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Confidence Falls For Auto Market
Gold and Silver: Shaking Out The Weak Hands
Gold Trailing Stops And Linear Regression Price Projections
Gold - Don't Buy The Dip Yet
How Far Can Gold Fall?
Gold, The World's Currency
Advanced Trading Series, Part II: Currency Trade Setups
Letter to Dennis Gartman about the Cortes Chart
ShortSideofLongBlog: Bonds & Gold in Euphoria
Biggest Gold Drop Since December 2008 Sends Metal To… Week Ago Levels
Japan downgraded by Moody's; gold price falls back
Germany May Want PIIGS Gold as Security for ‘Bailouts’ …
Top technical trader Roque: More downside ahead
Time to take a closer look at Gold and Silver
Kevorkian Economics – Hospice Care For The Economy
Hochberg of Elliottwave: We keep screwing up
Downfall of the USA
Gold & Silver Market Morning, August 24, 2011
Kazakhstan Will Buy All Domestic Gold Production Starting January 1st, 2012
Is a Fear-Driven Gold Mania Here?
ETF in Focus: GDX
German Minister Demands Gold Collateral For Future Bailouts
First in Line for New Money
Venezuela's move will deleverage gold market, Rickards tells King World News
Chavez expects gold to be back in Venezuela in 'weeks'
Gold price meets resistance at $1,900
Carlos Andres: Discovering Bargain Basement Gold Stocks
Gold and Interest Rates: More than Joined at the Hip
Gold, silver and platinum prices continue to rally
ECB: increase of oz 1564,29 in gold and gold receivables

Posted: 24 Aug 2011 05:56 AM PDT

By Wall Street Strategies:

By David Silver

Over the past week, many of the big forecasting shops (JD Power for one) have lowered their seasonally adjusted annual rate of sales (SAAR) for the auto industry for 2011. I am keeping mine the same, as I was below many of them to begin with. After months of April and May of 2011, I lowered by forecast from between 12.8 million and 13.2 million to between 12.4 million and 12.8 million. JD Power lowered the forecast to 12.6 million last week. Auto sales have been extremely weak during the summer, and just about all the momentum has left the industry. Even the redesign of the Camry didn't spur the usual buzz. Companies seem to be looking for ways to just get through the dog days of summer (August is almost over, can you believe it?) without too much more bad news. Toyota (TM), Nissan (NSANY.PK), and

Complete Story »

Gold and Silver: Shaking Out The Weak Hands

Posted: 24 Aug 2011 05:35 AM PDT

By Mark Thomas:

The gains in gold and silver in the last two moths show a marked acceleration; they obviously became too hot, moved too much and much too quickly. A parabolic move where the rate of ascent continues to accelerate usually ends a bull market. So we at Higher Gold Prices.com welcome the current correction.

We still think gold and silver will remain at elevated levels, possibly for years to come, and will even continue to increase after they rest and consolidate some. We're getting that correction now from the $1917 high down to possibly $1650. We need to digest these gains and trade between $1650 and $1750 for a while. That will be disappointing to hot-money investors. In my retirement accounts and the ETF model portfolio, we reduced any leverage and short exposure to stocks yesterday, just in the nick of time.

The premium on the Sprott Physical Gold Trust (PHYS)

Complete Story »

Gold Trailing Stops And Linear Regression Price Projections

Posted: 24 Aug 2011 05:18 AM PDT

By StopAlerts:

Gold went parabolic since mid-July, and as is typically the case, a parabolic price move is followed by a fairly swift and strong short-term correction. Yesterday and today may be the beginning of that correction.

Let's look at GLD in terms of percentage trailing stops (assuming you bought it before the recent high), and also look at some linear regression projections of possible prices out one year.

This chart of 5%, 10%, 15% and 20% stops trailing from the one-year high may be interesting or helpful.

This chart is for GLD, the ETF that tracks gold bullion. In round numbers, the 5% stop would be at about 176, the 10% stop at around 166, the 15% stop at around 157 and the 20% stop at around 148. The 200-day moving average is at about 144.

Click to enlarge

The price as of mid-day August 24 is about 172. Yesterday and

Complete Story »

Gold - Don't Buy The Dip Yet

Posted: 24 Aug 2011 04:57 AM PDT

By Glen Bradford:

I've read all sorts of threats like: "Not putting 10% of your wealth in gold is extraordinarily imprudent today and a recipe for further financial destruction." If you've been following me, my perspective is that Gold really isn't a currency. It's not really a store of wealth. It's a tool of speculation on the price of gold. It's a commodity that used to be a currency and is popularized for this reason. Apparently, there are business models that involve people digging this stuff out of the ground to put it back into the ground. I frequently see people on the side of the road these days holding up signs suggesting that I should stop by their establishment and trade gold with them. As laughable as it all is to me, I do believe that there are enough people out there who can be convinced of anything to drive what is

Complete Story »

How Far Can Gold Fall?

