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- 2011 Gold and Silver Prices at Record Highs: What you Need to Know Before Investing
- Gold, Silver and Mining Stocks Decline as Stocks Lead the Way
- update 17/03/2011
- Price Inflation Catches Up
- How Much Glitter Does Gold Add to Freeport's Stock?
- Eric Sprott: The Government Lied… There is No More Silver!
- Global X Debuts Exploration/Junior Miners ETF
- GEAB N°53 is available! Global systemic crisis: Second half of 2011 – Get ready for the meltdown of the US Treasury Bond market
- Yen Expected to Fall in the Medium Term
- Japan Catastrophe Pressures Deadbeat Debtors
- Happy Saint Patricks Day
- Time to Trade Stocks and Silver for Gold?
- This could be the day the dollar falls apart
- Mining Gold and Silver in Idaho, 1865-1885
- BREAKDOWN: The U.S. dollar is plunging to new lows for the year
- Must View, Grant just liad into Ben, Gold Standard pumping holy moly!
- AGFLATION: Food prices jump to their highest since 1974
- Gold Gold Report Excerpt – Gold COT, Bargain Hunt Underway
- Bahrain, $US Dollar, Copper, Ben/QE/Ron Paul blah blah puke blah population is on planet FuckTune to believe this shit
- Will the Aussie Carry Trade Blow Out 14% — Or 25%?
| 2011 Gold and Silver Prices at Record Highs: What you Need to Know Before Investing Posted: 17 Mar 2011 02:10 PM PDT In March 2011, gold is up 27% compared to March 2010 and silver is up an unbelievable 108%. So much for the short-term horizon. But also in the long run the precious metals' run has been spectacular. |
| Gold, Silver and Mining Stocks Decline as Stocks Lead the Way Posted: 17 Mar 2011 06:35 AM PDT
Based on the March 11th, 2011 Premium Update. Visit our archives for more gold & silver analysis. It's been only a few days since we've posted our latest timing-related essay on gold and silver prices, and since that time the situation has changed dramatically. Before providing you with the main point of this essay, we would like to comment on one of the questions that we've received recently. We've been asked about the influence that the general stock market can have on the prices of precious metals in the following weeks. In order to address this question, we believe it would be particularly useful to provide you with the basis for this type of analysis – the correlation numbers. This is where our Correlation Matrix comes in – please take a look a look below for details regarding gold, silver and mining stocks correlations. In Correlation Matrix, very little has changed since the previous week but we can draw some conclusions from the correlations seen with stocks. Looking at the 90-day column especially, we see that the value of the correlation coefficient between stocks and silver is quite high and amounts to 0.7. Consequently, it seems that bigger declines in the general stock market could result in the same across the precious metals sector and especially for silver. The bad news is that the situation on the general stock market is not bullish at all. Please take a look at the chart below (charts courtesy by http://stockcharts.com.) In the Broker / Dealer Index which reflects the action within the financial sector, we can see that index levels have broken below the rising trend channel. Normally this index leads the trends of other stocks and therefore the downturn seen here implies that declines will be seen in the general stock market as well. Therefore, caution is required at this time based on the correlation coefficients, the Broker / Dealer Index Chart, and also (not featured in this essay) the price-volume actions in the general stock market. The USD Index in the short term has moved mostly in the opposite direction of gold, silver and gold and silver mining stocks. These markets appear, however, to move independently in the medium term. If the situation turns bullish in the USD Index, this could be slightly bearish for the precious metals sector. In the short term, the precious metals appear to move on their own, however if large declines are seen in the general stock market, it would put a negative pressure on precious metals, especially on silver and juniors. In the very long-term chart for silver, we have quite a bearish development. When silver's price surpassed the $36 level, it touched the very long-term rising resistance line. This level may have been touched somewhat ahead of schedule and the $38 target level may not be seen now for some time. Actually, it is possible that we have seen a local top already, and extreme caution is warranted from here. In fact, on March 11th, 2011 we have suggested that our Subscribers close their speculative long positions in gold, silver and mining stocks, as we believed that the risk/reward ratio was no longer favorable. Before summarizing, we would like to move our analysis of the movements of the price of