-ounce bars and won't have any for six weeks. Is this the sign of a bubble, or the early stages of a bull market? The superficial (and ignorant) answer is silver has had a great run over the past year and latecomers are piling in at the top. The explanation we favour is silver is in the early stages of re-monetisation. This is a process that will last for years and will likely see the silver price breach its all-time high of US$50. It was set back in 1980 when the Hunt Brothers infamously tried to corner the market. Now, instead of two blokes with a scam, millions of people around the world want to swap a portion of their paper wealth for real money. Yes, silver – like gold – is real money. For thousands of years silver was the money of the people. As Milton Freidman said: 'The major monetary metal in history is silver, not gold'. Silver was the foundation of the British monetary system for hundreds of years. The British currency, the pound, derives its name from a pound of sterling silver. (BTW, one pound – 16 ounces – of silver today is worth nearly £300). Britain was on a 'silver standard' when in 1663 a new gold coin, the guinea, was introduced. These silver and gold coins correctly fluctuated in value against each other in response to changes in supply and demand. But the authorities thought they could make things better. And in 1717 Sir Issac Newton, as Master of the Royal Mint, set the gold/silver ratio at 15.1:1. That is, by decree, gold was 15.1 times more valuable than silver. This is like fixing the ratio of US dollars to euros, or yen. It's crazy, and won't work. After a few years, Newton's action set Gresham's Law in action. As more gold came into the market, silver became undervalued at the fixed ratio and slowly disappeared from circulation. By the early 1800s gold was the main circulating metal and Britain soon went onto a gold standard. By the end of the 1900s the US followed Britain in pushing silver out of circulation with the Gold Standard Act. Needless to say this suited the bankers just fine. The use of silver, the money of the people, was a major impediment in the institutionalisation of paper money. With the major powers now on a gold standard, they set about ridding the use of silver from the 'third world'. In 1898 India went off the silver standard and tied the rupee to the pound. The US worked on The Philippines, Mexico and China. China finally abandoned the silver standard, under pressure from the US in 1935. In this way the world's two great economic powers, Britain and the US, weaned the world off silver money and integrated the global monetary system for their own benefit. But you can't keep a good thing down and now silver is again in demand – by the people – as money. You can see evidence of this re-monetisation process by looking at the gold/silver ratio. Not 12 months ago it was 66:1. It has since moved down to 45:1 and over the next few years it will probably go much lower as the re-monetisation process continues. As central banks increase their supply of fiat money, demand for real money will also increase. This is leading to increasing stories of physical supply shortages around the world, including in Australia. Anyone who watches paper silver traded on the Comex knows there are all sorts of shenanigans going on there. Having exposure via the paper markets is becoming increasingly risky. Physical ownership, despite the costs and hassles involved, is where the big money is moving. This trend is evidenced by the extreme backwardation in the silver markets. This means it is cheaper to buy silver futures, and await delivery, than buy physical metal in the spot market. Awaiting delivery is all well and good if you expect delivery to take place. But silver buyers prefer a bird in the hand now to two in the bush later. If you're an investor, all we can say is make sure you have actual physical ownership of the metal…not a paper claim. It's not all one way traffic now though. Precious metals have always had a tough time of it against officialdom. While the ruling classes may have preferred gold over silver as money in the early days, this changed around 1914. They preferred neither. It was too hard to fight a war on the gold standard. Thereafter, gold become the main enemy of the bankers and politicians. It still is. Zerohedge reports the De Nederlandsche Bank (Dutch central bank) is getting into the asset advisory business. It ordered the Glassworkers pension fund to sell down its gold holdings because it's 13 per cent weighting was way above the average for pension fund commodity exposure. After the pension fund rightly told the bank to take a hike, the bank took it to court. And lo and behold, the court clowns ordered in favour of the bank! The gold must be sold within 2 months. This is legalised theft, but hardly surprising in the context of history. Those in power make the rules. To those in power, gold and silver in the hands of the people is a dangerous occurrence. Expect much more foul play as the precious metals bull market rolls on. Similar Posts: Silver – A Brief History of De-monetisation Investors to Silver: "Let's Get Physical" Gold is Money The Price of Gold is Low – But It Won't Stay There Forever! Gold Standard: The Long-Run Value