Posted: 24 Aug 2011 04:49 AM PDT

By Market Blog:

By David Berman

Gold isn't having a good day, suggesting that havens can turn into vortexes very quickly. In midday trading on Wednesday, gold in New York dipped to $1,784 (U.S.) an ounce, down more than $44. That brings the total decline over the past two days to 5 per cent – which, according to Bloomberg News, marks the biggest reversal in 18 months.

The declines come just a day after it hit a record high of $1,917.90 an ounce earlier on Tuesday amid concerns about – well, everything. Indeed, gold has become the go-to investment of choice among investors looking for shelter from inflation, deflation, slow economic growth, stimulative monetary policy, financial crises, debt crises and, of course, good old jewellery demand.

Gold stocks, which lagged the price of gold when it was charging higher, are getting beaten up worse now. The NYSE Arca Gold BUGS index was down

Complete Story »

Gold, The World's Currency

Posted: 24 Aug 2011 04:27 AM PDT

A good entry over on Mish's blog.

Gold "The World's Currency"
http://globaleconomicanalysis.blogsp...-currency.html

Some really interesting quotes by vaious folks too.

"The European central banks won't sell their gold because while it may be a means to raise cash, it definitely won't be enough to settle their debts," said Duan Shihua, head of corporate services at Haitong Futures Co., China's largest brokerage by registered capital. "Besides, none of the central banks believe in the currencies of other countries."

"The euro is breaking down and the process of its breaking down is creating very considerable difficulties in the European banking system." -- Alan Greenspan

"Gold, unlike all other commodities, is a currency. And the major thrust in the demand for gold is not for jewelry. It's not for anything other than an escape from what is perceived to be a fiat money system, paper money, that seems to be deteriorating." -- Alan Greenspan

Advanced Trading Series, Part II: Currency Trade Setups

Posted: 24 Aug 2011 03:41 AM PDT

To maximize opportunity and minimize risk, the professional trader relies on a customized arsenal of streamlined, high quality tools. In respect to swing trading, many of Mercenary Trader's key processes and methods are built on the software and execution platforms of TradeStation Prime Services.

Today we are going to take a deeper look at their platform and show how we use it in our own processes. (disclosure: TradeStation Prime Services is one of Mercenary Trader's sponsors)

This series is part of the Mercenary Vault, an archive of high quality materials available to Mercenary Dispatch subscribers. The Dispatch is our means of direct communication (via email) with Mercenary community members – and it's free! Sign up here – and don't miss out on future exclusives.

In part II of this series we'll look at Currency Trade Setups. Stay tuned for the third report: Option Hedging Techniques. Click on the link to review Part I of this series, Structured Option Setups.

EXECUTIVE SUMMARY:

• Currency pairs offer tremendous trading opportunities to exploit long-term trends.

• Inherent leverage for trading currency pairs allows for efficient use of capital and also requires strict risk management.

• Traders must pay careful attention to specific metrics for individual pairs when constructing entry and exit price points.

• The TradeStation Prime Services DMA Platform allows traders to enter currency trades commission free with an intuitive order entry platform.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

In today's economic environment, the ability to gain exposure to international markets is paramount.

Considering the debt crisis in Europe, the growth concerns in China, the emerging opportunities in Latin America, and the commodity exposure in Canada and Australia; traders need to be aware of major shifts and the effect that these markets have on existing exposure.

For many traders, the currency markets offer great opportunities to capture profits from political shifts, sovereign debt risks, and growth assumptions for a number of international regions.

Currency markets offer tremendous liquidity, efficient transaction metrics, and are notorious for being available to traders nearly 24/7. In fact, many of the great historical currency traders placed "quote machines" next to their beds in an attempt to always be on top of the market – years before personal computers became available to the mainstream public.

TradeStation Prime Services offers currency trading through their Direct Market Access (DMA) platform, and today we're going to take a look at how Jack and I use their platform to track and manage our own currency trades.

Available Currency Pairs

The TradeStation DMA platform allows access to more than 30 of the most liquid currency pairs (click image for full-size version):

click to open full size image in a separate window

When looking at currency pairs, it is important to understand the difference between the Base Currency and the Quote Currency.

Using an example of the EURUSD pair, the euro would be considered the base currency and the US dollar would be considered the quote currency.

The majority of our exposure (along with our cash balances) is denominated in US dollars. So when trading the EURUSD pair, it is fairly simple to calculate capital at risk and profit / loss figures. This is true for all currency pairs with USD being the quote currency.

As I write, the EURUSD is trading near 1.43900. This means that $1.00 (in US currency) is equivalent to 1.439 euros. If we took a 100,000 unit short position in the euro at the current price, and covered it at 1.36500, our profit could be calculated as follows:

1.43900 – 1.36500 = .07400 per unit profit
.07400 x 100,000 units equals 7,400 unit profit
Since USD is the quote currency, the profit is $7,400 (USD)

The concept becomes just a bit more complicated when trading pairs with a different quote currency.

For instance, we might be interested in taking a long position in USDCHF (where CHF is the quote currency).

