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Monday, April 18, 2011

Gold World News Flash

Gold World News Flash

SIL (Silver Miners ETF) to Silver ratio

Posted: 17 Apr 2011 05:40 PM PDT

[url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] This one is very revealing as it contains silver miners. Its performance against silver since last year has been spectacular - if one can measure a poor showing in those terms (spectacularly poor). SIL Top Ten Holdings [*]Silver Wheaton Corporation (SLW): 12.74% [*]Industrias Penoles SAB de CV (PE&OLES): 11.10% [*]Fresnillo PLC (FRES): 10.44% [*]Pan American Silver Corporation (PAAS): 9.82% [*]First Majestic Silver Corp (AG): 6.86% [*]Coeur D'Alene Mines Corporation (CDE): 5.64% [*]Silvercorp Metals Inc. (SVM): 5.22% [*]Hochschild Mining PLC (HOC): 4.45% [*]Hecla Mining Company (HL): 4.40% [*]Silver Standard Resources, Inc. (SSRI): 4.32% ...


Stock World Weekly: Inflation & the Great Beyond

Posted: 17 Apr 2011 05:34 PM PDT


Here's the latest Stock World Weekly: Inflation & The Great Beyond

Food and Gas Prices Soar-1

Excerpt:

In a classic retelling of the ancient “irresistible force meets immovable object” riddle, irresistible forces of rampant oil speculation, political and social instability in North Africa and the Middle East, and the Federal Reserve’s policy of quantitative easing (QE) are combining to support higher oil prices. Unfortunately, when the price gets high enough, it hits an immovable object called demand destruction every time.

[...]

As the American consumer copes with rising food prices, rising energy costs, stagnant wages, high unemployment, and declining real estate values, the premise of a “consumer led” recovery is difficult to fathom. High gasoline prices alone are costing U.S. consumers $360 million more a day compared to prices a year ago, according to petroleum industry analyst Bob van der Valk. Bob also expects the price of West Texas Intermediate Crude to drop sharply over the next few weeks, and points to the fact that inventories at the Cushing, Oklahoma hub are at all time highs, something we have been noting for months.

Jan Hatzius is Goldman Sachs’ chief US economist, and is responsible for setting the firm’s US economic and interest rate outlook. Friday afternoon, Zero Hedge reported that Mr. Hatzius issued a major downgrade in his forecast for the “real GDP” for 2011, revising it down to 1.75% (annualized), from 2.5% previously (and from 3.5% not too long ago). He is very concerned about the downside risk to household real disposable income. In his view, the best chance for improvement in the forecasts is either “a substantial acceleration in the labor market and/or a large drop in gasoline prices.” (Jan Hatzius Friday Night Bomb: “We Are Downgrading Our Real GDP Growth Estimate”)

With all the talk about real inflation rates, the impact of inflation on food and energy prices, and its resulting problems, popular opinion begins to embrace the inflationary premise and soon people begin talking openly about the possibility of not only inflation, but even hyperinflation. However, not everyone shares this opinion. Charles Hugh Smith, of the blog “Of Two Minds,” takes an opposing view of the future:

“What the true believers of hyperinflation and the destruction of the dollar cannot accept is that debt is an asset to the owner of that debt. In focusing solely on the advantages of inflation to borrowers, they ignore the critical fact that inflation quickly destroys the value of the asset that debt represents to the owner. And debt is a primary asset to pension funds, insurance companies, banks, and indeed the entire financial sector."

Archives #1e439a;">here >

Long May Gold and Silver Run

Posted: 17 Apr 2011 04:46 PM PDT

[U]www.preciousmetalstockreview.com April 15, 2011 [/U] It was another great week for gold and silver. Both hit new highs and soon we could see silver break into all-time highs. The S&P 500 has been consolidating with other markets after a strong bounce off the tsunami low. The S&P 500 is building what looks to be a reverse head and shoulders pattern here which should take it much higher after the pattern completes within a week or two. As always, I’m listening to some music while I write and as often happens some Neil Young came across the speakers so today’s title is for his great song “[ame="http://www.youtube.com/watch?v=nszR0tfp4Es"]Long May You Run[/ame]”. Unfortunately my reading and wiring computer is still down, apparently the part got lost in the mail! Hard to believe I know. And it’s getting very frustrating. We should be completely back to normal by next week I think, but I thought that last weekend ...


Selected Silver stocks to silver ratio by request

Posted: 17 Apr 2011 04:31 PM PDT

[url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] ...


US Currency in Circulation & Barron’s Gold Mining Index Part 3 of 3 (Continued)

Posted: 17 Apr 2011 04:13 PM PDT

Mark J. Lundeen [EMAIL="Mlundeen2@Comcast.net"]Mlundeen2@Comcast.net[/EMAIL] 15 April 2010 This is the continuation of my Part 3 of 3 on Currency in Circulation series. * * * What drives the Barron's Gold Mining Index (BGMI) up? The same force that drives it down: monetary inflation pumped in from the Federal Reserve, inflating a financial bubble somewhere in the economy. Initially, the Fed's inflation flows into their targeted market: the real estate and/or the stock markets. Eventually a public mania develops as the bubble inflates to epic proportions, inspiring the general public to believe that everyone investing in the bubble is going to get rich! At first precious metals mining shares might rise slightly in sympathy, or actually decline as our "monetary policy makers" feed their latest bubble. But inflationary bubbles don't last forever. At some point in the cycle, the Fed's "liquidity" stops flowing into the bubble, despite their best efforts to...


GDX (Majors) Versus GDXJ (Juniors) Ratio Chart

Posted: 17 Apr 2011 03:15 PM PDT

For further market analysis and commentary, please see Trader Dan's website at www.traderdan.net

Dear CIGAs,

At the suggestion of my good friend Jim Sinclair, I have prepared a chart detailing the ratio of the price of GDX compared to the price of GDXJ.

The GDX does contain some smaller cap miners but it also mainly includes the large cap mining outfits.

The GDXJ on the other hand, is comprised entirely of medium cap and small cap miners.

Over 60% of the stocks that make up the GDXJ are Canadian firms. Nearly 14% are US headquartered with 13.31% being Australian. The remaining are from various countries around the globe.

While not a perfect representation, it is a useful tool for charting the underperformance ( in general) of the small and medium cap miners compared to the larger cap miners.

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Note the steep decline in the line that began in the summer of last year which lasted throughout the remainder of 2010. Only towards the end of last year did the juniors recover a bit of ground but the best they could do was to retrace a small portion of their losses against the large cap miners by moving higher but since January they have gone nowhere against the large caps.

It seems to me that the hedge funds are selectively targeting some of the small and mid tier mining firms to go after with their short side of the spread trade that they have been employing. Perhaps they feel that due to their sheer size and financial firepower, they can overwhelm any buying coming into the smaller firms and thus create an effective put option against their long metals positions. I am not sure but either way, the chart reveals the reason for the frustration among many who own quality junior and mid cap mining firms whose share prices seem stuck in the mud even as the gold and silver markets continue soaring higher.

Let me take this opportunity to also clarify something in my earlier post about the HUI and XAU ratio charts. I did not mean to imply that the mining shares are trading at the same level as they were back in 2001 when silver was $4.00. That is of course preposterous as most have had strong gains over the last decade. The ratio charts' purpose is to show whether the shares are underperforming or outperforming physical gold and/or silver. What the charts do show however is that the mining shares in general have so seriously underperformed the gains in both gold and silver, that the ratio of the indices to the underlying metals is ridiculously skewed. In the case of silver, you have to go all the way back to 2001, a period in which very few people were calling for a major bull run in the metal. There was little if any excitement whatsoever in the mining sector back then.

