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- IB warns of Gold Margin Hike
- Buying 'Bomb Shelter Protection'
- Hewlett-Packard Disarray as It Fumbles IBM Strategy
- Try Some Contrarianism
- Gold, Silver, and ‘Leaky Buckets’
- Gold, Energy, and Natural Resource CEFs for the Income Investor
- GO AHEAD! Business Summit '11
- Frank Holmes: Gold Is for Fighting Deflation, Not Inflation
- Gold Stocks Break to New Highs Against Equities
- Dow/Gold Ratio Sinks to 87 Crash Low
- Perfect Storm Sees Gold & Silver Surge …
- FEAR TRADE: Rush to safety overnight pushes gold above $1,850, Treasury yields to record lows
- Gold has reached a historic new milestone
- Gold imports into India set to cross the 1,000 tonne mark this year
- Gold Backwardation has arrived
- Gold Climbs to Record, Set for Best Weekly Run Since 2007 on Haven Demand
- Evan the Royal Gaugers are Out!!
- Gold price shining amid financial turmoil
- Michael Hudson: The Case Against the Credit Ratings Agencies
- Joe Kernen: The Scorpio of CNBC Squawkbox
- Links 8/19/20
- Eric Sprott Sees A “Silver” Lining: Calls It “The Investment Of This Decade”
- Daily Continuous CBOE Gold Index (GOX)
- Europe Has Another Bad Market Day; Bank Stocks Get Whacked
- Investors flock to gold and US Treasuries as fear returns
- Are Gold and Silver the Only 'Safe-Haven' Investments Left?
- Comprehensive interview with Eric Sprott at King World News
- Is Gold the Only 'Safe-Haven' Investment Left?
- Gold to hit $2,100 by year-end but silver is better trade, Davies tells KWN
- Evy Hambro keen on gold equities while off-loading producers
| Posted: 19 Aug 2011 05:30 AM PDT Most likely followed by a CME one too. PICK UP THE PHONE, CALL Interactive Brokers, AND PULL YOUR ACCOUNTS. How many times do I have to say this?  |
| Buying 'Bomb Shelter Protection' Posted: 19 Aug 2011 05:24 AM PDT  By Roger Nusbaum: Nouriel Roubini made some comments about gold and raising cash the other day (here is a recap from Murray Coleman). Roubini talked about paranoia that leads people to load up on "canned food, guns, ammunition and gold Complete Story » |
| Hewlett-Packard Disarray as It Fumbles IBM Strategy Posted: 19 Aug 2011 05:10 AM PDT By Dana Blankenhorn: Hewlett-Packard (HPQ) CEO Leo Apotheker thinks he was done-in at SAP. He thinks that if he'd been given a little more time his strategy for the company would have worked. That strategy of focusing on enterprise software and services is now working for his old company, which is growing smartly while bringing nearly one dollar in six to its bottom line. But HP is not SAP. And Apotheker pursued his SAP strategy as a number two man, not as CEO. He's like a football coordinator who has trouble when moved to head coach. (Think Rod Marinelli, right.) Apotheker's ouster from SAP in 2010 (around the time of that year's Super Bowl, hence the footie references) followed his failure to lift prices, a wholesale rebellion by customers, and huge market share gains by rival Oracle. Complete Story » |
| Posted: 19 Aug 2011 05:05 AM PDT Negativity and bearishness abound in the marketplace. The stock market is way down, the VIX is way up, the Put/Call ratio is way up, an AAII survey says bearishness is up and bullishness is way down (compared to several weeks ago), stock market commentary has turned outright gloomy, former bullish pundits are pulling in their horns -- and I could go on. Many people with contrarian instincts are wondering whether this is the time to buy stocks. Indeed, I have seen several commentators recommend just that. The fact of the mater is that most people do not know how to apply the principle of contrarianism. They also do not know how to apply the principle of momentum. Both contrarian investing and momentum investing can work. There is no necessary contradiction between them. The trick is to know when they apply them and how. Complete Story » |
| Gold, Silver, and ‘Leaky Buckets’ Posted: 19 Aug 2011 04:58 AM PDT To those of us who have "found" precious metals, their (financially) life-saving properties are blatantly apparent. Indeed, apart from explaining the 5,000 year heritage of gold and silver as premier financial assets in our civilization, most of the arguments in favor of gold and and silver are straightforward, simple arithmetic. Because of this reality, one of the great frustrations for all precious metals bulls are the thankless (and generally fruitless) efforts we make to try to enlighten friends/relatives/associates. The pattern of such attempts is maddeningly similar. Some friend or loved one mentions how "inflation" is hurting them financially. So the gold/silver bull begins to explain what inflation really is, who is causing it, and how it is done. So far, so good. However, as soon as we move on to explain how we protect ourselves from this "inflation" (i.e. through accumulating gold and/or silver), a subtle metamorphosis inevitably takes place with our subject. A bland/placid expression creeps over their face, and is frozen into their features. Through years of experience with this phenomenon, I know exactly what that expression translates to in terms of the person's thoughts: "I'm trapped with this dangerous lunatic. How can I escape?" At that point, any attempt at "conversion" becomes purely an exercise in futility. After each such failure, I inevitably review the process which has taken place, and ask myself where I could have gone wrong. The reality, of course, is that the fault does not lie with ourselves, nor with the individual whom we have failed to convince. Rather, the "blame" belongs to the propaganda machine of the bankers, which for the past century has blared out one message above all others: paper currency = money = wealth. It is the fact that this simple, but totally erroneous equation is embedded in the "programming" of most of us which prevents the precious metals message of financial salvation from penetrating the psyche of those so afflicted. Thus, the initial step in being able to re-program the minds of these propaganda victims is to de-program them first. It starts with repudiating the bankers' odious "equation" (above). First of all, paper currency does not equal "money". This is actually an entire discussion in itself. I could abbreviate it by listing the four qualities which all "good money" must possess. However, without expanding on the reasoning behind those traits, such mere assertions will not sway the brainwashed mind. Readers can review my own previous discussion on this, or the many similar efforts of other commentators, however the conclusion is unequivocal: paper currency is not money. Now let's examine the third element in this propaganda-chain: wealth. The more cumbersome way to refute this equality/equivalence would be to explain why paper currency does not equal wealth. However, the better way to do this would be to simply point out the basic difference in the properties of these three elements. Paper currency is tangible. Money is tangible. Wealth is intangible. This can be easily demonstrated anecdotally. Many people (including myself) often go days at a time carrying out all of our commercial transactions without ever once using "money". Thanks to the credit card (which is simply an electronic cheque-book), we no longer need money to convey our wealth to a vendor to make a purchase. It can all be done electronically because of the intangible nature of our wealth. In similar terms, if we get up in the morning to discover that interest rates have been raised or lowered, this immediately affects property values – and the wealth of each/every property owner. Our properties have not changed in any way. We have not done anything ourselves. However, our level of wealth has gone up (or down). In fact, countless exogenous events affect our precise level of wealth at any given moment. Clearly, if wealth was not intangible than its exact level at any moment in time would not be so fluid. Our equity markets leap higher or plunge lower (affecting the wealth of any/every equities-holder) often based only on "sentiment" or "expectations" – purely intangible drivers themselves. Obviously anything which can be altered by mere attitudes is intangible. As with any "intangible" (in our material world), we often find it helpful to adopt a (tangible) metaphor to allow us to have a better conceptual grasp. In the case of wealth, the obvious metaphor is a liquid. Indeed, the very frequent use of the term "liquidity" as a synonym for wealth is proof of such suitability. Once we have conceptualized wealth as a "liquid", then it becomes equally simple to conceptualize "money" and "paper currency" within the same metaphor. They are containers for this liquid. Now let us make our metaphor even more tangible and precise. Instead of "money", let us divide this into two "containers": gold and silver – the best/most-preferred forms of money in the history of our species. And instead of "paper currency", let's call that container "U.S. dollar". Finally, let's simply refer to these containers as "buckets". |
