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• Goldrunner: Martin Armstrong vs. His Own Model
• U.S. Dollar to Rise into May 2011 and then…. and then?
• Gold "Dragged Higher" by Surging Silver as Dollar Rises, UK Inflation-Forecast Jumps
• Parabolic Inflation and “Deficit Hysteria”
• How Much More Demand Can Silver Handle?
• Thieves steal U-haul with all man owns
• Accumulate Gold but Be Cautious on Silver
• Help Buying Silver????
• The Return to a 16:1 GSR? How to get there?
• SLV March Call Options on FIRE
• Silver and Opium
• Why Silver Sales Demand Excitement
• How America can regain the lead in nuclear power
• Real money SHOCKER: What the world would look like priced in gold
• Ten economic charts that will blow your mind
• Curb Your Enthusiasm
• China, Inflation & Gold
• Gold Sees First Major Outflow in Over a Year
• Soros Raises SPDR Gold Holding 0.5% in Fourth Quarter
• Richard Russell - Possibility of Gold Breaking to New Highs
• Soros Raises Gold Holding 0.5% in Fourth Quarter
• Your Pension-Pot Warranty
• Why do we hoard gold?
• Sabotage
• Healthy Correction For Gold Miners And Precious Metals In Secular Bull Market
• Gold Moves East
• So Much Stimulus. So Little to Show for It.
• Lessons From Egypt For The American People
• What Is Wrong With The U.S. Economy? Here Are 10 Economic Charts That Will Blow Your Mind
• Silver Ready for Stratosphere, After CME Rate Hike
• Markets at a Crossroad – What Now?
• Feb 15, 1823 : The Discovery of Gold in Australia
• The World Priced in Gold
• John Paulson's Portfolio As Of 12.31.10
• The Golden Tripod & The Crisis
• This past week in gold
• Gold Seeker Closing Report: Gold and Silver Rise Again
• Timing Gold – Bond Yields’ Ratio Doesn’t Matter Much, But Gold:Bonds Ratio Does
• Will Silver Do Better Than Gold?

Goldrunner: Martin Armstrong vs. His Own Model Posted: 16 Feb 2011 06:46 AM PST Martin Armstrong has stated his expectations for Gold and the PM Sector to fall into the June period and to continue to correct into October based on his Economic Confidence Model. The fractal work that I do off of the 70's Precious Metals Bull market and other areas of the charts does not agree with his expectations. Thus, in this writing I take a look at how the Precious Metals Sector has performed in reference to Mr. Armstrong's Model "bottoms" themselves. Words: 1698

U.S. Dollar to Rise into May 2011 and then…. and then? Posted: 16 Feb 2011 06:46 AM PST Cycles repeat - just like clockwork - and, in spite of the on-going bull-bear debate, price eventually aligns to the dominate cycle. That being the case I am optimistic that the U.S. dollar is in for a short-term bullish run. Let me explain. Words: 808

Gold "Dragged Higher" by Surging Silver as Dollar Rises, UK Inflation-Forecast Jumps Posted: 16 Feb 2011 06:31 AM PST

Parabolic Inflation and “Deficit Hysteria” Posted: 16 Feb 2011 06:17 AM PST One of the disturbing things about trying to understand the US economy is the sense that official statistics don't match personal experience. They seem to be lying to us, in other words, and more blatantly all the time; hence the popularity of honest analysts like John Williams at ShadowStats.com. Here's another interesting alternative source, courtesy of Phil's Stock World: the MIT Billion Price Project, which is an attempt to bring modern data mining to bear on consumer prices. As MIT explains its methodology: Data collection: our data are collected every day from online retailers using a software that scans the underlying code in public webpages and stores the relevant price information in a database. The resulting dataset contains daily prices on the full array of products sold by these retailers. Our data include information on product descriptions, package sizes, brands, special characteristics (e.g. "organic"), and whether the item is on sale or price control. The BPP index tracked the US CPI pretty closely at first. But lately the two lines have diverged, with the CPI staying well-behaved and the BPP spiking. Which index is a better expression of reality? Time will tell, but based on recent experience it's easy to believe that MIT is making the more honest effort to get it right. Now for something different and more fun. The debate over the almost universally pathetic attempts to cut the federal deficit is generating heated words from all sides of the spectrum. Here's an opinion from the depths of "don't worry, keep spending" by MarketWatch's Darrell Delamaide that hardly needs a response. It's pretty much perfect as-is. Deficit hysteria grips Washington WASHINGTON (MarketWatch) – Deficit hysteria is rising to fever pitch in Washington as the political jockeying over the budget begins in earnest. "Fiscal nightmare," "buried under a mountain of debt," "awash in red ink" – these are some of the colorful phrases being bandied about by politicians, pundits and even journalists ostensibly reporting facts. Most of them are winging it on a single undergraduate course in economics, if that, but they know they're right because everybody agrees. Yet, if you look out the window, you don't see any red ink or mountains of debt. The only nightmare is unemployment continuing near 10% and ongoing waves of foreclosures – neither of which is attributable to the federal deficit and neither of which will be fixed by budget cuts. President Barack Obama said that "just like every family in America," the government has to live within its means while investing in the future. Obama said that's what his budget accomplishes. There is no visible harm from current deficits. Yields on U.S. Treasurys are up a tick but still near historic lows. Core inflation in the U.S. is still so far below the 2% annual rate deemed desirable by the Federal Reserve that deflation continues to be more worrying. There is no crowding out of private borrowers in the debt markets. Just you wait, cry the deficit hawks, it will be a nightmare by 2016 or 2020 or 2050. Well, let's wait and see. If we put those 15 million people back to work and get the economy growing at a steady clip, tax revenues will rise and cheat all those bloodthirsty hawks of their fiscal Armageddon. Worried? Confused? Alarmed at the slow-motion train wreck in Washington? There is cause for alarm. There is the possibility that the government, held under the sway of misguided and obsolete economic theories and driven by a not-so-hidden corporate agenda, will make genuinely harmful cuts in both discretionary spending and entitlement programs – cuts that will cause real and needless misery to millions. The overwrought hysteria of the deficit hawks – one economist calls them deficit terrorists – has already sabotaged government stimulus that could have rebooted the economy much more quickly and alleviated unemployment to a greater extent. It's certainly useful to comb through the budget and reexamine programs for possible cuts. Military spending can certainly be cut back. Some recalibration of entitlements is also necessary. But the helter-skelter axing of programs to meet a target pulled out of thin air – what's so magic about $100 billion in spending cuts this year? – risks causing much unnecessary harm. Before you succumb to the deficit hysteria, think about the disconnect between the dire language and the observable facts. Be careful about false comparisons – such as the U.S. going the way of Greece. The U.S. is not Greece. The U.S. has full monetary sovereignty – that is, it has complete control over its own currency. Greece, as a member of the euro, does not, which is why it has constraints on its borrowing. When the U.S. was bound by the gold standard, it also faced constraints. Most of the thinking and language about budgets and deficits actually goes back to this time, when the U.S. genuinely had to "finance" its deficit. Since abandonment of the gold standard and the de facto adoption of a fiat currency, however, these constraints no longer apply. The U.S. is free to print as much money as it likes; the U.S. government is free to spend money without financing it. How crazy, you say. What about inflation? Inflation occurs when there is more demand than supply and this simply isn't going to happen when there is 8-10% unemployment. Treasury and the Fed have ample tools – selling debt securities and raising interest rates – to deal with inflation when it does threaten. Modern monetary theory – which is espoused by a growing number of economists and investment managers because it explains the observable facts better than the obsolete theories driving most of the public discussion – deals with the world as it is without a gold standard. A better comparison for the U.S. than Greece is Japan, which also enjoys full monetary sovereignty. Japan has a public debt approaching 200% of GDP. This compares to the U.S. at 60% in 2010 and on its way up. Deficit terrorists have decided arbitrarily that 60% is the maximum limit. They have been predicting the imminent collapse of Japan – for the past 20 years. And yet Japan continues to finance its deficit with rock-bottom interest rates. The federal government is also not comparable to a household. It does not have a checkbook to balance or a credit card to max out, even though our folksy politicians like to use these metaphors. It does not have to "live within its means" like a family or individual. Our grandchildren will never have to repay all that debt. No one will, ever. It will continue to grow as our economy grows. All this flies in the face of all the groupthink going on in Congress, in the press and on cable TV. So if you want to reject modern monetary theory as hogwash and cling to theories that worked a century ago, you're in good company. But think about it, look around you, and decide for yourself what best describes the world you live in.

