Gold World News Flash |
- The Cannibalization At The Top Escalates: Sokol's (Re)Response To The Ukulele Master
- Freedom's 2011 Forecast & Update
- Weekly precious metals review at King World News
- Grant Williams: The 'next big trade' may be precious metals again
- Prosecutors investigate market manipulation through quote stuffing
- Garry White: Obama's weak dollar, not 'speculators,' to blame for oil spike
- Things That Make You Go Hmmm: "My Name Is Grant Williams And I’m a Precious Metals Bug"
- Sydney Morning Herald cites silver short-selling, quotes Ted Butler
- Rickards, Santelli interviewed at King World News
- EUR Non-Commercial Spec Positions Surge To Multi-Year High As USD And JPY Prepare To Take Out Lows
- THe SiLVeR INTeRNaTioNaLe (HaPPY MaY DaY Part II)(REGRESSED)
- It’s 2008 All Over Again… Only Worse
- As Munger's Anti-Gold Campaign Kicks Into High Gear, Buffett Confirms He May Have "Held Something Back" About Sokol
- An Unstable Economy Wobbling Atop Unsound Money
- People are Cashing In Their IRAs Early To Have Physical Silver Regardless Of Penalties!
- The Week in Numbers
- “The idea that 19 billion ounces [of silver] is available is absurd,” but silver bears continue to use this number
- A Precious Opportunity in Gold and Silver? Have they Topped?
- St. Louis Fed Stunner: Admits QE May Lead To Rise Rather Than Drop In Unemployment
- Downside Targets for Silver – Quick Comment on Gold
- JPMorgan et al Rush to Cover Silver Short Positions: Is a Silver Price Explosion Immi
- Geithner Nixed Dodd-Frank
- Plummeting US Dollar: The Age of America is Over
- Gold Rules!
- Gold Rally With a Silver Lining
- In The News Today
- Bernanke boxed in
- Richard Russell - China on Massive Gold Accumulation Program
- MF Global, run by former Goldman CEO Jon Corzine has joined the fray, and has hiked its silver margin to $25,397
- Greetings from Thailand!
| The Cannibalization At The Top Escalates: Sokol's (Re)Response To The Ukulele Master Posted: 30 Apr 2011 02:52 PM PDT
David Sokol's attorney Barry Wm. Levine fires right back, and it is now popcorn time.
Oddly this is an almost identical take to ours from earlier. The next Levine iteration will most certainly have an exhibit A which may or may not include Charlie Munger's BYD trade tickets, and/or who knows what other goodies. Cannibalization at the very top is always so entertaining for the peasantry... h/t Janet Tavakoli
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| Freedom's 2011 Forecast & Update Posted: 30 Apr 2011 11:52 AM PDT
As we near the halfway point, an update on my 2011 forecast. First, how we’ve done so far: Forecast: “It could be US municipal defaults, policy shifts from the Chinese, EU crisis, or an expanded war inthe Middle East.” Check: Although not officially declared a war, the ‘kinetic military action’ in Libya is an expansion of the ongoing wars in the Middle-East. Continued shifts in Chinese policy – evident by the April agreement between the BRICS to establish mutual lines of credit in local currencies, an important step towards the initiative to reduce/end the reign of the dollar as the world’s single reserve currency. Earlier this week it was reported that The Peoples Bank of China plans to shed $2 trillion of U$D assets. While this should not be a surprise and it will likely be a multi-year plan, it is still significant. Forecast: “As food and energy prices rise, nations will feel the sting of money printing(already happening). This will only increase the number of civil protests (RIOTS). Developing nations will feel the brunt of higher inflation, which will lead to various measures to control price increases (e.g., Russia’s recent announcement of food controls or COMEX margin hikes).” Check: Egyptian protests began just as I finished this piece and two weeks later, on 11 February, Mubarak resigned from office. Protests have since spread to Bahrain, Syria, Tunisia, Yemen, Jordan, Saudi Arabia and even Wisconsin. There have been three COMEX margin requirement increases for silver futures since this article (four in 2011 – 1/21, 3/24, 4/24, 4/29). Forecast: From a follow-up post (1/30) “QE2 appears to be an exercise in replacing the toxic assets purchased from the banks for Treasuries. Instead of returning any money back to the Treasury, they are exchanging the toxins for Treasuries. Thus, the Fed’s balance sheet will remain in the $2T…” Check: Federal Reserve Chairman Ben S. Bernanke may keep reinvesting maturing debt into Treasuries to maintain record stimulus even after making good on a pledge to complete $600 billion in bond purchases by the end of June.
OK enough, let’s look at the rest of 2011 – 2011: The rest of the story - I am reaffirming my expectation for significant volatility starting in the 2nd half of2011. From my January article: “As a result, I expect significant volatility throughout 2011. The global slowdown will lead to a drop in US markets by the middle of the year, giving the Fedimpetus for more money printing. For anyone still expecting a return to ‘normal’, 2011 will be a wake-up call.” During the April FOMC meeting, The Bernanke confirmed the end of QE2 after June. This was telegraphed to the markets and came as no surprise. The question now is whether reinvestment alone from the existing Fed balance sheet will be enough to keep the ponzi-economy growing. If the Fed cannot fill the funding gap, interest rates will rise to attractbuyers, leading to another drop in the stock market. To help find the answer to our question of whether the existing balance sheet will be enough, let’s look at funding requirements. The projected US deficit for 2011 is approximately $1.6 trillion. Reinvestment of principal payments from mortgage-backed securities plus maturing treasury holdings may account for $750B-$1T annually – so far so good. But this isn’t accounting for all the funding needs. We also have maturing debt that needs to be refinanced along with interest payments on existing debt. Even more threatening is the potential sale of Treasury Bonds by China, Japan & the Middle East. The simple fact is that while the rollover of the Fed’s balance sheet may provide funding for annual US deficits, it cannot provide the funding for existing debt or sales by foreign holders. It is imperative that interest rates remain below the rate of inflation (i.e., negative real rates) to encourage currency velocity to feed the insolvency; otherwise, they are truly pushing on a string. My best guess is a 3-month experiment ending with a spike in long-dated Treasury rates and a contraction in GDP and the stock market sometime in the fall or winter of this year. To help fill the gap, global central banks will be the buyers of last resort. What they call it, or how it’s communicated is still to be determined, but rest assured, there will be more currency printing. Global QE continued – some real fireworks to follow, along with some bombs. Precious Metals and Commodities – By the time rates spike and the market begins a decline, I expect oil to have hit$150/barrel, with gold nearing $1700. The increased costs of energy and food willcontribute to the US slow down. Going forward there will be repatriation of U$Ds by
Ways to play it - Within your investment portfolio, I have suggested 30% be stored in physical gold and silver, 30% in cash and 30% in growth. If you have followed this weighting, you have afforded yourself the most protection against a variety of financial outcomes. If in fact we have significant volatility in the 2nd half of 2011, you will have the opportunity to put some cash to work. If you are more cautious or have need for higher reserves, you could look to raise your cash position over the next couple months. Although the outcome of the USD is abundantly clear, there will be periods where it is advantageous to hold cash. If you understand why you are holding physical monetary metal, I won’t need to tell you to hold through this period. Again, if you follow the 30% rule, you will not be forced to sell into weakness. If you have a trading position in paper gold and/or silver and miners play catch-up for the remainder of the 2nd quarter, you could take some profits. You may look at stocks/funds impacted by rising rates. As an example, in a period of rising rates, demand for mortgages and other loan products diminishes. If I could offer one more bit of advice, it would be to reduce debt to a manageable
~David Freedom david@thevictoryreport.org
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| Weekly precious metals review at King World News Posted: 30 Apr 2011 11:21 AM PDT 7:17p ET Saturday, April 30, 2011 Dear Friend of GATA and Gold (and Silver): The weekly precious metals review at King World News finds Bill Haynes of CMI Gold & Silver reporting that the public was selling at retail last week and futures trader Dan Norcini expecting weakness in silver if it doesn't break through $50 quickly. The program can be found here: http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/4/30_KWN_W... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, 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: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf Join GATA here: World Resource Investment Conference Gold Rush 2011 https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: 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: 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: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Prophecy Resource Spins Off Platinum/Palladium Venture: 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