| Gold, Energy, and Natural Resource CEFs for the Income Investor Posted: 19 Aug 2011 04:39 AM PDT By Michael J. Ray: For today's income investor, the financial markets are wild places. No longer is anyone able to sit in CDs or U.S. Treasuries and make a decent return. As long as the U.S. government is going to keep interest rates as close to zero as possible, the income investor is forced out into the scary world of the equity markets in search of yield. With the recent volatility that we have seen, these markets are very scary places indeed. So the question is, where should the income investor look? Actually there are lots of possibilities from mReits, business development companies, trusts, and a whole laundry list of other items. One possibility that exists is the closed-end fund (CEF) market with a wide variety of funds available. Here we focus on CEFs providing a competitive yield and whose investment thesis rotates around gold, energy, and natural resources. Of course this is just Complete Story » |
| Posted: 19 Aug 2011 02:51 AM PDT GoldMoney's James Turk will be speaking at the GO AHEAD! Business Summit '11, to be held at Vienna's Palais Niederösterreich from September 30 to October 1. The summit is titled 'The Meltdown of ... |
| Frank Holmes: Gold Is for Fighting Deflation, Not Inflation Posted: 19 Aug 2011 01:52 AM PDT |
| Gold Stocks Break to New Highs Against Equities Posted: 19 Aug 2011 01:50 AM PDT |
| Dow/Gold Ratio Sinks to 87 Crash Low Posted: 19 Aug 2011 01:38 AM PDT |
| Perfect Storm Sees Gold & Silver Surge … Posted: 19 Aug 2011 01:36 AM PDT |
| FEAR TRADE: Rush to safety overnight pushes gold above $1,850, Treasury yields to record lows Posted: 19 Aug 2011 12:48 AM PDT From Bloomberg: Global stocks dropped, European shares suffered the biggest two-day slump since 2008 and oil sank below $80 a barrel on concern the U.S. recovery is faltering and Europe's debt crisis will worsen. The Swiss franc gained, while gold reached a record high. The MSCI All-Country World Index declined 1.2 percent at 10:28 a.m. in London. The Stoxx Europe 600 Index lost 1.9 percent, paring declines of as much as 3.6 percent. Standard & Poor's 500 Index futures slipped 1.3 percent. Oil dropped 2 percent and gold topped $1,850 an ounce for the first time. The franc strengthened against all of its 16 major peers. Ten-year German bunds reversed earlier gains, sending the yield two basis points higher to 2.11 percent. More than $6 trillion has been erased from the value of global equities this month on signs the U.S. recovery is stumbling, while the cost of insuring European sovereign debt is back to levels that triggered the region's central bank to buy Italian and Spanish bonds on Aug. 8. Citigroup Inc. cut its forecasts for the world's largest economy, while Morgan Stanley lowered targets for stock indexes in Indonesia and Singapore. "Fear is breeding fear now," said Nader Naeimi, a Sydney- based strategist for AMP Capital Investors Ltd., which manages almost $100 billion. "There's a total lack of confidence in policy makers' ability to defuse the situation." All but 54 of the Stoxx 600's members fell as the gauge headed for the lowest close in two years. Daimler AG and Bayerische Motoren Werke AG led a decline in automakers, sliding more than 3 percent. Technology shares were the only industry group among 19 in the Stoxx 600 to gain, as Autonomy Corp. surged 75 percent after the U.K. software company agreed to be bought by Hewlett-Packard Co. for $10.3 billion. Autonomy, HP The decline in U.S. futures signaled the S&P 500 will extend yesterday's 4.5 percent slump. The S&P 500 has tumbled 16 percent from its April high, about the same as the retreat between April 23 and July 2, 2010, previously the biggest contraction of the bull market that began in March 2009. Citigroup cut its U.S. gross domestic product growth estimate to 1.6 percent in 2011 from 1.7 percent, and lowered its forecast for 2012 to 2.1 percent from 2.7 percent. A gauge of banks in the Stoxx 600 slid 2.3 percent, on course for the lowest close since April 2009. Lloyds Banking Group Plc, Britain's biggest mortgage lender, declined 5.6 percent, Swedbank AB retreated 5.3 percent and Deutsche Bank AG lost 5 percent. The cost of protecting European bank bonds from default jumped a record, with the Markit iTraxx Financial Index of default swaps linked to senior debt of 25 banks and insurers climbing 12 basis points to 245 basis points, an all-time high based on closing prices, according to JPMorgan Chase & Co. The Markit iTraxx SovX Western Europe Index of credit-default swaps linked to 15 governments climbed 3.5 basis points to 294. Franc, Yen The franc appreciated 0.5 percent against dollar and rose 0.6 percent versus the euro, heading for the biggest weekly gain against the single currency since the week ended July 1. The yen rose against the dollar and the euro even after Finance Minister Yoshihiko Noda signaled he's ready to make an intervention in the market to curb its gains. The yen rose 0.2 percent against the dollar and 0.4 percent versus the euro. Treasuries gave up some of yesterday's gains that sent yields to record lows. The 30-year yield was little changed at 3.43 percent. The extra yield investors demand to hold U.S. 30- year bonds instead of two-year notes was at 323 basis points, matching the lowest since September last year, as concern on economic growth deepened. The narrowing spread signals investor preference for the longer-maturity paper, which is more sensitive to the outlook for inflation. The dollar Libor-OIS spread, a gauge of banks' reluctance to lend, was at 21 basis points, less than one basis point from the highest level since August last year. Emerging Markets Emerging-market stocks fell for a second day, putting the benchmark index on course for a fourth straight week of losses. The MSCI Emerging Markets Index lost 2.1 percent, bound for the lowest close since August 2010. South Korea's Kospi Index (KOSPI) sank 6.2 percent, the steepest drop since November 2008, while Taiwan's Taiex index plunged 3.6 percent. India's Bombay Stock Exchange Sensitive Index lost 2.4 percent. Bourses dropped at least 2.9 percent in Hungary, Turkey and Russia. The Turkish lira fell for a second day, hitting the lowest level since March 2009, on speculation that a global slowdown will prompt the central bank to cut rates next week. The S&P GSCI index of 24 commodities declined 1.3 percent and is down 0.8 percent this year. Gold for immediate delivery jumped to $1,862.73 an ounce after trading at the record $1,867.95 earlier today. To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net More on gold: Why gold could surprise everyone and soar even higher Why gold could easily triple from here Why the biggest gold rallies in history are yet to come |