Problems in Egypt Intensifies/gold and silver raid fail/ Feb silver standing for delivery rises big time Posted: 10 Feb 2011 10:45 AM PST

Increasing Government Debt to Produce Economic Growth Posted: 10 Feb 2011 10:44 AM PST Is the Great Correction over? Not quite! Nothing much in the markets yesterday. Dow and gold both essentially flat. So, let's rehearse what we've learned so far. Government's main business is protection. Always and everywhere, its chief responsibility is the security of the nation's borders and the safety of its own officers. As a secondary matter, it is concerned with the protection of the people it governs. Of course, it protects, first and foremost, the interests of the people who control it. A modern democracy is controlled by competing groups. In a combination of larceny and bribery, almost everyone gets something. Elite and powerful groups get a lot. The less powerful masses get a little. In the crisis of '07-'09, for example, government moved fast to protect elite interests - with trillion-dollar transfers to the banks and their bondholders. Then, as the economy weakened, the masses of voters needed bribes too - food-stamps, unemployment relief, shovel-ready jobs, etc. These measures do not produce genuine prosperity. How could they? They are just boondoggles and bailouts. But they give the appearance of stability and they help keep everything under control. But how can the feds pay for all this larceny and bribery? They have to borrow...effectively shifting the cost to the next generation. Debts are incurred now. Money is spent now. It is meant to be repaid sometime in the future, by people who benefit from neither the bribes nor the thefts. The private sector unloaded debt as quickly as it could in '08 and '09. Savings rates went from 2% of disposable income to 7%. We called it a "Great Correction." But now the process of correcting seems to have stalled. While the private sector threw off debt, the public sector picked it up. And now, it looks like the private economy is beginning to borrow again too. Savings rates have fallen back to around 5%. Credit card debt has increased for the first time since the crisis began. Non-revolving credit is reported to be at a record high. Government debt, meanwhile, is soaring. The US deficit last year was greater than all the money borrowed by the US government from its founding until 1986. And the Obama administration will borrow more than all previous administrations put together. Is the Great Correction over? Where will this end? Bankruptcy? Hyperinflation? Or revolution? Maybe all of the above. But wait. What if the peoples' representatives "see the light"? What if they turn the situation around, forcing the US government to de- leverage along with the private sector? Well, anything is possible. But we wouldn't count on it. Meanwhile, there's another part to our hypothesis. Over time, stable societies become more and more rigid as elites get a tighter grip on them. They become "zombified," with more and more of the society dependent on giveaways, bribes, boondoggles, protected markets and redistributed income. In a democracy, that means that the numbers begin to work against evolution. Against change. Against natural correction. More and voters get more from the government than they pay for it. They will not permit any change to the system, because any change would be harmful to them. So, over time, governments become less and less able to produce wealth...less dynamic...less responsive to evolutionary adjustment. How does that work, exactly? Well, it works in many, many different ways. But here's a simple example. If the crisis of '07- '09 had happened back in the 19th century the big banks involved would have gone broke. Not only that, the bankers involved would have lost everything - including their personal mansions in the Hamptons. Because back then, typically, a banker was personally responsible for his losses. Neither banks nor investment houses had the advantage of corporate protection. Today, the failures remain in business. The failed executives continue to receive bonuses. Their losses are socialized...picked up by feds and spread to people who don't deserve them - notably, the next generation. Most people think this process will last forever...with the costs pushed infinitely into the future. But it won't. "Stability leads to instability," said Hyman Minsky. We see it coming. Stability makes people think that the system is eternal. They lend to the government at low interest rates...or even accept its new, paper money as though it was the real thing. This permits the government to run up far more debt than it could in an "unstable" era. The debt then becomes unsustainable...and the system collapses. When? Who knows? But sooner or later, the lenders revolt. Or the next generation does. And more thoughts... As we reported yesterday, young people have extremely high rates of unemployment