saveyourassetsfirst3 |
- 0% Interest Rate = Worthless Dollar
- More from TurK today: Silver Backwardation Now “Unprecedented 73 Cents”
- Interview between GATA's Chris Powell and James Turk
- Hard to push PMs down when...
- Silver Supply vs. Demand Equals a Continued Higher Price
- Hommel: Silver Default Looms?! (It's about time!)
- Gold Miners: Spate of Acquisitions Bound to Increase
- The Momentum Peak Forecaster: A Rare and Reliable Signal?
- Analysts and Investors Extremely Bullish on Gold
- China's yuan value hits new high against U.S. dollar
- 7 Russell 1000 Retailers Primed for a Leveraged Buyout
- Commodity ETF Trends: Silver Breaks Out, Gold Steady Amid Commodity Strength
- 73 Cent Silver???
- Silver moves past old high and heading much higher
- Prepare To Give Up All Private Data For Any Gold Purchase Over $100
- Silver (Lagrimas de la Luna)
- Gold Market Update
- G-10 minutes from 1997 show central bankers conspiring about gold
- Canadian Wealth Managers Less Bullish on Gold
- GLD Options volume thick on the calls side- April
- Food, Work, Housing, and Fairness
- 18 Sobering Facts Which Prove That The Middle Class Is Not Being Included In This “Economic Recovery”
- $33 :D
- Why Israel may lead us to the land of Silver bartering and the transfer of wealth we are all Awaiting
- What is GOLD?
- Silver Market Update
- Lease rates in silver on the rise
- silver lease rates skyrocketing
- The Like-Minded Mechanics of the Economic Machine
- The Food Crisis is a Dollar Crisis
- Bargains Scarce, but New Vulture Bargain Named
- Silver Bullion Lease rates about to go parabolic
- SLV Calls/Puts Friday Action, BULLISH for silver
- The Gold Standard Theory and Myth (J.T. Salerno)
| 0% Interest Rate = Worthless Dollar Posted: 21 Feb 2011 03:48 AM PST In a recent piece I wrote, 'Suicide Bombers' in the Gold Market?, I strongly asserted that the highly-leveraged spread-trade which 'blew up' – and caused the most recent sell-off in the gold market – was deliberately orchestrated by the anti-gold banking cabal. To briefly summarize the facts, an unknown "trader" was able to leverage a $10 million "fund" (i.e. bet) into an $850 million dollar spread-trade, representing nearly 15% of the entire Comex futures market, while leveraged at an absurd 85:1. It was a "trade" created to fail. Of more relevance (to this piece), I observed that such tactics would likely become commonplace with the banksters, since a mere $850 million was "nothing" to them – in a world where they can get their friend (and fellow, private banker) Ben Bernanke to simply print-up $850 million more in Bernanke-bills, and "lend" it to them at 0% interest. A reader of my previous piece attempted to criticize that commentary by noting that the actual losses on the trade(s) would have been nowhere near $850 – totally missing the point. With the Wall Street bankers able to obtain (and Ben Bernanke willing to print) infinite amounts of Bernanke-bills, "loaned" at 0% interest, this paper has become nothing more than "confetti" to the banksters. Several observations need to be made about the United States' "zero interest rate policy" (ZIRP), observations which (strangely) no one in the mainstream media has been willing/able to make. 1) Calling the $trillions in Bernanke-bills funneled into Wall Street banks "loans" is absurd. Anything "borrowed" with ZIRP never needs to be repaid – since there is literally "zero" penalty for failing to do so. Thus every penny of these "0% loans" is simply another back-door hand-out to the greatest corporate deadbeats in the history of humanity. 2) As a matter of elementary economic fundamentals, a ZIRP economy must drive the value of its currency to zero over time. It is merely simple arithmetic that the long-term value of any/every good which can be obtained at zero cost is zero. Otherwise those with access to this 0% good could literally use the "arbitrage" on this scam to buy-up (i.e. steal) all of the world's assets. 3) The U.S. economy is already so insolvent that (in reality) U.S. interest rates are permanently frozen at 0%. Carrying $60 trillion in total public/private debt, raising interest rates by a mere 1% would drain an additional $600 billion per year out of the U.S. economy – equal (by itself) to nearly a 5% drop in GDP, before factoring-in the severe "multiplier effect" of draining that massive amount of capital from the economy. This means that in practical terms, the U.S. dollar is already worthless. 4) The Federal Reserve has placed absolutely no limits on the amount of 0% funny-money it's willing to funnel to Wall Street. In other words, it is available to these banksters in literally infinite amounts. For reasons previously given, the present value of any/every good which can be obtained in infinite amounts, at zero cost is zero. This means on the basis of simple arithmetic, the U.S. dollar is already worthless. The latter point should be extremely self-evident. If I could "borrow" infinite amounts of money at 0%, I would "borrow" $1,000,000 quadrillion, and "buy" every asset on the planet. I would need at least that much money to buy-up everything, since the moment all that funny-money began circulating in the global economy, it would rapidly drive-up the price of everything (kind of like what is currently taking place in the global economy after "QE2"). |
| More from TurK today: Silver Backwardation Now “Unprecedented 73 Cents” Posted: 21 Feb 2011 03:38 AM PST Turk - Silver Backwardation Now "Unprecedented 73 Cents" With silver trading at $33.50 and gold breaking above $1,400 in early trading in London, King World News today interviewed James Turk out of Spain to get his thoughts. Turk remarked, "The backwardation that we have been talking about has now blown out to 73 cents, that is unprecedented. I find that number to be completely astounding! Where are the arbitrageurs? They could make a fortune. This suggests to me that the arbitrageurs are out of the market because they don't have the physical metal to sell to deal with the imbalance." Turk continues: "The fact that arbitrageurs are not pouncing on this huge bakcwardation is just further evidence of how little physical silver is available. Going back the KWN blog we did on February 10th, this backwardation in silver has potentially huge implications for the US dollar. Metal goes into backwardation for two reasons - Either short supply, or nobody wants to accept fiat currency. We know the backwardation in silver is because the supply of physical metal is so short. But the lingering question in my mind is whether the strong hands who hold silver are unwilling to