| Gold has reached a historic new milestone Posted: 19 Aug 2011 12:44 AM PDT From The Big Picture: Gold! Are a new class of investors treating it like Treasurys? The evidence: A stunningly high correlation of Gold to 20+ Year Treasurys (Symbol: TLT) from July 21 through August 16 is 0.89. Over that period, Gold is up 12.3%, while Treasurys are up 11.8% (not counting today’s spasm). Contrast this to… Read full article… More on gold: This could be the most important gold story of the year Wells Fargo: Gold is a bubble "poised to burst" One of the world's greatest gold companies reports huge numbers |
| Gold imports into India set to cross the 1,000 tonne mark this year Posted: 19 Aug 2011 12:15 AM PDT Gold imports into India set to cross the 1,000 tonne mark this year India's investment demand for gold jumped 78% to 108.5 tonnes, while jewellery demand rose 17% in the second quarter till July 2011 to 139.8 tonnes, while in value terms demand rose 70% in India. Author: Shivom Seth Posted: Friday , 19 Aug 2011 MUMBAI - The world's biggest buyer of the yellow metal has shown the way again. Gold imports into India jumped 60% to 267 tonnes in just three months till June 2011, the first quarter, as investors stepped up purchases to protect their wealth from inflation. Even as global demand for gold dropped 17% to 919.8 tonnes in the second quarter from a year earlier, according to a report by the World Gold Council, demand in India continued to be robust. Analyst said this has to be taken against the metal rising over a fifth in value over the same period. Indian consumers continued buying gold in the second quarter of the current calendar year, resulting in overall demand rising 38% to 248.3 tonnes as compared to 180.4 tonnes in the same quarter of the previous year. In value terms, however, demand rose 70% to $11,725 million from $6,915 million in the second quarter of the previous year. India constituted 27% of the global gold demand at 919.8 tonnes in the second quarter, largely due to robust fresh purchases in both investment and jewellery demand. At 108.5 tonnes, the investment demand from India rose 78%, while jewellery demand shot up by 17% to 139.8 tonnes in the quarter under review. "With inflation reaching record heights and volatility at extreme levels in the equity markets, investments in gold continue to prove popular as investors look to diversify their portfolios,'' said Ajay Mitra, managing director with the Council. Gold imports, which stood at 553 tonnes between the January to June 2011 period, could well cross the 1,000 tonne mark this year amid strong demand. ``The first half performance was very strong and if this trend continues and Q3 imports reaches 170 to 180 tonnes and Q4 (with Diwali) is around 250 tonnes, then we may cross the 1,000 tonnes mark this year,'' Council's Mitra added. Analysts said with other investments turning negative in return, gold has been the only one offering sustained double-digit returns for several years. "We do not see any sharp change in fundamentals until new mines with huge reserves are discovered. Globally, gold is proving the best hedge against all financial constraints,'' said Mitra. Incidentally, total availability of the precious metal above ground is 165,000 tonnes. A recent report by auditing firm KPMG pegged the gold holding among Indian consumers at 18,000 tonnes - that was two years ago. With the Indian mentality to hoard gold, consumers are unwilling to sell their gold holdings - either in jewellery or in physical gold in the form of gold bars or coins. Consequently, the availability of gold from scrap sales has been dwindling. According to the Council, gold availability from scrap declined 50% to 10 tonnes in the second quarter ending June. In the first quarter, too, it had plunged to 10 tonnes from 14 tonnes in the corresponding quarter of the previous year. Rather than sell old gold ornaments to jewellers in order to meet financial exigencies, many consumers in India were pledging their gold with non banking financial institutions like Muthoot Finance and Manappuram Finance and redeeming it at a later date by paying back the loans. Global turmoil Globally, gold's strong start to the year was reinforced during the second quarter of 2011 where total global gold demand measured 919.8 tonnes, worth a record $44.5 billion, the standout markets being India and China, the Council has said, as these two markets accounted for 52% of total bar and coin investment and 55% of global jewellery demand. Earlier, the yellow metal hit a record high above $1,816 an ounce in London, as demand for the safe haven investment rose on resurgent worries about a possible new recession. Following the firm trend, gold prices hit a new high of $593.5 per 10 grams on the Multi Commodity Exchange in Mumbai for October futures. However, analysts have cautioned against the ever-rising price of gold. ``We have had several commodity bubbles in the past. This could be one too. To secure oneself, investors should not have an exposure of more than 5% of their net worth in gold,'' said Vajir Sardesai, of Sardesai Finance, an investment broking firm. Bharghava V, former director of the Bombay Bullion Association, said that demand in the current marriage season is not expected to be high given the ``massive price. There are very few customers that are coming in for fresh gold purchases. One has to understand that even if there is a marriage in the family, most purchases would have been made earlier on small dips. No family can afford to buy chunky jewellery or typical marriage jewellery with prices at $590 to $600 per 10 grams.'' However, Madhav Daga, bullion analyst said that some buyers could be found even at high levels provided there was some stability in the prices. ``If prices remain stable for even a fortnight, even at these levels, buying would come in,'' he said. Hitesh Jain, commodity analyst with a broking firm said investors should get ready for moderate corrections ``in the short term, though in the long term, we are still bullish on gold.'' http://www.mineweb.com/mineweb/view/...ail&id=110649 |
| Gold Backwardation has arrived Posted: 18 Aug 2011 11:45 PM PDT Well, the time has come. From ZH: "The near term August '11 contract was trading at $1871.40/oz while June '12 contract is trading at $1,870/oz (1216 GMT). The spread between spot and longer term contracts has fallen suggesting that gold may soon join silver in backwardation. The possibility of backwardation in gold suggests that major investors are concerned about the supply of physical gold. Buyers are concerned about securing supply in the future and are willing to pay a premium for spot or immediate delivery." And there you have it. Nothing else to say. Must be a bubble.  |
| Gold Climbs to Record, Set for Best Weekly Run Since 2007 on Haven Demand Posted: 18 Aug 2011 11:21 PM PDT Gold rose to a record above $1,880 an ounce in New York, poised for the longest run of weekly gains since April 2007, as escalating concern the global economy is slowing drove equities lower. The metal is set for a seventh weekly advance as worse- than-expected U.S. economic data and Europe's debt crisis boost speculation growth will falter. Asian and European stocks extended a global rout today after a Philadelphia-area manufacturing index sank to the lowest level since 2009, U.S. jobless claims rose and existing home sales fell. Morgan Stanley and Deutsche Bank AG this week cut forecasts for China's growth. "The drivers of the gold price at this point in time are all future expectations, such as more global liquidity and worsening of the status quo in global GDP," said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. "Either the gold market has adopted a very negative, and in our opinion not justifiable, negative, Armageddon-like view, or it is building an irrational bubble." Gold for December delivery gained $43.40, or 2.4 percent to $1,865.40 by 7:46 a.m. on the Comex in New York after touching an all-time high of $1,881.40. Prices are up 6.9 percent this week. Immediate-delivery bullion advanced 2.2 percent to $1,863.45 an ounce in London after reaching a record $1,878.15. http://www.bloomberg.com/news/2011-0...en-demand.html So $2000 by the end of September???? |
