Gold World News Flash |
- In The News Today
- Jim?s Mailbox
- The ?Secret? World of Gold & Silver Company Warrants
- James Turk - “Silver Will Hit New Highs in a Matter of Weeks”
- Gold, Another Goal Achieved, Silver, Into a Rare Position
- Bob Chapman: The Government Orchestrated Silver Sell-Off
- Commodities' drop curbs risk appetite
- Internet boom 2.0 is here, starts to look bubbly
- Qatar oil minister does not expect dramatic OPEC decision
- Secrets of Elite Funds - Brief Intro
- Gold and Silver Update Still the Investment Opportunity of a Lifetime!
- Gold Market Update - May 08, 2011
- Silver Market Update - May 08, 2011
- DON'T EXPECT OIL PRICES TO STAY LOW FOR LONG
- China Kicks Dollar’s Ass – Buy Silver!
- Full Barack Obama "60 Minutes" Interview And Complete Transcript
- Morgan Stanley Follows Goldman, Downgrades Economy
- Got Gold Report – May Correction on Schedule
- FT's John Dizard concedes grudgingly to gold and even cites GATA
- The Contrarian View 9th – 13th May
- Get Even — Join Max Keiser’s SLA (Silver Liberation Army) campaign — crash JP Morgan
- Industrial Metals to Gold Ratio - A Warning?
- Stacy’s beauty should provide us all with the ultimate in both numismatic value and in exchange in good times and bad
- “The Comex monopoly appears to be over.”
- Whatever it’s valued at one day to another in paper money is irrelevant
- It’s the End of the Dollar as we Know It (Do we Feel Fine?) Part 2 of 3
- Hong Kong Mercantile Exchange's 1 Kilo Gold Contract To End Comex Gold Futures Trading (And "Bang The Close") Monopoly
- Wall St. Banks hold dominion over Ireland and profit from its collapse
- Jim's Mailbox
- Twitter Weekly Updates for 2011-05-08
| Posted: 08 May 2011 05:31 PM PDT View the original post at jsmineset.com... May 08, 2011 11:22 AM Jim Sinclair's Mineset - In The News Today Jim Sinclair’s Commentary From 2011 to 2015 this is absolutely correct. It is called currency induced cost push inflation. That is what hyperinflation is. JIM ROGERS ON COMMODITIES: The Bull Market Will Go Up, Consolidate, Go Up, Consolidate, Go Up And Consolidate For Years Gus Lubin | May 7, 2011, 8:56 AM Jim Rogers didn’t buy or sell anything during last week’s commodity sell-off. He says he isn’t good at market timing. What he does believe is that we’re in the middle of a commodity bull market where everything will go up for years. Rogers tells the Economic Times: "5% correction in gold is meaningless. These things correct 10-15-20-30% every year. Nothing unusual about that. That is the way the markets work. I do not see anything unusual. I expect there would be more correction during the course of the bull market. I hope that the bull ma...
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| Posted: 08 May 2011 05:31 PM PDT View the original post at jsmineset.com... May 08, 2011 09:43 AM Jim Sinclair's Mineset - Jim’s Mailbox Dear Jaime, If you continue your pestering, I will cut your grass. Jim Gold & Silver: The Path To Concentration of Funds CIGA Eric The probability of higher-order trend acceleration increases once the upper channel resistance has been breached. Money has been supporting the breakout by repositioning from short to long as previous resistance is tested as support. This suggests that "Three Taps and Out" should be resolved and confirmed by June 2011. Gold London P.M Fixed And Gold Diffusion Index (DI) By way of comparison, silver’s trend accelerated substantially with the breach of its 2003 upper channel. This acceleration (breakout) is marked by the green circle below. Silver London P.M Fixed and the Silver Diffusion Index (DI) While the headline analysis and Street chatter the new flavor of the day – fear, they always miss the quiet movement o...
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| The ?Secret? World of Gold & Silver Company Warrants Posted: 08 May 2011 05:31 PM PDT Warrants have been the best kept ‘secret’ of the investment world until now. After all, when was the last time you read an article on warrants or had your financial advisor broach the subject? Pay attention to the particulars provided in this article, prepare with proper due diligence and enjoy the prospects of future prosperity that a basket of long-term warrants can provide. Words: 1744 So*says*Lorimer Wilson*(www.FinancialArticleSummariesToday.com)*and editor of www.munKNEE.com.*Please note that this paragraph must be included in any article reposting with*a link* to the article source to avoid copyright infringement.*Wilson goes on to say: The galaxy of warrants consists of*only 135 stars (i.e. constituents) of which only*36 are associated with 32 commodity-related stocks that have sufficient brightness (i.e. 24+ months duration) to warrant (the pun is intended!) the attention of earthly investors. (This article is an update as of the end of April, 2011. Changes from ...
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| James Turk - “Silver Will Hit New Highs in a Matter of Weeks” Posted: 08 May 2011 04:50 PM PDT  With tremendous volatility in gold and silver, today King World News interviewed James Turk out of Spain, and subsequently Turk sent the following piece below exclusively for the KWN blog. When asked about gold Turk remarked, "I'm taking my cue here from the mining stocks. The XAU once again held above the 200 level which has been the bottom of its trading range. That suggests to me that both the mining shares and gold are sold out here and due for a big bounce."
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| Gold, Another Goal Achieved, Silver, Into a Rare Position Posted: 08 May 2011 04:37 PM PDT Technical observations of [EMAIL="rossclark@shaw.ca"]RossClark@shaw.ca[/EMAIL] Bob Hoye Institutional Advisors The following report was published for our subscribers April 25, 2011. Gold reached its minimum upside target of $1515 over night, based upon measurements from the March 15th low of the consolidation of November through April 4th. A correction should find support between the 20-day and 34-day exponential moving averages (currently $1469 and $1451). The optimum target for this leg of the bull market remains $1580, based upon the measurement from the January 28th low. Silver prices have been advancing relative to gold since August in classic bull market fashion. In that time they are up 175% versus a gold move of 31%. The ratio has its most overextended monthly RSI(14) reading since January 1980. We expect to see the GSR find support at 30:1 and 26:1 (a silver/gold ratio of 3.3% and 3.9%). Silver is into Upside Exhausti...
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| Bob Chapman: The Government Orchestrated Silver Sell-Off Posted: 08 May 2011 02:29 PM PDT SGTbull talks to Bob Chapman of the International Forecaster about the fascist nature of the U.S. government, and the real reasons behind last week's plummet in silver.
