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- Bubble, Schmubble! What Gold Bubble?
- March 28th CTFC position Limits, Israeli lies, Silver shorts covering..?
- Significant Breakdown in Gold or a Short-term Bottom in Platinum?
- Silver manipulation claims spark discord at US watchdog
- The Floating Dollar as a Threat to Property Rights
- Liberty Dollar founder convicted of counterfeiting; U.S. attorney calls him a terrorist
- Turkish gold imports expected to rise by 50% in 2011
- Trading Comments, 19 March 2011 (posted 012h00 CET):
- Gold Reverses Weekly Loss, Silver Slips 2.3%...
- Eric Sprott: The Government Lied… There is No More Silver!
- When the Horn Silver Mine Crashed in
- A beginners guide to investing in Gold
- Collateral Damage
- Why Russia ETFs Are Receiving So Much Love
- Looks like the OJ jury wasn't the last jury to get it wrong.
- 8 Consumer Stocks Hedge Funds Are Extremely Bullish About
- Friday ETF Roundup: FXI Declines on Bank Tightening, EWJ Continues Rebound
- How to Save Yourself from Fed Money Creation
- Silver Is Too Rich vs. Gold
- Analyst: The dollar crash has officially begun
| Bubble, Schmubble! What Gold Bubble? Posted: 19 Mar 2011 07:00 AM PDT While a few mainstream outlets...acknowledge gold's stellar run, most remain skeptical or outright bearish and the blasphemy they purport is that gold is in a bubble. Let's settle it, right now, and shut these naysayers up. What bubble? Words: 670 | |||||||||||||||||||||||||||||||||||||||||||||||||
| March 28th CTFC position Limits, Israeli lies, Silver shorts covering..? Posted: 19 Mar 2011 06:21 AM PDT I would like to first immediately talk about Israel and the alleged Hamas mortar firing. I called this bullshit pre-emptive strike a month ago, and everyone laughed at me and said I was just being "anti-semitic' and had nothing to do with Silver. You can read my report here on Feb 20 no longer than a month ago Click here You can view Tylers Article below. Click here for entire Zerohedge | |||||||||||||||||||||||||||||||||||||||||||||||||
| Significant Breakdown in Gold or a Short-term Bottom in Platinum? Posted: 19 Mar 2011 02:00 AM PDT | |||||||||||||||||||||||||||||||||||||||||||||||||
| Silver manipulation claims spark discord at US watchdog Posted: 18 Mar 2011 11:58 PM PDT  Reader George Findlay has our last item of the day. It's a posting over at citywire.co.uk that's datelined yesterday. New claims that the silver price is being manipulated have prompted a senior US regulator Gary Gensler to criticise the agency regulating commodity markets –the very agency that he oversees. Silver analyst Ted Butler's name figures prominently in this article as well. This is also an absolute must read...and the link is here. | |||||||||||||||||||||||||||||||||||||||||||||||||
| The Floating Dollar as a Threat to Property Rights Posted: 18 Mar 2011 11:58 PM PDT  This longish piece was sent to me by reader Jason Hall earlier this week...and I've been saving it for this column. It's a must read from one end to the other...and don't let the title fool you. | |||||||||||||||||||||||||||||||||||||||||||||||||
| Liberty Dollar founder convicted of counterfeiting; U.S. attorney calls him a terrorist Posted: 18 Mar 2011 11:58 PM PDT  My last four stories are all precious metals-related...and the first one came from a GATA release yesterday. Liberty Dollar founder Bernard von NotHaus was convicted yesterday on federal charges in Statesville, N.C. The case has local implications, because Asheville Liberty Dollar head Kevin Innes also faces trial. Innes has asserted that he is innocent of any wrongdoing, and sought local support. This whole thing was a show trial from beginning to end, of course...especially considering the fact the many States of the Union...lead by Utah...are bringing back gold and silver as competing currencies for the U.S. dollar within their own states. | |||||||||||||||||||||||||||||||||||||||||||||||||
| Turkish gold imports expected to rise by 50% in 2011 Posted: 18 Mar 2011 11:58 PM PDT  Here's a story from mineweb.com filed from Istanbul that was sent to me by reader 'David in California' yesterday. Gold imports into Turkey, the world's fourth-biggest gold consumer, are expected to rise by around 50 percent in 2011 and jewellery exports by 15-20 percent, a Turkish gold banker said. Turkey's gold imports rose to 42.49 tonnes in 2010, up 13 percent from the previous year. Jewellery exports reached a value of $1.2 billion. The link is here. | |||||||||||||||||||||||||||||||||||||||||||||||||
| Trading Comments, 19 March 2011 (posted 012h00 CET): Posted: 18 Mar 2011 10:00 PM PDT It looks increasingly likely that the correction in the precious metals ended on March 15th. Both gold and silver re-tested the low made that day, which held. So we will continue to follow | |||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Reverses Weekly Loss, Silver Slips 2.3%... Posted: 18 Mar 2011 06:06 PM PDT Bullion Vault | |||||||||||||||||||||||||||||||||||||||||||||||||
| Eric Sprott: The Government Lied… There is No More Silver! Posted: 18 Mar 2011 06:00 PM PDT | |||||||||||||||||||||||||||||||||||||||||||||||||
| When the Horn Silver Mine Crashed in Posted: 18 Mar 2011 05:45 PM PDT Utah History | |||||||||||||||||||||||||||||||||||||||||||||||||
