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- These Indicators Suggest Stock Markets Have More Upside – and Gold Some Uncertainty
- James Turk Interviews Hugo Salinas-Price
- KWN - Asians Buying SLV to Take Delivery of Silver
- Why Fannie and Freddie May Never Die
- Real Alchemy – Dr Joe Champion is Turning Copper to Gold
- Update 15/02/2011
- Watson Pharmaceuticals' CEO Discusses Q4 2010 Results - Earnings Call Transcript
- Dollar Index Flight to Safety Has Appeal
- Investors Flock to Inverse Gold ETFs
- So Much Stimulus. So Little to Show for It.
- Will Silver Do Better Than Gold?
- Dow-Gold Ratio & its Implications
- Gold & Silver Jump as Global Inflation Rises, Middle East Unrest Spreads to Iran
- Turk: Silver is Approaching Stage Two of its Bull Market
- SLV Anomalies Part 2 - The SLV assay Comparison (UPDATED)
- Silver Nolo Contango
- Dollar Dives, Silver leads Gold now heading to Highs, CME rate hike Coming, Gartman ready to downplay metals
- Crise systémique globale / Dislocation géopolitique mondiale - Fin 2011 : Chute du 'Mur des pétro-dollars' et choc monétaro-pétrolier majeur pour les Etats-Unis
- Soaring commodity costs could soon slam stocks
- Global Macro Notes: The Great Compression
- Silver is Approaching Stage Two of its Bull Market
- A Weekly Review of Key Markets
- Problem?
- Brother, Can You Spare a Mine?
- Silver Story
- even main stream media is getting the fever
- Revolution in Egypt and Where to Be When Black Swans Appear
- Profiting from Rising Interest Rates
- The SLV Anomolies Part 1- The Conversation with a Contact
- Silver or Farm Land???
- Riots continue in Egypt and in Algeria/ Open interest rises in silver/Judge refuses mortgage transfer
- The Two Faces of Ben Bernanke
- Precious Metals Rise on UK Inflation Fears
- Produce, Spend, Build – Rinse & Repeat
- Barack Obama's Budget For 2012: A Complete And Total Joke
- Why Increasing Bank Credit Can Only End in Catastrophe
- Palladium steals the day...AGAIN.
- Gold Seeker Closing Report: Gold Rises and Silver Surges 1.6%
- Silver Bullion COMEX Stocks at 4-Year Low as Backwardation Deepens
- Silver Shortage Blamed on "Miner Hedging" as Price Rises with Gold, Global Inflation Data Eyed
- Any questions?
| These Indicators Suggest Stock Markets Have More Upside – and Gold Some Uncertainty Posted: 15 Feb 2011 07:10 AM PST A look at a variety of technical analyses all clearly indicate that the S&P 500's run is by no means over. Here are some charts and an analysis of what they mean for the markets, the U.S. dollar and gold. Words: 1234 | ||
| James Turk Interviews Hugo Salinas-Price Posted: 15 Feb 2011 05:20 AM PST :thumbs_up::thumbs_up::thumbs_up::thumbs_up: | ||
| KWN - Asians Buying SLV to Take Delivery of Silver Posted: 15 Feb 2011 05:14 AM PST London Source - Asians Buying SLV to Take Delivery of Silver With gold up over $10 and silver attacking multi-decade highs, the London Source has given King World News major news on the activities of the Asian buyers, "Not only have the the Asian buyers been purchasing large numbers of shares of the ETF GLD in order to take delivery of gold, but they have now in fact decided to buy SLV with the intention to take physical delivery of silver directly from that ETF." The London Source continues: "You have to remember that BlackRock sponsors SLV and I don't believe they will let anything happen to tarnish their good name. It would reflect badly on BlackRock if in fact SLV did not contain the physical silver to back up the shares, so the Asians will be successful in draining physical silver directly from SLV. The bottom line is they are comfortable with BlackRock being involved in the ETF SLV. In the end, BlackRock will have to ensure that the silver ETF makes good on redemptions from SLV. Another complicating factor is that there are currently 16.12 million shares short on SLV. This is an increase of almost 2 million ounces over the prior reading. In other words BlackRock will also have to make sure that this silver which has been borrowed will be returned. We have serious backwardation, a supply shortage, short interest growing on SLV and now we have the Chinese waking up to the fact that there is metal in SLV and saying, 'let's go get it.' Let's not forget the paltry inventories on the Comex. Any short would have to be frightened by that data. There are two options left for the shorts, one is to naked short the heck out of this market in an attempt to drive the price down. But if they decide take this option it will worsen their position longer-term. The other option is to capitulate and let the price of silver rise in an attempt to let the silver market get into equilibrium." It will be very interesting to see which option the shorts take here, but for now the wind is in their face and we will look to see if silver can clear $31 on good volume. The London Source closed with this question, "If you were a for-profit trader yourself and you were short here, what would you do?" Eric King KingWorldNews.com http://kingworldnews.com/kingworldne...of_Silver.html | ||
| Why Fannie and Freddie May Never Die Posted: 15 Feb 2011 04:53 AM PST Rick Newman submits: Their failures are manifest, and politicians of every stripe seem to revile them. Fannie Mae and Freddie Mac have turned out to be the biggest catastrophes of the 2008 financial meltdown. The government has already spent more than $130 billion in taxpayer money to keep them alive, and the tally is still rising. If they were in any way expendable, the two mortgage agencies would be gone by now. But the credit crunch of the last three years has left middle-class home buyers more dependent than ever on Fannie and Freddie. The two agencies' main role is to purchase mortgages from banks and roll them into marketable securities, which benefits home buyers by keeping rates relatively low and giving banks a stronger incentive to lend. One byproduct is the 30-year fixed-rate mortgage, which most banks wouldn't offer without the government's backing, because the odds of losing money would be higher. Complete Story » | ||
| Real Alchemy – Dr Joe Champion is Turning Copper to Gold Posted: 15 Feb 2011 04:52 AM PST Real Alchemy – Dr Joe Champion is Turning Copper to Gold February 13, 2011 Share By Dr. Joe Champion | drjoechampion.com… Resonant Atomic Transmutation of Metals… The following communication was sent to the US Department of Energy (DOE) in Washington DC on December 21, 2010: In 1987, I witnessed a phenomenon and devoted my life to refining the process. Low Energy Nuclear Change (LENC) is the term used for the occurrence of this phenomenon. In LENC, copper is subjected to a phonon resonance technology developed by me in 2001. The importance of any technology or discovery is repeatability and scalability. I have achieved both in this process, and have successfully converted copper to gold and platinum. The original theory was the single conversion of copper to gold. The formation of platinum was not predicted but was an unexpected occurrence. 100 pounds of copper was placed in a single phonon resonance device and produced 800 troy ounces of gold and platinum. Several ounces of gold and platinum have been refined and tested by independent facilities. This is the world's largest demonstration of a low energy nuclear event. This was accomplished using standard household electrical power within 30 days. I have produced over two kilos of platinum and gold in less than a week from my simple reaction. This material has been tested by third party laboratories. [The results of an independent Assay Report by Ray Grimmer Lab Services are republished below:] I am not a physicist, and therefore cannot fully explain this phenomenon, but I can report the results. It is totally repeatable on a macro scale. I have no idea why I have so much platinum. I was predicting gold, but I have an equal amount of gold and platinum… In 1994, Thomas Ward of the DOE visited me in Houston for a few days. At that point in time, I had only been able to achieve results in micro quantities. I have now finally achieved low energy reactions on a macro scale. A most interesting fact is that location of the reaction seems to be important and can be determined by a world wide geographic anomaly map. For years I have wanted to keep this in the USA and only within the last three months have I witnessed pounds of gold and platinum production in my current area. Dr Joe Champions website: drjoechampion.com Coming soon: an exclusive interview with Joe Champion on Red Ice Radio. For more, listen to our latest interview with Alex Putney. Analysis by Alex Putney From: humanresonance.org The resonant atomic transmutation processes developed by Dr. Champion confirm the specific information provided to 'Billy' Eduard Meier concerning the advanced metals conversion processes employed by his extraterrestrial contacts from the Plejares star system (who also provide fascinating information concerning specific cosmic events connected with the Mayan calendar end date of December 22, 2012). The following excerpt from Lightwater (2010), by Alexander Putney, elucidates the complex details of the complete conversion process: Well-known examples of resonant metal alloys formulated by Sanskrit-based Buddhist traditions in Asia include Tibetan singing bowls, comprised of 3 metals, and finer Bhutanese singing bowls rendered from 7 metals or more, known for highly resonant characteristics. While the singing bowls of Asia are comprised of a layered composite of various metals formed by hammering, the much more advanced resonant alloy production processes of Plejaren metallurgists involve the co-mingling of atoms in a composition unique to space-faring plasma ships, unlike any produced on Earth in modern times. Billy accepted several resonant metal samples as gifts from Asket, the products of her civilization, the Timars, who use similar advanced techniques of frequency resonance applied by the Plejaren, and indeed all cosmic travelers. The resonant metal alloys of transdimensional plasma ships are developed using precision multi-stage temperature and frequency programs that convert base metals into alloys (above) containing all of the precious metals, rare earth elements and trace amounts of every other element on the periodic table – many in crystallized or metallic states not yet conceived of by Earthly scientists. Polarization of the final products is achieved by the micro-layering of perpendicular grain patterns formed within the crystals. Semjase provided Meier with Plejaren beamship (mp3) metal alloy samples of a 7-stage metal conversion process from lead into a copper-nickel-silver-gold alloy, also containing traces of every stable element in a smooth curve from the heaviest elements through the lightest gases. Many aspects of this complex process were discussed during the 45th contact on February 25, 1976, in response to Meier's direct request – "Quite simply, we would like to know what sort of metal you use for your beamships?": Semjase: This I can explain for you: We gain it from a process of conversion from lead. We extract this soft metal from many things, as for example lead-containing atmospheres from stars, from waters, from different plants, etc., as well as from the decay of different ore-stones of stars in destruction. By an, according to Earth understanding, very difficult process, we convert the lead substances we assembled into the soft metal lead, which we then change by further mechanical-chemical processes into a hard-metal form, which is much harder than your metal which you call steel. This still is unserviceable in this form for beamships, because it must be polarized by further processes of conversion into a beamship-suited alloy of a special sort and character, about which I am not allowed to give details. The final product, which must have quite certain characteristics, consists of a copper-nickel-silver alloy, which for certain of the beamships also contains gold. Meier: Oh yes, thus an alloy which could be produced on Earth. You mentioned a lot of manners before, in ways in which you gain the lead. Here it has struck me that you have mentioned no word of an ore mining of Earth kind. Is this sort of obtaining ores not usual with you? Semjase: Ore-mining or other mineral mining on a planet or another star is done by us only in extreme emergency, because this process is equal to the destruction of the star. A planet or another star is never exploited in the form as is done on Earth. What the Earth human being does by that is equal to the destruction of the planet. The first evil effects of this destruction came up on the Earth already some decades ago, and at the present time it is already experiencing the pains of the destruction itself. This is to understand the way that the Earth human being exploits his planet, and robs from it its fundamental life force when de deprives it of its oil, gas and the different ores. The effect of this is that the Earth suffers shifts inside, leading to volcanic eruptions and earthquakes, because the Earth is slowly breaking down into itself. The same event is generated also by the construction of dams and similar formations, which cause, by the assembled masses of water, very dangerous shifts. The worst delusion the Earth human being is performing is his subterranean and below-surface experiments with atomic bombs, as well as those cruel deep subterranean explosion tests, which he declares are atomic bomb tests, but which in truth are much more dangerous. The spiritual ethics of the Plejaren culture reflect a comprehensive understanding of planetary systems. All 7 stages of beamship metal production were related on the following day, during Meier's 46th contact, with an astounding explanation of the atomic transmutation of metals by controlled frequency resonance: Semjase: Here I also have brought you some metal, of three different working steps… The first working step absorbs the lead substances from the atmosphere and condenses them into pure lead. The second process distracts from the resultant metal all dangerous radiations. Then the lead is fed into heat-converters, which, without the addition of any other metals, converts the lead by several processes into the alloy. (Ed.