gold beyond the usual factors. We would like to make you familiar with the idea of the Brownian motion. Brownian motion is a mathematical way of describing phenomena which are perceived as random. If we assume that the price changes of gold have a certain amount of randomness to them, then we may use Brownian motion to describe these price changes. Let's take a look at the chart above. It presents both actual prices of gold since 2002 (the red line) and the Brownian motion based on those actual prices (the green line). This particular Brownian motion fluctuates around an exponential relationship. However, it doesn't seem that prices of gold can be directly approximated by this Brownian motion – the actual prices of gold deviate from this motion and gold trades most of the time significantly below the green pattern. So, why would we be actually interested in Brownian motion if it doesn't tell us what the level of the price will be? The answer is right on the chart. If you look at the local tops in gold, you will surely notice that most of these tops had been preceded by a moment in which prices of gold reached the level suggested by Brownian motion. This means that the analysis of Brownian motion might be able to point to possible tops in gold. Knowing that let's move to the proper analysis. At the moment, the price of gold is around $1,400. The above-mentioned chart shows that this level is still far from the level suggested by Brownian motion. This might imply that gold still has a potential to move higher and that we won't see a major (!) top in the nearest future. Another thing is that the actual price of gold has been closing the distance to the Brownian motion and that much of that process took part in the second half of 2010 and in the first months this year. These two points suggest that the major top in gold is yet to come and that it won't materialize until the price of gold reaches the level of $1,600 – possibly moving temporarily above this level. At this moment it seems that long-term investments are more than justified as gold is still likely go move higher, even if it doesn't happen right away. Summing up, the long-term situation for the precious metals market remains favorable, but metals could decline from where they are on a short-term basis if the stock market decline continues. At this point, we view the latter as likely. 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, we urge you to sign up for our free e-mail list. Sign up for our gold mailing list 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 Sunshine Profits provides professional support for Gold & Silver Investors and Traders. 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.
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| Posted: 17 Mar 2011 06:28 AM PDT I'm back. What a world we live in. An earthquake followed by a tsunami and a nuclear nightmare! And that all in one week....  Back to Gold: Gold needs to stay above 1404 now. Thank you Chris from the US for your 14 USD donation. Someone has suggested me to use google adds to fund the model, others have suggested making it a paying membership site... I'm not the commercial guy.... For the moment I'm thinking about only publishing once a week or just quiting. After all, there are more important things in life. Just look at Japan.... Don't let the markets rule your life. Don't forget to live!  This posting includes an audio/video/photo media file: Download Now |
| Posted: 17 Mar 2011 05:32 AM PDT Hard Assets Investor submits: By Brad Zigler Data from the Bureau of Labor Statistics provides more confirmation of inflation's momentum. There is, of course, the headline number: The Consumer Price Index shot up 0.5 percent in February, fanned mostly by increases in fuel and food costs. More interesting, though, was the year-over-year figures. Especially the wholesale price data. The Producer Price Index for Finished Goods, the benchmark for goods obtained for sale by retailers, is the green line in the chart below. It's up 5.6 percent from this time last year. Over the same time, the Monetary Inflation Index — our proprietary benchmark of dollar strength measured from the vantage point of the gold and forex market — rose 1.3 percent. The MII is depicted by the red line in the chart. Monetary Vs. Price Inflation Granted, there's a big difference between a 1.3 percent and a 5.6 percent hike, but the more important Complete Story » |
| How Much Glitter Does Gold Add to Freeport's Stock? Posted: 17 Mar 2011 05:29 AM PDT Trefis submits: Freeport McMoran Copper (FCX) is involved in mining, smelting and refining of coper, gold and molybdenum. The company runs its mining and smelting operations in North and South America, Indonesia and Africa. Freeport competes with other miners such as Southern Copper (PCU), Codelco and Newmont Mining (NEM).
