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Wednesday, April 6, 2011

Gold World News Flash

Gold World News Flash

April 5, 1933 : Gold Confiscation Executive Order #6102

Posted: 05 Apr 2011 05:45 PM PDT

confiscation issue


Gold At All-Time High, Hits $1,450 an Ounce

Posted: 05 Apr 2011 05:14 PM PDT

World Market Pulse submits:

by Scott Boyd

Gold gained more than a percent


Complete Story »


Gobs And Gobs Of Debt

Posted: 05 Apr 2011 05:00 PM PDT

View the original post at jsmineset.com... April 05, 2011 01:33 PM Dear Friends, The following headline pretty much says it all and is a great companion to the post Jim put together today. The problem is debt – gobs and gobs of it. When a nation reaches the point that it is borrowing new money to pay off old money, it has past the point of ridiculous and has reached destructive levels. The longer this continues, the weaker the Dollar is going to become over the long term. Eventually more and more nations whom we are going begging to, are going to demand higher interest rates to compensate them for lending to such a profligate nation. When the long bond finally does break down on the technical price charts, our national nightmare then begins. Trader Dan March Madness: U.S. Gov’t Spent More Than Eight Times Its Monthly Revenue Monday, April 04, 2011 By Terence P. Jeffrey (CNSNews.com) – The U.S. Treasury has released a final statement for the month of Marc...


$1444 Gold Down For The Count

Posted: 05 Apr 2011 05:00 PM PDT

View the original post at jsmineset.com... April 05, 2011 01:27 PM My Dear Friends, I am writing to you from the Irving Farm Coffee and Internet cafe in Millerton NY. Our internet carrier went down today and is showing no promise of revival in the near future. I have a great coffee and a raisin bran muffin by my side so overall I have no grounds to complain. Gold linked to the dollar today certainly has taken down $1444 for the count on three taps. That lights up Angel $1521 as the next to be captured. Expect the Round Number Effect at $1500 for gold, but less severe than the battle at $1400. Angel $1650 is quickly coming into focus. If we have learned one thing, it is not to get short term focused on this market. Stay focused on what is important and not the noise. Think for a moment if Armstrong and Alf are right on gold. That would mean the following prices are coming: $1650 $3000 $5000 $12,500 Those prices are possible because the balance sheets of the entir...


Hourly Action In Gold From Trader Dan

Posted: 05 Apr 2011 05:00 PM PDT

View the original post at jsmineset.com... April 05, 2011 10:22 AM Dear CIGAs, Click chart to enlarge in PDF format with commentary from Trader Dan Norcini For further market analysis and commentary, please see Trader Dan's website at www.traderdan.net ...


XAU - Weekly Trend Change

Posted: 05 Apr 2011 05:00 PM PDT

The daily XAU chart for the Trend Directional (TDI) and Gravity Center (GC) indicators has been positive for 10 days. We have been waiting patiently for a weekly trend change to also emerge and this important event may occur shortly. Today's action in the XAU is very positive on a continuing daily basis with a new recovery high but not an all time high, such as occured in gold and silver. These events, if confirmed by further positive action this week, would go a long way toward resolving the flat weekly TDI trend on the chart at the bottom this page. There is also a distinct possibility of confirmation by the weekly GC indicator as of this Friday's close when weekly data is complete. As you know, both the [COLOR=#e06666]TDI and the GC indicators must agree to confirm the start of a new trend in any time frame. [/COLOR] From a different perspective, today's daily XAU Market Heath Indicator chart below shows a base pattern development. Upside penetration of the red line indicates ...


Gold Seeker Closing Report: Gold and Silver Rise To New Highs

Posted: 05 Apr 2011 04:00 PM PDT

Gold saw decent gains in Asia before it dipped to under $1430 in London, but it then shot up to a new all-time high of $1453.89 in New York and ended with a gain of 1.31%. Silver dropped forty cents to $38.05 in London, but it then surged to a new 31-year high of $39.198 in New York and ended with a gain of 1.69%. Both metals are rising to new highs in after hours access trade as well.


CBO Analyzes Ryan Budget Proposal: 2050 Debt/GDP At 10% Versus 344% In Revised Existing Budget... But How?

Posted: 05 Apr 2011 03:48 PM PDT


The Congressional Budget Office has chimed in with a 30 page summary comparing the proposed Ryan budget and two previously analyzed scenarios: scenarios—an extended-baseline scenario based on June 2010-current law and an alternative fiscal scenario that incorporated several changes to then-current law that were widely expected to occur or that would modify some provisions of law that might be difficult to sustain for a long period. In essence these are merely variation on the theme of an Obama budget. Needless to say, the divergences are quite dramatic. Since the Ryan budget is focused on fiscal solvency, it achieves that: indeed, comparing projected 2050 Debt/GDP in the Ryan proposal, the CBO reaches a number of 10%, compared to 90% and 344% for the extended-baseline and the alternative fiscal scenarios. On the other hand, the credibility of the assumptions used to goalseek this outcome remain very much in doubt (much more on these in the CBO analysis below). The massive amount of spending cuts, coupled with some very aggressive revenue postulates, will certainly bring the critics out of the woodwork. It will also mean that with fiscal stimulus essentially curtailed, the only source of incremental economic boosting will be monetary policy, read - the Fed, which is an outcome that Bernanke has vocally warned against, due to his concern of Fed "politicization." Then again, with no other choice, it means that the debauchery of the dollar, since the economy is nowhere near the stage where the morphine can be removed, is about to kick into hyperdrive. In the meantime, here are the CBO summary observations.

First, a table showing the key outcomes in the three scenarios.

Then the CBO takes up the topic of key spending line items. Needless the say, total spending is expected to be cut in half in 40 years. Then again, not even Moody's ever tried to forecast more than 5 years out...

Last it a chart showing the breakdown of "Spending on Health Care for a Typical 65-Year-Old with a Standardized Health Insurance Benefit" - i.e., the most contentuous topic at hand: the socialization of US healthcare.

And a summary of the key features of the proposal. Those who wish to sound intelligent while praising or bashing the proposed budget should at least read the following bullets:

Chairman Ryan’s proposal, as specified to CBO by his staff, encompasses changes to Medicare, Medicaid, the major 2010 health care legislation, other government spending (excluding that for Social Security), and tax law.

Medicare

Starting in 2022, the proposal would convert the current Medicare system to a system of premium support payments and would increase the age of eligibility for Medicare:

  • Starting in 2022, the age of eligibility for Medicare would increase by two months per year until it reached 67 in 2033.
  • People who turn 65 in 2022 or later years and Disability Insurance beneficiaries who become eligible for Medicare in 2022 or later would not enroll in the current Medicare program but instead would be entitled to a premium support payment to help them purchase private health insurance.
  • Beneficiaries of the premium support payments would choose among competing private insurance plans operating in a newly established Medicare exchange. Those plans would have to comply with a standard for benefits set by the Office of Personnel Management. Plans would have to issue insurance to all people eligible for Medicare who applied and would have to charge the same premiums for all enrollees of the same age. The premium support payments would go directly  from the government to the plans that people selected.
  • The premium support payments would vary with the health status of the beneficiary. In addition, the Centers for  Medicare and Medicaid Services would collect fees from plans with healthier enrollees, on average, and convey the proceeds to plans with less healthy enrollees, on average, with the goal of appropriately compensating plans for the health risks of their insured population. This riskadjustment mechanism would be known as the risk review audit and would be budget-neutral.
  • The payment for 65-year-olds in 2022 is specified to be $8,000, on average, which is approximately the same dollar amount as projected net federal spending per capita for 65-year-olds in traditional Medicare (that is, the program’s  outlays minus receipts from the premiums enrollees pay for Part B and Part D, expressed on a per capita basis) under current law in that year. People who become eligible for Medicare in 2023 and subsequent years would receive a payment that was larger than $8,000 by an amount that reflected the increase in the consumer price index for all urban consumers (CPI-U) and the age of the enrollee. The premium support payments would increase in each year after initial eligibility by an amount that reflected both the increase in the CPI-U and the fact that enrollees in Medicare tend to be less healthy and require more costly health care as they age. (For example, projected net federal spending per capita for all people age 65 and older in traditional Medicare would be about $15,000 in 2022, CBO estimates, in comparison with about $8,000 for 65-year-olds.)
  • The premium support payments would also vary with the income of the beneficiary. People in the top 2 percent of the annual income distribution of the Medicare-eligible population would receive 30 percent of the premium support amount described above; people in the next 6 percent of the distribution would receive 50 percent of the amount described above; and people in the remaining 92 percent of the distribution would receive the full premium support amount
  • described above.
  • Beginning in 2022, the federal government would establish a medical savings account (MSA) for certain beneficiaries with low income. (An MSA is an account that holds deposits that can be used for medical expenses.) Eligibility for MSA  payments would be determined annually by the federal government on the basis of income relative to the federal poverty thresholds. The amount of the contribution in 2022 would be $7,800, and the annual amounts in subsequent  years would grow with the CPI-U.
  • Eligibility for the traditional Medicare program would not change for people who are age 55 or older by the end of 2011 or for people who receive Medicare benefits through the Disability Insurance program prior to 2022. As a result, the average age and average costs of enrollees remaining in the traditional Medicare program would increase over time. However, enrollees’ premiums under traditional Medicare would be adjusted to equal what they would be under current law—a so-called hold harmless provision. People covered under traditional Medicare would, beginning in 2022, have the option of switching to the premium support system.

Medicaid

The proposal would modify Medicaid as follows:

  • Starting in 2013, the federal share of all Medicaid payments would be converted into block grants to be allocated to the states. The total dollar amount of the block grants would increase annually with population growth and with growth in the CPI-U.
  • Starting in 2022, Medicaid block grant payments would be reduced to exclude projected spending for acute care services or Medicare premiums and cost sharing paid by Medicaid.
  • States would have additional flexibility in designing their programs.


2010 Health Care Legislation

The proposal would make several changes to the Patient Protection and Affordable Care Act (or PPACA, Public Law 111-148) and the health care provisions of the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152). In general, it would repeal the provisions of those laws that deal with insurance coverage, including:

  • The requirement that most legal U.S. residents obtain health insurance;
  • The establishment of health insurance exchanges and the provision of subsidies for certain individuals and families who purchase coverage through the exchanges;
  • The expansion of Medicaid coverage to include most nonelderly people with income below 138 percent of the federal poverty level;
  • The penalties on certain employers if any of their workers obtain subsidized coverage through the exchanges; and
  • The tax credits for small employers that offer health insurance.
  • The proposal would also change some other provisions of PPACA and the Reconciliation Act:
  • It would repeal the Community Living Assistance Services and Supports (CLASS) program for long-term care insurance, as well as a number of mandatory grant programs including funds for so-called high-risk pools, reinsurance for early retirees, and prevention and public health activities.
  • The proposal would repeal the provisions that created the Independent Payment Advisory Board and that expanded subsidies for the “coverage gap” in Part D (a range of spending in which many enrollees have to pay all of their drug  costs, sometimes called the doughnut hole).

Most of the other changes that PPACA and the Reconciliation Act made to the Medicare program would be retained.

Other Spending

The path for all other federal spending excluding interest—that is, for discretionary spending and mandatory spending apart from that for Social Security and the major mandatory health care programs—was specified by Chairman Ryan’s staff. The remaining part of mandatory spending includes such programs as federal civilian and military retirement, the Supplemental Nutrition Assistance Program, unemployment compensation, Supplemental Security Income, the refundable portion of the earned income and child tax credits, and most veterans’ programs. Discretionary spending includes both defense spending and nondefense spending—in roughly equal amounts currently. That combination of other mandatory and discretionary spending was specified to decline from 12 percent of GDP in 2010 to about 6 percent in 2021 and then move in line with the GDP price deflator beginning in 2022, which would gen-erate a further decline relative to GDP. No proposals were specified that would generate that path.

Revenues

The path for revenues as a percentage of GDP was specified by Chairman Ryan’s staff. The path rises steadily from about 15 percent of GDP in 2010 to 19 percent in 2028 and remains at that level thereafter. There were no specifications of particular revenue provisions that would generate that path.

Hopefully the bolded sentence means there is something more than just a magic wand being waved around in geting this revenue rise.

Full report

CBO - Ryan Budget 2011-04-05


Ron Paul's 2012 presidential dilemma

Posted: 05 Apr 2011 02:23 PM PDT

By Patricia Murphy
The Daily Beast, New York
Monday, April 4, 2011

http://www.thedailybeast.com/blogs-and-stories/2011-04-04/-ron-paul-gath...

To the casual observer, Ron Paul might seem like a cross between Elmer Fudd and Chicken Little—a little-looking man, with a littler voice, warning about a coming financial catastrophe so dire that even a conspiracy theorist could dismiss him as over the top.

But after years in which Paul has sounded the alarm alone, financial experts now agree with at least part of his prophesy—that the country is headed toward insolvency if Washington fails to rein in federal spending and significantly reform entitlements, a prospect that's hard to envision as Democrats and Republicans keep squabbling over spare change in the $4 trillion budget.

"We're tinkering around with $20 or $30 billion and the national debt is going up $2 trillion this year? Unbelievable," Paul says during an interview in the Capitol after a day of votes, meetings, and committee hearings.

... Dispatch continues below ...


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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property

Company Press Release, October 27, 2010

VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:

-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.

-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.

-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.

Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.

"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."

For the company's full press release, please visit:

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That tell-it-like-it-is bluntness, along with his libertarian concoction of low taxes, limited government, and isolationist foreign policy, has won the Texas Republican legions of dedicated followers across the country since his run for president in 2008.

It has also given him a platform outside Washington unlike any he has enjoyed during his 20 years on Capitol Hill, including speeches in March to thousands of self-described members of the Paul Revolution in Iowa, New Hampshire, and North Carolina.

"It amazes me," Paul says. "I'm not shocked, but pleasantly surprised. I thought we would get these crowds during the campaign, but they would go away and I could just relax a little bit."

But instead of fading, the enthusiasm for Paul's ruthlessly consistent message of limited government seems only to have grown since he collected a series of single-digit results in the presidential primaries.

In addition to his standing-room-only speeches last month, Paul quietly raised an unusually large chunk of cash—$3 million—in the first quarter of 2011 between his PAC and nonprofit group, more than Mitt Romney or Michele Bachmann raised with their PACs and campaigns.

And unlike the other 2008 also-rans, whose organizations wound down soon after the ballots were counted, the operation around Ron Paul has ballooned from a cult-like presence on the campaign trail to a national infrastructure bordering on a cottage industry.

Paul now runs or is affiliated with a college campus outreach organization with 200 chapters, a leadership PAC, a foundation, and a national grassroots campaign with 17 staff, 10 consultants, 17 official state affiliates, and volunteers in all 50 states.

Even with his ready-made base, Paul says he's still torn about moving forward on another White House run. "I'm very reluctant," he says. "It's a tough job and I know what's involved."

Weighing his options for the next presidential cycle is a long way from Paul's first run for Congress in 1974, when the Pennsylvania-born OB-GYN ran in a heavily Democratic district along the Gulf Coast to protest the decision to remove the dollar from the gold standard. "I just wanted to get it off my chest. I was very confident I wouldn't have to worry about winning," he says.