- The metal specimens finally delivered to Meier, which they and we had analyzed, consisted of three of the seven states the metal goes through in production and refinement. We had samples of states 3, 4, and 5. The sample of state 3 was mostly lead, with impurities. State 4 was nearly equal parts of silver, copper and lead. State 5 contained silver, copper, nickel, gold, magnesium and other trace elements. We lost our specimens in the hands of testing laboratories before we had finished our analysis. We found traces of stable rhenium and thulium in our specimen tested by Marcel Vogel in his laboratory in San Jose, California. Since our testing in 1979, scientists have found that the addition of rare earth elements like rhenium and thulium produce astounding properties in otherwise basic metals, such as superconductivity, superhardness and supermagnetism, etc.) Meier: You mean that the lead becomes liquefied first, and in this step suffers the conversion? Semjase: Surely. There do all right exist direct possibilities for the alternation of stuff, but these possibilities are not given for us. But our scientists have already well achieved successes in experiment. For the present, however, we still convert the metals the old-fashioned way in heat-converters, and as said, this happens in seven different runs. The metal becomes liquified, like with you, in furnaces, to suffer then by distinct oscillations, an alternation, but just to a certain value, because of the different steps in working that are necessary. Each final product is then pushed by pressure through a cooling spiral, where then are generated the small figures, as you have then here before you. This process is repeated some times, while with each new process the value of the different metals increases and becomes the targeted alloy. The sixth working process then affects the complete alloy. The cooling spiral contains usual water, which we obtain especially for this process in a condensational manner… Meier: Thank you. Still it is not evident to me how you then will work the metal, as neither at your beamship, not Ptaah's huge ['Great-Spacer'] box, could I recognize joints or seams, etc. And nothing is riveted as well. Semjase: For this purpose we use an instrument which you would call a welding apparatus. But it is based on oscillation techniques, which liquifies the metal in a cold state and lets it flow together, by which it is completely without seam and forms one single piece. So we also do not know grinding operations, as you do when you have to do welding work, and then have to grind away the seams to smooth it all. In this respect, you on Earth use a very dangerous operation. While Earthly science achieved the liquification of metals using high-intensity ultrasound decades ago, Semjase informs us that for thousands of years Plejaren metallurgists have been producing beamship alloys by subjecting molten metals to "distinct [atomic] oscillations of a certain value." What are these particular resonant frequencies that induce the alchemical transmutation of one element into another? The atomic physicists among Earth's scientists have been making great strides in their understanding of low-energy nuclear transmutation – the most outspoken among them being Dr. Joseph Champion of the Phonon Resonance Institute in St. George, Utah. Dr. Champion's work elucidates the atomic principles enabling several successful methods of atomic transmutation involving the production of precious metals: Dimensional phonon resonance occurs when the space occupied by one isotope is exactly the same as that of another isotope in its rest state [i.e. 25°C]. This event can only occur under the following two conditions: the ex-pansion of an isotope by heating, or the contraction of an isotope by cooling. Due to the natural characteristics of elemental properties, this event is extremely rare and one can only force the event under select conditions. To determine the phonon resonance of an isotope, it is necessary to apply the following formula: In the formation of Au (or other elements) from a dimensional reaction, the conversion will occur without excess energies or nuclear signatures by heating Ag to a temperature of 43.2°C. To achieve maximum conversion of Ag to Au will depend on the dwell time at resonance temperature. To date, visible conversion of Ag to Au has taken as little as six hours, with 2% conversion taking up to 24 hours. The reaction is safe… [with] no toxicity Dr. Champion's phonon resonance formula provides the resonant frequency of gold (Au) in its rest state as 38,931,841 Hz and the 107Ag isotope of silver as 38,962,532 Hz (above). The relative proximity of the resonant frequencies of these two precious metals allows a low-energy atomic transmutation from 107Ag to Au to occur near room temperature. However, silver isotope 109Ag comprises 48.8% of all available silver bouillon and, unlike it's sister isotope 107Ag, is not so easily converted to Au. The conversion of 109Ag into gold requires a more complex process using megahertz frequencies in conjunction with precision heating techniques. By the same means aluminum can be converted into silver when oscillating at a resonance of 38,950,565 Hz (at 276°C) and will also convert into gold when dwelling at a resonance of 39,932,068 Hz (at 295°C). After just a few days of dwell-time at resonance, atoms of the starting element have become informed with the resonant frequency of the target element in its rest state. The metal is then melted and rapidly cooled in distilled water to achieve the maximum conversion rate, just as in the procedures described by Semjase in 1976. The respective electron configurations of aluminum, silver, platinum and gold reveal the restructuring of electron orbital shells during transmutation: The addition of subatomic particles into atoms vibrating at resonance is facilitated by standing waves that act as pathways for the reconfiguration of electrons, protons and neutrons into a more densely packed arrangement. Just as acoustic standing waves can power wireless devices by transmitting electrical currents across otherwise nonconductive airspaces, standing microwave resonances induced within atoms allow subatomic particles to jump across otherwise impassable gaps in the atomic framework. Direct observation of this resonant phenomenon of atomic transmutation will be made possible by the quantum stroboscope, which has already provided the first direct imaging of standing waves that comprise the structure of a single electron. A source metal like aluminum can thus be transmuted into silver and then gold as successive electron shells become filled, adding atomic weight in the process and significantly increasing the yield weight of the conversion with each stage of the complex process. Dr. Champion has identified a new class of intriguing natural metabolic processes where atomic transmutation occurs as fungi ingest silver, thereby undergoing a pleomorphic change. Dry, active yeast is a cheap and readily available bread-making product that requires only warmth and water to thrive and reproduce in vast numbers. Common yeast species like Saccharomyces cerevisiae produce the silver-binding protein SSB-1 that enables the attachment of active yeast cells to available silver surfaces. Ingestion of silver atoms by the round 2-3 nm microbes causes their mutation into rod-shaped mutant microbes about 1-2 nm in length (below). The budding yeast cells act as electron donors inducing the resonant transmutation of silver into gold, as 32 electrons, 32 protons and 57 neutrons are accepted by 107Ag silver atoms vibrating at a 38,931,841 Hz resonance with gold. This newly recognized metabolic process leaves nanoclusters of gold deposited on exposed silver binding sites, as further transmutation takes place within the bodies of the microbes whereby ingested silver is converted into gold nanorods. The rediscovery of biological transmutation in yeast species restores ancient metallurgical knowledge and informs a scientific reinterpretation of enigmatic passages from the Bible. Biblical accounts of the divine presence often refer to a sacred substance called manna, which was used in making holy items such as the 'bread of life' (or showbread) and the 'living water'. However, this holy bread was not simply produced by a common baker. Instead, Moses commanded the goldsmith Bezaleel to prepare manna for the 'Bread of the Presence of God' – apparently using yeast to convert silver nanopowder into gold. Many unmistakable references preserved in the Book of Exodus confirm the biological process of atomic transmutation was used in the enrichment of food and water for the elevation of human consciousness. Advanced material and spiritual knowledge possessed by Moses is revealed in his demonstration that the presence of God is not conferred by gold idols, but by gold nanoparticles in sacred bread and water: When Moses approached the camp and saw the calf and the dancing, his anger burned… He burnt the golden calf – melted it down, and then filed it to dust; and that the powder to which it was reduced might be taken notice of throughout the camp, he strewn it upon the water which they all drank of. He did this that it might appear that an idol is nothing in the world, he reduced this to atoms, that it might be as near nothing as could be. (32:19-20) http://novakeo.com/?p=9691 | ||
| Posted: 15 Feb 2011 04:34 AM PST | ||
| Watson Pharmaceuticals' CEO Discusses Q4 2010 Results - Earnings Call Transcript Posted: 15 Feb 2011 04:30 AM PST Watson Pharmaceuticals (WPI) Q4 2010 Earnings Call February 15, 2011 8:30 am ET Executives R. Joyce - Chief Financial Officer, Principal Accounting Officer, Senior Vice President, Corporate Controller and Treasurer David Buchen - Senior Vice President, Secretary and General Counsel Siggi Olafsson - Patricia Eisenhaur - Vice President of Investor Relations & Corporate Communications Paul Bisaro - Chief Executive Officer, President and Director George Wilkinson - Executive Vice President of Global Brands Analysts Ken Cacciatore - Cowen and Company, LLC Corey Davis - Jefferies & Company, Inc. David Risinger James Dawson - Buckingham Research Group Ronny Gal - Bernstein Research Richard Silver - Barclays Capital Michael Faerm - Crédit Suisse AG Timothy Chiang - CRT Capital Group LLC Gregory Gilbert - BofA Merrill Lynch David Amsellem - Piper Jaffray Companies Presentation Operator Good morning. My name is Cassandra, and I will be your conference operator today. At this time, Complete Story » | ||
| Dollar Index Flight to Safety Has Appeal Posted: 15 Feb 2011 04:07 AM PST The LFB submits: The dollar index has spent four weeks in a sideways channel that has now confirmed, with very little doubt, that the global central banking community has found fair value in the U.S. dollar. While stocks continue to hold at all time highs the dollar index still has 10% to drop to become aligned with the risk markets. The conclusion can be drawn that once equity trade does move lower to heavily test support, which it will, and will likely be on a non-POMO, non-Monday period of trade, the U.S. dollar would be expected to break the index range that has resistance at 79.50. The inverse correlation between S&P 500 trade and dollar index movement has been on hold to the greater degree over the course of the last few months, in regard to the percentage moves each market is making. The flight to risk with the unprecedented low-volume buying of Complete Story » | ||
| Investors Flock to Inverse Gold ETFs Posted: 15 Feb 2011 03:58 AM PST Michael Johnston submits: Precious metals have been on a tear for much of the last year, no doubt delivering huge profits to some of the hedge fund managers who began stocking up on bullion in early 2010. Physically-backed gold and silver ETFs took in close to $10 billion in inflows last year, as investors embraced the exchange-traded structure as the most efficient way to establish exposure to an asset class that has safe haven appeal and can perform relatively well in inflationary environments. With uncertainty over the global economic outlook swirling and concerns about an uptick in inflation lingering, gold surged to new record highs in 2010 after adding about 25%. But the yellow metal was overshadowed by silver, which gained close to 90% on the year. Forget the tiger, 2010 was the year of the precious metal. But it seems that when the calendars changed, so too did the outlook for precious Complete Story » | ||
| So Much Stimulus. So Little to Show for It. Posted: 15 Feb 2011 03:54 AM PST First, let's step back and look at the big picture. In 2007, after 60 years of stretching credit, the US economy snapped. Savings rates went up…from near zero up to 7%. Houses went into foreclosure. People tossed away their credit cards. Wall Street wobbled…and almost fell. The feds rushed in, trying to stop the correction. They threw everything they had into the fight against the big D – deflation, de-leveraging, default, and depression. Fiscal stimulus, monetary stimulus, unorthodox stimulus – trillions of dollars' worth. The biggest stimulus program of all time – with budget deficits of 10% of GDP…special stimulus spending on "shovel ready" programs for $800 billion…zero interest rates…and a total of $1.7 trillion in Fed purchases of mortgage backed securities and US Treasury debt. What happened? Well…not much. Unemployment rose to nearly 10% (after President Obama promised that his stimulus program would hold it at 8%). About 30 million people are still jobless. House prices are still falling. Foreclosures are still rising. GDP is positive…meaning, technically, the recession is over. But after such overwhelming stimulus (negative interest rates for more than 2 years)…you'd expect more than a tepid increase. Besides, who knows what is really going on? The figures are all in terms of dollars. And now, who knows what the dollar is worth? The feds' hot money has swamped the world. Food prices are soaring. Oil is approaching $100 a barrel. And a prominent analyst predicts that it will hit $300 by 2020. The feds say the US core inflation rate is still less than 2%…but the core rate doesn't include the things that are going up – food and energy. Properly adjusted for real cost of living increases… …and shorn of the curly growth caused by government's deficit spending (which it can't continue forever)… …real GDP growth might actually be negative! The Great Correction continues, in other words. Confusing and frustrating…with mixed signals and false starts. And it will continue for a long time. For the harder the feds fight against it, the tighter the ropes become. The feds' hot money boosts stock prices. But prices for the raw materials go up too. And food and energy prices paid by consumers. The consumer has less real purchasing power. Business profit margins are squeezed. Meanwhile, the Fed continues printing dollars – $600 billion of them scheduled for January to June of this year. Alert dollar holders wonder how long it can continue. Shrewd investors wonder how it could stop. If it takes a $1.5 trillion budget deficit and negative interest rates to produce 3% growth…what would a balanced budget and a 3% lending rate do? We don't know. But we know one thing: no one in Washington or in a position of authority wants to find out. The Financial Times yesterday reported that Mr. Obama will propose cutting $1.1 trillion from US deficits over the next 10 years. Hey… Wait a minute… That's $110 billion per year…out of a $3.7 trillion annual budget – a cut (please sit down, dear reader) of 3%…or only 7/10ths of 1% of GDP! Woo hoo! Hallelujah… Our problems are solved. Bill Bonner So Much Stimulus. So Little to Show for It. originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation. | ||