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| Commodities' drop curbs risk appetite Posted: 08 May 2011 02:00 PM PDT
NEW YORK (Reuters) – U.S. stock investors head into this week with added worries about the sustainability of the recent rally and a desire to reduce risk, as shown by the stampede out of commodities on Thursday. NEW YORK (Reuters) – U.S. stock investors head into this week with added worries about the sustainability of the recent rally and a desire to reduce risk, as shown by the stampede out of commodities on Thursday. Stocks also will begin to lose the support they have enjoyed from stronger-than-expected earnings, with the first-quarter reporting period nearing an end. The drop in commodities last week spilled over into commodity-related stocks, which were among the top performers in the last two quarters. The Standard & Poor's energy index .GSPE ended the week down 7 percent, its biggest weekly drop in a year, and the iShares Silver Trust (SLV.P) suffered its worst week of outflows ever after heavy losses in the precious metal. While the commodities rout may be done for now, it has left many investors worried about the ramifications. "It's hard to pinpoint the time when the bubble bursts and hard to go against the current, but when it bursts it's precipitous usually," said Natalie Trunow, senior vice president and chief investment officer of equities at Calvert Asset Management Company in Bethesda, Maryland, which manages about $14.8 billion in assets. With first-quarter earnings and the Federal Reserve's QE2 purchasing program coming to an end, the stock market could be vulnerable to some weakness in the short term, she said. "I wouldn't be surprised if we had a somewhat softer summer or somewhat softer next couple of months," said Trunow, who added she was still positive on the U.S. market longer-term. Last week, the S&P 500 .SPX suffered its worst week since March, even with Friday's surprisingly strong jobs report that allowed the index to end a four-day losing streak. It is now just above critical support at 1,330. A close below that level could "turn the intermediate-term picture bearish," according to a note from Larry McMillan, president of McMillan Analysis Corp. SENTIMENT STILL UPBEAT Despite last week's skittishness, sentiment for the market is positive in the longer term, and technical indicators do not suggest the market is overbought. "Our view is still unchanged; we still like the market," said Jeff Rubin, a market strategist at Birinyi Associates in Westport, Connecticut. Much of the fundamental picture remains bullish for stocks, said Hank Smith, chief investment officer at Haverford Trust Co in Philadelphia. "The economy and valuations remain attractive," he said. "We remain bullish, but with any bull market, it's healthy to have pullbacks." Friday's Labor Department report, which showed U.S. employment increased more than expected in April and U.S. companies created jobs at the fastest pace in five years, gave evidence of the underlying strength in the economy, analysts said. But labor has been among the weakest areas, and this week's jobless benefits claims and retail sales data will be watched for further clues on the jobs picture and health of consumer spending. In earnings news, a number of retailers are expected to report this week, including Macy's (M.N), Nordstrom (JWN.N) and Kohl's (KSS.N). Earnings estimates have risen since the start of the reporting period. S&P 500 companies' profits are now expected to have climbed 18 percent in the first quarter from the year before, up from an estimated 13 percent rise at the start of April, according to Thomson Reuters data. Of the 438 S&P 500 companies that have reported so far, 69 percent have beaten analyst earnings expectations. That is roughly in line with the high rate of beats seen in recent quarters. Adding to nervousness, a small group of European finance ministers were meeting to discuss the euro zone debt crisis, and Greece denied a media report speculating the country was considering leaving the euro zone. European Central bank Governing Council member Erkki Liikanen on Saturday shot down reports of Greece exiting the euro and said restructuring its 327 billion euro ($470 billion) debt would offer no permanent solution to its problems. "No euro zone country wants to leave the euro," Liikanen, who also heads the Bank of Finland, said in an interview for Finnish national broadcaster Yle. Nevertheless, the early speculation caused stocks to trim some gains on Friday. Friday marked the one-year anniversary of Wall Street's "flash crash" when prices suddenly plunged and nearly $1 trillion was wiped off U.S. stocks' value in a matter of minutes before the market bounced back. The crash shook many investors' confidence, but the market regained steam and has rallied since about the start of September. The S&P 500 is up about 28 percent since then. (Additional reporting by Doris Frankel, Editing by Kenneth Barry and Maureen Bavdek)
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| Internet boom 2.0 is here, starts to look bubbly Posted: 08 May 2011 02:00 PM PDT By Jenny Harris and Jennifer Rogers
NEW YORK (Reuters) – The tantalizing prospect of finding the next Facebook, Groupon or Twitter is driving the biggest rush of venture capital into the Internet start-up arena since dot-com mania first boomed and then fizzled more than a decade ago. NEW YORK (Reuters) – The tantalizing prospect of finding the next Facebook, Groupon or Twitter is driving the biggest rush of venture capital into the Internet start-up arena since dot-com mania first boomed and then fizzled more than a decade ago. More than $5 billion of venture capital investment flowed into young web companies globally in the first four months of the year, data from Thomson Reuters Deals Intelligence shows. Though small compared with the boom years, the sum puts 2011 on track to be the busiest in dollar terms since 2000, when more than $55 billion was deployed to back nascent technology firms. The latest frenzy bears some of the hallmarks of the previous web investment craze — exuberance over "concept" start-ups that have not launched their sites and intense competition among potential backers to place bets in presumptive hot spots, such as the social media space now defined by the likes of Facebook and LinkedIn. Entrepreneurs such as Clara Shih, chief executive of Hearsay, a San Francisco-based specialty software provider, enjoy more leverage with investors than last time and talk about having their pick of potential backers. Shih said she had already raised $3 million, when cash came knocking at her door. "Honestly, we weren't thinking of raising money, but now it's kind of landed on our lap, we may be open to it," Shih said in an interview with Reuters Insider. Herd investment behavior gives rise to talk that another Internet bubble is forming, particularly when analysts see valuations on the order of $70 billion for Facebook and $15 billion for Groupon calculated from private investments. "I've heard … many venture capitalists who are saying, 'No, there's not a bubble,'" said Dana Stalder, a partner in the Silicon Valley office of the venture capital firm Matrix Partners. "When you're seeing valuations double in the last 12 months for the same company, the same team, it feels like a bubble to me." But other characteristics of the current boom do set it apart from the one that ended in collapse 10 years ago. * VC investors say more of today's young companies are profitable or on a clearer path to profitability as the advent of cloud computing helps to lower operating costs dramatically from a decade ago * Online advertising and e-commerce, in their infancy a decade ago, have matured into accepted and more reliable revenue sources * The rush to cash out through an initial public offering has slowed. Bountiful sources of private investment, a raft of new public company disclosure regulations and the growth of alternative venues for trading private company shares provide the means and incentive to delay going public Perhaps the most distinguishing factor from the "It's different this time" litany is that today's web frenzy is global. In the three years that marked the height of the last boom, 1999 through 2001, the VC industry sank $96.4 billion into web start-ups, with more than 80 percent of that or nearly $78 billion in the United States alone, the Thomson Reuters data show. Of 10,755 VC deals over that run, 7,174 took place in the U.S. market. Not so today. Of the more than $5 billion of VC money invested so far in 2011, just $1.4 billion has been deployed in U.S. start-ups. according to Thomson Reuters data. Roughly three quarters of the 403 deals have taken place overseas. Moreover, it is the big deals that as often as not are now happening outside of the United States. Of the 25 biggest consumer Internet deals last year, 15 were non-U.S. investments, according to Quid, a Silicon Valley research start-up that tracks VC investment flows. Nearly half, 12, were Chinese. The investors as well as the start-ups have an increasingly international flavor. Perhaps the most notable new face among today's Internet king makers is Russian billionaire Yuri Milner, CEO of DST Global. Milner has invested hundreds of millions of dollars in Facebook, Groupon and Zynga. Last month his firm invested $500 million in 360Buy,com, China's biggest business-to-consumer website. While one of the distinguishing characteristics of the new boom is the tendency to remain private for a longer period, the IPO pipeline is nevertheless filling up with Internet names. So far in 2011, 16 web firms have filed IPO documents with U.S. securities regulators, seeking to raise proceeds estimated at nearly $4.1 billion, according to Thomson Reuters data. That already tops the full-year totals for every year except 1999, when 52 companies filed to raise $4.2 billion.
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| Qatar oil minister does not expect dramatic OPEC decision Posted: 08 May 2011 02:00 PM PDT DOHA (Reuters) – Qatar's oil minister said he does not expect OPEC to make a "dramatic" decision during the upcoming OPEC meeting in June, and that the market is still well supplied. DOHA (Reuters) – Qatar's oil minister said he does not expect OPEC to make a "dramatic" decision during the upcoming OPEC meeting in June, and that the market is still well supplied. "We think the fundamentals are fine… I don't expect OPEC to take a dramatic decision," Mohammed al-Sada told reporters on the sidelines of an industry meeting in Doha on Sunday. Oil fell on Friday to cap a frenzied trading week that sliced prices by a record of more than $16 a barrel on demand worries and a move by investors to slash commodities exposures. Brent crude fell $1.67 to settle at $109.13 a barrel in heavy trade, with volumes twice the 30-day moving average. The contract tumbled $16.76 a barrel for the week, marking the largest weekly decline ever in dollar terms. "Today the price of most commodities has dropped, not only oil. We think that fundamentals are fine and we cannot see any shortage of supply," said al-Sada. He added that OPEC and non-OPEC countries were producing enough crude to keep stocks at a "healthy" levels, and it is in the interest of OPEC countries to reduce price volatility. "We are after the stability of oil prices. It's in the interest of suppliers and consumers," he said. Asked if he expects a free fall in the oil price similar to the one in 2008, al-Sada said it was unlikely. "The world economy is not bad enough to a see a free fall (in oil prices). Many developing countries are sustaining healthy GDP growth." (Reporting by Regan Doherty; Editing by Amena Bakr)
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| Secrets of Elite Funds - Brief Intro Posted: 08 May 2011 01:54 PM PDT
What a beautiful day it was in Montreal. Absolutely perfect weather to celebrate Mother's Day. I wish all the moms out there a Happy Mother's Day, especially my mother who I love a lot. the only problem is that I was out all day enjoying this weather and I'm tired as I hit the gym early today.