In regards to silver in particular, the ratio of the HUI and the XAU to it may not be as good of a gauge of how the silver stocks in particular are performing when compared to the price of the bullion, mainly because both indices are dominated by gold producers, particularly the HUI, but both indices do hold silver miners in their basket as well as some gold miners who produce both gold and silver. Since silver has been outperforming gold on a percentage basis, and both of these indices favor a larger number of gold producers than silver, it is reasonable to assume that both of the indices would be lagging silver when a ratio is constructed, but not to this extent. To see these indices trading at such extremely low levels when a ratio is created is indicative of the kind of short selling pressure that is active in the mining sector in many instances.

It is just mindboggling to see how undervalued many of the shares are when compared to the metals. While many have moved strongly higher, a large number of them continue to lag and are not reflecting the kind of price movements that we would expect to normally see with the bullion making either all time highs in price or 30+ year highs.

If you want to get a "fair" or reasonable level at which the indices should be trading, run some statistical analysis and see what the mean or average value should be then see what the standard deviation away from that mean is. I will leave that to my statistics friends but either way, the result is indicative of how cheap the stocks are compared to the metals in many cases.

Here are a few of the silver stocks comparing them to the price of silver and creating a ratio chart. A rising line indicates the stock price is outperforming the price of silver. A falling line indicates the stock is underperforming.

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A pleasant exception: SLW

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Equities Don't Follow the Dollar Index So Hold On!

Posted: 17 Apr 2011 02:57 PM PDT

I favor the long side for both stocks and commodities, but that can change on a dime once the dollar starts to rally. There are many negative factors coming together that give me a negative outlook on stocks and commodities ... Read More...



Thanks to the folks who caught my stupid error

Posted: 17 Apr 2011 02:42 PM PDT

[url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] I appreciate the emails and notes from so many who took some time out to write and help me get my head on straight when it comes to interpreting my own chart. A falling GDX to GDXJ ratio does indeed note that GDX in UNDERPERFORMING the latter. That would mean the opposite is occuring from what I wrote! Maybe one of these days I will get some sleep and think clearly again. My apologies to the readers and my appreciation for your forebearance. What the falling ratio would indicate is that the large caps are underperforming against the smaller mid caps and juniors in general. I am going to leave the former post up as a monument to my denseness. Just flip the analysis around and you will have the right picture. You might also want to focus on some of the stocks I have detailed and compared to silver to get a view of actual company performances against the metal. I will probably be pressed fo...


Is the Gold price really rising?

Posted: 17 Apr 2011 01:00 PM PDT

If we look at the gold price in the euro, we see it holding between €1,010 and 1,020 for the last couple of weeks. In the Swiss Franc it is doing much the same. However, in the dollar it has been rising, hitting new highs at $1,475. Today it jumped to €1,026 and through $1,480.


Shortage Threat Drives Texas Schools Hoarding Bullion at HSBC

Posted: 17 Apr 2011 11:43 AM PDT

Dallas hedge-fund manager J. Kyle Bass helped advise the University of Texas Investment Management Co. on taking delivery of 6,643 gold bars, worth $987 million on April 15, now stored in a bank warehouse in New York.
Bass, who made $500 million with 2006 bets on a U.S. subprime-mortgage market collapse, said managers of the endowment, known as UTIMCO, sought board approval to convert its gold investments into bullion this year. A board member, Bass, 41, said he was asked to help with that process.
While Bass, a managing partner at Hayman Capital Management LP, said in an April 16 e-mail that "the decision to purchase and take delivery of the physical gold" was made by endowment staff members, "I helped where I could." Gold futures touched a record $1,489.10 an ounce April 15 in New York before closing at $1,486.
The Texas fund's $19.9 billion in assets ranked it behind only Harvard University's endowment as of August, according to the National Association of College and University Business Officers. Last year, UTIMCO added about $500 million in gold investments to an existing stake, said Bruce Zimmerman, the endowment's chief executive officer. The fund's managers sought to take delivery of bullion to protect against demand for the metal overwhelming supply, according to Bass.
More Here..

The SP 500, Oil, and Gold Will Respond To Price Action in the U.S. Dollar

Posted: 17 Apr 2011 10:56 AM PDT

'The week that was' left many investors running for the exits on Monday and Tuesday as prices in the equity, energy, and precious metals markets plunged. The U.S. Dollar index futures tried to work their way out of a descending channel ... Read More...



Will The Finnish Vote Dead End Europe's Bailout Bonanza?

Posted: 17 Apr 2011 10:26 AM PDT


The early Finnish votes are in and it does not look good for Portugal. As Reuters reports, Finland's anti-euro True Finns made huge gains in an election on Sunday, raising the risk of disruption to an EU bailout of Portugal. The right-leaning National Coalition topped the ballot, gaining just over a fifth of all votes. Party leaders will start talks soon on forming a new government. The problem is that as the anti-euro moniker indicates, the True Finns are pretty much hell bent on vetoing the Portugal bailout which means the ongoing annexation of Europe's periphery by Olli Rehn is about to finish (and yes there is a finish-Finnish joke in there somewhere). Per Marketwatch: "Early results Sunday from Finland’s parliamentary elections suggest the anti-EU bailout True Finns party will hold the second-most number of seats and could even be part of a coalition government. Such an outcome may mean the EU’s planned bailout of Portugal is vetoed by Finland, a move that would roil the euro-zone markets. With half the votes counted the True Finns were on 19% support, and on course for 41 seats, tied with the Social Democrats and one seat less than National Coalition Party’s predicted 42-seat haul, the BBC reported. Finland is the only euro-zone country that requires bailouts to be approved by its parliament. Strong gains by the True Finns could derail a planned rescue for Portugal." What this means is that Goldman Sachs' European analysts will be scrambling all night to come up with loophole to European law that will not result in an epic plunge for the European currency, as apparently not even that sage among sages, Thomas Stolper, whose 2010 batting average of 0.000 made his contrarian calls manna from heaven in the past year, could anticipate this Black Swan. We will keep you informed of all the sell-side spin as it starts trickling in.

In the meantime, here is more from Marketwatch:

A stronger-than-expected showing by the True Finns, “or if some members from other parties take a similar line, could make things very touch and go,” said Steven Barrow, currency and fixed-income strategist at Standard Bank. “And clearly if there’s any possibility at all that Portugal might not get its money, it could hit bonds and the euro hard.”

Strategists note that the main opposition Social Democrats have hinted they may also oppose a bailout. The center-left Social Democrats opposed bailouts for Greece and Ireland.

The Portuguese bailout remains unlikely to be derailed, “but caution seems to be the watchword here until we can be sure that Finland can’t upset the party,” Barrow said.

European Union officials hope to finalize negotiations by mid-May on a Portuguese bailout expected to total around 80 billion euros ($115.7 billion).

At the least, True Finn’s ability to tap into anger over euro-zone bailouts may mean the next government draws an ever harder line in negotiations over Finland’s role in future rescues.

Much of the True Finns party’s recent success has been attributed to its leader, Timo Soini. The 48-year-old politician is often described as folksy and charismatic, with a reputation for witty speeches and vivid metaphors.

“How come they can’t see the euro doesn’t work?” Soini told Bloomberg earlier this year. “If a melon and an apple each wear the same size baseball cap, everyone can see that just doesn’t work.”

Well, when Europe is run by a man who tweets haikus and comes from a country that hasn't had a government for the longest amount of time in modern political history, logic probably is not the failing monetary union's strong suit.