Freeport's extensive copper mining operations are its biggest source of value – more than 73% of our $63.42 base price estimate for Freeport's stock. Our price estimate currently stands about 25% ahead of market price. The company's mining and production of gold makes up for most of its remaining value. Here we try and explain how the outlook for gold prices in the years to come can affect Freeport's stock price. Freeport's Gold Operations Freeport sold about 1.9 million ounces of gold in 2010. The company's sale of gold hit a high point in 2009, at more than 2.6 million ounces. While these Complete Story » |
| Eric Sprott: The Government Lied… There is No More Silver! Posted: 17 Mar 2011 05:22 AM PDT Speaking at the Casey Research Gold and Resource Summit, Eric Sprott told investors that there is no more silver left to go around, "There's $22 billion of silver available in the world, of which the ETFs already own half, and between you guys and us we probably own the other half… Which means there's nothing left." We've got the highlights of his speech in the video below. Listen as the CEO of Sprott Asset Management discusses the availability of precious metals, the price of gold, the GDP, national debt, and more. |
| Global X Debuts Exploration/Junior Miners ETF Posted: 17 Mar 2011 05:19 AM PDT Michael Johnston submits: Global X announced on Thursday the launch of the S&P/TSX Venture 30 Canada (TSXV), the first ETF to target companies on Canada's junior exchange. The TSX Venture Exchange was created in 1999 after major Canadian stock exchanges agreed to restructure the country's financial markets by market capitalization. The Venture Exchange includes companies too small in terms of assets and market capitalization to be listed on the Toronto Stock Exchange, and as a result has historically been dominated by resource exploration and junior mining companies. TSXV will seek to replicate the S&P/TSX Venture 30 Index, a benchmark that includes the 30 most liquid securities of the S&P/TSX Venture Composite Index. The index is split between materials and energy companies, making TSXV an option for gaining exposure to the small-cap segment of Canada's natural resources industry. The largest components of the index include gold discovery firms Atac Resources (ATADF.PK) and Rainy River Complete Story » |
| Posted: 17 Mar 2011 05:07 AM PDT - Public announcement GEAB N°53 (March 17, 2011) -  Beyond its tragic human consequences (1), the terrible disaster that has just hit Japan weakens the shaky US Treasury Bond market a little more. In the GEAB No. 52, our team had already explained how the sequence of Arab revolutions, this fall of the "petro-dollar" wall (2), would translate during 2011 into the cessation of the massive purchases of US Treasury Bonds by the Gulf States. In this issue, we anticipate that the sudden shock experienced by the Japanese economy will lead not only to the halt in US T-Bond purchases by Japan, but it will force the authorities in Tokyo to make substantial sales of a significant portion of their US Treasury Bond reserves to finance the enormous cost of stabilization, reconstruction and revival of the Japanese economy (3). With Japan and the Gulf States alone accounting for 25% of the total 4.4 trillion USD of US federal debt (December 2010), LEAP/E2020 believes that this new situation which is asserting itself during the first quarter of 2011, against a background of China's increasing reluctance (holding 20% of US Treasury Bonds) to continue to invest in US government debt (4), carries the seeds for the collapse of the US Treasury Bond market in the second half of 2011, a market that now has only a single buyer: the US Federal Reserve (5). It is certain that the context of the crisis of US local authority securities (Munis) and European government debt (the entire periphery of the EU, including the United Kingdom) that our team anticipated for this timeframe (see GEAB N°50 ), will only exacerbate the event. Moreover, it is highly significant that PIMCO the world's largest bond fund manager decided, at the end of February 2011, to liquidate its US Treasury Bond holdings. And that was before the disaster in Japan (6)!  But beyond the Japanese and Arab shocks (see GEAB N°52 ), the process of US Federal debt market implosion in the second half of 2011 is accelerating under the effect of four other events: . the introduction of budget austerity in the US (as anticipated in GEAB No. 47) which condemns US local authorities to a major crisis in the market for their debt ("Munis") . impossible for the Fed to introduce QE3 . the inevitable rise in interest rates against a backdrop of global inflation . the end of safe-haven status for the US currency. Of course, these events are related and, characteristic of a major crisis, we are entering a period that will see a mutual strengthening of their effects, leading to this sudden shock in the second quarter of 2011. Incidentally, we could add a fifth event: the complete decisional paralysis of the US powers. The daily confrontation on virtually all subjects, between Republicans (hardened by the "Tea Parties") and Democrats (demoralized by an Obama administration