in most parts of the world. Why? It's explained by our hypothesis. [Ed. Note: Bill and Addison dedicated a whole chapter of their bestselling book, Financial Reckoning Day, to the coming demographic crisis we're now seeing unfold around the world. For an in depth look at the effects of this "youth bomb," be sure to swing by Laissez-Faire Books and grab yourself a copy of their book. Do so today and we'll knock 20% off the price. Simply punch in this code [E401M202] when you check out. Oh yeah...you'll also receive a copy of the award-winning Documentary, I.O.U.S.A., absolutely FREE. Can't beat that!] The older generation is taking advantage of the younger generation, shamelessly. Labor rules help protect existing jobs...but stand in the way of new ones. The cost of public pensions and health care too increase the price of taking on new employees - while rewarding almost exclusively older ones. Union labor contracts favor senior union members, not junior members. Minimum wages laws also pinch unskilled new workers more than their older, more experienced competitors. We saw this phenomenon in France, which has the most protective labor laws in the world. Small artisans refused to hire young assistants or to teach them their trade. It was simply too expensive and there was too much paperwork involved. They preferred to retire...leaving their businesses to retire with them. In our small town, it became hard to find a plumber or a brick mason - even as the government paid welfare benefits to thousands of young people who "couldn't find work." *** Poor Merced County, California. USA TODAY reports that things have changed. The Great Correction is still underway: Life has changed in ways big and small in this central California county, which is still trapped in the wreckage of a housing boom that went bust five years ago. The median home price, $116,000, is down 68% from its peak in 2006. Three of five homeowners with a mortgage here owe more on their loans than their houses are worth, compared with about one in five nationally. Socked by a sharp loss of property and sales tax revenue, Merced County and its cities have slashed budgets, workers and services. The grass is being mowed less often in city parks. A senior center is open fewer hours. Families have adjusted, too. Forget dreams of making big bucks on California real estate. Many here now count the years - guessing, really - until they'll no longer owe more on their homes than they're worth. "We're in survival mode, waiting for recovery," says Stephen Hammond, 42, pastor at Bethel Community Church in Los Banos, a Merced County town of 35,000 amid cotton and tomato fields. More cuts are possible because of looming budget deficits, Merced government officials say. Dozens of other communities nationwide may face the same tough choices in the wake of huge drops in home values, which often lead to less property tax revenue. In Merced, the impacts have hit hard, and they hint at what may be to come for others. For Merced County government, property taxes are the No. 1 source of general fund revenue, says Scott De Moss, deputy county executive officer. Property tax revenue has dropped 25% during the past three years. Almost 15% of the county's workforce has been slashed. Social and mental health service positions took the biggest hits, officials say. In the city of Merced, sales tax revenue is down 24% and property tax collections, about 34%, from 2007 levels, city officials say. That's forced cuts in the police and fire departments. Police might not show up anymore to take fender bender reports and firetrucks may no longer always roll on the same calls as ambulances, says Merced City Manager John Bramble. The city's 80,000 trees now get pruned once every three years, instead of every two. The senior center is open 28, not 40, hours a week. Asphalt patches, not new concrete, are being used to repair sidewalks. "People are used to a higher level of service," says Bill Spriggs, who serves as mayor for the city of 80,600. "But this is the new normal." In Los Banos, the grass is now cut in city parks every 15 days. It used to be cut weekly. Vacant houses dot nearly every neighborhood. New roads end in cul-de-sacs surrounded by vacant lots. A weather-beaten billboard announces a 35,000-square-foot retail center that is "coming soon" but never has. The double whammy of the recession and the real estate crash has forced changes in how consumers spend, plan for their futures and view their neighbors. Businesses also have suffered, because homeowners have less equity in their homes or none at all. Overlaying everything is a local economy in which one of five workers is jobless, in part because of the collapse of the area's once-fast-growing home construction industry. The "last good year" was 2008, says Greg Parle, owner of the Branding Iron Restaurant in Merced. Business is off at least 20% since then, he says. He's adding lower-priced items to the menu. The region's ability to foster such small businesses will suffer because of so much lost home equity. Almost one-quarter of small- business