| Evan the Royal Gaugers are Out!! Posted: 18 Aug 2011 10:56 PM PDT For those following the Royal Mints policy of selling gold bullion at 25% over spot and proofs at 75%, you would think they would always have inventory with those margins. I just checked their website and almost all gold 'products' are 'awaiting stock' What I find most strange is their masterpiece item, stated at an issue limit of 25, is awaiting stock....ITS AN ISSUE LIMIT OF 25!!!! Are they stamping it one at a time?!! http://www.royalmint.com/store/Medals/RMM11GP.aspx |
| Gold price shining amid financial turmoil Posted: 18 Aug 2011 10:30 PM PDT Global stock markets were once again convulsed by fear during yesterday's trading session, with investors dumping bank stocks on rising concerns about a significantly deteriorating outlook for ... |
| Michael Hudson: The Case Against the Credit Ratings Agencies Posted: 18 Aug 2011 10:24 PM PDT By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City and a research associate at the Levy Economics Institute of Bard College In today's looming confrontation the ratings agencies are playing the political role of "enforcer" as the gatekeepers to credit, to put pressure on Iceland, Greece and even the United States to pursue creditor-oriented policies that lead inevitably to financial crises. These crises in turn force debtor governments to sell off their assets under distress conditions. In pursuing this guard-dog service to the world's bankers, the ratings agencies are escalating a political strategy they have long been refined over a generation in the corrupt arena of local U.S. politics. Why ratings agencies public selloffs rather than sound tax policy: The Kucinich Case Study In 1936, as part of the New Deal's reform of America's financial markets, regulators forbid banks and institutional money managers to buy securities deemed "speculative" by "recognized rating manuals." Insurance companies, pension funds and mutual funds subject to public regulation are required to "take into account" the views of the credit ratings agencies, provided them with a government-sanctioned monopoly. These agencies make their money by offering their "opinions" (for which they have never been legally liable) as to the payment prospects of various grades of security, from AAA (as secure government debt, the top rating because governments always can print the money to pay) down to various depths of junk. Moody's, Standard and Poor's and Fitch focus mainly on stocks and on corporate, state and local bond issues. They make money twice off the same transaction when cities and states balance their budgets by spinning off public enterprises into new corporate entities issuing new bonds and stocks. This business incentive gives the ratings agencies an antipathy to governments that finance themselves on a pay-as-you-go basis (as Adam Smith endorsed) by raising taxes on real estate and other property, income or sales taxes instead of borrowing to cover their spending. The effect of this inherent bias is not to give an opinion about what is economically best for a locality, but rather what makes the most profit for themselves. Localities are pressured when their rising debt levels lead to a financial stringency. Banks pull back their credit lines, and urge cities and states to pay down their debts by selling off their most viable public enterprises. Offering opinions on this practice has become a big business for the ratings agencies. So it is understandable why their business model opposes policies – and political candidates – that support the idea of basing public financing on taxation rather than by borrowing. This self-interest colors their "opinions." If this seems too cynical an explanation for today's ratings agencies self-serving views, there are sufficient examples going back over thirty years to illustrate their unethical behavior. The first and most notorious case occurred in Cleveland, Ohio, after Dennis Kucinich was elected mayor in 1977. The ratings agencies had been giving the city good marks despite the fact that it had been using bond funds improperly for general operating purposes to covered its budget shortfalls by borrowing, leaving Cleveland with $14.5 million owed to the banks on open short-term credit lines. Cleveland had a potential cash cow in Municipal Light, which its Progressive Era mayor Tom Johnson had created in 1907 as one of America's first publicly owned power utilities. It provided the electricity to light Cleveland's streets and other public uses, as well as providing power to private users. Meanwhile, banks and their leading local clients were heavily invested in Muni Light's privately owned competitor, the Cleveland Electric Illuminating Company. Members of the Cleveland Trust sat on CEI's board and wielded a strong influence on the city council to try and take it over. In a series of moves that city officials, the U.S. Senate and regulatory agencies found to be improper (popular usage would say criminal), CEI caused a series of disruptions in service and worked with the banks and ratings agencies to try and force the city to sell it the utility. Banks for their part had their eye on financing a public buyout – and hoped to pressure the city into selling, threatening to pull the plug on its credit lines if it did not surrender Muni Light. It was to block this privatization that Mr. Kucinich ran for mayor. To free the city from being liable to financial pressure from its vested interests – above all from the banks and private utilities – he sought to put the city's finances on a sound footing by raising taxes. This threatened to slow borrowing from the banks (thereby shrinking the business of ratings agencies as well), while freeing Cleveland from the pressures that have risen across the United States for cities to start selling off their public enterprises, especially since the 1980s as tax-cutting politicians have left them deeper in debt. The banks and ratings agencies told Mayor Kucinich that they would back his political career and even hinted financing a run for the governorship if he played ball with them and agreed to sell the electric utility. When he balked, the banks said that they could not renew credit lines to a city that was so reluctant to balance its books by privatizing its most profitable enterprises. This threat was like a credit-card company suddenly demanding payment of the full balance from a customer, saying that if it were not paid, the sheriff would come in and seize property to sell off (usually on credit extended to customers of the bankers). The ratings agencies chimed in and threatened to downgrade Cleveland's credit rating if the city did not privatize its utility. The financial tactic was to offer the carrot of corrupting the mayor politically, while using the threat of forcing the city into financial crisis and raising its interest rates. If the economy did not pay higher utility charges as a result of privatization, it would have to pay higher interest. But standing on principle, the mayor refused to sell the utility, and voters elected to keep Muni light public by a 2-to-1 margin in a referendum. They proceeded to pay down the city's debt by raising its income-tax rate in order to avoid paying higher rates for privatized electricity. Their choice was thoroughly in line with Book V of Adam Smith's Wealth of Nations provides a perspective on how borrowing ends up with a proliferation of taxes to pay the interest. This makes the private sector pay higher prices for its basic needs that Cleveland Mayor Tom Johnson and other Progressive Era leaders a century ago sought to socialize in order to lower the cost of living and doing business in the United States. The bankers' alliance with the Cleveland's wealthy would-be power monopoly led it to be the first U.S. city to default since the Great Depression as the state of Ohio forced it into fiscal receivership in 1979. The banks used the crisis to make an easy gain in buying up bond anticipation notes