take a fiat currency. If that is the case, and this backwardation in silver eventually leads to a backwardation in gold, the implications for the US dollar, and indeed all of the fiat currencies in the world are ominous." When asked about gold specifically Turk stated, "Eric, here we have gold in London trading above $1,400 this morning. For the first time in a couple of weeks, the gold chart is starting to show real strength. I expect gold to be probing the old high of around $1,430 by the end of this week, given the strength we are already seeing. The old high should not provide much resistance, so expect new record high prices in gold soon." It will be interesting to see how both gold and silver trade the rest of the London session. If the metals stay strong for the balance of London trade, we could be in for some fireworks Tuesday. So far these markets have been very orderly, but the nagging question in the back of the short's mind has to be, "At some point will the gold and silver markets get disorderly to the upside?" Eric King KingWorldNews.com http://kingworldnews.com/kingworldne..._73_Cents.html |
| Interview between GATA's Chris Powell and James Turk Posted: 21 Feb 2011 03:28 AM PST :thumbs_up::thumbs_up::thumbs_up::thumbs_up: |
| Posted: 21 Feb 2011 03:25 AM PST The markets are closed ! ha ha ha and look at oil. |
| Silver Supply vs. Demand Equals a Continued Higher Price Posted: 21 Feb 2011 02:29 AM PST Donald Ingram submits: Silver prices hit their highest level in nearly 31 years Friday, on expectations of stronger demand and the metal's appeal as a relatively safe investment in times of uncertainty. It was the highest price since silver settled at $32.90 an ounce on March 7, 1980, but well below the price after accounting for the interim inflation. Silver has been rising consistently since late January on more evidence of global economic growth in emerging markets. Besides its popularity as a safe haven investment, the metal has a variety of uses, from jewelry and silverware to consumer electronics, solar energy and medical applications. Silver has a long history of use in medicine and was commonly used by doctors as late as the 1930s before the advent of antibiotics. Silver nitrate being the prevalent form, while silver lodide was used in babies eyes upon birth to prevent blinding as the result of bacterial Complete Story » |
| Hommel: Silver Default Looms?! (It's about time!) Posted: 21 Feb 2011 02:25 AM PST Silver Default Looms?! (It's about time!) Silver Stock Report by Jason Hommel, Feb 20th, 2011 I apologize in advance that this essay is entirely without humor, completely sober, and deadly serious. As I write on Sunday evening, Feb. 20th, silver prices are up another 40 cents to $33.10, another 30 year high, going back to the previous high of $50 from Jan. 1980. In the last two trading days, last Thursday and Friday, silver prices increased about a dollar per day. What's going on? As I read on the blogs, about 53,000 silver contracts for 5000 oz. each are nearing the first delivery day on Feb. 28th. At that time, each contract must be fully funded to await delivery in the following 30 days, or sold before then. By the way, 53k x 5k = 265 million oz. http://tfmetalsreport.blogspot.com/2011/02/wow.html The crazy thing is that the four COMEX approved warehouses have only about 100 million oz. of silver in them. So, in essence, a default looms. Will this be it? If so, what will happen? Usually, all but a very few contracts roll over to the next months. The futures contract holders rarely stand for delivery, as in their view it is too difficult, and too costly; they are in this game for the leverage. They usually only put down 10% of the money, so that if silver gains another 10% in price, they double their investment quickly. And if silver moves down 10%, they lose everything! But here's the kicker. COMEX just raised margin requirements 50% on Friday, meaning that the longs had to put up something probably like 15% instead of the usual 10%. (I have no idea of the real figures, as I have never traded futures, I have never had a futures broker, and don't know where to go for that data.) This means that the longs were not scared out of their positions, as the silver price went up, not down, as the manipulators had intended. What I do know is that usually, the majority of futures contracts stand about 3 months away from delivery. But not now. Tonight, 53,000 contracts are looming for either close out, or they will stand for delivery. Out of about 150,000 to 200,000 contracts! Harvey says 150,000 contracts in open interest. http://harveyorgan.blogspot.com/ 321gold.com says 200,000 contracts in open interest. http://www.321gold.com/cot_silver.html The current situation will be resolved in 8 days, and again, in another 30 days after that. Both deadlines are worth watching closely. Either way, this situation presents several problems. Clearly, if the longs stand for delivery of 265 million oz., when there are only 100 million oz. in the warehouses, there will be a short squeeze, and the price can go ballistic to the upside, perhaps prices could go up by 5 times higher in a few days. However the longs don't seem to realize that the shorts can cap the price by several other manipulative methods. They can deliver paper cash, or SLV shares as well. The shorts and COMEX can also limit total physical silver deliveries to as little as 1.5 million ounces to any individual, or 7.5 million ounces total, if my memory of the rules serves. If they do that, the shorts can delay a short squeeze at the COMEX. But this would create another problem. A cash settlement, or settlement in SLV shares, or a limit on physical silver deliveries, would be recognized as a default, or a "failure to deliver". If any such kind of default would take place, it could cause a run on any remaining silver at any other location, such as directly at the refineries, or bullion wholesalers, or bullion dealers like myself. I hope no such default takes place, as I don't want to go out of business for a few days, or a few weeks, or a few months, while I wait for my suppliers to get re-stocked. In any event, I think it's important to realize several fundamentals. 1. The dollar itself -- is fraud. 2. Silver futures contracts -- are fraud. 3. Fractional reserve banking -- is fraud. 4. Fractional reserve silver selling -- is fraud. 5. The nature of paper money and all frauds is that they tend to collapse rather suddenly, with little warning, especially when their ability to pay debts is called into question. 