owners borrow against their homes or use them as collateral to fuel businesses, according to a 2009 Gallup survey of small-business owners. That'll likely be less now in Merced and other places with so many underwater homeowners. Start-ups will feel the greatest impact, says Mark Schweitzer, director of research for the Federal Reserve Bank of Cleveland. Loreina Childress, 39, a county environmental health worker, has felt the impact of the new normal at home and work. The previous work of 26 in her department is now done by 21. At home, a lot remains vacant, and there are more renters in her neighborhood than before the real estate bust. Childress bought her Merced County home in 2006, when the market was still hot. She owes $241,000 on the 1,500-square-foot home that might sell for $140,000. John Betham, 58, and his wife, Sandra, 55, are staying put. They owe $375,000 on their Los Banos home. They estimate it would sell now for $150,000. *** We warned him. Former President George W. Bush might as well hand in his passport. Unless he travels to a country where the fix is in, he's likely to be arrested. Here's the report: GENEVA, Feb 5 (Reuters) - Former US President George W. Bush has cancelled a visit to Switzerland, where he was to address a Jewish charity gala, due to the risk of legal action against him for alleged torture, rights groups said on Saturday. Bush was to be the keynote speaker at Keren Hayesod's annual dinner on Feb. 12 in Geneva. But pressure has been building on the Swiss government to arrest him and open a criminal investigation if he enters the Alpine country. Regards, Bill Bonner for The Daily Reckoning Australia Similar Posts: Normally Small Businesses Lead the Economy Out of Recession Another Pile of Bills to Pay How the Stimulus Works The Role of Consumer Spending in Phony Economic Growth How One Local Government Cut its Expenses and Actually Gained Public Support

The Worst Possible Investing Mistake Posted: 10 Feb 2011 10:44 AM PST There are many mistakes people make that ensure they won't get rich investing. In 2011, I think one in particular mistake will hurt more than others. I can sum it up by citing the phrase, "Generals fighting the last war." I have come across many people in my travels who, despite a 50%-plus drop in the stock market from its peak in October 2007 to the March 2009 bottom, are still waiting for the market to crash. They missed one of the greatest rallies in the history of Planet Earth because they looked backward when they should've been looking ahead. I know people who still think the housing market will crash. Yet housing prices are already down 30% from the peak nationwide. Housing is now more affordable than it's been in a generation, as we've seen. I know people who still won't touch a tech stock, even though the tech bubble burst and hit bottom eight years ago, or who won't even think about owning a Brazilian stock, because they lost money on one when Brazil blew up in the 1990s. These are not dumb people. Most of them are successful in their chosen fields. But even smart people can get stuck in their views...which become outdated - and unprofitable - as the world changes around them. It is like Mark Twain's old dictum about the cat and the stove. "She will never sit on a hot stove lid again - and that is well," Twain said, "but also she will never sit down on a cold one anymore." Over the holidays, I read a good paper on this subject entitled, "Investment Strategy," by Barton Biggs in January 1977. Biggs was a well-known strategist for 30 years at Morgan Stanley. More recently, he wrote a very good book about investing called Hedgehogging, which I would recommend. Anyway, Biggs wrote his paper as a sort of New Year's address to the money managers under his charge. He began by talking about all the experiences an investor accumulates over a career, even a career as short as 10 or 15 years. "He has had his share of winners and bloody noses," Biggs writes, "his back is permanently twisted from whipsaws and he has gotten whatever benefit there is to get from being run up and down the market flagpole countless times." As the old saying goes, "Experience is a comb that life gives you after you lose your hair." But seriously, that experience is important, especially if you have a few hairs left. Experience gives you a sense of the market's habits, its moods and conventions. You have a working knowledge for some of its industries and stocks. And you've probably learned a great deal about yourself, such as your tolerance for risk. But that experience also comes with barnacles that latch onto your hull. Biggs captures it eloquently: The problem is that in accumulating experience, he also acquires prejudices against industries and stocks because he has lost money in them. It is easy to...become an investment bigot with a closed mind on many subjects... A fresh, opportunity-minded mind, uncluttered by prejudice, is crucial for superior investing in an environment where the one constant, the one inevitability is change and industry group rotation. By definition, there can be no