that were sold under distress conditions exacerbated by the ratings agencies. The banks helped fund Mayor Kucinich's opponent in the 1979 mayoral race. But in saving Muni Light he had saved voters hundreds of millions of dollars that the privatizers would have built into their electric rates to cover higher interest charges and financial fees, dividends to stockholders, and exorbitant salaries and stock options. In due course voters came to recognize Mr. Kucinich's achievement have sent him to Congress since 1997. As for Mini Light's privately owned rival, the Cleveland Electric Illuminating Company, it achieved notoriety for being primarily responsible for the northeastern United States power blackout in 2003 that left 50 million people without electricity. The moral is that the ratings agencies' criterion was simply what was best for the banks, not for the debtor economy issuing the bonds. They were eager to upgrade Cleveland's credit ratings for doing something injurious – first, borrowing from the banks rather than covering their budget by raising property and income taxes; and second, raising the cost of doing business by selling Muni Light. They threatened to downgrade the city for acting to protect its economic interest and trying to keep its cost of living and doing business low. The tactics by banks and credit rating agencies have been successful most easily in cities and states that have fallen deeply into debt dependency. The aim is to carve up national assets, by doing to Washington what they sought to do in Cleveland and other cities over the past generation. Similar pressure is being exerted on the international level on Greece and other countries. Ratings agencies act as political "enforcers" to knee-cap economies that refrain from privatization sell-offs to solve debt problems recognized by the markets before the ratings agencies acknowledge the bad financial mode that they endorse for self-serving business reasons. Why ratings agencies oppose public checks against financial fraud The danger posed by ratings agencies in pressing the global economy to a race into debt and privatization recently became even more blatant in their drive to give more leeway to abusive financial behavior by banks and underwriters. Former Congressional staffer Matt Stoller cites an example provided by Josh Rosner and Gretchen Morgenson in Reckless Endangerment regarding their support of creditor rights to engage in predatory lending and outright fraud. On January 12, 2003, the state of Georgia passed strong anti-fraud laws drafted by consumer advocates. Four days later, Standard & Poor announced that if Georgia passed anti-fraud penalties for corrupt mortgage brokers and lenders, packaging including such debts could not be given AAA ratings.
The message was that only bank loans free of legal threat against dishonest behavior were deemed legally risk-free for buyers of securities backed by predatory or fraudulent mortgages. The risk in question was that state agencies would reduce or even nullify payments being extracted by crooked real estate brokers, appraisers and bankers. As Rosner and Morgenson summarize:
The ratings agencies' logic is that bondholders will not be able to collect if public entities prosecute financial fraud involved in packaging deceptive mortgage packages and bonds. It is a basic principle of law that receivers or other buyers of stolen property must forfeit it, and the asset returned to the victim. So prosecuting fraud is a threat to the buyer – much as an art collector who bought a stolen painting must give it back, regardless of how much money has been paid to the fence or intermediate art dealer. The ratings agencies do not want this principle to be followed in the financial markets. We have fallen into quite a muddle when ratings agencies take the position that packaged mortgages can receive AAA ratings only from states that do not protect consumers and debtors against mortgage fraud and predatory finance. The logic is that giving courts the right to prosecute fraud threatens the viability of creditor claims endorses a race to the bottom. If honesty and viable credit were the objective of ratings agencies, they would give AAA ratings only to states whose courts deterred lenders from engaging in the kind of fraud that has ended up destroying the securitized mortgage binge since September 2008. But protecting the interests of savers or bank customers – and hence even the viability of securitized mortgage packages – is not the task with which ratings agencies are charged. Masquerading as objective think tanks and research organizations, the ratings agencies act as lobbyists for banks and underwriters by endorsing a race to the bottom – into debt, privatization sell-offs and an erosion of consumer rights and control over fraud. "S&P was aggressively killing mortgage servicing regulation and rules to prevent fraudulent or predatory mortgage lending," Stoller concludes. "Naomi Klein wrote about S&P and Moody's being used by Canadian bankers in the early 1990s to threaten a downgrade of that country unless unemployment insurance and health care were slashed." The basic conundrum is that anything that interferes with the arbitrary creditor power to make money by trickery, exploitation and outright fraud threatens the collectability of claims. The banks and ratings agencies have wielded this power with such intransigence that they have corrupted the financial system into junk mortgage lending, junk bonds to finance corporate raiders, and computerized gambles in "casino capitalism." What then is the logic in giving these agencies a public monopoly to impose their "opinions" on behalf of their paying clients, blackballing policies that the financial sector opposes – rulings that institutional investors are legally obliged to obey? Threats to downgrade the U.S. and other national economies to force pro-financial policies At the point where claims for payment prove self-destructive, creditors move to their fallback position. Plan B is to foreclose, taking possession of the property of debtors. In the case of public debt, governments are told to privatize the public domain – with banks creating the credit for their customers to buy these assets, typically under fire-sale distress conditions that leave room for capital gains and other financial rake-offs. In cases where foreclosure and forced sell-offs are not able to make creditors whole (as when the economy breaks down), Plan C is for governments simply to bail out the banks, taking bad bank debts and other obligations onto the public balance sheet for taxpayers to make good on. Standard and Poor's threat to downgrade of U.S. Treasury bonds from AAA to AA+ would exacerbate the problem if it actually discouraged purchasers from buying these bonds. But on the Monday on August 8, following their Friday evening downgrade, Treasury borrowing rates fell, with short-term T-bills actually in negative territory. That meant that investors had to lose a small margin simply to keep their money safe. So S&P's opinions are as ineffectual as being a useful guide to markets as they are as a guide to promote good economic policy. But S&P's intent was not really to affect the marketability of Treasury bonds. It was a political stunt to promote the idea that the solution to today's budget deficit is to pursue economic austerity. The message is that President Obama should roll back Social Security and Medicare entitlements so as to free more money for more subsidies, bailouts and tax cuts for the top of the steepening wealth pyramid. Neoliberal Harvard economics professor Robert Barro made this point explicitly in a Wall Street Journal op-ed. Calling the S&P downgrade a "wake-up call" to deal with the budget deficit, he outlined the financial sector's preferred solution: a vicious class war against labor to reduce living standards and further polarize the U.S. economy between creditors and debtors by shifting taxes off financial speculation and property onto employees and consumers.