Using a similar example and a current quote near 0.79500, we can consider a 100,000 unit long position in USDCHF. If we enter at 0.79500 and exit at 0.85100, the profit calculation would be as follows:

0.85100 – 0.79500 = 0.05600 per unit profit
0.05600 x 100,000 units equals 5,600 unit profit
Since CHF is the quote currency, the profit is 5,600 (CHF)
Translated to USD: 5,600 CHF x (1/.851) = $6,580 (USD)

So when determining your position size, it is important to realize that risk is determined in the quote currency which will then need to be translated back to your account currency to give you an accurate picture of capital at risk.

The beauty of the currency trading platform is that position size can be adjusted easily to allow you to take the correct amount of risk for your account size. With a currency trade, you don't need to trade round lots of 100,000 units. You can take a 15,000 unit position, a 72,500 unit position, or whatever size fits for your entry, exit, and risk metrics.

Executing a Currency Order

When executing a currency order using the TradeStation Prime Services DMA Platform, the process is similar to executing a stock or a single option order.

Begin by selecting the "Forex" tab on the left side of the order bar. Next, make sure that the correct account number is being used (more on forex account setup in a minute). Then enter the symbol for your currency pair along with the quantity and price metrics. Then click the "Buy" or "Sell" button to review your order.

For most of our currency trades (as well as equity and ETF trades), we prefer to use stop limit orders. This allows us to enter a trade when the price action moves in our favor, and the limit portion of the order keeps our execution from occurring too far away from our desired entry price (in the event that the currency gaps during a weekend or in between sessions).

For Half Profit Targets (HPTs) and risk point exits, we typically use an OCO order as explained in Professional Trader's Series, Part II: Trade Execution. The order metrics are the same, but the transaction takes place using the "Forex" tab.

Segregated Forex Account

To comply with margin requirements and capital rules, TradeStation Prime Services requires traders to keep a separate currency account. This account is linked to your existing trading account on the DMA platform, but the capital is kept separate to comply with the different margin rules for Forex versus equities.

Since currency platforms typically give traders a significant amount of available leverage (typically 100 to 1), you don't need to transfer as much capital into your forex account as you might expect. Typically, we hold a few percentage points of our capital in our forex account which gives us plenty of margin to take advantage of swing trade opportunities.

If profits begin to accumulate in this account, it is an easy process to request part of the capital to be moved back to our equity account. And conversely, if a few forex trades wind up being losers, we can transfer more capital out of our equity account and into the forex account.

Bottom line: the inherent leverage built into currency trades allows us to make efficient use of our capital without tying up a significant portion of available cash when placing a forex order.

It's also important to note that TradeStation Prime Services charges no commission for forex transactions. Since the brokerage arm makes their money from a markup in the spread, they do not have to explicitly charge a commission rate. In our experience, the bid / ask spread has still been very attractive, and given the fact that our positions are typically held for a period of several weeks, the markup in the spread has not historically been an issue.

The TradeStation Prime Services Direct Market Access Platform has a separate Trade Manager window which displays balances and account details for the forex account.

In the example below from one of the accounts that we manage, notice that there are three columns. The first is our native (USD) base currency. All balances are reconciled back into US dollars.

Since we are currently long USDCAD (as noted in the Mercenary Live Feed), the window also gives the conversion factor for USDCAD and shows our unrealized gain/loss for this trade.

Open positions can be seen in a separate tab within the Trade Manager bar and can be filtered to show only the forex trades or the entire list of positions including both the equity and the forex account.

As we head into the fall and continue to grapple with plenty of uncertainty around the globe, we will continue to track a number of currency opportunities. While many currency trades can be replicated using ETFs, the most efficient way to trade these markets is through an actual forex account using the actual currency pairs.

TradeStation Prime Services makes it easy to track and trade these markets, and as always, you can see our day-to-day trade setups with a free 14-day trial to the Mercenary Live Feed.