uninvestable industries. In short, an investor should never say, "Never." As in, "I'll never buy a housing stock," or "I'll never buy an airline stock." Biggs calls that kind of thinking "pure, fat, unadulterated laziness." There is a time and place for all things. I know I have to work hard to cultivate an open mind about all things investing. I try to change as the market changes. I don't want to be one of those guys who say the same thing every year even though the market has clearly changed. So while I always insist upon a favorable risk/reward proposition, I do not care what shape or structure that proposition takes. For example, I was bullish on fertilizer stocks in 2005 when I recommended Agrium to the subscribers of Capital & Crisis. After the stock tripled, I urged subscribers to sell the stock. I subsequently turned bearish on fertilizer stocks in 2007. In 2008, after the fertilizer stocks had collapsed, I told my subscribers to buy them once again. Since these 2008 recommendations, PotashCorp has more than doubled, while Mosaic (NYSE:MOS) sits atop a 57% gain. But I suspect we'll exit this position once again in 2011, as the grain story reaches a feverish pitch. Also in Capital & Crisis, I recommended various hotel, real estate, insurance and bank stocks in 2004-2005. I told subscribers to exit these positions - usually very profitably - in 2006. I did not recommend any stocks from these sectors after 2006, since I was worried about the housing bubble. But now that real estate prices have tumbled, this sector and the industries that support it, may be serving up some investment opportunities in 2011. As Roy Neuberger, who didn't suffer a single down year in 68 years on Wall Street, once said, "Fall in love with people...the last thing to fall in love with is a particular security. It is, after all, just a sheet of paper indicating a part ownership of a corporation. Its use is purely mercenary." Knowing this, I still have to fight not to make the very same mistakes I am warning you to avoid. I got burned badly investing in a master limited partnership (Atlas Pipeline) and that experience has hardened me against those structures. I got blasted investing in an oil refinery (CVR Energy), which prejudices me against that model. So I work at this too. But I think Biggs' message is going to be particularly important in 2011. That's because the wind has shifted...and some areas that have been hot will cool. And some areas that I've avoided look promising once again. Mining stocks, for instance, have been red-hot. Miners are flush with cash and spending lots of money on new projects and mines. That's the problem. In 2011, mining companies will pour a record $115-120 billion toward creating new supply. Companies that sell the picks and shovels have also been en fuego. "Exhibit A" is Joy Global, a mining equipment company. Its stock is up 300% since January 2009. With a few exceptions - such as in uranium and gold - I think there is too much optimism around mining-related stocks. The sun shines on no dog for long. Conversely, there are rafts of small banks trading for 60%, 70% or 80% of tangible book value, when acquirers are paying premiums as high as 148% of book to own them. These are sleepy local institutions that typically hold onto the loans they make. They didn't participate in the shark fest that hobbled the big banks. They have loads of cash. There is a lot of insider buying. Yet investors are ignoring these stocks out of prejudice stemming from the financial crisis...and hence, I think there is opportunity here. These are but two examples on either ends of the spectrum. The world changes and your views need to change with it. Don't get stuck. As Biggs said, "Successful investing is like riding a bicycle - either you keep moving or you fall down." Regards, Chris Mayer For Daily Reckoning Australia Editor's Notes: Chris Mayer studied finance at the University of Maryland, graduating magna cum laude. He went on to earn his MBA while embarking on a decade-long career in corporate banking. Chris has been quoted over a dozen times by MarketWatch, and has spoken on Forbes on Fox. Similar Posts: Mosaic Co. Offers a Very Compelling Investment Profile Dialing for Dollars Crisis Investing Don't Buy the Stock Market…Buy Stocks Opportunities in Mining's Takeover Game

Gold Miners Index May be a Warning Posted: 10 Feb 2011 10:00 AM PST Gold stocks sold off strong while both gold and silver closed only slightly lower. When this happens near a resistance zone, with a bearish price and volume patterns I start to look for a shorting opportunity.

$8,000 Gold by 2013-2015 May be Too Cheap Posted: 10 Feb 2011 10:00 AM PST GoldMoney founder James Turk says the Dow Jones Industrial Average to gold ratio will again revert to one, and that's where his $8,000/oz prediction lands.

Metals Little Changed as Gold at Resistance Posted: 10 Feb 2011 10:00 AM PST There continues to be a divergence between ETF holdings – which reached another multi-month low below 65 million troy ounces on Thursday – and prices, which have been rather resilient.