But he did win in 1978, and went on to serve in Congress until 1984, when he left to mount a losing Senate race against Phil Gramm. After running for president in 1988 on the Libertarian ticket, he returned to Congress for a second tour in 1997.

Although he has remained mostly cordial with his fellow Republicans, much of Paul's time in the House has been spent casting votes that make members of both parties more than a little uncomfortable.

He has voted for Second Amendment protections, but against the Patriot Act and the Iraq War. He has voted against every tax increase, congressional pay raise, and unbalanced federal budget put forward by both parties' appropriators, but has also railed against a federal ban on gay marriage, saying that the government has no role in regulating relationships.

His literal approach to limited government has earned him groans from some fellow Republicans, but his growing national base has kept him at least nominally in the fold with GOP leaders who want the Paul people inside their tent.

"Odd duck, huge following," says one leadership aide, neatly summing up Paul's role in the caucus.

"Ron Paul is seen as a man who marches to his own drummer," Rep. Mike Pence (R-IN) said carefully after a Capitol Hill Tea Party rally, which Paul did not attend. "On a personal level, I think he enjoys the respect and affection from members of the Republican caucus."

Later, Rep. Louie Gohmert, a fellow Texas Republican, jumped, unprompted, to Paul's defense. "I know there are some Republicans that are concerned about the Ron Paul influence in our party. But when I go to college campuses and see young people who have heard Ron's position that we've got too much government, how can that not be a healthy thing?"

Paul's aides say that people under 30 are the fuel behind his following, which includes Goldwater Republicans, libertarians, and, frankly, some pot-smokers drawn to Paul's call to end the government's war on drugs. A conversation with Paul's supporters often reveals a personal devotion to the man usually reserved for a family member or best friend.

"I hate to call him a politician," says Brady Nemeth, a North Carolina State student who helped organize Paul's recent speech on campus. "Policy-wise, he has just opened me up to the idea of liberty, both economic and social. It changes my outlook and perspective about how I should be living my life."

Bonnie Kristian interned for Paul's 2008 campaign and now works at Young Americans for Liberty, which grew out of the Ron Paul student movement. "We've grown up with nothing but war and debt and abuse of our civil liberties. It's not very hard for me and others in my generation to figure out that the two major parties don't have our best interests in mind. Ron Paul's message is different."

One intriguing twist in the saga is the emergence of his son Rand, the newly elected senator from Kentucky—and his father's new roommate in a condo outside Washington. The younger Paul has assumed the role of the stickiest thorn in the side of the Senate's GOP leadership, and after just two months is already testing the presidential waters with trips to Iowa and South Carolina. Rand Paul, who campaigned for his dad in 2008 and is close with the whole operation, would defer to him on the White House front. Still, he recently made this prediction: One of the Pauls will be on the presidential ballot in 2012.

Ron Paul says his decision will depend on the response he gets as he travels around the country, and the health of the economy. Jesse Benton, a top aide to Paul, said the congressman will decide "in early summertime, perhaps sooner," but the response so far has been light years away from 2008. "Doors that would have been closed to Ron three years ago are now friendly and open," he says.

Operatives in Iowa and New Hampshire say that Paul has a real following, but it is hard to imagine him beating a Romney or Tim Pawlenty. Then again, winning at partisan politics has never been the point for Paul.

"I don't want power," he says. "I want influence. I want to influence ideas. So really, my goals are completely different."

-----

Patricia Murphy is a writer in Washington, D.C., where she covers Congress and politics. She is a graduate of Vanderbilt University and the Columbia Graduate School of Journalism.

* * *

Join GATA here:

An Evening with Bill Murphy and James Turk
Sponsored by Deutsche Edelmetall-Gesellschaft
Friday, April 29, 2011
Hofbrauhaus, Munich, Germany

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https://www.amsterdamgold.eu/gata/index.asp?BiD=12

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The Gold Standard Now: It Can Work

Today a dollar is worth 80 percent less than it was 40 years ago, and less than 5 percent of its value a hundred years ago. We deserve a dollar that is as good as gold, a dollar that will hold its value from year to year so we can be financially secure and our economy can generate more and better jobs.

For most of America's history, our dollar was literally as good as gold. But on August 15, 1971, our politicians destroyed the link between gold and the dollar. They destroyed the foundations of our economic system.

A new Internet site, TheGoldStandardNow.org, provides news and cutting-edge analysis about this most important issue and explains how the gold standard worked in the past and how it can work in the future. Visit us today:

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Strategic Alpha Macro Update

Posted: 05 Apr 2011 12:55 PM PDT


Submitted by Strategic Alpha

Macro Update

It appears to me that the markets are NOT listening to what Bernanke is saying:

Apparently, I am told USDJPY rallied last night after Bernanke spoke on inflation but if you actually listen to what he said, he is quite clearly not worried by a transitory rise in inflation if wages do not follow! He went out of his way to suggest that the lack of wage inflation and inflation expectations are still on the low side means that he is not likely to see a pickup in core inflation and therefore is still unconcerned with rising prices. This does NOT suggest to me that he is planning to do anything about inflation in the foreseeable future. Mind you it seems that the bond markets realised this as futures rallied in Asia last night and correctly so. He may respond if he sees it but he was clear he does not. Bernanke is NOT concerned with inflation yet. For goodness sake just because Bernanke mentions inflation does not mean he is about to jack up rates or cancel the Q/E programme! There is also a very real possibility that foreign buying of US bonds is tailing off and cancelling Q/E now might be very bad timing indeed.

The problem I have with all this is that time is running out for a decision on Q/E but there is simply not enough evidence to make an informed judgement on the state of the economy and how it would react to a withdrawal of liquidity. Most analysts just look at the ISM and other supply data but Bernanke has got to make sure the economy can survive without his daily liquidity gift. In addition, if as some suggest, Q/E2 has done its job by ramping up equity markets, it still falls far short of his mandates. Unemployment is still massive (the real level is nearer 12-13%) and the participation rate continues to fall. Today there are 44.2 million Americans on food stamps, or 14.3% of the US population! Analysts also seem to forget the massive mountain of issuance coming from the Treasury this year and next. Consumer debt and confidence also matter more to Bernanke than it does to main stream analysts and housing is not helping at all and looks set fall further causing havoc at the banks again.

I must admit I have just seen the biggest load of old rubbish and political spin that I have heard in a long time and the source is scary. “The upsurge in commodity prices is not a result of the  Federal Reserve's quantitative easing”, according to research at the San Francisco Federal Reserve Bank released Monday. San Francisco Fed economists Reuven Glick and Sylvain Leduc contend that, “if anything, the Fed's large scale asset purchases, better known as "QE2," have put downward pressure on commodity prices”. WHAT? I give up; where do they find these idiots and why are they allowed to speak? Is the Fed so much on the defensive that it feels the need to spin this garbage?  It seems to me “thou dost protest to much methinks”.

The UK economy is in big trouble as stagflation looms:

The UK is just waking up to some of the austerity cuts and higher tax bands at a time when essential costs are spiralling higher. The cost of living will certainly impact hard but the problem is that growth is headed in the other direction. Real wages are falling so it is clear that consumers need to change their spending habits, if not their way of life. This is going to hurt and the UK cannot afford to allow the central bank to raise rates at this time, as it would be disastrous for the economy and consumer. In fact I would suggest that rates should not rise at all this year.

This concentrated focus on the fear of inflation is something quite strange in reality. The rapid rise in prices is not a demand issue from the UK, it is external pressures and a 25bp rise will achieve nothing but more pain. Job cuts are still to hit in the public sector and confidence is already at record lows. Higher stamp duty on buying houses is in place now and it now costs &ound;50,000 for the privilege to buy a house costing &ound;1m. VAT is at 20% and tax bands have been moved up. Petrol now costs &ound;1.44 a litre for diesel for those not in this country and food costs have gone ballistic. The UK is now a very expensive place to live for all but the 1% of top earners.