How Much More Demand Can Silver Handle? Posted: 16 Feb 2011 05:48 AM PST The numbers for silver demand are starting to make some market-watchers nervous. The U.S. Mint sold over 6.4 million silver Eagles in January, more than any other month since the coin's introduction in 1986. China's net imports of silver quadrupled in 2010, to 122.6 million ounces, roughly 13.7% of global production. Meanwhile, mine production can't meet worldwide demand; the only way demand gets fulfilled is from scrap supply.

Thieves steal U-haul with all man owns Posted: 16 Feb 2011 04:42 AM PST http://www.komonews.com/news/local/116292914.html A man looking for a fresh start in the Seattle area lost everything he owns to thieves. . . . . . . . . .Inside the truck were all of Judson's belongings, including a collection of five handguns, five rifles and ammunition for those weapons. Also taken were his personal favorite -- 1,200 Australian silver coins worth $50,000 :(

Accumulate Gold but Be Cautious on Silver Posted: 16 Feb 2011 04:15 AM PST Why is Silver continuing to outperform Gold? The Silver/Gold ratio tends to lead or follow the stock market. Risk assets are outperforming. Silver is outperforming Gold as a risk asset. It is not outperforming for monetary reasons. That occurs when both Gold and Silver advance but Silver outperforms Gold. This is one of several reasons why bugs should be wary of Silver in the near-term.

Help Buying Silver???? Posted: 16 Feb 2011 03:33 AM PST I have a problem with which I really need some advice and help. My husband doesn't want me to buy silver because he believes we will never recoup our money. The what ifs: What if sh** does hit the fan economically and the stores are somewhat still open. Will they take silver or only cash that they know? What if we only have a depression and even though inflation hits, the dollar still remains intact? What if silver goes back down and we end up with a few hundreds of dollars worth of silver after paying thousands? He doesn't believe silver will ever work as a currency until it is too far gone to even matter and then we'll probably be lucky to just break even. Help? Anybody? Thanks in advance.

The Return to a 16:1 GSR? How to get there? Posted: 16 Feb 2011 02:02 AM PST I was just thinking this morning... what would it take to get back to the historical Gold Silver Ratio of 16:1? Obviously, for silver to get back to its historic level, it would have to increase in value when compared to gold. That is not to say that gold would not do the some value increase as far as dollars and cents are concerned; silver would have to OUTPERFORM gold in some sort of drastic manner in order to get there. I projected out for how we would "best and worst case scenario" get there. I used $30.60 and $1373.40 for start values. I assumed that Silver would increase by 2% daily while Gold would only increase by 1% daily (silver basically outperforming Gold by 2:1) until the ratio settled out at 16:1. It would take 106 days of the 2:1 performance in order to achieve the desired GSR in a Bull situation (I am assuming that if silver was to make the rise, then gold would "have" to follow and that silver would not SIGNIFICANTLY outperform gold on a daily basis). The results are staggering. Silver Gold GSR $239.96 $3,865.63 16.11 $244.76 $3,904.28 15.95 On the flipside, though, is the Bear's way of doing this... if you inverse the percentages dropped (drpping silver 1% per day and gold 2% per day), then it would take 103 days to reach the 16:1 level but the results would cause the following values: Silver Gold GSR $11.09 $178.50 16.10 $10.98 $174.93 15.93 I know that this is an odd way of looking at the math (because the prices rise and fall and would "correct" against each other - a static rise or fall is assumed) but this could really be a scenario given our economy and the failing of the FIAT monetary system. I don't think that the Bear scenario will play out but is a slight possibility. I think that the Bull scenario is more likely. Makes me sleep well knowing that I know of a lake that has some catfish that feed on silver and gold.

SLV March Call Options on FIRE Posted: 16 Feb 2011 01:51 AM PST Surge in SLV calls for March 19th expiry as compared to puts. I cant wait for mid March, its like Christmas, 3 months after Christmas!

Silver and Opium Posted: 16 Feb 2011 12:35 AM PST The opium wars do not belong to the glorious episodes of Western history. Rather, they were instances of shameful behavior the West still has not lived down. Mercantilist governments resented the perpetual drain of silver from West to East in payment for Oriental goods (tea, silk, porcelain) that were in high demand in the Occident, facing low demand in the Orient for Occidental goods. From the mid-17th century more than 9 billion Troy ounces or 290 thousand metric tons of silver was absorbed by China from European countries in exchange for Chinese goods.

Why Silver Sales Demand Excitement Posted: 16 Feb 2011 12:19 AM PST Being a Big Silver Buff (BSB) like I am, I note the ups and downs of silver. Lately, it's been mostly the downs. This strange downtrend in the silver price makes me look like an idiot after I so arrogantly Highly, Highly Recommended (HHR) that people buy silver, buy silver, buy silver all these years, and I'm pretty testy about it, too.

How America can regain the lead in nuclear power Posted: 16 Feb 2011 12:03 AM PST From Gold Stock Trades: Once there was a time when America bestrode the nuclear world as a colossus. Names such as Einstein, Oppenheimer, and Manhattan Project helped to win World War II and contributed to many peacetime applications as well. Over the ensuing decades, the United States allowed other nations to take the lead in the development of nuclear power. Recently I wrote an article depicting the French Leader Sarkozy celebrating the multibillion-dollar agreement with India to build a new generation of safe nuclear reactors for the next 25 years. We have become a nation asleep at the switch while the world is developing cheap, non-carbon electricity. Many countries, especially Asian nations, are building reactors with many proposed to come online in the future. France is the world leader, building facilities in England, Finland, China, Italy, and India among others. Even countries rich with oil such as Saudi Arabia and Iran have goals of building nuclear power generation. Doesn't that show the winds of change are blowing? Read full article... More on energy: This could be the No. 1 energy investment of 2011 This green energy has the potential to power the entire world Marc Faber: This asset could soar no matter what happens next

Real money SHOCKER: What the world would look like priced in gold Posted: 16 Feb 2011 12:01 AM PST From Resource Investor: Just what would the world look like if, as some economists, investors, and politicians now urge, gold really was money once again? Well, in a word, it would look cheap...ish. Cheaper, at least, than most other major asset classes were a decade ago. Long used (together with silver) as a means of exchange and unit of account, gold had already lost those functions by the time it ceased backing the world's currency system forty years ago this coming August. But gold retains the third function of money – as a store of value – now beating, now lagging the unbacked fiat money (i.e. created at will) which replaced it. Since 1971, gold's value has also... Read full article... More on gold: Why silver will beat gold now Gold guru Lundin: "The market is coiling like a spring" This country is becoming a "mecca" of junior gold mining

Ten economic charts that will blow your mind Posted: 15 Feb 2011 11:38 PM PST From The Economic Collapse: The 10 economic charts you are about to see are completely and totally shocking. If you know anyone that still does not believe the United States is in the midst of a long-term economic decline, just show them these charts. Sometimes you can quote economic statistics to people until you are blue in the face and it won't do any good, but when those same people see charts and pictures, suddenly it all sinks in. What is great about charts is that you can very easily demonstrate what has been happening to the economy over an extended period of time. As you examine the economic charts below, pay special attention to what has been happening to the U.S. economy over the last 30 or 40 years. The truth is that what is wrong with the U.S. economy is not a great mystery. All the economic problems we are experiencing now have taken decades to develop. Hopefully the charts in this article will help people realize just how nightmarish our economic problems have become, because until people start realizing how incredibly bad things have gotten, they will never be willing to accept the dramatic solutions that are necessary to fix our financial system... Read full article... More on the economy: Top Reagan advisor: How we created 21 million jobs... Why small business isn't hiring... and won't be anytime soon Shocking data show Obama's first two years were a disaster

Curb Your Enthusiasm Posted: 15 Feb 2011 11:00 PM PST I like these kind of headlines; I just don't believe them: Here we go: House GOP vows to tackle entitlements in new budget Here is a statement from the Speaker's Office that generated a bit of hope for those who believe a financial collapse can still be averted: WASHINGTON, DC (Feb 15)House Speaker John Boehner [...]

