Gold World News Flash |
- Gold Up, Silver Up: Turk Was Right. Again.
- Existing Home Sales in U.S. Fell in July
- James Turk Revisted: $400 Silver & $8,000 Gold
- Gold Seeker Closing Report: Gold Gains $30 While Dow Dumps 400
- We Are Inches Away From DEFCON I / Gold Skyrockets to $1818 / Silver Hits $40.69
- Max Keiser: Gold is Not Just a Hedge Against Inflation, It's a Substitute Currency!
- ZERO Fed Funds Fate Equals Undercover QE3
- I SAW WHAT YOU DID
- The Other Side...
- Silver Stuff
- Is Gold Still a Buy?
- Gold Season Starting Soon!
- The Fed bombed the market - I ask, "Why?"
- The Fed bombed the market - I ask, "Why?"
- Panic Resumes: Gold To New Highs, Treasury Yields To New Lows, WTI About To Break $70 And Futures Sliding
- Comex Gold Price Closed at $1,818.90, up $27.70 and Another New All Time High
- Mining Share Ratio To Gold Back At Pre-QE1 Levels
- In The News Today
- Gold Should I Bank Profits
- Mining Share ratio to gold back at pre QE1 levels
- Gold Stocks that Think They’re As Good as Gold
- Forum 1800 - Part 2
- Did Chavez Just Spark the Gold Powder Keg?
- Homes Have Never Been More Affordable (With One Footnote)
- Guest Post: Economically Sleepwalking
- All-Time Highs, All-Time Lows
- Gold Daily and Silver Weekly Charts - La Douleur du Monde
- Is QE3 Already in the Works?
- Stocks Plunge, Gold Surges on Global Concern
- To the newly minted gold bugs
| Gold Up, Silver Up: Turk Was Right. Again. Posted: 18 Aug 2011 06:37 PM PDT It was just two short days ago on Tuesday, August 16th when GoldMoney founder James Turk told Eric King of KingWolrdNews, "We're $1,755 as we speak… but I think we'll be challenging that $1,820 high before the month is over." Flash forward two days and an evening and score another great call for JT:
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| Existing Home Sales in U.S. Fell in July Posted: 18 Aug 2011 06:14 PM PDT http://www.bloomberg.com/news/2011-08-18/existing-home-sales-in-u-s-fell-in-july.htmlBy Alex Kowalski – Aug 18, 2011 9:59 AM ET Thu Aug 18 13:59:03 GMT 2011 Sales of U.S. previously owned homes unexpectedly dropped in July, reflecting an increase in contract cancellations due to strict lending rules and low appraisals. Purchases decreased 3.5 percent to a 4.67 million annual rate, the weakest since November, figures [...] 
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| James Turk Revisted: $400 Silver & $8,000 Gold Posted: 18 Aug 2011 05:03 PM PDT It's important to re-visit the words of wise men. And I've interviewed a lot of them. James Turk is one of those men. I first interviewed James on May 29, 2011. Mr. Turk has long maintained that silver will be valued at $400 USD and gold will be worth $8,000 some time between 2013 – 2015. He has never wavered in that analysis. He has simply repeated it time and time again since gold was less than $350 and silver was $5. He's been dead on so far, care to bet against him? In a world smothering in fiat paper, James Turk's words are words to remember. For your consideration, GoldMoney.com's James Turk: $400 SILVER & $8,000 GOLD THE ROAD TO HYPERINFLATION
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| Gold Seeker Closing Report: Gold Gains $30 While Dow Dumps 400 Posted: 18 Aug 2011 04:00 PM PDT Gold soared to a new record high of $1826.28 by about 10AM EST before it fell back off a bit in the last few hours of trade, but it still ended with a gain of 1.64%. Silver climbed to as high as $40.858 and ended with a gain of 0.87%.
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| We Are Inches Away From DEFCON I / Gold Skyrockets to $1818 / Silver Hits $40.69 Posted: 18 Aug 2011 03:47 PM PDT by Harvey Organ: Good evening Ladies and Gentlemen: Rumours were flying all over the place this morning. We heard that two Italian banks, Unicredit, the largest bank in Italy and Intesa bank were both insolvent. Last night I also provided to you the zero hedge article which suggests that a bank went to the ECB for a handout to the tune of 500 million dollars as it could not get funding anywhere. This morning, news that a banking holiday in Europe is close at hand set the global bourses on a free for all slide. The Dow after being down by over 500 points rallied late in the day to be down 419 points or 3.68%. The Nasdaq was down 131 points or 5.22%. The German Dax was down 346 or 5.8%. The FTSE was down 139 points or 4.74%. The French CAC was down 178 points or 5.48%. Read More @ HarveyOrgan.Blogspot.com
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| Max Keiser: Gold is Not Just a Hedge Against Inflation, It's a Substitute Currency! Posted: 18 Aug 2011 02:53 PM PDT | ||||||||||||||||||||||||||||||
| ZERO Fed Funds Fate Equals Undercover QE3 Posted: 18 Aug 2011 02:52 PM PDT Economists see growing risk of global recession- AP NO WAY! Shocking revelation, that. A funny thing happened in the stock market slaughter today. Silver went up! Recall during last weeks equity market carnage, Silver was savaged along with all the other "industrial commodities". Today was different. Has Silver begun to assert it's monetary status, following in Gold's footsteps? Perhaps... By Gene Arensberg, Got Gold Report Combined COMEX commercial traders and Swap Dealer net buying in part responsible for $37 silver support. HOUSTON – The CFTC commitments of traders (COT) report for last week showed that commercial traders covered or offset a considerable amount of their net short positioning in gold futures as we reported in these pages yesterday. The report also showed a similarly large 'get-out' by the commercial traders in silver, but that's not the only thing analysts find interesting in the government reports covering the positioning of the largest metals futures traders. As silver fell $3.25 or 8% Tuesday to Tuesday (the cutoff for COT data released each Friday), to close at $37.52 on the Cash Market, the collective net short positioning of the traders the CFTC classes as 'commercial' (LCNS) dropped by a very large 9,247 contracts or 20.7% from 44,588 to 35,341 contracts net short. It is interesting to note that in the five reporting weeks from June 28 to August 2, as silver traveled from $33.91 to $40.77 (+$6.86 or 20.2%) the combined commercials, which include the Producer/Merchants and Swap Dealers, increased their net short bets on silver futures by 15,422 contracts, each covering the action of 5,000 ounces of silver metal. Thus, in the five weeks prior to this latest report, as silver rose just under $7, the Big Sellers of silver futures added about 77.1 million ounces worth of bets that would benefit if silver fell in price. As we noted above, in the past reporting week, as silver gave back $3.25 or roughly half of the 5-week price advance, the combined commercials covered or offset contracts representing 46.2 million ounces or roughly 60% of what they put on net short for the period. For each $1.00 drop in the price of silver, the combined commercial traders covered or offset about 14.2 million ounces worth of futures contract net short exposure. Swap Dealers were adding to their net long positioning in silver as they were covering their net shorts in gold. Bottom line: The COMEX combined commercial futures traders strongly reduced their net short positioning for silver futures on that $3.25 drop in the price of silver and the Swap Dealers increased their long position significantly. Since then the price of silver has crawled its way back to almost where it was the prior Tuesday, so the commercials apparently had good instincts when they decided to get smaller on the short side with silver in the $37s. We can say that their short covering and the Swap Dealers long position taking helped to put the floor under silver in the $37s instead of a lower mark, can we not? And can't we then say that it looks like the largest, best funded and presumably the best informed traders of silver futures were positioning more for higher prices than lower prices as silver only dipped to the $37s? We certainly cannot say that the Big Sellers were even net sellers over the past week. They were net buyers instead. Is the hand writing on the wall? Has the enemy sought asylum in the Silver Bull's camp? Time will tell...  ...and what more could be said about Gold... Blue Sky Baby! As each day now passes, Gold asserts itself not only as the "currency of choice", but The Currency Of Last Resort! Fiat = Debt, Gold = Freedom. At 8PM est, Gold hits yet another new ALL-TIME high of $1836. Another down day on Wall Street, and the cries for QE3 again grow louder, but fall on deaf ears. There will be no "announced" Fed monetary support mechanism. Everybody wants one...expects one to be announced at any time...and that is why there will not be one. That side of the boat is too full: From Zero Hedge, via Phoenix Capital Research The primary reason the markets have held up since QE 2 ended was because the bulls believe QE 3 is coming soon. I myself believe this is true (that QE 3 is coming) but it's going to take a lot more for it to arrive than most expect. Why are so many pining away for QE3, when QE2 was such a dismal failure? Other than propping up the banks, AND the stock markets, QE2 did little to "boost the economy", but it did a lot to boost stock and commodity prices. And everybody should know by now that a rising stock market is hardly indicative of a strong and growing economy. The Fed spent $900 Billion dollars on QE2 between November 2010 and June 2011 and got less than 1% GDP growth out of the economy in the first half of 2011. Americans are brainwashed into believing that a strong stock market equals a strong economy...pure bullshit. QE2, QE3, 4, 5, or 6...it doesn't matter, they are not intended to "boost the economy". Quantitative Easing is intended solely to prop up the banks, increase asset prices, AND fund the ever growing debt of the USA. What if I told you QE3 is here now, and in full swing as I type this, and you read it? These Fed guys may seem dumb, but they ain't stupid. In fact, they are down right sinister. Bumbling Ben Bernanke's decision to keep the Federal Funds rate at 0% for the next two years is QE3 in disguise. Many have wondered who the US Treasury would sell their new debt to, following the raising of the debt ceiling. "Why the Fed, of course. They have bought 70% of the debt the USA has issued in the past year already." That looks good on paper, but, one, it is politically unacceptable today, and two, their is reluctance among the Fed governors for the Fed to add to their billowing balance sheet by purchasing more US Treasury debt. There will be no "announced" QE3, but there will be a backdoor purchase of the US Debt by the Fed...indirectly, QE3 "undercover". It won't do much for the stock market, but it will go a long ways towards financing the USA's debt appetite...and inflating asset prices [except for real estate]. Sadly, the Undercover QE3 will be as ineffectual at boosting the economy as QE2 was. Undercover QE3 will actually do more harm to the economy, than it will do any good. With Undercover QE3, the Fed will print money, give it to the banks for free, they will increase their borrowed amount with leverage, and use the money to buy US Treasury debt that nobody else wants. The potential for hyperinflation is exponential within Undercover QE3, AND the Fed further becomes the facilitator of a choking debt sure to bury America alive. By: Peter Schiff Moving past the previously uncertain pronouncements that they would "keep interest rates low for an extended period," the Fed now tells us that rates will not budge from rock bottom for at least two years. Although the markets rallied on the news (at least for a few minutes) in reality the policy will inflict untold harm on the U.S. economy. The move was so dangerous and misguided that three members of the Fed's Open Market Committee actually voted against it. This level of dissent within the Fed hasn't been seen for years. Many economists have short-sightedly concluded that ultra low interest rates are a sure fire way to spur economic growth. The easier and cheaper it is to borrow, they argue, the more likely business and consumers are to spend. And because spending spurs growth, in their calculation, low rates are always good. But, as is typical, they have it backwards. It was bad enough that the Fed held rates far too low, but at least a fig leaf of uncertainty kept the most brazen speculators in partial paralysis. But by specifically telegraphing policy, the Fed has now given cover to the most parasitic elements of the financial sector to undertake transactions that offer no economic benefit to the nation. Specifically, it will simply encourage banks to borrow money at zero percent from the Fed, and then use significant leverage to buy low yielding treasuries at 2 to 4 percent. The result is a banker's dream: guaranteed low risk profit. In other words it will encourage banks to lend to the government, which already borrows too much, and not lend to private borrowers, whose activity could actually benefit the economy.This reckless policy, designed to facilitate government spending and appease Wall Street financiers, will continue to starve Main Street of the capital it needs to make real productivity-enhancing investments. American investment capital will continue to flow abroad, denying local business the means to expand and hire. It also destroys interest rates paid to holders of bank savings deposits which traditionally had been a financial pillar of retirees. In addition, such an inflationary policy drives real wages lower, robbing Americans of their purchasing power. The consequence is a dollar in free-fall, dragging down with it the standard of living of average Americans. Think about this for a moment. The banks profit... at no risk ...borrowing FREE money from the Fed, and purchasing US Treasury debt that nobody wants. And all the while the Fed says they are keeping interest rates at ZERO in the hopes that this will "promote growth" in the economy? How dumb are Americans? Guess who pays the 4% interest to the banks for their risk free profits by buying US Debt with FREE money? American Tax Payers! Outraged yet? A 4% return on $1.5 TRILLION is $60 BILLION right out of the American taxpayers pocket. Thanks Ben! From The Burning Platform I wonder what goes through Ben Bernanke's mind as he sits in his gold plated boardroom in the majestic Marriner Eccles building in Washington DC and decides to screw grandmothers in order to further enrich Wall Street bankers. He just pledged to keep interest rates at zero percent for two more years. Ben is a supposedly book smart man. Does he have no guilt or shame for what he has wrought? How does he sleep at night knowing he has created bloody revolutions around the globe due to his inflationary zero interest policy? People are dying because he has decided that an elite group of Wall Street bankers who recklessly brought down the worldwide financial system in 2008 deserve to be kept alive and enriched at the expense of the many. He uses words like transitory to describe inflation. Even as the price of gold reveals his lies he continues to promote policies that will lead to the demise of the USD and our economic system. There is only one way to counter his lies – truth. With a corporate fascist government run by the few for the benefit of the few, telling the truth is treason as stated by Ron Paul: "Truth is treason in the empire of lies." The storyline being sold to you by Bernanke, his Wall Street masters, and their captured puppets in Washington DC is that deflation is the great bogeyman they must slay. They make these statements from their ivory jewel encrusted towers as the real people in the real world deal with reality. The reality since Ben Bernanke announced his QE2 policyhis Wall Street masters, and their captured puppets in Washington DC is that deflation is the great bogeyman they must slay. They make these statements from their ivory jewel encrusted towers as the real people in the real world deal with reality. The reality since Ben Bernanke announced his QE2 policy in August 2010 is: •Unleaded gas prices are up 45%. •Heating oil prices are up 46%. •Corn prices are up 71%. •Soybean prices are up 26%. •Rice prices are up 13%. •Pork prices are up 31%. •Beef prices are up 25%. •Coffee prices are up 38%. •Sugar prices are up 48%. •Cotton prices are up 13%. •Gold prices are up 42%. •Silver prices are up 115%. •Copper prices are up 23%. These are the facts and they fly in the face of the lies being spouted by Bernanke and his Federal Reserve cronies. Words like transitory, quantitative easing, extended period, and liquidity are used by Professor Bernanke to obscure what he is doing to the average American. "The official inflation rate is 3.6%, but anybody with an IQ above 70 knows that's a statistical lie." - Greg Hunter, USAWatchdog According to economist John Williams of Shadowstats.com, the true annual inflation rate is around 11% (if calculated the way Bureau of Labor Statistics did it in 1980). If you are a "saver", an interest rate of 2% [if you are lucky] will not protect your savings in an environment with 11% inflation. In fact, your real return on your savings would be negative 9%. You would lose $9 of purchasing power, for every $100 you had in savings. I would consider that theft, wouldn't you? The Precious Metals thrive in a negative interest rate environment: By Andy Hoffman RANTING ANDY – In all the hype around the early August Fed meeting, yet again the entire investment world (and clueless media, of course) completely misunderstood the RAMIFICATIONS of the policy statement. Let's not