The UK also has a huge private debt issue (one of the biggest in the world) and I can only see this being addressed now as many will shed debt and deleverage. Surely the economists on the MPC will be good enough to look past the supply-side data and look at what is happening with the consumer. As Bernanke keeps saying (Trichet seems to disagree) if wages don’t move higher, then inflation, whilst sticky, is transitory as spending on non-essentials could collapse. An increase in mortgage payments now would tip many over the edge. Of course there is a problem, as the rate decision is a committee decision and this can produce an outcome that goes against the two senior members, King and Bean.

As the Telegraph points out; According to the Office for National Statistics, real disposable incomes (what's left after taxes and inflation) fell 0.8pc in 2010 – the first decline since 1981 and only the sixth since records began over 60 years ago. Given the Office for Budget Responsibility's (OBR) forecasts, working Britain better get used to it. Inflation is expected to exceed pay rises until the middle of 2013. In my view we need to take a new look at how we analyse inflation at the central bank as to me it should have a growth component built into the target.

Without doubt the knock-on effects of this will be felt by the retailers as higher input prices will have to be passed on or margins will collapse. The problem is the consumer is in no mood for higher priced non-essentials and the high Street is about to take a massive hit as earning get slammed. Given the pressures on consumers, the OBR has slashed its estimate of households' contribution to growth this year from 1.3pc last June to 0.6pc. This is far too optimistic still and 2011 is going to be a very tough one for many, even the middle classes as the disposable income levels are dropping like a stone. Families are going to be forced to dip into their savings or borrow more! Maybe not; they may just change their life styles and stop buying things they don’t need or can’t afford. After all it was only a generation or two ago when this was the norm. Maybe we need to have a close look at what impact that would have. Whatever happens growth forecasts are still too high and a rate hike would be a policy error.

The IMF’s global growth forecast is too optimistic:

Whilst suggesting correctly that the global economy is still rather fragile, the IMF then went on to suggest that growth we reach 4.5%. I disagree. I am not sure they are projecting forward the drop in demand from higher food and fuel prices across the globe and especially the developed world who are massive importers. Tackling debt, higher taxation and fewer jobs is going to take its toll on spending. Even in the US, prices are rising fast but wages are not, as alluded to by Bernanke and this matters. Demand-side dynamics need more attention!

Australia’s trade balance swung unexpectedly to a deficit in February at A$205 mln, for the first time in almost a year, as disruptions from natural disasters cut mining shipments and higher fuel prices boosted imports. New Zealand’s business confidence slumped to a two-year low in the first quarter, with 27% of companies surveyed expecting the economy to deteriorate over next six months. We still don’t know the full impact of the supply shock from Japan but the Tankan is not giving good news and PMi’s in Japan are collapsing. Japan also has to import just about all its essentials and costs are soaring! In Asia many are now revising down GDP growth forecasts for Taiwan, Malaysia, Singapore and Thailand based on the quake story! Let alone those of the UK and US! Plus the Nikkei reported Toyota’s 14 factories in North America may temporarily halt operations in April due to a shortage of parts provided from Japan. Global PMI’s have also peaked in my view.

There are very real shortages in soft commodities like corn and soya beans so food prices may well stay elevated and who knows where the situation in MENA will take oil to. Europe still has a massive issue with the peripherals and a rate hike will surely impact hard on the public there. EM nations are intervening like mad as hot money flows in which will exacerbate inflationary fears and impact on the domestic consumer. This money is recycled into currencies like the EUR and a higher EUR will not help the peripherals at all.

Developed world debt is also a massive unknown as countries take different strides to tackle it. (Not the US of course but their day is coming fast). This must surely mean higher taxes and further cuts for the poor consumer. The US still has to deal with the foreclosure issue and who knows what that means for banks solvency issues? The French have cut growth expectations to 2% from 2.5% for 2012. Consumer confidence across the developed world is falling precipitously and spending habits are likely to change. Can no one else see all this? In my view in summation, the demand dynamics may well impact on many central bank monetary policy decisions let alone growth forecasts...Wake up.

Zombie Banking and the Effectiveness of QE2

Posted: 05 Apr 2011 12:52 PM PDT

Bill Bonner View the original article. April 05, 2011 12:00 PM What's the biggest zombie business in the US private sector economy? Banking! The financial sector makes its money by shuffling money around and lending people rope so they can hang themselves. Of course, a little "banking" is necessary. Capital must be allocated. But a lot of it is just a pest. A leech. A blood-sucking, flesh eating zombie! Well, guess what? Profits in the zombie sector are back to where they were before 2007. Which just shows you where that $20 trillion went – into the pockets of the same people whose recklessness and greed caused the meltdown. Not that we're complaining about bankers. That's the way the system is supposed to work. It goes from boom to bust…from euphoria to desolation…from expansion to contraction… The whole system is meant to separate fools from their money; the bankers merely help! But when the feds step in to try to eliminate the down-stroke of the cycle they mak...


The US Federal Reserve: A Rich History of Financial Folly

Posted: 05 Apr 2011 12:40 PM PDT

Ehow.com relates a piece of history in that "Since the creation of the Federal Reserve in 1913, the money supply had increased 240 percent from 1913 to 1920, because of a relaxed gold standard, and prices had risen by an identical amount." Gaahhh! Prices rising 240%! In seven years, the money supply increased 240%, meaning it more than doubled, as did prices! No wonder they had a recession! Parenthetically, it is surprisingly hard to Google-search that 1913-1920 period of time to find anyone saying, "We're Freaking Doomed (WFD)!" However, this is not a critique of the powers of a Google search nor, alternatively, the apparent stupidity of the people back then who did not realize how important it was to buy gold and silver when the Federal Reserve was doubling the freaking money supply. Instead, the important point is the "prices had risen by an identical amount", in that it is inflation that is The Thing To Be Feared (THTBF) and here is what appears to be a handy gauge to estimate ...


U.S Dollar Collapse Will Accelerate

Posted: 05 Apr 2011 11:16 AM PDT

With gold and silver strong as of late, the Godfather of newsletter writers Richard Russell had this to say in his latest commentary, "(Bill) Gross warns that 75% of the US budget is nondiscretionary and is entitlement-based. With Medicare, Medicaid and Social Security, notes Gross, we are seeing $1 trillion deficits as far out as the eye can see. These three entitlements amount to 44% of Federal spending and their share is steadily rising."

Richard Russell continues:


"Concludes Bill Gross, "Unless entitlements are substantially reformed, I am confident that this country will default on its debts, not in conventional ways, but by picking the pocket of savers via a combination of less observable, yet historically verifiable policies -- inflation". . . . . "You must attack entitlements," warns Gross, "and make 'debt' a four-letter word."


Bill Gross manages the largest bond fund on the planet. Gross means what he says. I'm guessing that Gross thinks that the US will NOT ACT until the crisis is actually upon us. The crisis that I believe Gross foresees is a collapse of the US dollar at a time when no foreigner will want to buy Treasuries. In anticipation of such a disaster, Gross has eliminated all US Treasury bonds from his huge, multi-billion dollar fund.


I ask myself, "Is this our fate? Is Congress going to allow the dollar to crash, will Congress, through its procrastination, allow the US to lose its greatest advantage -- the reserve status of the US dollar? Could this really happen? A collapse of the dollar is too grotesque to even contemplate. Yet I am definitely considering that such an horrendous set of circumstances could occur.