China, Inflation & Gold Posted: 15 Feb 2011 10:24 PM PST China, Inflation & Gold * by Darryl Robert Schoon * February 10, 2011 Ralph T. Foster in his invaluable book, Fiat Paper Money, the History and Evolution of Our Currency, writes that paper money made its first appearance in Szechwan, a remote province of China, early in the 11th century. Because of a shortage of copper coins, provincial officials began circulating iron coins; but the difference in value and weight between the two metals caused unexpected problems: Housewives needed one and one-half pounds of iron coins to buy one pound of salt. Paper was the answer. People began to deposit their iron money in money shops and exchanged deposit receipts to transact business. The money shops' deposit receipts then began circulating as money. But the money shops soon issued more deposit receipts than their supply of coins and by 1022, confidence had eroded in both the notes and the supporting iron money, and government authorities closed the private note shops. When the Chinese government intervened, the government quickly discovered the advantages of paper money— at least to the issuers. The Sung dynasty immediately banned the issuance of paper notes by private money shops and on January 12, 1024, the Sung court directed the imperial treasury to issue national paper money for general use. In the beginning, the imperial treasury backed its paper notes with cash coins equal to 29% of the paper money issued. Eventually, however, the Sung, like each succeeding dynasty, would print far more money than it actually possessed in backing. The consequent loss of confidence in paper money caused Chinese scholars to question the nature of money. Hu Zhiyu (1127-1295) concluded that only backing gave paper value and blamed the retreat from convertibility for the loss of public confidence. Paper money, the child, is dependent on precious metals, the mother. Inconvertible notes are therefore "orphans who lost their mother in childbirth." For the next 600 years, succeeding dynasties would each attempt to use the advantages of paper money and avoid its disadvantages, but all attempts ended in runaway inflation and dynastic collapse. By 1661 China finally learned its lesson and the new Qing dynasty outlawed paper money. Today, almost 1,000 years after paper money first appeared and 350 years after China banned its use, China is again issuing excessive amounts of paper money; and, once again, paper money's initial prosperity is about to give way to inflation and economic chaos. Southern Weekly, a Chinese language publication, recently noted: China has not only been the country that prints money at the fastest rate but also been the country with the largest money supply in the world in the past decade. China's M2, a broad measure of money supply, was up 19.46% at the end of November from a year earlier. This compares with 3.3% and 2.5% of annual M2 growth in the United States and Japan, respectively, over the same period. China's money supply, M2-to-GDP ratio over the past decade is the highest in the world. The nation with the longest history of excessive money printing and consequent inflation has clearly forgotten its past. The past, however, has not forgotten China. Asian nations, China and India in particular, have a long history with gold. When chaos takes the form of inflation, gold is the default hedge; and, today, inflation is on the rise. China raised interest rates for the third time since mid-October ahead of a report forecast to show inflation accelerated to the fastest pace in 30 months. This has profound implications for the price of gold. As inflation continues to increase, the buying of physical gold by the Chinese will send the price of gold skyrocketing. In fact, it has already begun. It's not hard to understand the growing Chinese enthusiasm for gold. Officially, China's inflation rate was 4.6% in December, but many believe the actual inflation rate is considerably higher. But Chinese savers earn a paltry interest rate of 2.75% on one-year deposits, which means they face negative real interest rates. Faced with these dismal returns, Chinese households and businesses have been pouring money into physical assets such as food, real estate and commodities as a hedge against inflation. Chinese authorities are now trying to quell property market speculation by making it more difficult for buyers to get bank finance for their second and third investment properties, and have begun experimenting with property taxes in some cities. This has caused Chinese investors to turn to gold. The response to the 2008 global collapse set in motion an even greater danger— runaway inflation. In 2009 world governments attempted to offset the global collapse in demand with historic levels of liquidity. The excessive printing of money has now led to higher prices. Prices, especially food prices are rising rapidly. And while some may be ecstatic by the S&P's modest rise YTD, it is nothing compared to what virtually every single agricultural product has done in the first month of 2011. To wit: corn spot up 7.76%, wheat up 5.63%, rice up 10.08%, hogs up 10.16%, sugar up 5.64%, orange juice up 3.33%, and cotton up 17.08%. That's in one month! Rapidly rising food prices have already contributed to governments falling in Tunisia and Egypt. Other governments, well aware of the risk that inflationary food prices pose to their continued rule, are now stockpiling food to prevent further protests. This buying will only drive the cost of food even higher. Even the hardened paper boys on Wall Street are aware of inflation's impact on the price of gold. The meteoric rise of gold in the late 1970s was caused by rapidly rising prices. In the last decade, however, gold began moving steadily higher as did all commodities in a disinflationary atmosphere. That, however, is about to change. With gold already moving higher, the increasing inflationary impetus will send the price of gold far beyond its present price. Gold's spectacular ascent in the 1970s is now about to be dwarfed. History is the context within which our present circumstances present themselves. Of late, change has been so rapid that many believe the past is merely that which preceded the present. They are wrong. History is about to repeat itself, albeit in a new iteration. Paper money's journey to the west and back again is about to reach its fatal climax. Paper money's ten-century drama is almost over; and while a new and better era will replace it, the collapse of the present era will be unprecedented in magnitude. Darryl Robert Schoon, the author of How to Survive the Crisis and Prosper in the Process (2007), writes articles on economic issues. http://prudentbear.com/index.php/gue...w?art_id=10504

Gold Sees First Major Outflow in Over a Year Posted: 15 Feb 2011 08:28 PM PST Link:  Gold Sees First Major Outflow in Over a Year Image:  My first gold-related story today is a short piece imbedded in yesterday's Casey's Daily Dispatch.  If you scroll down a bit, you'll come to a story headlined "Gold Sees First Major Outflow in Over a Year".  It's a handful of short paragraphs and a couple of charts...all of which are worth your time...and the link is here.

Soros Raises SPDR Gold Holding 0.5% in Fourth Quarter Posted: 15 Feb 2011 08:28 PM PST Link:  Soros Raises SPDR Gold Holding 0.5% in Fourth Quarter Image:  Reader Scott Pluschau was kind enough to share the following Bloomberg item with us.  It bears the headline "Soros Raises SPDR Gold Holding 0.5% in Fourth Quarter".  It looks like these guys have been buying up gold and silver company shares left and right..and there's a list of them in this story.  This is worth the read...and the link is here.

Richard Russell - Possibility of Gold Breaking to New Highs Posted: 15 Feb 2011 08:28 PM PST Link:  Richard Russell - Possibility of Gold Breaking to New Highs Image:  Eric King over at King World News sent me a Richard Russell blog in the wee hours of yesterday morning...but because my Tuesday column was already overflowing with stories...I passed on it until now.  This one is titled "Richard Russell - Possibility of Gold Breaking to New Highs"...and the link is here.