get into the fact that the Fed prints VASTLY more money than it purports, sending trillions to insolvent banks and market manipulation activities each year, on a 24/7 basis, as well as to fraudulent offshore entities such as the "Caribbean banking centers" that mysteriously emerged in recent years as enormous U.S. Treasury bond buyers. Heck, we're no longer in the "Sunday Night Special" phase of collapse, but frankly an "EVERY DAY AND NIGHT SPECIAL" phase, not just in the States but all of Europe, Japan, and nearly the entire FIAT-DISEASED WORLD. Aside from the COVERT money-printing noted above, the Fed has an OVERT money-printing policy, which at this moment "the Street" erroneously believes engenders ONLY the reinvesting of interest payments into the Treasury market. However, what the Street does not understand is that maintaining the Fed Funds rate at 0% entails MASSIVE, DAILY PURCHASES OF TREASURY SECURITIES WITH FRESHLY PRINTED MONEY. This is "daily QE", not to be confused with the "supplemental QE" involved with a $600 billion Treasury/MBS repurchase program, the latter of which was referred to as "QE2." But this "daily QE" is the essence of "QE to Infinity", and thanks to the Fed's INCREDIBLY MORONIC statement last week, is now GUARANTEED to occur for at least two more years (if the dollar lasts that long). David Stockman: Rick Perry Is Right, the Fed Is "Totally Wrong"[MUST WATCH VIDEO] Stockman, who has long been a critic of the Fed's low interest rate policy, says it is "totally wrong." Stockman says "exceptionally low" interest rates have resulted in excessive speculation on Wall Street "that is utterly destroying our capital markets" and adding to the already unsustainable debt crisis. He goes on to say, "The fact is the Fed is the number one problem holding back this economy, punishing savers, savaging low income people trying to buy food, energy or fuel." By Daniel Indiviglio Its latest policy to keep interest rates near zero through mid-2013 could backfire and prevent home sales instead of encouraging them. Basic economic theory says that when mortgage interest rates are low, consumers should feel more encouraged to buy a home. But right now, that intuitive theory might not hold. Kathleen Madigan at Real Time Economics proposes that the Federal Reserve's latest proclamation -- that short-term interest rates would be kept near zero through mid-2013 - might discourage home buying. Could this be possible? This might seem like a backwards idea. To be sure, the last thing that the Fed would aim for is to make the housing market worse off. So why would it allow one of its policies to keep home sales artificially low? This might be an unfortunate and unintended consequence of its desire to calm the broader market. The logic works here because home prices are declining. Nobody is sure how far they might fall or when they'll finally hit bottom. But we can feel fairly confident that prices aren't there yet. But what do we now know? Interest rates will be low for another two years. So why hurry to buy a home now? Savvy potential home buyers who can wait the market out now have a good reason to do so. They don't have to worry about interest rates rising before the market bottoms. Instead, they can wait for the market to continue to decline. If it appears to bottom out in the next two years, then they can step in and finally buy at that time. But if prices keep declining over this period, then they'll be smart to buy in the first half of 2013, just before interest rates might begin rising. In the near-term, you might be better off waiting. This actually makes a lot of sense. Prior to the Fed's August revelation, one of the best arguments for why it might make sense to buy a home in the near future was that interest rates will rise. As long as the
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| Posted: 18 Aug 2011 02:21 PM PDT I ASKED YOU TO BEHAVE FOR ONE DAY, AND THIS WAS YOUR RESPONSE. It looks like I'm losing control of this site. I go away for one day and return to find soft porn, disgusting pictures and the stock market crashing and gold soaring. Nice!!! After 8 hours on the road, I'm toast. I'll post about [...]
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| Posted: 18 Aug 2011 02:00 PM PDT
 I always smile when I see some mainstream article about a market rout or discussion of a market swoon on "TOUT" (i.e. sucker) television. They love to show a distressed professional trader on the stock market trading floor after the markets are down. Something like this:  The flip side of this guy is the Gold bull out there with physical metal that knows enough not to trust the stock market. For every sad guy (and gal) on the NYSE floor getting hammered, there are others out there growing in number that look like this:  Sorry, but we traders and investors out here ain't all fraught with despair over the current market movements. Those crazy, weird people who invested in shiny hunks of metal with no intrinsic value (according to CNBC) are doing quite well, thank you. And as the Dow to Gold ratio descends upon 2, and we may well go below 1 this cycle, we out here eating physical Gold will continue to smile at not falling for the fraud that is known as Wall Street and for doing our homework on where we are in this economic cycle from a long-term perspective.  ![[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: 18 Aug 2011 01:50 PM PDT [url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] I wanted to post a few comments about the Silver market for some of those who have been asking me to do so. As mentioned in previous posts here, silver is finding itself caught in a war between those running out of risk trades who are selling commodities and equities, and those who are buying it as a safe haven metal. That tug of war has prevented it from surging alongside of gold but nonetheless, even in the face of such selling, it has been attracting enough buyers that its technical chart picture is slowly but steadily improving. I want to first note that it has regained its footing above the 50 day moving averaage having bounced firmly off of that key technical level last week. Since then it has established a nice little uptrend which has taken it back to the region where it has encountered selling resistance over the last month or so. I am speaking specifically about the region near and j...
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| Posted: 18 Aug 2011 01:21 PM PDT Bill Bonner View the original article. August 18, 2011 09:58 AM The price of gold jumped above $1,800 today. We can imagine $2,000 by the end of the year. Meanwhile, Wells Fargo, among others, is warning of a 'bubble' in gold. Is there a bubble in the gold market? An AP report explains why people are buying gold: In October 2007, it sold for about $740 an ounce. A little over a year later, it rose above $1,000 for the first time. This past March, it began rocketing up. On Wednesday, it traded above $1,793 an ounce, just shy of last week's record of $1,801. Meanwhile, stocks, despite rising sharply in the last two and a half years, are only slightly higher in price than they were a decade ago. Since hitting a record high in October 2007, the Standard & Poor's 500 index is down 23 percent. Gold hits a sweet spot among the elements: It's rare, but not too rare. It's chemically stable; all the gold ever mined is still around. And it can be divided into small amounts without losing it...
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| Posted: 18 Aug 2011 01:00 PM PDT There is a gold season but it has been changing its character for a while now, being swamped by the structural changes the gold world has experienced particularly over the last few years. To see the impact of the gold season may not be as easy as it was before. What is this gold season and what are the changes that are affecting its impact on the gold price now?
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| The Fed bombed the market - I ask, "Why?" Posted: 18 Aug 2011 12:52 PM PDT Last evening I got the WSJ breaking news story that busted the global capital markets today. Note the time, 8:06.  Look at the immediate consequence to the EURDLR fx rate. There are big gaps down for EUR shortly after the story hit the tape in Asia. That knee jerk reaction was the same market "read" that gutted a number of Euro banks today:  I looked at the WSJ story and concluded that it was a game changer. I wrote Tyler Durden at Zero Hedge about this. The "Re:" that I used was: Stink on Shit TD responded: Obviously a plant. ZH had a piece today on the WSJ story that caused all the trouble. The "plant" theme was repeated. from the ZH article: Why would (the Fed) use its traditional mouthpiece the WSJ to spread fear? Tyler answers his own question with: Why QE3 of course. .
