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Sunday, May 1, 2011

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saveyourassetsfirst3

Secret Silver Buying by Russian Billionaire, Chinese Traders…

Posted: 01 May 2011 07:00 AM PDT

Silver Backwardation Doubles Overnight

Posted: 01 May 2011 01:19 AM PDT

Tyler Durden's latest on Zerohedge:

http://www.zerohedge.com/article/sil...bles-overnight

fyi, R.

Sell in May? Commodities- Yes, Stocks and Bonds- No

Posted: 01 May 2011 12:47 AM PDT

The Simple Accountant submits:

After the short holiday week, the final week in April was much more eventful in the U.S. markets: Lots of economic data, a press conference with Fed Chairman Bernanke following the FOMC meeting, another slide in the U.S. Dollar index, extended gains in risk assets, and more indifference in the bond market. Let's get into the numbers and then look at where we might be going in May and beyond.

Week in Review

Stocks: The major U.S. indexes posted another week of solid gains, with most advancing in the 2% range or better. The NDX was a bit of a laggard, gaining only 1.1%, as it was held back by the rebalancing of the index as well as poorly received earnings outlooks from the likes of Microsoft (MSFT) and Research in Motion (RIMM). The Dow transports powered ahead with a better than 4% gain to confirm the move in the


Complete Story »

Not All Emerging Market Currencies Are Equal: Expect the Gap to Widen

Posted: 30 Apr 2011 11:55 PM PDT

ForexBlog submits:

A picture is truly worth a thousand words. [That probably means I should stop writing lengthy blog posts and instead stick to posting charts and other graphics, but that's a different story...]

Take a look at the chart below (click to enlarge images), which shows a handful of emerging market ("EM") currencies, all paired against the US dollar. At this time last year, you can see that all of the pairs were basically rising and falling in tandem. One year later, the disparity between the best and worst performers is already significant.

In this post, I want to offer an explanation as to why this is the case, and what we can expect going forward.

In the immediate wake of the credit crisis, I think that investors were somewhat unwilling to make concentrated bets on specific market sectors and specific assets, as part of a new framework for managing risk.


Complete Story »

Parallels to the 1970s Suggest Further Dollar Weakening and Parabolic Move in Gold Ahead

Posted: 30 Apr 2011 11:50 PM PDT

Financial Sense submits:

Written by Chris Puplava

The news last week was dominated by the Fed's historic press conference and the subsequent moves in metals and the dollar. Fed Chairman Bernanke pretty much gave a green light to USD bears and precious metal bulls in once again advancing the illusion that rising commodity prices are in no way related to our weakening currency but purely a byproduct of a strong global economy.

When the world's most powerful monetary authority shows such little regard for dealing truthfully with current realities on the ground, is it any wonder the USD continues to plummet as gold and silver climb even higher?

click to enlarge images

Source: Bloomberg

"Those who fail to learn the lessons of history are doomed to repeat them" – George Santayana

The above famous quote goes hand in hand with another one from Mark Twain, "History doesn't repeat itself, but it does rhyme."


Complete Story »

It Takes Two to Tango: The Fed and ECB in a Bad Faith Dance

Posted: 30 Apr 2011 11:12 PM PDT

Erwan Mahe submits:Ben Bernanke was not exactly straightforward with us when he claimed that the dollar's decline on forex markets ran contrary to the FOMC's policy goals, as he sought shelter behind Treasury Secretary Tim Geithner's comment that a strong dollar is in the interest of the United States.
Those with a long memory may recall that in his 2000 study, Japanese Monetary Policy: A Case of Self-Induced Paralysis, Mr. Bernanke clearly advised the BOJ to depreciate its currency to pull Japan out of the deflation liquidity trap in which it had been stuck for many years.
Check out this quote from Depreciation of the yen:

I agree with the recommendations of Meltzer (1999) and McCallum (1999) that the BOJ should attempt to achieve substantial depreciation of the yen, ideally through large open-market sales of yen. Through its effects on import-price inflation (which has been sharply negative in recent years), on the


Complete Story »

Weekly Market Movers: May 2-6

Posted: 30 Apr 2011 10:36 PM PDT

US employment data and Australian, British and European rate decisions are the main events this week. Here is an outlook for this week's market-movers. Will the blow that the dollar got from Ben Bernanke continue to push the dollar lower? Or will it consolidate as the market is calmer after the news?

Economists believe that Federal Reserve officials will get ready to end QE2 in September's statement by selling the securities it purchased to decrease borrowing costs. However, the current, small continuation of QE2 in the form of QE2 Lite announced just now is a factor weighing heavily on the greenback.

  1. US ISM Manufacturing PMI: Monday, 15:00. The manufacturing sector continued expanding in March, reaching 61.2, a bit lower than the 61.4 reading in February thanks to growth in new orders and production. However, there is a growing fear from inflation in commodity prices. A small drop to 59.9 is

Complete Story »

Chapter 4: Silver Equities

Posted: 30 Apr 2011 05:00 PM PDT

Chapter 5: Alternative Silver Investing

Posted: 30 Apr 2011 05:00 PM PDT

All that glisters is not gold…

Posted: 30 Apr 2011 04:45 PM PDT

Food for thought

The U.S. dollar on the edge of a great cliff! Within a hair of ALL-TIME LOW!

Posted: 30 Apr 2011 04:30 PM PDT

Money And Markets

The Case for a 100 Percent Gold Dollar

Posted: 30 Apr 2011 04:30 PM PDT

Mises.org

Gotterdammerung

Posted: 30 Apr 2011 04:00 PM PDT

Gold University

David Freedom

Posted: 30 Apr 2011 11:50 AM PDT

Britannias

Posted: 30 Apr 2011 09:39 AM PDT

I don't think I've posted Britannia pictures or many coin shots at all since GIM 1. Might as well, some of the new folk may not know what they look like. Got Kookaburras, Pandas, Kangaroos, Pandas, Mexican coins and a bunch of other stuff.

Isn't the gold Britannia just luscious?

David Freedom – 2011 Forecast & Update

Posted: 30 Apr 2011 09:01 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 in the 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 of 2011. 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 Fed impetus 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 attract buyers, 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 $1700. The increased costs of energy and food will contribute to the US slow down. Going forward there will be repatriation of U$Ds by 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.

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 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.

~David Freedom
david@thevictoryreport.org

Blythe..Why are you covering your shorts at 5000 year highs (the "top") if silver/gold are supposed to go down now? Got Tells?

Posted: 30 Apr 2011 06:53 AM PDT

Crimex News: Gold: Deposits to dealer, ZERO Silver: -2166 contracts or 10.83 million oz -Deposits to dealer, ZERO -Straight from Harvey blog: "When you have tiny notices with a large open interest standing certainly is causing headaches for our bankers as they scour the planet looking for metal to satisfy our longs. No doubt Blythe will be very busy this weekend trying to encourage the option
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