Gold World News Flash

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• Michael Pento - Here is Why Gold Shorts are Worried
• Stephen Leeb - Gold Skying Because of Bernanke Desperation
• TF Metals Report
• Harvey Organ's: The Daily Gold & Sliver Report
• Galluping Gold
• The Bear Market Rally Has Begun
• Gold and Your Blue Pen
• The Liberty Dollar, the Liberty Candidate and Liberty
• Michael Pento: Here is Why Gold Shorts are Worried
• Gold Seeker Closing Report: Gold and Silver Gain About 2%
• Gold Advances To $1826.70 / Silver To $41.40 / Silver Heads Into First Day Notice Tomorrow Morning
• Von Greyerz: own physical gold outside the banking system
• Dear Ben, Please Print us More Money
• Guest Post: The Rise And Fall Of US Confidence, Or Why The Fair Value Of Gold In Phase Space Is $6,000-$12,000
• Chuckie Evans Goes Full QEtard: Tells Hilsenrath Fed Needs To Do "Much More" Easing
• Chuckie Evans Goes Full QEtard: Tells Hilsenrath Fed Needs To Do "Much More" Easing
• Return of Deflation Gold Mirrors 2006 Rally Crash, Stocks Primed for Major Wave Down
• Physical Gold And The GLD: Just What Is Going On Here?
• Behind the Scenes at GLD
• Stephen Leeb: Gold Skying Because of Bernanke Desperation
• Gold Stocks Coiled Again
• The ultimate, ‘we lose a dollar on every sale but make it up on volume’ con (er, I mean, Groupcon)
• While We Have Our Eye's on One Dollar Moves, Silver is Planning to Triple, Gold to Double and More
• Tracking Gold : Behind the Scenes at GLD
• $1800 Can’t Kill Gold Demand
• Things That Make You Go "WTF?"
• Walter Williams On The 2012 Election And Sound Money
• 2008, Redux
• Guest Post: Russia and China's Energy Dispute and the Struggle for Eurasian Dominance
• Guest Post: Russia and China's Energy Dispute and the Struggle for Eurasian Dominance

Michael Pento - Here is Why Gold Shorts are Worried Posted: 30 Aug 2011 06:58 PM PDT The bottom line is with 10 trillion dollars in national debt accumulation in the next decade, the Federal Reserve must either monetize the debt or...

Stephen Leeb - Gold Skying Because of Bernanke Desperation Posted: 30 Aug 2011 06:50 PM PDT More Fed action means more dollars, means more currency out there. Gold is really in the early innings right now. When inflation in this country hits...

TF Metals Report Posted: 30 Aug 2011 06:43 PM PDT Let's start with silver where the technical picture is more clear, at least in the traditional sense. Take a look at the chart:

Harvey Organ's: The Daily Gold & Sliver Report Posted: 30 Aug 2011 06:36 PM PDT Gold advances to $1826.70/silver to $41.40/Silver Heads into First Day Notice Tomorrow morning

Galluping Gold Posted: 30 Aug 2011 06:34 PM PDT Bullion Vault

The Bear Market Rally Has Begun Posted: 30 Aug 2011 05:38 PM PDT Gold Scents

Gold and Your Blue Pen Posted: 30 Aug 2011 05:35 PM PDT Graceland Update

The Liberty Dollar, the Liberty Candidate and Liberty Posted: 30 Aug 2011 05:07 PM PDT

Michael Pento: Here is Why Gold Shorts are Worried Posted: 30 Aug 2011 04:02 PM PDT from King World News: With gold and silver on the move, today King World News asked Michael Pento what the Fed is poised to do at the critical meeting next week and how it will impact gold. Pento had this to say about the Fed and gold, "It wasn't too long ago that the Bernanke Fed was performing the phony exercise of explaining how they would go about draining the epic size of their balance sheet. I warned all the way back in the spring of 2010 that the Fed's next move was to ease, even while the Fed funds futures market was clearly pricing in tightening." Michael Pento continues: Read More @ KingWorldNews.com

Gold Seeker Closing Report: Gold and Silver Gain About 2% Posted: 30 Aug 2011 04:00 PM PDT Gold waffled near unchanged in Asia and London, but it then rose to as high as $1833.14 in New York and ended with a gain of 2.14%. Silver soared to as high as $41.62 and ended with a gain of 1.97%.

Gold Advances To $1826.70 / Silver To $41.40 / Silver Heads Into First Day Notice Tomorrow Morning Posted: 30 Aug 2011 03:57 PM PDT by Harvey Organ: Good evening Ladies and Gentlemen: I hope you all saw my amended commentary early this morning as the CME are providing details on silver and gold inventory movements later and later. Normally we get the data at around 2 pm. At exactly 6: 14 pm the CME sent down the inventory data for today. The data will be critical as we enter first day notice on silver tomorrow. Late tonight I will get the delivery notices for September on silver which should be quite exciting to watch. I will update those for you on the comments section on my blog. The price of gold by comex closing time rose by $38.20 to $1826.70. The move on gold started early last night and continued throughout the day. The bankers were caught flat footed again as they supplied massive paper trying to stop contracts from being exercised. You will see from my data that they failed miserably as more and more wish to buy physical metals whenever and wherever they can. The price of silver responded in kind to gold's advances rising by 86 cents to $41.40 by comex closing time. It seems that the bankers are trying one last kick of the can trying to shake both gold and silver leaves from their respective trees. Read More @ HarveyOrgan.Blogspot.com

Von Greyerz: own physical gold outside the banking system Posted: 30 Aug 2011 03:37 PM PDT

Dear Ben, Please Print us More Money Posted: 30 Aug 2011 02:30 PM PDT Dear Ben,   Please print us more money. We want you to prop up the stock market. Everybody knows it's a Ponzi scheme that will collapse without your support. You don't want us to end up like Bernie Madoff's clients. No, Ben, we love Ponzi schemes. We get in early and get out before they collapse. That's why we're rich. The bad thing is that they sometimes collapse before we can get out. But you already bailed us out twice in the last couple of years through printing trillions of dollars. Why not a third time?   That will also keep the bond-market bubble inflated. We have to admit that you've done an excellent job there, hands down. Negative real yields all the way up the yield curve! Awesome. Now if you could just print a few trillions and buy up the sovereigns from the PIIGS. Euro crisis over. End of story. And we'd get richer because we'd sell them to you at face value though we bought them at fifty cents on the dollar.   And why not forever? Just keep printing. Because as soon as you stop, stock markets will crash again, and credit markets will seize, and then we're back on this awful ride to hell.   Of course, it'll cause inflation, which is good. You yourself said that. You stated many times that you want inflation. In fact, you said that one of the goals of the Fed, after propping up the markets, is to create inflation. So stick to it, Ben. Don't slack off suddenly just because some cowboy threatened you.   Inflation, in conjunction with your near-zero yields, has all sorts of benefits. For example, it will eat up the Social Security trust fund, whose $2 trillion balance is invested in treasuries. Fixed-income investors, retirees, and everybody who has any savings will also be demolished. And homeowners. But don't worry. They won't figure it out. They don't get a statement every month that shows how much inflation cost them. It's a quiet way of stealing from them, and it'll impoverish them over time, but it'll make us, the recipients of the money you print, richer.   You see, Ben, we can charge higher prices for our goods and services. And even if we have to pay more for raw materials, we look good. Our inventories increase in value, and we can claim sales jumped 10% because we raised prices by 10%. Analysts dig that.   Recently, Ben, you've done a decent job on inflation. In July, we were running at an annual rate of 6%. Not bad. But you need to preempt any cooling off. So keep printing.   Now, we're not talking about wage inflation. Oh no. We have to keep wages down. We need cheap labor, or else we'd have to send these jobs to China—which we're doing anyway. And not just to assemble iPhones. Heck, our lawyers in India are doing the same work as our local lawyers for one-tenth the pay. So, if our local lawyers want to be competitive.... Just think how much more profit we could make if wages collapsed!   Real wages have been declining for ten years and fell another 1.7% since July 2010. But that's not enough. So get with it, Ben. Print more. And don't worry about the wusses out there who say that choking the middle class like that will put us into a permanent recession. Just get the banks to loan them lots of money so they can buy our stuff, and when the loans blow up, you buy them from the banks at face value. Full circle, Ben.   The trillions you've printed and handed to us, well, we put them to work, and we created jobs in China and Mexico and Germany, and we bought assets, and it inflated prices, and now we're even richer. We're proud of you, Ben. Think of the influence you have. And not just here. Around the world, Ben! Look at the Middle East and North Africa. See the food riots, rebellions, and civil wars it caused? Thousands of people died and entire governments were toppled.... Oh, wait. That's a bad example.   And then there is Congress. We invested in them through campaign contributions and other mechanisms to get them to spend trillions of dollars every year on our products and services, and they even started a few wars, and it made us richer—without taxing our companies or us. It's a wonderful system.     But the deficits have become so huge that they exceed what the Treasury can borrow. So we're glad, Ben, that you stepped up to the plate and printed enough money to monetize the deficit. But Ben, you can't just stop now! You've got to keep at it. Or else, the whole system will blow up. Well, it'll blow up anyway, but we don't want it to blow up now. So, Ben, you don't have a choice. Otherwise, we'd lose a lot of money in our schemes, and nobody wants that.