| A beginners guide to investing in Gold Posted: 18 Mar 2011 05:30 PM PDT | |||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 18 Mar 2011 11:38 AM PDT 'The Great Moderation' is the name given to the time leading up to the 2008 financial crisis. (Different people give it different starting dates.) The idea is (now was) that regulation and central banking had given rise to stability and growth. Part of this moderation was attributed to derivatives. By allowing companies to hedge the risks inherent in their primary business, derivatives were supposed to make those primary businesses safer. A company dealing in lots of foreign cash could secure an exchange rate by buying a foreign exchange derivative. Pension funds could insure their portfolios by buying options. Insurers could insure themselves against wild weather by buying a weather-linked derivative. But the practice didn't just allow risk to be mitigated. Someone had to take the opposite side of each trade. So, pretty quickly, derivatives got turned into financial gambling steroids. They allowed leveraging of positions without actual leverage. Heck, they changed the very definition of 'leverage'. It used to mean using debt. Now it describes bets that move in multiples to the underlying asset's movement. Aside from derivatives, which are of course a major factor, there is another story that allowed The Great Moderation to take hold and then blow up. And it's one we haven't really read about. At least not with this angle. When people engage in transactions, they often demand collateral from their counterparty. The idea being to reduce the risk of something going wrong. 'If you don't pay, then I have the right to sell your house.' Or something like that. Banks and financial institutions often use collateral to back up promises. And many companies hold safe assets on their balance sheet as a type of collateral to creditors. If the company fails, there are plenty of assets to go around. It may not be collateral in the strict sense of the word, but the effect is much the same: to reduce counterparty risk... the financial fallout of the other person not doing what they are supposed to under the agreement. But using collateral exposes you to a whole new risk. If housing is used as collateral, then house prices are a risk. If collateralised debt obligations (CDOs) are used as collateral, then you are exposed to CDO price risk. If an implied government backing, or 'too big to fail' status is used as a type of collateral, you are exposed to political indecision risk. (Ask Lehman Brothers creditors about this one.) If access to the central bank's discount window is used as a type of collateral, you expose yourself to risks in the discount rate. In other words, reducing counterparty risk by using collateral, or something that has the effect of collateral, may leave you with a new type of risk that can infect the rest of the transaction or relationship. Collateral can add to your overall risk instead of reducing it. So, what do you do? Not use collateral? More on that below. First, let's look at just how prevalent this issue is. Based on Ben Bernanke's comments at the Financial Crisis Inquiry Commission, the Tri-party Repo Market in 2008 was a prime example of how collateral can turn on you. With no small consequences. ' ... runs in the tri-party repo market, where what we used to think was very stable funding, which is funding through repurchase agreements where the investment banks would put out assets overnight and use that as collateral, they thought that was a pretty much foolproof form of short-term funding.' To clarify, a repurchase agreement, or 'repo' is like a short-term loan with collateral. You sell assets with the agreement to buy them back. If you can't finance the repurchase, the holder of the collateral is left holding assets. Which is much better than a claim on assets as with normal lending agreements. Bernanke continues: 'But in a crisis where people began to doubt the liquidity or the value of those assets, the haircuts went up and you got into a vicious cycle which led to the Bear Stearns collapse and was important in the Lehman collapse as well.' In other words, the collateral used in the repo agreements added risk instead of reducing it. The value of the assets fell, making the repo transactions dubious. That interrupted the funding structure of two major investment banks, marking the onset of a major financial crisis. Many of the assets used in these repo agreements were linked to real estate and mortgages. This is the crucial link between sub-prime lending, securitisation and the collapse of financial institutions. They used securitised loans as collateral in their repos. Assets that were conveniently rated AAA by credit ratings agencies, which is a common requirement for collateral in repo markets. Had Bear Stearns borrowed in straightforward lending agreements without collateral, the falling asset prices of the collateral used may not have caused the collapse of the company. This is of course an over-simplified view, as Bear Stearns would have had the assets used as collateral on its balance sheets instead of in the repo market. But the risk would have been within the company, which changes the nature of the risk. For example, by using housing-linked assets as collateral for so much of its funding (enough to cause it to fail), Bear Stearns was playing the game with an open hand. Its creditors knew the assets Bear Stearns held, as they themselves held them as collateral. The famous secrecy with which investment banks conduct their affairs allows them to hide such structural weaknesses. Also, when the repo market dried up, Bear was forced to sell exactly those assets that were being used as collateral in the repo market. This pushed the price down