I) Was the WSJ story a plant? IMHO opinion this was a plant. The author was Carrick Mollenkamp. This guy is a seasoned pro. This story was vetted at the highest levels at the WSJ. The editors knew full well the implication of this article. Every 'i' was dotted and all quotes were checked. There are no mistakes in this article. But who were those "sources" that the WSJ hung their hat(s) on? This was one of the biggest stories of the year. Who are the readers of the WSJ supposed to rely on regarding the serious issues raised in the article? Easy. No one is the answer. These are the attributed sources for the guts of the story:
That, for me, answers #s I & II above. But it begs the question, "Why"? Is it remotely possible that the Fed deliberately engineered a collapse in markets in order to get the necessary political "cover" to initiate some new massive monetary policy as TD suggeted? There is one possible clue in the article that points to this conclusion:
What is QE? It can be anything that stimulates the price, velocity and availability of money. It does not have to be LSAP (traditional QE) or an extension of ZIRP. It can take other forms. The most convenient of which is to open the Fed's $ swap lines to the Euro banks. We may get this development by Monday morning. My take on this is that the Fed manipulated the news. It did so very deliberately. The Fed had an agenda; they did whatever they thought necessary to gain acceptance for what they have up their sleeve. That's my take on this story. We may never know the truth. I wonder if Governor Perry understands this stuff. If he did, and he got the facts on this "out there" he would have a very big cannon to shoot. If the Fed did manipulate both the press and the markets to justify its actions it would be a very big deal indeed. . 
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| The Fed bombed the market - I ask, "Why?" Posted: 18 Aug 2011 12:52 PM PDT
Last evening I got the WSJ breaking news story that busted the global capital markets today. Note the time, 8:06. Look at the immediate consequence to the EURDLR fx rate. There are big gaps down for EUR shortly after the story hit the tape in Asia. That knee jerk reaction was the same market "read" that gutted a number of Euro banks today: I looked at the WSJ story and concluded that it was a game changer. I wrote Tyler Durden at Zero Hedge about this. The "Re:" that I used was: Stink on Shit TD responded: Obviously a plant. ZH had a piece today on the WSJ story that caused all the trouble. The "plant" theme was repeated. from the ZH article: Why would (the Fed) use its traditional mouthpiece the WSJ to spread fear? Tyler answers his own question with: Why QE3 of course. .
I) Was the WSJ story a plant? IMHO opinion this was a plant. The author was Carrick Mollenkamp. This guy is a seasoned pro. This story was vetted at the highest levels at the WSJ. The editors knew full well the implication of this article. Every 'i' was dotted and all quotes were checked. There are no mistakes in this article. But who were those "sources" that the WSJ hung their hat(s) on? This was one of the biggest stories of the year. Who are the readers of the WSJ supposed to rely on regarding the serious issues raised in the article? Easy. No one is the answer. These are the attributed sources for the guts of the story:
That, for me, answers #s I & II above. But it begs the question, "Why"? Is it remotely possible that the Fed deliberately engineered a collapse in markets in order to get the necessary political "cover" to initiate some new massive monetary policy as TD suggeted? There is one possible clue in the article that points to this conclusion:
What is QE? It can be anything that stimulates the price, velocity and availability of money. It does not have to be LSAP (traditional QE) or an extension of ZIRP. It can take other forms. The most convenient of which is to open the Fed's $ swap lines to the Euro banks. We may get this development by Monday morning. My take on this is that the Fed manipulated the news. It did so very deliberately. The Fed had an agenda; they did whatever they thought necessary to gain acceptance for what they have up their sleeve. That's my take on this story. We may never know the truth. I wonder if Governor Perry understands this stuff. If he did, and he got the facts on this "out there" he would have a very big cannon to shoot. If the Fed did manipulate both the press and the markets to justify its actions it would be a very big deal indeed. .
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| Posted: 18 Aug 2011 12:49 PM PDT The "panic" trade had a few hours to eat dinner, and now it's back to business. As Asia opened, the kneejerk reaction to Europe closing is that, naturally, Europe will open in a few short hours, this time however with fresh fears of what the SNB might be cooking if it needs Fed assistance to sustain its local banks' dollar margin calls. The result: gold hits new all time record highs, bonds drop to intraday lows, crude is about to reenter the critical 70's, so very necessary for QE3, and ES, well, you get the picture. Gold:
Treasurys:
Crude:
and ES:
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| Comex Gold Price Closed at $1,818.90, up $27.70 and Another New All Time High Posted: 18 Aug 2011 12:38 PM PDT Gold Price Close Today : 1818.90 Change : 27.70 or 1.5% Silver Price Close Today : 40.687 Change : 0.337 or 0.8% Gold Silver Ratio Today : 44.70 Change : 0.313 or 0.7% Silver Gold Ratio Today : 0.02237 Change : -0.000158 or -0.7% Platinum Price Close Today : 1847.00 Change : 0.00 or 0.0% Palladium Price Close Today : 757.00 Change : -19.00 or -2.4% S&P 500 : 1,140.65 Change : -53.24 or -4.5% Dow In GOLD$ : $124.91 Change : $ (6.76) or -5.1% Dow in GOLD oz : 6.042 Change : -0.327 or -5.1% Dow in SILVER oz : 270.13 Change : -12.66 or -4.5% Dow Industrial : 10,990.58 Change : -419.63 or -3.7% US Dollar Index : 74.21 Change : 0.532 or 0.7% Fueled by unabated panic, the GOLD PRICE about 6:00 a.m. pushed through $1,800 and by 10:00 stood over $1,825. Backed off a bit till noon, then began advancing again. Comex closed at $1,818.90, up $27.70 and another new all time high. Top of this channel is someplace around $2,000. When I saw gold over $1,825, I just picked up the phone and bought a bunch. Sure, sure, that's chasing a market, but what else can you do when after a 2-day close over the old high it breaks into new high territory? You buy it, and close your hanging jaw. Before I bought GOLD, though, I bought lots more SILVER. Not as strong as gold, but all it needed to do was break through that 4000c resistance, and there it stood at 4070c. Argue with the tape if you want to, but I don't. Yes, silver still has a tough row to hoe at 4100c and 4200c, but get the picture: it is FOLLOWING gold, not moving against it. Behold, something new under the sun! Big trouble coming. Go back to my 29 July commentary and 16 August commentary and re-read the preparations listed there. Call me Chicken Little if you like, 'twon't bother me cause I've been vilified by experts, but take that list seriously. Remember those riots in London. DID SOMEBODY MAKE AN ANNOUNCEMENT TODAY THAT THE WORLD IS CLOSING DOWN? I looked for some news item that might have sent the GOLD PRICE screaming and stocks careening. I couldn't find a single item that would launch a panic. Euro didn't even get beaten up badly until after New York Opened. Whatever the catalyst, it threw US stocks down enough to qualify as one of the 20 or 30 biggest point moves ever, down 419.63 (3.68%- owch!) to 10,990.58 in Dowville, with the S&P500 swooning even worse by 53.24 points (4.46%) to 1,140.65. Talking heads are as stumped as I am, talking about "growing fears of global recession" on bad US economic data and more bad news from euro-banks. IF YOU STILL HAVE STOCKS, GET OUT NOW! Put the proceeds into silver and gold, and take everything you've ever learned about "diversification," by which the experts all mean "buying different stocks" and throw it out in the carport and beat it to death with your ball peen hammer. If stocks are the answer, the question must be, "How can I lose LOTS of money quickly without buying lottery tickets?" Do any of y'all remember my saying not too long ago that stocks had lost more than 80% against silver and gold since 2001 and 1999, and would lose another 80% before stocks' bear market and metals' bull market ends? Do I remember that, or am I mistaken? Today the Dow in Gold Dollars stands at G$124.91 (6.042 oz) and the Dow in Silver Ounces at 270.13. Y'all write that down someplace, and hide and watch.  Y'all want a real laugh? The Philadelphia Bank Index, Tell me what kind of strength that shows. US Dollar index slapped 'em all in the face today by jumping 53.2 basis points, up 0.68% to 74.206, back from the bottom of the range to the middle. One wonders idly how many zillion dollars the Nice Government Men had to sell today to keep the dollar from rising through 75.50. Mistake me not! Long term the dollar is a cooked goose, a dead duck, a terminated turkey, a poached peacock. But short term it has yet enough strength to pull in money in a panic. Proof? The yield on the 10 year treasury note (inverse of the note's value) dropped again today, nay, gapped down and plunged. But hark! Is that a double top that the 30 year treasury bond is forming with the September 2010 high? Would that be a harbinger of great depths to come, of wailing, weeping, and gnashing of teeth as the Harbor of Dollar Refuge becomes the Maelstrom of Vanishing Value? Euro, to put it almost politely, got the snot slapped out of it today Closed down 0.58% at 1.4341, gapped down in fact, and now resteth upon its 20 dma, preparatory to plummeting toward the Earth's Core. Yen remains suspended high above the earth at 130.57c/Y100 (Y76.58/$). On Monday, 22 August I will be speaking for the Campaign for Liberty in Memphis at Jason's Deli, 3473 Poplar Ave. Suite 102, near Poplar and Highland. Speech should start shortly after 6:30 p.m. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2011, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. 