Silver Backwardation for Years, Possible Hyperinflation Posted: 10 Feb 2011 09:57 AM PST Turk - Silver Backwardation for Years, Possible Hyperinflation King World News has received word from James Turk that silver is in extreme backwardation. Turk stated, "There is a huge story that is brewing. Silver is in backwardation to 2015, which is 13-cents cheaper than spot. This is unbelievable. Money does not go into backwardation except 'in extremis'!" Turk continues: "If this situation continues, and there is no reason to suspect that it is about to end quietly because the demand for physical silver is not abating, there are only two alternatives: One, as we discussed on Friday, the silver price has to rise in order to dislodge physical metal from the strong hands that now own it. But why would anyone accept some national currency in exchange for physical silver unless the price is much, much higher? Two, the shorts declare force majeure and use government force to let them escape from their untenable position. The fall-out from this outcome is very complex because there are so many factors to consider. But I would expect that any default would only strengthen the resolve of the strong hands now owning physical metal. Meaning that the market for physical silver would become even more tight than it is now, even if the price shoots higher as I expect." Turk also went on to make the following points: "Look for a short squeeze in silver already underway as evidenced by the backwardation to intensify as we move toward silver option expiry at the end of this month, and silver delivery on March futures contracts in early March. In a short squeeze, what matters is ownership, not price. When you own physical metal, you are protected from government sanctioned force majeure that bails out the shorts. As I mentioned Friday, the paper market for silver is losing its significance in the process of price discovery. Everyone who owns physical silver should make their decisions based on what is happening in the physical market, not the paper market. A basic premise of precious metals is that silver leads gold, which is a point we have discussed before. It will be interesting to see whether the backwardation in silver will lead to a backwardation of gold. If it does, the end game for the US dollar is near. It would mean hyperinflation of the dollar is upon us." Turk brings up a key point here about keeping an eye on the physical market in both metals. Paper gyrations aside, in the end the physical market will have the last word. Eric King KingWorldNews.com http://kingworldnews.com/kingworldne...inflation.html

Decoding the Truth About Inflation Posted: 10 Feb 2011 08:53 AM PST Proving once again that investing in fixed-yield bonds when the foul, filthy Federal Reserve is creating so much money (so that their governments can deficit-spend it!) is a stupid, stupid, stupid idea because inflation will result, Agora Financial's 5-Minute Forecast newsletter reports that "Already since October, the rate on the 10-year has jumped from 2.4% to 3.6% – a 50% increase." Yikes! So how much value does a bond paying 2.4% lose when yield rates climb to 3.6%? I don't know, nor do I care, since I currently have less than zero interest in bonds, which is a kind of hostile antipathy towards them, not unlike that time I took the beautiful Brenda out, and when I later tried to kiss her goodnight, she said, "If your lips even come close to me one more time, I am going to claw your eyes out!" I changed my mind about Brenda, and, of course, I will eventually change my mind about bonds, too. This will be when interest rates are so high but inflation seems to be peaking, which means that I will get out of gold (which will theoretically be at its high price) and into bonds (which will be, theoretically, at their low prices). But that ain't now! Indeed, the torrent of new money continues, as The Daily Bell newsletter reports, "Central banks have pumped something like US$20 to US$50 TRILLION into the world's economy to try to reinflate economies that collapsed in 2008." The keen eyes and sharpened economic senses of Junior Mogambo Rangers (JMRs) everywhere surely detected the use of all-caps to spell "trillion," and which JMRs rightly suspect contains a secret code of some kind, perhaps relaying an important secret message to a shadowy group of insiders who have the code key, or a Secret Code Thingamabob (SCT) of some kind, such as a Mogambo Secret Decoder Ring (MSDR). Of course, there is the obvious interpretation that the $50 trillion dollars is a Hell Of A Lot Of Money (HOALOM), being just short of equaling the GDP of the Entire Freaking World (EFW)! Perhaps if we had a Mogambo Secret Decoder Ring (MSDR) to solve the mystery! Alas, the idea for the stupid rings never really worked, it cost WAAAY too much, it was made of really cheap materials (I think some of it was radioactive), with cheap labor, it was a Big Pain In The Butt (BPITB) to encode secret messages, and then I forgot how, but which wasn't the point, anyway: the Mogambo Secret Decoder Ring (MSDR) was just another attempt to make a lot of money in a hurry so that I could have a lot of money to buy gold, silver and oil because the Federal Reserve was creating so much money! Since I had no decoder ring, or code key, or any idea what I am talking about, I decided to just shut up, whereupon The Bell continued, "As this currency begins, finally, to circulate, price inflation must result, unless such money is quickly removed." And since money is obviously NOT being removed, it is no surprise that price inflation is already here, as attested to by Bloomberg reporting that "World food prices rose to a record in January on higher dairy, sugar and cereal costs and probably will remain elevated. An index of 55 food commodities climbed 3.4% from December to 231 points, the seventh straight increase." The biggest gainers were dairy prices, which were rising at 6.2%. And The Economist magazine reports that inflation in the "food" category made prices rise by a staggering 44% in the last year, and "non-food agriculturals" rising by a whopping 100.6%! More than doubling! In One Freaking Year (OFY)! Tyler Durden at zerohedge.com reports, "Corn spot up 7.76%, wheat up 5.63%, Rice up 10.08%, Hogs up 10.16%, Sugar up 5.64%, Orange Juice up 3.33%, and cotton… up 17.08%. That's in one month!" Mr. Durden's use of an exclamation point proves that he is concerned about inflation, and how fast prices are rising, too! What does this all mean to me? It means I was abso-freaking-lutely right to be buying gold, silver and oil, because monetary inflation means price inflation, and that means gold, silver and oil go up in price! Whee! This investing stuff is easy! The Mogambo Guru for The Daily Reckoning Decoding the Truth About Inflation originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.