further, exacerbating the problem. The predictability of this sequence of events from the perspective of Bear's repo counterparties is a major factor to the sudden loss of willingness to lend to Bear. If Bear had had access to a lending facility that was not as directly linked to the assets it held on its balance sheet, its funding crisis may have slowed significantly. Whether it could have been saved is pure speculation. It could be argued that by relying on funding that is directly linked to assets held (by using them as collateral), a company is asking for trouble. If something goes wrong with the assets held, not only is the balance sheet in trouble, but funding the balance sheet is too. Remembering the point made above about derivatives providing leverage, this is much the same concept, but applied to corporate finance. It is not traditional leverage, although that forms part of the equation. It is a speculative type of leverage, which changes the odds of the game. By tying funding (via collateral) and profit (via assets held) to the same set of assets, you get leveraged profits. In a good year, the price of the assets go up, improving the quality of your collateral, which lowers funding costs. The gains in the value of assets held also show up as revenue. A double-sided benefit. In a bad year, the collateral is perceived risky and funding costs rise, while the falling price of assets pushes down revenue. Good and bad are exacerbated. Much like with the derivatives used to earn multiples of returns, rather than the inherent return of the underlying asset. The idea that collateral can make things safer by reducing risk is a remarkably similar fraud to the derivatives story in many other ways. But an even closer parallel is likely to be found in your own portfolio. How many times has your financial advisor or broker told you to hold a diversified portfolio? Well, aren't you just assuming a larger number of different types of risk each time you buy a stock different to the ones you already hold? If you are optimistic on retail and your portfolio consists of retail stocks only, then you are exposed to risks affecting retail. If you buy mining stocks, you take on the risk of mining as well. You may be less exposed to risk in retail, but you now have two sectors of the economy for which bad news will affect you. To do well, you have to be right on both counts. As for the mathematical justification for diversification, your editor has studied it. And it relies on many theories that are now considered laughable by anyone who has followed the news during the financial crisis. But even before 2008, the idea that diversification was a good idea never really held up. For example, when your broker shows you how well the All Ords has performed over the long term, ask them what happens to the companies that fail and drop out of the index. What if you had bought and held them? How would your portfolio look compared to the index? The source of capitalism's strength is that everyone is not in it together. People can dissent. This allows those who are prudent to do well, and those who aren't to be taken over by better decision makers. If you force all to sink or swim together by assuming each other's risk, you lose this dynamism. The purpose of collateral is to soften those effects of capitalism. Some would call it risk management. But, as mentioned above, it often fails miserably. The solution is painfully obvious. Use collateral that is inversely correlated to your existing risk. Cancel the risk out. Do the opposite of firms like Bear Stearns. But now we are back to where we started - derivatives. The agreements designed to hedge risk, which can be abused to gamble. Collateral can be used in much the same way. But many people do use derivatives well and responsibly. So collateral can be used effectively too. And it should have similar attributes to the way derivatives are used well. The assets used as collateral should be inversely correlated to your inherent risk. Otherwise, don't call it collateral. So, we've had derivatives and collateral blow up. What's next? What asset class is currently being designated as 'risk mitigating' when it is actually increasing risk. In keeping with the idea that the economy is going from bad to worse and that the risk has gone from the balance sheets of the banks to the balance sheet of governments, bonds are the place to look. US treasuries are used by finance professionals as the risk-free benchmark. And what could better blow up than a risk-free asset? But how? Well, like the risk-mitigating abilities of derivatives and collateral encouraged bad behaviour, so too do government bonds. Designating the bonds 'risk free' created massive demand for them, which has allowed governments to spend and borrow their way to presidencies and prime-ministerships. But, like with derivatives traders and collateral users, the concept was taken too far. Now the so-called risk-free asset class looks like it could bring down the system completely. It will make derivative and collateral collapses look boring when it does. Japan, Europe and the US are playing a combination of spin the bottle and Russian roulette on this one. | |||||||||||||||||||||||||||||||||||||||||||||||||
| Why Russia ETFs Are Receiving So Much Love Posted: 18 Mar 2011 10:23 AM PDT  Gary Gordon submits: One of the reasons cited for the underperformance of several BRIC-related ETFs? Out-of-control inflation. Yet the data on rising consumer prices aren't supportive of the simplistic analysis.