that has betrayed the substance of its campaign promises (7)), tends to show, a little more each day, that Washington has become a sort of "Ship of Fools ", tossed about by events, without any strategy, without willpower, incapable of action(8); in other words, according to LEAP/E2020, when the US Treasury Bond collapse begins, one cannot expect anything from Washington other than a colossal squawking that will only worsen the crisis. In this issue's public announcement, we have chosen to present our anticipation of the Japanese shock on a global scale, in particular in terms of inflation and geopolitics, in more detail. The other events that lead to the collapse of the US Treasury Bond market in the second half of 2011 are analyzed in this issue, where we also set out our recommendations to address the clear worsening of the global geopolitical dislocation process. The triple disaster that has just hit Japan (earthquake, tsunami and nuclear accident) is a crucial event that will accelerate and intensify the global systemic crisis, and in particular the process of global geopolitical dislocation. The scale of destruction, the direct impact on the energy infrastructure of the third (or fourth) largest economy in the world (9), the severity of the accidents at the nuclear power plants (10), ... is one of the major shocks which the current international system is no longer able to withstand as we anticipated in the GEAB N° 51 ("2011: The Ruthless Year "). Japan, already seriously weakened by a chronic economic crisis that has lasted for twenty years and whose government debt is one of the largest in the world, now finds itself faced with the need to both finance a large-scale reconstruction and secure major change over an indefinite period characterized by a limitation of available energy and the disruption of commercial and industrial supply chains. Yet Japan is a fundamental part of the system of global governance of recent decades. Tokyo is one of the world's major financial centers, one of the three management hubs of the foreign exchange markets (along with London and New York) and the Japanese economy supplies a quantity of electronic components vital to the global economy. Finally, as we have analyzed in past issues, it is, with the United Kingdom, one of the two "floats" (11) that has allowed the US to manage global economic, monetary and financial affairs for over fifty years. For several years now this "float" has been increasingly attracted to the Chinese sphere of influence, keeping pace with China's increasing strength and the weakening of the United States. The crisis triggered by the earthquake will, according to LEAP/E2020, greatly accelerate this trend particularly because today, only China has the capacity to provide massive financial aid to Japan (12), while directly helping its economy by opening the huge Chinese market to Japanese business even more (13).  As regards global inflation, we can already identity five channels by which the Japanese crisis will reinforce current inflationary pressures: • the abrupt end to the policy of the expansion of the civil nuclear industry worldwide (14) will rapidly increase pressure on the price of oil (15), gas and coal • the shortage of many vital electronic parts which will mean higher prices for electronic equipment (from computers to flat screen TVs (16)) because of power cuts that affect plants and transport disruption (17) • increased pressure on world food and energy prices (18) due to a significant increase in Japanese food imports (especially rice) since the area affected is one of the country's major agricultural regions (see map below) • a further decline in the world economy following the global consequences of the near-halt of the Japanese economy, champion of both exports and "just-in-time" delivery (19), which will limit as much the "deflation" effect of globalized trade (20) • and finally, a double phenomenon of a falling yen due to massive injections of liquidity by the Bank of Japan and the immediate increase in the worldwide "borrowing cost" of money (higher interest rates) because of Japan's huge needs to carry out its reconstruction.  These anticipations obviously don't incorporate the ultimate disaster scenario that would see the Tokyo region heavily contaminated by radioactivity following an explosion and radioactive fallout at the Fukushima plant (21). Such a situation would, just like Chernobyl, lead to the creation of an exclusion zone affecting this region of more than thirty million inhabitants and which is at the heart of the flow of global basic necessities, and would lead to an historically unprecedented humanitarian disaster and an immediate disruption of economic, global, financial and monetary markets. Quite simply, there is no "plan B" for a "sudden shutdown" of the global intersection that Tokyo and the surrounding region constitutes. Whist hoping that this extreme situation doesn't materialize, our team believes that the shock that has taken place will, therefore, result in a sudden worsening of the global systemic crisis and that the US Treasury Bond market will be the first major collateral casualty from the second half of 