So just how real is the threat of a derailment of the encroaching bailout scheme:

Pasi Kuoppamaki, chief economist at Sampo Bank in Helsinki, said negotiations to form a new government could take some time. And if the True Finns become the third- or second-largest party in parliament, there could be reverberations in the financial markets, he said, speaking before the polls opened.

But like many observers, Kuoppamaki is not convinced that the True Finns would be in a position to block bailouts or increased rescue funding even if they were able to secure a junior role in a new government.

Finnish officials, however, reacted to the True Finns’ rise by offering tough talk on bailouts.

Finance Minister Jyrki Katainen, leader of the pro-EU National Coalition Party, warned at last week’s meeting of EU finance ministers that Portugal must implement additional austerity measures that go beyond the proposals rejected by the nation’s parliament in March.

And Finland last month balked at committing to a previously-outlined plan for the euro-zone’s AAA-rated nations to boost guarantees to the EFSF. Prime Minister Mari Kiviniemi, who heads the Center Party, said the decision should be made by the nation’s next parliament. EU leaders agreed to finalize the plan in June.

The BBC reported Sunday that while Katainen’s NCP will remain the largest party, Kiviniemi’s Center Party’s number of seats may fall to around 36. Even before the election, Katainen was seen as a strong possibility to lead the next government as prime minister.

But even if Finland is not the proverbial straw on the camel's back, one is certainly coming. At this point well over half of Europe has had it with the decade long failed EUR experiment.

Randolph sees little chance Finland will turn away from the euro zone in the wake of the elections.

“More worrying is the general spread of populist and nationalist politics in the EU,” Randolph said.

French President Nicolas Sarkozy’s UMP party suffered big losses in regional elections in March, with the far-right National Front making large inroads, he noted.

The tone makes it more difficult to sell austerity in debtor nations and to make the case for backing the euro and the EU in creditor countries, Randolph said.

So far the EURUSD is trading stead, even as silver just took out $43.20. Something tells us the next FX regime will not be one marked by continuing strength of a currency whose ever greater number of constituent countries continue to exist purely on the luck of the draw, or the ever angrier populist vote.

Guest Post: Years Of The Modern

Posted: 17 Apr 2011 10:01 AM PDT


Submitted by Jim Quinn of The Burning Platform

Years Of The Modern

Is humanity forming en-masse? for lo, tyrants tremble, crowns grow dim,
The earth, restive, confronts a new era, perhaps a general divine war,
No one knows what will happen next, such portents fill the days and
nights;

Years prophetical! the space ahead as I walk, as I vainly try to
pierce it, is full of phantoms,

Unborn deeds, things soon to be, project their shapes around me,
This incredible rush and heat, this strange ecstatic fever of dreams
O years! – Years of the Modern- Walt Whitman

The great American poet Walt Whitman wrote these words in 1859. Whitman was trying to peer into a future of uncertainty. He was sure the future would be bleak. He had visions of phantoms. Maybe he saw the 600,000 souls who would lose their lives in the next six years. Whitman had captured the mood of a country entering the Fourth Turning. He didn’t know what would happen, but he felt the beat of war drums in the distance. Whitman did not have the benefit of historical perspective that we have today.

There have been three Fourth Turnings in American History. The American Revolution Fourth Turning ended in 1794 with the Crisis mood easing with the presidency of George Washington. Whitman didn’t realize that, 64 years after the previous Fourth Turning, the mood of the country was ripe for revolution and the sweeping away of the old order. When the stock market crashed in 1929, 64 years after the exhausting conclusion to the Civil War Fourth Turning, Americans didn’t realize the generational constellation was propelling them toward a new social order and a horrific world war. It is now 66 years since the conclusion of the Depression/WWII Fourth Turning. All indications are that the current Fourth Turning began in the 2007 – 2009, with the collapse of the housing market and the ensuing financial system implosion.

I find myself vainly trying to pierce the veil of events yet to be. The future is filled with haunting phantoms of unborn deeds which could lead to renewed glory, untold death and destruction, or the possibly the end of the great American experiment. Walt Whitman captured the change of mood in the country with his poem. History books are filled with dates and descriptions of events, battles, speeches and assassinations. What most people don’t understand is Fourth Turnings aren’t about events, but about the citizens’ reaction to the events.

The Boston Massacre did not start the American Revolution Fourth Turning, but the Boston Tea Party did. John Brown’s attack on Harper’s Ferry did not start the Civil War Fourth Turning, but the election of Abraham Lincoln did. World War I did not start the Great Depression/World War II Fourth Turning, but the 1929 Stock Market Crash did. The 9/11 terrorist attack did not start latest Fourth Turning, but the Wall Street induced housing/financial system collapse did. In each instance, the generations were aligned in a manner that would lead to a sweeping away of the old civic order and a regeneracy with the institution of a new order.   Old Artists disappear, Prophets enter elder hood, Nomads enter midlife, Heroes enter young adulthood—and a new generation of child Artists is born.  

  

One hundred and fifty years ago this week Fort Sumter was bombarded by upstart revolutionaries attempting to break away from an overbearing Federal government based in Washington D.C. Exactly four years later the butchery and death concluded dramatically with Robert E. Lee surrendering to Ulysses S. Grant at Appomattox and the assassination of Abraham Lincoln by John Wilkes Booth at Ford’s Theatre. For the next four years we will celebrate the 150th anniversary of various battles that marked the Civil War. What people will not consider are the similarities between that tumultuous period in our history and the period we are in today. Fourth Turnings are marked by different events but the same mood of upheaval, anger and fury.

As Strauss & Howe note in their book, the morphology of a Fourth Turning follows a predictable pattern:

  • A Crisis era begins with a catalyst – a starting event (or sequence of events) that produces a sudden shift in mood.
  • Once catalyzed, a society achieves a regeneracy – a new counter entropy that reunifies and reenergizes civic life.
  • The regenerated society propels toward a climax – a crucial moment that confirms the death of the old order and birth of the new.
  • The climax culminates in a resolution – a triumphant or tragic conclusion that separates the winners from losers, resolves the big public questions, and establishes the new order. 

Strauss & Howe describe the normal sequence:

This Crisis morphology occurs over the span of one turning, which (except for the U.S. Civil War) means that around fifteen to twenty-five years elapse between the catalyst and the resolution. The regeneracy usually occurs one to five years after the era begins, the climax one to five years before it ends. 

The catalysts are relatively easy to identify, but the point of regeneracy is more subtle and harder to grasp.

Fiery Moment of Death & Discontinuity

“Like nature, history is full of processes that cannot happen in reverse. Just as the laws of entropy do not allow a bird to fly backward, or droplets to regroup at the top of a waterfall, history has no rewind button. Like the seasons of nature, it moves only forward. Saecular entropy cannot be reversed. An Unraveling cannot lead back to an Awakening, or forward to a High, without a Crisis in between. The spirit of America comes once a saeculum, only through what the ancients called ekpyrosis, nature’s fiery moment of death and discontinuity. History’s periodic eras of Crisis combust the old social order and give birth to a new.” – Strauss & Howe – The Fourth Turning

 

 

The catalyst for the American Revolution was the Boston Tea Party. The catalyst for the Civil War was the election of Abraham Lincoln. The catalyst for the Great Depression was the 1929 Stock market crash. The catalyst for the current Crisis was the housing/financial system collapse. The catalyst is an event that terminates the brooding mood of the Unraveling and unleashes the fury of a Crisis. The three previous Crisis periods in American history were driven by different events, but similar generational dynamics. By closely examining the dynamics and threats that were facing the country during these previous Crisis periods, we may be able to peer into the murky fog of the future and make out the phantoms of events to come. What we know for sure is every previous Crisis had an economic and fairness dimension that provided the initial spark, triggering a series of events that eventually led to an all encompassing war for survival.

