saveyourassetsfirst3 |
- The Dollar Is Still China's Best friend
- Gold, Miner ETFs Among Top Performers In August
- Inverse Treasury ETFs In Focus On Renewed Bond Bubble Talk
- Illusion of Stable Currency Vortex
- Silver Ready to Breakout - Technicals and Fundamentals Suggest $50/oz in Early Autumn
- What Happens to Gold During a Deflation?
- Columbia has raised its Gold reserves by 2.3 tons in July
- These "leading indicator" stocks are sending a bearish warning
- Gold vs Silver - Monthly purchase
- Why the New York Times is attacking gold
- Don't believe the lies... The real data show inflation is soaring
- Silver set to Soar? $50 October says so.
- How to Deal With Maniacs
- China Ramps Up Copper Purchases
- India's gold and silver demand exploding
- So, Gold Got Hit. So What!
- Get Ready For Fall Trading Excitement
- Philip Pilkington: Dynamism and Instability – The Search for Profits and Disequilibrium
- Gold & Silver Market Morning, August 31, 2011
- Gold 2011 - A CNBC Special Report - The Golden Age of Gold
- I'm Now 100% in Gold, Roubini is Wrong: Gerald Celente
- Here is Why Gold Shorts are Worried: Michael Pento
- Gold price ready to climb the helicopter
- The Storm is Over…
- Palladium price lags gold
- ECB: decrease of oz 3152,72 in gold and gold receivables
- Galluping Gold
- Gold and Your Blue Pen
- 2011 Silver Trends
- Ned Naylor-Leyland talks to James Turk
| The Dollar Is Still China's Best friend Posted: 31 Aug 2011 06:50 AM PDT By Susan Weerts: The recent downgrade of U.S. debt by S&P did not come as a total surprise to the world. U.S. fiscal problems have been known for years. Over the last decade China has amassed enormous foreign reserves. Nearly 70% of China's $3.2trillion in foreign reserves is in U.S. dollars, or U.S. dollar equivalents. To protect its assets, China can either diversify away from dollar assets or shrink its foreign reserves. In the last few years China has started to diversify away from its dollar assets. The sheer size of its reserves, however, makes diversification nearly impossible. There is no market other than the U.S. Bond market, big enough to accommodate China's foreign reserves. The German and UK bond markets total about $1trillion each. The Gold market is smaller than the bond market. The level of Chinese Gold reserve has not had any significant changes since September 2009. Other commodity markets are Complete Story » |
| Gold, Miner ETFs Among Top Performers In August Posted: 31 Aug 2011 06:12 AM PDT By Tom Lydon: Despite a mid-month correction, exchange traded funds that invest in gold were among the best performers in August, backed by safe-haven demand and a tumultuous market. Gold miner ETFs were also top performers this month as they benefited from the precious metal's rise. SPDR Gold Shares (NYSEArca: GLD) and iShares Gold Trust (NYSEArca: IAU) are up more than 10% this month, while Market Vectors Gold Miners ETF (NYSEArca: GDX) has added about 7%. Gold ETFs were fractionally lower Wednesday following the previous session's 3% rally on talk the Federal Reserve may announce more stimulus for the economy. BMO Capital Markets analysts calculate that some gold miners are the cheapest they've been in 20 years, writes Murray Coleman for Barron's. RBC Capital Markets analysts found that gold producers currently sit on record high margins, which could average $1,200 an ounce over the next couple of years. In contrast, the 10-year average Complete Story » |
| Inverse Treasury ETFs In Focus On Renewed Bond Bubble Talk Posted: 31 Aug 2011 05:53 AM PDT By Tom Lydon: Worries over the economy and global debt levels have caused investors to rush to safe havens such as U.S. Treasury bonds amid the volatility in stocks. Yields on the 10-year Treasury note recently dipped below 2% even though Standard & Poor's downgraded its triple-A rating on U.S. government bonds. Bond yields and prices move in opposite directions. The jump in Treasury bonds has led to renewed talk of a bond bubble. The bond bears think the rally is setting up the market for an even bigger plunge when interest rates eventually rise, reports Sue Shellenbarger for The Wall Street Journal. For years, many investors have been warning that U.S. Treasury bonds are in the final stage of a multi-year bubble that's set to burst. So far, it hasn't panned out. The Federal Reserve's decision to keep rates near zero until mid-2013 |
| Illusion of Stable Currency Vortex Posted: 31 Aug 2011 05:19 AM PDT
The Jackson Hole Conference was a dud. To the astute student observer, something happened never seen before. The US central bank chief admitted failure, if only people could properly interpret and translate his words of helplessness and disappointment. A more apt description was that USFed Chairman Bernanke used the forum to announce on stage that the central bank failed and is powerless to react to the current lapse into recession. Many watchers no longer believe that a Quantitative Easing chapter #3 will be announced. Surely it will come sooner or later. Watch the USTreasury auctions for the best clue. The QE2 program was about prevention of auction failure, not economic stimulus. A quick review of monetary policy and its effect is horrifying for its utter complete failure. The FedFunds rate has been under 0.5% for three years, yet neither the USEconomy nor the US housing market have recovered. That is a first in history. The USFed gobbled up over $1 trillion in toxic mortgage bonds and related derivatives, also with no resulting rebound in the housing or mortgage finance markets. The QE2 debt monetization program averted USTreasury auction failures, but the bold monetary inflation gesture sustained for several months did cause a backfire. It lifted the entire cost structure to the USEconomy in painful fashion. The profit margin squeeze and household spending squeeze have been radically evident and deeply damaging.