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| Grant Williams: The 'next big trade' may be precious metals again Posted: 30 Apr 2011 10:49 AM PDT 6:47p ET Saturday, April 30, 2011 Dear Friend of GATA and Gold: Thanks to Zero Hedge for calling attention to today's edition of the "Things That Make You Go 'Hmmm'" letter by Grant Williams, who suspects that the "next big trade" may be the last big trade all over again -- precious metals -- and who cites Tocqueville Gold Fund manager John Hathaway's wonderful and prophetic essay from 1999 about the forthcoming collapse of the paper gold market, whose vast supplies of imaginary gold could never be delivered. You can find Williams' letter here: http://www.scribd.com/doc/54285652/Hmmm-Apr-30-2011 CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Resource Spins Off Platinum/Palladium Venture: 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 Join GATA here: World Resource Investment Conference Gold Rush 2011 https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: 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: 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: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, 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: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
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| Prosecutors investigate market manipulation through quote stuffing Posted: 30 Apr 2011 09:58 AM PDT U.S. Prosecutors Probe High-Frequency, Algorithmic Trades By Joshua Gallu http://www.bloomberg.com/news/2011-04-29/high-frequency-trades-manipulat... U.S. prosecutors have joined regulators' investigation into whether some high-speed traders are manipulating markets by posting and immediately canceling waves of rapid-fire orders, two officials said. Justice Department investigators are "working closely" with the Securities and Exchange Commission to review practices "that are potentially manipulative, like quote-stuffing," Marc Berger, chief of the Securities and Commodities Task Force at the U.S. Attorney's Office for the Southern District of New York, said today at an event in New York. While regulators previously said they were probing possibly abusive algorithmic trading practices, the attention of criminal authorities ramps up the stakes. ... Dispatch continues below ... ADVERTISEMENT Wall Street Journal Publishes Lewis Lehrman's Call for the Gold Standard In its April 26 edition The Wall Street Journal published an important essay by the Lehrman Institute's chairman, Lewis E. Lehrman, explaining why a gold-convertible dollar is critical to eliminating the shocking federal deficit. "Experience and the operations of the Federal Reserve System compel me to predict that U.S. Rep. Paul Ryan's heroic efforts to balance the budget by 2015 without raising taxes will not end in success -- even with a Republican majority in both Houses and a Republican president in 2012. ... "What persistent debtor could resist permanent credit financing? For a government, an individual, or an enterprise, 'a deficit without tears' leads to the corrupt euphoria of limitless spending. For example, with new credit the Fed will have bought $600 billion of U.S. Treasuries between November 2010 and June 2011, a rate of purchase that approximates the annualized budget deficit. Commodity, equity, and emerging-market inflation are only a few of the volatile consequences of this Fed credit policy." To read more, and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit: http://www.thegoldstandardnow.org/gata The SEC and Commodity Futures Trading Commission sharpened their focus on technology-driven trading after the so-called flash crash on May 6, which temporarily erased about $862 billion from the value of U.S. equities in less than 20 minutes. Regulators have placed limits on price moves and proposed rules limiting other practices, and lawmakers banned "spoofing," in which market participants try to trick other computers into making decisions that can be exploited for profit. A joint SEC-CFTC report released in October found no evidence that the May 6 selloff was triggered by manipulation. The SEC last year established a market-abuse unit to investigate cases of manipulation. At the securities law conference in New York today, SEC Enforcement Director Robert Khuzami said investigators need better technology to adequately police markets and detect possible misconduct coming from high- speed and algorithmic trading. "The question is: Do we have enough transparency to detect wrongdoing if it was going on?" Khuzami said, adding that SEC investigators are probing other matters arising from the May 6 market crash. Berger said market manipulation was among six of his task force's priority areas, which include insider trading, Ponzi schemes, accounting fraud, asset forfeiture, and structured financial products. Join GATA here: World Resource Investment Conference Gold Rush 2011 https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: 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: 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: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT 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/.
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| Garry White: Obama's weak dollar, not 'speculators,' to blame for oil spike Posted: 30 Apr 2011 09:47 AM PDT By Garry White http://www.telegraph.co.uk/finance/oilprices/8482960/Obamas-lax-dollar-i... If President Obama is to be believed, "speculators" are responsible for the rise in oil prices that threatens the global recovery. However, for the real drivers of the oil price, the President needs to look closer to home. The US has continued to devalue its currency by allowing the Federal Reserve to print dollars like they are going out of fashion. This has boosted the price of all commodities -- and the trend is likely to continue for the rest of this year. Commodities such as oil are priced in dollars. When the dollar falls, these commodities -- be they copper, wheat, or oil -- become cheaper in other currencies. This prompts "speculators" to buy. Prices of raw materials have therefore risen on a sea of dollar liquidity -- fuelled by cheap money and quantitative easing. This is the reason that the gold price keeps hitting all-time highs, as US policy causes faith in "fiat money" to crumble. No country in the world has its currency backed by gold -- and the plan to spend America out of the downturn is making a mockery of the country's "strong dollar" policy. ... Dispatch continues below ... ADVERTISEMENT Prophecy Resource Spins Off Platinum/Palladium Venture: 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 The President must also remember that it's not only "evil" bankers who are involved in the oil derivatives markets -- airlines and other large consumers have to hedge their businesses against fluctuations in prices. Oil companies also use derivatives to hedge positions. The proportion of speculators in the market is really quite small -- it's just that they are an easy target for politicians wishing to deflect opinion away from their own shortcomings. "Speculation makes up only a small portion of the market," according to Andrew Moorfield, Global Head of Oil & Gas at Lloyds Banking Group Corporate Markets. "The idea that this minority can influence prices to the extent that is sometimes believed seems unreasonable. It is also a position that enjoys very limited empirical support. The real influencers of the current oil price are not hedge fund managers, who arguably add valuable liquidity to these markets, but rather the fundamental drivers of supply, demand, and global instability." It is not a coincidence that the dollar index, which tracks the US currency against those of six major trading partners, has fallen as the oil price has risen over the past year -- there is a remarkable correlation. Last week the index fell to its lowest level since 2008 after Ben Bernanke made it clear that US rates will not rise for some time. This fact will continue to support commodity prices as the dollar becomes even more unfashionable. Of course, there are fundamental drivers too. The oil price eased at the end of last week as it become clear that the US economy -- the most oil-thirsty in the world -- will be struggling for some time yet. This will limit demand and it should keep a lid on prices, if a dollar fall is ordered. On the other hand, US stockpiles of gasoline dropped for a 10th week in the week to April 22 -- the longest losing streak in four years, according to data from the Department of Energy. Still, speculators will get the blame for rising prices -- as it is politically expedient. This was the case when oil prices jumped as a result of the turmoil in Libya. However, the type of oil that Libya produces is an important consideration here. Oil from the North African country is "quality" oil. It is a low-sulphur product known as light sweet crude. This type of oil is an essential feedstock for European refineries to produce ultra low-sulphur diesel oil, which is used by