Inflation in Russia appears far more damaging than in other emerging market giants. And yet, investing in Russia has been hugely rewarding. In fact, Market Vectors Russia (RSX) hit a new multi-year high as recently as March 3, 2011, more than a week after the Libyan uprising. On March 18, 2011, RSX rested a mere 4% off of its pinnacle. This occurred in spite of rampant selling of risk assets; it occurred with little regard to inflationary pressure; it even occurred in spite of enormous fears of a nuclear meltdown in Japan. Meanwhile, WisdomTree India Earnings (EPI) has already Complete Story » | |||||||||||||||||||||||||||||||||||||||||||||||||
| Looks like the OJ jury wasn't the last jury to get it wrong. Posted: 18 Mar 2011 09:44 AM PDT Liberty dollar creator guilty on two counts. :thumpdown: http://coinworld.com/News/20110328/B...720110328.aspx | |||||||||||||||||||||||||||||||||||||||||||||||||
| 8 Consumer Stocks Hedge Funds Are Extremely Bullish About Posted: 18 Mar 2011 09:21 AM PDT Insider Monkey submits: We follow hedge fund managers because they're the smartest investors around. They leave less to chance than most investors. They go to great lengths to get an "edge" over ordinary investors. Hedge fund managers also have the resources to do extensive research on public companies and they have access to experts who can guide them. We believe we are more likely to beat the market by imitating insiders and hedge funds than trading against them. Based on the transactions of nearly 700 hedge funds, we compiled the list of the top eight consumer stocks hedge funds are crazy about during the most recent fourth quarter: Wal-Mart Stores (WMT): Walmart is the most popular consumer stock among hedge fund managers. There were 88 hedge funds with Wal-Mart holdings at the end of December. They have nearly $2 billion invested in WMT. George Soros and Warren Buffett are among the billionaire hedge Complete Story » | |||||||||||||||||||||||||||||||||||||||||||||||||
| Friday ETF Roundup: FXI Declines on Bank Tightening, EWJ Continues Rebound Posted: 18 Mar 2011 09:07 AM PDT ETF Database submits: U.S. equity markets started the day out on a high note but soon lost most of their gains as traders sold off holdings ahead of the weekend. Nevertheless, all of the major indexes managed to squeak by in the green for the day as the Dow gained 84 points and the S&P 500 and Nasdaq posted more modest gains of 0.4% and 0.3%, respectively. Meanwhile, commodity markets finished the day markedly ahead as well. Gold gained more than 1% on the day and oil added a few cents a barrel thanks to ongoing tensions in the Middle East. Grain and soft markets were broadly higher as corn surged by over 5.7% while sugar and cotton both added more than 3.5% in the session. The one exception to this commodity surge was in the cocoa markets where prices declined significantly both in the U.S. and London as rumors spread that the Complete Story » | |||||||||||||||||||||||||||||||||||||||||||||||||
| How to Save Yourself from Fed Money Creation Posted: 18 Mar 2011 09:00 AM PDT Roger Wiegand of Trader Tracks Newsletter ominously notes that "With no fiat money to spread around and no takers for their specious bonds, bills and other paper, stock and credit markets as we know them now are finished. Then we'll see some real, old-fashioned goods trading, black markets, expanding regional gangs and unbelievable backlash against the instigators. If you thought the 1850-1890 USA era was the Wild West, watch what comes next." Part of "what comes next" he gets from the book When Money Dies by Adam Fergesson, which is that "over 400 politicians were assassinated in the 1920-1921 Austrian-Weimar Germany hyperinflation. This is what happens when things go very desperate," and that "history books tell us, have proven time and time again, this is what lies ahead under these circumstances." He calls it The New Abnormal, which seems perfectly appropriate to me because I know that things are going to get weird from here on out, as the Old Normal is dead, making the Old Abnormal the New Normal, which is just a hint of How Freaking Bizarre (HFB) things are going to get when things are weird enough right now! In fact, to use an analogy, the economy is like a group of overpaid people, milking the government for every dollar and benefit they can get, on a chartered airplane that has been certified as "unsafe," where one minute everybody is having fun, drunk as skunks, laughing and telling dirty jokes, and the next minute the plane is plunging out of the sky, out of fuel, one wing is in flames, the engines are dead, the entire electrical system is kaput, and, worst