| Will Silver Do Better Than Gold? Posted: 15 Feb 2011 03:37 AM PST | ||
| Dow-Gold Ratio & its Implications Posted: 15 Feb 2011 03:21 AM PST | ||
| Gold & Silver Jump as Global Inflation Rises, Middle East Unrest Spreads to Iran Posted: 15 Feb 2011 03:12 AM PST
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| Turk: Silver is Approaching Stage Two of its Bull Market Posted: 15 Feb 2011 02:13 AM PST Silver is Approaching Stage Two of its Bull Market http://www.fgmr.com/silver-approachi...ll-market.html February 14, 2011 – Back in April 2007, I wrote about the three stages that appear in every bull market, and more to the point, that gold was approaching the end of stage one. Gold back then was still trading around $690, and therefore well below its then record high of $850 reached in January 1980. My view was that "gold looks ready to make a new all-time high. When that happens, stage two begins. There will not yet be widespread excitement about gold in the next stage, because that won't occur until stage three. But when gold makes a new record high, and particularly after it breaks into a 4-digit price, people will begin paying attention." I wrote a follow-up article in November 2009 entitled Welcome to Stage Two of Gold's Bull Market, just two months after gold broke above $1,000. Focusing on the change in prevailing sentiment, I noted how differently gold was being treated. "During the first stage of a bull market, the media and most investors alike focus on past issues, rather than future potential. Over the past decade one consequently heard all the reasons not to own the gold…But there is a notable difference in this stage compared to stage one. Look how many people are writing and talking about gold. Gold has moved from apathy and neglect – stage one characteristics – to growing attention. But importantly, instead of embracing gold and analyzing it to determine relative value, today's attention is one of widespread disbelief and skepticism that gold can climb higher. These are exactly the responses one should expect to emanate from stage two." I concluded by noting that at some unpredictable point in the future, gold will enter stage three "when gold no longer is relatively good value." I did not make any mention of silver in the above two articles. It too has three stages, but silver is still mired in stage one, which began in February 1991 after silver had collapsed to $3.50. It was an astounding 93% decline from its January 1980 peak of $50. But as we can see on the following chart, $3.50 was silver's low, and its price has been rising ever since.  This chart shows a massive accumulation pattern, marked by the green lines. This pattern is a story of strong hands and weak hands, specifically, of silver moving to the former from the latter. From its $50 high in January 1980 to its $3.50 low in February 1991, the weak hands were shaken out. At that point, the accumulation by strong hands – who were buying because the recognized that silver was an exceptional bargain – became the dominant force. Their buying power was stronger than the selling pressure of the weak hands, and the price of silver responded by starting to climb. It was classic stage one action, but here's the important point. Silver is still in stage one. It won't advance into stage two until $50 is exceeded, just like gold did not enter stage two until its previous high of $850 was hurdled. I expect that silver will exceed $50 this year, which is a point of view I first mentioned in my outlook for 2010. Admittedly, I was a little early with my forecast about when gold would enter stage two. So perhaps I will again be early by forecasting that silver will enter stage two of its bull market this year. Regardless of the accuracy of my timing, one thing is clear. Because it is still in stage one, silver remains good value. | ||
| SLV Anomalies Part 2 - The SLV assay Comparison (UPDATED) Posted: 15 Feb 2011 02:12 AM PST I'm not good with files transfers and mp3's and shit like that, I had posted the same pdf earlier, sorry about that. After reading through the public pdf's that SLV provides on their website, I have found some more anomalies. I have contacted the assayer, "Paul Alston" he has basically told me to fuck myself, and to call some corporate landline. So I said okay. Something stinks. The two most | ||
| Posted: 15 Feb 2011 12:30 AM PST Continuing with another excerpt of Sunday's full Got Gold Report, please consider the short portion of the biweekly GGR just below on the extremely tight contango in the New York silver futures market. Since this clip was written, the silver futures have gone back into a zero-contango, backwardated condition as of Monday, February 14. Zero contango means that not even one futures contract is trading at a higher price than the price for immediate delivery. Below is a little more of the GGR report from Sunday, February 13. | ||
| Posted: 15 Feb 2011 12:22 AM PST The US Dollar index took a shit just now, on some good or bad news-really who cares what it is I dont want to bore you with Econ 101 text book bullshit that is made up by some arbitrary bookrat a century ago. Silver is now leading Golds move higher. I'll say that again, SILVER is now leading Gold participation in the metals market rally. This is bullish, as all eyes are on the front month of | ||
| Posted: 15 Feb 2011 12:17 AM PST - Communiqué public GEAB N°52 (15 février 2011) -  Avec ce numéro 52 du GEAB, notre équipe célèbre deux anniversaires importants en terme d'anticipation. C'est en effet en Février 2006, il y a donc cinq ans exactement, que le GEAB N°2 a rencontré brusquement un succès mondial en annonçant le prochain « Déclenchement d'une crise mondiale majeure » caractérisée notamment par « La fin de l'Occident tel qu'on le connaît depuis 1945 ». Et c'est il y a deux ans exactement, en Février 2009, qu'avec le GEAB N°32, LEAP/E2020 anticipait le début de la phase de dislocation géopolitique mondiale pour la fin de cette même année. Dans les deux cas, il est important de noter que l'intérêt indéniable suscité par ces anticipations au niveau international, mesurable notamment aux millions de lecteurs des communiqués publics concernés, n'a eu d'équivalent que le silence des principaux médias sur ces mêmes analyses et l'opposition farouche (sur Internet) de la très grande majorité des experts et spécialistes économiques, financiers ou géopolitiques.  Pourtant, en ce début 2011, plus grand monde ne doute que nous sommes bien engagés dans un processus d'ampleur historique qui voit le monde d'après 1945 s'effondrer sous nos yeux, Etats-Unis en tête, tandis que la communauté internationale se disloque chaque jour un peu plus, tout comme le tissu social et économique de la plupart des pays de la planète (1). Mais cette évidence actuelle n'a bien entendu pas empêché « décideurs et experts » (2), en 2006, d'être certains qu'il n'y avait aucun risque de crise importante à l'horizon ; et, en 2009, qu'il était absurde d'imaginer le moindre risque de dislocation de l'ordre mondial en place et encore moins de l'ordre social. Hélas, aujourd'hui, la capacité intellectuelle de ces élites à faire face aux changements en cours ne semble pas s'être améliorée puisque les mêmes « décideurs et experts » n'imaginaient pas possible il y a seulement deux mois que la Tunisie, puis l'Egypte puissent voir leurs régimes être renversés prochainement. Gouvernements et institutions internationales aveugles (3), experts et médias dépassés (4), … les élites occidentales, et leurs clones des différentes régions du monde, continuent à s'enfoncer sur les « holzweg » de l'Histoire, ces chemins forestiers qui ne mènent nulle part, ou plus exactement comme le soulignait Heidegger, qui ne mènent quelque part que si on a l'humilité d'être constamment à l'écoute de la forêt et de ses signaux (5). Néanmoins, alors que les signaux deviennent de vraies sirènes d'alerte, nos élites semblent décider à tout faire pour les ignorer. Prenons un exemple très récent : la comparaison des évènements affectant le monde arabe avec la Chute du Mur de Berlin. Notre équipe a été très intéressée de constater que cette image que nous utilisons depuis 2006 pour aider à comprendre le processus en cours de désintégration de la puissance des Etats-Unis, est désormais reprise allègrement par des dirigeants politiques (Angela Merkel en-tête (6)) et des experts en tout genre. Pourtant, à ce jour, ceux-là même qui font cette comparaison semblent s'interdire de poursuivre leur cheminement intellectuel jusqu'au bout, jusqu'au moment où il débouche sur une compréhension de la dynamique des évènements. Ils se contentent de décrire, sans analyser.  Or ce « mur » qui s'effondre a bien été construit par quelqu'un, ou quelque chose, et dans un but précis. Le « Mur de Berlin » avait été construit par le régime est-allemand, dans le contexte plus général du « Rideau de Fer », voulu par l'URSS, pour séparer le plus hermétiquement possible le bloc communiste de l'Occident. Et cela visait essentiellement à éviter toute remise en cause du pouvoir détenu par le parti unique dans chaque pays communiste afin de perpétuer le contrôle par Moscou des pays européens de l'Est ; en échange, Moscou assurait soutien sans faille et prébendes en tout genre aux dirigeants des pays d'Europe de l'Est. L'effondrement du « Mur de Berlin », remettant en cause ces monopoles de pouvoir et donc les objectifs qu'ils servaient, a ainsi provoqué en quelques mois la chute successive de tous les régimes communistes d'Europe de l'Est pour se terminer deux ans plus tard par la dissolution de l'URSS et la fin de soixante-dix ans de pouvoir absolu du parti communiste russe. Alors, si c'est aussi un « mur » qui est en train de tomber sous nos yeux dans le monde arabe, pour pouvoir espérer anticiper la suite des évènements, il est essentiel de pouvoir répondre à ces questions : qui l'a construit ? Dans quel but ? Et les réponses ne sont pas si difficiles à trouver pour qui ceux qui ne regardent pas l'actualité avec des œillères idéologiques : . ce « mur » a été construit par chacun des dictateurs (ou régimes) arabes de la région afin de s'assurer du maintien de leur monopole sur le pouvoir et les richesses du pays, en évitant tout risque de remise en cause de leur parti unique ou de leur légitimité dynastique (pour les royaumes). En ce sens, il y a très peu de différence entre les cliques au pouvoir dans les pays arabes et celles qui dirigeaient les pays communistes. . ce « mur » s'intégrait dans le dispositif plus général mis en place par Washington pour préserver son accès préférentiel (et en Dollars US) aux ressources pétrolières de la région et préserver les intérêts d'Israël. L'intégration poussée de l'appareil militaire et sécuritaire de ces pays (sauf la Syrie et la Lybie) avec le dispositif de défense des Etats-Unis assur(ait) un soutien américain sans faille et permet(tait) aux dirigeants arabes concernés de bénéficier de prébendes en tout genre sans risque de remise en cause par des forces intérieures ou extérieures. Ainsi, en réfléchissant un peu plus à sa comparaison avec la Chute du Mur de Berlin lors de la Conférence sur la Sécurité de Munich, la chancelière allemande aurait pu se tourner vers sa voisine de débat, la Secrétaire d'Etat américaine Hillary Clinton, et lui demander : « Ne pensez-vous pas que les évènements actuels en Tunisie et en Egypte sont les premiers signes de la chute de tous les régimes qui dépendent de Washington pour leur survie ? Et qu'ils peuvent en particulier conduire à un effondrement rapide du système d'approvisionnement en pétrole des Etats-Unis tel qu'il a été mis en place il y a des décennies ? Et donc du système global de facturation du pétrole et du rôle central du Dollar en la matière ? (7) ». Pendant que l'audience de la Conférence sur la Sécurité de Munich se serait soudain rendu compte qu'ils débattaient enfin de quelque chose de sérieux (8), Angela Merkel aurait pu ajouter : « Et concernant Israël, ne pensez-vous pas que cette chute de « mur » va impliquer très vite la nécessité de reconsidérer toute la politique américano-israélienne dans la région ? (9) ». Et là miracle, la Conférence sur la Sécurité de Munich aurait repris pied dans le XXI° siècle et le débat euro-américain pouvait se ressourcer dans le monde réel au lieu de divaguer dans la virtualité transatlantique et la lutte contre le terrorisme. Hélas, comme nous le savons tous, cet échange n'a pas eu lieu. Et les divagations de nos dirigeants risquent donc de continuer avec comme conséquence d'accentuer les chocs de l'année 2011 et de son caractère impitoyable comme anticipé dans le GEAB N°51.  