Soros Raises Gold Holding 0.5% in Fourth Quarter Posted: 15 Feb 2011 08:28 PM PST Possibility of Gold Breaking to New Highs: Richard Russell. U.S. Mint's gold eagle sales continue to surge.  Interviews with Eric Sprott and Hugo Salinas Price...and much more. ¤ Yesterday in Gold and Silver The pop in the gold price just before the London open yesterday morning was pretty much all the excitement there was on Tuesday.  Gold made a brief rally attempt at the Comex open at 8:20 a.m. Eastern...but that was pretty much it for the day.  Gold's high price tick was $1,377.90 spot which occurred 8:30 a.m. in New York. The silver spiked up a bit the same time as gold...and from there, silver worked itself slowly higher.  The high tick was shortly before lunch in London...which was close to the London silver fix.  But, from that high, the silver price came under selling pressure after every rally attempt...and silver finished up less than 20 cents from its Monday close. The dollar swung within a 25 basis point range, both up and down, from its open on Tuesday morning in the Far East...and finished down 10 basis points on the day.  For the second day running, there was no co-relation between the precious metals and the world's reserve currency that I could see.    The gold stocks gapped higher once again...and stayed up for the rest of the New York trading session...with the HUI finishing up 1.86% on the day.  Most silver stocks had a good showing as well.    The CME's Daily Delivery Report showed that 62 gold along with only 1 silver contract were posted for delivery tomorrow.  It was all 'da boyz' in gold...and the link to the action is here. The GLD ETF showed another decline.  This time it was 48,780 ounces.  There were no reported changes in SLV. Over at Switzerland's Zürcher Kantonalbank for the week that was, they reported a 32,339 troy ounce decline in their gold ETF, but over at their silver ETF, they increased their holdings by 296,173 ounces.  As always, I thank reader Carl Loeb for those numbers.  The U.S. Mint reported that they sold another 13,500 ounces of gold eagles yesterday...but nothing in silver eagles.  Month-to-date...55,500 ounces of gold eagles have been sold...along with 1,705,500 silver eagles. There was almost no activity over at the Comex-approved depositories on Monday.  They received a smallish 74,519 ounces of silver. 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Please visit our website and contact us for further information. ¤ Critical Reads Subscribe UK Inflation Surges to 4%, Highest Since Nov. 2008 There were a couple of inflation-related stories out of the U.K. yesterday.  The first is a cnbc.com piece that was sent to me by reader Scott Pluschau early on Tuesday morning.  The headline there reads "UK Inflation Surges to 4%, Highest Since Nov. 2008".  British consumer price inflation surged to double the Bank of England's target in January, official data showed on Tuesday, raising pressure on the central bank to look seriously at increasing interest rates.  The link is here. View full GSD edition Interest rates to rise, Mervyn King hints Then late yesterday evening, Roy Stephens sent me a story on the U.K.'s inflation problem that was published late last night in The Telegraph.  The headline reads "Interest rates to rise, Mervyn King hints".  Mervyn King, the Bank of England's governor, has given his clearest signal yet that rates could hit 1.25 per cent by the year end, as he warned that inflation could cause serious problems for families over the next three years.  I'll be amazed if he raises rates by very much in the light of the other serious problems that the British economy has.  The link is here. View full GSD edition China Inflation Data Today Cuts Food Weighting, Newspaper Says Today's next inflation-related story is courtesy of yesterday's King Report.  It's a Bloomberg offering that's headlined "China Inflation Data Today Cuts Food Weighting, Newspaper Says".  It looks like China has at least one U.S. import...and that's ability to fix its inflation numbers so that everything is not as bad as it seems.  Without doubt, they learned all about it from the BLS...and the link to the story is here. View full GSD edition From Prison, Madoff Says Banks 'Had to Know' of Fraud' Reader Phil Barlett provides the next item, which is from yesterday's edition of The New York Times.  It's an interview with Bernie Madoff that's headlined "From Prison, Madoff Says Banks 'Had to Know' of Fraud".  It's a rather longish story, but I found it to be a fascinating read...and the link is here. View full GSD edition Wall Street's Dead End The next piece is also from The New York Times...and is another story that I stole from yesterday's King Report.  The headline of this op-ed piece reads "Wall Street's Dead End". The author says..."In truth, the stock market is becoming increasingly irrelevant — a trend that threatens the core principles of American capitalism." "These days a healthy stock market doesn't mean a healthy economy, as a glance at the high unemployment rate or the low labor-market participation rate will show. The Tea Party is right about one thing: What's good for Wall Street isn't necessarily good for Main Street. And the Germans aren't buying the New York Stock Exchange for its commoditized, highly competitive and ultra-low-margin stock business, but rather for its lucrative derivatives operations." The link to the story is here. View full GSD edition Iranian police fire tear gas into protesters as unrest spreads across Middle East Today's next reading material is from The Telegraph and is courtesy of Roy Stephens once again.  The headline here reads "Iranian police fire tear gas into protesters as unrest spreads across Middle East".  Thousands of people marching illegally through Iran were targeted by police firing tear gas on Monday as the wave of Middle East revolution continued to spread beyond Egypt and Tunisia.  The link to the story is here. View full GSD edition Gold Sees First Major Outflow in Over a Year My first gold-related story today is a short piece imbedded in yesterday's Casey's Daily Dispatch.  If you scroll down a bit, you'll come to a story headlined "Gold Sees First Major Outflow in Over a Year".  It's a handful of short paragraphs and a couple of charts...all of which are worth your time...and the link is here. View full GSD edition Your Pension-Pot Warranty The next item that's also worth your time is this piece from Amsterdam reader Ronald Langereis.  Last week I ran a story about a Dutch pension fund that is being forced to sell part of its gold position.  The appeal against the Dutch National Bank, that's being launched by the pension fund, is still pending...so it all may come to naught.  But here's a story about it from Adrian Ash over at the bullionvault.com.  It's headlined "Your Pension-Pot Warranty"...and it's worth running through...and the link is here. View full GSD edition Soros Raises SPDR Gold Holding 0.5% in Fourth Quarter Reader Scott Pluschau was kind enough to share the following Bloomberg item with us.  It bears the headline "Soros Raises SPDR Gold Holding 0.5% in Fourth Quarter".  It looks like these guys have been buying up gold and silver company shares left and right..and there's a list of them in this story.  This is worth the read...and the link is here. View full GSD edition Richard Russell - Possibility of Gold Breaking to New Highs Eric King over at King World News sent me a Richard Russell blog in the wee hours of yesterday morning...but because my Tuesday column was already overflowing with stories...I passed on it until now.  This one is tit

Your Pension-Pot Warranty Posted: 15 Feb 2011 08:28 PM PST Link:  Your Pension-Pot Warranty Image:  The next item that's also worth your time is this piece from Amsterdam reader Ronald Langereis.  Last week I ran a story about a Dutch pension fund that is being forced to sell part of its gold position.  The appeal against the Dutch National Bank, that's being launched by the pension fund, is still pending...so it all may come to naught.  But here's a story about it from Adrian Ash over at the bullionvault.com.  It's headlined "Your Pension-Pot Warranty"...and it's worth running through...and the link is read more

Why do we hoard gold? Posted: 15 Feb 2011 07:30 PM PST

Sabotage Posted: 15 Feb 2011 05:45 PM PST Mercenary Links Roundup for Tuesday, Feb 15th (after the jump). 02-15 Tuesday The sabotaging of Iran Crop Surge Lifts Farmland Prices – WSJ.com World Bank: Food prices at "dangerous levels" – Yahoo! News Rains May be `Too Late' for China's Wheat Areas, Forecaster Says Manufacturers Get Squeezed as Prices Rise for Precious Metals NYSE Euronext, Deutsche Börse Announce Merger – WSJ.com Exxon Struggles to Find Oil – WSJ.com Russia Embraces Offshore Arctic Drilling – NYTimes.com Ecuadoreans Plan Spasm of Lawsuits Against Chevron Soaking Up the Sun to Squeeze Energy Use to Zero China Reports Mixed Inflation News – WSJ.com China Buying North Korean Iron Best Birthday Gift for Kim Price pressures in China: Inflation revisionism | The Economist Hang Lung Makes $5 Billion China Bet to Dodge Rivals – Bloomberg Kyle Bass' Latest Must Read Letter: "The Cognitive Dissonance Of It All" Merrill – Money Manager Confidence In Stocks At All Time Record High Fed dictator Bernanke needs to be toppled Brazil Finance Chief Renews Attack on Fed Fed's Lacker Warns More Easing Would Lead to Inflation Great Inflation Debate: Big Week for Inflationistas Dim view of housing market weighs on economy Banks Demand Bigger Down Payments – WSJ.com Option ARM Time Bomb Blows Early, Easing Damage to U.S. Housing Population Adjusted Retail Sales and the "Real" Retail Sales Depression BHP Goes on $80 Billion Expansion Spree BHP Billiton Profit Rises – WSJ.com In Prison Interview, Madoff Says Banks 'Had to Know' "Crazy Eddie" Fraudster Sam Antar to return to crime Italy's Berlusconi indicted in prostitution probe Grand Jury Investigates Karzai Brother – WSJ.com Banks Make Loans Straight to Public Borrowers – WSJ.com JPMorgan CEO: I'm staying put, and bank is expanding | Reuters What is the secret to Germany's economic success? Mervyn King on the defensive as inflation hits double the target Argentina Holds Confiscated U.S. Air Force Cargo – WSJ.com Dell blows past targets, but doubt persists | Reuters Technology News: Dell Profit Lifted by Corporate Demand – WSJ.com Dell Profit Beats Estimates as Businesses Replace Aging PCs; Shares Climb TPG, Gores Said to Compete to Acquire Stake in Nokia Siemens Networks Peltz bids for Family Dollar, shares soar | Reuters David Tepper Betting On Airlines – Insider Monkey Egypt's Autocrats Exploited Internet's Weaknesses Mubarak falls into coma after final speech: report Bahrain Opposition Bloc Defects as Protests Mount Tunisians vote with their feet, flee the country Yemenis trying to oust leader protest for 5th day CBS News' Lara Logan Assaulted During Egypt Protests Cashing Out Start-Ups Gets More Complicated – WSJ.com Texas AG Discloses Details of Google Antitrust Review – WSJ.com Goldman to Shut Global Macro Trading Desk – WSJ.com The $100 Billion Foreign Currency King – SmartMoney.com SAC Capital's Cohen Opens Up – NYTimes.com Being sober is boring: Charlie Sheen Computer crushes the competition on `Jeopardy!' Colombian seizes 100-foot drug sub that can hold 8 tons of cocaine Conan 2.0 – Fortune Tech ~ ~