I've shown chart after chart of the US dollar. I've shown how the Dollar Index has been violating support levels. To refresh your thinking, I've included an up-dated chart of the US Dollar Index (above). What we see here is a giant head-and-shoulders top with a right shoulder that is in the process of breaking down.
More Here..



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Where Is Unemployment Heading?

Posted: 05 Apr 2011 10:32 AM PDT


This article originally appeared in The Daily Capitalist.

The Bureau of Labor Statistics (BLS) came out with a positive employment report for March, 2011, but the growth, while encouraging, is tenuous at best. There are still 13.5 million people unemployed in America.

Here are the headline numbers from Econoday:

The 8.8% unemployment rate is the lowest since March, 2009. Private employment was actually up by 230,000, but the BLS deducts the loss of jobs from the public sector from that amount to get to the 216,000 headline number.  The breakdown was as follows (from the BLS report):

Job gains occurred in professional and business services, health care, leisure and hospitality, and mining. Employment in manufacturing continued to trend up.

 

The number of unemployed persons (13.5 million) and the unemployment rate (8.8 percent) changed little in March. The labor force also was little changed over the month. Since November 2010, the jobless rate has declined by 1.0 percentage point. ...

 

In March, the civilian labor force participation rate held at 64.2 percent, and the employment-population ratio, at 58.5 percent, changed little.

 

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in March, at 8.4 million. ... In March, 2.4 million persons were marginally attached to the labor force, up slightly from a year earlier. ... Among the marginally attached, there were 921,000 discouraged workers in March, little changed from a year earlier. ... The remaining 1.5 million persons marginally attached to the labor force in March had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities. ...

Where are the job gains coming from? (from the BLS):

In March, employment in the service-providing sector continued to expand, led by a gain of 78,000 in professional and business services. Most of the gain occurred in temporary help services (+29,000) and in professional and technical services (+35,000).

 

Health care employment continued to increase in March (+37,000). Over the last 12 months, health care has added 283,000 jobs, or an average of 24,000 jobs per month.

 

Employment in leisure and hospitality rose by 37,000 over the month, with more than two-thirds of the increase in food services and drinking places (+27,000).

Manufacturing employment continued to trend up in March (+17,000). Job gains were concentrated in two durable goods industries—fabricated metal products (+8,000) and machinery (+5,000). Employment in durable goods manufacturing has risen by 243,000 since its most recent low in December 2009.

 

In March, employment in mining increased by 14,000, with much of the gain occurring in support activities for mining (+9,000).

This data matches the private reports that came out this week from ADP, Challenger, Monster, TrimTabs, and even Gallup (more in a moment), which hasn't occurred for quite a while.  The only fly in the ointment came from yesterday's jobless claims report from the BLS that was down slightly for the week, but actually up slightly in the 4-week moving average.

Here is how the data look:

 

The closely watched "U-6" report improved as well:

 

U-6 was not significantly improved according to the BLS. About 45.5% of unemployed Americans, or 6.1 million people, were out of work for more than six months in March, up from 43.9% in February.

Wage growth continues to be flat:

Over the past 12 months, average hourly earnings have risen by 1.7 percent.  From February 2010 to February 2011, the Consumer Price Index for All Urban Consumers (CPI-U) increased by 2.2 percent.

One disturbing thing about the data is that much of job growth appears to be coming from low-wage jobs. For example the services sector added 78,000 jobs but they seem to be at opposite ends of the wages sector: temporary help services (+29,000); professional and technical services (+35,000). Also, the Leisure and Hospitality sector grew by 37,000 but two-thirds of the increase occurred in food services and drinking places (+27,000). Temps and waiters aren't going to grow this economy.

In an interesting piece from Costco's monthly magazine, in a debate on the value of a college education, Professor Richard Vedder argues that we are churning out too many college graduates who don't have the skills required by the workplace (he favors more vocational training). He says:

[T]he number of highly skilled, managerial, professional and technical jobs is growing far less rapidly than the number of new college graduates. We now have almost one-third of a million waiters and waitresses with college degrees, and more than 15 percent of taxi drivers likewise have a diploma. I have estimated that 60 percent of the increase in the proportion of Americans with college degrees since 1992 has ended up doing jobs that the Bureau of Labor statistics says do not require a college diploma.

We can conclude from this that while employment is growing, such growth is tepid at best. While the government and many economists can spin it in a more positive light, we are far from job growth as opposed to stemming the losses.

The Wall Street Journal's Sudeep Reddy put the numbers in perspective which reveals the enormity of the task ahead:

The payroll gains in March were good. But we’d need eight years of consistent monthly gains just like that — taking us to the year 2019 — to bring the economy back to full employment.


The labor market lost almost 8.8 million jobs from the peak for payrolls in January 2008 (138 million payroll jobs, when the unemployment rate was 5%) to the trough in February 2010 (129.2 million). Since then, the U.S. has added 1.5 million jobs.

If the March gain of 216,000 jobs were to continue, payrolls would return to their peak in 34 months — early 2014.

 

But the economy also needs to add at least 100,000 jobs a month just to keep pace with long-run growth in the labor force. That brings us to early 2019 under March’s pace for payroll gains.


The bottom line: the labor market needs to be producing far more jobs — 300,000 to 400,000 a month — to put the labor market on a trajectory that most Americans would find acceptable. Even adding 300,000 jobs a month would take almost five years to get back to full employment.

I haven't tested these numbers, but, if true, they are sobering at best. Prior calculations were in the range of 200,000 to 250,000 jobs per month growth to get us back to "full employment." Of course many economist are projecting future employment gains on a straight-line continuous uptick based on today's news. The Fed is still forecasting another three years to get back to "full."

It reinforces my belief that the economy is still in a structural readjustment that will leave the middle class higher and drier. The long-term factors that will continue to affect employment include:

  1. The decline of the construction and real estate industry which supported a large services structure (commonly known as FIRE: finance, insurance, and real estate).
  2. Demographics related to retiring Boomers will force them to continue to work to prepare for retirement which makes them compete for lower paying jobs.
  3. A more competitive world that is able to compete with American expertise as their economies improve and provide more jobs for high skilled services which may reduce the pool for available technical skills.
  4. A dumbing down of our educational system that turns out more communications majors than software engineers.
  5. Inevitable higher taxation in the U.S. that will drain more capital from the economy.
  6. Government spending takes a larger and larger share of GDP.
  7. A monetary system that continues to debase the dollar and wipe out real savings needed for expansion.

This is not a definitive list, but it is one that will directly impact job growth in America. All of these factors will negatively affect future economic growth and the requirement for future employment gains.

For the near term, I see continued slow improvement in employment, but I think we are headed to a higher level of permanent unemployment than the 5% that existed in pre-crash 2008. I cannot predict a certain level, but my estimate is that it will stall out at 6.5% to 7.0%.

Again, as my readers know, I think this adds up to stagflation.

One last note. A Bloomberg interview with Pimco's Bill Gross yielded the shocking conclusion that Gross thinks these employment numbers prove that the Fed's quantitative easing is working. “Their objective obviously is to improve the economy and to create jobs, but also to put a floor under the stock market, and we know that’s working.” That is such an absurd remark that it deserves a separate article. Yes, it's putting a floor under the market--where else does he think those fiat dollars are going? Perhaps he will be our next "Crony Capitalist of the Month."