Guest Post: The Rise And Fall Of US Confidence, Or Why The Fair Value Of Gold In Phase Space Is $6,000-$12,000 Posted: 30 Aug 2011 02:05 PM PDT Submitted by The World Complex The Rise And Fall Of US Confidence Today we look at a graph of confidence in the US system. The US confidence ratio represents the ratio of outstanding US Federal debt to the dollar value of US gold holdings (as reported*). No corrections for inflation should be necessary, as both terms are valued in the same depreciating dollars. We use the term confidence as the ability of the US to stretch this ratio to (by our thinking) absurd multiples was a reflection of the world's confidence in the United States--which differs from the ability to actually repay debts. For post-1971 I used the assumed holdings of 250 million ounces multiplied by the average annual price (from Kitco). There are those who suggest the true holdings are substantially less than 250 million ounces. That may be so, but the picture is already bad enough if we accept the official numbers. Confidence level sank throughout the Depression up until the beginning of WWII, after which ascendant American power was reflected in a climbing confidence ratio up to the oil crisis in the early 1970s. Confidence sank as the US withdrew from Viet Nam and inflation rose until the price of gold rose sufficiently to restore confidence in American solvency. From 1980 to 2001 was a golden age for the US. In this time, both stock and bond markets were strong, the US currency was strong, and the only credible opposition to US hegemony disintegrated. But every bubble meets its pin, and ever since the planes hit the towers, the US power and prestige has gone into decline. This decline is marked by a rapid decline in the confidence index. How low will it go? There is a provocative looking left shoulder and head, suggesting a drop to the neckline somewhere around 2020, after which there may be something of a resurgence in American confidence. The anticipated completion of the bankruptcy head-and-shoulders formation promises to be a hair-raising event. Actually, though, what appears to be happening is the blowing of bubbles. A bubble is blown, but can only expand so far before confidence fails and the bubble deflates. Then another, in this case larger, bubble is blown. If the bubble is able to deflate without society collapsing, perhaps it will be possible to blow another. Or perhaps we will be wise enough to act in ways that prevent the bubble from being blown in the first place. At the World Complex we are of the opinion that bubbles are bad--but we recognize they can be a lot of fun. Sort of like going on a bender. The US has been on a bender since 1980. Soon the weekend will be over and it will have to be back at work. Although the new boss may be of the Asian persuasion. For the bubble to deflate, the debt must disappear, or the gold price must rise. Assuming no change in debt levels, the gold price would have to rise about ten-fold for the confidence ratio to fall to historical values. Unfortunately, a considerable rise in US debt appears to be baked into the cake at this point, so we would foresee gold to eventually reach breathtaking prices. The 2-d reconstructed phase space of the confidence ratio appears below: On this chart we don't dare suggest anything other than a fall towards the origin of the graph. If the ratio falls to 10, then gold has to rise to about $6,000 per ounce at today's level of debt. If the ratio falls to 5 (the last low in 1980), then gold would have to be about $12,000 per ounce (again, only at the present debt level). The numbers could be quite astronomical once the deficits in Medicare and Social Security start being realized.

Chuckie Evans Goes Full QEtard: Tells Hilsenrath Fed Needs To Do "Much More" Easing Posted: 30 Aug 2011 01:11 PM PDT Confirming that the Fed's doves, every single one of them, are genocidal sociopaths, we have a repeat appearance from Chicago's Chuckie Evans, who first sent stocks barreling in the latest algo driven, no volume meltup, earlier, this time dodecatupling down, by telling Fed lackey Jon Hilsenrath that "we need to do much more to increase the level of accomodation"... much more as in the ~$2.5 trillion of debt that needs to be monetized in the period before Obama's desperate reelection campaign. And by "we", he means the group of 12+1 madmen bundled up in a room in the Marriner Eccles building with or without padded walls, who unlike a simple unfunded blog, believed that Q4 GDP in the US would be about 4% instead of the negative print it is about to be in a few short months. Yes sure: lets give the sociopaths-cum-Econ Ph.D's another run at destroying the world: just because the Arab Spring was not enough to demonstrate just how efficient the Fed is at toppling regimes, this time around they will make sure that the revolutionary wave sweeps across Asia, through Europe, and ends on the banks of the Potomac. Of course, if in the process it also brings with it the much desired hyperinflation that will make the US banking sector whole, who cares if a few million people die - at least Wall Street, which has long since converted its fiat wealth into gold and other real money, will be spared, go on a 5 year vacation to non-extradition Libya, then come back when the shotguns have rusted, and the pitchforks have been dulled, and pick up where they left off. Because as we all know, nobody is more "intuitive" than an Econ. Ph.D, and nobody can create greater financial innovation, aka the primary export of the US, than someone from New York's Financial District. More from the Fed's mouthpiece: Mr. Evans, who stirred markets with similar comments earlier in the day on CNBC, said he felt the Fed needed to make an even stronger commitment to keep interest rates low. He worries the public has tended to be too quick to assume the Fed will raise interest rates whenever the economy perks up a little and says that view is undermining the recovery.   "I would want to nail down expectations about accommodation," he said. "By itself that would be very helpful."   Mr. Evans doesn't think the Fed should raise interest rates until the unemployment rate gets to 7% or 7.5%, or unless inflation threatens to move up to 3% in the medium-run. The Fed has a 2% long- run goal for inflation, but just as it undershot that by roughly a percentage point during the recession, he thinks it is OK to temporarily overshoot it, too. A little hyperinflation never hurt anyone... "Running a little bit above 2% is far from a catastrophe," he said, adding that the 2% goal is what inflation should average over time and it shouldn't be seen as an absolute ceiling.   Without stronger commitments to keep money easy or other efforts by the Fed to boost growth, there is a "tangible risk" the economy won't be any stronger two years from now than it is today, "and I think that would be a huge problem," he said. Perhaps it is time to rename "doves" to "rabid middle class vultures" Mr. Evans is part of a contingent of Fed doves -- officials who tend to be less worried about inflation and favor more action to boost growth and reduce unemployment. The hawks who worry about inflation and oppose more action tend to get a lot of attention because of their recent dissents from Fed decisions. Minutes of an August meeting by officials, released Tuesday, showed that the doves have been very vocal internally.   "A few members felt that recent economic developments justified a more substantial move at this meeting, but they were willing to accept (the measures taken) as a step in the direction of additional accommodation," the minutes said.   Mr. Evans declined in the interview to say whether he would support additional securities purchases by the Fed, also known as quantitative easing. Of course he won't "support" it - he will demand it. Next up: formal targets: The idea of setting formal targets for the economy is an area that is getting more attention inside the central bank. Such a move, some argued in August, "would establish greater clarity regarding the (Fed's) intentions and its likely reaction to future economic developments," the minutes said. Among the targets in question: gold in popular circulation in ounces: zero; middle east country to be nuked to prove Keynes was right after all: Iran; middle class expendable: 50-100 million (carry the 0); weapons to be confiscated: all; start-end curfew hours: 8pm - 6am, and so forth. And since gold is about to be 6102'ed very soon, we urge readers to make a map of where they bury theirs, memorize it, and then swallow it.

Chuckie Evans Goes Full QEtard: Tells Hilsenrath Fed Needs To Do "Much More" Easing Posted: 30 Aug 2011 01:11 PM PDT Confirming that the Fed's doves, every single one of them, are genocidal sociopaths, we have a repeat appearance from Chicago's Chuckie Evans, who first sent stocks barreling in the latest algo driven, no volume meltup, earlier, this time dodecatupling down, by telling Fed lackey Jon Hilsenrath that "we need to do much more to increase the level of accomodation"... much more as in the ~$2.5 trillion of debt that needs to be monetized in the period before Obama's desperate reelection campaign. And by "we", he means the group of 12+1 madmen bundled up in a room in the Marriner Eccles building with or without padded walls, who unlike a simple unfunded blog, believed that Q4 GDP in the US would be about 4% instead of the negative print it is about to be in a few short months. Yes sure: lets give the sociopaths-cum-Econ Ph.D's another run at destroying the world: just because the Arab Spring was not enough to demonstrate just how efficient the Fed is at toppling regimes, this time around they will make sure that the revolutionary wave sweeps across Asia, through Europe, and ends on the banks of the Potomac. Of course, if in the process it also brings with it the much desired hyperinflation that will make the US banking sector whole, who cares if a few million people die - at least Wall Street, which has long since converted its fiat wealth into gold and other real money, will be spared, go on a 5 year vacation to non-extradition Libya, then come back when the shotguns have rusted, and the pitchforks have been dulled, and pick up where they left off. Because as we all know, nobody is more "intuitive" than an Econ. Ph.D, and nobody can create greater financial innovation, aka the primary export of the US, the than someone from New York's Financial District. More from the Fed's mouthpiece: Mr. Evans, who stirred markets with similar comments earlier in the day on CNBC, said he felt the Fed needed to make an even stronger commitment to keep interest rates low. He worries the public has tended to be too quick to assume the Fed will raise interest rates whenever the economy perks up a little and says that view is undermining the recovery.   "I would want to nail down expectations about accommodation," he said. "By itself that would be very helpful."   Mr. Evans doesn't think the Fed should raise interest rates until the unemployment rate gets to 7% or 7.5%, or unless inflation threatens to move up to 3% in the medium-run. The Fed has a 2% long- run goal for inflation, but just as it undershot that by roughly a percentage point during the recession, he thinks it is OK to temporarily overshoot it, too. A little hyperinflation never hurt anyone... "Running a little bit above 2% is far from a catastrophe," he said, adding that the 2% goal is what inflation should average over time and it shouldn't be seen as an absolute ceiling.   Without stronger commitments to keep money easy or other efforts by the Fed to boost growth, there is a "tangible risk" the economy won't be any stronger two years from now than it is today, "and I think that would be a huge problem," he said. Perhaps it is time to rename "doves" to "rabid middle class vultures" Mr. Evans is part of a contingent of Fed doves -- officials who tend to be less worried about inflation and favor more action to boost growth and reduce unemployment. The hawks who worry about inflation and oppose more action tend to get a lot of attention because of their recent dissents from Fed decisions. Minutes of an August meeting by officials, released Tuesday, showed that the doves have been very vocal internally.   "A few members felt that recent economic developments justified a more substantial move at this meeting, but they were willing to accept (the measures taken) as a step in the direction of additional accommodation," the minutes said.   Mr. Evans declined in the interview to say whether he would support additional securities purchases by the Fed, also known as quantitative easing. Of course he won't "support" it - he will demand it. Next up: formal targets: The idea of setting formal targets for the economy is an area that is getting more attention inside the central bank. Such a move, some argued in August, "would establish greater clarity regarding the (Fed's) intentions and its likely reaction to future economic developments," the minutes said. Among the targets in question: gold in popular circulation in ounces: zero; middle east country to be nuked to prove Keynes was right after all: Iran; middle class expendable: 50-100 million (carry the 0); weapons to be confiscated: all; start-end curfew hours: 8pm - 6am, and so forth. And since gold is about to be 6102'ed very soon, we urge readers to make a map of where they bury theirs, memorize it, and then swallow it.