6. Argentina maintained a peg of their peso to the dollar, and it lasted until they could no longer make interest payments in dollars. Then, their peso collapsed in value nearly 75% overnight. Even Americans, with American dollars, in American banks (in Argentina) had their dollars forcibly converted into pesos, and their ability to withdraw money severely limited. 7. The same thing can happen to the dollar. 8. Silver prices must be seen to have the potential to explode by about a factor of 4-10, literally overnight. This means we might see silver prices at about $33/oz. on one day, and silver prices from $130 to $330/oz. the next day. If that happens, I might close up the JH MINT for anywhere from an hour to a day or so, until I can guarantee a source of silver from my suppliers. I will likely be able to remain in business though, because if there is a price quote, it means silver is available at such prices. The most likely course is that the paper traders continue their game of "chicken". Both sides will swerve at the last moment and avoid a collision. Prices will likely go up to about $35 to maybe as high as $40 next month. We will likely have another record sales of silver bars and coins. The US mint will likely have another record of sales of 1 oz. American Eagle silver coins. They might run out for a week at a time, again. We will likely have plenty of silver available at about 6% over spot, while all the physical silver ETF's trade at about a 8-12% premium over "spot" prices. But then again, you never know. I can predict that the busses will likely run on time, and I will likely be right, until they don't. Better order silver now, while you still can. My greatest fear is that silver will run out. When silver runs out, people will buy other things to protect the value of their dollars, such as food. If people start buying up food, in amounts of up to $100,000, food prices will soar, and that will cause food prices to exceed the values that most people can afford, and then, most people will begin to starve. The beauty of gold and silver is that you cannot eat them, and thus, there is no such thing as a price that is "too high" of a price for gold and silver. My wife and I stocked up on food this weekend at COSTCO. We spent only $700, the least we have spent in months. We filled up the back of our Ford Excursion. You can see what problems would be created if wealthy people begain to buy 50 to 100 truckloads of food at a time, in the event that silver became unavailable. http://campaign.r20.constantcontact....xWGhiRVVdWhIMo |
| Gold Miners: Spate of Acquisitions Bound to Increase Posted: 21 Feb 2011 02:24 AM PST Marco G. submits: As gold prices rise, the spate of gold company acquisitions is bound to increase. 2010 was tumultuous with three major multi-billion gold acquisitions: the $ 10 billion acquisition of Australian Lihir Gold by fellow Newcrest Mining (NCMGY.PK), the $7.1 billion combination of Canada's giant Kinross (KGC) and fellow Red Back, and the $3.5 billion Canadian giant Goldcorp (GG) buy-out of Australian Andean Resources. More recently, there is the announced $2.3 billion acquisition of Canada's Fronteer Gold by American giant Newmont Mining (NEM). Smaller deals include the $830 million Franco-Nevada (FNV) pending purchase of Gold Wheaton, the $700 million American Thompson Creek Metals (TCM) takeover of Canadian Terrane Metals and the previous $140 million Kinross takeover of Underworld Resources. The larger gold miners are just not able to succeed at their own organic gold exploration programs and need to acquire the smaller more capable exploration companies to replenish their mining reserves, Complete Story » |
| The Momentum Peak Forecaster: A Rare and Reliable Signal? Posted: 21 Feb 2011 02:03 AM PST Bruce Pile submits: What if you had a black box that could take a continuous feed of all pertinent market data and spit out a warning two to three months in advance of all the major mania peaks? I'd give a dollar and a half at least for such a box. Don't laugh, because something just about like this actually exists. It was invented by Bob Hoye's company, Institutional Advisors, in 1998 as they were studying the debt spreads of the European Union. It was named the Momentum Peak Forecaster and it gave its first warning Feb. 13, 1998. In Bob's words, "Spread widening began in May and became a disaster that collapsed the biggest hedge fund of the day, Long Term Capital Management". They back-tested this same model going back to 1970 and found that it kicked out a warning in front of three major speculation run-ups. Its overall histo Complete Story » |
| Analysts and Investors Extremely Bullish on Gold Posted: 21 Feb 2011 01:38 AM PST Insider Monkey submits: Analysts and traders are extremely bullish about gold. Rising inflation, the decline in the US dollar, and ultra-low interest rates created the perfect environment for gold to flourish. Legendary investors George Soros and Jim Rogers are bullish about gold. John Paulson, David Einhorn, and Dan Loeb are among several younger hedge fund managers who are extremely bullish about gold. They either use physical gold, SPDR Gold Shares (GLD), Market Vectors Gold Miners ETF (GDX), or the Junior Gold Miners ETF (GDXJ) to speculate. ETFS Physical Swiss Gold Shares (SGOL), ETFS Physical Asian Gold Shares (AGOL), iShares Gold Trust (IAU) are other alternatives for gold investors. Deutsche Bank's DGL, DGP, DGZ, DZZ are used by individual investors who are mostly seeking leveraged exposure. Countries such as Saudi Arabia, China, India, and Russia are boosting their gold reserves through purchases of physical gold. Industry insiders also think that gold prices are more Complete Story » |
| China's yuan value hits new high against U.S. dollar Posted: 21 Feb 2011 01:26 AM PST The value of China's currency, the yuan, hit a record high for the fifth straight trading day Monday with the central parity rate at 6.5705 yuan per U.S. dollar, according to the China Foreign Exchange Trading system. The central parity rate of the yuan, or RMB, was 76 basis points up from 6.5781 on Feb. 18, the previous trading day... Read |
| 7 Russell 1000 Retailers Primed for a Leveraged Buyout Posted: 21 Feb 2011 01:20 AM PST Whopper Investments submits: With debt markets wide open and a leveraged buy out taking place (seemingly) every day, private equity is clearly back in business after being left for dead during the credit freeze in 2008-2009. And it seems retail is their new favorite place to invest, with recent deals or offers being announced for Family Dollar (FDO), J. Crew, JoAnn stores, Gymboree (GYMB) (among others) and rumors abounding that a variety of other stores are in play, including just about all of the teen retailers (American Eagle (AEO) shares surged last week on buyout rumors, and Abercrombie (ANF) and Aeropostale (ARO) seem to have similar rumors float around once a quarter or so). Multiples are also expanding - Gymboree was acquired for ~7.7x EV / EBITDA in the late summer while the recent offer for Family Dollar was ~10x EV / EBITDA. With a backdrop of growing private equity interest and expanding Complete Story » |