2011, as we analyze in detail in this issue. Thankfully the worst situation may not happen but, on the other hand, there's no doubt that it's very serious. -------- Notes: (1) In these tragic circumstances, the LEAP/E2020 team would like to express its solidarity with the people of Japan and in particular with our numerous Japanese subscribers and visitors to our website. We would also like to emphasize that our very "clinical" analysis of the consequences of the catastrophe that Japan has just suffered is not a mark of indifference but simply the respect of our methodology which aims to limit the subjective elements at the heart of our anticipations to the strict minimum likely. (2) Even the Telegraph of 02/24/2011 now interprets the grassroots Arab revolution as the fall of the Middle Eastern US empire. (3) Source: JapanToday, 03/14/2011 (4) According to the German edition of the FT, the Chinese central bank has even been given instructions to not buy any at all anymore. Source : FT Deutschland, 10/03/2011 (5) Before the Japanese disaster, it was estimated that the Fed had become the primary holder of US Treasury Bonds, having already purchased more than 70% of new issue. In the coming weeks this proportion will, step-by-step, approach 90% to 95%. Because, even despite its docility vis-à-vis US pressure, the United Kingdom which each day sinks a little further into the new phase of the crisis, the "double-dip-flation" as our team calls it, can no longer afford to buy US Treasury Bonds: it is too busy repurchasing its own government debt. Moreover, according to Karen Ward, one of HSBC's main economists, the British government could face hunger riots if food price continue to soar the way they have been doing in the past few weeks. Source: SkyNews, 03/09/2011 (6) In the short term, the flight from stocks (Japanese and others) will benefit US Treasury Bonds, but it's a temporary event. Source : CNBC, 03/09/2011 (7) The latest is the reopening of the Guantanamo trials whilst he had promised the closure of the prison within a year after his election at the latest, thus drawing millions of voters from the left of the Democratic Party. (8) France is the other major western country whose leadership finds itself in the same situation. (9) Depending on whether one considers Euroland as an economy on its own. Yet the March 11 summit that continued to tighten the budgetary and financial integration of Eurozone countries makes the position of wanting to continue to separately count the Eurozone countries' combined major economic numbers more and more absurd. Thus, with a GDP of €8.4 trillion, Euroland is in second place behind the US (€10.428 trillion) at a current exchange rate of 1 €/$ 1.4, and way ahead of China (€4.1 trillion) and Japan (€3.85 trillion). Sources: Wikipedia, Eurozone, Countries listed by GDP. (10) Without even mentioning at this stage the risk of partial or complete neutralization of the Tokyo region, one of the key cities of the world in recent decades, due to nuclear contamination. (11) Like a trimaran. (12) Keep in mind that Beijing seeks by all means to quickly, but profitably, get rid of its mountain of Treasury Bonds and US Dollars. The cataclysm that Japan is currently suffering will thus offer Chinese leaders a unique opportunity to strategically align Tokyo with Beijing. (13) Conversely, the highly controversial US troop presence in Japan will materialize in Japanese public opinion, as all the more anachronistic and useless in the face of the current disaster. This is another example, as we have already seen in the case of the Arab revolution, of the growing uselessness of the huge US military machine: in crisis after crisis, it is becoming obvious that it is of virtually no use in enabling the US government to influence events. (14) It is in fact certain that civil nuclear power has just come to a sudden halt from which it will be very hard to recover, especially because this disaster now joined in the conflict between the elite and public opinion that the global systemic crisis exacerbates a little more on a daily basis. We can already include France amongst the countries that will suffer the full brunt of this "revolution" vis-à-vis nuclear energy which has, for nearly fifty years of civil nuclear energy, made it one of the jewels of its technology and exports. Source: Spiegel, 03/14/2011 (15) One factor that will strengthen the inexorable progression in the Gulf region towards a situation of chaos, even direct conflict between Shiites and Sunnis, between the people of the region and their leaders, between Iran and Saudi Arabia. Sending Saudi troops to Bahrain is an indication of the escalating risks in the region just as the financial implications for the UAE who are trying to urgently alleviate forty years of neglect of entire segments of their population. Sources: AlJazeera, 03/15/2011; New York Times, 03/10/2011; AlJazeera, 03/10/2011 (16) One of the few "bearish" sectors which allowed the soaring price of food and energy at the core of many price indices to be hidden. So even in China and throughout Southeast Asia, the impact of Japanese spare-part shortages is already being felt with immediate