To your trading success!
MM

~~~~~~~~~~~~~~~~~~~~~

Note: TradeStation Prime Services is one of Mercenary Trader's sponsors. Jack and I are very selective in who we will accept as a Mercenary Trader sponsor. Our criteria is this: If the company offers a product or service that we believe in, that we actually use, and that we could highly recommend; then (and only then) will be be willing to consider them as a sponsor.

As a TradeStation Prime Services client (I've used their platform for years), I can heartily endorse the company, their DMA platform, and the institutional trading services that they offer.

To contact Tradestation Prime Services or to inquire about a demo on their platform, you can learn more on their website or contact their New York office:

William Katts, Senior Managing Director
phone: (212) 847-5900
WKatts@TradeStationPrime.com

Letter to Dennis Gartman about the Cortes Chart

Posted: 24 Aug 2011 03:06 AM PDT

Mr. Dennis Gartman is a well-known investment newsletter writer who publishes an excellent daily commentary. In today's issue, Mr. Gartman provided a comparison chart that was apparently prepared by Mr. Steve Cortes, a contributor to the cable TV network CNBC. Unfortunately we do not have permission or the ability to reproduce the comparison chart, but Mr. Gartman went on to comment about that chart:

"SANTAYANA WAS RIGHT: The American philosopher George Santayana said that those who do not know history are doomed to repeat it. In this light we have this chart, courtesy of fellow "Fast Money" contributor and very good friend, Mr. Steven Cortes, noting the correlation between gold's action of late and that of 1980. The implications here are ominous for the gold bulls… indeed very." – Dennis Gartman

We thought our Vulture readership might appreciate a letter we felt motivated enough to pen while vacationing. It follows below.

August 24, 2011

Hello Dennis, I have been vacationing away from my usual "battle station," but please allow me to comment on the chart you reproduced in today's TGL by Steve Cortes of CNBC.

The chart Mr. Cortes sent is kind of like a parlor trick. As if we can even use 1980 as a model at this point, we cannot, … in 1979 - 1980 the gold price advanced by roughly 240% in the final year, from roughly $250 to roughly $850.

The equivalent 1-year move for gold in today's market would be August 2010 to August 2011. A year ago gold was roughly $1,250. An equivalent 240% move higher would have taken gold to $3,000, or about 56% higher than $1,917.

In the final two months of that 1980 event, gold surged more than 100% from roughly $400 to roughly $850.

The equivalent 2-month move for gold in today's market would be June to August. Two months ago gold was roughly $1,550. Obviously, a roughly 100% surge in a blow-off gets one to more or less the same $3,000 place.

Do you see the parabola that consolidated in around Oct. of 1979 in the first chart below? That would have been a better comparison to today's market percentage wise. (Roughly $280 to $440 or about 57%, but it was actually the second of two legs up that started at around $230.)

Mr. Cortes may be right about a correction now, however, one is overdue. Note the 17% correction which occurred in Oct-Nov of 1979 below in the first chart.

That's roughly equivalent to a $325 dip today, or to around $1,590 or so, which is where I would think there would be overwhelming support in this environment.

One can see what followed that dip in the second chart.

The THIRD and final blow-off top shown in the second chart does not compare well to today in my humble opinion.

The current parabola bears little resemblance to the events of 1980 except as a fractal, but again, comparisons to 1980 are at best fractals and disregard the huge differences in the marketplace today.

Having said that, we will know if this pullback/correction is similar to 1980 very shortly. In two weeks. Notice that gold blew up when it peaked in 1980? Remember it collapsed $260 or so, or about $30% in two weeks. The equivalent today would be to about $1,342. I would be a buyer of gold at $1,342 in two weeks, Dennis. How about you?

Best regards,

Gene Arensberg

GotGoldReport.com

Credit George Kleinman for the two charts below via Gold-Eagle.com.

http://www.gold-eagle.com/editorials_05/kleinman111406.html

See two charts below plus a current view.

ShortSideofLongBlog: Bonds & Gold in Euphoria

Posted: 24 Aug 2011 03:00 AM PDT

The following is from the ShortSideofLong Blog:

I have to admit, I love the "Safety Crowd." In case you don't know what that means, it's a term I coined for those who interpret every single set of news as bearish, regardless of it being inflationary or deflationary. This group of investors is also known as perma-bearish. And since we are in this perma-bearish environment, thanks to the total economic collapse in 2008, the old argument between Bonds vs Stocks is not even alive anymore. It has morphed itself into Bonds vs Gold.

You see it goes something like this: if a news report comes out showing that US ISM has declined below 50 (contracting) and that the economy is slowing, half of the Safety Crowd will tell you that this is an inflationary event because the slower the economy, the more money printing the Federal Reserve will do and the more Gold you shall buy – because Gold is a safe haven, they claim.

On the other hand, the other half of the Safety Crowd will argue that this is a deflationary event because the slower economy will tend to collapse on its own two feet and the worst thing you can have in a recession is a high amount of debt (asset deflation occurs while debts remain at the same level). Under this scenario, they claim, Treasury Bonds is the ultimate place to park your money, as they are a safe haven.

There is so much fear around since the end of 2007, that the Safety Crowd has on a consistent basis just recommended to buy Gold or Treasuries over and over and over again. They claim that these asset classes will preserve your capital and that when 2008 repeats, you are going to benefit from the risk off scenario.

Lets consider both…