American Revolution - The economic dimension that led to the onset of the American Revolution can be summed up in the rallying cry of the colonists, “No Taxation, Without Representation.”  The British felt that the colonies were created to be used in the way that best suited the crown and parliament. The French & Indian War left the British Empire deeply in debt. They responded by demanding more revenue from the colonies. The British Parliament continued to pass taxation Acts which became increasingly onerous to the independent minded American colonists:

  • Sugar Act – 1764
  • Currency Act – 1765
  • Stamp Act – 1765
  • Townshend Acts – 1767
  • Tea Act – 1773

The increasing levels of taxation and control resulted in the formation of Committees of Correspondence and the Sons of Liberty. Samuel Adams, Thomas Paine and the other firebrands led the movement for independence. The colonists grew increasingly angry with the heavy handedness and harshness of the British Monarchy. These incidents and actions solidified the mood for independence: 

  • Quartering Act – 1765
  • Boston Massacre – 1770
  • Intolerable Acts – 1774 

As you can see there were years of economic and political turmoil before the Boston Tea Party catalyst event ignited the revolution. The mood of enough citizens had shifted as the generational alignment no longer allowed for compromise. In the end, the increase of economic restrictions and limiting of freedom led to the revolution. As a side note, a Fourth Turning does not need a majority to be initiated. Only one-third of the colonists actively supported the rebellion.

American Civil War - The economic dimension that drove the dynamics of the Civil War related to the Southern agrarian society based upon growing cotton and the rapidly industrializing North with its cities and manufacturing prowess. The invention of the cotton gin led to many more plantations in the South depending solely on cotton to support their way of life. Cotton farming required vast amounts of cheap human labor, and slaves fit the bill. Abolitionists in the North had the moral high ground as Southern plantation owners treated human beings as property. Attitudes became more intense after the publication of  Uncle Tom’s Cabin, the Dred Scott Decision, and the John Brown raid on Harper’s Ferry. The issue of slavery had been boiling beneath the surface since the adoption of the US Constitution. Various compromises had been struck over the years to keep the issue at bay:  

  • Missouri Compromise
  • Compromise of 1850
  • Kansas – Nebraska Act

These economic and human rights issues became wrapped in the mantle of states’ rights and the struggle between the Federal government and State governments. The battle reached back to the earliest days of the Republic between Jefferson and Hamilton.  Many felt that the new constitution ignored the rights of states to continue to act independently. They felt the states should still have the right to decide if they were willing to accept certain federal acts. This resulted in the idea of nullification, whereby the states would have the right to rule federal acts unconstitutional. The federal government denied states this right. With the election of Abraham Lincoln, the Southern states saw a man who was against slavery, believed in a strong Federal government, and supporter of the industrial North. The years of compromise were over. The firebrand prophet generation took control in Washington DC and Richmond Virginia. A fight to the finish was unavoidable.

Great Depression/World War II – The economic dimension that drove the onset of this Crisis was the unbridled greed and speculation of Wall Street banks. The easy money policies of the Federal Reserve, formed in secret and voted into existence on Christmas Eve with many members of Congress not present created the Roaring 20&rime;s. While farmers struggled to survive on the drought stricken plains and the average person lived a hard scrabble existence, the banking elite reaped obscene profits, with the top 1% sucking 23.9% of all the national income – the highest level in U.S. history.

The 1920&rime;s were a time of cultural decay, decadence and disillusionment. This mood was reflected in F. Scott Fitzgerald’s The Great Gatsby. As we know too well, every boom eventually goes bust. The bust came in October 1929, with a stock market crash. Stockholders lost $40 billion. The market dropped 89% over a two year period. By 1933, 11,000 of the 25,000 banks in the US had failed. These were mostly small regional banks. The major NY banks such as JP Morgan and Mellon became more powerful. The artificial interference in the economy by the Federal government and Federal Reserve was a disaster prior to the Depression, and government efforts to prop up the economy after the crash of 1929 only made things worse. Passage of the Smoot-Hawley tariffs spread the depression around the world. The economic hardship in Germany led to the election of Adolf Hitler and set the stage for a future war that would kill 65 million people. FDR’s New Deal programs crowded out private industry and resulted in unemployment staying at levels exceeding 15% for an entire decade. Keynesian government spending prolonged the depression and put into place social programs that set in motion the debt bomb that threatens the country today.   

Force Advancing with Irresistible Power 

I see not America only, not only Liberty’s nation but other nations
preparing,

I see tremendous entrances and exits, new combinations, the solidarity
of races,

I see that force advancing with irresistible power on the world’s stage,
(Have the old forces, the old wars, played their parts? are the acts
suitable to them closed?)

I see Freedom, completely arm’d and victorious and very haughty,
with Law on one side and Peace on the other,

A stupendous trio all issuing forth against the idea of caste;
What historic denouements are these we so rapidly approach?
I see men marching and countermarching by swift millions,
I see the frontiers and boundaries of the old aristocracies broken,
I see the landmarks of European kings removed,
I see this day the People beginning their landmarks, (all others give
way;)

Never were such sharp questions ask’d as this day,
Never was average man, his soul, more energetic, more like a God,

Years of the Modern- Walt Whitman

 

 

Walt Whitman foresaw vast armies on the march and old orders being swept away by the historic denouements that were rapidly approaching. But even he couldn’t have foreseen the butchery and tragic deaths of over 600,000 men in the next four bloody years. The economic dimensions of the current Crisis were foreseeable at least a decade before the Crisis arrived. The Federal Reserve, under the “wise” supervision of former Ayn Rand disciple Alan Greenspan, progressively blew one bubble after another through its easy money policies. The Greenspan Put allowed the Wall Street vampire squids to suck the life out of the American economic system without fear of being harpooned for taking financial system endangering leveraged bets. The financial oligarchs used their influence, power and vast wealth to repeal Glass-Steagall, capture and buy off the rating agencies, neuter the SEC and other regulatory agencies and place their executives in high level government positions. The ruling wealthy elite again matched their peak take of the national income, just as they did in 1928.

 

The debt, fraud and lack of financial regulation that catalyzed the near collapse of the worldwide financial system in 2008, 63 years after the end of the last Fourth Turning, have not been purged from the system. In fact, those in power have decided more debt, accounting fraud and financial ignorance is the path to recovery for America. The issues which will be the driving forces during this Crisis are clear to anyone with their eyes open:

  • A National Debt the will approach $20 trillion by 2015 and has already surpassed 90% of GDP, the point of no return.
  • Annual deficits exceeding $1.5 trillion and equal to over 10% of GDP.
  • The unfunded promises made by slimy politicians over decades for Medicare, Medicaid and Social Security exceeds $100 trillion and can never be paid. 
  • A military industrial complex that controls Congress, is fighting three wars, occupies hundreds of bases throughout the world and spends $1 trillion per year, seven times more than any other country in the world.
  • A financial industry debt peddling complex that has gained control over the government and media to such an extent they have been able to rape and pillage the American people for three decades, convincing regulatory agencies to allow them 40 to 1 leverage, crashing the financial system through a massive mortgage/derivatives fraudulent ponzi scheme, threatening the American people into giving them $4 trillion of taxpayer money, paying themselves hundreds of billions in bonuses for a job well done, and then insisting on lower taxes for their corporations and the rich oligarchs who inhabit these towers of evil in downtown Manhattan.
  • Wealthy elite who use their existing wealth to control Congress, the media and the financial debt peddling industry, abscond with 25% of the national income and control 42% of the financial wealth in the country. At the same time real wages of middle class Americans have been stagnant for 4 decades, real unemployment exceeds 20%, 45 million people need food stamps to make ends meet, and real inflation on the things middle class Americans need hovers around 10%. The gap between the Haves and Have Nots has never been greater.