The article cites many reasons as to why small cap stocks are overvalued, including QE2 and the fact that investors believe small caps outperform over the long-run (with greater volatility), but let me tell you the real reason why small caps are rising so much. Go back to read my comment on whether hedge funds have grown too big. With so much money being shoveled to hedge funds, it's not surprising to see small cap stocks rally so strongly. Why is that? For one, a large percentage of hedge fund investments go to Long/Short Equity funds. The strategy of these funds is very similar. They go long small cap stocks which are not covered properly by analysts and go short large cap stocks which are more liquid and covered to death by analysts. I wouldn't be surprised if many hedge funds are just swapping into a small cap index for their long position. I believe in tracking the activity of elite funds closely. In particular, I track quarterly holdings of a number of elite hedge funds and long-only funds, many of which I mentioned in the past when I wrote about why small is beautiful. Why do I track quarterly holdings of elite funds? Simply because the best funds attract the best talent (they can pay them top dollar) and they typically exhibit performance persistence over a long period. You're not going to get a thousand elite funds. Only the cream of the crop can truly boast of long-term success. The question I often get is do I just mimic what these top funds are doing? I don't mimic anyone and will choose my entry and exit very carefully. The quarterly holdings of top funds helps me focus, especially if I notice a cluster of activity in a certain stock or sector. Institutional investors investing in top funds should be asking them their top 10 long and short positions every month and the reasons behind these positions. I screen stocks daily, looking at largest percentage moves (up and down), moves on unusual volume, and then I add them to a list of stocks that I filter by industry. This allows me to see if the stocks are moving in unison (beta) or if it's company specific news moving one stock up or down. There are always news stories covering some elite hedge fund. For example, Marketwatch reports that Greenlight Capital is betting on a possible initial public offering by auto-parts maker Delphi Automotive. Minyanville reports that Einhorn’s quarterly letter to investors in his funds discussed establishment of new positions in Internet-giant Yahoo (YHOO) and electronics retailer Best Buy (BBY). This is the type of information I look for to do my own analysis, paying close attention to whether other elite funds are also initiating or accumulating more shares of certain companies. It sounds easy but it's far from easy. Quite often stocks that are being bought by top funds are also heavily shorted or heavily manipulated by other funds. You might see great earning reports, one after the other, and yet the stock keeps falling, leaving you bewildered. Trading stocks, especially day or swing trading stocks, is not an easy game. I've done it before, and will do it again if I have to, but it's very tough to consistently make money. You need to have discipline, cut your losses, and know that things can get very volatile (tight stop losses can work against you). I'm running out of gas so I will come back to this topic next week, providing you with more analysis of what top funds are actually buying and selling. If you love picking stocks, this is going to be a treat for you.
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| Gold and Silver Update Still the Investment Opportunity of a Lifetime! Posted: 08 May 2011 01:00 PM PDT Mark Lundeen Archives Mark J. Lundeen [EMAIL="Mlundeen2@Comcast.net"]Mlundeen2@Comcast.net[/EMAIL] 06 May 2011 Wow! What a week!! This week’s decline in silver was on a scale not seen since the Hunt Brothers’ silver liquidation of 1980. Silver was down 25.43% in only four days! How often does this happen? I had to find out, so I took the four-day percentage moves in silver going back to 1969, filtered out all moves of less than 25%, and plotted the results below. The answer is not very often! Like the 1980 liquidation, silver’s 2011’s precipitous decline was a manufactured event by the silver market’s regulators. In 1980, with silver near $50 an ounce, regulators changed the rules for traders classified as speculators (any silver trader who wasn’t a big bank). The new regulations prohibited going long (buying), allowing only sales of silver contracts. With the big banks (who have been short silver since Noah left ...
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| Gold Market Update - May 08, 2011 Posted: 08 May 2011 12:53 PM PDT Clive Maund Gold's reaction last week was quite modest, given what happened elsewhere, especially to silver, and with the benefit of hindsight it is quite clear that it was a good point for it to react as it had the Friday before risen to become critically overbought on its short-term oscillators. On its 6-month chart we can see how, late the previous week, gold had risen to become critically overbought on its RSI, opening up a pretty large gap with its moving averages. It was thus a good time for it to react back and the severe reaction across the commodity sector last week, especially in silver, provided the perfect backdrop. As we can see this reaction was far less extreme than that which occurred in silver, and brought the price back in a fairly normal manner to support above its 50-day moving average. However, the four successive down days, which although more modest, mirror those in silver, are not viewed as normal and are not liked and are regarded as bearish in p...
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| Silver Market Update - May 08, 2011 Posted: 08 May 2011 12:47 PM PDT Clive Maund Silver newbies discovered to their shock and horror last week that silver can actually go down as well as up, and even worse, that it drops a lot faster than it goes up. We were partly fooled ourselves last week by the seemingly bullish COT figures, but not to the extent that it stopped us implementing protection in the form of Puts, or Calls in silver bear ETFs such as ZSL. After last week's devastating plunge the silver battlefield is littered with the corpses of silver longs, with those who are still breathing being exhorted to "put their shoulder to the wheel" again by undismayed silver cheerleaders, who are hailing a "fantastic buying opportunity" for the ride of a lifetime. Is it?? - let's see what the charts have to say... On its 6-month chart we can see that after hitting the top of its intermediate trend channel in the high $40's, where it showed signs of running into trouble that we will look at in more detail on a one-month chart, silver su...
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| DON'T EXPECT OIL PRICES TO STAY LOW FOR LONG Posted: 08 May 2011 12:36 PM PDT Two stories on Zero Hedge that give perspective to the collapse in oil from $114 a barrel to $97 a barrel in one week. The MSM will cackle about speculators. Obama can take credit because he threatened big oil. Americans who had started to think about getting a more fuel efficient car can go back [...]
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| China Kicks Dollar’s Ass – Buy Silver! Posted: 08 May 2011 12:10 PM PDT Share this:
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| Full Barack Obama "60 Minutes" Interview And Complete Transcript Posted: 08 May 2011 11:36 AM PDT
On Wednesday, May 4, 2011 - three days after he announced that American troops had killed Osama bin Laden in Pakistan - President Barack Obama talked with "60 Minutes" correspondent Steve Kroft in the Roosevelt Room of the White House. Below is a transcript of that interview, as well as the full interview. STEVE KROFT: Mr. President, was this the most satisfying week of your Presidency? PRESIDENT BARACK OBAMA: Well, it was certainly one of the most satisfying weeks not only for my Presidency, but I think for the United States since I've been President. Obviously bin Laden had been not only a symbol of terrorism, but a mass murderer who's had eluded justice for so long, and so many families who have been affected I think had given up hope. And for us to be able to definitively say, "We got the man who caused thousands of deaths here in the United States and who had been the rallying point for a violent extremist jihad around the world" was something that I think all of us were profoundly grateful to be a part of. KROFT: Was the decision to launch this attack the most difficult decision that you've made as Commander-In-Chief? PRESIDENT OBAMA: Certainly one. You know, every time I send young men and women into a war theatre, that's a tough decision. And, you know, whenever you go to Walter Reed [Army Medical Center] or Bethesda [Naval Hospital] and you see the price that our young people pay to keep this country safe, that's a tough decision. Whenever you write a letter to a family who's lost a loved one. It's sobering. This was a very difficult decision, in part because the evidence that we had was not absolutely conclusive. This was circumstantial evidence that he was gonna be there. Obviously it entailed enormous risk to the guys that I sent in there. But ultimately I had so much confidence in the capacity of our guys to carry out the mission that I felt that the risks were outweighed by the potential benefit of us finally getting our man. KROFT: When the CIA first brought this information to you . . . PRESIDENT OBAMA: Right. KROFT: What was your reaction? Was there a sense of excitement? Did this look promising from the very beginning? PRESIDENT OBAMA: It did look promising from the beginning. Keep in mind that obviously when I was still campaigning for President, I had said that if I ever get a shot at bin Laden we're gonna take it. And that was subject to some criticism at the time, because I had said if it's in Pakistan and, you know, we don't have the ability to capture 'em in any other way, then we're gonna go ahead and take the shot. So I felt very strongly that there was a strategic imperative for us to go after him. Shortly after I got into office, I brought [CIA director] Leon Panetta privately into the Oval Office and I said to him, "We need to redouble our efforts in hunting bin Laden down. And I want us to start putting more resources, more focus, and more urgency into that mission." Leon took that to the CIA. They had been working steadily on this since 2001, obviously. And there were a range of threads that were out there that hadn't quite been pulled all together. They did an incredible job during the course of a year and a half to pull on a number of these threads until we were able to identify a courier who was known to be a bin Laden associate, to be able to track them to this compound. So by the time they came to me they had worked up an image of the compound, where it was and the factors that led them to conclude that this was the best evidence that we had regarding bin Laden's whereabouts since Tora Bora. But we didn't have a photograph of bin Laden in that building. There was no direct evidence of his presence. And so the CIA continued to build the case meticulously over the course of several months. What I told them when they first came to me with this evidence was: "Even as you guys are