In my own opinion, buying Gold right now would be extremely foolish and totally defeating the purpose of wisdom which states to "buy low, sell high". The sentiment for this asset as measured by ETF fund flows for SPDR GLD is now at the highest ever monthly inflows. Listen to that again…. highest ever monthly inflows. That means dumb money is doing exactly that… following the Safety Crowds advice. This trade has become so obvious to the public, which are scared out of their own minds, that it is obviously wrong.Furthermore, the Gold bull market has now been in progress for over 1000 days without even touching the 200 day moving average once. I admit my warnings have been a tad early, as I have already posted about this as early as late July, but in all honesty that was only three weeks ago. I guess majority of investors today are actually traders, who only use intra day charts, so gone are the days of actually buying something and riding out the trend. Either way, previous warnings can be read here, here and here.

And while Gold remains in a secular bull market and profoundly has good fundamentals behind it for several years to come, Treasury Bonds actually do not. They are even worse out of the two, because the Safety Crowd forgot to tell you that during recessions, tax revenues decline and therefore deficits will go through the roof. I do not know how they missed that, but it is similar to the Goldilocks Crowd in 2007, which forgot to tell you that Financial Sector was actually not cheap.

So what happens to the United States budget during a recession, which the perma-deflation Safety Crowd claims will be good for Treasuries?

You see during negative economic growth, company earnings as well as profits fall and jobs are cut. That means tax revenues decline. The Treasury will therefore have to issue new bonds at a very rapid speed to finance the deficit budget, which was already at over 4 trillion dollars last year (including hidden liabilities).

The fresh issues of new Treasuries will devalue the credit quality of the actual existing bonds (not that it has any credibility with the country being bust already). Therefore, the Treasury Bond will actually be close to reassembling a Junk Bond to a certain degree. Having said all that, an investor should also consider that optimism is so high on the Treasuries right now, that the asset class is actually setting itself up for a short of the decade!

Summary: My advice to investors with a six month to a few year time horizon looking at buying something during this turmoil is to stay away from the recommendations of the Safety Crowd perma-bears… stay away as far as possible. You must understand that these investments will not only lose you money, but also lose you sleep over the coming months. If I was to buy anything right now, it would actually be agricultural commodities or commodity related stocks that are linked to fertiliser.

Furthermore, as a side note, I would also look at buying energy commodities or commodity related stocks that are linked to Oil drilling. You see my view is that if Crude Oil declines below $75 per barrel, drilling will automatically stop and you can forget about the ability to actually find Oil at any price in the future! With the continuos increase in demand from Emerging Market economies, supply will just fail to keep pace, making Crude Oil price go much much higher. Higher than both you and I can imagine.

Biggest Gold Drop Since December 2008 Sends Metal To… Week Ago Levels

Posted: 24 Aug 2011 02:46 AM PDT

Gold this morning is plunging by the most since December 2008. For those seeking the reason for the sell off, it once again appears that the market is about 24 hours late in processing news that has been out for over a day. One of the main catalysts for today's gold price is the realization that the Shanghai Gold Exchange hiked gold margins by 26%. Of course that this happened not one but two days ago (as we reported) is irrelevant. There are other factors to be sure: on Tuesday holdings of the SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell by nearly 25 tonnes, their biggest one-day outflow since Jan. 25. Furthermore, there is another rumor that hedge funds that have been crushed by the market volatility over the past month are shoring cash ahead of Jackson Hole by selling their winners. Either way, at last check gold was down to $1770. This is the price it was on August 16: about a week ago. As for where gold will go next: we suggest investors consider what the options for the world central banking cartel are, and how many of them do not include diluting paper. We are eager to hear the alternatives.

Source: http://www.zerohedge.com/news/biggest-gold-drop-december-2008-send-metal-week-ago-levels

Japan downgraded by Moody's; gold price falls back

Posted: 24 Aug 2011 02:15 AM PDT

Since hitting a new record high above $1,900 per ounce on Monday, the gold price has lost ground. But Moody's Investors Service unexpectedly downgraded Japan's credit rating to Aa3 from Aa2 at the ...

Germany May Want PIIGS Gold as Security for ‘Bailouts’ …

Posted: 24 Aug 2011 01:40 AM PDT

Top technical trader Roque: More downside ahead

Posted: 24 Aug 2011 01:18 AM PDT

From All Star Charts:

John Roque is hands down one of the best technicians in the business. I think the way he was able to explain what he is seeing in the charts is second to none. The Chief Technical Strategist at WJB Capital was on CNBC last night talking technicals.

Everyone keeps talking about this Death Cross for the market. This is when the 50-day simple moving average crosses below the 200-day simple moving average. A lot is made of this particular indicator even though last time we had this "sell signal" (last July) the stock market rallied 30% very quickly (SPY).

What is more important to take note of is NOT the cross, but the...

Read full article (with video)...

More trading ideas:

Where gold's parabolic rise could stop

Fantastic advice every trader should read immediately

Trader alert: These are the most volatile stocks in the world right now

Time to take a closer look at Gold and Silver

Posted: 24 Aug 2011 12:47 AM PDT

Over at TFV Blog, you can gauge a different perspective of what may happen.