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| Mining Share Ratio To Gold Back At Pre-QE1 Levels Posted: 18 Aug 2011 11:59 AM PDT My Dear Friends, Gold's move to a new high today above $1764 has not happened for technical reasons. There are fundamental problems in the entire Western World Finance that lack solution. Gold is heading exponentially beyond any expectations of the short of gold share hedge funds. Weakness in gold shares is manic at this Continue reading Mining Share Ratio To Gold Back At Pre-QE1 Levels
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| Posted: 18 Aug 2011 11:56 AM PDT Jim Sinclair's Commentary When we suggested this in 2005 all the nasties sent their emails. Central Banks' Demand For Gold Quadrupled In 2nd Quarter By Rhiannon Hoyle Of DOW JONES NEWSWIRES LONDON (Dow Jones)–Central banks are topping up their gold reserves, quadrupling their total purchases from the market in the last quarter as Continue reading In The News Today
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| Posted: 18 Aug 2011 11:05 AM PDT Gold in US dollars is pushing $2000 USD. Should you bank some profits. Depends on the currency you hold it in. Read More...
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| Mining Share ratio to gold back at pre QE1 levels Posted: 18 Aug 2011 10:30 AM PDT [url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] The following ratio chart says in a picture just how severely undervalued the gold stocks are in relation to the price of bullion. You might recall that as the credit crisis erupted in the summer of 2008 with the failure of Lehman Brothers and subsequent meltdown of other large financial firms, stocks and commodities plummeted as the Yen carry trade unwound and deflationary fears escalated. The rumors began to circulate as the crisis deepened that the Federal Reserve was getting ready to implement some unorthodox policies in an attempt to stave off the deflation and prevent a credit market lockup. That was when the phrase, "Quantitative Easing" first began making the rounds in the markets. So confident were traders that the Fed was not going to sit idly by while the entire US financial system imploded that they began covering shorts and bidding up the price of equities and commodities ahead ...
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| Gold Stocks that Think They’re As Good as Gold Posted: 18 Aug 2011 10:00 AM PDT In the first five minutes of trading this morning, the Dow fell 300 points. It fell a further 40 in the ensuing 25 minutes. Then shed another 150 the moment the Philadelphia Fed announced grim news for manufacturing at 10:00 a.m. As you might expect, the "safety trade" is back on. At the opening, it sure looks like today will be the day gold breaks $1,800… and sticks. At last check, the Midas metal is up to $1,822. This morning's initial shock in New York began in Europe. Major indexes in London, Frankfurt and Paris all shed 3-4% during their sessions. No specific event set things off… except perhaps "the realization is that [officials] don't really have a clue" one waggish analyst explained it to MarketWatch. Banks across the board are taking the biggest hit. Good thing officials banned short-selling financial stocks in France, Italy, Spain and Belgium last week, isn't it? With the Dow's 450-point plunge, all the gains since a week ago today are gone. Ditto the S&P and the Nasdaq. As we mentioned, The "Philly Fed" – a Federal Reserve measure of manufacturing in the mid-Atlantic region – plunged deep into negative territory, to a grim level last seen in March 2009…
A hit list of additional domestic economic numbers in the US isn't helping much:
Add all these data points up you get a giant sigh of disgust from economic pundits across the nation. Every one of these numbers was worse than the "consensus estimate" of economists polled by outfits like Bloomberg and MarketWatch. Likewise, the "safety trade" is driving money into Treasuries… forcing yields down. The yield on a 10-year Treasury note set a record low this morning. At last check, Uncle Sam will give you a whopping 1.98% return on money you lend him for the next decade – even less than during the panic low on Dec. 19, 2008. Perspective: On that same date, gold went for $840 an ounce. Treasuries have a newfound companion when it comes to the safety trade. "I think we've reached a stage," says First Eagle Funds' Jean-Marie Eveillard, "where [gold is] not just a hedge against inflation, it's a substitute currency." "Investors look at issues in Europe and in the US, in Europe the problem with the single currency and in the US there is the problem of the ballooning government debt because of gigantic budget deficits." "We have had a pure paper money system for 40 years when Nixon closed the gold window in '71. That system, or what passes for a system, is fraying at the edges and gold becomes a hedge and some kind of insurance policy." Even our favorite Latin American caudillo has figured that out. Venezuelan president Hugo Chavez nationalized the country's gold mines yesterday. Well, the ones that weren't nationalized already anyway. Not that Venezuela is much of a gold producer to begin with. Lost in the noise surrounding this announcement is something we find a lot more significant: Chavez is repatriating much of Venezuela's gold held overseas – about $11 billion worth. The Bank of England, J.P. Morgan Chase, Barclays, Standard Chartered, the Bank of Nova Scotia… all of them recently got a request from Chavez asking that the gold he has stored with them be shipped home. "We've held 99 tons of gold at the Bank of England since 1980," declared Chavez. "It's a healthy decision" to bring it back. So where does gold go from here? In the options market, traders are making some extreme bets. There's a high amount of open interest – 14,532 contracts, says the Financial Times – in December 2011 gold calls with a strike price of $3,000. That's a lot of people counting on nearly a double in four months. There are 189 contracts for December 2012 calls at $5,000. December 2012? That's the Apocalypse trade. The stock market is dragging down gold stocks today, but not much. The GDX ETF of major gold miners is down about 2/3 of a percent. Over the last 10 trading days, gold stocks have performed a lot more like gold than stocks:
"Here we are right now with a very interesting set of circumstances," said Byron King during our teleconference this week, released to Reserve members last night. "The price of what they sell has gone up a lot, and a big part of the cost of what they do, which is energy, has gone down quite a bit." "So you've got higher income from your gold sales and you've got lower cost from cheaper oil and cheaper energy. That ought to go to the bottom line, and from a pure valuation standpoint, that ought to be good for the gold mining stocks." The breakout of gold stocks in recent days marks the reversal of a stunning trend as shown on this chart, courtesy of our friend Bill Baker and the crew at Gaineswood Investment Management and the Marlmont Fund:
This shows the correlation between gold and gold stocks as represented by the Philadelphia Gold and Silver Index, commonly known as the XAU. "During the second quarter of this year," says a new report from Marlmont, "shares of precious metals companies behaved strangely, actually going down in value when gold appreciated." "This negative correlation has never existed in the data that extend as far back as we could access, to 1992. There have been very short bouts when the movement of miners and the metal did not move well in unison, but never this." Their conclusion: "We frankly could not conjure up a more convincing case for owning companies that search for and produce precious metals – especially now that in recent decades these have underperformed gold bullion as dramatically as only seen in the meltdown of 2008." Addison Wiggin Gold Stocks that Think They're As Good as Gold originally appeared in the Daily Reckoning. The Daily Reckoning provides 400,000+ readers economic news, market analysis, and contrarian investment ideas. Follow the Daily Reckoning on Facebook.