| Commodity ETF Trends: Silver Breaks Out, Gold Steady Amid Commodity Strength Posted: 21 Feb 2011 12:42 AM PST MyPlanIQ submits: Amid steady up trend of U.S. stock markets, silver (SLV) finally broke out last week, ending the week with 8.8% gain. SLV is now above the previous high $30.18 per share, achieved on 12/31/2010. It closed on Friday at $31.79, a historical high. Gold (GLD) was also steady, closing the week with 2.3% gain, though its Friday's closing price $135.47 is still below its recent high of $139.11. For more commodity performance details, please refer to here. The following trend table shows the trend scores of commodity ETFs. Silve (SLV) is retaining its first place, way ahead of the second place agriculture ETF (DBA). It should be noted that DBA Complete Story » |
| Posted: 21 Feb 2011 12:30 AM PST Oops, sorry! That's what the backwardation is at now. 73 cents! I'll make this easy to understand: if you don't get your hands on physical soon, you may not have a chance to, and if you by chance come across some a year from now, you most likely wont be able to afford it. The arbitrageurs are out, retail is welcome to take advantage of this opportunity. Let me know if my strong "BUY SILVER |
| Silver moves past old high and heading much higher Posted: 21 Feb 2011 12:28 AM PST A week ago and you could have made a good argument for the silver price being at a double top. And typically after confirming a previous high, a downturn would be in prospect. But not after prices jumped to $32.60 by the end of the week, comfortably placing silver in a fresh stage of upward momentum. |
| Prepare To Give Up All Private Data For Any Gold Purchase Over $100 Posted: 20 Feb 2011 09:00 PM PST |
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| G-10 minutes from 1997 show central bankers conspiring about gold Posted: 20 Feb 2011 05:00 PM PST
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| Canadian Wealth Managers Less Bullish on Gold Posted: 20 Feb 2011 04:55 PM PST The fading allure of bullion and gold stocks is tied to rising prospects for the global economy, said Howard Atkinson, the president of BetaPro Management Inc, which puts out a quarterly survey on adviser sentiment. The latest results showed a big drop in expectations for gold following two years of consistently strong sentiment. For the first quarter, 33 percent of advisers said they were bullion bulls, down from 64 percent in the fourth quarter. Bullishness toward the S&P/TSX Global Gold Index fell to 33 percent from 64 percent. The index rose more than 25 percent last year. Fading allure? Gold is what…3% off its high? Quite the fading allure. Find out what we are doing. Signup for a free 14-day trial…. http://thedailygold.com/newsletter/
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| GLD Options volume thick on the calls side- April Posted: 20 Feb 2011 02:52 PM PST Things to note. Options call volume is very healthy, also notice the premiums on the put side are in the green as to suggest more of a 'hedge' for longs as opposed to a bet on a future decline in price. Also note the heavy $134 ITM OI, I likey! Lots of bets being put on that GLD sees new highs in April. |
| Food, Work, Housing, and Fairness Posted: 20 Feb 2011 12:36 PM PST --Will Ben Bernanke go down in history as the Simon Bolivar of the Middle East? Probably not. Bernanke is a central banker with an academic pedigree. Bolivar was a revolutionary who led much of Latin American to overthrow the Spanish Empire. One cuts a dashing figure through history. The other may go down as a villain in rumpled suit. --As the architect of a weak U.S. dollar, though, Bernanke has become the poster boy for unintended consequences. The end of the global dollar standard, in which American money is the undisputed reserve currency, has destabilised things that were quite stable for many years. Like food prices. And oil prices. And autocratic regimes in the Middle East. (Many of whom were also backed with U.S. weapons.) --Libya joins Tunisia, Egypt, Algeria, Bahrain, Yemen and Iran as the latest nation state to see its legitimacy challenged by millions of unhappy, mostly young, men and women. Of course in each particular country there are political factors unique to that country, which have caused or contributed to the popular revolution. It would be trite to chalk it all up to Helicopter Ben. --But we'd suggest that when history looks back, one of the trigger events for the toppling of multi-decade petro-dictators will be the toppling of the multi-decade petro-dollar standard. At the geopolitical level, the weak dollar and low interest rates have driven investors into commodities (some of it speculation).The resulting inflationary bubbles are now having real-world consequences. --This is the crying shame of bubbles. At the household level, bubbles bankrupt families. Low interest rates on cash incentivises households to join the speculative rabble. People buy tech stocks with no earnings. Or houses that are already far too expensive for the average income. Real household wealth is destroyed in inflationary bubbles because people miscalculate risk and chase asset price growth. --But let's get back to North Africa and the Middle East and make two more points in today's reckoning. The first is a demographic point. You've seen in the past that demographics are working against Western Welfare Entitlement States. They have ageing populations that are consuming more and more government services. Meanwhile, the tax base is crumbling and debt is (for now) growing to bridge the divide between tax revenues and what the Welfare State owes to the people it's bribed. --But down Libya way the demographic problem is different. The population pyramids are fat at the bottom and thin at the top. This means these countries have huge young populations. Many of those people have no jobs and no real economic prospects. This is fuel to the revolutionary fire. Take a look at the pyramids for Libya (population 6.5 million), Algeria (34 million), and Iran (77.8 million). All these figures, by the way, are taken from the U.S. Census Bureau.