"This brings us to Gold which is, technically speaking, the safest currency. However the rise in gold in the last 60 days has been so steep that even I, a staunch gold bull admits that we will see a significant correction in the yellow metal before we continue the upward movement. To say one expects gold to retreat does not make one a gold bear. However, take a look at the chart of gold below and come to the realization that nothing goes straight up despite what many perma-bulls will tell you. Gold might get to $2,000, $2,500 or $5,000 an ounce….who knows… but it will not get there tomorrow or the day after. The last parabolic move we saw came at the expense of silver and we all recall what happened last May. Silver was off significantly today and what failed to inspire me in the recent gold rally was that silver did not follow the lead as Gold continued to make new highs.
Click here to see the rest...

Kevorkian Economics – Hospice Care For The Economy

Posted: 24 Aug 2011 12:01 AM PDT

The bloated, self-serving political class can usefully be understood as parasites feeding off the private sector of the economy. As the economy spirals toward collapse and the government toward bankruptcy, the necessity of spending cuts and downsizing of government should be obvious. However, the recent debt ceiling debacle indicates that the political class is not [...]

Hochberg of Elliottwave: We keep screwing up

Posted: 23 Aug 2011 09:49 PM PDT

Yes, this is another EWI bashing thread. On why he's kept calling it wrong on gold. Here is what Steve Hochberg in Financial Forecast had to say in his most recent issue:

"Gold's rise has continued to thwart our call for a significant decline, and we are not satisfied with the accuracy of our forecasting with this asset. But the evidence becomes more one-sided every day, so there is no way we can adopt a different view."

I have a question for these guys. If the techniques you use to analyze these markets consistently fail to work, why do you keep using them? Their so called techniques has not worked for the entire 10 year run in gold and silver.

Downfall of the USA

Posted: 23 Aug 2011 09:46 PM PDT

Left-Wing Commie Socialist Strategy To Take-Down America Is Working.

"The Cloward–Piven strategy is a political strategy outlined in 1966 by American sociologists and political activists Richard Cloward (1926-2001) and Frances Fox Piven (b. 1932) that called for overloading the U.S. public welfare system in order to precipitate a crisis that would lead to a replacement of the welfare system with a national system of "a guaranteed annual income and thus an end to poverty". Cloward and Piven were a married couple who were both professors at the Columbia University School of Social Work. The strategy was formulated in a May 1966 article in left-wing[1] magazine The Nation entitled "The Weight of the Poor: A Strategy to End Poverty".[2]

"The two were critical of the public welfare system, and their strategy called for overloading that system to force a different set of policies to address poverty. They stated that many Americans who were eligible for welfare were not receiving benefits, and that a welfare enrollment drive would strain local budgets, precipitating a crisis at the state and local levels that would be a wake-up call for the federal government, particularly the Democratic Party, thus forcing it to implement a national solution to poverty. Cloward and Piven wrote that "the ultimate objective of this strategy [would be] to wipe out poverty by establishing a guaranteed annual income…"[2] There would also be side consequences of this strategy, according to Cloward and Piven. These would include: easing the plight of the poor in the short-term (through their participation in the welfare system); shoring up support for the national Democratic Party then-splintered by pluralist interests (through its cultivation of poor and minority constituencies by implementing a national solution to poverty); and relieving local governments of the financially and politically onerous burdens of public welfare (through a national solution to poverty)."

"Cloward and Piven's article is focused on forcing the Democratic Party, which in 1966 controlled the presidency and both houses of the United States Congress, to take federal action to help the poor. They stated that full enrollment of those eligible for welfare "would produce bureaucratic disruption in welfare agencies and fiscal disruption in local and state governments" that would "deepen existing divisions among elements in the big-city Democratic coalition: the remaining white middle class, the working-class ethnic groups and the growing minority poor. To avoid a further weakening of that historic coalition, a national Democratic administration would be constrained to advance a federal solution to poverty that would override local welfare failures, local class and racial conflicts and local revenue dilemmas."[3] They wrote:"

"The ultimate objective of this strategy—to wipe out poverty by establishing a guaranteed annual income—will be questioned by some. Because the ideal of individual social and economic mobility has deep roots, even activists seem reluctant to call for national programs to eliminate poverty by outright redistribution of income.[3]'

"Michael Reisch and Janice Andrews wrote that Cloward and Piven "proposed to create a crisis in the current welfare system – by exploiting the gap between welfare law and practice – that would ultimately bring about its collapse and replace it with a system of guaranteed annual income. They hoped to accomplish this end by informing the poor of their rights to welfare assistance, encouraging them to apply for benefits and, in effect, overloading an already overburdened bureaucracy."[4] -Wiikopedia

Our Northern Advisor remarked on this scheme this week indicating the current administration and some previous administrations have been following this nefarious plan. It began with the Great Society in the middle 1960's and is spreading over the western world. The primary idea is to "make a crisis" and get as many citizens as possible on welfare making them government dependent. Then all are converted from socialism to the enslaving communism. We see two longer view weaknesses here: Americans have millions of guns and hold a sincere dislike for this kind of politics and economics. The larger change arrives when the global bond markets crash. The bond crash is well on its way to be going over the cliff. Europe goes first, then the USA followed by China and other Asian nations. -Editor