Pourtant, LEAP/E2020 est convaincu que les évènements actuels dans le monde arabe, dont nous avions correctement anticipé les mécanismes, sont avant tout la traduction régionale des tendances de fond de la crise systémique globale, et en particulier de la dislocation géopolitique mondiale (10). A ce titre, ils sont les prémisses de chocs majeurs dans les trimestres à venir. Nous estimons en particulier que la fin 2011 sera marquée par ce que notre équipe appelle la « Chute du Mur des pétro-dollars » (11) qui génèrera immédiatement un choc monétaro-pétrolier majeur pour les Etats-Unis. C'est d'ailleurs l'un des sujets principaux de ce GEAB N°52 avec l'anticipation plus générale de l'évolution du monde arabe (y compris un indicateur précis du risque-pays dans la région). D'autre part notre équipe analyse l'accélération en cours du processus d'émergence de l'Euroland et ses conséquences pour l'Euro et la situation en Europe. Enfin, nous présentons nos recommandations concernant tous ces évènements. --------- Notes: (1) Même le FMI, à l'imagination pourtant peu développée, évoque désormais le spectre de guerres civiles à travers toute la planète comme le rapporte le Telegraph du 01/02/2011 ; tandis que The Onion du 24/01/2011 s'exerce avec succès à l'humour noir dans un article étonnant, mais révélateur de l'ambiance actuelle, qui évoque la désignation par la Fondation du Patrimoine Mondial, sponsorisée par Goldman Sachs, du « Fossé entre riches et pauvres de la planète » comme étant la 8° Merveille du Monde du fait de son ampleur désormais sans équivalent. (2) Nous mettons des guillemets car à notre avis un décideur qui ne prévoit rien et un expert qui ne sait rien sont en fait des imposteurs. (3) La CIA et le gouvernement français fournissent deux illustrations exemplaires de cette tendance générale : ils n'ont rien vu venir en Tunisie et en Egypte, alors même que les uns dépensent des dizaines de milliards de Dollars par an pour espionner le monde arabe et que les autres se promenaient au plus haut niveau (Premier Ministre et Ministre des Affaires étrangères) au cœur des pays concernés. La simple lecture de nos anticipations de 2008 (GEAB N°26 sur le sujet aurait pourtant pu les mettre sur la piste puisque ce sont exactement les tendances décrites alors qui ont abouti aux évènements tunisiens et égyptiens de ces dernières semaines. Comme le résume brutalement le Spiegel du 03/02/2011, « La révolution, ça n'est pas bon pour les affaires » … surtout quand on a rien vu venir pourrait-on ajouter. (4) En la matière, les investisseurs et les acteurs économiques qui se sont contentés de ces analyses se retrouvent aujourd'hui dans des difficultés sérieuses puisque les « El Dorado » promus à coup de reportages et de commentaires « éclairés » se sont transformées brutalement en piège à capitaux, en zones instables, en prévisions incertaines. Les « fantastiques avantages compétitifs » sont quant à eux devenus en une nuit ou presque des « risques pays insupportables ». Délocalisation, sous-traitance, tourisme, construction d'infrastructures, … pour l'ensemble de ces activités, c'est en effet tout le contexte social, légal, économique, monétaire et financier des pays concernés qui est projeté dans l'inconnu. (5) Petite remarque philosophique et méthodologique : sans aucune préméditation, notre équipe s'inscrit ici à nouveau dans une approche très franco-allemande puisque notre travail d'anticipation s'appuie non seulement sur cette notion d' « écoute » et de dévoilement de réalité chère à Heidegger, mais également sur l'approche défendue par Descartes, à savoir, la définition d'une méthode rationnelle. Voilà d'ailleurs une synthèse qui devrait inspirer ceux qui actuellement travaillent à définir les futures caractéristiques de la gouvernance de l'Euroland. Pour en savoir plus sur cette question du « chemin » chez Heidegger et Descartes, on peut lire utilement cette page du site Digressions. Et pour mieux comprendre la méthode utilisée par LEAP/E2020 et tenter de l'appliquer vous-même directement, nous vous recommandons le Manuel d'Anticipation Politique publié aux éditions Anticipolis. (6) Source : Bundeskanzlerin, 10/02/2011 (7) On assiste déjà à des mouvements d'ampleur autour du pétrole puisque les Etats-Unis s'apprêtent à abandonner leur propre indice WTI du cours du pétrole pour se rallier à l'indice européen Brent étrole) auquel l'Arabie saoudite s'est déjà convertie en 2009 en abandonnant le WTI. La divergence des cours entre les deux indices a culminé avec la crise égyptienne. Nous revenons sur la question pétrolière dans un autre chapitre de ce numéro du GEAB. Source : Bloomberg 10/02/2011 (8) Cette conférence, à l'instar du Forum de Davos, a un air délicieusement rétro. Les organisateurs et les participants semblent ne pas avoir réalisé que le monde auquel ils appartiennent a disparu, que leurs débats n'intéressent en fait plus personne dans le monde « réel » et que les nombreuses heures d'émissions qui leurs sont consacrées sur les chaines de télévision internationales sont la mesure inverse du très petit nombre de spectateurs qui les regardent. Avec plus de 1.500 participants américains et britanniques contre 58 latino-américains et moins de 500 asiatiques, Davos incarne indéniablement le forum typique du « monde d'avant la crise », confirmé par sa signature linguistique, le monolinguisme anglophone (même sur son site web). Monolinguisme ou multilinguisme constitue d'ailleurs selon LEAP/E2020 un premier critère très simple d'évaluation pour savoir si un projet ou une organisation à vocation internationale appartient plutôt au monde d'avant la crise ou au contraire est déjà en partie adaptée au monde d'après. (9) A ce sujet, il faut lire le remarquable éditorial de Larry Derfner dans le Jerusalem Post du 09/02/2011. (10) Washington a ainsi fait preuve d'une impréparation absolue, puis d'une indécision évidente, confirmant non seulement la fin de tout leadership américain au niveau international mais l'accélération d'un processus de paralysie du pouvoir central américain. Pour comprendre l'importance du phénomène, il faut garder en mémoire que l'Egypte est l'un des pays au monde qui est le plus directement financé et encadré par les Etats-Unis depuis la fin des années 1970. D'ailleurs, le New York Times du 12/02/2011 résume très bien la situation, tout en essayant de la présenter comme une stratégie alors qu'elle n'est qu'une absence de stratégie, en décrivant la gestion de la crise par Barack Obama comme étant du « straddle », une technique boursière consistant à essayer de se couvrir des deux côtés quand on sent qu'un événement important va arriver mais qu'on a aucune idée du sens qu'il va prendre. Au passage, l'article illustre le clivage entre « anciens » et « modernes » que cette crise a fait émerger au cœur du pouvoir US. Mais, nous revenons plus en détail sur tous ces aspects et leurs conséquences dans une autre partie de ce GEAB. (11) Qui est un segment stratégiquement essentiel du « Mur Dollar », comme le « Mur de Berlin » l'était pour l'ensemble du « Rideau de Fer ». | ||
| Soaring commodity costs could soon slam stocks Posted: 14 Feb 2011 11:41 PM PST From Pragmatic Capitalism: FedEx slashed their outlook after the bell citing higher fuel costs and lost revenue due to winter storms. This is just one more sign that rising commodity costs are pinching private sector income statements. FedEx is an economic bellwether so while this is likely not a reason to panic it is a sign that income statements are starting to tighten. With margins near record-highs, it's probably not too early to begin wondering if the great margin driven recovery is coming to an end. MEMPHIS, Tenn. – (BUSINESS WIRE) – FedEx Corporation (NYSE: FDX) today announced third quarter earnings have been negatively impacted by an estimated $0.25 per diluted share, due to loss of revenue and increased expenses resulting from severe winter storms and higher-than-expected fuel prices. The company now expects... Read full article... More on commodities: Why silver will beat gold now These commodities are now a one-way bet Marc Faber: This asset could soar no matter what happens next | ||
| Global Macro Notes: The Great Compression Posted: 14 Feb 2011 09:58 PM PST
Where is all the spending coming from? We know where the liquidity and the "animal spirits" are coming from. Those are courtesy of Ben S. Bernanke, the golden god of stocks. But from whence the spending – specifically, the consumer spending (circa 70% of the U.S. economy) that powers earnings and recovery stats and makes this market relentless? Look at the above chart of XRT, the SPDR S&P Retail Index. XRT has been a juggernaut – a tank. This reflects the strength of retail names, and of U.S. consumer spending in general (at least on the high end). The refusal of the consumer to roll over has driven bears up a wall (pun intended). You've heard the arguments. You've heard them pounded into the table, hard enough to make it break. And then there's the data: The persistent unemployment; the still-deflating housing bubble; the clear evidences of wage reduction and stagnation; the lessons of financial history; the need of a serious and prolonged deleveraging that keeps getting put off. Thus far, none of it has mattered. The consumer has powered through, with the ample help of the most reckless Keynesian monetary experiment the world has ever known. And thus, animal spirits have prevailed. But how?
A theory: What has widely come to be called "the Great Recession" is actually, in many ways, "the Great Compression." Via Fortune, "How to Deal With an Invisible Promotion:"
For the sake of debate, let's call people like Maura the "over-employed." We can think of the over-employed as a sort of reverse mirror image of the under-employed: Workers who are doing a hell of a lot more work for the same pay (or even reduced pay, given cutbacks in bonuses, perks, etcetera). Given the above as a backdrop, let's follow the "Great Compression" logic:
Howard Davidowitz, of Davidowitz & Associates, has been a consultant to the retail business for decades. Davidowitz has also been a very loud and colorful bear these past few years. When asked to explain how his bearish macro views fit with resilient consumer spending trends, Davidowitz asserted that high-end retailers are driven by the top 30% of consumers. The bottom 70% don't really matter. If this 30% assertion is more or less right, it can help explain why the LuluLemon Athleticas of the world can be hopping and popping even as the true unemployment rate skyrockets and "99ers" tell horrible stories of destitution. The bottom 70% are screwed, blued and tattooed – but so what. The spending is being driven by those in the upper strata… those who still have jobs and incomes and the ability to absorb rising grocery and gas prices without blinking an eye. And again, take into account the psychological profile of an over-employed survivor like Maura. She knows she's kicking ass for less than stellar pay. And if the company isn't rewarding her, she is going to want to reward herself with a little spending and splurging here and there. And she'll be encouraged to do so by the steadily improving stock market and the "green shoots" news she hears in the media, courtesy of Fed Chairman Bernanke.  In some ways, the profile of the over-employed counts as a monetary policy success. After 9/11, President Bush told consumers to go shopping. After the global financial crisis, the Fed told investors to go shopping for stocks. This is all suppposed to feed a positive feedback loop in which "animal spirits" – those famed Keynesian drivers – take us back to a good and healthy place. But what about that other 70%?
Inflation is heating up in emerging markets. China is a bubble waiting for a pin. Riots are breaking out in the Middle East, with demands for wage increases one of the drivers. The "E.M. hiking cycle" (as we have dubbed it) is in full effect. This is, in part, because rising food and energy prices make up a much larger percentage of consumer spending in developing world countries than they do in the United States. Food and energy prices also make up a much larger portion of budgets for the un- and under-employed in the U.S. – that great swathe of folks the Federal Reserve could care less about. And so here is where "The Great Compression" puts us on a path to disaster:
Look around and you can see this "Compression" phenomenon everywhere. Companies are compressing productivity into the output of fewer workers. The Federal Reserve is compressing the discretionary income of the bottom 70% (and especially the under-employed) by ignoring the inflationary impact of its policies. China, a long-time veteran of exploiting its own labor force, is compressing the earnings power of workers through mercantilist trade policies and fudged inflation statistics. Dictators in the Middle East compress the well being of their subjects by running kleptocrat regimes that siphon wealth out of the system… and so on. It's quite remarkable really. Under the management of a liberal Democrat U.S. President and (until recently) liberal Democrat congress, we have seen perhaps the most lopsided wealth-transfer effort in decades – not from rich to poor but vice versa. It's like LBJ's Great Society in reverse. Bottom line: The stealth-inflationary asset-propping monetary policies of both the Federal Reserve and China, to the extent they drive paper asset returns and optimism among those with means, are simultaneously brutalizing the silent majority without adequate means of saving (or even paying the bills). As the U.S. equity market soars, we are in real danger of creating an institutionalized underclass. The Fed's great hope, of course, is that the love trickles down before the experiment goes bust. In Chairman Bernanke's world, the healing power of rising nominal asset prices will eventually console not just the top 30%, but the bottom 70% as well. But why should this happen? If we can correctly identify the current earnings and data recovery as a "Great Compression" phenomenon in which the many are sacrificed for the few, is there any logic for justifying things will change? Not really…
Some time back, Jeremy Grantham of GMO Advisors –- one of the most accurate forecasters of the past few years — warned that the worst thing that could happen would be a successful reflation campaign. Were the Fed to succeed in their bid to reflate the asset bubble, Grantham opined, we would be on the path to an even greater disaster when it popped. And look where we are now… As flexible Mercenaries, we are making most of our hay on the long side these days (as are most traders with P&L still intact). If the above is true, however, the ultimate outcome of "the Great Compression" could wind up being brutal, not just for the stressed and strained underclasses from America to China to Egypt, but for investors too – in the form of swiftly collapsing P/E Ratios on the other side of a 1987/1929 style denouement. Winston Churchill: "There is no worse course in leadership than to hold out false hopes soon to be swept away." We still submit that, via the non-sustainable nature of the Great Compression, and the eventual exposure of the bankrupt thinking behind it, the scale and scope of Bernanke's failures will be far more spectacular than his successes in the end. JS | ||
| Silver is Approaching Stage Two of its Bull Market Posted: 14 Feb 2011 08:40 PM PST Physical Demand For Gold And Silver Continues To Confound Bubble Believers. Silver to reach $50 by 2011, and gold at $8,000 by 2015 conservative - Turk...and much more. ¤ Yesterday in Gold and SilverThe gold price didn't do much in Far East and early London trading on Monday...but shortly before the Comex opened, gold caught a bid. The high [$1,368.00 spot] came sometime between 10:00 a.m. and 11:30 a.m. Eastern time yesterday...as it was very broad top. But from that high, gold slid about six bucks going into the New York close...and was only up about $5 from its Friday close. Volume was light.
Silver had a far better time of it than gold yesterday. The silver price was held at or below $29.92 for the first six hours of trading in the Far East yesterday...and was only set free around 1:00 p.m. Hong Kong time. Silver gained about 20 cents from that point, until shortly before the New York open. Then, just like gold, the silver price took off to the upside...reaching its high tick of the day [$30.76 spot] about 10:40 a.m. in New York. At that point, either the buyer disappeared...or a not-for-profit seller showed up...and silver sold off about 20 cents before trading sideways in electronic trading. Silver volume was light as well.
The highlight of the dollar's day yesterday was a rally that began around 7:40 a.m. in London...and ended shortly after 11:00 a.m. in New York. From its low, the dollar was up about 55 basis points...but gave 25 of those back going into the close of electronic trading at 5:15 p.m. Eastern time. If you're looking for any correlation between the dollar and gold yesterday...don't look too hard, as there wasn't any.