Bank lobbyist Anders Aslund of the Peterson Institute of International Finance jumped onto the bandwagon by applauding Latvia's economic disaster (a 20 percent plunge in GDP, 30 percent reduction of public-sector salaries and accelerating emigration as a success story for other European countries to follow. As they say, one can't make this up. As the main advocate and ultimate beneficiary of privatization, the financial sector directs debtor economies to sell off their public property and cut social services – while increasing taxes on employees. Populations living in such economies call them hell and seek to emigrate to find work or simply to flee their debts. What else should someone call surging poverty, death rates and alcoholism while a few grow rich? The ratings agencies today are like the IMF in the 1970s and '80s. Countries that do not agree sell off their public domain (and give tax deductibility to the interest payments of buyers-on-credit, providing multinationals with income-tax exemption on their takings from the monopolies being privatized) are treated as outlaws and isolated Cuba- or Iran-style. Such austerity plans are a failed economic model, but the financial sector has managed to gain even as economies are carved up. Their "Plan B" is foreclosure, extending to the national scale. By the 1980s, creditor-planned economies in Third World debtor countries had reached the limit of their credit-worthiness. Under World Bank coordination, a vast market in national infrastructure spending for creditor-nation bank debt, bonds and exports. The projects being financed on credit were mainly to facilitate exports and provide electric power for foreign investments. After Mexico announced its insolvency in 1982 when it no longer could afford to service foreign-currency debt, where were creditors to turn? Their solution was to use the debt crisis as a lever to start financing these same infrastructure projects all over again, now that most were largely paid for. This time, what was being financed was not new construction, but private-sector buyouts of property that had been financed by the World Bank and its allied consortia of international bankers. There is talk of the U.S. Government selling off its national parks and other real estate, national highways and infrastructure, perhaps the oil reserve, postal service and so forth. S&P's "opinion" was treated seriously enough by John Kerry, the 2004 Democratic Presidential nominee, as a warning that America should "get its house in order." Despite the fact that on page 4 of its 8-page explanation of why it downgraded Treasury bonds, S&P's stated: "We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act," was one of the three senators appointed to the commission under the debt-ceiling agreement. He chimed in to endorse the S&P action as a helpful nudge for the country to deal with its "entitlements" program – as if Social Security and FICA withholding were a kind of welfare, not actual savings put in by labor, to be wiped out as the government empties its coffers to bail out Wall Street's high rollers. No less a financial publication than the Wall Street Journal has come to the conclusion that "in a perfect world, S&P wouldn't exist. And neither would its rivals Moody's Investors Service and Fitch Ratings Ltd. At least not in their current roles as global judges and juries of corporate and government bonds." As its financial editor Francesco Guerrera wrote quite eloquently in the aftermath of S&P's bold threat to downgrade the U.S. Treasury's credit rating: "The historic decision taken by S&P on Aug. 5 is the culmination of 75 years of policy mistakes that ended up delegating a key regulatory function to three for-profit entities." The behavior of leading banks and ratings agencies Cleveland and other similar cases – of promising to give good ratings to states, counties and cities that agree to pay off short-term bank debt by selling off their crown jewels – is not ostensibly criminal under the law (except when their hit men actually succeed in assassination). But the ratings agencies have made an compact with crooks to endorse only public borrowers that agree to pursue such policies and not to prosecute financial fraud. To acquiescence in such economically destructive financial behavior is the opposite of fiscal responsibility. Cutting federal taxes and Social Security payments to obtain a more positive S&P "opinion" would give banks an ability to "pull the plug" and force privatization and anti-labor austerity plans by refraining from rolling over the U.S. debt – and cutting taxes Tea-Party style rather than funding spending by taxation on a pay-as-you-go-basis. The present meltdown of the euro provides an object lesson for why policy-making never should be left to central bankers, because their mentality is pro-creditor. Otherwise they would not have the political reliability demanded by the financial sector that has captured the central bank, Treasury and regulatory agencies to gain veto power over who is appointed. Given their preference for debt deflation of the "real" economy – while trying to inflate asset prices by promoting the banks' product (debt creation) – central bank and Treasury solutions tend to aggravate economic downturns. This is self-destructive because today's major problem blocking recovery is over-indebtedness.
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| Joe Kernen: The Scorpio of CNBC Squawkbox Posted: 18 Aug 2011 10:10 PM PDT Started this morning on the world show at about 5:45 when they had the CEO of APMEX on showing physical gold and silver. The gal hosting the show was literally cuddling up to a kilo bar of gold....." THIS is 64,000 dollars ? " Followed by an hour of CNBC's Joe Kernen on gold carrying on about that "Hersey bar sized hunk of gold is 65,000 ?......I'd rather have a 65,000 car".....and on and on....... Here's the deal. Joe Kernen is just like our resident bear, Scorpio....he talks down gold and silver and berates us for buying it.....and THEN goes in the closet in his basement ( next to the safe full of gold ) and.... :23_30_104::23_30_104::23_30_104::23_30_104::23_30 _104: Joe Kernen is the same way....bet the trunk of his 65,000 buck car is dragging all the way down the street from the weight of gold in the trunk.......ahahahahahaaaaaaaaaaaaaaaaa |
| Posted: 18 Aug 2011 10:02 PM PDT We are hosting the Book Salon for Gretchen Morgenson's and Josh Rosner's Reckless Endangerment on Saturday at FireDogLake from 5-7 PM EDT. Be there or be square! Giant lobster avoids becoming lunch and finds home on Coney Island Daily News (hat tip Buzz Potamkin) Aliens may destroy humanity to protect other civilisations, say scientists Guardian (hat tip Buzz Potamkin). The idea that aliens or anyone cares is a bit narcissistic. And if I recall correctly, at one of the big species loss boundaries (forgive me for looking up which one, the Permian-Triassic or KT), the Earth was pretty close to barren for nearly 100,000 years. So more complex life forms have come back from some pretty serious reversals. Critters Moving Away from Global Warming Faster Common Dreams (hat tip reader Aquifer) Ecstasy could treat cancer: researchers PhysOrg This Is the Giant Dust Storm That Just Engulfed Phoenix [Video] Gawker BP's Gulf Oil Well May Be Leaking AGAIN: "The Oil May Be Coming From Cracks And Fissures In The Seafloor Caused By The Work BP Did During Its Failed Attempts To Cap The Runaway Macondo Well – And That Type Of Leakage Can't Be Stopped, Ever" George Washington (hat tip reader Bruno) New York Subpoenas Energy Companies Over Plans for Gas Wells New York Times A Society on the Verge of a Meltdown Der Spiegel (hat tip reader Francois T) The moral decay of our society is as bad at the top as the bottom Telegraph (hat tip reader May S) Right-Wing Populists Stoke Anti-Southern Rage Der Spiegel (hat tip reader May S) The Texas "Miracle" Barry Ritholtz Texans bridle at Perry miracle claims Financial Times. Looks like the miracle he meant was his investing: Perry Made More Than a Million on Real Estate While in Office Bloomberg (hat tip reader Robert M) Only One in Four Approve of Obama on the Economy Jon Walker, FireDogLake This is looking more like Hoover every day Ed Harrison Goldman Sachs VP Changed Name, Now a Top Congressional Staffer TruthOut (hat tip readers Chris McC and Aquifer). This goes in the "You really cannot make this stuff up" category. And what is a guy this seasoned (even forgetting his time at Goldman) doing as a Congressional staffer? Moody's, S&P Mortgage Ratings Face Probe Bloomberg. So it is both big agencies, not jus S&P, as first reported by the NY Times, and the DOJ, which means it could be criminal charges. Manufacturing gauge drops to 2-1/2 year low Reuters. In case you managed to miss this stunner. Markets suffer global turmoil Financial Times. More market porn: Treasury yields lowest in 60 years. How the mining boom is shared (or not) MacroBusiness Medical Debt Cited More Often in Bankruptcies New York Times Last Straw or Time to Buy? Wall Street Journal Antidote du jour (hat tip reader Paul S):
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| Eric Sprott Sees A “Silver” Lining: Calls It “The Investment Of This Decade” Posted: 18 Aug 2011 09:59 PM PDT |
| Daily Continuous CBOE Gold Index (GOX) Posted: 18 Aug 2011 09:37 PM PDT "The gold currency broke down because one country after another began to disregard the rules. At the same time, the international order crumbled because the prevailing liberal economic order of the last century and the beginning of the 20th century began to give way to a more and more socialist, interventionist, or even collectivist order. The new politics killed a currency order which was based on free markets and personal freedom." -Ferdinand Lips from Golden Insights complied by James U. Blanchard lll.