Return of Deflation Gold Mirrors 2006 Rally Crash, Stocks Primed for Major Wave Down Posted: 30 Aug 2011 12:56 PM PDT from ContraryInvesting:

Physical Gold And The GLD: Just What Is Going On Here? Posted: 30 Aug 2011 12:48 PM PDT Friday afternoon Hurricane Irene hits.  Saturday morning power goes out.  Saturday evening power comes on.  Sunday clean up the mess.  Monday go back to work.  Monday evening Internet goes down.  Tuesday morning eye glasses break in half. Life's A Beach! Over the past week the mainstream financial news media has been all a twitter about the "Gold Bubble Bursting".  Unfortunately for the top callers, Gold has to be in a bubble before it can burst.  In my post on August 23rd, the morning of the Gold take down from it's recent ALL-Time high, I tried to make a clear case that Gold was nowhere near being in a bubble. It's amusing how the mainstream media determines a market is "in a bubble".  It rises quickly to a new high, therefore it must be "in a bubble".  What simpletons.  Gold rose over $400 from it's July first low because of a massive short squeeze of the Banking Cartel.  Gold bubbles are not created on the back of a short squeeze. Yes, Gold did fall dramatically from it's early morning August 23nd high above $1900, and why or what caused it to fall is irrelevant.  Gold is not in a bubble, and it's bubble did not burst.  On August 23rd, Gold fell $67 an ounce.  On August 24th, Gold fell $79 an ounce.  At one point on August 25th, gold had fallen ANOTHER $49 an ounce.  Over the course of two and a half trading days, Gold fell $195 an ounce..over 10%.  A minor, overdue correction. What if I told you Gold's drop in price August 23-25 was designed by the banking cartel to get their hands on much needed physical gold to make deliveries on the August Gold contract before they were wiped out in the short squeeze that began July 5th, and accelerated on news of Hugo Chavez's demand that Venezuela's Gold be repatriated?  What if I told you that the 10% correction in Gold is a signal that Gold is about to rocket higher in the coming weeks towards yet ANOTHER new ALL-Time high? Lance Lewis, a newsletter writer, has developed an indicator he calls "the GLD puke indicator".  This indicator tracks the fall in physical ounces of Gold held by this ETF.  Of particular interest are daily drops in the Gold holdings of GLD in excess of 1%. One-day declines in the holdings of this ETF of over 1% have tended to be capitulatory in nature and have typically occurred near important lows in the Gold price during Gold's secular bull market. When one goes back and looks at where these 1% declines in bullion holdings have occurred, virtually all of them occurred "at" or were "clustered at" important lows in the gold price. On August 23rd, GLD's Gold Bullion holdings dropped 1.93%. On August 24th, GLD's Gold bullion holdings dropped 2.16%. Note that the last significant "puke" of Gold bullion from the GLD was on January 25th, 2011.  The GLD coughed up 2.48% of it's bullion holdings.  Gold bottomed on January 27th, 2011 at $1318, and then went on a run three month rally that peaked on May 1st at $1577 an ounce. The GLD also puked up 1.82% of its Gold bullion holdings on August 11, 2011.  COINCIDENTALLY the day of the first CME margin hike.  Gold prices bottomed on August 12th at $1725...the early morning of August 23rd saw Gold at $1917, up a full 11% in eleven days after the GLD puked. Geezo-beezo, is it just be another coincidence that the GLD pukes up 4.09% of it's Gold bullion holdings between August 23 and 24 just in time for the second CME margin increase in Gold on August 24th? Just what is going on here?  Could the GLD puke indicator be telling us that physical Gold bullion is in far tighter supply than any of us has imagined?  Is the Banking Cartel so desperate for physical metal to meet delivery demands that they must force a sell-off in the Gold price so that they may then buy discounted shares of GLD and then redeem them for physical Gold from the GLD trustee?  Could the GLD puke indicator be signaling traders that the banking cartel are ripe for a short squeeze due to their lack of physical bullion to meet delivery demands? On January 29, 2011, FOFOA posted on their blog site an essay Who is Draining GLD?  This is where I first learned of the "GLD puke indicator".  In this essay FOFOA considers that "buyers of size" may be behind the take downs in the price of Gold, and the subsequent puking of bullion by the GLD. What was relevant then, relative to "buyers of size" in the market at a Gold price of $1318, is probably even more relevant today with a Gold price of $1900.  I'll let FOFOA explain: What we appear to have here is a severely tight noose around the supply of Bullion Bank deliverable physical gold at a time when the Giants are chomping it up! Bullion Banks have many means at their disposal to shuffle around a globally limited quantity of gold reserves and get it to where it needs to go. Especially when "important clients," like those in the East or Middle East, come calling for physical delivery or allocation. Upon getting requests from unallocated depositors for either outright withdrawal, or more simply for transfer into allocated accounts, any Bullion Bank has options. Yes, it can seek to acquire (through borrowing or purchase) the requisite ETF shares for redemption of a "basket" in its special capacity as an Authorized Participant of GLD But what if those other options are disappearing faster than a sack of currency left on the COMEX trading floor? If gold (in size) on the open market is scarce, the unallocated pool is spoken for (in other words, undergoing allocation) and the fraternity brothers are all suffering the same noose, what do you think becomes the most efficient and cost-effective option? Raiding the GLD reservoir perhaps? Did you even know that you could take physical delivery from GLD? I highly recommend reading the entire essay.  It is very insightful. A basket of GLD shares is 100,000 shares.  Each basket equals 10,000 ounces of Gold.  This is the minimum that can be redeemed for physical Gold. A basket of GLD shares can ONLY be redeemed through an "Authorized Participant"... Authorized Participants are: BMO Capital Markets Corp., CIBC World Markets Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., EWT, LLC, Goldman, Sachs & Co., Goldman Sachs Execution & Clearing, L.P., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc., Merrill Lynch Professional Clearing Corp., Morgan Stanley & Co. Incorporated, Newedge USA LLC, RBC Capital Markets Corporation, Scotia Capital (USA) Inc., and UBS Securities LLC The bullion banks, aka the Banking Cartel.  Is the GLD a front, a Gold reservoir for the CRIMEX?  Was the GLD created specifically for the purose of supporting the CRIMEX Gold price suppression...perhaps as a safety valve? The GLD puke indicator would seem to suggest the GLD's existence is twofold.  One to give the impression that physical Gold supply is greater than that which actually exists in the hopes of suppressing price with "supply", and two, to give the Banking Cartel a reserve from which to meet demand that exceeds CRIMEX supply.  Is the markets management of the physical Gold supply nothing more than a shell game, with price being the victim? More questions I struggle to answer, but find ever easier to ask.  Clearly however, the data shows that when the GLD pukes up physical gold bullion, a rise in the price of Gold is soon to follow. Gold has since risen $132 from the August 25th low following the two-day GLD puke of 4.09% on August 23-24.  The GLD puke indicator's accuracy is proven once again.  It would pay to pay close attention to the GLD physical Gold holdings in the event of another CME margin hike as another major short squeeze of our banking Cartel appears to have been initiated.  At this time, $1705 would appear to be a major low in the ongoing secular Bull Market in Gold. Gold Bubble blowers be damned...don't fight the Fed. Gold At $1,950 Within The Month Reaffirm UBS; JP Morgan $2,500 Year End Call Remains From Zero Hedge The UBS daily note reports that "the mood among gold investors appears to be to buy the dip rather than chase the market, which is understandable given last week's volatility." UBS conclude that the "violent sell-off hasn't done any lasting damage to gold, and the reasons investors bought gold in recent months remain valid. Our one-month forecast of $1950 remains in place." UBS three month price view is $2,100 per ounce. Very significant demand being seen for bullion internationally and especially in Asia means that gold's correction is likely to again be of short duration. Indeed, the scale of demand suggests that gold may not need a long period of consolidation and could again surprise to the upside.  Bank of America-Merrill Lynch said in a research note it was revising its 12-month gold target to $2,000 an ounce. JPMorgan said that gold could reach over $2,500 per ounce prior to year end. The recent sell off has not seen banks and analysts revise down their price forecasts. A Dispirited Fed Chairman Emerges From Jackson Hole From Zero hedge A thoroughly chastened and discouraged Fed Chairman Ben Bernanke gave his annual speech last Friday at the Fed conference in Jackson Hole, Wyoming. After reading this year's speech, and then re-reading last year's speech, I found his tone gloomy and dispirited. This is a far cry from the younger, more confident Ben Bernanke who in 2002 told Milton Friedman at his 90th birthday party that Milton was right about the Fed causing the Great Depression and "we won't do it again." Of course Milton was right about the Fed but for the wrong reasons, which could be part of our problem. If you have followed Bernanke's speeches over the years, at least since the Crash of '08, you will get a flavor of the man. Like all Chairman his tone has to be sober, reservedly confident, and in control. Unlike The Oracle, Chairman Alan Greenspan, who gave little clarity or direction at all, Dr. Bernanke has tried to be more "transparent" in communicating Fed policies. It is my impression that while he has tried to exude confidence, he is now clearly discouraged. As well he should, since none of the Fed's "suite of tools" have worked as intended and almost every forecast the Fed has given since the Crash has been wrong. Fed Dove Evans Open Mouth, Demands More QE, Sends Gold Soaring From Zero Hedge Who would think that all it takes for gold to surge by $40 in under an hour is for the Fed to resume the old song and dance. Yet that is precisely what happened: ever since Chicago Fed president Evans sat down with Steve Liesman to discuss that he would be in favor of more easing, and saying he believes in "room for accommodation" and that we "still need to do more on monetary policy", gold soared from under $1790 to over $1830. And confirming that gold will go far higher is his statement that "Fed policy was not a driver of the commodity price surge." In other words, these buffoons have not learned anything, and the commodity price shock is coming. However, as usual, it will be blamed on speculators. Luckily the CME can hold them in their tracks with a relentless series of margin hikes. Or not. When will the CME finally hike margins on printer toner cartridges? A Few Fed Policy Makers Favored Stronger Move By Jeannine Aversa and Scott Lanman A few Federal Reserve policy makers this month favored more aggressive action to stimulate the economy and lower unemployment, minutes of their meeting released today showed. Those members, who weren't identified, "felt that recent economic developments justified a more substantial move" beyond the pledge adopted at the Aug. 9 meeting of the Federal Open Market Committee to hold its key interest rate at a record low until mid-2013. Fed officials discussed a range of tools, including buying more government bonds, to bolster the economy, without coming to an agreement on what they might do next should the economy weaken further. They will more fully debate their options when they gather next month for a two-day meeting that was originally scheduled to last one day. At the August meeting, the Fed staff cut its estimate for gross domestic product in the second half of 2011. That was the fourth consecutive downward revision to its near-term outlook, the longest series of downward revisions since the recovery began two years ago. The staff also cut its 2012 outlook and lowered its appraisal of the economy's potential growth rate. Besides buying government bonds, the Fed could cut the 0.25 percent interest rate it pays bank on the $1.6 trillion in excess reserves parked at the Fed. It also could replace shorter-term securities with longer maturities, which may help lower interest rates on mortgages and other long-term debt. The Fed also could pledge to keep its balance sheet near a record $2.86 trillion for an "extended period" or for a specific time period. In contrast, some Fed officials "judged that none of the tools available" to the Fed "would likely do much to promote a faster economic recovery," the minutes said. These officials were concerned that providing additional stimulus would risk boosting inflation without providing a "significant benefit" to bolstering economic growth or lowering unemployment. Stocks Extend Gains on Hopes for More Economic Stimulus- AP The mere discussion of more economic stimulus from the Federal Reserve was enough to send stocks higher Tuesday. The Dow Jones industrial average rose 20 points, and the Nasdaq added about 0.5%. This Is The Way The Hopium Ends: Not With A Bang, But With The Biggest Collapse In Future Consumer Expectations... Ever From Zero Hedge The charts below demonstrate the 6 month change in the 6 month forward looking Consumer Confidence outlook: in other words, this chart measure just how deceived US consumers have been by hopium consumption 6 months ago compared to reality now. In short: 2011 has been the most disappointing year for Americans in history. Whether it is due to excess hopium consumption or not... well, it is not irrelevant.