European trucks and cars. So supply remains very important -- especially for the US. Yet moves by the Obama administration following the Gulf of Mexico oil spill a year ago will crimp supply for years to come. His moratorium on US drilling, coupled with thousand of pages of new regulations for drilling companies, will make the supply side tighter. In the past two weeks the US President has asked the Department of Justice to investigate whether Wall Street speculators are manipulating the oil market. Maybe he thinks that it is. However, next time you fill up your tank and the price has increased, don't blame investment banking speculators for the rising prices -- they are a tiny part of the problem. The blame lies with loose monetary policy in the US, plus high taxation by the UK Government, of course. Join GATA here: World Resource Investment Conference Gold Rush 2011 https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: 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: 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: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Wall Street Journal Publishes Lewis Lehrman's Call for the Gold Standard In its April 26 edition The Wall Street Journal published an important essay by the Lehrman Institute's chairman, Lewis E. Lehrman, explaining why a gold-convertible dollar is critical to eliminating the shocking federal deficit. "Experience and the operations of the Federal Reserve System compel me to predict that U.S. Rep. Paul Ryan's heroic efforts to balance the budget by 2015 without raising taxes will not end in success -- even with a Republican majority in both Houses and a Republican president in 2012. ... "What persistent debtor could resist permanent credit financing? For a government, an individual, or an enterprise, 'a deficit without tears' leads to the corrupt euphoria of limitless spending. For example, with new credit the Fed will have bought $600 billion of U.S. Treasuries between November 2010 and June 2011, a rate of purchase that approximates the annualized budget deficit. Commodity, equity, and emerging-market inflation are only a few of the volatile consequences of this Fed credit policy." To read more, and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit: http://www.thegoldstandardnow.org/gata
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| Things That Make You Go Hmmm: "My Name Is Grant Williams And I’m a Precious Metals Bug" Posted: 30 Apr 2011 08:33 AM PDT
From Things That Make You Go Hmmm, April 30 My name is Grant Williams and I’m a precious metals bug. There. I’ve said it. It feels good to get that off my chest. Of course, those amongst you who have been riding alongside me these past few years probably already had a sneaking suspicion that was the case and, I imagine, several more of you are now tutting, rolling your eyes and muttering “I KNEW it. Where’s that ‘Unsubscribe’ button?” (bottom of the last page – no offence taken). Well today, we’re going to talk about precious metals again I’m afraid, but in a broader sense if that helps at all. For readers who are over the whole precious metals thing, there’s a nice cartoon on the last page and you’ll find several stories about alternate subjects scattered throughout pages 7 to 15). For those of you still reading at this point, join me inside the recesses of my mind. Please keep your hands and arms inside the carriage at all times. Whenever I look at an idea as either a potential trade or a possible thematic shift, the very first question I ask myself is ‘does this idea make sense?’. Plain old common sense. Nothing to do with the numbers or the likely quantum of any associated move, but would the idea seem reasonable if presented to someone with either zero, or at best a very limited background in finance? Whilst stories around individual stocks can fulfill this criterion reasonably regularly, they often operate in confined parameters (a particular geography or a particular market segment for example) and so an idea is easier to explain and simple to quantify. It is much harder to find bigger picture, macro ideas that make secular sense because, for the most part, these ideas– but it is these big picture shifts that contain the possibility to make real money. To illustrate this point, one of my favourite charts of all time demonstrates how, by making a single trade in each decade, it was possible to take $35 in 1970 and turn it into $159,591 in 2008. Of course, had you then made a 5th decision and completed the circle by reinvesting that $159,591 back into precious metals - this time silver - in 2008 (and, to ensure nobody accuses me of picking the low price we’ll take the year high of $21, recorded the day Bear Stearns disappeared), you would, this week, have turned your $35 into a staggering $372,379. Five simple, considered decisions over a forty year period for a gain of a little over 1,000,000%. Easy..... Kind of. I have lost count of how many calls I have had from friends of mine who have bought either gold or silver at some point in the bull run (sadly, most were late to the party because they just didn’t believe the story - but we’ll get to that later) and wanted to know whether it was time to take some profit. I’ve lost count of the number of calls, but the questions, in essence, were the same:
My answer to both questions was the same. “What if it doesn’t?” Yes, silver is extended. Yes, gold has performed incredibly well. But the point here is to understand WHY you bought them. If you bought silver for a trade then go ahead and sell it - depending on your entry point it has been a hell of a trade. If you bought gold as a trade then the same thing applies. If it DOES pull back and you want to play again you can. If it doesn’t, then you still made some money. But if you bought either of the precious metals as an INVESTMENT, then you need to ask yourself a whole lot more questions before you call your broker, visit your bullion dealer or place an order to sell electronically. Last year Mark Dice went to the beach in California and tried to sell a one-ounce solid gold Canadian Maple Leaf coin (worth, at the time, $1,100) to passers-by for $50 cash. No takers. This was one of my favourite exchanges:
But the best part of the video is when Dice tries to sell the coin to a passer-by who has a live parrot casually sitting on his shoulder. When you see a man in the street wearing a tropical bird as a fashion accessory look at someone trying to sell him a 1-oz gold coin worth $1,100 as though HE’S crazy - you’ve pretty much hit rock bottom. (If you want to watch the video, it’s HERE but PLEASE... no emails about Dice’s views on anything else - to me it’s just an interesting video) But enough about parrots and passers-by - they are mere distractions from the point I am trying to make here.
Many who sold have yet to buy their gold back and have missed out as gold has more than doubled from its late-2008 lows. It could be a short trade in US Treasuries, as many believe (certainly when something is at zero and can’t, in absolute terms at least, go below that level - in this case the discount rate - it is a pretty safe assumption which way it will ultimately be headed). It could be a long position in crude oil or a basket of commodities if you believe in all or part of the ‘Peak Everything’ theory laid out beautifully in the great Jeremy Grantham’s latest letter - which you will find HERE. (As an aside, if you HAVEN’T read it yet - I recommend you take the time to do so as it is a truly marvellous piece of work - even by Jeremy’s lofty standards - and one you will doubtless want to read again at some point.) But here’s the thing. What if the big trade is buying precious metals - again? At no point does Bud Conrad say you can’t have your money in the same asset class for consecutive decades - in fact, Bud doesn’t lay out the rules at all because there aren’t any. It’s about finding the ‘big trade’, making sure the logic of it is sound to you and then sitting with it until it has either run its course, or you feel that a better opportunity for long-term gain has presented itself. Has the precious metals trade run its course? Well, I guess it’s possible - but let’s look at the factors that are affecting the price of what, for the specific purposes of this part of our program, we will refer to as ‘monetary metals’. Behind every $35 in paper money, in a vault in the United States, sat an ounce of gold. Quiet, immutable, stoic. The gold couldn’t be printed at will or created out of thin air. The idea of dropping gold from helicopters would have seemed downright dangerous or overtly stupid. Of course, as it turns out, dropping paper money from helicopters has proven equally dangerous - particularly to the value of the dollar itself which broke through 73 this week and has now lost roughly 90% of its purchasing power since the decision was taken by Nixon to shut the gold window. Never were the words of Nixon’s Treasury Secretary, John Connally, more apropos than today:
Since that day, with the restraint of a gold-backed dollar removed, the amount of dollars in cirulation has steadily increased until, as the waves of 2008 crashed upon the world’s shores, it absolutely exploded. The graph below shows the adjusted monetary base, with the near-vertical updrafts representing QE1 and QE2.