Summer doldrums of July-August give us choppy trading for the most part. This weeks' gold rocket rally was brief as the flying numbers were a direct and short response to credit problems and budgets in Europe and America. Those problems have not been resolved and we think the "weak sister" reactions of central bankers and politicians will not help whatsoever. Expect a flat and choppy August with a bias toward the upside for commodities. Crude oil has more support than most of these markets except for gold. This changes as the month wears on and new trends develop. Brokers, investors and traders are mostly on vacation and trying to focus on getting a tan rather than trading for now. Be patient and try not to enter prematurely. However some of our select juniors have developed new base supports. If you enter them now they just might slip a little more but after that the primary trend is up.         This posting includes an audio/video/photo media file: Download Now |
| Europe Has Another Bad Market Day; Bank Stocks Get Whacked Posted: 18 Aug 2011 09:33 PM PDT The European markets had a bad day Thursday and the gloomy data releases in the US (terrible Philly Fed manufacturing numbers and an unexpected fall in existing home sales due to contract cancellations) led to a second day of sharp falls in equity prices overseas. . Asia didn't fare too well either. The Nikkei closed down 1.9% and the Hang Seng was off 3.0%. The yen is back in nosebleed territory at 76.4. S&P futures are off 19 points. Treasuries are trading at their lowest yields in 60 years. Gold has risen to $1868. The FTSE is now off 2.8%, the CAC 40 also down 2.8%, and the DAX off 3.3%. Brent crude is at $106. The euro is at 1.43. The most worrisome (but not irrational) development is that UK and Eurobank stocks are on their third day of getting hit (note by contrast US banks stocks were whacked only a tad more than the rest of the market). Per Bloomberg:
And the Wall Street Journal:
The Bloomberg story quoted a brave analyst who said the odds of a 2008 style liquidity crisis in Europe was remote (huh? If you think Trichet is gonna gear up as fast as Bernanke did, I suspect you will be disappointed). But the leaks from regulators suggest otherwise. Again from the Journal:
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| Investors flock to gold and US Treasuries as fear returns Posted: 18 Aug 2011 09:15 PM PDT Renewed fears of a European credit crunch combined with the release of disappointing US economic data yesterday to send investors rushing for safe havens - with gold and US Treasuries the two ... |
| Are Gold and Silver the Only 'Safe-Haven' Investments Left? Posted: 18 Aug 2011 09:06 PM PDT ¤ Yesterday in Gold and SilverGold didn't do much during the Thursday trading day until shortly after the London a.m. gold fix, which occurred around 5:30 a.m. Eastern time yesterday morning. Then away it went to the up-side. This wonderful state of affairs lasted until shortly after 10:00 a.m. Eastern...and that was basically it for the rest of the trading day on both the Comex...and the thinly-traded New York Access Market that followed. Gold finished up $35.90 spot...and also set a new record-high price in nominal dollar terms. Volume was huge.
The silver price more or less followed the gold price yesterday...but its advance was much more subdued. Silver's high tick of the day came at 9:30 a.m. Eastern...and that was pretty much it for the rest of the New York trading session. Despite the lack of price activity, volume was pretty heavy, even when the roll-overs out of the September delivery month were subtracted.
The dollar traded in a 25 basis point range around the 74.00 mark yesterday...and closed virtually on its high...up about 50 basis points on the day. There was an obvious 'flight to safety' during the European trading day. Both the dollar and the gold price rose together from around 4:00 a.m. to 10:00 a.m. Eastern time yesterday. The world's reserve fiat currency is now in competition with real money. I expect that trend to continue...and accelerate.
The gold stocks got hit right at the open of equity trading yesterday, but that didn't last long, as the HUI recovered to the unchanged mark during the New York lunch hour. Then someone came along and sold the gold stocks off almost 2.5%...although there was a tiny rally into the close that cut that loss a bit...and the HUI finished down 1.73% on the day.
The silver stocks did much worse...as CDE really got creamed. That was one of the big reasons that Nick Laird's Silver Sentiment Index got smoked for 3.18%
(Click on image to enlarge) The Comex Daily Delivery Report showed that 111 gold, along with one silver contract, were posted for delivery on Monday. In gold, the big short/issuer was the Bank of Nova Scotia...and the largest long/stoppers that took delivery of these contracts were JPMorgan, HSBC and Goldman Sachs. Here's the link to this action. For the second day running both GLD and SLV showed additions. GLD took in 477,126 ounces...and SLV added 584,505 troy ounces. For a change, there was no sales report from the U.S Mint. On Wednesday, the Comex-approved depositories added 630,512 troy ounces...and shipped a smallish 29,973 ounces out the door. The link to that action is here. Since today is the 19th of the month, the Central Bank of the Russian Federation should report it's gold purchases for July...and if they do, I'll have the number [and Nick Laird's updated graph] in this column on Saturday. Here's a photo that I've had sitting on my desktop for a couple of days...and I've had so much stuff to post at this point in my column, that I've never had room for it until now. This is a photo that was taken from the International Space Station earlier this week. We've all seen meteors from the ground. Here's a one-in-a-million shot of one taken from above, rather than from below. This spectacular fireball picture was taken by astronaut Ron Garan at the height of the Perseid meteor shower that peaked on August 12th and 13th...and I 'borrowed' the photo from spaceweather.com.