Behind the Scenes at GLD Posted: 30 Aug 2011 11:00 AM PDT Author: Vedran Vuk Synopsis: Alternative gold investments don't always track the precious metal itself as closely as their owners or investors might like. Doug Hornig explains how one such investment, the exchange-traded fund GLD, works. Dear Reader, The New York Times had a piece today about Steve Jobs' lack of philanthropy. He's earned billions yet has seldom donated to any charitable organization. Since some readers may already donate to charities or may consider doing so in their financial future, I thought this subject would be worth discussing. First of all, I don't think that there's anything wrong with charity. In fact, when done correctly, charity is a very noble act. Furthermore, I don't buy into the libertarian argument that if billionaires such as Jobs want to help the world, then they should create another billion-dollar company. Yes, the world would b...

Stephen Leeb: Gold Skying Because of Bernanke Desperation Posted: 30 Aug 2011 10:57 AM PDT from King World News: With gold surging roughly $40, now trading above $1,825 and silver over $41, today King World News interviewed acclaimed money manager Stephen Leeb to get his thoughts on where things are headed. When asked about the reason for the big move in gold Leeb replied, "I think that there is no doubt that the strong move in gold is the anticipation of more Fed action. More Fed action means more dollars, means more currency out there. Gold is really in the early innings right now. When inflation in this country hits 8%, 10%, 12%, then you might say gold is in a later inning. Maybe then it will be in the 6th or 7th inning, I know this sounds crazy, but it's true." Stephen Leeb continues: Read More @ KingWorldNews.com

Gold Stocks Coiled Again Posted: 30 Aug 2011 10:49 AM PDT By Neil Charnock www.goldoz.com.au Gold has roared an assertive “here I am” as a wider group of investors realized the problems in the financial system were worse than they previously thought. It is hard to let go of a concept when you are taught something and believe it for a long period of time. This is especially hard when your model fits the world nicely over this time span. I have not written this article to be condescending I sincerely understand how hard it is to let go of a newly broken concept that has worked in the past. I believe this is the hurdle that is gradually breaking down and changing sentiment in the precious metals sector. Gold stocks are now freshly coiled and raring to go up. I have watched the journey from 2001 and have read comments over the years that speculated about what price level would finally ignite strong interest from the general public. It was going to be the old yearly closing price record and then the 1980 high, the...

The ultimate, ‘we lose a dollar on every sale but make it up on volume’ con (er, I mean, Groupcon) Posted: 30 Aug 2011 10:43 AM PDT Groupon’s MySpace Moment? Groupoff: Some business owners say they lose money on Groupon and other coupon deals

While We Have Our Eye's on One Dollar Moves, Silver is Planning to Triple, Gold to Double and More Posted: 30 Aug 2011 10:24 AM PDT Gold Price Close Today : 1826.70 Change : 38.20 or 2.1% Silver Price Close Today : 41.398 Change : 0.852 or 2.1% Gold Silver Ratio Today : 44.13 Change : 0.015 or 0.0% Silver Gold Ratio Today : 0.02266 Change : -0.000008 or 0.0% Platinum Price Close Today : 1855.50 Change : 31.50 or 1.7% Palladium Price Close Today : 773.50 Change : 17.35 or 2.3% S&P 500 : 1,212.92 Change : 2.84 or 0.2% Dow In GOLD$ : $13,081.81 Change : $ (277.82) or -2.1% Dow in GOLD oz : 632.832 Change : -13.439 or -2.1% Dow in SILVER oz : 27,923.93 Change : -586.26 or -2.1% Dow Industrial : 1,155,995.00 Change : 20.67 or 0.0% US Dollar Index : 73.98 Change : 0.256 or 0.3% The GOLD PRICE baffled everyone today by rising $38.20 on Comex and closing at $1,826.70. It's now trading at $1,839.10, but nobody -- least of all me -- seems to know why, other than, "Somebody's buying it." GOLD is pounding hard on that $1,850 ceiling, or it is tracing a double top with last Friday at $,1850. First important support stands at $1,780. Overhead the SILVER PRICE needs to barrel through $1,850, and soon, or admit to beginning a longer correction. I am blowing hot and cold out of both sides of my mouth -- like a parricide throwing himself on the mercy of the court because he's an orphan -- because although gold's past 10 days' performance gives it a downward bias, I have been consistently UNDERestimating gold's performance. If it closes higher tomorrow I will admit it is rising again and hop aboard. The SILVER PRICE has also beaten me up lately. Friday, yesterday, and today the SILVER PRICE has traded in a range of roughly 4025c to 4150c. This patter either marks a top or a continuation (a breather before rising higher). SILVER actually looks more likely to rise than GOLD. Last week's correction took it nearly to its 50dma, and set up what might be another move up. Ratio rose today, but remains equivocal. Down below the SILVER PRICE needs to hold 3976c, while up above it must cross 4200c, then 4400c to prove anything at all. All this is just dithering about what tomorrow might bring, but the long term outlook has not changed. While we have our eye's on one dollar moves, silver is planning to triple, gold to double and more. These markets are not suitable for shallow pockets or the impatient. Stocks stalled today at 11,600, unable to punch through resistance there. Better shoot the general in charge and bring out another. Dow needs some new energy breach 11,600. Dow closed today up a nothing 20.7, a jiggle, to 11,559.95. S&P waddled right along side, up 2.84 to 1,212.92. Temporarily momentum is up because day before yesterday stocks closed above their 20 day moving average. Still, that needs to be confirmed by a continuing advance and a close over the 50 dma, now at 11,926. Here's what I don't like about the US Stock Market: a real stock market has an economy behind it. The US stock market doesn't, at least, not one that is anything grander than a filmy veil hiding the ugliest bride you can imagine. Somebody's getting fooled. Stocks -- they are the sow behind the propaganda lipstick. Watching currencies -- all of 'em -- is like being dragged to your child's fiddle recital. Some of the children are getting it, but up steps one or two who are wasting their parent's money shamefully and would be better off being taught how to do something useful like changing tires or laying asphalt. Y'all know what this is like. The performance is painfully bad, so bad you don't even lean over to your wife and giggle in her ear, because the spectacle is so embarrassing for everybody you'd be ashamed to do that. Anyhow, the US dollar index rose 25.6 basis points today, a magnificent 1/3 of 1%, to 73.977. More meaningless movement within a narrow range, before a rally which will probably proceed a drop to 39 [sic] or so. Yesterday the dollar defended and validated support above 73.40. Wow. That leaves me so excited I'm not sure I can stay awake. Then there's the euro. Yesterday it traded to the top of its narrow range (high 1.4546), then today gapped DOWN to close at 1.4443, down 1/2%. Euro has a great future as an oddity of history. Yen remains close to the top of its range, held down only by the mortification of the Japanese Nice Government Men. 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.