   

  • The Federal Reserve has boxed itself into a corner and will be unable to extricate itself with its only weapon – the printing press. It has tripled the size of its balance sheet to $2.7 trillion, with at least half of the “assets” consisting of toxic worthless mortgages bought from their Wall Street masters. 0% interest rates for two and a half years, QE1 and QE2, and allowing banks to fraudulently report the value of their loans have failed to jumpstart the economy. Come June of 2011 they will be faced with a dilemma – PRINT or DIE. If they stop buying U.S. Treasury debt, interest rates will go up dramatically. If they keep printing to buy U.S. Treasury debt, the dollar will continue to fall and inflation will accelerate from its already high level.
  • The biggest wildcard among the Fourth Turning catalysts is Peak Oil. The modern industrial world is completely dependent upon cheap accessible oil. Globalization, consumerism, suburban sprawl, food production and distribution, and all means of transportation are dependent upon cheap abundant oil. Pea


Global Key Economic Event And Bond Issuance Summary For The Upcoming Week

Posted: 17 Apr 2011 09:53 AM PDT


Now that the global financial system is down to living literally auction to auction, with negligible available cash and deficits as far as the eye can see, not to mention a European continent living day to day on the whims of either political extreme, issuance of government paper, and particularly its proper uptake, takes takes on a especially significant role. Below we present not only Goldman's summary of the key events in the past week as well as those in the next 5 days, but a bond auction schedule, together with a POMO summary, for the next two weeks.With everyone selling as much paper as they can wet away it, not even the global central banking cartel selling unlimited long term puts on the worldwide treasury curve will do much to prevent the upcoming global yield tsunami.

Source: Morgan Stanley:

Next, Goldman summarizes the past week, and forecast the next 4 business days (Friday is a holiday)

What Matters in FX This Week : Business Surveys in Europe and Turkish Central Bank Meeting

From a macro perspective, last week’s data offered a slightly more positive mix of growth vs. inflation. CPI data in the US showed a more moderate increase in core inflation, while consumer confidence in the US came in slightly better than expected and long-term inflation expectations eased.?
?

In terms of our own market views, we re-emphasized our Dollar bearish bias in the FX Monthly but also highlighted that limited further upside in European rates together with slightly more volatile risk sentiment could temporarily hurt our long EUR/US $ exposure. Our commodities strategy team turned more neutral in the near term for oil, and as a result, we closed our long recommendation in Canadian equities.
?

Week Ahead?
?

The week ahead is reasonably light on data. The European PMIs and the German IFO will be the key releases to watch. So far, these forward-looking growth indicators have remained steady at remarkably high levels, and it will be interesting to watch whether it extends for another month.?
?

As a result of our more neutral stance on oil, we are watching our RUB trade closely. If the CBR remains hawkish then there is room for RUB to continue to perform even if oil prices correct lower in the near term. Therefore, watching next week’s investment data is key for our view on the economy and the central bank’s next move.?
?

Next week’s central bank meeting in Turkey is unlikely to provide a negative backdrop for our long EURTRY recommendation as we do not expect CBRT to raise reserve requirements again.?
?

Monday 18 April?

RBA Board Meeting Minutes.?

Hungary Monetary Policy Meeting: We expect the National Bank of Hungary to keep rates unchanged at 6%.?
Also of interest: Poland wages, US homebuilders’ survey, Singapore trade balance. Fed speeches by Bullard, Fischer & Lockhart.?

Tuesday 19 April?

Eurozone Flash PMIs (Apr): We expect the manufacturing PMI to print at 57.2, very close to last month’s print (of 57.5). Similarly for the services PMI we expect 57, which would be slightly below last month’s 57.2 print.

Russia Investment Statistics (Mar): The strength of the rebound in domestic demand will be important to watch in order to assess the odds for further monetary tightening in the near term in Russia. Our long RUB basket recommendation is predicated on a hawkish CBR stance.?

US Housing Starts (Mar): We expect a 5% increase in starts vs consensus forecasts of 9.6%.?

Also of interest: Canada CPI (Mar), Japan trade balance (Mar), Hungary Wages (Feb), Poland IP (Mar).?

Wednesday 20 April?

Thailand Central Bank Meeting: We expect a 25bp hike of the policy rate to 2.75%, on the back of rising inflationary pressures.?

Taiwan Export Orders (Mar): The March 11 earthquake in Japan is likely to distort export numbers across the region.?
Sweden MPC Meeting: We expect the Riksbank to hike rates by 25bps to 1.75%. This is in line with consensus expectations.?

UK MPC Meeting Minutes: It would be a surprise if any committee member had switched votes between March and April.?

US Existing Home Sales (Mar): We forecast a decline of 6% mom vs a 2.5%mom increase that consensus expects.?

Also of interest: South Africa Retail Sales, Mexico INPC inflation.?

Thursday 21 April?

Germany IFO (Apr): We will be watching whether the IFO continues to point to substantial strength in the German manufacturing sector. The components will also be of interest in terms of assessing the course for business expectations and current trends in the retail and wholesale sectors.?

Turkey Monetary Policy Meeting: We expect the Bank to leave rates unchanged at 6.25%. We do not expect the bank to hike reserve requirements (RRR).?

Japanese Portfolio Flow data for the week ending April 15. The last data set showed large Japanese selling of foreign debt. In comparison to previous years, we think it is related to fiscal year end. If the trend continues, it may signal repatriation of foreign assets in response to last month’s earthquake.?

US Philly Fed (Apr): We expect the Philly Fed indicator to decline to 33 from 43.4, consensus expects a decline to 36 only.

Also of interest: US initial claims?, Canada retail sales.
?

Friday 22 April?
?

Good Friday?
?

Of interest: Hungary Retail Sales

GATA London conference and hotel registrations are open

Posted: 17 Apr 2011 08:56 AM PDT

5:16p ET Sunday, April 17, 2011

Dear Friend of GATA and Gold (and Silver):

Registrations are now being taken for GATA's Gold Rush 2011 conference in London, to be held Thursday-Saturday, August 4-6, at the famous Savoy Hotel (http://www.fairmont.com/savoy/), and the hotel has begun taking reservations for GATA conference participants at a discounted rate.

Admission to the conference will be US$800, $US1,500 for couples. This will cover not only all conference presentations but also a reception on Thursday night, coffee breaks and lunches on Friday and Saturday, and dinner Friday night.

For couples with a member who wants to see a little more of London and a little less of monetary metals advocates, a ticket covering admission just to the reception, the two lunches, and the dinner will be available for US$250.

We hope to offer some family outings in London as well, possibly on Sunday, August 7. More about that later.

... Dispatch continues below ...


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Canuc Resources Pursues Ecuador and Nova Scotia Gold Projects

Canuc Resources Corp. (TSX: CDA) has confirmed high-grade gold and the potential for large-tonnage, low-grade copper and gold mineralization at its primary asset, property in the historic Nambija gold mining district in southeastern Ecuador.

Last November Canuc took an option on the Mill Village gold property in southwestern Nova Scotia, which includes two past-producing mines. Canuc plans to begin surface and underground exploration at Mill Village in the next several weeks, financed by $2 million recently raised through a private placement.

To generate immediate income, Canuc is acquiring MidTex Oil and Gas Co., owner of a producing gas well and a lease on 320 acres in Stephens County, Texas.