The gold shares gapped up a bit at the open yesterday...with the top coming around 10:15 a.m. in New York. That time was probably gold's high tick of the day as well...but it's hard to tell from looking at the gold graph above. By noon, the shares had given back some of their gains...and basically flat-lined going into the 4:00 p.m. close...and the HUI was only up 1.29% which, considering the smallish five dollar gain in the gold price, was actually a pretty good showing. With some notable exceptions, most [but not all] silver stocks were up about double that amount.
The CME Delivery Report on Monday is almost not worth the mention...as only 6 gold and 37 silver contracts were posted for delivery. The link to the 'action'...such as it was...is here. There was no report from the GLD ETF yesterday...but SLV added 732,448 troy ounces of silver. The U.S. Mint had a sales report yesterday as well. They sold another 3,000 ounces of gold eagles...along with a very chunky 719,000 silver eagles. Month-to-date the mint has reported selling 42,000 ounces of gold eagles...along with 1,705,500 ounces of silver eagles. The Comex-approved depositories reported receiving 613,143 ounces of silver on Friday...and shipped out 273,784 ounces, for a net gain of 339,359 ounces. The link to that action is here. Over the weekend I received an e-mail from Alasdair Macleod over at FinanceAndEcnomics.org. His works have appeared in this column many times in the past...and will again today. This is what he had to say regarding the Financial Times story about silver forward sales that I ran in this column on Saturday..."Ed, I was intrigued by the FT story you highlighted in today's Gold and Silver Daily, and I think there is a simple explanation, if it is indeed true." "The FT story implies the transactions were initiated by the mining companies. I think this is unlikely, there being a greater likelihood that it was initiated by one of the big commercials, such as JPMorgan. Bearing in mind these are forward transactions, they do not appear in the public domain, and can be completed at any price, giving the bullion bank the opportunity to do a very special deal with a nice fat premium for a possibly reluctant miner. And what better time to do this, when the price has fallen and there is uncertainty in the market." "So my guess is that it one of the Big Four [JPM?] covering its shorts, because there is no other way of doing so and the timing is opportune. Kind regards. Alasdair" Silver analyst Ted Butler and I had a very long conversation on the phone yesterday about this Financial Times story that reported on the 100 million ounces sold forward by the silver mining companies...and Ted agrees that Alasdair may have a point. The FT story is misleading in some respects, because it insinuates that all of these forward sales had just occurred during the first six weeks of 2011, when silver prices were at their peak...then heading lower. That was not the case at all, as most of these hedges were placed many months prior to the end of 2010. Of that 100 million ounces, the standout was the 70 million ounces sold forward by Mexican silver company Minera Frisco...in which Mexican billionaire Carlos Slim has a huge position. These hedges were placed at $18.82 the ounce...and the last time we were that low in price, was back in the third week of August 2010...so that's probably when it happened. Not only did they sell forward a huge chunk of silver...but they also did it for gold, lead, zinc and copper. Silver and gold hedges run for three years...and the base metals for two. This is what Ted had to say about it in a note [headlined "Hedging Insanity"] to his subscribers yesterday..."I don't think I have ever seen such a dangerous hedge book [and I've seen plenty]. By my calculations, the company is already in the hole for upwards of $600 million on all its metal hedges...with silver accounting for $300 million of that total. Its additional exposure will be many times that amount if prices move higher, as they are expected to do." This sound exactly like what happened to Apex Silver many years back...and they ended up filing for bankruptcy. It's also similar to what happened to Ashanti Gold...and AngloGold had to come along and take it over because their hedge book had become toxic. And let's not forget a Canadian gold company called Cambior. As Ted went on to say..."The hedging experience [also] cost Barrick Gold $10 billion in total." Based on what happened to all four of these companies, I doubt that Minera Frisco will survive long enough to pay out its hedge book...and I also doubt that the owner [billionaire or not] will have deep enough pockets to cover his company's ever-increasing losses. Well, dear reader, I wonder what bullion banks were the ones that did the deals on all these forward sales? Without doubt, virtually every ounce was hedged in the OTC market...so all this happened without causing a ripple in the silver price. I would bet a fair amount of coin that Alasdair is right on the money. This reeks of JPMorgan. As Ted Butler pointed out, the Minera Frisco deal alone is equivalent to 14,000 Comex contracts that JPMorgan might possibly have been able to cover in the OTC market. Stay tuned! Before diving into my huge number of stories...here is a chart that Nick Laird over at sharelynx.com was kind enough to send out last night. It's titled "E-Bay 1oz. Silver Eagle Base Price Average"...and it need no further comments from me.
¤ Critical ReadsSubscribeWisconsin National Guard Prepares For Worker Unrest After Governor Unveils Emergency BudgetI have so many stories in my in-box I just don't know what to do with them all. Just running through the headlines over the last three days, I can tell that the world is going to hell from one end to the other. It's wall-to-wall bad news. The situation is so fluid...and so dynamic...it's almost impossible to post a story that captures what's happening, as the situations are changing so rapidly. I must admit that it will be up to you to do the final edit once again. The first group of stories is from the United States...and leading the pack is this item from reader 'David in California'. It's a story posted in yesterday's edition of the businessinsider.com...and the startling headline reads "Wisconsin National Guard Prepares For Worker Unrest After Governor Unveils Emergency Budget". Expect to see much more of this in the U.S. as the year wears on...and the link is here.  Latest Salaries for SJ City Employees Posted OnlineThe next story is from reader Scott Pluschau...and is posted over at the ktvu.com website...and is filed from San Jose, California. The headline reads "Latest Salaries for SJ City Employees Posted Online". They are something to see! Why should any public employee get paid that kind of money? It's definitely worth a look...and the link is here. Click on the video to bring it up to full-screen size.  Federal deficit on track for a record this fiscal year: Government debt to exceed U.S. economyHere's another story from Scott. This one was posted over at The Washington Times yesterday...and the headline reads "Federal deficit on track for a record this fiscal year: Government debt to exceed U.S. economy". Mr. Obama's budget projects that 2011 will see the biggest one-year debt jump in history, or nearly $2 trillion, to reach $15.476 trillion by Sept. 30th, the end of the fiscal year. That would be 102.6 percent of GDP - the first time since World War II that dubious figure has been reached. The link is here.  Obama tests bond markets with mega-deficitsRoy Stephens provides a story from The Telegraph on the same issue...as Ambrose Evans-Pritchard teed this one up last night with the headline "Obama tests bond markets with mega-deficits". US President Barack Obama faces a stiff battle with Republican foes in Congress after unveiling plans for $7.2 trillion (£4.5 trillion) of deficit spending over the next decade, and making little attempt to control the spiralling costs of social security and medical entitlements. It's not a big read...and the link is here.  US Bond YieldsWhile we're on the subject of the bond market. Here's another chart that Nick Laird dropped in my in-box late last night. It's titled "US Bond Yields"...and the chart needs no further embellishment from me.
 Companies Raise Prices as Commodity Costs JumpReader Phil Barlett sent me this next piece out of yesterday's edition of The New York Times. The headline there reads "Companies Raise Prices as Commodity Costs Jump". A package of Oscar Mayer cold cuts. A pair of Nine West boots. A Whirlpool washing machine. By the fall, people will most likely be paying more for each of them, as rising prices hit most consumer goods, say retailers, food companies and manufacturers of consumer products. No surprises in this story...and the link is here. &l | ||
| A Weekly Review of Key Markets Posted: 14 Feb 2011 08:14 PM PST Dow Jones Industrial Average: Closed at 12273.26 +43.97 on 130% of normal volume and rising momentum. The resignation of Egypt's leader spiked shares in an otherwise flat, corrective stock market. New resistance is 12,280 and support is 12,250. Price remains in the center of an up-bull-channel closing on an up bar and above all moving averages. There was a correction warning at the end of January but it proved to be a normal month ending pause. With the higher close today on good news from the Middle East we expect a buy Monday with some possibility of real fire power. S&P 100 Index: Closed at 596.60 rising on higher volume and trading above all moving averages. New resistance is 600.00 nearby, and support is 586.47 on the 20-day moving average. The trend up-line appears solid coming off a base back in November. With so many new IPO offerings to come in this quarter, we expect higher prices and a continuation of the bull market with a pause at the end of February. There is a pivot reversal date on February 15-16 next week. This is at a spot where stocks could pause and continue to rise, or begin a mild correction. If stocks correct, we are looking for a -7% correction as a maximum on the technicals. Generally, we are forecasting a bull shares market for most all stocks including precious metals until the end of May. Between now and that date, we forecast at least two profit-taking events (sell-off corrections). For Monday, look for more buying in the stock indexes. S&P 500 Index: Closed at 1329.15 +7.28 on 105% of normal volume and resistance at 1350. New support is 1325 and momentum is firm and rising gradually. Price is above all moving averages and this faster trading index was normal today after being tentative in the morning. The Middle Eastern events gave traders a push and the weekly index broke through a top channel resistance. Price could now, on the technicals, be moving up to 1400 resistance. On our weekly chart, there is room for price to rally all the way to 1450 resistance. Expect more buying on Monday but watch out for a "maybe" pause on February 15th a cycle pivot reversal day. Nasdaq 100 Index: Closed at 2379.15 +14.80 on very high volume above 1.2 Billion shares. The normal average volume has been 705,883,392. It seems some heavy buyers entered the market with new positions today on positive news. We have said many times, this index is the guide and leading indicator for the others. With so much buying power today, we expect all stocks to rise. Further, they could be rising even faster than most expect considering the several red flag warning patterns we've seen lately. New support is the very important 2350 and resistance is 2400. More buying ahead on Monday with potential serious rallies. 30-Year Treasury Bonds: Closed at 118.41 +0.91 with important resistance at 118.50. New support is 117.50 where we see a tiny bull double bottom helping this market to stabilize. Bonds sold so fast and hard the price hit the bottom of the price chart. Momentum was on the bottom in December, came up a little and then skidded toward new lows under -1 to the lower number at -2. It appears we are levitating just above -2 (lowest on the chart) near -1.25. Prices on all markets do not rise or fall in straight lines. While we see a recovery pause in the bonds, with stocks beginning to bull next week, look for bonds to sink again to 117.50 support. Gold: Closed at 1356.10 -6.20 as momentum based last week after a normal correction. Gold, after selling back to 1307 support recently rallied back to 1365 on the cash and 1370 on the April futures. Today, we see a normal ABC sideways correction and expect a new rally when choppy prices are settled. There is a cycle date on 2-25-11 and on 2-28 when we could expect a pause and or mild selling. There is new resistance on the futures at 1370 and 1360 on the cash 50-day moving average. We do expect a new rally but it could be a mild landing with a top some where between 1375-1385. If gold can rally over 1407, we could revisit the recent high at 1430-1431. More sideways chop early next week followed by a mild up-bias. Silver: Closed at 29.88 -0.35 after touching a correction low last month near $27.00. Silver has formed the beginnings of bear head and shoulders top but the right shoulder remains incomplete. The formation to sell is only one option at this point in the pattern. Fundamentals on silver seem more bullish than ever. We are seeing a continuous stream of news signaling a massive bull market. However, getting from here to there can take more time and does not preclude cycle selling. Resistance is $30.00 and support is 29.85. We are in an ABC choppy pattern for now but should snap out of it early next week. The weekly chart has gapped up and finished in the center of closing bar center; telling us undecided. This could be mean nearby selling ahead or it's just a move into completion of the ABC. Let silver decide its next move before taking on new positions. The primary trend is long and up for most the year. We've done new tech work showing us support and resistance to $48.85 to $51.00. Watch for a new trend next week. Gold & Silver Index XAU: Closed at 203.73 -0.76 on rising momentum but is flat to down on the metal to shares ratio. Price is under two of the three moving averages. Until gold and silver get firm and begin to rally, the shares will hold and pause with a very mild down bias. Since the broader stock market is going higher, we expect the XAU to be pushed along with the others. I would do nothing on new positions until after February 15-16 to first see if a cycle-sell pops up. It could go either way. Resistance is 206, 208 and 209 on nearby moving averages. This is formidable resistance. Once past 209 on the 50-day average with conviction, it should be okay to buy new shares positions. If we see a cycle sell on those key dates, price could sink to 196.44 on 200-day moving average support before a rebound. Hold funds until things are more certain. U.S. Dollar Index: Closed at 78.41 +.16 with new resistance at 78.50 and support at 78.00. The dollar has stopped selling and formed an inverse head and shoulders pattern for more buying. Momentum has based and is set to cross to the bull side on moving averages. Averages are clustered around the close telling us we are in congestion and the price can't move much in either direction for now. The 50-day average is just above at 78.82 and this is powerful resistance to overcome. While the dollar is trying to bull, price is stuck between 77.50 and 78.50. We think the price is stuck in a channel for another month. With QE2 in process, the dollar and the bonds should fundamentally be weak. Stocks are rising but the stock market is not the economy. Rising dollars are negative for commodities. For now we are just flat. Crude Oil: Closed at 85.45 -1.73 on falling momentum and formation of a selling bear price channel. We see a bear parabolic top. The price could drop all the way to 82.96 on the 200-day moving average. We thought 86.00 support could hold but Egypt problems hit and then have calmed down. There seems to be plenty of supply. However, OPEC said today they see a need for an additional 400K barrels added per month to keep supplies even. We think this is just talk as no one is complaining about oil shortages. The US Energy Department mandated an increase in ethanol from corn, taking obligatory demand to 5mm gallons for the year. This is wasteful, driving corn and food prices higher, but this is the reality of politics. Corn is over $7.00 per bushel and headed for $8; our 2011 high forecast. That forecast may have to be revised on higher demand and not enough acres available. Expect oil to touch $83.00 then support and rebound in a new rally on gasoline manufacture and on-going Middle Eastern political problems in several nations. Egypt opened the door and we forecast several similar flare-ups will be encouraged by their events. CRB Index: Closed at 337.78 -2.17 on falling momentum and peaking prices between 337.50 and 340.00. Those are support and resistance but when commodities base-out over the next 4-6 weeks we envision a new rally taking the average all the way up to 450-500 where we were in April, 2008. Prices are all up for the most part. Eggs up 288%, cotton over 100%, silver and gold ready to stampede and the softs' markets pushing the pricing envelope. Rice feeds half the world and is rising faster on dwindling supplies. We still contend oil will touch at least $115 or higher this year and natural gas, while down and over-supplied, is expected to see 5.00 very soon. Resistance is 350; but after a peak and pause pullback, prices go even higher. – Traderrog         This posting includes an audio/video/photo media file: Download Now | ||
| Posted: 14 Feb 2011 06:13 PM PST
Mercenary Links Roundup for Monday, Feb 14th (below the jump). 02-14 Monday