Tracking Gold : Behind the Scenes at GLD Posted: 30 Aug 2011 10:13 AM PDT Casey Research

$1800 Can’t Kill Gold Demand Posted: 30 Aug 2011 09:34 AM PDT Addison Wiggin – August 30, 2011 Up, down, back up again: Gold crests $1,800… again. China, India and the global 'love trade'… The ideal moment to load up on gold stocks… and a special offer with access to your best picks, free… Dow up 800 in three weeks: Why Chris Mayer says "meh" and what he's doing instead… Smash the system? Heh… protesters stuff corporate coffers instead… The mailbag unplugged (at last!): Hurricane irritation, regulatory overreach, a Tea Party "sex strike"… economics in one lesson and more! If you woke up this morning a little bleary eyed, you likely blinked and missed gold's latest sortie above $1,800. Our favorite precious metal shot above $1,800 Friday… and tumbled back below yesterday… only to reclaim it again today. At last check, the spot price is $1,829. Warning: If you have been following our advice and been buying gold since it was in the $280 range, the following episode of The 5 contains a fair dose of guilty pleasure. In fact, perhaps just to spite "bubbles Roubini" this morning, The 5 takes (yet another) look at what near record prices are doing to demand for the Midas metal in markets around the globe. Slowing it down, right? Well, no. Not in China — the world's largest gold producer and its second-largest consumer.. In shops around Shanghai, a Reuters survey found "surprisingly solid gold sales over the last few weeks. Shoppers [are] unfazed by gold's stellar price gains. "Demand from the world's most populous country," the world's oldest news organization of the English speaking world adds helpfully, "is adding hundreds of thousands of people to the ranks of affluent and middle-income consumers of gold every year. [Which] implies that the long-term price floor for gold is set for a steady increase…" How about India? Not in the land of curry, either. In India — the world's No. 1 gold-consuming nation — the "love trade" is about to kick in. Gold consumption during the gift-giving season — which begins in earnest on Oct. 26 with Diwali — is expected to surge 25%. "Purchases may climb to 250 metric tons in the three months ending Nov. 30," say Rajesh Exports, India's biggest jewelry maker. That's up from 200 metric tons last year. Of course, Diwali in October is followed by Indian wedding season… then Christmas in the West… and then Chinese New Year In Dubai, today is the first day of Eid al-Fitr, the Muslim holiday that marks the end of Ramadan and "traditionally a period of strong gold buying in the Middle East," according to Sharps Pixley. "Traders and investors… and you newsletter writers… are always fixated on the 'fear trade,'" our friend Frank Holmes chided us about over drinks at the Fairmont lounge during our Vancouver symposium in July. "But it's the 'love trade' that drives demand several times a year." "It's all good," we assured him. "We can live with love." "Gold's steady rally — still without mining stock participation — presents an opportunity," says our short strategist Dan Amoss, turning our attention to the gold stocks. "The HUI Gold Bugs Index includes all the popular large gold stocks. The ratio of the HUI to gold has weakened over the past six months — retracing half of its rally from generational lows in late 2008: "Large-cap mining stocks will report spectacular cash flows in the second half of 2011," Dan goes on. "Gold mining projects must compete with base metals projects for mining equipment. As global GDP growth slows and base metal prices weaken, the competition for scarce mining equipment and skilled labor should ease." Meanwhile, "high capital and operating costs, which have held down gold mining stock prices, should decline. Diesel prices should remain weak in terms of gold (perhaps not in terms of dollars), offering another boost to profit margins." Dan suggests it's also looking like a prime time to jump into the higher-risk-but-higher-reward junior gold miners, a segment that has heretofore remained not nearly as attractive. "Take a look," Dan says, "at this 10-year monthly chart of the TSX Canadian Venture Index, a proxy for junior mining stocks. "It shows that in most years, the first half tends to be weak, offering buying opportunities. And the second half of the year typically witnesses strong rallies:" "The two exceptions: In 2007-08 (straight down) and 2009 (straight up) as a deflationary depression was fully priced in — and then didn't happen." "After the recent rally in gold bullion prices above $1,900 per ounce, the junior mining stocks still have plenty of catching up to do." Mr. Amoss made a recommendation last Friday: a small firm working a 55-million ounce deposit in Western Canada. The guy who runs the firm has an incredible track record, building his last company from a $2 million market cap to $2 billion. [Ed. Note: This is a remarkable time. Unique in your lifetime, even. With gold hitting new highs on a routine basis, the mainstream is just about to come around. Many of our analysts are "backing up the truck" on gold stock recommendations. So much so, we've assembled a special report of AF's top gold picks and we want to give it to you for free. Along with your free report, we're opening a unique opportunity for you to join one of our most valuable membership services, The Equity Reserve. If you'd like a chance to make some solid gains with record highs in gold… as well as the trends and forecasts we've been highlighting here in The 5… but you're not interested in trading options, currencies or commodities… the Equity Reserve is perfect for you. The Equity Reserve gives you full access to our five entry-level newsletters… plus four of our premium services… Energy & Scarcity Investor, featuring tiny energy and mining plays hand-picked by Byron King Breakthrough Technology Alert, with Patrick Cox's life-changing microcap opportunities in high-tech and biotech Mayer's Special Situations, with under-the-radar opportunities from Chris Mayer Penny Momentum Trader, where Jonas Elmerraji aims for double-digit moves over holding periods of six weeks or less. The Equity Reserve represents an incredible value. (Easily one of the highest values in the newsletter industry today. We've been to the meetings and "round tables." We know what our competitors are offering…) What's more, as a new member, you get an immediate all-access invitation to join us in Baltimore for our Emergency Summit Oct. 13-14, 2011 — a "boot camp" for investing in these volatile and "interesting" times. The following Equity Reserve invitation is an extraordinary offer — one we've never extended before and aren't liable to extend again. Please, review your list of benefits right here. Including your free special report detailing the array of Agora Financial's top gold stock recommendations… free of charge, gratis for taking a trial membership. Give it a shot.] U.S. stocks are drifting after yesterday's big gains. The major indexes are down, but not by much, as traders digest these numbers… Home prices gauged by the Case-Shiller home-price index moved up 3.6% from the first quarter to the second, but are down 4.5% year over year. Every city in the 20-city survey experienced a year-over-year decline; the Twin Cities had it worst, and even the government-inflated bubble of Washington, D.C., couldn't escape a modest 1.2% drop Consumer confidence as measured by the Conference Board plunged to its lowest reading since April 2009. This was another instance of the result being lower than even the lowest guess among dozens of economists polled by Bloomberg. The market will likely drift most of today until the midafternoon release of minutes from the Federal Reserve's Aug. 9 meeting. From that, traders will try to deduce the Fed's next moves on Sept. 21, much as a witch doctor examines entrails. The Dow is up 800 points in the last three weeks. "The rally is surprising if you focus on the bad economic news and the potential for another recession," says Chris Mayer. "It's not… if you look at stocks compared with what else you might do with your money." In this space two weeks ago, Mr. Mayer observed that relative to Treasuries, stocks hadn't been this attractive in three decades. Not long after that panic, money flooded out of stocks and into Treasuries. "A tidal wave of money pushed the short-term T-bill negative for a brief moment," Chris recalls, "but it would be irrational to stay there for long, given where stocks are." Now comes a report from James Bianco of Bianco Research — with a chart showing price-earnings ratios for the last half-century, along with his projection of 2011 earnings… "Low rates benefit P/E (price-earnings ratios) more" than slowing economic growth hurts them, Bianco maintains. Based on the 10-year Treasury rate of 2.2%, he thinks fair value for the S&P 500 would be at least 14 times earnings. That's 1,358 on the S&P, which would mean a 13.5% rise from here. "Of course," Mr. Mayer points out, "you could poke holes in this a few different ways. Interest rates could rise. And earnings could fall. So far, neither has happened. Corporate profits for the first half of the year have been strong, for example. "It can be helpful sometimes to have a sense for the backdrop on the overall market. In the late 1990s, it helped to understand the market was frothy. By 2000, it made no sense at all, with even ho-hum companies like Coca-Cola commanding a price-earnings ratio of 50 times. It helped to know in the late 2000s that there was a housing bubble. It meant you skated around banks, real estate and housing stocks." Chris' unique conclusion: Unlike the tech bubble or the housing bubble, "today, though, there are no such extremes in the stock market as a whole. I think the market is in some gray middle area — neither cheap nor dear." In other words, it's a stock picker's market — which is exactly what Chris likes. "I don't buy the stock market," Mr. Mayer asserts, "I buy stocks. I buy businesses. And I look to hold onto them and not trade them." For some of Chris' favorites, look here. And for access to all of our editors' favorites across the spectrum of stocks, you can't go wrong with the Equity Reserve. We wouldn't be urging you this hard if, in fact, we didn't believe the following offer is your best possible shot at maximizing returns before the "love trade" concludes early next year. Last today, let's file this one under: "Subversion FAIL." It seems protesters of all stripes have taken a shine to the Guy Fawkes masks made popular in the 2006 movie V for Vendetta. It's become a particular favorite of Anonymous, the computer hackers who sometimes turn out for public protests against Scientology, or police brutality or even the Federal Reserve. Turns out, selling the masks is a good business. "We sell over 100,000 of these masks a year," says Howard Beige, executive vice president of Rubie's Costume in New York. "We usually only sell 5,000 or so of our other masks. "We just thought people liked the V for Vendetta movie. Then one morning I saw a picture of these protesters wearing the mask in an online news article. I quickly showed my sales manager." "What few people seem to know," says a bubble-bursting article in The New York Times, "is that Time Warner, one of the largest media companies in the world and parent of Warner Bros., owns the rights to the image and is paid a licensing fee with the sale of each mask." Heh… as Thomas Frank would say, "Commodify your dissent." Maybe the nabobs who populate the ranks of Anonymous will target Time Warner next. Wouldn't that be sweet irony? "I wonder," writes a reader of the gold market's action last week, "why seven hours before margin requirements were raised on gold, the price was down $100.00. "To say it leaked out through our fearless leaders and commodities exchange hours before it was released to the public would not be out of the question — just as bank stocks jumped 10% or more before the bailout." "No wonder our congressmen and -women are so rich. They are exempt from insider trading… nor does the SEC ever find the obvious." The 5: Suspicious, indeed. But other than the obvious enjoyment one derives from conspiracy theories, why obsess over the short-term movements? Dollar cost average your way into gold, so you smooth out your acquisition costs, and give yourself peace of mind while the trend still holds. Here's a good place to start. "I'm somewhat annoyed by your comment that Irene was underwhelming," writes another reader. "Lots of preparation by some very careful people made it a nonevent for most of us." "The storm reminds me of Y2K, where a whole lot of meticulous work turned it into a nonevent too. I sincerely hope the people who 'hyped' Irene are around the next time and make it a nonevent too. I personally thank each and every one of those dedicated professionals." "Really?" adds another. "Thirty-seven dead, fourth deadliest hurricane. Surely you're not so desensitized that you can't recognize tragedy! You offer good advice, but sometimes get too partisan. Leave the rhetoric to the politicians." The 5: "Partisan?" What's partisan about media and the wea… oh, never mind. "The tweet from Lizzie O'Leary was illuminating," writes another reader who managed to figure out that we found Irene underwhelming relative to the media's bigger-than-Katrina treatment. "I live in New York City and spent some time on Saturday morning scanning cable and broadcast news channels for some storm information." "Each channel was filled with hysterical commentators shrieking on about how awful things were. Yet the images shown just didn't look that severe. As I suspected, the storm wasn't so bad, yet trying to find honest and useful commentary accurately describing what to expect from the storm was simply impossible." "Amidst the blaring headlines and constant commercials was nonstop shrieking about how awful it was to be. In the end, we got some wind, some rain and in a five-block radius around my apartment, one poor small tree fell over. At least the supermarkets had a great day Saturday." "The one near me was packed. Who knew shopping carts jammed with beer and chips were survival supplies?" "Of course, the stores bought the hype and closed all day Sunday, which ended up a mostly cloudy and breezy, dry, perfectly safe day. So I guess it all balanced out — media-hyped, crazed-sales Saturday and an unfortunate total loss of business on Sunday." "It's not just financial news — we can't even get honest, nonhyped weather reporting, either." The 5: We have this conversation all the time: Media is entertainment. Not the "news." You get what you pay for. "Whenever attorneys need work," writes a reader in response to the "news" the Securities and Exchange Commission (SEC) is undertaking to regulate the hydraulic fracturing of shale gas deposits, "Congress listens, and apparently, so does the administration." "It appears the Brotherhood of Attorneys, to which most members of our esteemed Congress belong, had some empty pages in their day timers. So we now have the SEC concurrently doing work done by the EPA." "I wonder: Will we now have the EPA requiring corporations to submit their balance sheets, P&L and forward-looking statements when an environmental permit is applied for? What's next? Will the SEC require proof that the board of directors' flu shots are current?" "If the people in government don't snap out of this zombie-like trance they are in, they will wake up one day and find that the brightest and best that was America has moved on to a place that provides them with a better opportunity, just like America was for those that sought a better opportunity away from their homeland over 100 years ago." "What an idea!" writes a reader who saw our item on the sex strike in Colombia. "My grandfather used to say that the best contraceptive was a pair of crossed legs. Maybe this could spread to the United States and the Tea Party." The 5: Um… your suggestion is a tad racy for a family outfit such as ours, but we can't help but ask: What conditions do you think the Tea Party women should set before agreeing to end the strike? Cheers, Addison Wiggin The 5 Min. Forecast P.S. "Chris Mayer's recommendation of Hazlitt's book Economics in One Lesson cannot be emphasized enough," adds our last reader for the day. "If all were required to read this pithy tome, and just 50% grasped its contents, then we would not be a nation of economic illiterates." The 5: Well, taking Hazlitt's lead, we wouldn't want to make the read "compulsory" exactly… except perhaps among the bureaucracy. Not that it would do much good. P.P.S. "Gold stocks are like dry kindling in a forest," Chris Mayer advised his readers yesterday. "They'll light at some point." When? Don't fret about that. Just load up on the best stocks you can find. Our team has sniffed out six of the best in a special report available to you right now. Learn how to get yours here.