building a stronger intelligence case, let's also start building an action plan to figure out if in fact we make a decision that this is him or we've got a good chance that we've got him, how are we gonna deal with him? How can we get at that?" And so at that point you probably had unprecedented cooperation between the CIA and our military in starting to shape an action plan that ultimately resulted in success this week. KROFT: When was that when you set that plan in motion? PRESIDENT OBAMA: Well, they first came to me in August of last year with evidence of the compound. And they said that they had more work to do on it, but at that point they had enough that they felt that it was appropriate for us to start doing some planning. And so from that point on we started looking at the time what our options might be. The vigorous planning did not begin until early this year. And obviously over the last two months it's been very intensive in which not only did an action plan get developed, but our guys actually started practicing being able to execute. KROFT: How actively were you involved in that process? PRESIDENT OBAMA: About as active as any project that I've been involved with since I've been President. Obviously we have extraordinary guys. Our Special Forces are the best of the best. And so I was not involved in designing the initial plan. But each iteration of that plan they'd bring back to me. Make a full presentation. We would ask questions. We had multiple meetings in the Situation Room in which we would map out -- and we would actually have a model of the compound and discuss how this operation might proceed, and what various options there were because there was more than one way in which we might go about this. And in some ways sending in choppers and actually puttin' our guys on the ground entailed some greater risks than some other options. I thought it was important, though, for us to be able to say that we'd definitely got the guy. We thought that it was important for us to be able to exploit potential information that was on the ground in the compound if it did turn out to be him. We thought that it was important for us not only to protect the lives of our guys, but also to try to minimize collateral damage in the region because this was in a residential neighborhood. I mean one of the ironies of this is, you know, I think the image that bin Laden had tried to promote was that he was an ascetic, living in a cave. This guy was living in a million dollar compound in a residential neighborhood. KROFT: Were you surprised when they came to you with this compound right in the middle of sort of the military center of Pakistan? PRESIDENT OBAMA: Well, I think that there had been discussions that this guy might be hiding in plain sight. And we knew that some al Qaeda operatives, high level targets basically, just blended into the crowd like this. I think we where surprised when we learned that this compound had been there for five or six years, and that it was in an area in which you would think that potentially he would attract some attention. So yes, the answer is that we were surprised that he could maintain a compound like that for that long without there being a tip off. KROFT: Do you believe it was built for him? PRESIDENT OBAMA: We are still investigating that, but what is clear is that the elements of the compound were structured so that nobody could see in. There were no sight lines that would enable somebody walking by or somebody in an adjoining building to see him. So it was clearly designed to make sure that bin Laden was protected from public view. KROFT: Do you have any idea how long he was there? PRESIDENT OBAMA: We know he was there at least five years. KROFT: Five years? PRESIDENT OBAMA: Yeah. KROFT: Did he move out of that compound? PRESIDENT OBAMA: That we don't know yet. But we know that for five to six years this compound was there, and our belief is that he was there during that time. KROFT: What was the most difficult part? I mean you had to decide. This was your decision -- whether to proceed or not and how to proceed. What was the most difficult part of that decision? PRESIDENT OBAMA: The most difficult part is always the fact that you're sending guys into harm's way. And there are a lot of things that could go wrong. I mean there're a lot of moving parts here. So my biggest concern was, if I'm sending those guys in and Murphy's Law applies and somethin' happens, can we still get our guys out? So that's point number one. Point number two, these guys are goin' in in, you know, the darkest of night. And they don't know what they're gonna find there. They don't know if the building is rigged. They don't know if, you know, there are explosives that are triggered by a particular door opening. So huge risks that these guys are taking. And so my number one concern was: if I send them in, can I get them out? And a lot of the discussion we had during the course of planning was how do we make sure there's backup? How do we make sure that there's redundancy built into the plan so that we have the best chance of getting our guys out? That's point number one. Point number two was: as outstanding a job as our intelligence teams did -- and I cannot praise them enough they did an extraordinary job with just the slenderest of bits of information to piece this all together -- at the end of the day, this was still a 55/45 situation. I mean, we could not say definitively that bin Laden was there. Had he not been there, then there would have been significant consequences.
Obviously, we're going into the sovereign territory of another country and landing helicopters and conducting a military operation. And so if it turns out that it's a wealthy, you know, prince from Dubai who's in this compound, and, you know, we've spent Special Forces in -- we've got problems. So there were risks involved geopolitically in making the decision.
But my number one concern was: can our guys get in and get out safely. The fact that our Special Forces have become so good -- these guys perform at levels that 20, 30 years ago would not have happened -- I think finally gave me the confidence to say, "Let's go ahead." I think that the American people have some sense of how good these guys are, but until you actually see 'em and meet them, it's hard to describe how courageous, how tough, how skilled, how precise they are. And it was because of their skills that I ended up having confidence to make the decision.
KROFT: I mean it's been reported that there was some resistance from advisors and planners who disagreed with the commando raid approach. Was it difficult for you to overcome that? And what level of confidence did you have? PRESIDENT OBAMA: You know one of the things that we've done here is to build a team that is collegial and where everybody speaks their mind. And there's not a lot of snipin' or back-biting after the fact. And what I've tried to do is make sure that every time I sit down in the situation room, every one of my advisors around there knows I expect them to give me their best assessments. And so the fact that there were some who voiced doubts about this approach was invaluable, because it meant the plan was sharper, it meant that we had thought through all of our options, it meant that when I finally did make the decision, I was making it based on the very best information.
But as I said, you know, there were sufficient risks involved where it wasn't as if any of the folks who were voicing doubts were voicing somethin' that I wasn't already runnin' through in my own head. You know, we understood that there were some significant risks involved in this. KROFT: How much did some of the past failures, like the Iran hostage rescue attempt, how did that weigh on you? I mean . . . PRESIDENT OBAMA: I thought about that. KROFT: . . . was that a factor? PRESIDENT OBAMA: Absolutely. Absolutely. No, I mean you think about Black Hawk Down. You think about what happened with the Iranian rescue. And it, you know, I am very sympathetic to the situation for other Presidents where you make a decision, you're making your best call, your best shot, and something goes wrong -- because these are tough, complicated operations. And yeah, absolutely. The day before I was thinkin' about this quite a bit. KROFT: It sounds like you made a decision that you could accept failure. You didn't want failure but after looking at . . . PRESIDENT OBAMA: Yeah KROFT: . . . the 55/45 thing that you mentioned, you must have at some point concluded that the advantages outweighed the risks . . . . PRESIDENT OBAMA: I concluded that it was worth it. And the reason that I concluded it was worth it was that we have devoted enormous blood and treasure in fighting back against al Qaeda. Ever since 2001. And even before with the embassy bombing in Kenya.
And so part of what was in my mind was all those young men that I visited who are still fighting in Afghanistan. And the families of victims of terrorism that I talk to. And I said to myself that if we have a good chance of not completely defeating but badly disabling al Qaeda, then it was worth both the political risks as well as the risks to our men. KROFT: How much of it was gut instinct? Did you have personal feelings about whether . . . . PRESIDENT OBAMA: You know, the thing KROFT: . . . he was there? PRESIDENT OBAMA: The thing about gut instinct is if it works, then you think, "Boy, I had good instincts." If it doesn't, then you're gonna be running back in your mind all the things that told you maybe you shouldn't have done it. Obviously I had enough of an instinct that we could be right, but it was worth doing. KROFT: After you made the decision to go ahead, you had like this incredible weekend where you were you surveyed the tornado damage in Alabama. PRESIDENT OBAMA: Right. KROFT: You took your family to the shuttle launch and met with people down there. With Gabby . . . . PRESIDENT OBAMA: With Gabby . . . . KROFT: . . . Giffords. PRESIDENT OBAMA: Giffords, yeah. KROFT: You attended the White House Association dinner. There was a commencement address. And this was all going on, I mean you knew what was gonna happen. PRESIDENT OBAMA: Yeah. Yeah. The decision was made. I made the decision Thursday night, informed my team Friday morning, and then we flew off to look at the tornado damage. To go to Cape Canaveral, to make a speech, a commencement speech. And then we had the White House Correspondents' Dinner on Saturday night. So this was in the back of my mind all weekend. KROFT: Just the back? PRESIDENT OBAMA: Middle, front. KROFT: Was it hard keeping your focus? PRESIDENT OBAMA: Yes. Yeah. KROFT: Did you have to suppress the urge to tell someone? Did you wanna tell somebody? Did you wanna tell Michelle? Did you tell Michelle? PRESIDENT OBAMA: You know one of the great successes of this operation was that we were able to keep this thing secret. And it's a testimony to how seriously everybody took this operation and the understanding that any leak could end up not only compromising the mission, but killing some of the guys that we were sending in there. And so very few people in the White House knew. The vast majority of my most senior aides did not know that we were doing this. And you know, there were times where you wanted to go around and talk this through with some more folks. And that just wasn't an option.