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| Brother, Can You Spare a Mine? Posted: 14 Feb 2011 11:12 AM PST The price of gold and silver rose back to last week's highs early in London on Monday, hitting $1364 and $30 per ounce respectively even as the US Dollar rose to 1-month highs on the currency market. European stock markets slipped but government bonds and commodity prices were little changed after China reported a further rise in its imports, led by a 5.7% rise in copper demand. "Physical market is still absent," said one Hong Kong gold dealer in a note, citing a "lukewarm" premium and low trading volumes in Asia's bullion markets despite the return of Chinese traders after the Lunar New Year. "There is plenty of data out this week," says Standard Bank today, "but of particular importance to precious metals will be the inflation numbers" due from China, the US and the UK. "[China's recent] increase in interest rates is too little too late given the surge in inflation," reckons Peking finance professor and Sheyin Wanguo Securities chief strategist Michael Pettis. "Real estate prices have been on an upward tear, while everything in China that might be considered collectible and capable of holding value – gold, jewelry, premium tea, premium liqueurs, stamps, calligraphy, art, antiques, jade, and so on – has surged in price, in almost every case to record highs." Monday saw Japan's full-year 2010 economic data confirm its fall to third place – in Dollar terms – behind China and the US. With Japanese society as a whole growing ever older, says a report from Goldman Sachs, the national savings rate could fall from 5% of income in 2009 to possibly negative levels as early as next year. Copper, zinc and aluminum futures will start trading on the Singapore Exchange from Tuesday, under a deal with the London Metal Exchange. World No.1 aluminum producer United Co. Rusal believes that a physically-backed exchange-traded trust for investors to track the metal's price will be launched within "weeks" according to its deputy CEO Oleg Mukhamedshin. "Since the start of the year, [silver investment in US futures] has dropped...6% while the ETF position has dropped 3.9%," says the latest Metal Matters from bullion bank Scotia Mocatta, "[which] might just reflect some repositioning by investors as they adjust their portfolios." Noting "strong buying" from coin investors and product-fabricators, however, Scotia attributes the current "backwardation" in silver prices – where future deliveries, unusually, are now cheaper than immediate supply – to "a combination of commercial bank borrowing and by [mining] producer-related forward hedging business." Five un-named silver mining companies apparently sold forward a large chunk of their future production to "lock in" current prices, the Financial Times reported last week. Needing to borrow physical silver bullion, these miners have helped create the recent supply shortages, suggests Scotia, in London – heart of the world's wholesale precious metals market. Silver imports to China rose four-fold in 2010, according to official data. The recent Lunar New Years celebrations also saw heavy shipping of metal to the Far East, according to senior logistics executives in Europe. Adrian Ash | ||
| Posted: 14 Feb 2011 11:11 AM PST It all started with a scandal. Now something amazing has started in the silver market. The silver price took nine long months to crawl from $18 to $20. It then jumped by 50% to hit $30 in just three months. Last year it finished the year up by more than 68%, leaving most other commodities for dead. This is not normal! What the heck is going on? And how does it lead to a precious metals producer in North Argentina with 11.2 million ounces in silver reserves that I believe is undervalued? If you haven't been keeping up with silver lately, there have been some important stories. These stories have led to a huge move in silver which could continue into 2011. What exactly happened? A few months ago, Bart Chilton of the Commodity Futures and Trading Commission (CFTC) said he "believes that there have been repeated attempts to influence prices in the silver markets". JP Morgan and HSBC now potentially face class action lawsuits alleging that they had forced silver prices down for their own benefit. Compared to gold, the silver price had been pretty flat for a year. But once the cat was out of the bag, the silver price went off like a rocket. Silver price has gone through $30 again
Source: Goldprice.org I reckon it still has a long way to go yet. But the important question is how do you profit? On the Australian Stock Exchange we only have a few small silver companies, and none are producing yet. But eighty percent of the world's silver comes from mines that produce silver as a by-product after something else, such as copper for example. So, one good way to profit from high silver prices is to invest in a company with the highest proportion of silver in their deposit possible. And to profit straight away from today's high price means picking a company already producing the stuff. Why am I so bullish on gold's cheeky little cousin? We all know the gold price has climbed steadily for years. Paper money's value is based purely on the bond of trust we have in Central Bankers. But this bond has been broken. Gold functioned as money for thousands of years, and after forty years off-duty is returning to this role. It is 'remonetising'. So what about silver? It should be doing the same. And now it is. The market manipulation has been uncovered. The silver price is now jumping like a kid on red cordial. But how far can silver go? Well, for the last few thousand years the gold price has been fifteen times more than the silver price on average. This wasn't by design, and was probably because gold is fifteen times rarer than silver in the earth's crust. This fifteen to one 'gold-to-silver price ratio' stayed true through history right up to start of the start twentieth Century. Then as Central Banks grew in power, silver was kicked off the podium and lost its importance. It soon became a shiny financial relic from a 'less educated' time. So the relationship between the gold and silver price broke down completely. So much so, that silver has been around seventy times less valuable than gold for the last few decades. This belittles silver. It's like seeing an old mate queuing up at the soup kitchen. But all this is changing. Silver is back on its feet and fighting. This ratio is falling like a stone. Silver's price jump means it is now just forty-five times less valuable than gold. Gold to silver ratio returning to former glory?
Source: Goldprice.org But the silver price would still have to triple to more than $90/ounce to get this ratio back to fifteen to one. Is this really possible? As you should know from our financial advice disclaimer 'previous performance does not guarantee future returns'. Just because it happened in the past, it doesn't mean it will happen again. But if you take a quick look at the silver market today, it looks like it could happen. There are only 1.2 billion ounces of silver bullion in the global 'stockpile'. This means there is only $33 billion worth of silver available. I'll put that in context. The value of the entire global silver stockpile is less than Woodside Petroleum's market cap. Considering how many buyers there are worldwide, THIS IS TINY! Silver is being bought by the ute-load with each paragraph you read. For example, silver coin sales have gone through the roof. The US Mint, Canadian Mint and Perth Mint are all setting new record silver sales each month. I'd say our own Perth mint is doing well pretty well. Fifty percent of the silver supply is used by industry. With the world gone digital, the days of its use in photography is in its senior years. Medical industries are now behind a lot of demand for silvers unique antibacterial properties. It is used in bandages for example. And as so little silver is needed in each product, the silver price is irrelevant. The same huge demand will still be there if the silver price did indeed triple. The important point is that none of this silver used in industry is recycled. It gets chucked in with the rest of the medical waste. Who would want to pick through that stuff? So all this silver slips through the cracks in the system: never to become bullion. The real game-changer is the money going into Exchange Traded Funds (ETFs). Incredibly these hold about 60% of the world's silver stockpile already. There's really not much silver out there left to buy, and the ETFs are quickly buying what's left. They snapped up another 1.5% of the global stockpile in November alone. It would take less than two years to mop up the rest at that rate. With this sort of demand, the silver price is not going to fall any time soon. To make the market even tighter, silver has an unusual supply problem. Eighty percent of silver supply comes as a by-product from mining companies producing other metals. Silver is not their main concern, or source of revenue. When demand increases, these producers don't give a monkey's. The supply will not change. Huge demand? Disappearing stockpiles? Unresponsive supply? I think long-term the price goes up from here. In essence, silver is entering a bull market that will put gold's to shame. | ||
| even main stream media is getting the fever Posted: 14 Feb 2011 11:02 AM PST http://news.yahoo.com/s/yblog_theloo...ency-for-state A South Carolina state politician wants the state to develop its own gold and silver-based currency in case the Federal Reserve collapses and hyper-inflation ensues. "If folks lose faith in the dollar, we need to have some kind of backup," State Sen. Lee Bright told the Spartanburg Herald Journal's Stephen Largen. His bill asks a committee to look into the development of a state currency, citing the Constitution and Supreme Court precedents to prove the bill's legality. Slate's Annie Lowrey tracks down similar bills in Georgia and Virginia, and points out that the legislation reflects a larger trend of state politicians wading into monetary policy. A bill in Georgia would require all debts to the state be paid in pre-1965 gold and silver coins. The Virginia proposal would let the state print its own money. Meanwhile, one politician in Utah wants to cut out the middleman entirely and allow the state's residents to run their very own mints. Advocates of currency alternatives to the dollar argue that the Federal Reserve's quantitive easing techniques will lead to inflation. Texas GOP Rep. Ron Paul, who won the Conservative Political Action Committee's presidential candidate straw poll last week, has been Congress' most visible anti-Fed leader. Paul argues the Fed devalues the dollar, and proposes that the United States should gradually return to gold-backed currency. In addition to the nightmarish logistical challenges involved with a state adopting a new currency, Lowrey points out that commodity-backed currencies can also experience volatility. For example, if a state collects income taxes in gold and then a big new gold mine is discovered, the metal's value would decline--together with the state's revenue holdings. So for now, it's probably bests for individual consumers to refrain from shifting over to sovereign state currencies--especially since none of the recently introduced currency bills stands a strong chance of passing. However, for numistmatists looking to make a political statement, the Ron Paul silver dollar will likely appreciate--especially since federal authorities raided the libertarian minting operation that marketed it back in 2007. (Dollar coins in a U.S. mint in Philadelphia: AP/Matt Rourke.) Posted just today 02/14/11. Thought it was kind of funny the slant they put at the end. | ||
| Revolution in Egypt and Where to Be When Black Swans Appear Posted: 14 Feb 2011 10:34 AM PST Not much action in the stock market on Friday. Gold didn't do much either. The big news was that Hosni Mubarak called it quits. After supporting him for 3 decades, the US threw him under a tank. Almost everywhere except the Mubarak household, people rejoiced. We were surprised they had an opinion, one way or the other. We got emails from strangers telling us what a "hopeful" development this was...or how "free elections" might be coming next. Typical was the report in The Washington Post: "Mubarak became the second Arab leader in a month to succumb to his people's powerful thirst for freedom." "Thirst for freedom?" If Egyptians were thirsty for freedom they must be like camels. They only need a drink of it once every 30 years. Mubarak ruled for three decades. Egyptians went without quenching their "powerful thirst for freedom" through the '80s, the '90s and the '00s. Apparently, they only needed to bring the cup to their lips this year. Many spoke of the "jubilant crowds" and the "idealistic youth" behind the peaceful revolution. We were tempted to mention the jubilant crowds that attended the execution of Louis 16th...or the idealistic youth who gathered to jeer at Nicholas II when he and his family were shipped off to Yekaterinburg, where they would be murdered, along with their valet and even the cook. Mubarak left office on Friday. The army took control on Saturday. On Sunday, the generals dissolved parliament. Revolutions don't always turn out well. The French Revolution was a good time to be in England. The Russian Revolution was a good time to be almost anywhere other than Russia. Even the American Revolution was a good time to be elsewhere too. And then, when Americans finally got their freedom from Britain they almost immediately began shackling one another. Tax rates had been only about 3% when the English ran the colonies. Now, the federal rate is 11 times as much. And for every injustice done to Americans by the English there must be 100 they have done to themselves. But revolutions happen. Where should you be now? We don't know. But we suggest that you have a bolt hole somewhere. A refuge...a getaway...a family stronghold... Many things could go wrong. Earthquakes. Plagues. Volcanic eruptions. Wars. Bankruptcies. Hyperinflations. And - we wouldn't rule it out - invasions from space. These events are hard to predict. Even something as obvious as the revolution in Egypt was unforeseen by almost everyone. We pay the CIA hundreds of billions to keep on top of things like this, but as one journal put it, sarcastically: "CIA Forecasts, like, Suck." Here at The Daily Reckoning, however, we take up for the CIA, just as we would stand up for any drunk or half-wit. The CIA's work is at least on a par with the SEC or Amtrak. We have no doubt about it. It is at least as efficient as the Post Office. It is as necessary as the TSA. And it is as competent and effective as the Congressional Ethics Committee. But we do not take up pen today to criticize America's intelligence agencies. Instead, we merely point out that: bad stuff happens. What kind of bad stuff? All kinds. Kinds you expect. And kinds you don't. The problem with bad stuff is that it often comes in drag...pretending to be something it is not. A "peaceful revolution," for example, can turn bloody mighty fast. And no one gives you advance notice. Real trouble comes unannounced. If you knew that the dollar would collapse on the 3rd of June, for example, you could switch your money into euros. If the Irish Prime Minister called you on the phone and tipped you off - "Hey, we're going to default next Thursday," - you'd know what to do. You'd short the euro and make a bundle. Or, if you intercepted a secret cable - "Nuclear Attack on Washington, DC, 4PM, October 13th..." you'd get out of town as soon as possible. But black swans do not honk before they appear. They just appear. We've spent a lot of time anticipating disaster. There will be a collapse of the international monetary system, for example. It is almost inevitable...but it is still unpredictable. We can't say when or how it will come about. Likewise, much higher inflation rates are coming...and a huge sell-off in government bond markets. Those things will provoke widespread financial disasters - possibly leading to riots, revolutions and other bad stuff. It is possible that these financial calamities will cause a major economic disruption, like the collapse of the Roman Empire. In the chaos, trading networks could fall apart and take many decades to be rebuilt. GDP growth could turn negative and remain in the red for years. Developed regions could slide backward for generations. Emerging markets could explode. Who knows what would happen? We see trouble coming...but we can't tell you exactly what color wig it will be wearing...when it will get here...or what it will do when it arrives. And then, there are the disasters that are impossible to see coming at all. For example, our old friend, Marc Faber, includes an essay on "cyber security" in his latest newsletter:
Apparently, the cyber attackers are well funded, very sophisticated groups engaged in serious warfare all the time. For the moment, they are outgunned by the forces of law and order - led by the USA. But imagine what happens when the USA runs out of money? How long will it take the attackers to get ahead technologically? With all the billions and billions of dollars worth of capital in the world...and the millions of people with high-tech computer skills...it seems like a matter of time before a serious Black Swan event occurs. One thing about cyber war makes it especially attractive to low budget terrorists - it costs relatively little to maintain a serious threat. No battleships necessary. No billion-dollar fighter jets. No nuclear deterrent. In fact, with the right team of software geniuses, it may be possible to turn a nation's own nuclear capability against itself.