Things That Make You Go "WTF?" Posted: 30 Aug 2011 09:31 AM PDT I heard a funny joke today:  Q:  How do you starve an Obama supporter?   A: Hide his food stamps under his work boots...Jobs are out there for many of those who want them, otherwise there wouldn't be people from Mexico sneaking into this country in order to work.  But why work if the Government makes it possible for you to not work?...I wanted to point out that, per the most recent Government report on personal income report, LINK, that 18% of all personal income is derived from Government transfer payments.  One way to think about this is to consider that a large percentage of the taxes you pay are taken and distributed back to certain segments of the population and counted as their income.  I don't know about you but I believe that's just wrong.  I suppose I could dig up the portion of my income is that is taken from me and given to others, who contribute nothing to our system, but I'm not ready to move out of the country to an island somewhere yet and I might do that if I knew that number. Einstein once said that the definition of "insanity" is to keep doing the same thing, over and over again, but expecting different results.  I was reminded of this when I read comments by Gerald Celente in the King World News Blog LINK  Celente has huge respect from me because his vision is very similar to mine.  Sometimes I like to think he must have had my phone conversations taped back in the early 2000's, even though I think he's been a super-bear long before I saw the light.  Anyway, Celente referenced the fact that a couple of years ago Nouriel "Gold is in a bubble" Roubini had said that gold would never reach $1,100.  How's that forecast looking?  Now Roubini is out pounding the gold bubble table once again.  At some point you have to consider that maybe, according to Einstein's definition, Roubini is insane...Reminds of 2002 timeframe when gold was around $375 and Robert Prechter said that the gold was move over and that it was going to collapse to $50.  Haven't heard from Prechter on gold in a LONG time.  Maybe he's saving a bed for Roubini in the mental ward of Bellvue Hospital in NYC...