And during the course of the weekend, you know, there was no doubt that this was weighin' on me. But, you know, something I said during the campaign that I've learned over and over again in this job is the Presidency requires you to do more than one thing at a time. And it is important for you to be able to focus on somethin' that matters deeply to you, but still be able to do the things on a daily basis that are makin' a difference in people's lives.
KROFT: I want to go to the Situation Room. What was the mood? PRESIDENT OBAMA: Tense. KROFT: People talking? PRESIDENT OBAMA: Yeah, but doing a lot of listening as well, 'cause we were able to monitor the situation in real time. Getting reports back from Bill McRaven, the head of our special forces operations, as well as Leon Panetta. And you know, there were big chunks of time in which all we were doin' was just waiting. And it was the longest 40 minutes of my life with the possible exception of when Sasha got meningitis when she was three months old, and I was waiting for the doctor to tell me that she was all right. It was a very tense situation. KROFT: Were you nervous? PRESIDENT OBAMA: Yes. KROFT: What could you see? PRESIDENT OBAMA: As I said, we were monitoring the situation. And we knew as events unfolded what was happening in and around the compound, but we could not get information clearly about what was happening inside the compound. KROFT: Right. And that went on for a long time? Could you hear gunfire? PRESIDENT OBAMA: We had a sense of when gunfire and explosions took place. KROFT: Flashes? PRESIDENT OBAMA: Yeah. And we also knew when one of the helicopters went down in a way that wasn't according to plan. And, as you might imagine that made us more tense. KROFT: So it got off to a bad start? PRESIDENT OBAMA: Well, it did not go exactly according to planned, but this is exactly where all the work that had been done anticipating what might go wrong made a huge difference. KROFT: There was a backup plan? PRESIDENT OBAMA: There was a backup plan. KROFT: You had to blow up some walls? PRESIDENT OBAMA: We had to blow up some walls. KROFT: When was the first indication you got that you had found the right place? That bin Laden was in there? PRESIDENT OBAMA: There was a point before folks had left, before we had gotten everybody back on the helicopter and were flying back to base, where they said Geronimo has been killed. And Geronimo was the code name for bin Laden. And now obviously at that point these guys were operating in the dark with all kinds of stuff going on so everybody was cautious. But at that point cautiously optimistic. KROFT: What was your reaction when you heard those words? PRESIDENT OBAMA: I was relieved and I wanted to make sure those guys got over the Pakistan border and landed safely. And I think deeply proud and deeply satisfied of my team. KROFT: When did you start to feel comfortable that bin Laden had been killed? PRESIDENT OBAMA: When they landed we had very strong confirmation at that point that it was him. Photographs had been taken. Facial analysis indicated that in fact it was him. We hadn't yet done DNA testing, but at that point we were 95 percent sure. KROFT: Did you see the pictures? PRESIDENT OBAMA: Yes. KROFT: What was your reaction when you saw them? PRESIDENT OBAMA: It was him. KROFT: Why haven't you released them? PRESIDENT OBAMA: You know, we discussed this internally. Keep in mind that we are absolutely certain this was him. We've done DNA sampling and testing. And so there is no doubt that we killed Osama bin Laden. It is important for us to make sure that very graphic photos of somebody who was shot in the head are not floating around as an incitement to additional violence. As a propaganda tool. You know, that's not who we are. You know, we don't trot out this stuff as trophies. You know, the fact of the matter is this was somebody who was deserving of the justice that he received. And I think Americans and people around the world are glad that he's gone. But we don't need to spike the football. And I think that given the graphic nature of these photos, it would create some national security risk. And I've discussed this with Bob Gates and Hillary Clinton and my intelligence teams and they all agree. KROFT: There are people in Pakistan, for example, who say, "Look, this is all a lie. This is another American trick. Osama's not dead." PRESIDENT OBAMA: You know, the truth is that - and we're monitoring worldwide reaction -- there's no doubt that bin Laden is dead. Certainly there's no doubt among al Qaeda members that he is dead. And so we don't think that a photograph in and of itself is gonna make any difference. There are gonna be some folks who deny it. The fact of the matter is, you will not see bin Laden walkin' on this earth again. KROFT: Was it your decision to bury him at sea? PRESIDENT OBAMA: It was a joint decision. We thought it was important to think through ahead of time how we would dispose of the body if he were killed in the compound. And I think that what we tried to do was, consulting with experts in Islamic law and ritual, to find something that was appropriate that was respectful of the body. Frankly we took more care on this than, obviously, bin Laden took when he killed 3,000 people. He didn't have much regard for how they were treated and desecrated. But that, again, is somethin' that makes us different. And I think we handled it appropriately. KROFT: When the mission was over . . . PRESIDENT OBAMA: Uh-huh. KROFT: . . . and you walked out of the situation room . . . . PRESIDENT OBAMA: Yeah. KROFT: . . . what did you do? What was the first thing you did? PRESIDENT OBAMA: Yeah, I think I walked up with my team, and I just said, "We got him." And I expressed my profound gratitude and pride to the team that had worked on this.
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| Morgan Stanley Follows Goldman, Downgrades Economy Posted: 08 May 2011 11:16 AM PDT
And like clockwork, the expect avalanche of economic downgrades greenlighted by Jan Hatzius begins. Heading up the lemming crew, as always, is Morgan Stanley's David Greenlaw. "We are adjusting our GDP growth forecast lower for the third time this year. We now look for +3.3% GDP growth over the four quarters of 2011 (versus +3.6% in our April update). Essentially, this puts us back to where we were in early December – before policymakers enacted a package of tax cuts aimed at stimulating the economy." In other news David, how do you spell roundtrip (and is a refund due)? Or "hockeystick?" Or how about an imminent push for more QEasing once the inflationary "shock" is forgotten (unless Saudi Arabia falls to the tsunami of "spooks on the ground" in which case all bets are off), just in case the virtuous cycle doesn't quite kick in, in this 3rd, and soon to be failed, attempt to jump start the economy. In other news, we can't wait to hear what validation LaVorgna, who is always at the very end of the lemming bus, comes up with to justify his feverish enthusiasm over the economy, which once again proves to be worth the amount of money DB's customers pay the firm's sales coverage to bet against them. Full note from Morgan Stanley:
And summarizing it all (and more downgrades to come from here on out):
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| Got Gold Report – May Correction on Schedule Posted: 08 May 2011 11:13 AM PDT "These dramatic downdrafts are God-given gifts." – Rick Rule, Global Resource Investments on King World News HOUSTON (Got Gold Report) – There is one story in the news of the past little while that has been more or less overlooked by those attempting to make sense of the May selloff in commodities. Before we mention that story, let us crow just a little. We Vultures actually expected a major selloff; we prepared for it by building up a Bargain War Chest (raised buying "horsepower" by selling parts of positions) well in advance of it, and now that it is here (more or less on schedule) it feels better to us than it might have otherwise. No, the story we are talking about is not the CME raising margin rates on silver to something like 5X what it was a year ago to open a new silver futures contract on the COMEX bourse in New York. That is definitely a factor in the near 30% crushing of silver over the past two weeks, but the last two margin hikes were after silver had already turned south, so the exchange was just adding insult to injury and piling on. No, the story we are talking about is not the market moving call by Goldman Sachs to exit commodities (over the short term – long term they remain bullish), that seemingly hit the news right as the plunge was getting underway, but only seemingly. The call was first issued back in the first part of April. For a couple of weeks it looked about as accurate as their $200 oil call in the summer of 2008, but when precious metals stocks refused to answer the new higher highs for gold and silver it was clear that Big Money was listening to Blankfein and Company. Like many we wonder if Goldman also front runs Goldman, but if they do, so what? Sometimes they get it dead wrong. Besides, what one might consider front running, someone else might just call prepositioning or trading in line with their convictions and that's not a subject we need to waste time on around here. The story we ARE talking about is of a mega-giant new IPO coming out later this month in London and Hong Kong that will launch Glencore (see story) into the public domain right out of its secretive Swiss hideaway forever, allowing some rather unsavory individuals … (one of them might be founder Marc Rich, the guy who made, through his ex-wife a hefty donation to the Bill/Hillary Clinton duo and democratic causes, some say in return for a presidential pardon for fraud charges, but we digress…) … to become 'instant' multi-billionaires. In truth, the Glencore IPO is far from "instant," Glencore has been doing what it does in the commodities arena since at least the 1970s and Rich is no longer involved in the management of it. What is kind of "instant" is that Glencore is fast tracked to get a FTSE listing, meaning, because of its size, that every portfolio manager that has an index-tracking fund has to buy it – in size. More in a moment, but first, here is this week's closing table:
(If the table is too small or is cut off, click on it for a larger version). Table comments: Goodness, look at the huge negative money flow in the largest silver ETF. Imagine ten thousand people all trying to hit the same exit door and that pretty well describes the scene in silver. We have repeatedly warned that silver's parabolic move was dangerous and this week's 25.6% silver plunger is testament to it. Gold seems tame by comparison does it not? The gold/silver ratio spikes higher to a 42 handle. Remember two weeks ago we were talking about the lowest weekly close since 1980, a 32 handle? We suspect that the GSR is already near a top – close to what used to be a "floor" for it near 45 (much more about that later in the report), but high volatility demands we put a 5-point bracket around that figure short term. Outside reversals for the metals confirm that May has indeed arrived on schedule, but no one can say we didn't see it coming here. Note the somewhat higher open interest for silver futures late week, meaning that some specs had seen enough downside and now want to play again – we think. Mining shares were tossed overboard by Big Money and small money, both worried that others would sell even more. Sometimes April-May-June means negative liquidity in our favorite space. Once in a while it means very strong negative liquidity, like this year for example. The good news? The stronger the April-May-June get-out, the more likely it is the Big One for the year. It was in 2004. It was again in 2006. It looked like it might be in 2008 – before the crash showed us it wasn't. It was again in 2009, but the past is merely the past and it can't be relied upon as a guarantee of what the future holds. Is this current energetic sell-down the Big One for 2011? We'll see. We intend to play it as the official beginning of the Vulture Bargain Hunting Season for 2011. Sure do hope that view is correct! Back to the introduction: Why is the new Glencore IPO important? Well, on top of the CME being on the warpath on silver; on top of the Goldman "get-out-of-commods" call before May, there was also a giant new IPO sucking between 50 and 60 billion dollars out of the commodity space so its major European index tracking players could lay in a stock of the big new public commodity behemoth. Portfolio managers have to sell something in order to raise funds. When it is a large amount to raise (in this case an extremely large amount) they have to sell quite a bit. Is it just us, or isn't that a lot of negative liquidity for a relatively small sector to eat in a single month? No wonder the miners have been "mailing it in" on the charts lately. Seasonal pressure included, and U.S. exchange interference aside, there is a giant vacuum of liquidity hitting the commodity equity space on multiple fronts. It's a wonder the miners haven't been crushed by all of it, isn't it? Got Gold ReportFirst things first, the Got Gold Report – the full report – is published biweekly at least 24 times per year. Between reports we communicate more regularly on the GGR web log, which is always free and open to the public, or in our COT Flash reports and Vulture Bargain Hunter reports reserved exclusively for subscribers. COT Flash reports appear on off weeks for the Got Gold Report when there are what we consider important changes in the commitments of traders reports which cannot wait until the next full report. Vulture Bargain offerings appear ad hoc as there are developments we feel merit comment for and in the resource company issues we track closely. Our aim is to briefly summarize our positioning for the gold and silver markets, and also to highlight a few of the dozens of indicators, ratios and graphs we keep in constant touch with. Vultures, after logging in, please see the commentary in our even-dozen technical charts now located in their own section of the password-protected subscriber pages. We update most of the Got Gold Report linked charts each week, even the weekends when we don't publish the full report. Changes to the linked charts are almost always completed by 6:00 pm ET on Sunday evening (except when Monday is a holiday) and occasionally during the week itself as events unfold. To continue reading, please log in or click here to subscribe to a Got Gold Report Membership.
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| FT's John Dizard concedes grudgingly to gold and even cites GATA Posted: 08 May 2011 10:57 AM PDT 7:15p ET Sunday, May 8, 2011 Dear Friend of GATA and Gold: Financial Times columnist John Dizard, who long has been pretty disparaging about gold, today gives it some grudging respect and even seems to concede that it's the right asset for the time being, even if, at the end of his column, he can't help trying to trump gold with the apocalypse -- as if the apocalypse won't trump every asset class. Further, Dizard remarkably not only makes reference to the seminal academic study by economics professors Lawrence Summers and Robert Barsky in the June 1988 issue of the Journal of Political Economy, "Gibson's Paradox and the Gold Standard," of which GATA long has made much, but he even links to the copy of the study that is posted at GATA's Internet site. Dizard gets the date of the study wrong -- it was 1988, not 1985 -- and he misidentifies Barsky as a Harvard professor when he was in fact a professor at the University of Michigan, but these are small details. It's hard to be too sore at a guy in the financial press who at least is paying this much attention. Dizard's column, headlined "Reasons Not to Fondle Your Gold," is appended. CHRIS POWELL, Secretary/Treasurer * * * Reasons Not to Fondle Your Gold By John Dizard http://www.ft.com/cms/s/0/988fe886-782c-11e0-b90e-00144feabdc0,dwp_uuid=... "No man is poor who can do what he likes to do once in a while! And I like to dive around in my money like a porpoise! And burrow through it like a gopher! And toss it up and let it hit me on the head!" -- Scrooge McDuck. There's been a lot of news about precious metals prices lately, given the reports of the dramatic fall in the price of silver and the somewhat less dramatic fall in the price of gold. A lot of news, but not much information, since the price of precious metals in the various currencies, particularly the dollar, is really following market events rather than creating them. Silver and gold were not "overbought." You could more accurately say that the major currencies were "oversold." Too many people were prepared to believe that governments and central banks in the US, Japan, and Europe, were about to completely lose control of their economic destinies and financial systems. Or they were prepared to believe it a bit too early. ... 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 And while the longer term (or "secular") bull market in the metals, or bear market in the currencies, will probably resume, we can already see that this one will end as the previous ones have, with a significant, sustained increase in real interest rates. The problem that gold enthusiasts have, in the end, is that they are correct: Gold is "real" money. As currencies have declined with the credibility of central banks and governments, gold's "moneyness" has become ever more important, relative to its value as a commodity. Real money, un-invested in any enterprise or security, does not earn any return. That is true if it is in the form of precious metal or hard currency. Warren Buffett made this point in an accurate, if rambling, answer to a shareholder question at the Berkshire Hathaway annual meeting a couple of weeks ago. If you owned all $7,000 billion of gold in the world, he pointed out, you could climb on top of it, "fondle" it, and declare yourself king, but you couldn't earn anything on it. For that price, Mr Buffett said, you could own all the farmland in the United States, several ExxonMobils, and a lot of other earning assets. He prefers that "stuff." A more systematic answer to the value of gold relative to earning assets was offered in 1985 by two Harvard economists, Larry Summers and Robert Barsky, in a paper called "Gibson's Paradox and the Gold Standard": http://www.gata.org/files/gibson.pdf To brutally summarise their conclusion in a single quote, the two found "Strong co-movement between the inverse relative price of gold (and other metals) on the one hand, and the real interest rate on the other. ... " If real rates on bonds, or equities, are high, holders of money have more incentive to use their cash to buy assets. Messrs. Summers and Barsky were developing a theory to explain, in their words, "price levels and interest rates over long periods of economic history," not to be used as the basis for trading tactics. However, the Summers-Barsky model can be reasonably incorporated into a multi-year investment strategy. When real returns are high, the fiat-currency price of gold will stagnate or decline. When real returns have been low or stagnant, as they have been during the past decade, the gold price has been strong. In the past three years, as one rescue operation or monetary stimulus has followed another, the S&P 500 cumulative total return has been less than half of 1 per cent, while the dollar gold price has increased by more than 78 per cent. Right now, thanks to the profligacy of central banks, real interest rates are negative. So why buy the two-year Treasury, let alone T-bills, rather than gold? Conservative capital preservation strategies are now ensuring only capital destruction. The most recent run in gold coincided with the Federal Reserve's QE2 monetary expansion since the Jackson Hole summit in August. Its recent weakness has followed chairman Ben Bernanke's confirmation that QE2 will end on schedule this summer. Cheap money, expensive gold; expensive money, cheap gold. I have my doubts that this moment is comparable to the late conversion of the Carter administration and the Volcker Fed to a strong dollar and tight money. This administration and this Fed are, respectively, not that desperate and not that principled. So this gold (and silver) price correction will be followed by a resumption of the secular bull market. There is another issue with being too dogmatic about gold. Yes, the goldbugs are right: Governments are degenerating, and their paper/electronic money is losing value. But what if the political and social order completely collapse, as many of them expect? Who's going to protect their piles of gold? Without that oppressive and intrusive nanny state, those can be taken by someone with a $600 Kalashnikov. Even with the present price weakness, gold-as-real-money is a useful capital preserver. Over the decades, though, staying in cash rather than earning assets is as pointless as Scrooge McDuck's money bin. 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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| The Contrarian View 9th – 13th May Posted: 08 May 2011 10:39 AM PDT
So why bother with a contrarian outlook? Click me to get some background on these reports A turbulent week across the markets but especially so in the Commodities where we saw some wild swings.