In ‘Apropos of Everything’, Paul and Lee revisit their ‘Shadow Gold Price’ which is a measure of what returning to a gold-backed dollar would mean to the price of gold:
And there, in a nutshell, is the ‘big trade’ in gold. Fear of all these issues amongst investors has driven them to what they consider ‘safe’ money. Money that can’t be manufactured at will (though it CAN be confiscated - but more of that another day) and that will protect their purchasing power. Yes, there is definitely some speculative froth in the monetary metal prices (nowhere more obvious than silver at the moment) but, structurally, there are more reasons why monetary metals could well be the next, next ‘big trade’ and that resides in the difference between the futures price and that of the metals themselves. Historically, the monetary metals futures contracts were used primarily by gold producers to hedge their exposure to fluctuations in the gold price and/or to lock in prices against their forward production. Simple. There have been all sorts of conspiracy theories about central banks leasing their gold holdings in order to keep the price of gold down, thus validating their fiat currencies, and of bullion banks manipulating the futures prices to make profits from the technical funds, but, again, we will leave those aside today. In August 1999, John Hathaway of Tocqueville Gold Fund wrote an essay called The Golden Pyramid (I have linked to it in a previous edition of Things That Make You Go Hmmm..... but in case you didn’t see it, or didn’t have the time to read it, I would urge you, if you have any interest in the monetary metals, to do so. You will find it here) In his essay, John lays out quite clearly how what he calls the ‘Golden Pyramid’ works:
Read that last sentence again.
Many casual readers of John’s work would have found that statement difficult to accept in 1999. They would have, in fact, dismissed his words simply because the outcome he was proposing - a rise in price of several hundred dollars - would have seemed extremely unlikely with Gold trading around $300. And yet, the beauty of reading this essay now, 12 years later, is that you can clearly see a simple idea that, with the benefit of hindsight, makes complete sense. The trick comes in trying to find these simple, clear ideas WITHOUT the benefit of hindsight. So, to recap: Sovereign governments are awash with debt; several are on the verge of inevitable default (you STILL know who you are), Central Banks around the world have printed trillions of units of their respective paper currencies in the past three years in an attempt to stimulate their moribund economies (which are either slowing in the case of the US and the UK, or are tipping back into recession like Japan), politicians are starting to finally understand that Austerity ISN’T Calvin Klein’s new cologne and are about to find out just how hard it will be to apply in the real sense, consumers are pulling in their heads and are more concerned about the future than at any point since the depths of the crisis in 2008, the housing market in the United States - Ground Zero for the debt-driven disasters that tipped the world on its head - has turned down once more and is about to make new lows just as a slew of Option ARM resets are due, inflation is starting to bite in a real way, not only in Asia, but in the West as well and all the REAL money that has ever been mined could STILL only fill a cube 67 feet in each direction (thanks for that, Warren). Full report: |
| Sydney Morning Herald cites silver short-selling, quotes Ted Butler Posted: 30 Apr 2011 08:15 AM PDT The real precious metals story really is getting around Oz. * * * In-Demand Silver All Set to Soar By David Potts http://www.smh.com.au/money/indemand-silver-all-set-to-soar-20110430-1e1... Bully for bullion but silver is where the real money is. Even if you feel the pinch after next week's budget, whatever you do, hang on to the family silverware. While gold is going gangbusters, breaking all records except its own personal best, it hasn't done too well in Australian dollars. Since January 1, gold has climbed barely 1 per cent, a victim of the dollar's surge against the US dollar. But silver is up some 45 per cent, rising so fast, in fact, that the stronger dollar is barely touching it. In the past 12 months, silver has surged 169 per cent in US dollars, leaving some 128 per cent in Australian dollars. ... Dispatch continues below ... ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, 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: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf For all its headline grabbing, gold rose 33 per cent, leaving only an 11 per cent gain in Australian dollars, which, admittedly, still beats almost everything else. And what was that about gold's personal best? Well, at more than $US1500 an ounce it's well above its 1980 peak of $US850 an ounce but after inflation it's way off form. Try $US2200 in today's dollars. Or $2,790 since Australia's inflation has been higher still. Silver peaked at the same time as gold -- at $US50.35 an ounce when the Hunt brothers cornered the market. That was $45.48 an ounce at the then exchange rate, and would be $166 in today's dollars. So neither metal looks all that precious as a hedge against inflation but there's another way of looking at it. Since both used to be currencies -- silver even more so than gold, history shows -- it's hard to know what is measuring which. Looked at that way, an ounce of gold, which bought 850 US dollars in 1980, would today buy 1,500 of them. Either gold is rising in price in its own right or paper money is devaluing. Anyway, it's the fact it has been falling further behind gold for so long that's turned silver around. Why it's been such a laggard is a mystery. After all, the uses of gold are pretty limited. Admire it or stick it in a vault as a store of value and there's not much else you can do with it. But silver is both a store of value and a handy metal around the home in its own right -- with demand almost split down the middle. Which is used in computers, mobile phones, cars, and medicine? Silver. Really, the wonder is that it's not worth more than gold except that while there might be more demand for it, there's also a lot more of it around. Most gold is locked away in Fort Knox and other central bank vaults but silver is footloose and fancy free with about a fifth recycled from scrap. Oh, gold is prettier, too. Historically, an ounce of gold bought 15 ounces of silver, a ratio of 15:1 -- though when they both peaked in real terms in 1980 it was 17:1. Today it's 33:1. So gold is buying twice as much silver as the norm. If bullion stays where it is, the silver price would have to jump to $100 to get to the 15:1 ratio. Alternatively, gold would have to drop to $700 if the silver price stays where it is. Just as most of the world's gold is locked away in central banks, there are silver-only managed funds. But these holdings are highly volatile depending on how many buy into or sell out of the fund. Silver has also been massively short-sold through futures and options contracts, according to the leading silver analyst in the US, Theodore Butler. That's selling something you don't have, so you must buy later to meet the contract. This is no crackpot. He was instrumental in bringing two leading banks to trial, still under way in the US, for rigging the silver price by short selling. When short sellers can't get their hands on the commodity there's strife. It's known as a "squeeze" in the trade and the price consequently rockets temporarily. Butler estimates that there are about 1 million ounces of silver circulating while what he calls the "monstrous" short position runs into billions of ounces. "Silver has the largest short position that's ever existed in anything," he says. As well as short-sold futures contracts, the deficiency arises from forward selling, leasing, and "the cumulative issuance of unbacked silver bank certificates." The 1 billion ounces of silver above the ground compares with 5 billion for gold. "Less than one tenth of 1 per cent of the world's investors were aware that silver was rarer than gold," Butler says. The chance of a squeeze has some analysts suggesting selling gold and reinvesting the proceeds in silver on the grounds one has peaked and the other can only rise. Or, at the very least, silver will rise faster than gold, so that's where you want to be. A squeeze this time would be a twist on the 1980 sting. Then the Hunt brothers were hoarding silver, at one point holding one-third of the world's non-government supply, which