Healthy Correction For Gold Miners And Precious Metals In Secular Bull Market Posted: 15 Feb 2011 05:00 PM PST

Gold Moves East Posted: 15 Feb 2011 12:25 PM PST The gold price kicked off this year with a fall. It dropped from $1422 / oz, down to a low of $1318 / oz by late January. This was a fall of just 7.3%, but still this gave all the gold bears something to rant about for a few weeks: 'It's the end of the gold bull market', 'I told you it was in a bubble', and so on. We've heard it all before, and we can be sure to hear it all again. But the fall they were all getting so excited about was really just another tiny dip on the way up. Take a look at the top right hand side of the two-year gold chart below. That little pull-back was what all the fuss was about..... Gold price continues its steady march upwards Source: Goldprice.com More to the point, you can see that the gold price has already bounced since then! It is on its way up already, climbing 4% in the last few weeks. It didn't take long. Media reports also focused on the amount of gold being withdrawn from the gold ETF (GOLD). This is the world's largest gold exchange traded fund (ETF), and apparently holds around 40 million ounces of gold for investors. But when these investors cashed in on a few million ounces of gold last month, the media were citing it as evidence of the coming end of the gold market's epic run. But again, take a step back. This few million ounces was but a fraction of the amount of gold on their books. And moreover, this drop is no worse than ones we have seen in the last few years. Recent withdrawals from the GOLD ETF barely even register in the big picture Source: Credit Suisse Most reporters would have you believe that the GOLD ETF is the only part of the gold market that you need to look at. But it is just a small part of the puzzle. CHINA is soon to be the world's largest gold market. With four gold recommendations in Diggers and Drillers (which are up 85% on average), it is what's been happening in China's gold market that makes me sleep well at night. This has always been the main reason I am bullish on gold: the potential demand from the hundreds of millions of newly wealthy, Chinese middle classes. Not to mention the fact that the Chinese government are doing all they can to promote gold ownership. With a long cultural history of personal gold ownership, this is not a hard sell. Gold demand in China has now gone ballistic. It imported 6.7 million ounces in just the first ten months of last year! Compare that to 1.4 million ounces in the full twelve months of 2009. It's not just gold either. Last year China imported 120 million ounces of silver. The year before that it was just 30 million ounces of silver. A 300% increase! It's good to know this as another two of the Diggers and Drillers tips are silver plays. These are up 42% on average, with the most recent one just getting going now. (You can get my latest research, and take a test drive of my service by clicking here ) Last week I managed to get my hands on some current data for Shanghai gold trading volumes. This is a market that has pretty much started from scratch just a few years ago, but is already now going at full tilt. It's hungrily vacuuming up any gold that US investors are silly enough to liberate. Shanghai Gold Exchange volumes climbing last six years Source: ANZ commodity research There are many days where 30million ounces have changed hands, and the 12 month rolling average is now closing in on 20 million ounces daily. This is one busy market. So with this kind of growing demand from China, it really is hard to see the gold price falling very far, for very long, in the foreseeable future! The fact is that for all the media coverage of gold, only a fraction of global investment assets are tied up in gold and gold stocks. It's just a fraction-of-a-fraction of the investible universe. The thin bar on the bottom right of the chart below is what we are talking about. Gold is still a small fish in a big pond, for now anyway... Source: Barrick Maybe this is the real reason why so few commentators understand the gold market. Because so few are genuinely involved with it! There are many willing to venture an opinion, but few who really know the gold market. Check out Sprott Asset Management's commentary to hear it from some of the best. The good news is that until gold becomes main-stream, there is still a huge opportunity there. When the media start saying gold is good, that's when I'll be thinking about selling out! For the foreseeable future though, in the words of another one of the world's best gold commentators Marc Faber 'The risk is really not to own any precious metals at all'. Regards, Dr.Alex Cowie for Money Morning Australia Similar Posts: Silver Story A Gold Standard, Without Gold How Much is Too Much for Gold-in-the-Ground? Gold and Silver Demand Unprecedented Silver Stats That Will Make You Salivate

So Much Stimulus. So Little to Show for It. Posted: 15 Feb 2011 10:50 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. We promised more thoughts on refuges, hideaways, and family strongholds... ...that will have to wait until we have more time to think about it. Stay tuned. *** Uh oh...people are wising up... The IMF has called for a close look at the alternatives to a dollar-centered world financial system. CNN MONEY has the story: The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world's reserve currency. The IMF said Special Drawing Rights, or SDRs, could help stabilize the global financial system. SDRs represent potential claims on the currencies of IMF members. They were created by the IMF in 1969 and can be converted into whatever currency a borrower requires at exchange rates based on a weighted basket of international currencies. The IMF typically lends countries funds denominated in SDRs While they are not a tangible currency, some economists argue that SDRs could be used as a less volatile alternative to the US dollar. Dominique Strauss-Kahn, managing director of the IMF, acknowledged there are some "technical hurdles" involved with SDRs, but he believes they could help correct global imbalances and shore up the global financial system. "Over time, there may also be a role for the SDR to contribute to a more stable international monetary system," he said. The goal is to have a reserve asset for central banks that better reflects the global economy since the dollar is vulnerable to swings in the domestic economy and changes in US policy. Regards, Bill Bonner for The Daily Reckoning Australia Similar Posts: US Dollar As Reserve Currency Not Working Very Well US Dollar Declining as China's Currency Rises Government Debt The Greatness of a Depression is Commensurate to the Government's Efforts to Prevent It Shouldn't Do It; Couldn't Do It Anyway