of all, the beverage cart is completely empty of cold beer and those little bottles of different kinds of tasty liquors. Uh-oh! Naturally, everyone is shouting, "Help! Help! What can we do to save ourselves? Can we save ourselves, like the banks saved themselves, by having the Federal Reserve create enough new money, which increases the misery of the poor by making prices rise, and rise, and rise with every new dollar created by the foul Federal Reserve, so that we can make a huge, huge, HUGE pile of money on the ground to cushion our crash landing, thus saving ourselves?" Well, I admit it's not the best analogy I ever saw, and I anticipate a deluge of hate-mail over it, and I am sorry that I used it, and I only did it because I cannot suppress – Hahaha! – the Laugh Of Mogambo Scorn (LOMS) at any idiots who actually believe in the long-term possibility of a dysfunctional, government-centric economic system, based on a constantly-rising money supply based on a fiat currency and insane levels of fractional-reserve banking, especially one where total local, state and federal government spending has grown to – literally! – half of all spending in the Whole Freaking Country (WFD)! Half! This dismal fact is made possible, remember, only by the evil Federal Reserve creating more and more and more money and credit to finance it all, and thus creating the resultant inflation in prices that literally destroys – piece by piece, bit by bit – those who cannot pay higher prices for food and energy, and more-or-less figuratively destroys everyone else. Except, that is, those who happily own gold and silver, of course, as these wonderful metals have always reigned triumphant over all other investments when things get to this metastasized end-stage, which is the part where the rise in consumer prices goes exponential along with the creation of new money by the Federal Reserve going exponential as the deficit-spending needs of the federal government go, likewise, exponential, and everything gets, predictably, exponentially worse. Well, Mr. Weigand, who has been watching all of this, apparently realized that it was foolish to get into a conversation with a paranoid whack-job like me, and offers that "It appears we are mostly safe until May or June when the 'Sell In May And Go Away' bell rings," which I take to mean that we have a couple of months in which to accumulate as much gold, silver, oil, guns and ammo as we can. And with a nice lead-time like that, what can you say except, "Whee! This investing stuff is easy!" The Mogambo Guru How to Save Yourself from Fed Money Creation originally appeared in the Daily Reckoning. The Daily Reckoning now provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. | |||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 18 Mar 2011 08:52 AM PDT  Richard Shaw (QVM Group) submits: We think silver is too highly priced versus the price of gold. They are both precious metals, but are not driven entirely by the same factors. Silver has more industrial attributes than gold. Therefore, one would expect silver to become more valuable relative to gold in an improving economy, but it seems to have gone outside of historical boundaries. This 20-year monthly chart shows the price ratio of silver to gold, along with the 1-year, 3-year, 5-year and 10-year averages of that ratio (in red in the legend). Click to enlarge Complete Story » | |||||||||||||||||||||||||||||||||||||||||||||||||
| Analyst: The dollar crash has officially begun Posted: 18 Mar 2011 08:51 AM PDT From The TSI Trader: The U.S. Dollar is falling apart fast. Really fast. Two days ago it completed a failed daily cycle when it traded below 76.12. Now, literally within this hour, the U.S. Dollar has already failed its yearly cycle by trading below 75.63. The next downside target for the U.S. Dollar would be the three-year cycle low at 70.70. Can you comprehend what will happen to the price of commodities when people realize that the world's reserve currency is in a precipitous freefall? Who will want to own the currency then? Who wants to own it now, for that matter? Something like 70% of all new government debt is being purchased by our FED – not the Japanese, or Saudis, or Chinese. We Americans are buying our own debt because no one else wants it. So what will people buy with dollars to get rid of them? Read full article... More on the U.S. dollar: This could be the day the dollar falls apart Jim Rogers: "We're at a moment of truth for the dollar" BREAKDOWN: The U.S. dollar is plunging to new lows for the year | |||||||||||||||||||||||||||||||||||||||||||||||||
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