--You can see that there are a lot of young people, as a percentage of the total population, in each country. But wait! That shouldn't be a problem, right? Iran, Algeria, and Libya are the third, ninth, and twelfth largest exporters of crude oil in the world, respectively. They should be generating plenty of oil money to build a rich, prosperous, fair, just and well-fed society. So why aren't they? --Well, as you might know, just because you have a land mass rich in resources doesn't make you wealthy. In fact, there's plenty of academic research to suggest that, "countries with great natural resource wealth tend nevertheless to grow more slowly than resource-poor countries." It's called the "resource curse" or "Dutch disease." In one of his recent reports, Greg Canavan has shown how Australia is already infected. --Are resource-rich countries just economically and intellectually lazy? You've got it all in the ground. You don't have to work for it, save, invest, grow your capital base, and produce real goods. That kind of geological windfall might breed certain insolence to the fundamental laws of the free market. In other worlds, your resource wealth blinds you to the hard work of actually making a living. -- It's not at all ironic that Hong Kong and Singapore became so rich even though they had so little resource wealth. They traded, produced, and invested. Low taxes, the rule of law, light regulation, and free trade have made both countries incredibly wealthy. --It's probably worth thinking about the resource curse when you're carving up BHP Billiton's $10 billion half-year profit in your mind (if you're Juila Gillard). BHP went and found those resources. It paid leases for them. It employed people to define them, to mine them, and extract them. It took capital, labour, and the enterprise of a great Australian firm. And we want to punish that? --Interestingly enough, a discussion paper published by the Reserve Bank of Australia a few years ago showed how resource wealth can lead to really bad policy making. One critical issue was whether the government thought the increase in the terms of trade from a commodity boom was temporary or cyclical. If it's a permanent increase in the terms of trade, the government can anticipate higher corporate tax revenues and royalty revenues from commodity producers...forever. If it's cyclical, then government spending shouldn't factor in ever-rising resource prices. From the article:
--Gee. That sounds familiar. A rapid rise in resource prices leads to a windfall profits tax that amounts to a wealth transfer to favoured political friends and institutions. What could possibly go wrong? --Well, China could catch a little of whatever is going around in the Middle East. UK papers are reporting that Chinese workers are being encouraged to rally and shout, "We want food, we want work, we want housing, we want fairness!" Someone has dubbed it the Jasmine Revolution, although it's a bit early to expect that a popular revolution is going to get any traction in the Chinese police state. --Again, inflation could be the culprit in China, just as it has been elsewhere. The "currency quake" is rumbling all over the world. While we were away from DR HQ last week, we learned that China again raised reserve requirements at banks in a bid to cool lending and slow down house price inflation. The government also raised local fuel prices to keep up with rising global crude prices. --Milton Friedman once said that inflation is, "always and everywhere a monetary phenomenon." But it is everywhere fast becoming a geopolitical one too. What will it mean, if anything, to Australia inflation and the value of your money and investments? Stay tuned... |
| Posted: 20 Feb 2011 12:12 PM PST 
According to Gallup, the unemployment rate is now over 10%. The number of Americans that have given up looking for work recently set a new all-time record. The number of mortgages in foreclosure tied a record high during the fourth quarter of 2010. Gas and food prices are rising rapidly. The number of Americans on food stamps continues to increase every single month. Yes, right now the economic situation is not in free fall like it was a couple years ago. We should be thankful for that. Periods of relative stability such as we are enjoying now will be few and far between in the years ahead. This "bubble" of economic calm is a great opportunity that we should all be taking advantage of. However, those that are hoping that this is an economic "turning point" and that things will soon be back to "normal" are going to be greatly disappointed. This is about as "normal" as things are going to be ever again. Even during this time of relative economic stability, the U.S. middle class is still being ripped to shreds. If there are those among your family and friends that are somehow convinced that the U.S. economy is recovering nicely, you might want want to show them the following 18 very sobering facts.... #1 According to Gallup, the U.S. unemployment rate is currently 10.3 percent. When you add in part-time American workers that want full-time employment, that number rises to 20.2 percent. #2 According to the U.S. Bureau of Labor Statistics, the number of job openings in the United States declined for a second straight month during December. #3 There are currently more than 4 million Americans that have been unemployed for more than a year. #4 The number of Americans that have become so discouraged that they have given up searching for work completely now stands at an all-time high. #5 Gasoline prices in the United States recently hit a 28-month high. #6 During the 4th quarter of 2010, 4.63 percent of all U.S. home loans were in foreclosure. That matched the all-time high, and it was up significantly from 4.39 percent in the 3rd quarter. #7 It is estimated that there are about 5 million homeowners in the United States that are at least two months behind on their mortgages, and it is being projected that over a million American families will be booted out of their homes this year alone. #8 Almost 14 percent of all credit card accounts in the United States are currently 90 days or more delinquent. #9 The average credit card rate in the United States had increased to a whopping 13.44 percent at the end of 2010. #10 Americans now owe more than $890 billion on student loans, which is even more than they owe on credit cards. #11 Average household debt in the United States has now reached a level of 136% of average household income. In China, average household debt is only 17% of average household income. #12 U.S. life expectancy at birth is now three years less than Canada and four years less than Japan. #13 New home sales in the state of California