price rises as the Japanese electronics industry has massively relocated entire parts of its production throughout Asia while keeping strategic manufacturing in Japan. Source: China Daily, 03/15/2011 (17) Around the world we will experience shortages of Japanese cars and spare parts for them. Given the global importance of the Japanese automobile industry, there will be no solution of an easy alternative which can be implemented. Thus, even in India, yet little dependent on Japanese brands, the impact is already being directly felt with the cancellation of sales and promotion of new models by the major Japanese manufacturers. Source: Times of India, 03/15/2011 (18) Several Japanese refineries have been destroyed. That implies increased Japanese imports of refined products which are already causing petrol price rises in the US. Source: USAToday, 03/14/2011 (19) The Chinese and German export economies (as well as those of South Korea, Taiwan…) will also suffer the negative consequences of this development. (20) It is important to keep in mind that the decline in the globalization of trade in favor of a focus on regional economic zones endowed with a single or dominant currency (EU, Asia, Latin America ...) involves a simultaneous decrease in the need for US Dollars to finance international trade. See previous GEAB issues. (21) This would also lead to international consequences in terms of radioactive fallout. |
| Yen Expected to Fall in the Medium Term Posted: 17 Mar 2011 04:51 AM PDT Lok Sang Ho submits: The recent surge in the value of the yen is based on the notion that the Japanese had to repatriate their foreign assets home to meet the needs of disaster relief and post disaster reconstruction after the giant earthquake and tsunami. While these short term effects are indeed expected, there is little doubt that over the medium term the yen will depreciate significantly from the current levels, probably back to 90 yen to the dollar or lower. There is little doubt that the reconstruction will require massive imports to feed the reconstruction activities. At the same time Japan's capacity to attract foreign earnings through tourism and exports has been damaged. On the fiscal front, the reconstruction is going to add to the already massive national debt. Traditionally the Japanese government has raised the money domestically. It is unlikely that it can raise the necessary funds from the private sector to Complete Story » |
| Japan Catastrophe Pressures Deadbeat Debtors Posted: 17 Mar 2011 03:05 AM PDT The sequence of catastrophes which has afflicted Japan can only fill us with empathy for the Japanese people. However, Western deadbeat debtors cannot afford to concern themselves only with expressing their official condolences to Japan. Rather, they need to be focusing upon their own financial survival. With Japan's era of near-zero interest rates now stretching into decades, Japanese citizens were forced (by their own government) to invest outside the country. Countless trillions of yen flowed into the economies of other nations (and were converted into those local currencies). With Japan facing a massive reconstruction effort, those trillions of yen are now required at home – to attempt to mend the domestic economy, and the nation of Japan itself. Over the short term, two trends dominate. One is general downward pressure on global asset prices as Japanese investors liquidate those foreign assets. The second is upward pressure on the yen as assets previously held in foreign currencies are converted back to yen – causing a short-term spike in demand for this worthless paper. Thus we now have the peculiar situation where one of the worst of the deadbeat debtors – Japan itself – is seeing a spike in the (relative) value of its currency, despite the fact that over the longer term the direction for the yen must be lower, not higher. Japan was gripped with enormous structural deficits before these series of tragedies struck. Thanks to the horrific damage to infrastructure, Japan faces massive spending requirements, even as its capacity to generate wealth/income has been severely impaired. It highlights the unforgivable negligence and recklessness of Western "leaders" in creating these structural deficits in all of our economies – with the consequence being that none of our economies is prepared to withstand any sort of major catastrophe in our own backyards. The size of Japan's already-huge deficits can only soar higher. This effectively cuts Japan off from international debt markets, as Japan's ability to even service these higher debt-loads is seriously in question. Longer term, debt-default now seems a virtual certainty for Japan. Thus, the only way Japan could engage in any foreign borrowing is through much higher interest rates (to compensate lenders for greatly increased risk). However this would drive-up the costs of servicing Japan's existing debt by such an extreme amount that arguably any and every dollar which Japan could borrow would simply be consumed in rising interest payments. Effectively, Japan can do nothing but print money by the trillions (the "Bernanke solution"), while its economy sinks further and further