This posting includes an audio/video/photo media file: Download Now

Gold & Silver Market Morning, August 24, 2011

Posted: 23 Aug 2011 09:00 PM PDT

Kazakhstan Will Buy All Domestic Gold Production Starting January 1st, 2012

Posted: 23 Aug 2011 08:57 PM PDT

¤ Yesterday in Gold and Silver

Well, the big price spike that occurred at the open of trading in the New York Access Market at 6:00 p.m. on Monday evening turned out to be the high of the day for the Tuesday trading session. The first real selling pressure began at the London open, with a temporary bottom coming at 9:15 a.m. in New York.

The ensuing twenty-five dollar rally lasted until shortly after 11:00 a.m. Eastern, before the selling pressure showed up again. At 12:45 p.m. the seller disappeared...and a decent rally began that carried right into the thinly-traded electronic trading session after the Comex close.

Then, at precisely 2:00 p.m. a not-for-profit seller showed up...and by the time the bulk of the selling was in, gold got clocked for another forty bucks. The gold price finished down $68 on the day. Volume was monstrous.

It should come as no surprise to anyone that the real damage came in the silver market. From its $44.25 spike high on Monday night, until it's low tick around $41.50 in the thinly-traded New York Access Market yesterday afternoon...silver got smacked for about $2.75...although the closing price change only showed a decline of $1.84 spot.

The dollar opened at 74.15 in early Far East trading on Tuesday morning...and fell all the way down to 73.60 by around lunchtime in London, before rallying back to close just under the 74.00 cent mark. The dollar's movements played no part in yesterday's precious metals price gyrations.

The gold stocks got hit pretty hard, but considering the hit to the metal itself, the loses weren't all that bad...and the HUI finished well of its low...down 3.55%. It could have been worse.

And despite the pounding that silver took yesterday, the associated equities were very sanguine about it...and Nick Laird's Silver Sentiment Index finished down an rather insignificant 1.76%. I was impressed.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 375 gold, along with 69 silver contracts, were posted for delivery on Thursday. In gold, the big short/issuer was JPMorgan in their proprietary trading account...and the big receiver/stopper was Goldman Sachs. In silver, the big short/issuer was Jefferies once again...and the big stopper was JPMorgan in their client account. The numbers are worth a look...and the link is here.

There was a huge withdrawal from GLD yesterday...down 798,417 troy ounces...and the SLV had a monster deposit of 4,286,172 ounces. That's a large part of what the ETF is probably owed from last week and Monday. As I mentioned in yesterday's column, it will be interesting to see what the short positions are for GLD and SLV when they're reported later this week...especially after yesterday's price action.

The Comex-approved depositories took in 16,302 troy ounces of silver on Monday...and shipped 302,913 ounces out the door. The link to that action is here.

Here's another interesting e-mail from German reader Patricia Ritz about the physical tightness in silver..."I would confirm what your U.K. reader said about the tight physical silver supply. Last week we went to our local Hamburg Bank, HASPA, where we have been buying gold and silver for the past few years. We bought everything they had, which included bars and new coins...about 20,000 Euros worth...as they said that they didn't know when they could get any more. The mints were all working with gold and not providing any silver to the markets, the ratio of gold to silver purchases being about 10:1. They were hoping to get more silver in a few weeks but couldn't promise it."

"It was great meeting you in London on the last day of the GATA conference. As always looking forward to reading your reports each afternoon here."

Here's an interesting Bloomberg chart that was sent to me by Washington state reader S.A. It shows the quiet rise in the overnight inter-bank lending rate. The chart only covers a couple of months, so you can see that the counterparty risk level is starting to creep up as the summer winds down.

(Click on image to enlarge)

For the most part, it was pretty quiet all night long in gold and silver, but I'm sure the bullion banks are still lurking out there somewhere.

Vietnam tries to cope with new bout of gold fever. German Minister Demands Gold Collateral For Future Bailouts. Venezuela's move will deleverage gold market, Rickards tells King World News

¤ Critical Reads

Bank of America's share nosedive fuels fears of a second credit crunch

Bank of America continued its tailspin on Tuesday as shares in the largest US bank tumbled by another 6.4% to their lowest level since March 2009, fuelling fears of a second banking crisis.

As concerns mounted that BoA will need to take huge additional write-offs on bad mortgages, the cost of insuring the group's debt jumped to record levels and investors became increasingly concerned that the financial system could be facing a fresh credit crunch.

And, dear reader, if you check Citigroup's stock...it's not in much better shape, either.

I thank Swiss reader G.B. for sending me this story out of The Guardian late last night...and the link is here.

View full GSD edition

First in Line for New Money

The world of high finance was still in full flight in February 2007. The cracks in the mortgage market had not yet begun to show and Stephen Schwarzman's Blackstone Group had just completed its $39 billion purchase of Equity Office Properties in what was the largest leveraged buyout ever.