S&P 500 | Commercial Traders Lead this Market| Commercial 61.89 | Large 53.96 | Neutral This weeks COT data shows a neutral set up with both Commercial and Large traders becoming Neutral. The uptrend for the S&P 500 remains very much intact; however the new highs we saw week ending 29th April are not being supported by Commercial traders.
EURUSD | Large Traders Lead this Market| Commercial 0.00 | Large 100.00 | Bullish FX Retail Trader Positioning Analysis - 45.51% Long | 54.49% Short | Neutral COT data as we provides information on the open interest of the Tuesday that it is collected and released 3 days later on a Friday. As a result the Euro COT will not be able to represent the 2 day sell off we say at the end of the week. However it is worth noting that the COT from Tuesday remains incredibly bullish, so it’s likely we are not quite seeing the end of the Euro bullishness. Short term speculation is unlikely to dampen wider fundamental realities. On the flip side of the coin supporting a more neutral view is the Retail Trader Positioning Analysis which shows a neutral set up.
GBPUSD | Large Traders Lead this Market| Commercial 14.72 | Large 67.37 | Neutral FX Retail Trader Positioning Analysis - 44.79% Long | 55.21% Short | Neutral Last week we finally got a bullish COT set up for the GBPUSD, unfortunately it did just scrape the set up in the week ending 29th April and we saw some selling that quickly took the COT set up back into neutral. Retail Trader Analysis also supports a more neutral view
GOLD | Large Traders Lead this Market| Commercial 52.02 | Large 43.65 | Neutral We’ve seen a neutral COT set up with Gold for a while and this set up remains very much in play.
OIL | Large Traders Lead this Market| Commercial 22.35 | Large 76.70 | Slightly Bullish We saw very strong selling in Crude last week; we’ve seen an amazingly bullish Crude COT, this week despite still technically being a bullish set up Large traders have pulled back to an index rating of 76.70, a few points lower and we would be in neutral territory. Provided by Pivotfarm Support & Resistance. Redefined. Thanks to timingcharts.com
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| Get Even — Join Max Keiser’s SLA (Silver Liberation Army) campaign — crash JP Morgan Posted: 08 May 2011 10:02 AM PDT Share this:
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| Industrial Metals to Gold Ratio - A Warning? Posted: 08 May 2011 09:07 AM PDT
 I like ratio charts to give a sense of relative value. This is important to me because we live in an anchorless fiat world where price is not meaningful in a vacuum. Gold is the global monetary anchor, whether paperbugs care to understand/believe it or not. I have always liked the copper to Gold ratio but other industrial metals in their ratio to Gold can give similar information. I find the current chart of the $GYX (an industrial metals index) when priced in Gold (i.e. a $GYX:$GOLD ratio chart) rather interesting. Here is a log scale ratio price chart of $GYX:$GOLD since 2003:  The last major trend line break was a warning signal for the end of the last cyclical general equity bull market. Will history repeat? I believe it will but I have no interest in shorting the stock market at this time. I may after a confirmed major trend line break in general equity indices and a subsequent relief rally higher, but not now. Pricing things in Gold is an important concept for those who hold physical metal. It is shocking to see how much the Dow Jones and housing prices have declined in Gold terms since their peak. The nominal declines are much less severe. This is why printing is the best way out for governments around the world. It worked in the 1970s and it might just work again. The problem for the U.S. is that its problems are much bigger this time around than in the 1970s, so that the amount of monetary inflation needed to combat the ongoing economic problems is much greater. If the Dow Jones Industrial Average is at the 10,000 level in 10 years but a loaf of bread costs $15 at that time, many people will be fooled into thinking things aren't that bad. The boiling frog analogy is apropos here. Private debt is being extinguished by putting it on the public books! This is high treason right in front of our eyes, but it will continue. Consider Fannie Mae and Freddie Mac needing $259 billion from taxpayers to bail them out. Now this $259 billion is a current number and it will go higher before the real estate bust is over - count on it since the government now backs 85% or so of all mortgages in the United States. When you transfer all that bad debt to the government balance sheet, you weaken the currency. U.S. Dollar-centric deflationists assume that the laws will be followed and that what is reasonable and appropriate will be at least a minor consideration. These assumptions are erroneous, as recent policy decisions and policymaker law breaking have shown. What if almost all the bad debt created and/or held by "the friends of Angelo" [i.e. Angelo Mozillo of Countrywide], by which I mean to sarcastically refer to the major financial corporations of America, is placed on the government balance sheet? Gold is a buy at current levels. The current monetary system will be replaced before this secular equities bear market is over, whether in 5 years or 15. The best way for the average person to protect their financial wealth is to buy and hold physical Gold outside the banking system. Other precious metals should also do well and may do even better, but they carry a higher risk. The longer the chaotic policy response to unavoidable economic outcomes continues, the higher the chance that the Dow to Gold ratio will fall below 1 this cycle and the higher the likelihood that this ratio will bottom with Gold in 5 digit territory.  ![[Most Recent Charts from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_4.gif) 
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| Posted: 08 May 2011 08:48 AM PDT Greetings fellow SLA members, It is my belief the time has now come to put a fresh and beautiful face to the Silver Liberation Army’s battle against all that evil in this world. To confront such enormous evil we need … Continue reading
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| “The Comex monopoly appears to be over.” Posted: 08 May 2011 08:45 AM PDT Hong Kong Mercantile Exchange’s 1 Kilo Gold Contract To End Comex Gold Futures Trading (And “Bang The Close”) Monopoly Share this:
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| Whatever it’s valued at one day to another in paper money is irrelevant Posted: 08 May 2011 08:42 AM PDT Hathaway – Gold & Silver to Explode Again Share this:
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| It’s the End of the Dollar as we Know It (Do we Feel Fine?) Part 2 of 3 Posted: 08 May 2011 07:57 AM PDT Continued from part one. So what might such a 'dollar crisis' look like, how would the US government likely respond, and what impact should we expect this to have on financial markets? While we do not purport to have the specific answers to these questions, there are some general considerations we can discuss with some reasonable confidence. First, let's define 'dollar crisis'. While dollar weakness certainly plays a role, what really matters is the impact that this has on US government financing costs. When these rise to levels that cannot be serviced without resort to direct debt monetization by the Fed, you have a crisis. Now imagine if you will that as the dollar slides, major global buyers of US Treasuries and other dollar securities gradually withdraw from the market in favor of alternative currencies or, perhaps, gold reserves. They needn't sell their existing holdings, mind you, rather merely reduce or cease ongoing purchases. As US borrowing costs rise, all the current assumptions about US debt serviceability must necessarily be re-evaluated for a higher rate environment. While there is no magic number, in the event that Treasury yields rise back above 5% or so, chances are that financial markets begin to price in a materially higher risk premium for holding US debt. In a self-reinforcing spiral, unless the US government takes swift and credible action to restore confidence in debt sustainability–that is, a convincing program to reduce the deficit–what might have been a gentle and orderly if concerning rise abruptly becomes sharp and disorderly. At this point, desperate measures will be on the table. First of all, most likely the Fed implements some sort of 'emergency' program of Treasury bond buying, perhaps a cap on yields at 5% or so, in order to buy some time. The problem with capping yields, however, is that if the market clearing yield is higher than the cap, then the Fed becomes the 'buyer of last resort' and, in short order, finds itself holding the bulk of US Treasury market debt outstanding. While this would no doubt lead to (increasingly appropriate) comparisons with banana republics, the US Fed and government would nevertheless continue to try to exude an aura of being in control of the situation as investors dump Treasuries and the Fed's balance sheet explodes. Second, as foreign investors flee US Treasuries and most probably other US assets, domestic investors are highly likely to attempt to do the same. This is when the US government probably imposes some form of capital controls, making it essentially impossible and perhaps outright illegal for US investors to purchase foreign assets. Not only the US but also most countries facing such dire economic circumstances have resorted to comparably desperate measures in response to past economic crises, so extreme actions of this sort should not be ruled out but rather anticipated. Third, the government may try to make life more difficult for so-called 'speculators', that is, people trying to protect themselves by reducing their exposure to devaluing dollars and risky Treasury securities. For example, they might restrict investors' access to