Chairman Bernanke admitted on stage before his peers, in full admiration of his failure and lost leadership, that the USFed has no more tools at its disposal, and that the USEconomy must recover on its own. For the first time he mentioned tools at his disposal without delineation what they were. He has none. His heavy doses of liquidity to treat insolvency have not succeeded in achieving anything except higher costs without job growth. He even attempted to point the finger of responsibility to the USGovt for its budget extravagance and intractable deficit. Big Ben has crashed his helicopter without any cash drops on citizen homes. Worse, he has shown all on stage that he has nothing under the hood, and that the bulge below is nothing but a massive paperwad in his pocket. The USFed is impotent. Its board members are in open dispute on the chosen path for QE3, even the scored success of QE2. The US Federal Reserve is a failure, its franchise system a failure, its monetary policy a failure, its balance sheet a failure, its analysis chronically incorrect, its initiatives in backfire, its toolbag empty. Perhaps it is time for the USFed to resign its contract with the USCongress. The crowning blow should have been the $16 trillion in unauthorized loans to global banks, given cloud cover by the TARP Fund and its confusion. This is a syndicate fortress with its own agenda, nothing more.
THE WAITING GAME WITH EUROPE In past analysis, a Jackass viewpoint has been shared concerning the Competing Currency War. A sense of stability can be achieved, if only the European mess can be equated with the American mess on equal footing. For the past two years, the bounces and jumps in the USDollar have often come by wretched comparisons to the Euro currency. The Euro is uglier, therefore the USDollar looks better. But Europe has a huge distinction. Their many broken sovereign bonds from member nations trade at different bond yields, thus differentiating them. The Euro currency thus trades on interest rate expectations, rather than what Wall Street compromised analysts believe. EuroCB head Trichet is the object of language dissection also. His latest utterance indicated no longer a concern over inflation, thus prompting forecasts of no more ECB rate hikes. The European banks have a colossal problem as an extension of the rate differential Trichet brought about with the official rate hikes this year. The European inter-bank lending is in the process of seizure, as in the money market funds. Call it an unintended consequence from the EuroCB attempting to make distance from the reckless USFed monetary policy. Just another casualty in the Competing Currency War. The Euro Central Bank did not want to follow the USFed into the monetary hell-hole in 2009. The USFed went down to 0%, but the EuroCB chose not to follow. The Euro currency rose too high as a result, up to the 150 level, harming the German import trade. Just another casualty in the Competing Currency War. In fact, the war kills all economies and destroys capital uniformly.
The corps of sell side analysts seem never to factor in the bond yield effect, choosing to paint Europe with a single broad brush incorrectly. My theory is that the USFed is waiting for Europe to announce and come to a more firm agreement on bailouts of the expanding sovereign debt crisis. The EUR 850 billion pledge to the European Financial Stability Fund hit the rocks quickly, as German bankers pulled their support. The Europeans must contend with contagion, as the sovereign bond toxicity has moved across the borders into Italy and France. Funny how Spain has avoided the axe, but France has been thrust onto the firing line.
The USFed is waiting for the Euro Central Bank to take action. The key is the EuroCB debasing its Euro currency in the next move, which will give the USFed permission to debase its USDollar currency in its next move. They require coordination. Japan and Switzerland are doing their part in monetary debasement, having learned much from the Americans. The inescapable truth is that in the larger context it does not matter since both the Euro and USDollar are doomed. When Greece or Italy or Spain defaults on sovereign debt, or France is bailed out on sovereign debt, all of which are inevitable, the landscape will see 20 Lehman-type bank failures, perhaps some in London and New York. The strategy is clear. The central banker rats are cornered. The USFed is tangled in a US$ straitjacket. It cannot continue on its QE2 or advance into QE3 without a dance partner in Europe capable of stepping in the quicksand at a matching pace. If Bernanke Fed goes it alone, then the puss from the USDollar will break through the FOREX skin surface. That would cause a rash of rising costs in the entire commodity sector, from gasoline to food to cotton to metals to paper to scrap. The myopic wrong-footed analytically incompetent Bernanke, still widely revered for his leadership to ruin in a sequence of direct iceberg hits, would prefer that European monetary authorities dispense trillions more Euros to save their wrecked banks. The tragedy lies in the fact that neither the large American nor European nor London banks can be saved. Ample or accelerated liquidity does not fix their insolvency. The key is the falling housing markets, still on a downward course. The key is lost industrial bases, handed to China as part of the grand plan. That plan pertains to designed ruin, gold leases, and consolidated power.