Beware High Margins

Posted: 05 Apr 2011 10:30 AM PDT

The 5 min. Forecast April 05, 2011 12:31 PM by Addison Wiggin – April 4, 2011 [LIST] [*]Corporate America crowing about fat profit margins… Chris Mayer on why they may soon be eating crow… and a chart that shows stocks may be overpriced by 45%… [*]Silver at another post-1980 record… Eric Sprott on whether the white metal is due for a rest [*]A phone as powerful your old desktop computer… and the lucrative micro-sector that makes it possible [*]Vigilante reviewer on AMZN causes minor spat… while another reader has trouble wiping the grin off his face… and so much more… including digital editions of Dice [/LIST]0:00 — With the Fed's self-fulfilling "wealth effect" taking hold… both the Nasdaq and Russell 2000 indexes reaching heights above April 2008… and talk of QE2 ending before the June 30 deadline, we begin today's 5 with a question: What is the most likely pin to prick this 24-month bull?...


The Gold Bubble that Just Won't Pop

Posted: 05 Apr 2011 09:48 AM PDT

The gold price reached a new all-time high today at $1,457 an ounce and most investors are probably just shaking their heads at the craziness of it all – who in their right mind would pay almost $1,500 for a dumb 'ol one ounce gold coin? Of course, they were shaking their heads at $1,200 an ounce, $1,000 an ounce, $725 an ounce, $500 an ounce, and so on, calling it a bubble ever since the price started rising about ten years ago when you could have bought the metal for about $300 an ounce. That's one tough gold bubble…

In Frank Holmes latest commentary over at U.S. Global Investors, he explains some of the reasons why the current gold bubble just doesn't seem ready, willing, or able to pop, the chart below offered up as evidence that, in a world full of increasingly suspect paper money and paper assets where more investors are looking for something other than dodgy paper, the yellow metal remains under-owned.

Citing a recent presentation by Eric Sprott of Sprott Asset Management, Holmes notes that new investment in gold over the last ten years totaled about $250 billion versus almost $100 trillion that went into other financial assets over that same time. That's not to say that, as a percent of all assets, it will ever get back to the levels seen prior to 1990, but, based on everything that's been happening in the world lately, it's certainly headed in that direction.

Gold Price Chart Points to a $100 Rise to $1535

Posted: 05 Apr 2011 09:41 AM PDT

Gold Price Close Today : 1451.80
Change : 19.60 or 1.4%

Silver Price Close Today : 39.175
Change : 69.1 cents or 1.8%

Gold Silver Ratio Today : 37.06
Change : -0.156 or -0.4%

Silver Gold Ratio Today : 0.02698
Change : 0.000113 or 0.4%

Platinum Price Close Today : 1794.40
Change : 9.40 or 0.5%

Palladium Price Close Today : 788.75
Change : 4.95 or 0.6%

S&P 500 : 1,332.75
Change : -0.15 or 0.0%

Dow In GOLD$ : $176.47
Change : $ (2.49) or -1.4%

Dow in GOLD oz : 8.537
Change : -0.120 or -1.4%

Dow in SILVER oz : 316.37
Change : -0.22 or -0.1%

Dow Industrial : 12,393.75
Change : -6.28 or -0.1%

US Dollar Index : 75.88
Change : -0.035 or 0.0%

The GOLD PRICE slapped its gainsayers silly today, adding $19.60 today AND closing above $1,451 at $1,451.80. The 5 day chart plainly shows an explosive blowout through $1,440. What may be an inverted head and shoulders on gold's chart points to a $100 rise, say to $1,535 or so.

Buy the breakout! That's the rule.

The SILVER PRICE did not allow gold to outrun it today. But it was a close race. The gold/silver ratio fell slightly, to 37.059 as silver rose 69.1c (1.8%!) to 3917.5c.

From below silver must not close below 3800c or 'twill wreck its uptrend. 3950c brings us to resistance/support 31 years old. Based on the sinewy strength of this present rise, I must expect silver to punch through 3950c - 4000c and race another two dollars.

Once again, buy the breakout.

In case y'all missed the message yesterday about the bakery QC supervisor, y'all have to distinguish between cookies with holes and donuts. This is a sure-enough donut, a bull market, not a bubble. Buy it.

Think on this. The average Gold/Silver Ratio from 1900 thru 2010 is 47.50. The 2000 - 2010 average is 60.53. The ratio at today's 37.059 is more than three standard deviations below that mean. If you know Tchebyscheff's Theorem, or even if you don't, that's a very unusual reading. That alone points to some large correction, but not yet. Not yet.

Stocks today posted the first half of a key reversal, namely, a rise to a new high coupled with a lower close. Now this was not by much, but if the second half appears tomorrow -- a lower close -- then stocks will have reversed. Dow closed down 6.28 to 12,393.75 while the S&P barely moved, dropping 0.15 points to 1,332.75.

Proof is in the picture. Look at www.nasdaq.com for daily charts. Stocks started out down, climbed the hill to peak about 1:30, then steadily walked down the hill to close lower.

Investing in stocks at this point resembles carrying water in a split white-oak woven basket. It looks really pretty and crafty, it just don't hold much water.

US DOLLAR INDEX is stubbornly going nowhere. Fell 3.5 basis points today to end at 75.877. Day toted up a failure for the dollar, because it tried to escape gravity by rallying to 76.152, but gravity took its revenge. Down below the dollar must remain above 75.70 or slide a long and painful way. As I suspected and adumbrated yesterday, the euro rolled over today, closing about where it closed yesterday but rounding its peak. Euro may have reached its apogee for this move. Closed. at 1.4221 today. Yen struggleth still, today at 84.82Y/$ (117.90c/Y).

On this day in 1603 the new king of England, James I (Stewart) departed Edinburgh to take up his throne in London. His legs were so weak that he had to be held up on both sides when he dismounted his horse, and beside that, he was not (as my wife might tactfully say) a nice person. After nearly 50 peaceful years under Elizabeth, the Stewarts would torment England, Scotland, Ireland, and the world for the next 86 years. Somehow not a one of them could get it right.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2011, The Moneychanger. May not be republished in any form, including electronically, without our express permission.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't.

A look at gold’s long-term outlook

Posted: 05 Apr 2011 09:35 AM PDT

[FONT=arial][FONT=Arial]Let's step back for a moment and take a look at the big picture. Although the primary focus of traders should be on the short-term technical outlook for gold, silver and mining stocks, it's good to have a good idea of where the precious metals are likely headed in the 3-4 year out look. Our primary analytical tools for discerning the longer-term trends that are likely to emerge are the yearly Kress Cycles. Fundamentals can be useful but the long-term cycles are even more important since they ultimately determine the overall direction that asset prices will take. In the context of these long-term cycles we are in early stages of what might be called the "runaway deflationary" leg of the 120-year mega cycle. This cycle, which is scheduled to bottom in 2014, has been responsible for the long-term undercurrent of deflation within the economy for at least the last 10 years or longer. Deflation may not be visible to the naked eye if all you look at is retail pric...


Stratigraphy and host rock controls of gold deposits of the northern Carlin Trend

Posted: 05 Apr 2011 09:32 AM PDT

nbmg


Audio of King World News interview with Eric Sprott

Posted: 05 Apr 2011 09:16 AM PDT

5:13p ET Tuesday, April 5, 2011

Dear Friend of GATA and Gold (and Silver):

Audio of the recent King World News interview with Sprott Asset Management Chairman Eric Sprott has been posted at the King World News Internet site. It is 19 minutes long and you can listen to it here:

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/4/5_Er...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


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The Gold Standard Now: It Can Work

Today a dollar is worth 80 percent less than it was 40 years ago, and less than 5 percent of its value a hundred years ago. We deserve a dollar that is as good as gold, a dollar that will hold its value from year to year so we can be financially secure and our economy can generate more and better jobs.

For most of America's history, our dollar was literally as good as gold. But on August 15, 1971, our politicians destroyed the link between gold and the dollar. They destroyed the foundations of our economic system.