created an artificial scarcity. This time it's short sellers in options and futures contracts, trying to drive the price down, who are creating the shortage because they're borrowing so much of it. Eventually this will send the silver price soaring as spectacularly as it collapsed after the Hunt brothers. Since you asked, the Hunts came unstuck with a margin call after the Comex commodities exchange suddenly changed the rule book for buying commodities on margin loans. Certainly there isn't enough new silver being produced to come anywhere near the demand on paper for it, a legacy of the long period when its price was so low that it wasn't profitable to mine it. Even as we speak, there are few pure-silver mines; most silver is mined as a byproduct of lead, zinc, or copper. Production of silver from mines is increasing only about 2.5 per cent a year, according to the Silver Institute. Yet demand for "fabrication" -- silver used in industry or jewellery -- rose 13 per cent last year, while investment demand shot up 47 per cent. Only the fact that scrap silver climbed 14 per cent, and stocks were run down, prevented the price going even higher. There's no reason to suppose that the amount of silver produced will be stepped up at its much higher price. You don't hear of explorers setting off to find silver. Still, having hit a high of almost $US50 an ounce on Tuesday, silver has eased a bit, proving how volatile it is at the best -- or perhaps that should be worst -- of times. So could there be a cloud to the silver lining? Yes, but you wouldn't credit this, only if gold actually drops. That would be because the US has lifted interest rates, the sovereign debt crisis suddenly disappears, or China, which has switched from being a silver exporter to a heavy importer, falls in a heap. Neither metal would then look so precious because there would be a rush back into US dollars. But don't hold your breath. As silver becomes the new gold, the challenge is finding ways of investing in it. "The silver market is not at all analysed by mainstream investors and remains very much overlooked as an investment opportunity," says the editor of Sound Money, Sound Investments, Greg Canavan. Although Australia has the largest reserves of silver, there's really only one mine and then the rest. That's BHP Billiton's Cannington in northwest Queensland, one of the world's biggest silver/lead mines, which produces 42 million ounces a year. There are five other listed stocks mining silver. Alcoyne Resources (ASX:AYN), formerly Macmin Silver, expects to produce its first silver from its Queensland mine this month and says it costs just $14.02 an ounce to mine silver. Cobar Consolidated Resources (CCU) has just raised $28 million to develop its Wonawinta mine and expects to produce 2.5 million ounces of silver a year. Coeur d'Alene Mines (CXC) is a US-listed miner but also trades on the ASX through depository receipts, having bought Endeavour Mine. Intrepid Mines (IAU) has a gold/silver/copper project in Indonesia, which is "definitely an exciting one and, like all early-stage projects, it comes with plenty of risk. Being years away from generating cash flow, we see no need to rush in," Canavan says. Perilya (PEM) has silver mines at Broken Hill and in the Dominican Republic, which between them produce a combined 2 million ounces a year, but it also mines other base metals. An easier, more direct way of investing in silver is through an exchange traded fund, a managed fund that trades on a stock exchange. Rather inconveniently, the first and biggest silver fund, iShares's SLV, trades on the New York exchange. Back home, there's Physical Silver Securities (ETPMAG) run by ETF Securities. "It's getting more money than our gold fund," the head of Asia-Pacific sales for ETF Securities, Nigel Phelan, says. The fund invests purely in silver and so slavishly follows its price, less the 0.49 per cent annual fee. Another way to trade silver is through "minis" offered by RBS. These are glorified contracts for difference (CFDs), only less risky because there's a built-in stop-loss. Unlike a CFD, you can't lose more than you've invested. But it's heavily geared and there can be margin calls since silver is the most volatile commodity traded. You can go short (if you think the price will drop) with ZSIKZA or ZSIKZB, or long with ZSIKZQ or ZSIKZS. Then there are silver bars and coins. Note there's a difference between sterling (which is 92.5 per cent pure) and fine silver (99.9 per cent). You can buy fine silver bars at bullionvault.com or goldmoney.com. Both will store them on your behalf for a small fee but you can't bring them home. If you prefer to touch your investment, there are pure silver coins issued by various mints. But ounce for ounce you're paying more for a coin than a bar because of the retail margin, where you're likely to be paying 5 per cent more buying and getting 5 per cent less selling. The other catch is mints are issuing so many of them that they will never be considered rare. The most popular are the US $1 Silver Eagle (165 million sold and rising), Canada's $5 Maple Leaf (13 million so far but they are one decimal place purer than any other silver coin), and the Perth Mint's $5 Kookaburra (more than 8 million). Join GATA here: World Resource Investment Conference Gold Rush 2011 https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: 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: 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: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Prophecy Resource Spins Off Platinum/Palladium Venture: 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
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| Rickards, Santelli interviewed at King World News Posted: 30 Apr 2011 07:51 AM PDT 3:50p ET Saturday, April 30, 2011 Dear Friend of GATA and Gold: King World News today posts audio of interviews with market analysts Jim Rickards and Rick Santelli. Rickards says the Federal Reserve wants the dollar to fall in an orderly way, which means steadily rising gold. You can listen to that interview here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/4/30_J... Santelli says "quantitative easing" has failed to produce equivalent economic growth in the United States. You can listen to that interview here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/4/30_R... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Resource Spins Off Platinum/Palladium Venture: 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 Join GATA here: World Resource Investment Conference Gold Rush 2011 https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: 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: 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: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, 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: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
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| EUR Non-Commercial Spec Positions Surge To Multi-Year High As USD And JPY Prepare To Take Out Lows Posted: 30 Apr 2011 07:21 AM PDT
Commodity speculators may or may not be the vile criminals the president and his new working group are making them out to be, but they sure have made their view clear on where they think the USD and the EUR (the JPY not so much) are going. Below is the latest update from the CFTC Commitment of traders report on the three key currencies. While there has been some modest short covering in both the USD and JPY, both continue to trade like the carry funding currencies they are. And with bullish spec positions in the EUR at a multi year highs, the only question is whether the yen or the dollar will be the carry currency of choice in the next beatdown. Of course, how the EUR is expected to retain its lofty perch with all of the PIIGS soon to go under is beyond us, but hopefully it makes sense to Trichet, who is stuck between an inflationary rock and a insolvent peripheral hard place.
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| THe SiLVeR INTeRNaTioNaLe (HaPPY MaY DaY Part II)(REGRESSED) Posted: 30 Apr 2011 07:12 AM PDT
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THE SILVER INTERNATIONALE WilliamBanzai7 Arise ye victims of Banksta plunder Arise ye sufferers of Wall Street greed and want For simple reason in revolt now thunders And at last comes the age of the bailed out Banksta bitchez hunt. Away with all those neo-Keynesian superstitions Arise ye masses arise, arise We'll end henceforth the old Wall Street swindler tradition And spurn the toxic shit to win the precious silver prize.