into debt. This is now a scenario which could quickly and easily degenerate into a hyperinflation spiral, as it now becomes very similar to that of Weimar Germany. With Weimar Germany, it was the combination of huge, existing debts and future spending obligations which together were impossible for that economy to continue to manage which precipitated hyperinflation. It is the combination of gigantic debts and the future expectations that things can only get worse which destroys confidence in a currency. And as with all scams, the inherent "con-game" (i.e. confidence game) of fiat currencies can only continue as long as the "chumps" (i.e. us) can continue to be duped into believing that all this worthless banker paper has "value". As with any cheap magician, once the "illusion" has been dispelled, the "magic" (i.e. the con) fools no one. Thus our current generation of "cheap magicians" (i.e. central bankers) are nearing the end of their era. Some of the chumps (i.e. those of us investing in precious metals) have already seen through the stealing-by-dilution inherent in their reckless, fiat money-printing. Every "un-backed" paper currency ever created by bankers (over a thousand years) has been destroyed by those same bankers – through excessive dilution. |
| Posted: 17 Mar 2011 02:29 AM PDT gold.ie |
| Time to Trade Stocks and Silver for Gold? Posted: 17 Mar 2011 02:26 AM PDT Ciovacco Capital Management |
| This could be the day the dollar falls apart Posted: 17 Mar 2011 02:06 AM PDT From Gonzalo Lira: I could be wrong – hell, most of the time, I'm way wrong. But I do think that today is the day the dollar breaks down. Consider the evidence: The Bank of Japan managed to keep the yen down following last Friday's Sendai quake. It was trading in an eerily placid 81-to-82 band on Monday, Tuesday, and Wednesday – but then Thursday (Japan time), someone at the BoJ must have prematurely decided it was all over, because they let go of the gas. What happened? It all went south – huge. As I write this morning (8:12am EST), the yen is trading at 78.50 to the dollar. ... and the dollar index is off nearly a percent, at 75.970. I think this is it: I think this is the point in time when the dollar is going to break decisively lower – the next 48 hours. And if the Consumer Price Index numbers that come out tomorrow (Friday) are as bad as the PPI numbers would lead one to believe, I think the dollar will fall harder over the next week. But the thing is, if I'm wrong about the timing, I'm not wrong about the outcome. If the dollar doesn't break down now, it'll break down the next time, or the time after that. And not next year or next decade – this year. Now. The reason the dollar will break down now is... Read full article... More on the dollar: A dollar collapse could be imminent The U.S. dollar is in immediate danger You must diversify now before it's too late |
| Mining Gold and Silver in Idaho, 1865-1885 Posted: 17 Mar 2011 01:53 AM PDT Access Genealogy |
| BREAKDOWN: The U.S. dollar is plunging to new lows for the year Posted: 17 Mar 2011 01:28 AM PDT From The TSI Trader: I have been saying for some time now that our current situation is very similar to Q1 of 2008. I'll get to that in a minute. But first, a quick look at the price action of the U.S. Dollar in the last hour or so. This is a daily chart of the U.S. Dollar continuous contract. The current daily cycle began with a low of 76.12 which was taken out to the downside after the market closed yesterday, Wednesday. In the mean time, this price level was assaulted just a couple hours ago and the dollar was dropped all the way to 75.85. The implication for the dollar is ominous... Read full article (with charts)... More on the dollar: Trade expert: 50% dollar devaluation could be coming This could be your last great chance to get out of the dollar The next 10 days could determine the fate of the U.S. dollar |
| Must View, Grant just liad into Ben, Gold Standard pumping holy moly! Posted: 17 Mar 2011 01:24 AM PDT Like the Bears Part 4 video said, there is a war going on right now... Click here to Watch |
| AGFLATION: Food prices jump to their highest since 1974 Posted: 17 Mar 2011 01:10 AM PDT From Zero Hedge: With so much going on in the geopolitical/logical arena, it's easy to forget there is an actual underlying economy, which the Fed in its endless efforts to hike the Russell 2000 is doing all it can to destroy. Earlier, we pointed out when we looked at the PPI number, the finished consumer food inflation index surged by the highest percentage in 37 years. This fact bears repeating. So we leave it to John Lohman to summarize briefly and succinctly as he is wont to do, how Americans will soon have no choice but to indeed eat their iPad 2 as soon as Benny unleashes QE3, which is now inevitable. It's understandable that this morning's spike in finished consumer food prices received little attention. What with a mini-crash in housing starts, spent fuel pools running dry, USDJPY breaking the BOJ's strike price of 80, and busted underwater POMO trades, there was no shortage of distractions. Nevertheless, any time an ecostat comes in at the 4th highest reading in its 64 year history, it's worth taking note. As shown in... Read full article... More on agflation: This could be a big buying opportunity in agriculture stocks Forget gold... One of America's favorite commodities is headed to all-time highs "Dr. Doom" Roubini: Forget the financial crisis... This crisis could topple world governments |