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| Posted: 18 Aug 2011 09:57 AM PDT Monday, August 6, 2001 - GOLD @ $267.20 - FOA: "The result will be a massive dollar price rise in gold that performs over several years, as the reserve function transition politically begins." Tuesday, January 1, 2002 - Launch of euro notes and coins Friday, February 8, 2002 - GOLD ABOVE $300 Monday, December 1, 2003 - GOLD ABOVE $400 Thursday December 1, 2005 - GOLD ABOVE $500 Monday, April 17
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| Did Chavez Just Spark the Gold Powder Keg? Posted: 18 Aug 2011 09:53 AM PDT voxOnox I asked myself this question Wednesday night when I heard the news that Chavez intended to nationalize Venezuelan gold mines..... Over the past decade, several precious metals experts have suggested that there MAY come a time when the price of Mining Stocks would collapse as the price of precious metals soared because there is a certain correlation between the price of precious metals and the risk/probability of mines becoming nationalized....... "There was an expression during the Great Depression – Would you rather have a pretty picture of food or have the meal on your plate? – now relate that to precious metals – Would you rather have a pretty certificate of gold/silver or have the actual metal?" ........ - Silver Shield - I would not be surprised if Hugo does not end up getting his gold. If he does it certainly means that someone else is going to be left out in the cold. Germany has almost all of its gold reserves sitting in the basement of the New York Fed. It is insanity for any foreign nation to have their gold held by another country. I am warning small investors to make sure that they hold their physical metals and trust nobody. I would not put it past our criminal Elite to confiscate those nations that trust us with their gold. Hugo might have just as well tipped off a gold rush, make sure you have yours before the rest of the world wakes up. 
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| Homes Have Never Been More Affordable (With One Footnote) Posted: 18 Aug 2011 09:20 AM PDT We said 1 for a reason, because while indeed homes have never been more affordable... one must pay for them in constant gold. Yes, holding gold over the past century has as of this point effectively defeated any of the accumulated home price inflation over the years, and when expressing home prices in terms of gold, the average home is now more affordable than ever before. We said gold. Not dollars, not yen, not spam, not Nobel economics prizes. So for everyone who wants to exchange some of that shiny metal into the most valuable and capital intensive investment the average American will do in their lifetimes, this is your moment.
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| Guest Post: Economically Sleepwalking Posted: 18 Aug 2011 09:08 AM PDT Guest Post: Casey Research Economically Sleepwalking The rebound from the recent recession is the slowest economic comeback in living memory – so slow that some doubt whether it is happening at all. The recession bottomed (the economy stopped shrinking) in June 2009, so the recovery is now two years old. Here's how things looked 24 months into recovery from the last four recessions.
The sleepwalking during the last 24 months is all the more remarkable, given that the economy has been treated with the biggest dose of monetary and fiscal stimulants ever administered in U.S. history. Why the continued weak pulse? Each recession has its own story – how long it lasts, how deep it gets, industries worst hit, particular bubbles burst. But in every recession, the heart of the problem is the same, namely, an imbalance in the market for cash. Every recession begins when the aggregate amount of cash that people want to hold (given their wealth and the other things they want to own) is more than the amount of cash actually in existence. That imbalance – the demand for cash exceeding the supply – depresses the entire economy because the flip side of the market for cash is the market for everything else. All markets and all industries are hit, and most of them contract because most people are trying to sell more than they buy... which is the only way for anyone to increase his cash holdings and which is impossible for everyone to do at the same time. In the period from the end of the Civil War to the end of World War II, most recessions began when the government, by plan or by blunder, contracted the supply of cash, so that it fell below the public's demand for cash. Since World War II, every recession has begun when the government, again by plan or by blunder, allowed the growth in the supply of cash to lag behind the growth in the demand. The early stages of a typical pre-WWII recession would push some commercial banks into insolvency, which would shrink the supply of cash even further, since insolvency meant that some part of the deposits held by bank customers were lost. As the recession proceeded, an increase in the demand for cash by worried investors, worried business people and worried workers would make the cash shortage even more severe. Every recession between the Civil War and World War II ended on its own. In no case was a recession brought to an end by the actions of an alert government agency or with the advice of learned economists. Recessions were cured, automatically, by falling prices. Falling prices were the cure because they increased the real value (purchasing power) of whatever amount of cash the public was holding. Prices kept falling until the real value of the existing supply of cash grew to a level that exceeded what the public wanted to hold. Then, as individuals and businesses began to spend the excess, the economy would begin to recover. Until the Great Depression of the 1930s, the average length of a recession was 21 months. The misery that began in October 1929 lasted five times that long – 105 months. It was the severest recession ever, with unemployment reaching one-third of the workforce, because the shortage of cash that brought it on was the severest ever: the M1 money supply (hand-to-hand currency plus checking deposits) shrank by one-third. But a different factor made it the most prolonged of recessions. Aiming at a symptom of recession rather than at the cause, the government pursued an array of policies to prevent prices from falling, which had the perverse effect of preventing the economy from recovering. The government's would-be medicine was, in fact, poison. Even though the government's first active attempt to end a recession produced a disaster, it did establish a presumption that the government shouldn't just stand by when the economy turns down. It should do something, and the duty to do something has been assigned to the Federal Reserve. Since the end of World War II, the Federal Reserve has acted in fire department fashion to cure each recession as soon as it was identified. Relying on a fall in prices to restore prosperity wasn't an option the Fed wanted to consider. The Fed has attached a variety of labels to its recession-fighting steps, such as "lowering interests," "easing credit conditions" or, more recently, "quantitative easing." But they've all amounted to the same thing – increasing the public's supply of cash to a point where it exceeds the public's demand for cash. As of the end of June, we are 42 months from the December 2007 start of the last recession. The table below shows the total growth in the M1 money supply during that period and also during the 42 months following each of the preceding three recessions. The most recent downturn has clearly been met with the most aggressive additions to the supply of cash. The July 1990 recession comes close in that regard, but in that case the new cash produced the intended effect; the economy revived. Why is it that, this time around, the new money seems to be accomplishing so little?
The answer has at least four parts. 1. Nearly all recessions are exacerbated to some degree by an increase in the public's demand to hold cash. Recessions produce worry and uncertainty, and cash is the most versatile provision for the unknown and hence is the best anti-anxiety drug. The collapse, in 2008 and 2009, of financial institutions that the public had taken for granted as part of an unshakeable firmament is still a fresh memory. The public wants to hold more cash now than it did going into the last recession because it is still worried. So some part of the 40% increase in M1 has been absorbed by that increase in the demand to hold money. 2. Expected real estate deflation. In the housing market, the U.S. government has repeated the 180-degree wrong-way error of the Great Depression – trying to keep prices from falling. Tax credits for first-time homebuyers, payments to lenders in exchange for rewriting existing mortgages and the inventorying of foreclosed houses by government-dependent banks have prevented house prices from reaching a market-clearing level. The expectation that prices have further to fall is a reason to hold off on buying, and the flip side of delaying a purchase is holding more cash. 3. Unsettled loan portfolios. The echo of vulnerable real estate prices is doubt about bank loan portfolios. As real estate prices decline, losses on mortgages can only increase. Will the banks need to be rescued again? If so, will a deficit-ridden government show up in time? More uncertainty means more demand to hold cash. 4. Uncertainty about tax rates and rules. Much of today's tax rules will expire at the end of 2012. No one knows what the rules will be after that. Uncertainty about tax rules is a reason for businesses to postpone investing, and a reason to put off investing is a reason to hold cash. We don't know how much each of those four factors has added to the demand for money, and, as investors, we don't need to know. The critical point is that each of the factors adds a quantity to the demand for cash, something finite. So it is a certainty that their total effect can be overcome by yet more increases in the supply of money. And more increases in the supply of money are what we are going to get until unemployment rates come down. Don't be distracted by speculation over whether there will be a QE3. QE is just a slogan. It's the numbers that matter, and the numbers on the money supply will keep growing. The Federal Reserve's fear that the economy might slip back into recession will keep the numbers growing. The Fed's need to protect the capital markets from the effect of the Treasury's trillion-dollar deficits will keep the numbers growing.