So silver comrades, come rally And the bailed out Wall Street scum let us now face The Silver Internationale unites the anti-banksta human race So silver comrades, come rally Don't let that banksta scum disappear without a trace The Silver Internationale unites the anti-banksta human race
No more deluded by conniving quantitative distraction On bailout pimps we'll make systemic war The 401k holders too will take evasive action They'll break ranks and tell those thieving money changing whores: “Up Yours!” And if those swindling Bankstas keep on trying To sacrifice our dwindling wealth for their greedy Wall Street hides They soon shall hear the silver-anti banksta bullets flying We'll kick thos scheming bitchez where the Ponzi sun don’t shine
So silver comrades, come rally And the bailed out Wall Street scum let us now face The Silver Internationale unites the anti-banksta human race So silver comrades, come rally Don't let that bailout scum disappear without a trace The Silver Internationale unites the anti-banksta human race
No market saviour from on high delivers No faith have we in captive regulatory fear On their thieving crony hands the silver chains must shiver Chains to punish selfish greed and foolish pride E'er those low down banksta thieves will disappear with all their pilfered booty And keep it all for their scrappy lot. Each at the anti-banksta silver forge must do their duty And we'll strike while the precious metal iron is still hot.
So silver comrades, come rally And the bailed out Wall Street scum let us now face The Silver Internationale unites the anti-banksta human race. So silver comrades, come rally Don't let that bailout scum disappear without a trace The Silver Internationale unites the anti-banksta human race
Happy Berkshire Hathaway Day as Well!
Calling All Ants
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| It’s 2008 All Over Again… Only Worse Posted: 30 Apr 2011 06:57 AM PDT
Bernanke and pals wanted to recreate the same booming leverage and fiscal insanity of the bubble years. And they’ve done that in a big way. Among their various successes:
§ Commodities are at levels not seen since 2008. § Gas prices are at levels not seen since 2008. § The US Dollar has fallen to levels not seen since 2008. § Bank leverage is at levels not seen since 2008. § Microcap stocks are at levels not seen since 2007. § Wall Street bonuses are at levels not seen since 2007.
It’s really striking the similarities. And all the Fed and US Government had to do was:
1) Make itself insolvent 2) Bankrupt the US 3) Spend Trillions in Bailouts and Stimulus 4) Trash the US Dollar
So what’s the difference this time around?
Well, first off, the US consumer is in far worse shape than in 2008. The US has lost some 7.5 million jobs since 2007. The U-6 unemployment rate (which accounts for unemployed and underemployed) stands at 16.2%. These folks are in far worse positions to stomach higher fuel and food prices this time around.
Speaking of which, the number of people on food stamps is also up 58% since 2007. However, even this safety net is proving less and less helpful as food prices skyrocket. Indeed, Wal-Mart’s CEO recently commented that the firm’s customers are “running out of money” due to higher fuel prices.
As for those who have been receiving unemployment checks, the situation is getting grim. Some 2.3 million of them have lost their coverage since last year. The Feds claim that the US economy created 1.3 million jobs so only 1 million of the 2.3 are people who lost coverage and have no income. However, everyone on the planet knows the “jobs created” myth is as full of BS as the “recovery” myth.
My point with all of this is the following: we have entered a period quite similar to 2008 all over again. Energy and food prices are soaring. And the US Dollar is collapsing.
The only difference is that this time around, the US economy is FAR more fragile than it was in 2008. The average American has far less to fall back on than in 2008. And there are far fewer people with jobs than then.
On top of this, the US debt load and balance sheet is far FAR worse than it was in 2008. We’re running deficits and debt-to-GDP levels comparable to Greece.
In other words, when this mess comes unhinged it’s going to be much, much worse than in 2008. And believe me, it WILL come unhinged.
And this time, when it does, the Fed will have NOTHING to stop it. The Fed’s already grown its balance sheet to roughly $3 trillion AND used every weapon it has to combat Round One of the Financial Crisis. So when the next round hits this time around, the Fed will be powerless to do anything about it.
On that note, if you’re getting worried about the future of the stock market and have yet to take steps to prepare for the Second Round of the Financial Crisis… I highly suggest you download my FREE Special Report specifying exactly how to prepare for what’s to come.
I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).
Again, this is all 100% FREE. To pick up your copy today, go to http://www.gainspainscapital.com and click on FREE REPORTS.
PPS. We ALSO publish a FREE Special Report on Inflation detailing three investments that have all already SOARED as a result of the Fed’s monetary policy.
You can access this Report at the link above.
Best Regards,
Graham Summers
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| Posted: 30 Apr 2011 05:49 AM PDT
Crony capitalism bailout induced dementia may be a bitch but it sure does put things on the fast track. Specifically, from "Neither Dave nor I feel his Lubrizol purchases were in any way unlawful" to "the Sokol situation is inexplicable and inexcusable" in thirty days. Ignore the fact that Buffett both "explained" and "excused" it when he first announced it hoping that would be the end of course. After all who would dare disturb the kindly old Octogenarian of Omaha atop his perch, after he himself made billions off the backs of taxpayers, the same people his sidekick Munger who did precisely the same illegal frontrunning when he bought a boatload of BYD (oddly nobody brought that one up yet: we are confident it is being saved for the Too Bit To Fail launch party at the Museum of Mirrors) told should only buy gold if they believe the country they live in is going to kill them. We wonder if Munger has seen the price of gold lately, and if that to him is any indication of the genocidal inclinations of said host country. As for the demented one, who ended his letter with: "I have held back nothing in this statement. Therefore, if questioned about this matter in the future, I will simply refer the questioner back to this release" we wonder: now that the validity of that statement has been thoroughly refuted by none other than grandpa Warren, whether he would like to revise it, and if so, can he absolutely, definitely guarantee us that his heir apparent (not to mention Munger) was the only one who would frontrun Berkshire on corporate acquisitions in the past? We promise to believe him this time. From Reuters:
And since this whole affair has now passed way beyond damage control, we can't wait to see just what skeleton falls out of David Sokol's sleeve next...
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| An Unstable Economy Wobbling Atop Unsound Money Posted: 30 Apr 2011 05:45 AM PDT It's a clumsy old thing, that all-knowing, all-seeing government. No matter how hard it (says it) tries to "fix" the problems of the world, to the extent that the state intervenes, things only seem to get worse. Let's start with the economy… This week we heard from Chairman Bernanke about how his "on sound footing" recovery (somehow, remarkably, standing atop unsound money) is beginning to falter. The recovery, says he, is now "moderate," requiring the Fed to maintain their historically low interest rates for "an extended period." More unsound money, in other words…designed to build a surer foundation on which to erect that ever-illusive recovery. So, are investors actually buying the Chairman's newspeak? At the very moment The Bernank was busy proclaiming his commitment to a "strong dollar policy," the dollar index hit a brand new, post-2008 recession low. Strange, no? What about precious metal investors? Are they betting on The Bernank? The price of gold says, emphatically, NO! An ounce of the anti-dollar metal this week hit $1,560…although, by the time you read this, it may have already moved higher. (Of course, for our purposes, it's more correct to say that the dollar actually slid to 1/1,560th an ounce of gold…but that's a tale for another day.) And what of those other anti-dollar investments? Silver is back up to $48 an ounce and crude (West Texas Intermediate) climbed back above $113 per barrel. Of course, Bernanke tells us this high price will be a temporary phenomenon. Yes…and spending money to get rich is a sound financial plan, too. No, Fellow Reckoner, the powers-that-be are not here to fix your problems and cure your ills. They're here to cause, induce and exacerbate them. They fiddle with this sector and stimulate with that one, trying to get the "machine" to correct its course. But every time they hit the accelerator, the wheels fall off and the engine stalls. Individual components seize up and cease to work. And so the wonks scratch their heads and go back to the same old drawing board. They fret that unemployment is too high or that the growth rate is slowing…and presume to know what to do about it. Take GDP, for example. As you might have seen, this rather meaningless "measurement" contracted during the first quarter of the year, down to 1.8% annualized from a 3.1% rate the previous quarter. It was the "worst" showing since last spring, the (thus far) height of the European debt debacle. Astute readers can already see here how the measurers and fiddlers have missed the point altogether. Then again, to our recollection, they've never displayed a shred of evidence that they grasped it in the first place. First of all, there is no "machine"…no "economy" of which to speak. Not in the sense they are expecting, anyway. There is no economy that isn't comprised of individuals and their reliably untamable, unforecastable, untinkerable aspirations and desires. As Frank Shostak, an adjunct scholar of the Mises Institute, puts it, "The GDP framework gives the impression that it is not the activities of individuals that produce goods and services, but something else outside these activities called the 'economy.' However, at no stage does the so-called 'economy' have a life of its own independent of individuals. The so-called economy is a metaphor – it doesn't exist." And thus is this fundamental flaw of the orderers' and meddlers' plans laid bare for all to see. They are tuning something that can't be tuned, trying to create demand – along with dollars – out of thin air, rather than allowing the market to respond to the wills and desires of its many millions of participants. This is their error, one F.A. Hayek so eloquently referred to as "The Fatal Conceit." And with that, we'll leave you with a bit of entertaining weekend viewing, courtesy of the good-humored people at econstories.tv Regards, Joel Bowman An Unstable Economy Wobbling Atop Unsound Money originally appeared in the Daily Reckoning. The Daily Reckoning recently featured articles on stagflation, best libertarian books, and QE2 .