In other words, when it comes to bad stuff...the sky's the limit. It's gonna happen, eventually...one way or another. And it could be real bad. And when bad stuff happens, you're better off being somewhere else. Where? Generally, bad stuff seems to happen most often in cities. Why is that? Cities are where most people live. It is where governments are. And it is where the labor force is most specialized. There are no subsistence farmers living in cities. Nor do urban populations "live off the land." Instead, they depend on complex networks of commerce. The typical city dweller produces neither food nor energy. He sits all day in an office - completely dependent on others to provide power and food. Then, he goes home - still completely dependent on the division of labor for his most important needs. Progress can be described as the elaboration of the division of labor. In man's most primitive state, specialization is extremely limited. From what we've been told, the early man was the hunter. Early woman gathered...that's about the extent of it. As the tribe grows larger, specialization increases. One person might tend the fire. Another might be in charge of making clothes or arrows. The advent of sedentary agriculture and towns caused a big leap forward in human progress and, not coincidentally, the division of labor. Some townspeople went out to tend the fields. Others began to focus on woodworking...or iron mongering...or making weapons...or clothes. Some played cards and hung around at bars. There was soon a homebuilding industry...and, not long after, merchants, prostitutes and bankers...and even shyster lawyers and tax collectors. As the division of labor expanded, the average person became richer...and more dependent on others. In order to eat, someone else had to plant...and till...and harvest...and hunt...and gather. And then, when agriculture became mechanized, he depended on faraway people who produced oil and gasoline...and people who built tractors and combines...and bankers who financed industries and factories. And, of course, he was more dependent on money too. In the days when he bartered, money was no threat. Then, when he traded only with gold and silver coins, there were no monetary breakdowns...no hyperinflations...and no financial crises. As the 20th century progressed, more and more people gave up agriculture, moved to cities and took part in other industries. Today, cities may have millions of residents - like Bombay with 14 million...or Sao Paulo with 20 million...or Mexico City with even more. All of these people are dependent on vast, stretched lines of communication and commerce. Even the farmers themselves are now dependent on these sophisticated networks of commerce. They depend on money...and what it will buy. Agriculture has become monocultural. That is, a farmer is likely to produce only wheat. Or only rapeseed. Or only barley. Or only cattle. Gone are the chickens around the farmhouse and the pig in the back pen. If the system of transport and trade breaks down - or the money itself goes bad - thousands of farmers could go hungry too. There are black swans all over the place, waiting to be discovered. And when a black swan appears, people in the cities seem to suffer most. In the hyperinflation in Germany in 1923, for example, farmers had so much food they ran out of storage space. But they wouldn't sell it to city slickers. The mark was losing value so fast, farmers preferred to hold their crops off the market, knowing that the price was soaring...and that if they sold, the money they got would soon be worthless. People in the cities, meanwhile, were starving. Soon, gangs roved the countryside, raiding rural barns and houses...and occasionally killing farmers who tried to resist. Plagues hit city dwellers hard too. Proximity seems to be a curse when an infectious disease appears. And, of course, in time of war and revolution, cities tend to be the battlegrounds. Advancing armies are rarely polite. But even if they are advancing through the countryside, they are usually advancing towards cities, which they attack. In the old days, cities were besieged, starved out, and then, when they were taken, the attacking soldiers were given 3 days in which to sack the cities. In other words, they had three days to commit whatever mischief and mayhem their imaginations suggested. When bad stuff happens, progress goes into reverse - so does the division of labor. When an economy goes backward, much of the specialization that developed during the boom years turns out to be uneconomic, or unaffordable, or unwanted. People may be willing to pay someone to park their car when they are flush. But when they are broke, they will park their own cars. As the division of labor goes backward, people also find they need to tend to their own food and energy needs. Here is where it gets very tough for people who live in cities. They have no stores of mason jars with food from their own gardens that they have canned themselves. They have no hams hanging in the barn or stocked away in the larder. They have no animals on the hoof that they can slaughter. They get no eggs from the chickens they don't have...and they can hardly go into the local park and shoot squirrels to make a pie. Instead, they are out of luck. Generally, when the black swans come out you are better off in the country - with country-boy skills and old-time farms supplies. We once met a fellow who had a keen appreciation for apocalypse. He was sure it was coming. So, he moved to Arkansas where, he said, "I'm protected by 300 miles of armed hillbillies." That's something else to think about. Not only do you have to worry about food and energy, you also have to worry about your neighbors. If you have a nice little vegetable garden next to a large apartment complex, for example, you might have a hard time protecting your crops. And don't count on fattening a calf in Central Park during a famine. You need to be somewhere else. Where? Stay tuned. Regards, Bill Bonner | ||
| Profiting from Rising Interest Rates Posted: 14 Feb 2011 10:34 AM PST In the fall of 2008, the Federal Reserve responded to the Lehman bankruptcy by igniting a rapid expansion in the US money supply. It did so because, by its lights, the immediate and obvious menace to the economy was a deflationary collapse - with one giant bankruptcy begetting another. The Fed went about the task without compromise; the monetary base more than doubled in less than a year, and the public's M1 money supply (checkable deposits plus hand-to-hand currency) jumped by 20%. To many investors, this policy seemed to guarantee price inflation sooner or later - which, when it arrived, would mean higher interest rates and falling prices for long-term bonds, including Treasuries. But "sooner or later" is a nearly useless observation. In the fall of 2008, Treasury bond yields did not rise; they plummeted, as investors scurried into the safety of Teasurys. The fear brought on by the bursting of the housing bubble, tumbling stock prices, the near- death experiences of large financial institutions, and the well- publicized bailouts of public companies, trumped any concerns about inflation somewhere in the future. The compelling desire, especially among institutional investors, was to escape default risk, and that meant buying Treasuries. Inflation was a hypothetical event that could be dealt with later. For those investors who've followed the inflation-vs.-deflation debate and who've come down on the side of inflation, shorting Treasuries looks like a sure thing. But the timing of this trade has been anything but a sure thing. Throughout the last two years, every time Treasury yields started to rise, some unexpected piece of bad news and/or exogenous event would push yields back down again: Bad news from somewhere would revive fears of everlasting recession, a new wave of defaults, or a tumble into a deflationary abyss. Housing prices would take another step down. The reported unemployment rate would stall or rise. The specter of a default in the sovereign debt of a European country would reappear. And every time, whatever the problem, it would stimulate flight-to-safety demand for US Treasury securities. So there was no sustained rise in T-bond yields. Shorting an investment has costs. In the case of a bond, even if the price stands still, the cost of maintaining a simple short position is the difference between the yield on the bond (which the short-seller must pay) and the yield on the cash that is credited to the short- seller's account. You can't dodge that cost by using futures, options, or an exchange-traded fund. Regardless of how the instrument is put together, the performance will reflect the cost of a simple short sale. Until very recently, the investors who have been betting on rising T- bond rates have been betting wrong. So if you were one of the early short-sellers of T-bonds, you may have already thrown in the towel. With the meter running, being early doesn't feel much different than being wrong. But I believe that the mere passage of time, plus the accumulation of inflationary forces, has stacked the deck in favor of shorting Treasury bonds now. Here are the reasons:
Does this add up to a "sure thing" of rising yields and falling prices for Treasuries in 2011? No. But it does stack the deck, which is all a speculator can ask for. If a rise in T-bond rates is what lies in the near future, there are three ways it might play out. The first is a gradual, but persistent rise. As the economy recovers, so does the demand for loans. So interest rates on all types of credit instruments, including T-bonds, also rise. And as the fears of 2008 and 2009 become more distant, the public leans more and more toward spending the excess cash the Federal Reserve has created, so inflation picks up. And it keeps picking up. So interest rates keep rising. The second possible pattern is a sudden jump in interest rates as investors seek to dump dollar-denominated bonds. The triggering event might be a new war that guarantees even bigger federal deficits or an announcement from the Federal Reserve that it is considering QE3. As we've seen with the serial sovereign debt crises in Europe, a flutter from any not-so-white swan can set things off. And, of course, the rise in interest rates could begin with the first pattern and then jump into the second. But any would-be short-seller of T-bonds must bear in mind that the dollar is still the world's reserve currency, the US Treasury still looks like the world's most reliable sovereign borrower, and by the standards of most of the world, the US still looks like a haven of stability. So any troubles outside the US that don't directly threaten the US would bring flight-to-safety buying, which would temporarily depress T-bond yields. Or an actual default by Greece or any of the other popular candidates for sovereign bankruptcy would, for a while, reverse the rise in Treasury bond yields. A major war that the US stayed out of (if you can imagine such a thing) would have the same effect. Any such setback for short-sellers of Treasury bonds would be short- lived. The reason for expecting a rise in rates isn't the events that lie ahead. It is the money creation and the deficits that have already occurred. The most efficient and reliable way to speculate on rising interest rates is something most investors don't want to do - use the futures market. If you do take that route, I suggest shorting the 10-year T- bond. That's the maturity the Federal Reserve is targeting with QE2. There is no better way to boost your odds than to short the bond whose price the government is trying to support. The fire-and-forget strategy would be to deposit sufficient margin (as required by the particular broker you trade through) to keep your position open even if the rate on the 10-year bond falls back to 2.4% - which is the low since 2007. That's the simple and cautious approach. It would limit your leverage, but it also might improve your sleep patterns. The more convenient way to speculate on rising interest rates is to use the Rising Rates Opportunity 10 ProFund (RRPIX), which is a mutual fund that tries to emulate a non-leveraged short position in Treasury bonds. [Editor's Note: The ProShares Short 20+ Year Treasury ETF (NYSE:TBF) is a slightly different short-Treasury vehicle that has produced almost identical investment results to those of RRPIX]. Such funds have an unavoidable shortcoming: maintaining a 100% short position in anything isn't easy when capital is flowing into or out of the fund every day. This may make an investment in fund shares more profitable or less profitable than a short position in the futures market that you establish for yourself. It adds another element of uncertainty. That's a flaw. But I wouldn't rate it as a disqualifying flaw. And just to be unmistakably clear, these funds offer a speculation, not an investment. Regards, Terry Coxon Editor's Notes: Terry Coxon is a contributing editor to The Casey Report, Casey Research's flagship advisory for big-picture investing, and the author of Keep What You Earn and Using Warrants and the co-author (with Harry Browne) of Inflation-Proofing Your Investments. Similar Posts: | ||
| The SLV Anomolies Part 1- The Conversation with a Contact Posted: 14 Feb 2011 10:28 AM PST | ||
| Posted: 14 Feb 2011 10:19 AM PST What to invest in, farm land physical silver or a little of both??? Any recommendations???:biggrin: | ||
| Posted: 14 Feb 2011 10:01 AM PST | ||
| Posted: 14 Feb 2011 10:00 AM PST Based on his recent public comments, Fed Chairman Bernanke seems determined to give the U.S. dollar the reputation of Egypt's Hosni Mubarak: an unwanted relic of the past that everyone agrees must go, but stubbornly clings to a privileged position. The dollar is currently the world's ruling currency, but, as with Mubarak, I believe that growing public discontent will spur regime change quicker than most pundits expect. Clearly, the most significant problem facing central bankers around the | ||
| Precious Metals Rise on UK Inflation Fears Posted: 14 Feb 2011 10:00 AM PST Silver and particularly gold rose sharply on the release of the higher than expected UK inflation data. It showed that UK inflation quickened to 26 month highs at 4.0%. | ||
| Produce, Spend, Build – Rinse & Repeat Posted: 14 Feb 2011 10:00 AM PST A smaller than anticipated gain in US retail sales activity dragged the US dollar marginally lower on the trade-weighted index this morning, and, coupled with rising inflation news out of the UK and China motivated further speculative activity in gold. | ||
| Barack Obama's Budget For 2012: A Complete And Total Joke Posted: 14 Feb 2011 09:41 AM PST 
Oh, but Obama is really trying to sell it hard. When Obama unveiled this new $3.7 trillion budget for 2012 at a middle school in Baltimore, he insisted that his plan will make it "so that every American is equipped to compete with any worker anywhere in the world." Well, that is a nice sound bite, but as I have written about previously, unless Barack Obama suddenly finds a way to stop multinational corporations from paying slave labor wages to their workers on the other side of the globe the job losses in America are going to continue. But that is a topic for another day. Getting back to the 2012 budget, Obama is proposing to cut more than a trillion dollars from federal budget deficits over the next ten years. That sounds really good until you figure out that means that the cuts only amount to about $100 billion a year. Considering the fact that Obama's budget is projecting that we will have a $1.6 trillion budget deficit this year alone, that really is not a whole heck of a lot to be cutting. The truth is that Barack Obama should be proposing spending cuts that are at least ten times as large if he was actually serious about addressing our budget woes. But at least Obama is not proposing an increase in spending. Oh wait, he actually is. In fact, under Obama's budget, U.S. government spending will soar from 3.8 trillion dollars this year to 5.6 trillion dollars in 2021. But the mainstream media is solely focusing on the budget cuts that Obama is proposing. Apparently they are trying to cast him as some sort of "fiscal conservative". Try not to laugh. But the modest cuts that Obama is proposing are at least some place to start. Under Obama's budget, approximately half of all government agencies will have their funding decreased from 2010 levels. In fact, approximately 33 billion dollars would be saved by scaling back or shutting down 200 federal programs. Of course Obama's fellow Democrats in Congress will never go along with many of these cuts, but at least it is something. However, this is where most in the mainstream media stop their analysis. They don't take a closer look at the numbers in Obama's budget. They don't question the wacky economic growth assumptions. They don't question the bizarre government income projections. But even with the Obama administration's crooked numbers, the federal deficit still never drops below 600 billion dollars over the next decade and a total of 7.2 trillion dollars is still added to the national debt over the next decade. If economic growth ends up being much lower, or if the U.S. government is not able to get twice as much money out of the American people by the end of the decade then the projections would look much, much different. So where does the Obama administration assume all of that extra money for the government is going to come from? Oh, from raising taxes of course. The Obama budget assumes that there will be significant tax increases starting in the year 2013. A recent article on CNBC summarized some of the tax increases that the Obama budget calls for....