There was plenty to celebrate, so Schwarzman threw himself a party for his 60th birthday, a 3 million dollar affair for 350 of the billionaire's closest friends, including Barbara Walters, CNBC money honey Maria Bartiromo, the Donald, Cardinal Edward Egan, and former New York governor George Pataki.

It was lobster, filet mignon, and baked Alaska for everyone, washed down with expensive vino, with comedian Martin Short as emcee. Composer-pianist Marvin Hamlisch played a number from A Chorus Line. Patti LaBelle sang a song written for the birthday boy, and Rod Stewart sang a medley of his hits, reportedly for a fee of a million dollars.

This Doug French piece posted over at mises.org is a bit of a read, but well worth it in my opinion. I thank Australian reader Wesley Legrand for sending it along...and the link is here.

View full GSD edition

Bundesbank questions legality of EU bail-outs

Germany's Bundesbank has issued a blistering critique of EU bail-out policies, warning that the eurozone is drifting towards a debt union without "democratic legitimacy" or treaty backing.

"The latest agreements mean that far-reaching extra risks will be shifted to those countries providing help and to their taxpayers, and entail a large step towards a pooling of risks from particular EMU states with unsound public finances," said the bank's August report.

Here's Ambrose Evans-Pritchard up on his high horse over at The Telegraph once again...and I thank Roy Stephens for this story. The link is here.

View full GSD edition

Debating the Common Currency: 'Euro Bonds Would Destroy the Euro'

Many in Europe would like to see the introduction of euro bonds to help indebted euro-zone member states borrow money on international markets. Germany, however, has refused. SPIEGEL listens in as two top German economists debate the issue.

These two economists really go at it. This spiegel.de piece from yesterday is also courtesy of reader Roy Stephens...and the link is here.

View full GSD edition

Dr. Dave Janda interviews your humble scribe

On Sunday afternoon just past, I had the pleasure of doing a 30-minute radio show with Dr. Dave Janda over at WAAM 1600 in Ann Arbor, Michigan. For those of you with some time on your hands, the link to the interview is here.

View full GSD edition

German Minister Demands Gold Collateral For Future Bailouts

German Labor Minister and CDU deputy president Ursula von der Leyen said that future bailouts in eurozone countries should be covered by gold reserves or industry stakes, according to a Reuters report.

This is the newest development in the debate over whether collateral should be offered to nations contributing to the Greek bailout.

It remains to be seen if this idea goes anywhere.

This is a short read posted over at the businessinsider.com website...and I thank reader Norbert Wangnick for sharing it with us. The link is here.

View full GSD edition

ETF in Focus: GDX

Scott Pluschau, a frequent contributor to this column, has posted a short 2-page piece on the Gold Miners ETF. It's posted over at thestreet.com...and if this sort of thing interests you, the link is here.

View full GSD edition

Is a Fear-Driven Gold Mania Here?

Yesterday's edition of Casey's Daily Dispatch contained a commentary by BIG GOLD editor Jeff Clark...and it's headlined "The Fear Mania". It's a short read that I know you will find interesting...and you'll have to scroll down a bit to get to it. The link is here.

Is a Fear-Driven Gold Mania Here?

Posted: 23 Aug 2011 08:57 PM PDT

Is a Fear-Driven Gold Mania Here?

ETF in Focus: GDX

Posted: 23 Aug 2011 08:57 PM PDT

ETF in Focus: GDX

German Minister Demands Gold Collateral For Future Bailouts

Posted: 23 Aug 2011 08:57 PM PDT

German Minister Demands Gold Collateral For Future Bailouts

This is the newest development in the debate over whether collateral should be offered to nations contributing to the Greek bailout.

It remains to be seen if this idea goes anywhere.

This is a short read posted over at the businessinsider.com website...and I thank reader Norbert Wangnick for sharing it with us. The link is here.

First in Line for New Money

Posted: 23 Aug 2011 08:57 PM PDT

First in Line for New Money

Venezuela's move will deleverage gold market, Rickards tells King World News

Posted: 23 Aug 2011 08:57 PM PDT

Venezuela's move will deleverage gold market, Rickards tells King World News

Eric King sent me this story early on Tuesday morning, but I just couldn't find the room for it in my column yesterday, so here it is today.

Geopolitical analyst Jim Rickards, who spoke at GATA's London conference this month, told King World News on Monday that Venezuela's withdrawal of gold from the Western banking system isn't fully appreciated yet. It likely means a painful deleveraging of the gold market, Rickards says, as the bullion banks to which the gold has been leased try to recover it.

I've listened to this interview...and it's well worth your time. The link is here.

Chavez expects gold to be back in Venezuela in 'weeks'

Posted: 23 Aug 2011 08:57 PM PDT

Chavez expects gold to be back in Venezuela in 'weeks'

Venezuelan President Hugo Chavez signed into law Tuesday the official nationalization of the country's gold mining industry and announced the impending arrival of the first shipment of repatriated gold.

Chavez signed the "natural law that reserves the exploration and management of gold, as well as the connected activities, to the state" during a ministerial meeting broadcast by state media.

This AFP story headlined "Chavez officially nationalizes Venezuela's gold industry" was picked up by google.com...and is another borrowed story from a GATA release...and the link is here.

Gold price meets resistance at $1,900

Posted: 23 Aug 2011 08:00 PM PDT

After hitting a new all-time nominal high at $1,913.50 per troy ounce yesterday, the gold price corrected sharply to a low of $1,826, from where spot gold has now recovered slightly to trade around ...

Carlos Andres: Discovering Bargain Basement Gold Stocks

Posted: 23 Aug 2011 07:00 PM PDT

If gold equities are on sale, the stocks Carlos Andres follows as publisher of the Frontier Research Report are on clearance. Andres seeks out stocks that have been unfairly pummeled, offering extra...

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