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| People are Cashing In Their IRAs Early To Have Physical Silver Regardless Of Penalties! Posted: 30 Apr 2011 05:07 AM PDT Share this:
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| Posted: 30 Apr 2011 04:14 AM PDT This week's closing table:
This week's disaggregated commitments of traders change as of the Tuesday close.
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| Posted: 30 Apr 2011 03:42 AM PDT Stacy Summary: In the latest Morgan Report, David Morgan looks at the price and supply of silver. While very cautious after the big rise in the price of silver, Morgan looks at a few demand supply issues. On the demand … Continue reading
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| A Precious Opportunity in Gold and Silver? Have they Topped? Posted: 30 Apr 2011 01:50 AM PDT “They say the cover-up is worse than the crime… Until we rip the seal off the Fed's books, we will never discover the depth of the Fed's looting of taxpayers… You see, the government and the Fed put taxpayers on the hook for $14 trillion during the financial crisis.
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| St. Louis Fed Stunner: Admits QE May Lead To Rise Rather Than Drop In Unemployment Posted: 30 Apr 2011 01:45 AM PDT
It's one thing for bloggers and even various non-mainstream economists to charge the Fed with pandering exclusively to Wall Street's interests, and accuse Ben Bernanke of hypocrisy when he says that the Fed's ultimate goal is the strengthening of the economy through a decrease in unemployment (recall that one of the original two mandates of the Fed is "maximum employment"... that is until it was supplanted by the third and only one: "Russell 2000 to 2000") and caring for "lower-income households." It is something far more serious when the one doing the accusing is... the Federal Reserve. In a seminal paper which we are convinced will make the rounds the next time the puppetmaster is undergoing his periodic grilling by Congressional and Senate critters, Yi Wen of the St. Louis Fed indicates that the entire experiment in increasing the adjusted monetary base by $2 trillion in 2 years is not only not benefiting the economy, but is in fact having an adverse impact on such key economic drivers as unemployment. To wit: "permanent increases in the monetary base foreshadow eventual increases in inflation that can increase, rather than reduce, unemployment over the long term." We wonder if Bernanke knew in advance that LSAP (aka QE2) had a statistically greater chance of resulting in greater unemployment, and thus more pain for the working class, and if the only offset, a doubling in the stock market when ever more capital is diverted from organic economic growth to pursuing speculative risk, was important enough for the Fed to effective replace its employment mandate with one of stock market manipulation? Here is how the St. Louis Fed confirms that the Chairman is nothing but a puppet in the hands of Wall Street:
And the stunners:
It is, in fact, as we have always expected: QE not only does not result in relative economic outperformence (the opposite), it simply leads to higher inflation, and subdued economic growth. And the Chairman of the Federal Reserve was not aware of this data? And while this too is more than obvious, anyone could have foreseen the impact QE/LSAP would have on precious metals:
Perhaps the above explains why we have been bullish on the precious metals complex since March 18, 2009 (official start of QE1). Alternatively it may just be our long-running bet that Bernanke will fail in his attempt at instituting central planning effectively, and the outcome will be the end of the monetary system in its current iteration. And before skeptics accuse the St Louis Fed, which has sometimes been defined as hawkish (although we have yet to see James Bullard vote in the "against" column during an FOMC decision), this is a finding that has been replicated elsewhere on not just one occasion.
The conclusion is obvious:
Alas, unfortunately, the author is wrong. Policymakers, neither of the fiscal nor monetary variety have any care for what the long-term costs of inflation are for the general population. The only determinant is how far is the S&P has risen in any given electoral cycle. After all it is so much easier to manipulate the stock market than the economy. Which is why Bernanke is nothing more than an enabler of market manipulative political posturing... and Wall Street greed naturally: the one certain side effect of the R2K@2K is another year of record bonuses on Wall Street. h/t Nolsgrad
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| Downside Targets for Silver – Quick Comment on Gold Posted: 30 Apr 2011 12:50 AM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! April 30, 2011 03:13 AM Read I spoke about $1, 550 – $1,600 gold as May begins as a place to consider taking some profits. Stay Tuned. [url]http://www.grandich.com/[/url] grandich.com...
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| JPMorgan et al Rush to Cover Silver Short Positions: Is a Silver Price Explosion Immi Posted: 30 Apr 2011 12:50 AM PDT ¤ Yesterday in Gold and Silver What a day it was on Friday! Gold did virtually nothing all through Far East trading, but began to develop a positive bias starting at 10:00 a.m. local time in London...which was 5:00 a.m. Eastern. This bias gained more traction the moment that London p.m. fix was in at 10:00 in New York. Then at 12:00 noon, the gold rally really picked up steam...with the high of the day [$1,570.60 spot] coming about 2:40 p.m. Eastern in electronic trading...before getting sold off a hair going into the 5:15 p.m. New York close. Volume was not overly heavy...and I'm hoping that some of Friday's price action was short covering. Silver's price action, up until the Comex open in New York, was the same as gold's. From there, everything changed. I was as surprised as you were that silver's price action did not mirror gold, or the other two precious metals. I would give a day's pay to see who went long and who went short during Friday's New York ...