Canuc's CEO, Gary Lohman, has more than 30 years of experience in the mining industry, primarily as a geologist, and the company's officers include similarly experienced people.

For more information about Canuc, please visit http://www.canucresources.ca/.


Among the speakers at Gold Rush 2011 in London:

-- James G. Rickards, senior managing director for market intelligence at consulting firm Omnis Inc. in McLean, Virginia.

-- London silver trader and whistleblower Andrew Maguire, whose complaint about silver market manipulation, presented by GATA to the public hearing of the U.S. Commodity Futures Trading Commission in Washington a year ago March, sent the price of silver soaring.

-- Ben Davies, CEO of Hinde Capital, who has been making the case for gold and silver on financial news television programs throughout the world.

-- Market Force Analysis editor and GATA Board of Directors member Adrian Douglas, whose research studies have documented gold and silver market manipulation.

-- Cheviot Asset Management Investment Director Ned Naylor-Leyland.

-- Economist and former banker Alasdair Macleod, whose commentaries on the markets are published at his Internet site, FinanceAndEconomics.org, and now at GoldMoney.com.

-- GATA Board of Directors member Ed Steer, editor of Ed Steer's Gold and Silver Daily letter, published by Casey Research.

Speakers returning from GATA's Gold Rush 21 conference in Dawson City, Yukon Territory, in 2005 will include:

-- GATA Chairman Bill Murphy.

-- South African gold mining industry expert Peter George.

-- Sprott Asset Management Chairman Eric Sprott.

-- Sprott Asset Management Chief Investment Strategist John Embry.

-- GoldMoney founder James Turk.

-- Hugo Salinas Price, president of the Mexican Civic Association for Silver.

-- Gold price suppression litigator Reginald H. Howe.

-- Kirkland Lake Gold CEO Brian A. Hinchcliffe.

-- Gold market analyst John Brimelow.

-- Samex Mining Corp. President Jeff Dahl.

-- And your secretary/treasurer.

Bringing the gold price suppression scheme to the attention of influential people around the world, the Gold Rush 21 conference in 2005 sent the gold price up sharply. With its conference in London, home of two major perpetrators of the gold price suppression scheme, the Bank of England and the London Bullion Market Association, GATA plans to increase understanding of the scheme and hasten its downfall. The conference will review where gold has gone amid GATA's hectoring and examine where it might go as it returns to its necessary place at the center of the world financial system.

Gold Rush 21 conference organizer Janet Lee has returned to help organize GATA's London conference along with Howard Fitch of Market Edge Media in Vancouver.

GATA soon will be posting an Internet site dedicated to the London conference but for the moment we've posted the conference invitation here --

http://www.gata.org/goldrush2011-london

-- and you should not wait to register.

Just send an e-mail to LondonConference@GATA.org with the names, postal addresses, telephone numbers, and e-mail addresses of all the people you're registering. Specify any registrations that are for just the reception and meals. We'll reply with information about payment and how to make your reservation at the Savoy at the conference rate.

Of course it's not necessary for conference participants to stay at the Savoy but it sure will make things easier for the London police at closing time.

We hope to see many of our old friends and to make many new friends in London -- so many, in fact, that we'd love to have to find out how many free gold market advocates it takes to fill the Albert Hall.

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

* * *

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

World Resource Investment Conference
Sunday-Monday, June 5-6, 2011
Vancouver Convention Centre East
Vancouver, British Columbia, Canada

http://cambridgehouse.com/conference-details/world-resource-investment-c...

Gold Rush 2011
GATA's London Conference
Thursday-Saturday, August 4-6, 2011
Savoy Hotel, London, England

http://www.gata.org/goldrush2011-london

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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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

International Forecaster April 2011 (#5) - Gold, Silver, Economy + More

Posted: 17 Apr 2011 08:19 AM PDT

Europe continues to struggle from one problem to another. The euro has been strong only because the dollar has been weak. The governments of Greece, Ireland, Portugal and Spain continue their balancing acts on the edge of a financial precipice. All have Socialist governments, which have done terrible jobs, but the opposition is not much better. Each economy is in serious trouble and if Italy and Belgium follow it will take $4 trillion to bail them out. If the solvent EU members bail them out they'll fail as well. Americans and Brits can look down their noses, but their problems are just as bad if not worse.


Buying Gold on the Price Inflation Guarantee

Posted: 17 Apr 2011 08:04 AM PDT

At my age, I have pretty much figured out that people don't like me because they fear me. I don't know why, exactly, but perhaps they fear me because I am a cynical, paranoid, gold-bug old man who thinks that the Federal Reserve has turned into an evil institution by creating So Freaking Much Money (SFMM), now so that it can commit the sin of monetizing new government debt by the truckload, increasing the money supply and guaranteeing a roaring inflation that hurts the poor, and hurts the almost-poor, and hurts the not-quite-poor, and (now that I think about it) it hurts everybody, which hurts me personally because they come whining to me to give them some of MY money!


Mining shares priced for 2001 gold and silver prices, Norcini tells KWN

Posted: 17 Apr 2011 07:55 AM PDT

View the original post at jsmineset.com... April 17, 2011 09:28 AM Dear Friend of GATA and Gold: The weekly review of the precious metals markets at King World News finds Bill Haynes of CMI Gold & Silver reporting that retail demand remains strong, and futures market expert Dan Norcini reporting that gold and silver mining shares are priced as if the metals were still trading at their 2001 prices. You can listen to the interview here: [URL]http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/4/16_KWN_Weekly_Metals_Wrap.html[/URL] Audio of the recent King World News interview with James Grant of Grant’s Interest Rate Observer has been posted here: [URL]http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/4/16_James_Grant.html[/URL] And audio of the recent King World News interview with resource company broker Rick Rule has been posted here: [URL]http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/4/16_Rick_Rule.html[/URL] CHRIS POWELL, Se...


Jim?s Mailbox

Posted: 17 Apr 2011 07:55 AM PDT

View the original post at jsmineset.com... April 17, 2011 09:24 AM Dear Jim, All this QE has devastating effects on the poor! Best, CIGA Big Tatanka CIGA Big Tanaka, You got that right with a little help from the weather long cycle, but what created the absolute need for the Central Bank tool, QE? The answer is the international collapse and false valuation of OTC derivatives scam. If karma exists the bankers are doomed for eternity. Regards, Jim World’s Poor 'One Shock' From Crisis as Food Prices Climb, Zoellick Says By Eric Martin – Apr 16, 2011 5:49 PM MT World Bank President Robert Zoellick said the global economy is "one shock away" from a crisis in food supplies and prices. Zoellick estimated 44 million people have fallen into poverty due to rising food prices in the past year, and a 10 percent increase in the food price index would send 10 million more people into poverty. The United Nations FAO Food Price index jumped 25 percent las...


“SANYA: Brazil, Russia, India, China and South Africa – the BRICS group of fastest growing economies – Thursday signed an agreement to use their own currencies instead of the predominant US dollar in issuing credit or grants to each other.”

Posted: 17 Apr 2011 06:09 AM PDT

BRICS credit: Local currencies to replace dollar Palantír: following the headline with this: Max and Stacy, can you talk about the significant around what Chicago Mercantile Exchange (CME) will do tomorrow, April 18; offer six oil contracts (one for North Sea Oil and five for gasoline) that will be traded in Euros – not Dollars. [...]


On The Upcoming Glencore IPO: Is The Juice Worth The Squeeze?

Posted: 17 Apr 2011 05:43 AM PDT


This article is from Stone Street Advisors.