were at the lowest level ever recorded in the month of January. #14 43 percent of all mortgages in south Florida are currently underwater. #15 Prior to the most recent economic downturn, there were usually somewhere around four to five million job openings in America. Today there are about 3 million. #16 When you adjust wages for inflation, middle class workers in the United States make less money today than they did back in 1971. #17 One out of every seven Americans is now on food stamps. #18 One out of every six elderly Americans now lives below the federal poverty line. You know things are bad when articles start popping up in the mainstream news instructing us how to interact socially with the hordes of unemployed Americans that are out there today. A recent USA Today article entitled "What not to say to someone who is unemployed" listed some of the things that you should not say to someone that does not have a job. The following are some of their suggestions on what NOT to say.... "Hey, have you found anything yet?" "How's the search going?" "You just have to pound the pavement." "Something will turn up." "It's tough out there." "Other people are going through the same thing." "Maybe you're asking for too much money." "Maybe you should go back to school." "There are plenty of jobs out there." I am sure most of us have heard things like this at one time or another. It can be a soul-crushing thing to have others like at you in pity because you don't have a job and you can't pay the mortgage and feed your family. Most unemployed Americans are not lazy. The vast majority of them desperately want jobs. But the U.S. economy is not producing nearly enough jobs today. As noted above, the U.S. economy currently has about 3 million job openings, but approximately 20 percent of the workforce wants to find a full-time job. The demand for jobs is far, far, far greater than the supply. Unfortunately, this is the legacy of decades of bad economic decision-making. The U.S. economy should be able to provide work for every single person that wants it, but because of the choices that have been made that will never be the case again. The middle class in America is being ripped to shreds right in front of our eyes and very little is being done to stop it. Desperation is rising across the nation. More Americans slip into poverty every single day. It is almost as if a cloud of gloom and despair has descended upon the U.S. economy and every single month the situation only seems to get darker. So what about you? How has this economy affected you and your family? Please feel free to leave a comment with your thoughts below.... |
| Posted: 20 Feb 2011 11:42 AM PST No time to argue anymore, gotta enjoy the jump!!! :D |
| Posted: 20 Feb 2011 10:58 AM PST In a recent interview with Bix Wier, by the youtube channel admin, SGTBull07's (http://www.youtube.com/user/SGTbull07#p/u/14/Lwkpr8D-Fjc), Bix makes several notable points about the end game, collapse, silver, gold, but one struck me as DEAD WRONG, and why his opinion on the 'bring home the troops' especially with what info I have received from a man that just came back from the middle east |
| Posted: 20 Feb 2011 10:53 AM PST What is GOLD? What's your definition of GOLD, is it the be all and end all? Lets get down to the very basics of things. I want to know what GOLD is at its very core. Sure we all have a gold sovereign or two, perhaps, or a couple of Krugs but what does it actually mean to have some gold tucked away? What is GOLD? |
| Posted: 20 Feb 2011 10:42 AM PST Silver has shown amazing strength in recent weeks, surprising even its staunchest advocates by making light work of recovering the ground lost in the January reaction, and even went as far as to break out to new highs late last week, hugely outperforming gold in the process, which not unnaturally has silver bugs cock-a-hoop. We were looking for a big rally in the last update posted at the end of January and we have not been disappointed. |
| Lease rates in silver on the rise Posted: 20 Feb 2011 10:19 AM PST |
| silver lease rates skyrocketing Posted: 20 Feb 2011 10:18 AM PST |
| The Like-Minded Mechanics of the Economic Machine Posted: 20 Feb 2011 09:21 AM PST The World According to The Daily Reckoning... First, a quick look at the news... Dow up 29 points... Gold added $10. Stocks are up about 100% from their March '09 lows... Guess we were wrong. We thought stocks were too dangerous... We've been out of them since the late '90s. Wait...you say stocks have gone nowhere since the late '90s? Investors have made nothing. Well, that makes us feel better about missing this rally. Hey, what's this? Oil is up too - it traded at more than $100 a barrel yesterday. And look at the other commodities: "Wholesale prices hit two year high," reports The Wall Street Journal. Looks like everything is a good investment. If only we had a Wall Street bank! We could borrow from the Fed at zero...and buy anything. Whatever we bought, it would go up. Especially if it were gold. Is this evidence of a robust, growing economy? Or, is something else going on? We'll come back to that... Because today you're in for a treat... The World Explained! Or, at least part of it. Ultimate Secrets Revealed! At Last...how an economy really works. And as an added bonus - we'll tell you what government is all about too. But that will have to wait until next week. How's that for a build-up? We've managed expectations so high they'll need a parachute to come down. But why not? Today, we reveal - for the first time ever - why Ben Bernanke is an idiot. And why almost all modern economists are wrong. And why all the trillion-dollar "recovery" schemes won't work. And no... We're not forgetting the bonus. We'll also tell you why all the chatter about democracy breaking out in the Mideast is just vain heavy breathing... This is an important edition of The Daily Reckoning...print it out. Share it with your friends. Put it away for safekeeping. And then, in a quiet moment, pull it out...pour yourself a stiff drink...and throw it away. Let's get started. The trouble with modern economists and most people who don't work at The Daily Reckoning, we've said so many times, is that they have the wrong paradigm. The wrong idea. The wrong metaphor. They think an economy is a kind of machine. They think they can make it work better, or fix it when it is broken, by tinkering with it. That's why they have a fellow like Ben Bernanke - a techie kind of fellow with an adjustable wrench in his pocket - at the Fed. They think he can turn some valves...and make the juice flow. 'The economy needs more liquidity,' says one expert. 'No, it's time to raise rates,' says another. 