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| Posted: 18 Aug 2011 08:31 AM PDT Addison Wiggin – August 18, 2011
Readers rant: Rick Perry, Ron Paul, Greece, the presidential motorcade… and more!
As you might expect, the "safety trade" is back on. At the opening, it sure looks like today will be the day gold breaks $1,800… and sticks. At last check, the Midas metal is up to $1,822.
No specific event set things off…. except perhaps "the realization is that [officials] don't really have a clue" one waggish analyst explained it to MarketWatch. Banks across the board are taking the biggest hit. Good thing officials banned short-selling financial stocks in France, Italy, Spain and Belgium last week, isn't it?
As we mentioned, The "Philly Fed" — a Federal Reserve measure of manufacturing in the mid-Atlantic region — plunged deep into negative territory, to a grim level last seen in March 2009…  A hit list of additional domestic economic numbers in the U.S. isn't helping much:
Add all these data points up you get a giant sigh of disgust from economic pundits across the nation. Every one of these numbers was worse than the "consensus estimate" of economists polled by outfits like Bloomberg and MarketWatch.
At last check, Uncle Sam will give you a whopping 1.98% return on money you lend him for the next decade — even less than during the panic low on Dec. 19, 2008. Perspective: On that same date, gold went for $840 an ounce. Treasuries have a newfound companion when it comes to the safety trade. "I think we've reached a stage," says First Eagle Funds' Jean-Marie Eveillard, "where [gold is] not just a hedge against inflation, it's a substitute currency." "Investors look at issues in Europe and in the U.S., in Europe the problem with the single currency and in the U.S. there is the problem of the ballooning government debt because of gigantic budget deficits." "We have had a pure paper money system for 40 years when Nixon closed the gold window in '71. That system, or what passes for a system, is fraying at the edges and gold becomes a hedge and some kind of insurance policy."
Well, the ones that weren't nationalized already anyway. Not that Venezuela is much of a gold producer to begin with. Lost in the noise surrounding this announcement is something we find a lot more significant: Chavez is repatriating much of Venezuela's gold held overseas — about $11 billion worth. The Bank of England, J.P. Morgan Chase, Barclays, Standard Chartered, the Bank of Nova Scotia… all of them recently got a request from Chavez asking that the gold he has stored with them be shipped home. "We've held 99 tons of gold at the Bank of England since 1980," declared Chavez. "It's a healthy decision" to bring it back.
There's a high amount of open interest — 14,532 contracts, says the Financial Times — in December 2011 gold calls with a strike price of $3,000. That's a lot of people counting on nearly a double in four months. There are 189 contracts for December 2012 calls at $5,000. December 2012? That's the Apocalypse trade.
Over the last 10 trading days, gold stocks have performed a lot more like gold than stocks:  "Here we are right now with a very interesting set of circumstances," said Byron King during our teleconference this week, released to Reserve members last night. "The price of what they sell has gone up a lot, and a big part of the cost of what they do, which is energy, has gone down quite a bit." "So you've got higher income from your gold sales and you've got lower cost from cheaper oil and cheaper energy. That ought to go to the bottom line, and from a pure valuation standpoint, that ought to be good for the gold mining stocks."
 This shows the correlation between gold and gold stocks as represented by the Philadelphia Gold and Silver Index, commonly known as the XAU. "During the second quarter of this year," says a new report from Marlmont, "shares of precious metals companies behaved strangely, actually going down in value when gold appreciated." "This negative correlation has never existed in the data that extend as far back as we could access, to 1992. There have been very short bouts when the movement of miners and the metal did not move well in unison, but never this." Their conclusion: "We frankly could not conjure up a more convincing case for owning companies that search for and produce precious metals — especially now that in recent decades these have underperformed gold bullion as dramatically as only seen in the meltdown of 2008."
That's the second part 3-Part "Market Volatility" Strategy. We lay out a handful of plays among our editors that are the ideal buys… right now. More broadly speaking, stocks are tanking… again. Treasury yields are at record lows, and gold is at record highs. The information recorded in our teleconference this week is more urgent than ever. That was the first part of our strategy. You can access, right here. And with new crises looming in Europe, a new showdown over the federal budget in Washington and a cost of living that keeps rising despite panics worldwide… you can't afford to overlook the third part of our strategy. It's an "Emergency Summit" of our editors and a select group of readers. The dates are set: Oct. 13-14, here in Baltimore. And we're going out of our way to make it worth your while: We'll cover your hotel, we'll cover $500 of your airfare… and admission to the event itself is free. But space is limited. We can accept only 300 people. Please review your invitation here.
Only S&P. Not Moody's and Fitch, which also gave their AAA blessing to similar securities. Note… it's the Justice Department doing the investigation… not the Securities and Exchange Commission (SEC). Turns out the SEC has had a peculiar policy for years now: If it finds no wrongdoing in an investigation, it destroys all the records. "Imagine a world," begins Matt Taibbi's Rolling Stone expose, "in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case." "No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file — 'Hey, chief, didja know this guy had two wives die falling down the stairs?' No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements." "This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record."
Thankfully, the reporter saved face and got Snooki's take on the economy.  "The economy is really scary," Snooki wowed with her brilliance, "because 2012 is coming. I feel like the first thing that's going to happen… is a blackout and then everyone freaks out and the world goes crazy." OK, maybe we're being too hard on her. We're heading into the heart of the 11-year sunspot cycle and respectable scientists talk about the possibility of a solar flare so strong it could take out the power grid. "So hopefully," she went on, "Obama will take care [of the economy] before 2012." No, we take it back.
The 5: Ahh, so you're the one who flunked the reading comprehension test in Mrs. Rice's fifth-grade class. Try again.
"I wish he would give up the presidential bid and get the nomination for either the secretary of the Treasury and head the IRS and negotiate the finances or be appointed to the Fed chairman. That is a position from which he could be heard. And that is a position in which he could effect real change." The 5: Um, who would appoint him to such a position? And how would he have to prostitute himself to secure that appointment?
"There was a big concern that the rating companies would still label that as a 'default,' thus roiling the markets. Since then the issue has gotten overshadowed by the U.S. debt ceiling debate and the threat of a U.S. bond default. The debt ceiling has been resolved, for a while, and now Italy and Spain are at the center of another EU bailout scheme. "Did Greece ever get the bailout money? And have a soft default? Did the ratings agencies react? Or is that still unresolved?" The 5: Yes, yes, no and yes. Greece got another bailout, and the terms of the restructuring are, in the real world and in plain English, a default. But the rating agencies haven't classified it as such, lest it trigger the cascade of events we've described before that would ultimately set off another crisis in U.S. money market funds. And nothing has been resolved. Under terms of the bailout, Greece has put more "austerity measures" in place. That will make for a further drag on the economy, suppressing tax revenue and forcing the Greek government to go back to the bailout well yet again. Sometime, this will have to end in tears. Certainly that's what traders in the credit default swap market believe. This morning they still peg Greece's likelihood of default in the next five years at nearly 79%.
"At one point the family takes a train to the country to escape from Moscow. On the way, they have to stop and pull over on a sidetrack to let another mysterious black train pass. It contains the head of political correctness, who's been burning out villages he thinks have helped those rebelling against the new order. It is a scary comparison."
"I work at the embassy in Paris and am saddened by the money that is spent on these visiting dignitaries. But it is not only the money, it is also how these royal visitors expect to receive this treatment and no longer understand what the rest of us or our friends deal with on a daily basis." "So it is not just the retinue of servers that travel with our president, but also the rest of government executives that expect the same. The consequences are obvious."