A new Internet site, TheGoldStandardNow.org, provides news and cutting-edge analysis about this most important issue and explains how the gold standard worked in the past and how it can work in the future. Visit us today:

http://www.thegoldstandardnow.org/about/137-welcome-newsmax


Join GATA here:

An Evening with Bill Murphy and James Turk
Sponsored by Deutsche Edelmetall-Gesellschaft
Friday, April 29, 2011
Hofbrauhaus, Munich, Germany

http://www.goldmoney.com/munich-2011-april-29.html

Support GATA by purchasing gold and silver commemorative coins:

https://www.amsterdamgold.eu/gata/index.asp?BiD=12

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon:

http://www.goldrush21.com/

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16


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Prophecy Resource Spins Off Platinum/Palladium Venture:
World-Class PGM Deposit in Yukon

Company Press Release, January 18, 2011

VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy.

PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding.

Following the transaction:

-- Prophecy will own approximately 90 percent of PCNC.

-- PCNC will consolidate its share capital on a 10 old for one new basis.

-- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp.

-- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings.

Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000.

For the complete announcement, please visit:

http://prophecyresource.com/news_2011_jan18.php

A Look at Gold's Long-Term Outlook

Posted: 05 Apr 2011 09:15 AM PDT

Let's step back for a moment and take a look at the big picture. Although the primary focus of traders should be on the short-term technical outlook for gold, silver and mining stocks, it's good to have a good idea of where the precious metals ... Read More...



Gold settles at record, pushes past $1,455

Posted: 05 Apr 2011 09:15 AM PDT

By Claudia Assis
April 5, 2011 (MarketWatch) — Gold futures rose to a record high Tuesday, shaking off early weakness to find firmer footing in fears of a potential U.S. government shutdown, conflict in the Middle East and North Africa, and Europe's sovereign debt crisis.

Gold for June delivery rose $19.50, or 1.4%, to $1,452.50 an ounce on the Comex division of the New York Mercantile Exchange.

… In addition to all the overseas reasons to seek safety in gold, investors also flocked to the metal on fears that the U.S. government may run out of money by Friday if parties don't reach an agreement about the federal budget, said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago.

"A lot of people are uncomfortable with going into that without some safety net," he said. "People want some protection" and traditionally gold is seen as both a storer of wealth and a safe haven from turmoil, he added.

Moody's Investors Service pegging Portugal's bailout as "inevitable" fueled the rally in both gold and silver, said Jeffrey Clark, an analyst with Casey Research.

"That's a strong statement, but there's no denying it's Portugal's turn. … We've seen this movie before, and gold is up because there's probably not a happy ending here. Sovereign debt issues continue playing across Europe, and the bigger concern is that these debt issues will spread outside of Europe, including to the elephant in the room, the U.S.," Clark said in an e-mail interview.

[source]

Gold Surges to Record on Hedge Against 'Chaos;' Silver Tops $39
by Pham-Duy Nguyen
April 5 (Bloomberg) — Gold futures surged to a[n intraday] record of $1,458.60 an ounce as sovereign-debt concerns boosted demand for the precious metal as an alternative asset. Silver prices topped $39 an ounce. Gold futures for June delivery … extended its rally to a record after the end of regular trading. Gold for immediate delivery rose as much as 1.6 percent to an all-time high of $1,457.45.

… "Once a central bank goes down the expansionary path to fight recession, it is much easier to keep pumping money than to reverse course when inflation starts to bite into purchasing power," said Michael Pento, a senior economist at Euro Pacific Capital Inc. in New York.

The Fed has kept its benchmark rate at zero percent to 0.25 percent since December 2008 to stimulate the economy. President Barack Obama is negotiating with congressional leaders to prevent a government closure as the budget deficit soars.

"What's looming ahead is the fear that if there is a shutdown in government, who's going to want to own paper currency?" Klopfenstein of Lind-Waldock said.

Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, told clients to sell Japanese equities and buy gold. Japanese stocks fell the most in three weeks after Tokyo Electric Power Co. began dumping radioactive water from its Fukushima Dai-Ichi nuclear station into the sea.

[source]

Gold Daily and Silver Weekly - Metals Soar, Threaten to Break Out and Run - 1455 Target Met

Posted: 05 Apr 2011 09:15 AM PDT


This posting includes an audio/video/photo media file: Download Now

A Look at Gold’s Long-term Outlook

Posted: 05 Apr 2011 09:09 AM PDT

Let’s step back for a moment and take a look at the big picture. Although the primary focus of traders should be on the short-term technical outlook for gold, silver and mining stocks, it’s good to have a good idea of where the precious metals are likely headed in the 3-4 year out look. Our primary analytical tools for discerning the longer-term trends that are likely to emerge are the yearly Kress Cycles. Fundamentals can be useful but the long-term cycles are even more important since they ultimately determine the overall direction that asset prices will take.


“Gold is Seen as an Alternative to Paper Currencies”

Posted: 05 Apr 2011 09:05 AM PDT

JP Morgan China: China Room to Increase Gold Reserves – "Gold is Seen as an Alternative to Paper Currencies" Share this:


Gold, banks and the governments

Posted: 05 Apr 2011 09:01 AM PDT

by Neil Charnock
April 5, 2011 (MarketOracle) — … Considering that gold's role in the monetary system was so understated a few years back it is no surprise that mainstream investors are taking time to correctly weight it back into their investment modelling. We are at a critical point in history, things are changing rapidly.

… I do not believe the sky is on fire or that civilization as we know it is about to end unless you are one of the unfortunate who lose everything. Currencies, banks, governments and corporations will come and go – the question is; are you prepared?

clowns

… One of the things that bother me about some of the data I have seen on the internet is the notion that banks create money out of thin air. Hear me out please as this is very important. Many investors in the UK, Europe and the US lost everything and are living in cars for the want of facts. FACT: there is a big difference between your local bank and a Central Bank. Unfortunately there is no differentiation from some analysis on this division and yet it is critical when we try to work out how this current financial mess we find ourselves in will pan out.

… This is a simplified outline and therefore there are some minor points not fully explained. A complete explanation that covers further detail is beyond the scope of this essay. Trading banks are both dealers and producers. They are not just a business where you keep your savings and borrow money as most of the public think. This system is rigged in their favour it is true. For a start, when you deposit money, it becomes their asset (as far as they are concerned – by an accounting measure) on their own balance sheet becoming part of their reserve requirements. If this does not disturb you I don't know why – it is the essence of the rigged nature of the game.

They are dealers; they provide the shop front that facilitates lending and borrowing. You deposit and they lend against it. You provide the asset (your savings) that gives them some of their ability to produce their stock in trade, which are loans. These have to be repaid at interest. Your deposits are not enough in this day and age. Trading banks also go to the wholesale money markets and buy (borrow) money themselves which they then loan out at a profit, a higher interest rate…

They are also producers in effect as they transform cash issued by the government (via Central Banks) into more convenient checks and digital deposits or demand deposits, which are supposed to have greater security than cash. They also transform short-term deposits into longer-term loans. In the process, it can be said that they do the financial intermediation and maintain liquidity in the system at a very basic level. The Central Banks are there as the back stop lender to the banking system amongst other activities.

… The banking crisis is forcing governments to act with injections of capital and new red tape which makes the situation worse.

Perversely a part of this action has included offerings of our money to banks that have misappropriated these bail outs in part via bonuses to higher level employees. Governments are also trying to stop a repeat of the GFC without the full understanding of the root cause, only the symptoms seem visible to them.

[source]

Why High Profit Margins Could Be Bad for the Bull Market

Posted: 05 Apr 2011 08:53 AM PDT

With the Fed's self-fulfilling "wealth effect" taking hold…

3 Year Performance of Major Stock Indexes

…both the NASDAQ and Russell 2000 indexes reaching heights above April 2008…and talk of QE2 ending before the June 30 deadline, we begin today with a question: What is the most likely pin to prick this 24-month bull?