precious metals in various ways. In doing so, US government officials will most probably draw some sort of arbitrary line between those institutions still allowed to transact in precious metals–the big banks–and those not so allowed, such as private investors and households. While such double-standards are no doubt arbitrary, unconstitutional and simply unfair, such actions have 'legal' precedent and, as such, may well come into force at this stage. While capital controls and curbs on 'speculators' might also buy some time for the US government to try and restore some degree of stability in financial markets, in fact they will just bring the day of reckoning closer. Indeed, the very idea of the world's pre-eminent reserve currency being subject to capital controls is downright farcical. Unless rescinded in short order, capital controls will lead to the US not only losing reserve currency status but probably becoming something of a global economic pariah. As such, expect any discussion of capital controls to be couched in 'temporary', 'emergency' language, although we doubt that such rhetoric will prevent the Chinese, Russians, Indians, Brazilians, Europeans and probably also OPEC nations from forming new associations and alliances to offset the loss of investment and trade with a United States rushing headlong into masochistic, counterproductive economic nationalism. As for the broader impact of curbs on 'speculation' in precious metals and possibly also other commodities, such policies will quickly drive global commodity trading offshore, most probably to locations historically keen to acquire such business from the US, including London, Switzerland, Singapore, Shanghai, Hong Kong, Moscow and Dubai. Yes, the US government will no doubt be able to mandate, by executive fiat, who, what, and at what price various commodities will be traded on US exchanges, but to the extent that the rest of the world thinks the price of something should be higher (or the dollar lower), the associated transactions will take place elsewhere until, inevitably, the bulk of exchange activity emigrates to friendlier jurisdictions abroad. As one desperate time-buying measure after another approaches its effective expiry date, the next step could be for the US to open negotiations with foreign creditors to restructure its debt, something which might well prove politically impossible, even with the best of intentions. Alternatively, and more in keeping with US and global economic history, the US might simply impose a settlement forcing foreign and possibly also domestic creditors take a huge 'haircut' on their holdings of Treasury debt. Although obviously a default by any other name, no doubt the US will call it something else. (We suggest TOUGH, or 'Treasury Obligations Under General Haircut', given the historical proclivity of US authorities to employ euphemistic acronyms when implementing unprecedented and counterproductive economic policies.) At any stage of the above process, and highly likely to occur in our opinion, the US may simply do away with such shenanigans and devalue the dollar unilaterally in some fashion and to a level which, in theory at least, would be sustainable and allow for the US to service, with reasonable confidence, its accumulated debts in sharply devalued dollars. Indeed, the US has done exactly this before. In 1934, FDR unilaterally devalued the dollar by some 60%. In the early 1970s, President Nixon removed the anchor to gold entirely, claiming that this would not be inflationary. More recently, any objective analysis would conclude that the US has had an unstated policy of dollar devaluation since at least 2004 if not earlier, as that was around the time that the US started to attack China's exchange rate policy and, by implication, that of any other country which chose to maintain stable rather than appreciating exchange rates vis-a-vis the weakening dollar. Continued in part three. Regards, John Butler, [Editor's Note: The above essay is excerpted from The Amphora Report, which is dedicated to providing the defensive investor with practical ideas for protecting wealth and maintaining liquidity in a world in which currencies are no longer reliable stores of value.] It's the End of the Dollar as we Know It (Do we Feel Fine?) Part 2 of 3 originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Bill Bonner, the founder of the the Daily Reckoning released his latest book Dice Have No Memory: Big Bets & Bad Economics From Paris to the Pampas in April 2011.
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| Posted: 08 May 2011 06:40 AM PDT
30 years ago, Bunker Hunt, while trying to demand delivery for virtually every single silver bar in existence, and getting caught in the middle of a series of margin hikes (sound familiar), accused the Comex (as well as the CFTC and the CBOT) of changing the rules in the middle of the game (and was not too happy about it). Whether or not this allegation is valid is open to debate. We do know that "testimony would reveal that nine of the 23 Comex board members held short contracts on 38,000,000 ounces of silver. With their 1.88 billion dollar collective interest in having the price go down, it is easy to see why Bunker did not view them as objective." One wonders how many short positions current Comex board members have on now. Yet by dint of being a monopoly, the Comex had and has free reign to do as it pleases: after all, where can futures investors go? Nowhere... at least until now. In precisely 9 days, on May 18, the Hong Kong Mercantile exchange will finally offer an alternative to the Comex and its alleged attempts at perpetual precious metals manipulation. From Commodity Online:
And while the Chinese market is far more bubbly when it comes to gold and silver purchases, it remains to be seen just how happy a gambling addicted Chinese population will take to spurious and conveniently timed margin hikes that take the air out of the next parabolic move up in gold and silver (our guess is not very). Far more importantly, the Comex monopoly appears to be over, and going forward the exchange will have to be far more sensitive about angering broad swaths of the population using 5 consecutive margin hikes in 9 days. The new exchange will also make the now traditional "banging the close" operation (or "banging the whatever" as the May 1 15% drop from $49 to $42 in minutes demonstrated) obsolete, as traders will have options of where to route orders from the hours of 0800 HKT to 2300 HKT. Bottom line: if Chinese demand for gold and silver is as strong as it was a week ago, and it is, the recent Comex-directed plunge in precious metals is about to the BTFDed. From the HKMex:
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| Wall St. Banks hold dominion over Ireland and profit from its collapse Posted: 08 May 2011 06:00 AM PDT Morgan Kelly On How Ireland Can Save Itself From Bankruptcy The haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over … Continue reading
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| Posted: 08 May 2011 05:43 AM PDT Jim Sinclair's Mineset - Jim’s Mailbox Dear Jaime, If you continue your pestering, I will cut your grass. Jim
Gold & Silver: The Path To Concentration of Funds The probability of higher-order trend acceleration increases once the upper channel resistance has been breached. Money has been supporting the breakout by repositioning from short to long as previous resistance is tested as support. This suggests that "Three Taps and Out" should be resolved and confirmed by June 2011. Gold London P.M Fixed And Gold Diffusion Index (DI) By way of comparison, silver's trend accelerated substantially with the breach of its 2003 upper channel. This acceleration (breakout) is marked by the green circle below. Silver London P.M Fixed and the Silver Diffusion Index (DI) While the headline analysis and Street chatter the new flavor of the day – fear, they always miss the quiet movement of money. Money continues to reposition against the grain of consensus. That is, rather than long from short, money is moving from short to long. The devastating decline yet to be recorded in the COT data should extend the formation of the bullish setups already underway. Strong hands continue to aggressively cover their shorts. Silver London P.M Fixed and the Commercial Traders COT Futures and Options ZScore Weighted Average of Long & Short As A % of Open Interest Money flows are beginning to show concentration. It's not statistically extreme, but it's close. Concentration of funds by 'strong hands' will provide the fuel for the next advance. Silver London P.M Fixed and the Commercial Traders COT Futures and Options ZScore Weighted Average of Net Long As A % of Open Interest Example of Flavor of the Day Headline It's been a volatile week for commodities and Russ Koesterich, BlackRock iShares Group says silver may still be overvalued despite its steep decline. Source: custom.yahoo.com
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| Twitter Weekly Updates for 2011-05-08 Posted: 08 May 2011 05:30 AM PDT [LIST] [*]New article posted on munKNEE: [URL]http://www.munknee.com/2011/05/richard-russell-demise-of-the-yankee-dollar-vs-the-rise-in-gold/[/URL] # [*]New article by Chris Puplava: [URL]http://www.munknee.com/2011/05/what-the-1970s-performance-of-gold-silver-and-usd-says-about-tomorrow/[/URL] # [*]New article! [URL]http://www.munknee.com/2011/05/why-hyperinflation-is-not-likely-let-alone-imminent/[/URL] # [*]New Article on Gold and Silver [URL]http://www.munknee.com/2011/05/%e2%80%9cthree-peaks%e2%80%9d-pattern-suggests-gold-to-decline-17-into-june/[/URL] # [*]Not too late to buy gold! [URL]http://www.munknee.com/2011/04/goldrunner-gold-on-track-to-reach-1860-1920-by-mid-year/[/URL] # [*]An opposite point of view: [URL]http://www.munknee.com/2011/05/america-is-bankrupt-claim-is-total-nonsense-heres-why/[/URL] # [/LIST] Powered by Twitter Tools ...
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