Lessons From Egypt For The American People Posted: 15 Feb 2011 10:50 AM PST "Cairo, US Blindsided by Revolt" was The Wall Street Journal's headline on its analysis of what led up to the Egyptian crisis. "We were caught by surprise." Israeli Finance Minister Yval Steinitz told the same newspaper in a separate interview. As I reflected on the demonstrations in Egypt and followed the news of the events that followed, it occurred to me there were two vital lessons for the American people that have been overlooked. The first is that the entire notion the United States can pursue an independent monetary policy is a dangerous and erroneous conceit. The surge in food prices that has contributed directly to the uprisings in Tunisia, Egypt and other countries throughout the Middle East can be traced directly to the Fed's parochial effort to stimulate the domestic economy with an inflationary monetary policy. Food prices as reflected on the CRB food index are up 36% in the past year - including an 8% advance in the month of January. The UN's FAO Food Price Index rose 3.4% in January alone, and now stands at its highest in real and nominal terms since 1990. Rising food prices are not given much weight in the calculation of the US consumer price index, but they've created havoc in the lives of millions of people throughout the world. Fed Chairman Ben Bernanke's position that it is up to each country to protect itself from the Fed's inflationary ignores this simple fact: The dollar is at the center of the international monetary system. Many currencies, including the Egyptian pound, are linked to the dollar. As a result, when the Fed's easy money policies drive the value of the dollar down and the dollar price of commodities up, it contributes directly to monetary and political instability throughout the world. The costs of an inflationary monetary policy aimed at stimulating employment are far greater than any temporary benefit to the American people. The resulting rise in commodity prices is stoking resentment against the US and providing an opening for radical Islamists - who promise food and shelter for all - to seize power. The Fed's decision to ignore the international implications of its actions is tantamount to willful negligence. It puts America's vital interests at risk, reduces our soft power, and produces economic and political instability within our sphere of influence. The second lesson is those who serve in our government are no more able to anticipate the future in their immediate area of responsibility than are the rest of us. Two of the best intelligence agencies in the world with access to Egyptian officials, the US State Department with a long and important presence in Egypt, to say nothing of the Egyptian government itself were all unable to anticipate the crisis now unfolding in this extraordinarily important nation of 80 million people in the heart of the Middle East. That what is happening in Egypt was a surprise does not mean those who failed to forecast the uprising are incompetent. Instead, it shows the hubris of those who claim competent and well-informed government officials and public servants have the power to anticipate the future. Yet, this premise underlies most calls for increased government regulations, from health care to financial services. For example, new federal regulations of financial services put even more power in the hands of a few public servants rather than dispersing power among market participants. This centralization of power implicitly assumes that those who work for government are less fallible than those who work in the private sector, and therefore can be trusted to foresee and avoid the next financial crisis. But, as the Egyptian crisis demonstrates, this is an illusion. Government officials are not more capable than anyone else in anticipating or controlling the future. As former British Prime Minister Tony Blair writes in his memoir, A Journey: My Political Life, the financial crisis was not caused by a lack of regulatory oversight. "We didn't spot it...it wasn't that we were powerless to prevent it even if we had seen it coming; it wasn't a failure of regulation in the sense that we lacked the power to intervene. Had regulators said to the leaders that a huge crisis was about to break, we wouldn't have said: There's nothing we can do about it until we get more regulation through. We would have acted. But they didn't say that." As a result, the government's promise that it can prevent future crises actually has the opposite effect. This promise, backed up by thousands of pages of regulations, undermines the natural risk aversion and skepticism of market participants by creating the illusion of a risk- free future. This is what happened when government sanctioned rating agencies tranquilized investors throughout the world into believing that various "tranches" of mortgage backed securities were AAA credits when in reality they carried far higher risks. The result was a financial crisis that threatened the entire banking system. Markets may be no better than public servants in this regard. But, with markets, risks are dispersed. When those who make bad decisions are not bailed out but bear the consequences of their actions, markets quickly self correct and impose just sanctions on the imprudent and greedy. That is why the bursting of the tech bubble did not cause a financial, economic or political crisis. Imagining that public officials are endowed with special powers to see the future and protect us from the vicissitudes of life is a license for tyranny, no matter how well intentioned or ostensibly benevolent its foundation. In this moment, Benjamin Franklin's warning rings true: "They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." We ignore both of these lessons from Egypt at our peril. Regards, Charles Kadlec For Daily Reckoning Australia Editor's Notes: Mr. Kadlec is a member of the Economic Advisory Board of the American Principles Project, an author and founder of the Community of Liberty. Similar Posts: The Geopolitics of Energy The Magic Formula of Economic Success The Petro-Dollar Standard In Crisis The Goldman Sachs Phenomenon China is the World's Largest Exporter to the Middle East

What Is Wrong With The U.S. Economy? Here Are 10 Economic Charts That Will Blow Your Mind Posted: 15 Feb 2011 10:24 AM PST The 10 economic charts that you are about to see are completely and totally shocking.  If you know anyone that still does not believe that the United States is in the midst of a long-term economic decline, just show them these charts.  Sometimes you can quote economic statistics to people until you are blue in the face and it won't do any good, but when those same people see charts and pictures suddenly it all sinks in.  What is great about charts is that you can very easily demonstrate what has been happening to the economy over an extended period of time.  As you examine the economic charts below, pay special attention to what has been happening to the U.S. economy over the last 30 or 40 years.  The truth is that what is wrong with the U.S. economy is not a great mystery.  All of the economic problems that we are experiencing now have taken decades to develop.  Hopefully the charts in this article will help people realize just how nightmarish our economic problems have become, because until people start realizing how incredibly bad things have gotten they will never be willing to accept the dramatic solutions that are necessary to fix our financial system. The sad fact of the matter is that we have been living in the biggest debt bubble in the history of the world over the last 40 years.  All of this debt has purchased a wonderful standard of living for the vast majority of us, but all of this debt has also destroyed the economic future of our children and our grandchildren.  Someday future generations will look back on what we have done in absolute horror. The 10 economic charts posted below are meant to shock you.  Most Americans today need to be shocked before they will be motivated to take action.  Please share these charts with as many people as you can.  Hopefully we can wake enough people up that something will be done about all of these problems while there is still time. 1 - Government spending is expanding at an exponential rate.  As you can see from the chart below, federal spending is almost 18 times higher than it was back in 1970.  Now Barack Obama has proposed a budget that would increase U.S. government spending to 5.6 trillion dollars in 2021.  Just imagine what the following chart would look like if that happens.... 2 - U.S. government debt is absolutely exploding.  The U.S. national debt is currently $14,081,561,324,681.83.  It is more than 14 times larger than it was back in 1980.  Unfortunately, the national debt continues to grow at breathtaking speed.  In fact, the Obama administration is projecting that the federal budget deficit for this year will be an all-time record 1.6 trillion dollars.  Can we afford to continue to accumulate debt at this rate?.... 3 - Unless something changes right now, the outlook for U.S. government finances in future years is downright apocalyptic.  The chart posted below is from an official U.S. government report to Congress.  As you can see, it is projected that interest on our exploding national debt is absolutely going to spiral out of control if we continue on the path that we are currently on.... 4 - Household debt has soared to almost unbelievable levels over the last 30 years.  The sad truth is that it is not just the U.S. government that has a massive debt problem.  U.S. households have also been accumulating debt at a staggering rate.  Total U.S. household debt did not pass the 2 trillion dollar mark until the mid-1980s, but now total U.S. household debt is well over 13 trillion dollars.... 5 - The total of all debt (government, business and consumer) in the United States is now well over 50 trillion dollars.  For the past couple of years this figure has been hovering around a level that is equivalent to approximately 360 percent of GDP.  This is a debt bubble that is absolutely unprecedented in U.S. history.... 6 - As tens of thousands of U.S. factories get shut down and as millions of our jobs get shipped overseas, the number of unemployed Americans continues to go up and up and up.  As you can see from the chart below, there has been a long-term trend of increasing unemployment in the United States.  In fact, there are about 3 and a half times as many unemployed workers in the United States today as there were when 1970 began.  These jobs losses are going to continue as long as we allow our corporations to pay slave labor wages to workers on the other side of the globe.  All of the major trends in global trade are very bad for the U.S. middle class.  For example, the U.S. trade deficit with China for 2010 was 27 times larger than it was back in 1990.  How long will our politicians stand by as our nation bleeds jobs?.... 7 - The median duration of unemployment in the United States is in unprecedented territory.  For most of the post-World War 2 era, when the median duration of unemployment in America reached 10 weeks that was considered a national crisis.  Well, today competition for jobs is so intense that the median duration of unemployment is now well over 20 weeks.... 8 - Since the Federal Reserve was created in 1913, the value of the U.S. dollar has declined by over 95 percent.  One of the reasons given for the existence of the Federal Reserve is that the Fed helps control inflation.  But that is a huge lie.  The truth is that the United States never had consistently rampant inflation until the Federal Reserve took control.  In particular, once the U.S. totally went off the gold standard in the 1970s inflation really started escalating out of control.... 9 - Now the Federal Reserve says that the solution to our current economic problems is to print even more money out of thin air.  The games that the Federal Reserve is playing with our money supply are simply inexcusable.  Just look at what the Federal Reserve has done to the monetary base since the beginning of the recession.... 10 - All of this new money is creating tremendous inflation.  In particular, the price of oil is now ridiculously high.  A high price for oil is very, very bad for the U.S. economy.  Our entire economic system is based on being able to use massive quantities of very cheap oil.  Unfortunately, that paradigm is starting to break down and the consequences will be very bitter.  Back in mid-2008, the price of oil hit an all-time record of $147 a barrel and subsequently the world financial system imploded a few months later.  Well, the price of oil is on the march again and that is very bad news for the U.S. economy.... Needless to say, if the economic trends documented by the charts above continue the U.S. economy will be totally wiped out.  The U.S. economy as it currently exists is unsustainable by definition.  It is only a matter of time before we slam into an economic brick wall. We have developed an economy that cannot function without debt, and at this point it seems like almost everyone is drowning in red ink.  The federal government is massively overextended, most of our state and local governments are massively overextended, most of our major corporations are massively overextended and the majority of U.S. consumers are massively overextended. The only way that the game can continue is for the Federal Reserve to print increasingly larger amounts of paper money out of thin air and for everyone in the economic food chain to go into increasingly larger amounts of debt. But no debt spiral can go on forever.  At some point this entire house of cards is going to collapse. When that happens, there is going to be economic pain that is greater than anything that this country has ever seen before. Someday we will all desperately wish that we could go back to the "good times" of 2011.  A great economic collapse is coming, and all of us had better get ready.