"Profit margins," comes the plausible reply from Horizon Asset Management.

"Profit margins are near peaks," writes Chris Mayer parsing the report into nuggets useful for our purposes. "Investors tend to like companies with fat profit margins, but high profit margins are like honey pots that attract competitors.

"They are rarely sustainable for long.

"What is more important for stock prices is not the profit margin itself, but the direction they move. Rising profit margins goose stock prices in wonderful ways, but declining profit margins are a tough anchor to overcome."

The problem today is that most of the big blue chips report record profit margins. Let's look at the tech sector. Here are the profit margins of top 10 tech stocks on the NASDAQ-100, listed in order of market cap.

Nasdaq 100 Top 10 Technology Stocks

The top 10 techs in the market are sporting an average profit margin of nearly 26%. That number is "without any historical precedent whatsoever," Horizon notes.

"Profit margins are extremely high and unlikely to stay there," says Chris, "which ought to lead to earnings disappointments down the road – hence Cisco's one-day drop of 16% recently."

The phenomenon extends well beyond techs. "There are quite a few companies," in the top 50 stocks in the S&P 500, Horizon's report says, "with very high absolute profit margins."

The nontech list is notable: Coca-Cola, Schlumberger, McDonald's, Occidental Petroleum and Freeport-McMoRan Copper & Gold "all have the common feature of after-tax net profit margins well in excess of 20%…

"In general, a 20% profit margin for any company is a historical rarity."

"In some ways," Chris observes, "the surge in profit margins is what you would expect to see in the early phases of a recovery. Companies cut costs going in a downturn. Then, as sales rise, there is a big boost to the bottom line, as costs have yet to catch up.

"Today, though, I doubt many of these firms have much more to cut.

"Instead, the focus is now growing sales and taking business from competitors or defending an existing business. The focus, too, is how to deal with rising raw material costs. All of these put enormous pressure on margins.

"We should expect to see them fall."

Addison Wiggin
for The Daily Reckoning

Why High Profit Margins Could Be Bad for the Bull Market originally appeared in the Daily Reckoning. Daily Reckoning founder Bill Bonner recently wrote articles on stagflation and introduced his new book Dice Have No Memory: Big Bets & Bad Economics From Paris to the Pampas.

HAPPY 78th BIRTHDAY

Posted: 05 Apr 2011 08:48 AM PDT

78 years ago today Franklin Delano Roosevelt banned gold and Americans were forced to turn it over to the government. The government went into bank vaults and confiscated people's gold. It was a dark day for this country. Isn't it fitting that gold hit an all-time high of $1,456 today on this anniversary. When FDR [...]


Winning Despite the Economy

Posted: 05 Apr 2011 08:44 AM PDT

Dr. Stephen Leeb submits:

Short-Term Key: Neutral Long-Term Key: -47 (Neutral)

The big news Friday was a 200,000 increase in non-farm payrolls. The unemployment rate actually declined in the face of new people entering into the job market, rather than people giving up on finding a job.

While this was welcome news, it was offset by the fact that wages were flat. Subtract consumer inflation, and wages actually fell in real terms. The situation is even worse if you properly weight energy and food inflation, which the Bureau of Labor Statistics doesn't. (We think food and energy inflation matters more than housing prices, since most people only buy a house once every decade or two whereas rising food and gasoline prices are a steady drain on the wallet.)

Nor do we think consumers will feel less pinched for some time. Not only will oil and food prices continue to rise, but we also see


Complete Story »


"Transitory" Inflation Tally: Gold, Corn Record Highs, Silver 31 Year High, Brent 2.5 Year High

Posted: 05 Apr 2011 08:36 AM PDT


Yesterday the Chairman said something about inflation being "transitory", and that he would be prepared to act by the time inflation becomes more then just "transitory", which we read as "permanent." So, in other words, by the time inflation is set in, Bernanke will be prepared to act, do we have that right?  We hope this is just another Transocean-esque vocabulary disaster, because while we all know how good the Fed is at predicting things, being incapable of sensing grammatical nuances is a Fed Chairman first... which is not surprising: nobody had any clue what Greenspan said most of the time. We just hope Benny's reference was not in the context of a "transition" to a permanently higher "new price normal." Which is maybe how the market interpreted his words: after enjoyed picking apart the irony in the Chairman's statement and once again calling his bluff, the net result is: gold and corn all time high, silver fresh 31 year high, brent 2.5 year high. At some point these prices may revert, and Bernanke will be right. We just hope that by then TEPCO is not in charge of cleaning up radiation ("it's only 1 nano sievert- we swear") from everywhere, not just Fukushima.

From Reuters:

Gold jumped to an all-time high above $1,450 an ounce on Tuesday, as peak crude and corn prices fanned inflation fears and a downgrade of Portugal's credit rating drew attention to euro zone problems.

Bullion rose more than 1 percent, its biggest gain in more than a month of range-bound trading. Silver soared to a 31-year peak. Both drew support from Federal Reserve Chairman Ben Bernanke's comments late on Monday suggesting he was committed to completing a $600 billion stimulus program as scheduled in June.

On technical charts, gold broke above a recent double-top technical formation around $1,440 an ounce. This added to a rush of buying triggered by news that Portugal's leading banks threatened to stop buying government debt hours after a Moody's downgrade.

Silver gained 1.8 percent to $39.12 an ounce, after hitting a session high of $39.25. That was the highest since the Hunt Brothers cornered the market in the early 1980s, when silver briefly hit a record of just below $50 an ounce.

Silver outperformed gold in the first quarter, rising 22 percent while gold rose 0.7 percent. The gold:silver ratio, which shows how many silver ounces are needed to buy an ounce of gold, fell to a 28-year low at 37.3.

 U.S. corn futures hit a record high on Tuesday, extending their biggest rally in six months as traders feared supplies could run out unless ranchers or ethanol makers cut back on purchases.

Corn has surged more than 15 percent in four days since a U.S. government report showed unexpectedly low inventories as of March 1. Gains slowed on Tuesday, with prices up a 0.7 percent as traders bet that the U.S. Agriculture Department on Friday will further downgrade its end-of-season stocks forecast. But with supplies at their tightest since the 1930s many saw more gains ahead.

"Corn has the potential to go higher and I see spot up to $8.25 to $8.45 and it will happen in April or early May," said Tim Hannagan, analyst for PFG Best.

Other grains have lagged the rally and ended lower on Tuesday, with soybeans depressed by a fourth interest rate rise in China, a move that threatens to reduce oilseed imports by the world's biggest buyer.

For all those waiting for Dennis Gartman's permission to jump in the pool (at all time record highs) it is finally here:

 Investor Dennis Gartman, publisher of the Gartman Letter, said gold was free from liquidation pressure once it breached $1,441 an ounce, a level which had triggered selling.

"It appears that gold is beginning a new up-trend after its recent consolidation," said Adam Sarhan of Sarhan Capital. "If gold negates this breakout and falls back below $1,440 to $1,430, one would expect sideways action to continue."

If the preceding wasn't enough for people to consider locking in some profits here, the following from UBS should serve as a wake up call:

UBS said silver investors show no sign of being ready to sell, even though there is a "real danger that silver prices have travelled too fast, too soon." Silver at $40 an ounce appears inevitable in the near term, UBS said.

And so more continue to "predict" the future, and be paid the big bux for their big calls.

Bottom line: if yes QE3: gold goes to $2,000. If no QE3, gold drops to $1,200, then jumps way beyond $2,000 following the deflationary tsunami that will flood the world, crash markets, and push the Fed's hand for one last expoeriment in failed voodoo economics.


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