There are many liberals (such as my friend Gary) that would love to see these tax increases go into effect, but Obama knows that there is no chance that they will ever see the light of day unless the Democrats retake the House of Representatives. But most of Obama's budget for 2012 is based on things that simply never even have a chance of happening. The reality is that Obama's budget for 2012 is a great work of fiction. Meanwhile, the U.S. government continues to accumulate staggering amounts of debt. In fact, Obama's budget admits that we will witness the biggest one year debt increase in history this year. In 2011, the gross federal debt with surpass 15 trillion dollars. In fact, it is being projected by some analysts that this will be the year when the debt finally becomes larger than the size of the entire U.S. economy. Ouch. But Obama insists that he is taking this debt problem very seriously. Obama insists that he is committed to making "deep" cuts. In fact, as he announced this new budget Obama stated that these budget cuts hit "many programs whose mission I care deeply about, but meeting our fiscal targets while investing in our future demands no less." Do any of you actually believe him? Not that the Obama administration is in an easy position. The truth is that the U.S. government (both Republicans and Democrats) have been horribly irresponsible with our money for decades. The 14 trillion dollar national debt problem that we have now did not develop overnight. Neither will it be solved overnight. But Obama is not even trying to address the tough issues such as Social Security and Medicare. The truth is that the federal debt problem cannot be solved without addressing our out of control entitlement programs. So why didn't Obama address them in his budget? Well, the reality is that Obama is not stupid. Social Security and Medicare are political sacred cows. Obama is not going to do anything at this point that would cost him millions of votes in 2012. So Barack Obama ignored most of the $4 trillion in budget cuts recommended by the White House-appointed deficit commission. It kind of makes you wonder why Obama ever appointed a "deficit commission" in the first place. One area that Obama does attempt to cut in his new budget is military spending. Obama's budget for 2012 sets military spending at 5 percent below what the Pentagon requested for 2011. In fact, Obama's defense budget would slash military spending by $78 billion over the next five years. His budget also assumes that we are not going to get involved in any more wars, which is not necessarily a safe assumption. So will these military spending cuts actually get through Congress? Not likely. The Republicans control the House of Representatives, and they are not likely to take too kindly to large cuts to the defense budget. In fact, the truth is that not too many of Barack Obama's spending cuts are likely to survive in Congress. As a recent article on CNN explained, Barack Obama's budget plan must navigate a vast array of congressional committees in the coming months and by the time it emerges it is likely to be radically changed from its current form....
As our Congress critters have demonstrated over and over and over, they love to spend our money on some of the most wasteful things imaginable. For example, a total of $3 million has already been granted to researchers at the University of California at Irvine so that they can play video games such as World of Warcraft. Something seems to happen to people who get elected to Congress. Almost all of them seem to develop an addiction to spending our hard-earned money. Let us hope that something changes in that regard, because right now government debt is completely and totally out of control. In fact, the U.S. national debt is currently increasing by approximately 4 billion dollars every single day. In the end, if something is not done about all this debt it will destroy the entire U.S. financial system. But our politicians just keep putting it off and putting it off. Eventually we will reap what we have sown. Debt is a very cruel master, and nobody can run from it forever - not even the U.S. government. | ||
| Why Increasing Bank Credit Can Only End in Catastrophe Posted: 14 Feb 2011 09:00 AM PST I have to admit that I was stunned that Fed Credit (the magical fairy dust from which money appears out of thin air) went up last week by a huge $19 billion, which the Fed itself used to buy $18.4 billion in government debt. In one week! In One Freaking Week (OFW)!! As Eric Fry, Editorial Director of The Daily Reckoning, puts it, "The effect of this bizarre transaction is that one branch of the government issues debt securities, while another branch of the government purchases those securities"!!! You can tell by my OFW acronym and extreme punctuation that I am still upset about all this new money and all this new debt, even though it is exactly as per the plan laid out by the Federal Reserve, which causes people to ask, "What in the hell is wrong with you, you Big Mogambo Idiot (BMI)? The Fed said that they were going to do it, and now they are doing it! So, why all the OFW crap and all the exclamation points making you look like some kind of raving idiot?" Now, here is obviously a case where somebody needs to have their face slapped, hard and repeatedly, until they get some smarts that all this money is going to cause inflation in prices, in this case food, which is the cause of (at last count) riots in at least 6 countries so far. I can sort of sympathize with the rioters, in that the incessant crying of starving children really gets on your nerves after a Very Short While (VSW), and perhaps the parents think that the relative peace and quiet of a street riot would be a welcome relief! Or at least drown out the kid's noise! Hahaha! No, seriously, while I can sympathize with people not being able to afford food, I can still laugh at them – hahaha! – with Undisguised Mogambo Scorn (UMS) because they ignore the root of their problem: Their central bank has been creating too much money, which causes the inflation in prices! Yet, as far as I know without actually trying to find out, their central banks are unharmed, instead of being burnt to the ground, and the central bankers cowering within are not being arrested and thrown into some kind of horrible medieval dungeon, all the assets of all the bankers confiscated and sold, and the money used to buy gold to put the country back on a gold standard which would eliminate inflation. But they don't! Morons! What a bunch of morons! You can see why I laugh! Hahaha! Closer to home, last week's stupendous increase in Fed Credit, to create new money so that the federal government can borrow that money and deficit-spend it, seems to be, finally, showing up in the St. Louis Fed's estimate of the monetary base. The base had more than doubled, almost overnight, from $830 billion in September of 2008 to $1,700 billion three months later, finally peaking in November of 2009 at just over $2 trillion, whereupon it kind of meandered around at that level until turning down in the middle of 2010, finally "bottoming" in October 2010, for a total downturn of $50 billion from the $2 trillion peak 10 months earlier. Now, a lousy four months later, the monetary base has regained the entire $50 billion, and is sitting at $2.047 trillion, and rising, like Treasury Gross Public Debt is rising, which is (to use a Simpsons phrase), "rising like a rocket with a rocket up its butt." This is all because, as Ben Bernanke warned, not hiking the debt ceiling could put the US "into a position of defaulting on its debt and the implications of that, for our financial system, for our fiscal policy, for our economy, would be catastrophic." On this point he is entirely correct, as loathe as I am to agree with Ben Bernanke about anything, but catastrophe is, sadly, the predictable "end game" of the Fed's insanity of constantly increasing credit in the banks over the decades, and letting the banks engage in insane levels of fractional-reserve banking to turn this new credit into money where, at its height, reserves never increased so much as A Freaking Dime (AFD), even as loans and leases increased more and more and more! Not AFD!! In fact, Required Reserves in the banks is still a miniscule $70 billion, which is the banks' "cushion" against the risk in holding more than $7 trillion in loans and leases, which mathematically comes to a measly 1%! Hahaha! One lousy percent! Some fabulous "reserves" alright! Hahaha! The last 4,500 years of history have shown pretty conclusively ("100% of the time! Can't fail! Never misses!") that it's going to be a Big Ugly Mess (BUM) for an economy whose idiotic people let the damned government let the damned bankers create so damned much fiat money. And, by extension, it is going to be a Big Ugly Mess (BUM) for the whole fiat-money scumbag WORLD when the biggest fiat-money scumbag economy in the world, upon whom they all depend, goes belly-up, which it will because it must, which is why it has always happened Just This Way (JTW) for the last 4,500 years. And while it may be a BUM for most people, it won't be for everybody. And who are these lucky people who will prosper when all others fail? Those fortunate few who had enough sense to own gold, silver and oil, and thus for whom things will be just peachy! Whee! This investing stuff is easy! The Mogambo Guru Why Increasing Bank Credit Can Only End in Catastrophe originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation. | ||
| Palladium steals the day...AGAIN. Posted: 14 Feb 2011 08:38 AM PST | ||
| Gold Seeker Closing Report: Gold Rises and Silver Surges 1.6% Posted: 14 Feb 2011 07:17 AM PST Gold fell $4.15 to $1355.65 in London, but it then climbed to as high as $1366.74 by late morning in New York and closed with a gain of 0.34%. Silver fell $0.17 to $29.88 in Asia before it rose to as high as $30.715 in New York and then fell back off a bit in the last few hours of trade, but it still ended with a gain of 1.6%. | ||
| Silver Bullion COMEX Stocks at 4-Year Low as Backwardation Deepens Posted: 14 Feb 2011 05:23 AM PST | ||
| Silver Shortage Blamed on "Miner Hedging" as Price Rises with Gold, Global Inflation Data Eyed Posted: 14 Feb 2011 04:48 AM PST | ||
| Posted: 14 Feb 2011 04:30 AM PST All the people who cannot listen or won't listen can see why the CNBC crowd were just laughing at those who couldn't see the demand/supply equation with copper and of course silver.http://www.bloomberg.com/news/2011-0...to-record.html They spent 10 mins on copper and 5 on silver. Maybe arrogant Zed and his crowd who he said I pissed off will finally admit they have NO clue with all his technical bullshit. I just increased my net worth by 5 grand in 3 hours using my liberal arts, road wise ability. I'll let you guys fight out the Comex, and all that bullshit while I just keep on doubling my money. Good luck with your property tax payments Zed. I learned my lesson and rent at an exclusive country club:) |
Step back and consider the global picture for a moment.
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