Silver Ready for Stratosphere, After CME Rate Hike Posted: 15 Feb 2011 10:03 AM PST COMEX NEWS: Gold: (who cares, pass GO, collect $200 and go straight to silver) Silver: -OI explodes 4956 -sitting at an OI of 147,450 equivalent to 737 million oz's....WHAT!!??? -Front delivery contracts RISE by 483 contracts -Total ounces standing in this NON delivery month stay the same, as someone needed silver today -SLV sheds 73,000 oz's (right...) -Can you say BULLISH? I'll make this

Markets at a Crossroad – What Now? Posted: 15 Feb 2011 10:00 AM PST We are very bullish for the long-term for the resource sector, i.e., gold, silver and the resource shares. However, we need to live life and the markets in real time and the question is where are we now and what should investors do, if anything?

Feb 15, 1823 : The Discovery of Gold in Australia Posted: 15 Feb 2011 10:00 AM PST

The World Priced in Gold Posted: 15 Feb 2011 10:00 AM PST If gold really was money today, what would equities, housing, commodities and bonds look like...?

John Paulson's Portfolio As Of 12.31.10 Posted: 15 Feb 2011 08:33 AM PST John Paulson's & Co. 13F is out and there are changes. Highlights: His top two holdings are still the ETF; GLD and Anglogold. Total equity has increased from $23 billion to $30 billion (Paulson is now bigger than many mutual funds). A 10% decline in Paulson's third biggest holding, Bank of America. A reduction in Citi holdings, from 424 million shares to 413.5 million. Paulson added 7.9 million shares to his Anadarko holding. Props to Zhedge for the lowdown and the table that details the portfolio. Green highlighted rows reflect additions; red in the far right column represents a decline in position. Click the image to jump.

The Golden Tripod & The Crisis Posted: 15 Feb 2011 07:50 AM PST This morning, the battle of the head and shoulders patterns makes its move from the bullion arena to the gold juniors arena for you.  As I write these words around 4am, the bull side of the equation is showing some teeth.  Click here now for a view of the bull side of things. GDXJ H&S Pattern Chart Battle. Just as no technician (or fundamentalist) knew gold junior stocks would suddenly form a big top pattern in October, none knew the juniors would suddenly form a powerful bottom formation now. Yet, here it is! The head and shoulders bottom for gold juniors now! Those who sold all their gold into the lows, or worse, shorted it, might be a little nervous this morning. So they should be.  This is the market, and the greatest wiener is the person who can sell the most gold into the most weakness, after the neckline of a head and shoulders top pattern is broken. The winner is the person who can buy the most gold on the most weakness and sell a portion of it into strength, working to build more ounces of wealth. How many times have I said, "Gold turns up when you feel the most negative, when your knowledge, and mine, is greatest that it must continue down.  In the market, bet against what you know.  Buy into the declines from head and shoulders top formations, all the way down". How many listened?  More importantly, how many took action?  It's too late now for those of you who failed to buy GDXJ into the lows of $32.  It's not too late to buy some of the individual juniors that have yet to move with GDXJ, with limited risk capital in a pyramid formation of buys into price weakness. Not all the juniors have jumped with GDXJ as it tracks bullion higher, so you can still act on those! Here's a look at the Gold Bullion Chart early this morning, blasting thru the $1370 resistance.  What you are looking at is a tidal wave of loss booking by the top callers.  The multiple H&S bottom pattern targets the $1400 marker, and we are now $65 off the $1310 low. As price blows through $1370, the failed short positions of overleveraged speculators are sadly passed from their weak hands to the strong hands of….the banksters.  Don't chase price and buy gold from the banksters as it soars.  You won't like what happens to you. "Wheat advanced in Chicago and traded at a record in Zhengzhou, China, as demand increased and on speculation a drought in the Asian nation, the biggest grower, may damage plants.  Snowfalls in China's major wheat-growing regions failed to ease a drought and the dry spell is likely to affect crops, Chen Lei, deputy director at the State Flood Control and Drought Relief Headquarters, said Feb. 12." – Bloomberg News, Feb 14, 2011. Not many people know that China consumes almost as much wheat as it does rice.  China consumes about 8-9 times more wheat than Egypt consumes.  Other than Bob Moriarty, how many people in the world do I think really understand what soaring gold is going to do to the price of food, and to civilization itself via mass starvation?  How many even have a tiny clue?  How many people do I think really understand how dire the situation is?  The answer is close to… zero. Look at your obsession with your paper account dollar valuations, versus the tiny effort you put into understanding Gold as money.  Paper is currency.  It is not money.  Think about the tiny effort you put into building ounces of wealth, as paper currency rallies against gold money.  Think about higher gold as: the wrecking ball of civilization.  Because that's exactly what it is.  You now are beginning to understand… The Gold Punisher. Meantime, Elmer Fudd Public Investor keeps cheering Ben "Dr. Pinocchio" Bernanke and his Quantitative Easing "solution" as having saved you and fixed everything, with a couple of points of marked to model OTC derivatives GDP growth. In contrast, I keep telling you nothing is fixed, nothing is saved, and now hyperinflation is a real risk.  The Dow soars higher, as institutional money managers, who understand the real consequences of Quantitative Easing and Mark to Model Lies accounting, fear a dollar crash and are already pouring money into the Dow.  This is only the beginning of the hyperinflation of the Dow.  Buy all corrections or be obliterated.  You totally blew it at 6500 and now are wasting time trying to make micro money shorting it, while the world verges on total hyperinflationary implosion and starvation. You saw Egypt burn, just based on wheat tagging the $9 a bushel marker.  What happens when wheat hits my target of $20?  The answer might be: You burn.  Meantime, feel free to continue to stare at the head and shoulders top on gold and imagine your paper trading accounts are all that matters.  Hide under your desk while blubbering that gold might drop to some paper widget number that seems important to you, so you better sell your gold before it goes to Armstrong's $1100 number, right?  Pretend Armstrong is wrong so you don't have to think about it.  All heads report to the sand, right? Wrong.  You better buy more if you are lucky enough to see anything close to Armstrong's numbers happen.  You better pray that Gold goes lower and stays lower, not higher, because what is coming if it goes higher is a horror most of you can't even imagine.  Keep in mind the minor detail that any one of us cheering gold higher might be….cheering for starvation.  Remember my words back at gold $900: Don't wish for something too hard…or you just might get it!  Well, you are going to get it. President "So what if a few hundred million people starve to death as we wreck the dollar, there's always a few who fall thru the cracks for the good of all" Obama is working hard at his post.  He's working together with Ben "Dr. Pinocchio" Bernanke and Tim "The Terminator" Geithner at the tripod helm of the Good Ship Hyperinflation. They hold a steady keel.  President Obama just announced his first ten year plan.  Nothing like a good ten year plan from the Gman to fix America!  Fix a debt crisis…by borrowing more!  President Obama states that America's Gman will borrow a minimum of $600 billion a year for the next ten years.  He has volunteered to personally kick off the hyperinflation main act himself, with a $1.6 trillion super-debt for 2011. Let's have a round of applause for President Hyperinflation, Dr. Pinocchio, and The Terminator.  The Golden Tripod!  The tripod's actions have ensured 1.6 trillion in fresh money borrowing that you know about.  How much is being printed by Dr. Pinocchio & The Terminator that you don't know about?  Only the banskters know the answer. The bottom line:  The deal is pretty much sealed on a food prices causing worldwide chaos, and the starvation horror show has barely started.  Like I have told you only 1 billion times, the crisis has barely started, and the only question is:  Are You Prepared? Can the members of the Golden Tripod regain their sanity and work to bring down debt levels?  Starvation is pretty much a done deal now, so the next question is:  Will starvation be followed by war?  Suggestion:  The answer is not in the head and shoulders top fairy tale formation on gold.  The answer is in the actions of the Golden Tripod.  Will the bond market be imploded by the banksters while margins on gold futures are cranked to halt the price rises of wheat, rice, and all foods, and cause those still under the spell of paper dollar account valuations to hand all their gold to the banksters just in time for the starvation phase of the crisis to move to the war phase? All I know is that I'm working maniacally to get more gold.  I have absolutely no intention of letting any toilet paper currency obsessed pinhead separate me from one ounce of the golden goodness, as the crisis accelerates.  Welcome to the main stage of the great OTC derivatives crisis.  The starvation stage.  Still think your juniors charts are more important than…. THIS ONE?! 2011 is not the year of the rabbit. It is the year of… The Punisher! Special Offer for Website Readers:  Send me an Email to freereports4@gracelandupdates.com and I'll rush you my free "It's Time To Get Real!" report.  Take action now in the food markets before food takes action on you!  Thanks! Thanks! Cheers! st Stewart Thomson Graceland Updates www.gracelandupdates.com Email: stewart@gracelandupdates.com Stewart Thomson / 1276 Lakeview Drive / Oakville, Ontario L6H 2M8 Canada Risks, Disclaimers, Legal Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line: Are You Prepared?