Glencore is the most powerful, connected commodities trading firm on the planet.  Since many valuable commodities are located in politically unstable parts of the world, earning, and more importantly retaining that honor necessitates that Glencore engage in some possibly questionable business practices, some (many?) of which might just happen to violate one or more international laws or sanctions.  Running such operations as a private, closely-held firm based in a quiet corner of Switzerland is hard enough, but doing so as a soon-to-be publicly-traded company in both London and Hong Kong may provide near impossible given the much higher visibility and scrutiny that comes with a public listing.

Joe Upsidetrader had a good post earlier this weekend about how Glencore is like something out of a Tom Clancy spy novel.  Other outlets have gone so far as to liken the firm to one or more evil empire found in a Bond film.  Infamous must a firm be for it to earn such impressive accolades, despite not only being a privately-held off-shore firm (based in Zug, Switzerland), but almost completely off the radar of Main Street (and even parts of Wall Street).

For the uninitiated among you, I strongly suggest you read this Business Week article from 2005, entitled "The Rich Boys," not for the wealth accumulated by its employees, but in honor of the Man, the Myth, the Legend, Marc Rich, Glencore's founder and mentor extraordinaire.  If allegations of his disregard for the law are even remotely true, then comparisons of Rich and his cronies to an evil empire of Bond Villain-esque proportions are not necessarily unfair.  Under-the-table deals with despots and dictators, disregard for laws and according to some, a complete disregard for ethical practices, all in the quest for dominance of the global commodities trade.

But now, as the legacy of Glencore, nee Marc Rich & Co AG, prepares its initial public offering, Wall Street anxiously awaits its chance to get a piece of the most successful commodities firm on the planet, and the riches that come with it.  Seldom talked-about though is how those riches are procured.  Mining, exploration, and extraction are not exactly pretty business, especially when said business is in some of the most hostile locations in the world, many rife with what amounts to little more than slave labor.

One way or another, an incredibly wide swath of The Public is going to have some economic exposure to a piece Glencore (both pre and post IPO).  I doubt many pensioners and endowment beneficiaries, to say nothing of the myriad mutual fund owners would be thrilled to know they're funding a firm described by some as the most evil on Earth. If people are outraged about Goldman Sachs' business practices, their heads would probably explode if they knew even the half of Glencore's dirt.

Fund, pension, and endowment managers and trustees should be asking themselves whether they can in good faith support Glencore's IPO, not from a socially responsible investing perspective, but from an economic one.  Do they want to be left holding the bag when, after the IPO, some of Glencore's less-proud tactics and practices result in potentially enormous economic liability while insiders cash-out? (Glencore's CEO has said no partners will be selling shares in the IPO, but that does not mean they won't at some point down the road)  For their part, these insiders have to be asking themselves whether some liquidity (ok, $10 billion is ALOT of liquidity!)  is worth the heightened exposure and criticism.  Will the firm be able to deliver such stellar results when they have not just every regulator and politician in the world breathing down their neck, but the media, as well?

Perhaps investors will view Glencore no-differently than any other publicly-traded energy/commodity firm, and the concerns about the Ways of Marc Rich are entirely overblown.  But on the other hand, perhaps they are not.  As an investor, legal liability and the uncertainties thereof should at the very-least give one pause before piling-into the trade.  Glencore may be the best in the world at what it does, and buying best-of-breed may often be a winning strategy, but investors should be extremely wary of buying into a firm with such a colorful history.  Given as-yet-"recovered" credit market conditions (at least to full pre-crisis levels), and a global commodity price boom, one cannot blame Glencore management for wanting to take advantage of the opportunity to raise a not-insignificant amount of capital in the equity markets.  As an investor, do you really want to be on the other side of the trade from one of the most successful trading firms in this history?

Caveat Emptor.


--The Analyst

Stone Street Advisors

S&P500, Crude Oil, and Gold Reliant on U.S. Dollar Price Action

Posted: 17 Apr 2011 05:38 AM PDT

 “The week that was” left many investors running for the exits on Monday and Tuesday as prices in the equity, energy, and precious metals markets plunged. The U.S. Dollar index futures tried to work their way out of a descending channel, but came up unsuccessful. The U.S. Dollar index rallied in several morning sessions, but usually was met with heavy selling later in the day which either muted gains or pushed the dollar index lower. The other notable development this week was some Fed drivel which solidified the Central Bank’s continued efforts to devalue the U.S. currency and hold short term interest rates hostage. In addition, it seems more likely with every press release from a Fed Governor that Quantitative Easing II will expire in June and Quantitative Easing III will not be pursued unless economic conditions worsen.


Jim's Mailbox

Posted: 17 Apr 2011 05:24 AM PDT

Dear Jim,

All this QE has devastating effects on the poor!

Best,
CIGA Big Tatanka

CIGA Big Tanaka,

You got that right with a little help from the weather long cycle, but what created the absolute need for the Central Bank tool, QE?

The answer is the international collapse and false valuation of OTC derivatives scam.

If karma exists the bankers are doomed for eternity.

Regards,
Jim

World's Poor 'One Shock' From Crisis as Food Prices Climb, Zoellick Says
By Eric Martin – Apr 16, 2011 5:49 PM MT

World Bank President Robert Zoellick said the global economy is "one shock away" from a crisis in food supplies and prices.

Zoellick estimated 44 million people have fallen into poverty due to rising food prices in the past year, and a 10 percent increase in the food price index would send 10 million more people into poverty. The United Nations FAO Food Price index jumped 25 percent last year, the second-steepest increase since at least 1991, and surged to a record in February.

Food price inflation is "the biggest threat today to the world's poor," Zoellick said at a press conference following meetings of the World Bank and the International Monetary Fund. "We are one shock away from a full-blown crisis."

More…

Silver Continues to Outpace Gold

Posted: 17 Apr 2011 05:14 AM PDT

Once again silver is out pacing gold in the weekly performance.  Is it too much of a good thing?  Only time will tell.  Lower gold volume versus higher silver volume seems to suggest the betting is really on silver.


Spitzer: If The Attorney General Does Not Sue Goldman Sachs, He Should Resign

Posted: 17 Apr 2011 04:58 AM PDT


Now that Goldman is back in the spotlight following Carl Levin's concluding report, referring Goldman Sachs to the same law enforcement authorities that are overeager to get a job at none other than Goldman (the most recent example of which came yesterday when Bank of America which hired Gary Lynch, a former director of enforcement at the SEC, to head its legal, compliance, and regulatory relations efforts) for misleading investors and perjury, the wave of indignation at the glaringly obvious is once again back in vogue. To wit: on Friday's Andreson Cooper, Matt Taibbi and Eliot Spitzer presented their views on the fact that several years into the biggest ponzi collapse in Wall Street history, stabilized only by the Fed's pledging of trillions in taxpayer capital and the Treasury issuing like amount in debt to prevent the insolvency of Wall Street's corner offices, nobody has still gone to jail. It was actually an oddly open and forthright show. Some of the notable soundbites from the transcript: "Eliot, do you believe Goldman broke the law and lied? - Yes, I do. And I know people are going to say how can you say that as a lawyer? I have read this report. It confirms our worst fears about double dealing, lying. Goldman Sachs has zero, none, nada credibility in my book"....."Tim Geithner, treasury secretary, apparently reported in today's "New York Times" was calling people saying don't bring cases, it will unsettle the markets, so they let these guys go free. Meanwhile, he signed off on $12.9 billion to Goldman to cover a bad bet they made."....."Goldman Sachs was the number one private campaign contributor to Barack Obama's presidential election campaign. It's one of the single biggest campaign contributors to both parties in Congress"..."Anderson, before I sued, went after Merrill Lynch, which was the first case we filed many years back, I was told by their lawyer -- this is a direct quote -- "Be careful, we have powerful friends"...and the kicker: "Do you think the Justice Department will prosecute? Spitzer: If they don't, shame on them. If they don't, the Attorney General should resign if he can't bring this case." And when Holder resigns, he can go work as Goldman's newest General Counsel, the end. Hopefully, unlike last time people got angry, only to promptly lose interest in Wall Street's crimes, this time it actually leads to something.