Walter Williams On The 2012 Election And Sound Money Posted: 30 Aug 2011 09:29 AM PDT From by Casey Research Guest Post: Walter Williams On The 2012 Election And Sound Money Walter Williams has been a professor of economics at George Mason University in Virginia since 1980. He is the author of many books, hundreds of articles and a weekly syndicated column. You may have caught some of his many radio and television appearances – a champion of free-market economics speaking out against socialism and intrusive government. He has described laissez-faire capitalism as "the most moral and most productive system man has ever devised." Casey Research: Good morning, Dr. Williams. I was immensely relieved to learn that you were not the author of the recent article No Matter What, purporting to explain why, no matter how bad things get, President Obama would win a second term. The article was widely circulated, however, and I have some concern that a lot of people were misled but never learned that you had not written it. Walter Williams: Of course the article was a hoax. When it first came out and people started sending it to me, I sent it to the Creators Syndicate that handles my column. They contacted the website that ran the article, and that website ran an apology. Casey Research: I am happy to have the opportunity to help set the record straight and to share your views with our readers. Can President Obama be defeated in 2012? Walter Williams: Oh yes. According to a recent poll, if the election were held today, Mitt Romney would beat him. It's hard for a president to win reelection with a high unemployment rate. It looks like there is no way in the world, between now and the election, that unemployment will drop substantially. That does not bode well for Obama's reelection. CR: I believe official unemployment now stands at about 9% and that it's actually even higher because of how unemployment statistics are reported. Walter Williams: That's right. CR: The midterm election and the Tea Party movement sent a strong message to Congress and the president. Voters want less spending on less government, but Congress and the president still seem to think voters will accept business as usual. Are they right? Walter Williams: They could be. We can blame politicians a little bit, but the bulk of the blame lies with the American people. That was kind of an epiphany for me. During the 1980s, I would occasionally have lunch with Senator Jesse Helms from North Carolina. He knew that I was highly critical of agricultural subsidies, handouts to farmers. Something Jesse Helms told me at one of our luncheons made me realize some things I had not realized until then. He said, "Walter, I agree with you 100% that these farm subsidies ought to be eliminated." But then he asked, "Can you tell me how I can remain the senator from North Carolina and vote against them? If I do what you say, I would be voted out of office." Applying his observation today, we can note that the biggest expenditures by the federal government are Social Security, Medicare, Medicaid and prescription drugs. Along with other entitlements, these expenditures amount to almost 60% of the federal budget. The beneficiaries of these programs vote in large numbers. Politicians who talk about cutting these programs are going to run into trouble. We have to get the American people, as much as politicians, to respect the Constitution. CR: It seems that we must overcome some significant misconceptions before we reach that point. For example, some smart people have asked why we can't just live on credit, why can't the Fed just continue to print money? You've been an economics professor for over 30 years. Do you have a sense of what it would take to teach the average American that living on credit does not work for the federal government any more than it would for individuals or families? Walter Williams: We have to ask ourselves, "Are the American people any different than the Romans, the British, the French? Are they different from Spain or Portugal?" These were all once great empires that went down the tubes for bread and circuses, for huge spending. There is every indication that Americans will go the same way. They want politicians to enable them to live at the expense of other Americans. CR: That seems to be a recurring message during elections: "I will give you what you want and make someone else pay for it." Walter Williams: That is absolutely right. In my opinion, it is nothing more than legalized theft. If there is slight hope on the horizon, it's that the Obama administration and Congress have been so brazen that Americans, like never before in our lives, are arguing about the Constitution. States' attorneys general are suing the federal government over Obamacare. State legislatures are passing Tenth Amendment resolutions ["state sovereignty resolutions" affirming that the US Constitution gives the federal government only specific enumerated powers and that all other powers remain with the state and the people]. Texas is telling the TSA to "keep your hands off our people." North Dakota has nullified the health care bill. So the point is, if there is hope on the horizon, it may be this slight groundswell of rebellion. The question is, is it too little, too late? CR: The US dollar was once redeemable in gold or silver but now it just says, "In God We Trust." The US monetary system is based on trust, but that trust has been breached and the dollar is in decline. Americans will be wondering whom to hold responsible as we lose the privileges we have enjoyed as custodians of the world's reserve currency. Walter Williams: Very seldom are people willing to blame themselves for the problems they create. They always want to blame someone else: the Chinese, Republicans, Democrats. It's a natural, normal human response, but blaming someone else does not solve the problem. CR: I mentioned those who have asked why we can't just live on credit. What about those who really should know better, like Fed Chairman Ben Bernanke and members of the Joint Economic Committee in Congress – do they truly believe in Keynesian economics? For example, does the Fed chairman believe that one more round of quantitative easing will actually get the economy back on track? Walter Williams: Keep in mind something that Richard Nixon said to John Ehrlichman, who warned that Milton Friedman, an economist and Nobel laureate, advised against the policy Nixon was pursuing. Nixon's response was, "Milton Friedman is not running for reelection." These people in Washington have commitments and responsibilities that I don't have. I don't owe anybody anything, so I can be perfectly honest. When you are trying to get reelected, or appointed to a high-level position, or hoping to have a high-paying job when you leave government, you just can't say the sort of things I am free to say. CR: Will we ever return to fiscal responsibility when there is no constraint on how many dollars can be produced? Walter Williams: The gold standard is a discipline for the monetary authorities. It restricts their ability to print money. Without a gold standard, the only restriction is the political arena's restraint that has been shown around the world to be insufficient. Our founders feared fiat money. CR: Americans seem to have forgotten that. Walter Williams: Not so much forgotten as just observed that such a restraint on government limits my ability to live off my fellow Americans. At the Democratic National Convention in 1896, William Jennings Bryan, one of the first so-called "progressives," gave a speech – the "Cross of Gold" speech – condemning the high rate of silver-to-gold convertibility. [Bryan called for the inflationary free coinage of silver at a ratio of 16:1 to gold. His answer to the demand for a gold standard: "You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold."] At that time, we had presidents like Grover Cleveland, who fought against the weakening of the dollar and against moving away from the gold standard. CR: That's certainly not a cause championed by Barack Obama. Walter Williams: No, it's not. As to that article on Obama's reelection, I don't think any of it makes a lot of sense. I appreciate your efforts to get the word out that it was not written by me. CR: My pleasure. Thank you very much, Dr. Williams. I appreciate you taking the time to talk with me.

2008, Redux Posted: 30 Aug 2011 09:21 AM PDT Who says there's no such thing as time travel? It's starting to feel like the fall of 2008 all over again. Indeed, the demons of 2008 are like those characters you see in the Halloween horror movies. You can kill and bury the monsters, but a few scenes later, they reappear. So what's happening? Is it 2008 redux? Or are things now worse than 2008 and we just don't know it yet? Oh, for a copy of a tomorrow's newspaper! Still, let's do the best we can with what we've got. Let's start with oil. In an eerie similarity to 2008, oil prices ran up for much of 2011. Posted US oil prices were well over $100 per barrel for a while. Then prices faded a bit, and traded in a $90-100 range. In August, oil prices suddenly dropped nearly 17% within a couple of days, into the high $70s. US oil prices are now in the mid $80s per barrel. To state the obvious, there's a lot of money in play. Here's the raw math. The US consumes over 20 million barrels of oil per day, while world consumption is over 90 million barrels per day. So roughly, a $10 price decrease per barrel pulls $200 million per day out of the cash flow of the domestic oil industry. That same $10 price decrease pulls about $900 million per day from the cash flow of the global energy industry, from everything from independent oil companies to large state-owned actors. Thus, if oil prices just stay where they are for any length of time, we'll see lower top-line numbers across the energy industry, and likely lower bottom-line numbers, as well. Oil producers tend not to make large capital decisions based on temporary price swings, and most of the current cap ex will likely remain programmed. But at least some companies will scale back expenditures where and when possible. So the large, quick oil price swing we're experiencing could make a major difference to energy sector investors over time. What's driving this gyrating action in the oil trading pits? Start with the run-up. Earlier in 2011, events in the Middle East — unrest in Tunisia, Egypt, Yemen, etc., as well as civil war in Libya — contributed to supply fears and higher oil prices. Oil prices climbed a wall of worry, with a particular focus on the perennially worrisome Middle East. Rising oil prices aren't all bad, of course. High oil prices support capital investment in energy projects, from shale gas to oil sands to offshore projects and more. So along the way, with rising oil prices, we had nice run-ups in the oil and oil service sectors. But recently, market retreats have taken almost everything down across the board. Now we're witness to share price massacres, even for the normally long-term oil business. A broad-based stock market calamity is accomplishing what nothing else has been able to do this year — take down oil prices and pull the support from related share prices in the energy sector. Heck, even the Obama administration's ill-advised sale of oil from the US Strategic Petroleum Reserve in midsummer didn't have a fraction of the oil price effect we see in the current market crash. The precipitous decline in oil prices has given crew cuts to some of the best names in the energy sector — Schlumberger (NYSE:SLB), Baker Hughes (NYSE:BHI), FMC Technologies (NYSE:FTI) and more. The nominal losses in share value seem bad now, but when the dust settles, you'll have bargains galore in this sector. You'll have a chance to pad your portfolio with the best of the best names. It's hard to say this during a market meltdown, but don't fear investing in the energy sector. Things will get better because energy sector fundamentals are solid. That is, keep in mind that the oil price crash isn't due to a sudden increase in global supply, let alone a sudden drop in global demand. It's much more due to speculators despeculating, which I'll address below. First, let's look at the supply side. Most of the world's daily oil output comes from legacy fields — some of which are decades old, and "not getting younger," if you get my drift. For all the new technology that's bringing "new" oil upward, the global industry still faces the same old issues of inexorable depletion. On the demand side, there's also no significant negative change. The general economy may stink, and people may even be rioting in the streets — as in London and other places. Yet one of the last things people do anywhere is cut back on fuel usage. Once people get used to living with the convenience of gasoline, diesel and jet fuel, they won't give it up easily. The US Energy Information Agency (EIA) recently confirmed this point about inelastic oil demand. The EIA just released a report stating that worldwide oil consumption will increase in 2011 and 2012, spurred by increasing demand in developing countries. In other words, rising demand is baked into the cake via worldwide growth, no matter what happens in the sclerotic Western economies. Thus with this in mind, why did we see an oil price crash, and oil share takedown? The bottom line is that oil prices and share prices for oil and service companies are sliding due to massive liquidations of positions by traders and speculators (especially hedge funds) that are caught in a price downdraft. The traders and hedgers have to fire sell positions just to raise cash to cover margin calls. Looking ahead, the energy sector is destined to recover. I expect oil prices to drift back upward, restoring the otherwise missing cash flows to producers. I believe that oil prices, and share prices within the energy sector, will recover sooner than most other parts of the economy and stock market. Regards, Byron King, for The Daily Reckoning 2008, Redux originally appeared in the Daily Reckoning. The Daily Reckoning provides 400,000+ readers economic news, market analysis, and contrarian investment ideas. The 5 Best Ways to Invest in Gold was previously featured in the Daily Reckoning.