"I think the Congress, Senate and the president should all have to live on what the middle class make for a living, and they should have a limit of what they get for a retirement package. "I'll bet all their money is in gold and they have it stashed overseas." The 5: If that's true, at least they're following an investment strategy we could get behind. Cheers, Addison Wiggin P.S.The volatility index (VIX) is back above 40 as we write — the third time it's crested that level this month. Multiple spikes in a short time span don't happen often. They can signal the onset of a bull market — as in 1998 and last year. Or they can signal worse to come, like 2001 and 2008. Which will it be this time? More important, what's the best thing to do with your money right now? That's the question we set out to answer with our 3-Part "Market Volatility" Strategy. The first two parts you can access right away: the teleconference convening six of our editors and the special report detailing our editors' favorite gold stock picks. The third part comes in October, with our urgent Summit here in Baltimore. This event is so important, we're going all out to make it possible for you to join us. But we have room for only 300 people. So please, take this opportunity right now to review this invitation.
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| Gold Daily and Silver Weekly Charts - La Douleur du Monde Posted: 18 Aug 2011 08:31 AM PDT | ||||||||||||||||||||||||||||||
| Posted: 18 Aug 2011 08:31 AM PDT Synopsis: Bud Conrad presents data that suggest the Fed's near-zero interest rate policy through 2013 is in effect QE3. Vedran Vuk offers some thoughts on Standard & Poor's downgrade of U.S. debt; and two Casey Research analysts will be speaking at upcoming World MoneyShow events in Toronto and Vancouver. Dear Reader, At Casey Research, we've known that the Fed's policies have been insane for some time, but soon that should be apparent to everyone. For example, consider this excerpt from a Bloomberg article quoting Charles Plosser and Richard Fisher, who dissented on the Fed's recent mid-2013 rate announcement: Philadelphia Fed President Charles Plosser said in an interview yesterday that taking action after stocks tumbled "signaled that we are in the business of supporting the stock market." Richard Fisher, the Dallas Fed chief, said in a speech that the Fed "should never enact such asymmetric policies to protect stock market traders and investors." Both also said the policy won't help spur growth. I'm all for dissenters at the Fed, but what an incredulous statement. Yes, in theory central banks should not boost the stock market. However, the reality in the past few years has been much different than theory. The Fed has propped up the stock market in hopes of reviving consumer confidence by breathing life into 401K portfolios. For some reason, Plosser and Fisher act as if this was some new development. Just a few months ago, financial commentators were heatedly debating the effects of QE2. Fed supporters had a big problem – unemployment had not considerably decreased. So they had to look for QE2's other "accomplishments." And does anyone remember those? One was avoiding deflation. Yes, printing $600 billion can help achieve this "success." The other was a boom in the stock market. That's right. Only a few months ago, Fed supporters praised the Fed for boosting the stock market. Now Fed members state that their intention is not to support the stock market. Someone here has a serious case of schizophrenia. The Bloomberg article continues: Some traders might view the easing of monetary policy as a "Bernanke put," or the idea that the central bank will loosen credit after a stock-market decline, Fisher said. Of course traders will see Bernanke's near-zero rates for two years as a reaction to the stock market. Does Fisher really expect us to believe that Bernanke's decision was not at all influenced by the crashing markets? Was a two-year commitment to zero rates really the result of a few lackluster unemployment reports? I hardly think so. Given the state of unemployment, Bernanke could have extended near-zero rates for an additional six to nine months. In that time, he could reevaluate the state of the market… but he didn't do that. He reacted with unprecedented actions in the face of a crashing market. If the Fed is trying to say something else to the market, it's doing a really bad job. Before we get started today, I want to mention The World MoneyShow in Toronto from September 8-10. Along with an enormous number of excellent speakers, Louis James of the International Spectator will address the subjects of resource investing and speculating. The following week at The World MoneyShow in Vancouver, Bud Conrad will be speaking on the role of energy in economies, as well as what to invest in for the duration of the economic crisis; and Louis James will give two presentations on resource investing. Speaking of Bud Conrad, I'll pass the issue over to him; he'll discuss how much the Fed might have to print to keep near-zero rates for a period of two years. Then I'll provide links on the Department of Justice's investigation of S&P, Chavez's gold nationalization, and the CPI data.
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| Stocks Plunge, Gold Surges on Global Concern Posted: 18 Aug 2011 08:30 AM PDT August 18 (Bloomberg) — Stocks plunged while Treasuries rallied, pushing yields to record lows, amid growing signs the economy is slowing and speculation that European banks lack sufficient capital. Gold climbed to a record, while oil led commodities lower. The Standard & Poor's 500 Index tumbled 4.5 percent to 1,140.74 at 4 p.m. in New York. The Stoxx Europe 600 Index lost 4.8 percent in its worst plunge since March 2009 and Germany's DAX Index slid 5.8 percent, the most since 2008. Ten-year Treasury yields fell as much as 19 basis points to 1.97 percent as rates on similar-maturity Canadian and British debt also reached all-time lows. The dollar gained versus 15 of 16 major peers, strengthening 0.6 percent to $1.4336 per euro. Gold futures rallied as much as 2.1 percent to $1,832 an ounce, while oil slid 5.9 percent. [source]
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| Posted: 18 Aug 2011 08:21 AM PDT Biwii
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In the first five minutes of trading this morning, the Dow fell 300 points. It fell a further 40 in the ensuing 25 minutes. Then shed another 150 the moment the Philadelphia Fed announced grim news for manufacturing at 10:00 a.m.
This morning's initial shock in New York began in Europe. Major indexes in London, Frankfurt and Paris all shed 3-4% during their sessions.
With the Dow's 450-point plunge, all the gains since a week ago today are gone. Ditto the S&P and the Nasdaq.
Likewise, the "safety trade" is driving money into Treasuries… forcing yields down. The yield on a 10-year Treasury note set a record low this morning.
Even our favorite Latin American caudillo has figured that out. Venezuelan president Hugo Chavez nationalized the country's gold mines yesterday.
So where does gold go from here? In the options market, traders are making some extreme bets.
The stock market is dragging down gold stocks today, but not much. The GDX ETF of major gold miners is down about 2/3 of a percent.
The breakout of gold stocks in recent days marks the reversal of a stunning trend as shown on this chart, courtesy of our friend Bill Baker and the crew at Gaineswood Investment Management and the Marlmont Fund:
This is a pivotal moment. With gold where it is today, the stars are now aligned for a handful of junior gold miners to make big moves… the kind that can leave you set for life.
Less than two weeks after Standard & Poor's downgrade of the United States comes word the Justice Department is investigating S&P's AAA ratings of rotten mortgage-backed securities back in the day.
Apparently because The Wall Street Journal has nothing better to cover at this moment in history, the paper recently sent a reporter to interview two stars of the reality series Jersey Shore.
"So now you are defending Rick Perry," writes a reader. "But of course, you right-wingers would like to see a cowboy in the White House."
"What would be really interesting," a reader muses, "is if Ron Paul would position himself for a really useful job where he could actually accomplish something."
"What ever happened to Greece?" another reader inquires. "Four months ago, Greece was asking for its next tranche of bailout loans, but Merkel of Germany wanted bondholders to share some pain and arrange a soft default, where banks would voluntarily write some bonds, or value, off."
"I seriously doubt that bus cost $1.1 million," writes a reader of the presidential motorcade through the upper Midwest. "That's probably what it cost to buy it from the factory, but after the Secret Service was done with it (armor, communications, etc.), I'm sure it more than doubled." "And what's with the black? Looks a bit ominous to me."
"The motorcade," another reader picks up where the previous left off, "reminds me of the movie Doctor Zhivago, set during the Russian Revolution."
"That was not the Obama motorcade," adds one more. "It was the funeral procession for the economy."
"On your comment on an 'imperial presidency,' you should see how we overseas at American embassies treat our congressional 'royalty.' The money spent to serve their every need is truly incredible."
"Personally," writes our last, "I'm sick of Congress and the political parties throwing blame at the other when they all had a hand in destroying our country.
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