This past week in gold Posted: 15 Feb 2011 07:24 AM PST GLD – on buy signal. SLV – on buy signal. GDX – on buy signal. XGD.TO – on buy signal. Summary Long term – on major buy signal. Short term – on buy signals. We increased our exposure from current buy signals, and will add more upon new set ups. Disclosure We do not offer predictions or forecasts for the markets. What you see here is our simple trading model which provides us the signals and set ups to be either long, short, or in cash at any given time. Entry points and stops are provided in real time to subscribers, therefore, this update may not reflect our current positions in the markets. Trade at your own discretion. We also provide coverage to the major indexes and oil sector. End of update

Gold Seeker Closing Report: Gold and Silver Rise Again Posted: 15 Feb 2011 07:14 AM PST Gold fell $1.25 to $1363.15 in Asia before it rose to as high as $1376.49 by about 8:30AM EST and then fell back off a bit into the close, but it still ended with a gain of 0.69%. Silver fell to $30.47 and rose to $30.918 before it also fell back off a bit, but it still ended with a gain of 0.69%.

Timing Gold – Bond Yields’ Ratio Doesn’t Matter Much, But Gold:Bonds Ratio Does Posted: 15 Feb 2011 06:34 AM PST Inflation vs. market fluctuations is always a hot topic in precious metal markets. Inflation is good for gold, which has a long history of acting as a hedge against it. With rising inflation it is likely that there will be a corresponding rise in the price of precious metals; that brings us to the question, how do you value gold? It is evident that there is no scientific method for valuing gold since it's a non-earning asset. Perhaps we should value gold by "1/n, where 'n' is investor confidence in paper currencies. But how do you measure 'n'?  Let's have a look into the history. In Babylonian times it was said that an ounce of gold bought some 350 loaves of bread. According to our source known as The Bread Lady in Miami, the average price of a loaf of bread in the U.S. is about $1.70, which suggests a fair price for gold of about $595. But hold on! We are not sure this comparison is valid. The Babylonians had organic whole wheat bread, which would cost a lot more today than $1.70, more like $5.00 per loaf, which would make the price of gold $1,750. Another rule-of-thumb says an ounce of gold could purchase a decent men's toga in Roman times and a gentleman's suit today. The quality of tailoring is not spelled out but you can certainly get a good quality suit for over $1,300. Since 1900, an ounce of gold on average (which means that during declines in precious metals silver declined more, and during upswings silver rallied more – and the ratio was more favorable to silver investors than 50 to 1) could purchase 50 times its weight in silver. After last year's run-up of silver, this ratio has fallen to 47 times. The price of gold in terms of oil has also been fairly constant. Since 1900, an ounce of gold has purchased on average 13.4 barrels of oil. Today, the same ounce buys 15.5 barrels. These are the historical explanations for gold 'valuation'. However in the recent past, interest in analyzing influence of currencies and bonds on gold prices has increased substantially. One of our Subscribers recently asked if the current breakout in the yield spread between short-term and long-term bonds is meaningful to precious metals investors. He further asked if it changes anything from the fundamental perspective, for instance that inflation was no longer a threat to the economy. Our comment here is that long-term fundamentals are driven by the fundamental situations of the markets themselves not the short-term technical signs. These are used to time the market not analyze the economy. The economy is analyzed by economic indicators, major trends, demographics, industry analysis and other analyses which is more of a top-down approach. Prices reflect not only fundamental but also emotional factors, and that's why technical analysis is so useful while timing the market. However, it cannot by itself change the fundamental outlook. Once we see a breakout, we cannot automatically infer that it was because of a change in fundamentals – it could have been caused by emotional factors, or it could have been just an accident. Printing presses around the world are hot from printing money and the inflation remains a long-term threat. Let's begin this week's technical part of our analysis by taking a look at the chart featuring aforementioned yield spread between short-term and long-term bonds (charts courtesy by http://stockcharts.com). We took a lot of time to thoroughly review the chart above and even analyzed it from the perspective of the rate-of-change indicator for the bond yield spreads. No important implications were uncovered for stock, nor Precious Metals Investors. There were times when such a quick rally meant a local bottom for metals; there were times when it meant a local top, and times when it meant absolutely nothing. Consequently, seeing such event doesn't provide us with much information.  Overall, we infer that the analysis of the yield spreads does not appear to be a useful analytical tool for the Precious Metals Investors as far as timing is concerned. However, there are other markets that have had – at times – key influence as far as timing is concerned. One of these markets is the currency market and the USD-EUR pair. Let's start true technical discussion with the current influence of Euro – USD indices on gold moves. In the short-term Euro Index chart this week we see sideways movement and there remains a bearish outlook. A small increase in index levels that we've seen this week should not be viewed as bullish, in fact, it resulted in the right shoulder of the bearish head-and- shoulders pattern being formed. These implications will naturally result in a bullish sentiment for the USD Index as seen on the next chart. In the long-term USD Index chart this week we can see that index levels have barely moved since last week's update. We have, however, seen a small decline which appears to be verifying the upper support line and is therefore not a bearish indicator. No breakdown has been seen. At this point the bottom appears to be in and the trend appears bullish. Based on the strong correlation between gold and USD in recent weeks, short-term suggestion is a definite "buy" for gold. Next, let's see what would bonds proffer at this juncture – however not in terms of spread between yields, but as a ratio  - bonds relative to gold prices. The ratio between the price of gold and corporate bonds once again provides us some valuable insight into the latest developments. The following chart describes the ratio between gold and Dow Jones Corporate Bond Index. The ratio has recently touched a support line and has now moved higher, actually exceeding the 2008 spike high. This is an important development and from this point the odds slightly favor a continuation of the big rally that we've seen in the second half of 2010. Moreover, from a non-USD perspective, gold has bottomed close to the rising long-term support line and also close to the 50-week moving average. This is a trend, which has been seen fairly often in the past and usually points to a subsequent rally. Most importantly, no evidence of a breakdown has been seen and the outlook for gold from a non-USD perspective is therefore bullish for the short term. Summing up, once again the outlook is bullish for the USD Index and slightly bearish for the Euro Index. Since precious metals have been trending with the dollar in recent weeks, the implications for gold, silver and mining stocks are also short-term bullish. Gold:bonds ratio also suggests that the previous rally might continue. Of course there's more to the golden story this week, but we will leave that part of our analysis to our Subscribers. To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, I urge you to sign up for my free e-mail list. Sign up today and you'll also get free, 7-day access to the Premium Sections on my website, including valuable tools and charts dedicated to serious PM Investors and Speculators. It's free and you may unsubscribe at any time. Thank you for reading. Have a great and profitable week! P. Radomski Editor www.SunshineProfits.com * * * * * Interested in increasing your profits in the PM sector? Want to know which stocks to buy? Would you like to improve your risk/reward ratio? Sunshine Profits provides professional support for precious metals Investors and Traders. Apart from weekly Premium Updates and quick Market Alerts, members of the Sunshine Profits' Premium Service gain access to Charts, Tools and Key Principles sections. Click the following link to find out how many benefits this means to you. Naturally, you may browse the sample version and easily sing-up for a free weekly trial to see if the Premium Service meets your expectations. All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments. By reading Mr. Radomski's essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Will Silver Do Better Than Gold? Posted: 15 Feb 2011 03:37 AM PST

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