'Forget it,' says a third, 'the federal government should launch a major infrastructure program.' Each mechanic thinks he knows which screw to turn. Each has his theory...his idea...and his role to play. In fact, each is paid to believe what isn't true. If he admits that he has no idea which knob to turn, who will give him a job? Who will publish his book? Who will invest money in his hedge fund? Not the government. They want solid mechanics...guys who know how to use a screwdriver. They think their job is to control this machine. At the Fed, for example, there are hundreds of economists paid to maintain the value of the dollar, full employment and (a mission Ben Bernanke has taken on recently) a bull market on Wall Street. What about a university? Could he get a job there? Well, first, you need to be able to describe the machine even to get into the Ph.D. program. Then, you need to write a thesis about how it works...about how the Fed's interest rates effect consumer purchasing...or how you can create a complex mathematical formula that predicts capital investment booms in medieval city states. You need to add to the world's knowledge and understanding of the Great Machine, in other words. You need to give policymakers more and better tools to tinker with. Do it well enough and you may get to be the head of the Princeton economics department. Or, you might even get a Nobel Prize. In practice, academia and government are as close as ticks on a hound dog. Why do they all think the same thing and why do they all believe in the mechanical model: they're paid to believe it. This, from The Huffington Post:
What if you didn't believe that the grease-monkeys working for the Fed really could make things better? What if you thought an economy wasn't like a machine at all? What if you didn't believe economists could control it? Or improve it? Or even understand it? What if you thought that you could not predict what would happen...nor could you turn any screws or valves or knobs and be able to tell what effect it would have? Who would hire you? Who would publish your book? Who would ask your opinion at cocktail parties or invite you to submit articles to The Financial Times? No one. But you would be right. [Joel's Note: Fortunately, Fellow Reckoners needn't rely on the Fed's academic stooges to inform them on the finer points of liberty and morality. For that, they have Laissez-Fair Books! Agora Financial's newly-acquired trove of freedom-inclined publications contains hundreds of must-read books for intellectually curious readers to enjoy. Heck, there's even a few titles in there from Bill and Addison for your consideration, like this one. Be sure to include your DR discount code [E401M202] to grab 20% off the retail price. Happy non-Federal Reserve-approved reading!] An economy is not really like a machine at all. It is not a mechanical system. It is a moral system. Yes, dear reader, it is a system that punishes sin and rewards virtue. It gives no one what he expects...and ALMOST everyone what he deserves. The "almost" is an important qualifier, to which we will return... What do we mean when we say it "rewards virtue"? Well, that's what it does. It rewards saving, thrift, hard work, innovation, honesty, thinking about others, self-discipline, creativity and all the other qualities you normally associate with decent people and financial progress. As for sin, it punishes the obvious ones - greed, vanity, short- sightedness, extravagance, envy, laziness, lying, cheating, stealing, stupidity, self-indulgence...and so forth. When the Fed creates money out of thin air, for example, it is a lie. It is a sort of fraud. It is trying to get something for nothing. It is distorting the facts and encouraging mistakes. It surely will be punished. When? How? We can take a guess, but it's not for us to say.... Likewise, take a fellow who works hard and saves his money... Will he be wealthy? Again, we don't know. All we know is that he OUGHT to do well... So, we should return to our qualifier...it USUALLY works that way. Some greedy bastards do get rich. Some lazy fools win the lottery. We never know for sure who will make money and who won't. Why not? First, because we're not God. He sees things we don't see...and He has his own plans that he doesn't share with us. Second, because there is sin and virtue IN THE SYSTEM itself...to which we are all subject. When the Roman Empire fell apart, and Rome was sacked by barbarians, even the most virtuous Roman probably suffered a decline in his standard of living. Not much he could do about it. Why would a system that rewards virtue and punishes sin be so frustratingly unreliable? Well, that's just the way it is. It's a moral system, remember. And moral systems do not make it easy for you. If all you had to do to get rich were to respect the moral rules it would not be a moral system. It would be a simpleton's system. Everyone would follow the rules. Moral systems are more demanding. They require you to follow the rules without being sure what it will do for you. As every theological thinker from St. Augustine to Billy Sunday has noticed, you can't get to heaven just by following the rules. That would be too easy. Instead, you follow the rules...and HOPE to get heaven by the grace of God. Similarly, you have to follow the rules of an economy...knowing you might not get rich after all. There's no gaming the system. There's no pretending. There are no quick fixes...no shortcuts...and no guarantees. And even if this isn't true, you're better off believing it anyway. You have to love virtue for its own sake. And hate sin. And keep your fingers crossed. Regards, Bill Bonner |
| The Food Crisis is a Dollar Crisis Posted: 20 Feb 2011 09:21 AM PST At this week's hearing on Capitol Hill, Fed Chairman Ben Bernanke demonstrated a lack of understanding about what causes inflation. His comments reflected a belief that GDP growth causes inflation. But true economic growth is production-driven, and adds to the supply of goods and services in the economy. True economic growth is not inflationary. Rather, inflation is driven by runaway government deficits and bloated central bank balance sheets. And right now, we have plenty of both. So we have every reason to expect the CPI, even with all of its window-dressing shenanigans, to soar past 2% in short order. I'm surprised at how complacent the stock market remains in the face of obvious pressure building on the CPI. If the Fed doesn't react to a rising CPI by tightening policy, Treasury yields will keep soaring, and inflationary psychology will take root among most producers. If the Fed does react by ending QE and raising short-term rates, it doesn't require much imagination to guess what would happen to