Gold Seeker Closing Report: Gold and Silver End Slightly Lower Posted: 10 Feb 2011 07:21 AM PST Gold fell as much as $13.20 to $1351.20 by about 8:30AM EST before it rallied to see a $1.60 gain at as high as $1366.00 three hours later, but it then fell back off a bit in the last couple of hours of trade and ended with a loss of 0.14%. Silver fell $0.618 to $29.662 before it rallied back to almost unchanged at as high as $30.278 by late morning in New York, but it also fell back off a bit in the last couple of hours of trade and ended with a loss of 0.53%.

Vulture Rules of the Road, Part 1 Posted: 10 Feb 2011 05:32 AM PST Vultures might be wondering why we haven't been out with any new Vulture Bargains lately. There's a good reason for that. Bargains are currently pretty scarce, and we are not as comfortable jumping on "already moving" trains as we are gaming harsh sell-downs on the issues we take an interest in.

The Anti-PM crowd Posted: 10 Feb 2011 04:34 AM PST Why does the Anti-PM crowd always assume that people who stack PMs, have absolutely no other preps? I constantly read comment on other preparedness sites like: You can't eat gold When TSHTF I'll sell you a single bottle of water for 1 ounce of your gold The only metal I'm collecting is Lead and Brass (which I don't think you can eat either) Yet these same people have no problem with those who "stack" US paper (or electronic) dollars. I don't get it. . Collecting US paper dollars is OK, but collecting physical metals with industrial applications is somehow stupid or bad. WTF????? I don't have all my assets in PMs. We own a home, We own land. We have bank accounts. We have 401Ks and other retirement plans. To me, diversifying is good, and part of that diversification is PMs. Oh well. . Just venting because I just ran into yet another Anti over on GlockTalk. Quote: Having actually seen society be degraded once, and completely obliterated at another time, I can tell you that within the hierarchy of needs, when you are thirsty, hungry or in need of help, gold may in fact be worthless. You can fill your pockets full of gold, and try swim away, but you'll drown. Wait about 6 weeks. By then, a lot of the city folks that hoarded gold, but no food or water will have starved or died if thirst. Look in their back yard for signs of fresh digging. Then you'll have lots of gold. . . . Otherwise, expect the guy to drive a hard bargain. I'll take a couple of ounces of gold for a case of canned stew. But only if I have plenty to spare, and there is hope that things will improve. Otherwise, gold is worthless to me, at least in SHTF emergency situations. I'll not starve to death so that I can look at pretty shiny things as I perish Again the assumption that stacking and prepping are mutually exclusive. Based on comments made here, I'd guess that a large percentage of the folks here also have more than just Gold and Silver as their preps. Part of my response to him was: Quote: The majority of people I know of who have Gold and Silver as a prep, have maxed out their other preps a long time ago. But feel free to take a narrow view towards Gold and Silver. That just leaves more for the rest of us. I won't be coming to anyone to buy a case of beans or a case of bottle of water for an ounce or two of Gold. I already have a years supply of beans (and other food) and 3 different high quality water filters. In my opinion, I currently see the biggest threats as: Natural but localized disaster Financial meltdown (debt crisis, dollar devaluation) Large scale terrorist attack (WMDs) Natural wide scale disaster (Madrid fault, Yellowstone, Plague) While admittedly food and supplies would be of great value in all 4 of those situations, I also think that PMs would maintain or even possibly increase in value for the first three. Oh well. . I just don't understand the Anti PM mentality any more than I understand the Anti-gun or Anti-preparedness mentalities. . . I do know that arguing with those folk is like arguing with a brick wall. . =========

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