| Gold Gold Report Excerpt – Gold COT, Bargain Hunt Underway Posted: 17 Mar 2011 12:29 AM PDT HOUSTON – Just below is another excerpt of this past Sunday's full Got Gold Report (GGR). This excerpt is the part of the report that looks at the Commodity Futures Trading Commission (CFTC) Commitments of Traders Report (COT) for gold, and it will give non-subscribers a sense of some of what we look at in the GGR, but first a quick contemporary comment. |
| Posted: 17 Mar 2011 12:18 AM PDT 1. Bahrain closes banks today. Click here to Read Things are getting worse in the middle east. Dont let CNN tell you any different. 2. US dollar is holding 76 like a motherfucker. This is key pivot point here. 3. Copper up over 2%, I wish I had 99.999.99.99999999% of the market like Blythe does, thank you CTFC for supporting criminals, and the continuation of the complete skinnage of the |
| Will the Aussie Carry Trade Blow Out 14% — Or 25%? Posted: 16 Mar 2011 11:07 PM PDT
But this brittle carry trade cannot handle prices below .9800 for long – and if the trade shatters, the blowout could be huge. The AUDUSD carry trade broke down during the May "Flash Crash" last year, causing the AUDUSD to shed nearly 14% percent in one month. Once it became clear the world wasn't going to end, and that the eurozone wasn't going to default en masse, the carry trade resumed. We are near the point where the AUDUSD Carry trade could begin to liquidate again. My expectations are that any sustained trading below .9800 AUDUSD could ignite the liquidation process. We are near that level now…
The question is, how large could the liquidation be? In May, the liquidation shaved 14% from the AUDUSD over the course of a month. That's a figure we can use as a first blush comparison. However, since we've had a gigantic rally in the months after the flash crash, I ask: Is the real target in an AUDUSD carry trade blowout the .8050 level? The AUDUSD is up over 25% off the May 2010 lows. After the flash crash in May, the AUDUSD resumed its upward march, putting in a top above parity (1.0000) at 1.0256 on December 31, 2010! That's right, the recent highs in the AUDUSD were made on the last trading day of 2010, just in time to calculate returns on the bonus. I call that "painting the tape" – way to go, Carry Traders! So, while the AUDUSD blew out 14% during the May 2010 Carry trade unwind, we have to consider that there could be a larger blowout this time. Could the AUDUSD blow out to .8050 once again?
The question is open as to how much of this big rally in the AUDUSD was driven by the carry trade. If it is nearly all of it, then the .8050 level is again in play. While most of the Australian Dollar carry trade has been funded with U.S. Dollars during this latest rally, there is still AUDJPY carry trade activity. The yen is making new highs, and the Bank of Japan seems to have given up after a very light intervention right after the earthquake. We are seeing continued weakness in the AUDJPY. This puts additional pressure on the AUD, which for carry traders is not good news…
The AUDUSD Carry Trade Explained The carry trade is a popular trade for institutional traders. Traders sell the low interest rate currency, and buy the high interest rate currency, and make a profit from the interest rate spread. When you sell a currency, you are effectively borrowing the currency, so you pay interest on the money you borrow. When you buy a currency, you get to lend this currency out to someone, and you get payment from that person. To put on a carry trade, all you need to do is buy AUDUSD – where you are buying AUD with a 4.75% overnight interest and selling USD with a 0.5% interest rate. The act of buying this currency pair puts you into the carry trade. This trade works great if the exchange rate is stable – you can make 15% a year from just owning one currency over another – with a moderate amount of leverage. It works even better if the currency pair goes in your favor – like the AUDUSD has done for months now. With the huge rally in the AUDUSD, the returns for this trade were fantastic in the second half of 2010. But carry trades are brittle! When they break, the entire trade tends to break down very quickly. That is what we saw during the flash crash of May 2010. The AUDUSD broke down and shed 14% in a matter of days. We could see breakdown of the AUDUSD and AUDJPY carry trades as well in the coming weeks (or days). Once this starts, the entire blowout could last for an extended period as successive waves of traders are forced to liquidate their positions. If this carry trade unwinds, how low will these pairs go? WW  |
The AUDUSD carry trade – where you sell US dollars and buy Australian dollars to profit on the interest rate spread and any gains in the AUDUSD – has been been on a tear since June of last year.
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