(Click on image to enlarge) Considering the decades-long distortions that the CFTC and the SEC have allowed to be built up in both the gold and silver markets, we could stay overbought for a very long time as the shorts panic and cover. Gold's Newest Believers. Evy Hambro keen on gold equities. A Block Abuzz With the Business of Gold. Gold to hit $2,100 by year-end but silver is better trade: Ben Davies. ¤ Critical ReadsSubscribeSwiss Swap Rates Turn Negative Amid Swiss National Bank's Franc Struggle"What the market is doing is making the move to negative interest rates for the SNB," said Douglas Borthwick, head of foreign-exchange trading at Stamford, Connecticut-based Faros Trading. Even with the decline in rates, "people still are buying Swiss securities out of fear and wealth preservation anxiety. Investors continue to purchase Swiss assets as well as gold." I stole this Bloomberg story from yesterday's edition of the King Report...and the link is here.  Part-time Britain hits record high as unemployment soarsBritain's economic recovery hopes were dashed today as official figures showed unemployment rose by 38,000 in the three months to June to 2.49m and the number of people working part-time because they could not find full-time jobs surged to a new record high. The statistics also point to further misery for Britain's young people: youth unemployment rose by 15,000 over the quarter to reach 949,000, or 20.2pc of 16-24 year olds. The "worrying" figures come on the eve of thousands of young people receiving their A-level results and entering the jobs market for the first time. This is another story that I stole from yesterday's King Report...this one is from The Telegraph...and the link is here.  The Greatest Trade of All TimeHere's Sprott Asset Management's latest Markets at a Glance commentary...and here's a snippet..."We are of the view that the appetite for sovereign paper promises will continue to decline, and such promises will continue to lose their value relative to real assets, like gold. What needs to be understood is that paper promises (sovereign debt and fiat currencies) are 'faith-based assets'. They have no inherent value. They have perceived value in that they have historically been convertible into real assets. With their value decreasing against real assets, however, we are of the view that holders of faith-based assets will be increasingly unwilling to store their wealth in them. This will drive up the prices of real assets versus faith-based assets, a process which we have already begun to see en masse." This is well worth the read...and was posted over at the sprott.com website yesterday. The link is here.  A Block Abuzz With the Business of GoldAs pedestrian traffic in the diamond district of Manhattan increases with the price of gold, hawkers representing buyers are stationed on West 47th Street. "This is a gold rush," said Ernie Velez, 48, a jeweler and an owner of Universal Refinery, a glass-counter booth in one of the many mini-mall exchanges on the block where jewelry is bought and sold. Mr. Velez, an immigrant from Ecuador, said things could get even busier. The diamond district in New York does not particularly need a gold rush to invigorate its sidewalks. The block always percolates with business and energy. This is a very interesting story from yesterday's edition of The New York Times. It was sent to me by reader Phil Barlett...and the link is here.  Gold's Newest BelieversLos Angeles couple Chantay and Conrad Bridges have been on the fence about buying gold for years -- even as the shiny metal was notching new highs. Their reason was Investing 101: They didn't want to buy high and sell low. But recently they've changed their minds, deciding like many investors that gold still has plenty of upside. "The dollar is losing its value and if we're going to do it we might as well do it now," says Chantay, a real estate specialist. "Even though gold is high it will get even higher." Call them gold's newest converts. Last week's market upheaval following the unprecedented downgrade of United States debt has convinced some of gold's most-skeptical bears to suddenly switch teams. Indeed, they helped drive some $2 billion into precious metals exchange-traded funds in the week ending August 10, marking five straight weeks of inflows, a turnaround from the outflows seen in May and June, according to fund researcher Lipper. Scott Carter, chief executive officer of Goldline International, a gold retailer in Santa Monica, Calif., says gold purchases at his shop have increased by 20% since the S&P downgrade. "We're seeing the average guy go into the gold market," says Phil Streible, a senior market strategist for MF Global. I thank reader Richard Sypher for sending me this smartmoney.com story. The usual nay-sayers...and doom-and-gloomers show up towards the end of the article...but it's worth the read anyway...and the link is here.  Think gold may lose some lustre? Eric Sprott sees a silver liningHere's a story that was in yesterday's edition of The Globe and Mail in Toronto. It talks about him selling part of his gold holdings and buying silver...a story that I ran in this column yesterday. But there's much more to this article than that, so I urge you to read it. Eric Sprott doesn't apologize for shifting more of his attention to silver, and is still touting his gold trust to retail investors who think economic turmoil will send bullion prices higher. "I think silver will outperform gold this decade, so why wouldn't I position myself, position our accounts, that way?" The link to the story, which I extracted from a GATA release yesterday, is here.  Evy Hambro keen on gold equities while off-loading producersYou just know that this bull market in precious metals is getting some legs when Fidelity International out of the U.K. starts writing about in glowing terms. BlackRock Gold & General manager Evy Hambro is eyeing further opportunities to buy gold miners as the discrepancy between the gold price and gold equities has widened again in the market sell-off. Hambro has more than 78% of his £2.8 billion fund in gold equities, and has seen the gold price continue to soar amid the market chaos as it has thrived on its relative safe haven status. The first two pages of this 4-page pdf file posted over at fidelity.co.uk are a must read...and I thank British reader Ian Strange for sharing it with us...and the link is here.  Comprehensive interview with Eric Sprott at King World News Posted: 18 Aug 2011 09:06 PM PDT  Yesterday, King World News posted what may be the most comprehensive interview ever with Sprott Asset Management CEO Eric Sprott, whose comments cover GATA's Gold Rush 2011 conference in London, the regard shown there for fellow speaker, mining entrepreneur, and veteran gold trader Jim Sinclair, the burgeoning demand for gold and silver, and their possible return as official money. |
| Is Gold the Only 'Safe-Haven' Investment Left? Posted: 18 Aug 2011 09:06 PM PDT  Well, it's finally starting to sink in with some of the main stream media...and this story certainly reflects the new reality. "Gold has a new class of investor," said Steve Grasso, director of institutional sales trading at Stuart Frankel & Co. "The people buying gold this time around are buying it to hold it long term for their kids, for their retirement and not just a market timing trade. Coming out of the housing implosion and Eurozone stress, there is a real perception, right or wrong, that gold is the only investment that's not built on sand." This cnbc.com story was sent to me by West Virginia reader, Elliot Simon...and it's well worth your time. The link is here. |
| Gold to hit $2,100 by year-end but silver is better trade, Davies tells KWN Posted: 18 Aug 2011 09:06 PM PDT  Hinde Capital CEO Ben Davies, who spoke at GATA's Gold Rush 2011 conference in London, told King World News yesterday that it's "obvious to me that someone is trying to hold the price of silver down." Davies thinks silver is a better trade than gold now, but still expects gold to reach $2,100 by the end of the year. I stole this blog...and the preamble...from Chris Powell's GATA dispatch yesterday...and the link is here. |
| Evy Hambro keen on gold equities while off-loading producers Posted: 18 Aug 2011 09:06 PM PDT  You just know that this bull market in precious metals is getting some legs when Fidelity International out of the U.K. starts writing about in glowing terms. BlackRock Gold & General manager Evy Hambro is eyeing further opportunities to buy gold miners as the discrepancy between the gold price and gold equities has widened again in the market sell-off. Hambro has more than 78% of his £2.8 billion fund in gold equities, and has seen the gold price continue to soar amid the market chaos as it has thrived on its relative safe haven status. |
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