Guest Post: Russia and China's Energy Dispute and the Struggle for Eurasian Dominance Posted: 30 Aug 2011 09:15 AM PDT Submitted by John Daly of OilPrice.com Russia and China's Energy Dispute and the Struggle for Eurasian Dominance China's voracious appetite for energy from anywhere has led most oil-producing nations to attempt to feed the dragon, including Russia. But a curious situation has developed as regards Russian oil exports to the Celestial Kingdom, underlining that the two nations, which fought for global supremacy over the Communist movement for four decades, remain at best, "frenemies." According to Chinese customs reports, last month oil imports from Russia fell by nearly half. Not so, Rosneft says, stating that deliveries are proceeding through the Eastern Siberia-Pacific Ocean (ESPO) oil pipeline at their normal levels. Russia is now China's ninth largest source of oil imports, with Saudi Arabia first, Iran second and Angola third. In trying to read the tea leaves in the contradictory statements emanating from Beijing and Rosneft, Russian analysts believe that China is sending Moscow a not so subtle signal that it can do without Russian imports. The Eastern Siberia-Pacific Ocean oil pipeline began deliveries to China last January, at a volume of 300,000 barrels a day. Last month China imported 4.58 million barrels per day, with Russian imports making up a mere 6.5 percent of the total. So, where's the beef? Money, apparently. According to the 2009 Russian-Chinese intergovernmental agreement, oil deliveries to China through the Eastern Siberia-Pacific Ocean pipeline are made under contracts among Russian oil company Rosneft, Russian state-owned pipeline monopoly Transneft, and the China National Petroleum Corporation (CNPC) for 15 million tons a year over two decades. In exchange for guarantees of long-term oil deliveries China provided Transneft and Rosneft with loans of $10 billion and $15 billion respectively. But at the beginning of 2011 the CNPC started underpaying for Russian oil, as China demanded a revision of the price formula. It currently includes the price of transporting oil along ESPO's entire route to the port terminal in Kozmino. But as the branch to China begins at the point of Skovorodino, 1,271 miles from Kozmino, China is insisting that the pricing formula must be revised and that the cost of transportation from Skovorodino to Kozmino must be subtracted from it, with Beijing originally estimating the difference at $12 a barrel, underpaying accordingly. Accordingly, China's debt as calculated by Moscow is now approximately $85 million. In a telling comment on the validity of both Russia and China's court systems, Rosneft and Transneft have begun consulting with lawyers about the possibility of initiating a lawsuit against the CNPC at the London Court of Arbitration. Earlier this month Transneft sniffed that if the case goes to court, it is prepared to return to China the $10 billion received in 2009 and to stop transporting Russian oil to China, unilaterally abrogating the 20-year contract. Switching gears, China is upping the stakes to begin discussions at the governmental level to resolve the impasse. Chinese negotiators have invited Russian Energy Minister Sergei Shmatko to participate in the next round of talks, which is to take place in Beijing starting at the end of August, when it was originally assumed that only Rosneft and Transneft representatives would be participating in the discussions. Konstantin Simonov, general director of the National Energy Security Foundation, is convinced that China is indulging in a bit of good old fashioned "provokatsiia," to use a Soviet word, telling reporters, "The statement by the Chinese customs is of a provocative nature: The Chinese are endeavoring to show that Russia is not fulfilling its contract obligations and is casting doubt on the development of energy relations with China as a whole." The reality is that Russia and China's struggle for Eurasian dominance did not end with the 1991 collapse of Communism. The implosion of the Soviet system left many Russians feeling disoriented and it is worth remembering that the USSR was a continuation of the Russian Empire, which began to expand eastwards into Siberia in the later part of the 16th century. Many Russian intellectuals bemoan the fact that Gorbachev liberalized the political system but not the economy, leading to the Soviet Union's demise as China liberalized the economy while keeping tight Communist Party control, leading to the country's dazzling economic achievements of the last decade. The rivalry is evident in Moscow and Beijing's contrasting visions of the Shanghai Cooperation Organization, which Russia sees primarily as a military structure, while Beijing favors increased economic integration. Both nations are engaged in an ongoing "Great Game" for the hearts, minds and economies of the former Soviet Central Asian states, with their rich energy assets. Beijing is making serious inroads there, not least of because of their deep pockets and the locals' bitter memories of seven decades of Soviet domination. Last but not least are Russian atavistic fears of the "yellow peril" and its threat to eastern Siberia, still largely devoid of population, large swathes which Russia acquired by the 1858 Aigun Treaty, which ceded the left bank of the Amur River to Russia and the 1860 Convention of Beijing, under which Russia gained control of Outer Mongolia. Both the Chinese Empire and subsequently the People's Republic of China referred to them as "unequal treaties" until Prime Minister Zhou Enlai acknowledged them in 1969 in an effort to improve Soviet-Chinese relations in the wake of a series of violent frontier clashes along the Amur River earlier that year. The struggle between the two nations is a fascinating study in opacity. Russia, the energy superpower versus China, the economic superpower. Amidst the energy pricing squabbles and ongoing covert struggle for influence in Eurasia, Beijing and Moscow nevertheless find common ground on one topic – limiting the influence of the United States. If 42 years ago Soviet and Communist Chinese politicians could hammer out a border agreement, what's a mere $85 million among friends?

Guest Post: Russia and China's Energy Dispute and the Struggle for Eurasian Dominance Posted: 30 Aug 2011 09:15 AM PDT Submitted by John Daly of OilPrice.com Russia and China's Energy Dispute and the Struggle for Eurasian Dominance China's voracious appetite for energy from anywhere has led most oil-producing nations to attempt to feed the dragon, including Russia. But a curious situation has developed as regards Russian oil exports to the Celestial Kingdom, underlining that the two nations, which fought for global supremacy over the Communist movement for four decades, remain at best, "frenemies." According to Chinese customs reports, last month oil imports from Russia fell by nearly half. Not so, Rosneft says, stating that deliveries are proceeding through the Eastern Siberia-Pacific Ocean (ESPO) oil pipeline at their normal levels. Russia is now China's ninth largest source of oil imports, with Saudi Arabia first, Iran second and Angola third. In trying to read the tea leaves in the contradictory statements emanating from Beijing and Rosneft, Russian analysts believe that China is sending Moscow a not so subtle signal that it can do without Russian imports. The Eastern Siberia-Pacific Ocean oil pipeline began deliveries to China last January, at a volume of 300,000 barrels a day. Last month China imported 4.58 million barrels per day, with Russian imports making up a mere 6.5 percent of the total. So, where's the beef? Money, apparently. According to the 2009 Russian-Chinese intergovernmental agreement, oil deliveries to China through the Eastern Siberia-Pacific Ocean pipeline are made under contracts among Russian oil company Rosneft, Russian state-owned pipeline monopoly Transneft, and the China National Petroleum Corporation (CNPC) for 15 million tons a year over two decades. In exchange for guarantees of long-term oil deliveries China provided Transneft and Rosneft with loans of $10 billion and $15 billion respectively. But at the beginning of 2011 the CNPC started underpaying for Russian oil, as China demanded a revision of the price formula. It currently includes the price of transporting oil along ESPO's entire route to the port terminal in Kozmino. But as the branch to China begins at the point of Skovorodino, 1,271 miles from Kozmino, China is insisting that the pricing formula must be revised and that the cost of transportation from Skovorodino to Kozmino must be subtracted from it, with Beijing originally estimating the difference at $12 a barrel, underpaying accordingly. Accordingly, China's debt as calculated by Moscow is now approximately $85 million. In a telling comment on the validity of both Russia and China's court systems, Rosneft and Transneft have begun consulting with lawyers about the possibility of initiating a lawsuit against the CNPC at the London Court of Arbitration. Earlier this month Transneft sniffed that if the case goes to court, it is prepared to return to China the $10 billion received in 2009 and to stop transporting Russian oil to China, unilaterally abrogating the 20-year contract. Switching gears, China is upping the stakes to begin discussions at the governmental level to resolve the impasse. Chinese negotiators have invited Russian Energy Minister Sergei Shmatko to participate in the next round of talks, which is to take place in Beijing starting at the end of August, when it was originally assumed that only Rosneft and Transneft representatives would be participating in the discussions. Konstantin Simonov, general director of the National Energy Security Foundation, is convinced that China is indulging in a bit of good old fashioned "provokatsiia," to use a Soviet word, telling reporters, "The statement by the Chinese customs is of a provocative nature: The Chinese are endeavoring to show that Russia is not fulfilling its contract obligations and is casting doubt on the development of energy relations with China as a whole." The reality is that Russia and China's struggle for Eurasian dominance did not end with the 1991 collapse of Communism. The implosion of the Soviet system left many Russians feeling disoriented and it is worth remembering that the USSR was a continuation of the Russian Empire, which began to expand eastwards into Siberia in the later part of the 16th century. Many Russian intellectuals bemoan the fact that Gorbachev liberalized the political system but not the economy, leading to the Soviet Union's demise as China liberalized the economy while keeping tight Communist Party control, leading to the country's dazzling economic achievements of the last decade. The rivalry is evident in Moscow and Beijing's contrasting visions of the Shanghai Cooperation Organization, which Russia sees primarily as a military structure, while Beijing favors increased economic integration. Both nations are engaged in an ongoing "Great Game" for the hearts, minds and economies of the former Soviet Central Asian states, with their rich energy assets. Beijing is making serious inroads there, not least of because of their deep pockets and the locals' bitter memories of seven decades of Soviet domination. Last but not least are Russian atavistic fears of the "yellow peril" and its threat to eastern Siberia, still largely devoid of population, large swathes which Russia acquired by the 1858 Aigun Treaty, which ceded the left bank of the Amur River to Russia and the 1860 Convention of Beijing, under which Russia gained control of Outer Mongolia. Both the Chinese Empire and subsequently the People's Republic of China referred to them as "unequal treaties" until Prime Minister Zhou Enlai acknowledged them in 1969 in an effort to improve Soviet-Chinese relations in the wake of a series of violent frontier clashes along the Amur River earlier that year. The struggle between the two nations is a fascinating study in opacity. Russia, the energy superpower versus China, the economic superpower. Amidst the energy pricing squabbles and ongoing covert struggle for influence in Eurasia, Beijing and Moscow nevertheless find common ground on one topic – limiting the influence of the United States. If 42 years ago Soviet and Communist Chinese politicians could hammer out a border agreement, what's a mere $85 million among friends?

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