a stock market that's running entirely on fuel from the Fed. Either of these potential scenarios is bad for stocks. The only scenario that argues for further rallies in stocks is if - miraculously - even with unprecedented money printing and deficits worldwide, the CPI doesn't continue rising. A rising CPI will give more ammunition to the growing chorus of Fed critics in Congress. At this week's hearing, when questioned about the building pressure on consumer prices, Bernanke answered that it would be easy to stop this trend by reversing his policies. But you know he's terrified at the prospect of tightening. He's an academic with his head in the sand. When asked about the impact of QE2 on global food prices, Bernanke responded that the destabilizing spikes are due to weather and rapid growth in demand for grains in emerging markets. What a lame excuse! As an admirer of Milton Friedman, he must know that "inflation is always and everywhere a monetary phenomenon." Inflation isn't a "weather phenomenon." Without forever-growing money supplies, price spikes in one set of goods, like food, would be offset by price declines in more discretionary goods. But in today's world, demand isn't limited to what one can produce and save; it's boosted further by what one can get from government handouts and what one can borrow at the Fed window at 0%. Yet after all the experiences of recent years (including the early 2008 experience in oil and grains), Bernanke is still oblivious to the consequences of debasing the world's reserve currency. In his view, if the world doesn't conform to his personal Phillips Curve and output gap models, there must be something wrong with the world, not his models. Bernanke has the intellect to understand the negative consequences of the Fed's radical policies, but he simply chooses to ignore them or rationalize them away. By pushing on the monetary accelerator last fall (rather than wait for another "deflation scare"), Bernanke is going to undermine public support for the Fed. As a result, Bernanke gambled that he could spark a stock market rally. He indeed sparked a rally, starting last August - one that looks very long in the tooth. But the fact remains that there is no direct "transmission mechanism" from the Fed's balance sheet to the stock market. Speculators have to have a very specific, benign perspective on Fed policy in order for Fed policy to impact stocks. Today's misplaced faith in the omniscience of the Fed will soon fade, and when it does, the market will return to intrinsic value very rapidly. The day trading robots and speculators counting on a "Bernanke put" will all look to sell at the same time, and patient investors won't look to buy until prices fall much closer to intrinsic value. Using the most robust, back-tested historical valuation models, the best estimates of fair value for the S&P 500 that I've seen is somewhere in the range of 800-1,000 - 25% to 40% below current levels. At times like these, it is often constructive to contemplate probable outcomes - to thoughtfully consider the likely winners and losers that soaring food prices will create. The shares of Ag equipment guys and fertilizer companies have been soaring. For example, the shares of Deere and Caterpillar have both more than tripled since Chairmen Ben announced his very first QE program on March 18, 2009. Fertilizer company stocks like Potash and Mosaic have also been on a tear. All these companies are on the receiving side of rising food prices - more or less. But what about those companies who are on the paying side? Food producers and processors of all types are struggling to accommodate soaring food costs into their business models...and their share prices are showing the strain. Pilgrim's Pride, Tyson Foods, Sanderson Farms, Kellogg, General Mills and Safeway have all turned in conspicuously poor stock market performances during the last several months. I recently issued a bearish call on another likely victim of rising food prices. This company is subject to many of the same food price stresses that have been buffeting the companies cited above. Yet, for reasons that are not completely intuitive, the shares of this particular company continue to trend higher. Nevertheless, I suspect rising food costs will put the breaks on this uptrend and cause the stock to reverse course. This company is facing serious fundamental stresses that will cause similar problems for individuals as well. Inflation is here, folks...whether we like it or not. No use in complaining. Better to prepare. Regards, Dan Amoss Editor's Notes: Dan Amoss, CFA, is managing editor for Strategic Short Report. Dan joined Agora Financial from Investment Counselors of Maryland, investment adviser for one of the top small-cap value mutual funds over the past 15 years. "The Food Crisis is a Dollar Crisis" originally appeared in The Daily Reckoning US. Similar Posts: |
| Bargains Scarce, but New Vulture Bargain Named Posted: 20 Feb 2011 07:20 AM PST HOUSTON – From the trader's notebook this week: Silver on a roll. The Little Guys (our pet name for the smaller resource company miners and explorers) in high form. Our long-held belief that the gold/silver ratio would return to its historic relationship to gold beginning to gain acceptance; zero contango and historic backwardation in New York silver futures; spectacular Asian demand for physical precious metals, especially silver; China raising rates again, trying to reign in high and rising inflation (a precursor to price inflation here? We have already had the monetary kind); formerly stable kleptocracies falling like dominoes in the Middle East where so much of the world's oil comes from – who is next? Yemen, Libya, Syria, Bahrain? It won't be Iran with one execution of a dissident or "political blasphemer" every eight hours … will it? Let's hope they really don't have a nuclear WMD there as the region "hots up." |
| Silver Bullion Lease rates about to go parabolic Posted: 20 Feb 2011 04:29 AM PST Backwardation + Blythe + lease rates = parabolic...Paging Blythe to the OFFICE, Blythe, the principal would like to see you again... |
| SLV Calls/Puts Friday Action, BULLISH for silver Posted: 20 Feb 2011 02:41 AM PST Here is some of the future months SLV options trading. Note the heavy buy side (calls) volume and OI as opposed to the Put side for the Spring. From options trading, it seems $35 is not too far off. One step at a time folks, eventually the $50 calls will be 'off the chart' as the all time Hunt Brothers high approaches. More too come later, you know how to thank me. |
| The Gold Standard Theory and Myth (J.T. Salerno) Posted: 19 Feb 2011 04:45 PM PST |
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