Complete program transcript:

Anderson Cooper Transcript

h/t MM

David Kostin's Latest Weekly Chartology: The S&P Downgrade Preparations Begin

Posted: 17 Apr 2011 04:16 AM PDT


In his latest weekly kickstart, David Kostin says: "The core aspects of our positive outlook for US stocks remain in place. However, the distribution around our base case has widened since early December following a 9% rally in the S&P 500 and elevated risk to the US economic outlook from higher oil prices and inflation. Accordingly, we have shifted our recommended sector weights closer to benchmark and adjusted our thematic trade recommendations to gain more exposure to growth markets. We (1) maintain our S&P 500 year-end 2011 price target of 1500 (+14%); (2) lower our Financials weighting to Neutral from Overweight and reduce the size of our Health Care underweight; and (3) recommend buying stocks with high BRICs sales and close our Dividend Growth and Dual Beta trades. We believe these changes are consistent with portfolio risk reduction during periods of uncertainty." Considering that this came out before Hatzius' Friday night bomb skewering Q1 GDP from 2.5% to 1.75%, we are confident Kostin will have no choice but to lower his interim S&P target, following promptly by his full year 1,500 on the S&P. After all preparations for QE3 are now in full force., only this time the brent will have $125 as a baseline instead of $70. We won't even mention gold.

Kostin Kickstart 4.15


$5,000 Gold: Who?s Missing From This List of Peak Price Prognosticators?

Posted: 17 Apr 2011 03:53 AM PDT

[B]86*Analysts Believe Gold Will Go to $5,000 – or More![/B] 126 economists, academics, gold analysts and market commentators have been identified*as maintaining*that gold will reach a parabolic peak price of at least $2,500 a troy*ounce (ozt)*before the bubble finally pops! Of those 126 prognosticators 86 – yes, 86 – believe gold*will reach a high of $5,000 ozt; 52 of those maintain that a price in excess of $5,000 ozt is more likely. It would seem it is still not too late to buy into this gold (and silver) bull run. Words: 820 MunKNEE.com Editor-in-Chief Lorimer Wilson Holding a Gold Bar Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com*and *www.munKNEE.com, identifies the 126 analysts below*by name with their price projections and time* frame. Please note that this complete paragraph, and a link back to the original article*,*must be included in any article posting or re-posting to avoid copyright infringement.* Editor’s Note: If you find a name or tw...


“With real estate no longer an attractive asset bubble, the “mass affluent” Chinese will be forced to invest in gold.”

Posted: 17 Apr 2011 03:51 AM PDT

“Mass Affluent” Chinese Rushing Into Gold Share this:


University of Texas buys $1 billion in gold bars, takes delivery

Posted: 17 Apr 2011 02:41 AM PDT

"The decision to turn the fund's investment into gold bars was influenced by Kyle Bass, a Dallas hedge fund manager and member of the endowment's board," Zimmerman said at its annual meeting on April 14. Bass made $500 million on the U.S. subprime-mortgage collapse.

"Central banks are printing more money than they ever have, so what's the value of money in terms of purchases of goods and services," Bass said yesterday in a telephone interview. 'I look at gold as just another currency that they can't print any more of.'"

(Link)

USAGOLD: True believers led the first wave; big private money globally the second. Then came the third wave led by the hedge funds. Major institutions, of which the University of Texas is among the first, will lead the fourth wave. (There are likely others). Nation states, in my view, will constitute the fifth and final wave in this bull market. Even as each arrives on board, previous wave riders still add to their holdings. All the waves — all momentum — remain at sea yet to reach a beachhead. I recall the great quote from Mr. Churchill, "Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning." MK

China Hikes RRR For Fourth Time In 2011: As Real Estate Bubble Pops, JPM Sees "Mass Affluent" Rushing Into Gold

Posted: 17 Apr 2011 02:21 AM PDT


Following leaked (and confirmed) news that in March Chinese inflation came at 5.4%, the PBoC has once again decided to intervene, enacting its fourth Reserve Requirement Ratio hike of 2011. From Bloomberg: "Reserve ratios will increase a half point from April 21, the People’s Bank of China said on its website today. The move, taking the requirement to 20.5 percent for the nation’s biggest lenders, came less than two weeks after the central bank boosted benchmark interest rates. “Tightening will continue until there are signs that inflation has been effectively brought under control,” Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd., said before today’s announcement. A surge in foreign-exchange reserves to $3 trillion last month and rebounding lending and money-supply growth have highlighted overheating risks in the fastest-growing major economy. Gross domestic product rose 9.7 percent in the first quarter from a year earlier and inflation accelerated to 5.4 percent, the most since July 2008, the statistics bureau said April 15.  Inflation has exceeded the government’s 2011 target of 4 percent each month so far this year. The increase in reserve requirements was the fourth this year." Naturally, this also means that the plunge in real estate ASPs, confirmed everywhere, but most pronounced in the capital, is set to continue. This, according to JPM's Jing Ulrich, means that with real estate no longer an attractive asset bubble, the "mass affluent" Chinese will be forced to invest in gold and alternative property investments. From Dow Jones: This group "has seen its investment options sharply affected by restrictive housing measures" such as property taxes, increases in down-payment requirements, and raised interest rates, "since these households possess sufficient capital to purchase investment property, but do not have the same degree of access to investment vehicles such as private equity funds and retail property" as the super-rich, she says, adding that equities, gold and alternative property investments are therefore the key beneficiaries."

Below is Goldman's take on the RRR hike:

The People’s Bank of China (PBOC) announced today that the reserve requirement ratio (RRR) will be raised by 50 bp, to be effective April 21. After this hike, the official RRR for large banks will be 20.5% and 18.5% for small and medium banks. However, given the usage of the Dynamic Differentiated RRR, the actual RRR varies for different banks.

The hike withdraws around Rmb350 billion out of the banking system. The hike was widely anticipated given 1) the rebound in March CPI inflation and activity growth; 2) large amount of central bank bills expiring; 3) large amount of FX net inflows (close to Rmb400 billion in March); and 4) numerous comments from senior policy makers including the Premier on controlling inflation using monetary tools.

We reiterate our view that there has been a clear preference from the PBOC to use the RRR as a regular tool to absorb liquidity, to a large extent in replacement of central bank bill issuance because it tends to be 1) more proactive (because its an order as supposed to a negotiation in the case of bill issuance); 2) high profile in terms of its signaling effect; and 3) cheaper (the required reserve interest is 1.62%, significantly lower than the 3%+ bill rate). As a result, the RRR hike itself does not necessarily imply a net tightening if the amount of expiring bills and FX inflows are larger as it is the case now. We expect repeated RRR hikes going forward as it has been over the past half year. As we estimate the excess reserve ratio is still above 1%, the hike is not directly binding and the burden of net monetary tightening will still mostly fall on window guidance (explicitly or implicitly via the Dynamic Differentiated RRR). In the meantime, we expect the PBOC to allow further currency appreciation (6% on an annual basis) and hike benchmark interest rates (1 more hike of 25 bp in 2Q2011). 

And the full Jing Ulrich note:

Ulrich On Investment Behavior


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