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| Posted: 30 Apr 2011 12:34 AM PDT
Tim Geithner made a big choice Friday afternoon. He excluded FX spot and forwards from the Central Clearing requirements of Dodd-Frank ("D-F"). Tim’s words: Treasury is today issuing a Notice of Proposed Determination providing that central clearing and exchange trading requirements would not apply to FX swaps and forwards. The basis for Tim’s big decision was made clear in the Treasury announcement: In contrast to other derivatives, FX swaps and forwards always require both parties to physically exchange the full amount of currency on fixed terms that are set at the outset of the contract. Okay! Got that? Interbank FX is excluded from D-F because it requires a settlement. Unlike FX futures that have zero expectation of actual cash settlement (AKA: A bet) the FX spot and forward market requires that the parties exchange the currencies. I think many people will like this distinction. The thinking is that if actually delivery of a commodity or currency is required, then it is a commercial transaction and not a bet speculation. But actually those folks don’t understand how the system works. Tim Geithner knows how it works inside and out. He worked on the Fed desk in NY. Therefore he knows that the basis for his decision is flawed. The simple answer is that only a small fraction of interbank FX spot and forward transactions are actually settled for cash. They are netted out and settled by an outfit called CLS. What’s CLS? A good description comes from Tim’s former employer, the Fed:  Is CLS a big deal? Does this outfit settle the lion’s share of all interbank spot and forward settlements? You bet it does. The Feb. numbers were a Multi-Trillion dollar blow out:  As a result of CLS 98% of all FX spot and forward transactions are netted out and settled with no delivery of the underlying currencies. So the argument that Tim has put forward in defense of his big choice is actually bogus. And he knows it. ********************************* Let me take you in a different direction on this. A guess on how the D-F FX market carve-out will be exploited. Follows are three slides of the spot/forward swap/Euro deposit rates for the AUDUSD. There are a bunch of numbers (sorry). I circle the numbers to focus on. I’ll try to make this easy. (Note: all currency pairs have similar swap rates)   Take the mid point of each of the swaps/rates for one year AUDUSD. Those numbers are: Swaps = .0505 AUD Euro deposit = 5.43% USD Euro Deposit = 0.83% Spot AUDUSD = 1.0970. Put this together. The interest differential is 4.60% (5.43 - .83). The swap differential is .0505, divide that by the spot rate of 1.0970 and you get 4.60%. Bingo! Some observations on this: -All forward swaps are = to interest differentials. -All forward swaps are interest rate derivatives. -All forward FX swaps have just been carved out of Dodd-Frank. -One can make a bet on interest rate changes through the swaps market. -The swaps markets are highly liquid. Forward swaps are available for virtually all currency pairs. -If a financial institution wanted to make a derivative bet on interest rates AND avoid the central clearing requirements of Dodd-Frank they could do it with no problem. -Sharpies will figure this out. (they already have) Ergo: Dodd-Frank has no teeth. Ergo: We’re living in Joke Town. "Joke Town" 
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| Plummeting US Dollar: The Age of America is Over Posted: 29 Apr 2011 11:53 PM PDT Today the Swiss franc made yet another new high against the super dollar, as it has been doing for 120 days. What you are reading in the graphs is less and less of the foreign currency that one dollar can buy. Of course, gold and silver also consistently hit new highs.
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| Posted: 29 Apr 2011 11:37 PM PDT Visions of Absolute Wealth As defined by the most valued currency throughout the history of humankind, an exclusively visual presentation of nearly ALL-THINGS vs. the value of Gold illuminates precisely where absolute wealth and truth reside.
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| Gold Rally With a Silver Lining Posted: 29 Apr 2011 11:25 PM PDT There were plenty of silver linings this week. Silver moved close to the 1980 and the key barrier of $50 and gold is moving to new highs at the moment of writing these words. Before jumping right into gold and silver charts, let’s take a few moments to examine the situation in the Euro Index, as it has been recently highly correlated with gold. We will start with the long-term chart (charts courtesy by http://stockcharts.com.)
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| Posted: 29 Apr 2011 10:50 PM PDT View the original post at jsmineset.com... April 29, 2011 07:53 PM My Dear Extended Family, Gold at $1650 is in the basket. Formational breakouts are selectively happening in some precious metals shares. I think I will celebrate by taking a nap, wake up and go with the kids to a traditional Italian restaurant for a bowl of wonderful pasta. If JSMineset is a tad thin tonight know our hearts are full. You are all protected from conditions over which you have no control. Your success is my joy! Regards, Jim Jim Sinclair’s Commentary Five so far this weekend. Bank Closing Information April 29, 2011 Community Central Bank, Mount Clemens, MI The Park Avenue Bank, Valdosta, GA First Choice Community Bank, Dallas, GA Cortez Community Bank, Brooksville, FL First National Bank of Central Florida, Winter Park, FL [URL]http://www.fdic.gov/[/URL] Jim Sinclair’s Commentary For old time’s sake. ...
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| Posted: 29 Apr 2011 09:00 PM PDT After the first-ever Fed press conference, gold and silver rose sharply. This was hardly a vote of confidence in paper money. Perhaps the event and the Federal Open Market Committee statement that ...
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| Richard Russell - China on Massive Gold Accumulation Program Posted: 29 Apr 2011 07:30 PM PDT  With gold closing at an all-time high, silver hitting new 31 year highs this week and the US dollar continuing its plunge, the Godfather of newsletter writers, Richard Russell had this to say in his latest commentary, "One of the questions that I'm most frequently asked is this: 'Russell, do you think the US government will call in all the privately-held gold, just as Roosevelt did in 1933?' I've thought about this at length, and I've arrived at what I believe to be the correct answer. The answer is -- No, the government will definitely not call in the gold. The simple reason is that a tremendous amount of gold is held in very powerful hands. Gold (GLD) and gold bullion is held by pension funds, university endowment funds, large powerful hedge funds, corporate reserves, and state treasuries. Note the two paragraphs below."
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| Posted: 29 Apr 2011 07:25 PM PDT It's Getting Plain Silly: MF Global Hikes Silver Margin To 175% Of CME, Or Over 10% Of Contract There's been some rotation out of silver and into gold – which if fine by me – as long as the dollar … Continue reading
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| Posted: 29 Apr 2011 06:53 PM PDT Dear Max & Stacy, I have just discovered Keiser Report and "Buy Silver, Crash JP Morgan" campaign. Thank you for an eye opening information. (and kudos to RT as well!) Even though I'm late to the game, but I still … Continue reading
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foreign holders, which will support higher commodity and metal prices. Baring natural disasters and geopolitical events, the precious metals bull will slow while the stock market declines. Gold will be less affected than silver, but should also take a temporary breather as the printing presses refuel. If I am correct and there is a delay between QE2.5 and Q3 (or whatever it’s called or not called), this will be an opportunity to acquire more gold & silver.
amount. The common thought is to leverage up and inflate it away. Again, my philosophy is not about getting rich, it’s about protection. I would consider this gambling and those that gamble must be prepared to lose.
My friends Paul Brodsky and Lee Quaintance of QBAMCO recently published parts II & III of their paper entitled ‘Apropos of Everything’ and I would recommend everyone who reads this to email Paul and ask him to send you a copy of all three parts as, together, they comprise one of the single best reads I have seen in years. In fact, if you only have time in your busy day to either finish reading this or dig into Paul and Lee’s exceptional writing then let me help you out: STOP READING THIS AND EMAIL PAUL. NOW. 
The old currency gold/pyramid has been replaced by a little understood labyrinth of paper claims against gold. Responsible senior officials of mining companies, central banks, and bullion banks cannot begin to understand the internal mechanics in order to make appropriate judgements of risk. There are few published figures, no reserve requirements, no supervision or regulation, and no accountability. It is the private domain of bullion dealers, central banks, and mining companies. The credit worthiness of the old currency/gold pyramid was quantifiable. The credit worthiness of the new pyramid can only be an educated guess. Our guess is that it is bankrupt.
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