LACK OF OPTIONS The USFed, like the USDollar, is cornered. The historically unprecedented nearly $2 trillion in debt monetization fixed nothing. Take a look backwards at the lack of options that the USFed faced. In 2007, debate was over whether the USFed should drop the interest rate. The mortgage crisis was erupting from its subprime core. The USFed openly admitted its reluctance to lower rates, since doing so would invite inflation to the dinner table. After crisis struck the banks, after the stock market dived, after the recession was obvious, the USFed took action with sharp sudden big rate cuts. They were suddenly heroes whose elbows rested over the liquor cabinet. They are as lousy at policy delivery as with economic analysis topped by forecasts. In early 2010, the USFed was again cornered without options. It was pressured to keep the near 0% steady, since the housing market was so fragile. They openly spoke about an Exit Strategy from the ZIRP jail. The Zero Interest Rate Policy, for adept students, is a permanent prison, something American economists refuse to comprehend or believe, due to blindness, incompetence, intellectual compromise, and syndicate devotion. So instead of exiting from the 0% corner, then doubled down with a Quantitative Easing enema, both forecasted by the Jackass. Being in a straitjacket is compounded by massive bloat of liquid infusions. The excrement is played out on the USEconomy directly, but the global economy as well, from the rising cost structure. Questions abound while for almost five years, the USFed has been out of options. Should they pop the housing bubble they so eagerly created in 2006 by hiking interest rates? Should they instead encourage price inflation by lowering rates below the prevailing inflation rate, as in free money? Should they prevent a galloping recession, or encourage more asset bubbles? Should they lap up the excess liquidity, or rely upon inflation as a growth engine? Should they take away bank loan loss reserves, or leave the Fed balance sheet exposed as wrecked? Should they go it alone with QE3, or enlist the aid of other central bankers in a Global QE? Should the primary bond dealers be hung out to dry as they swallow huge USTBond supply, or continue the 3-week roundtrip to FOMC coverage to hide the complete auction farce of indirect backdoor bond monetization? Should the stock market be used as a justification for massive QE3 liquidity infusions in a departure from the Fed charter, or permit the stock indexes to settle at lower levels in synch with the reality of recession and profit squeeze? Should they attempt to let the banking system run without crutch props and intravenous lines, or continue them in a manner that displays the USFed acting as the entire banking system intermediary octopus? Should they let the USEconomy falter badly in order to encourage USTreasury Bond demand in a stock fund migration, or stand aside and not crowd out the bond market which is vital to capital formation? Should they permit a large already dead US bank to fail, in order to gain more emergency powers and earn the side benefit of a black hole to lose more data? Should they simply continue doing what they wish, and simply lie much more?
It is extremely safe to conclude that the USFed has no good choices. It is without alternatives or tools. The deception is topped off by decisions to deploy the powerful leveraged Interest Rate Swaps. They enabled the 10-year USTNote yield to fall to 2.0% and paint a billboard to contradict the risk of USGovt credit worthiness. Soon the Office of the Comptroller to the Currency will not report such derivative data, since it is so clearly the tool to keep long-term interest rates down. The IRSwap not only pushes down rates, but creates artificial end demand for bonds that covers the $trillion bond fraud committed by Wall Street firms. They lost their investment banking business, but found a ripe channel with USGovt cloud cover. All hail the resilient USTreasury Bond asset bubble. It is a sponsored Black Hole. It will starve the USEconomy for capital. Its supply will grow from even larger deficits. Its appetite will grow. Its funding needs will grow. It will demand QE To Infinity. The USTBond bubble will destroy the USDollar. It will destroy the entire fiat monetary system. The pathogenesis will require the passage of time before conclusion, more than the Sound Money advocates believe, but not as much time as the Powerz believe. The pace of internal systemic devastation has turned rapid.
The language to cover their actions is full of deception and veiled intrigue. The USFed never discusses the risk to USTreasury auctions, the real reason they instituted QE1 and QE2, and the actual reason they will be forced to institute QE3. They further cloud the stage with their nonsense about deflation. The pendulum moves from inflation to deflation over the many years and back whenever the USFed must justify its destructive policy. The ringtones of deflation were frequently heard a year ago when QE2 was announced. They actually said that with higher risk of falling prices, the need for QE2 was urgently pressing. The latest ringtones direct attention to an economy denied as showing signs of recession. Bear in mind that the Bernanke Fed has not correctly assessed breakdown risks, has not correctly analyzed any risk of bond contagion, has not correctly anticipated any price shocks, and has dutifully channeled $trillions to big banks in the open and in large quantities shrouded by secrecy.
OBVIOUS RECESSION IN THE USECONOMY Last week the Jackass was on high alert for the trigger for a US Stock market rebound. Anything reasonable would serve the purpose. It arrived with vivid deception and full banner. The durable goods report was the road car decided upon to wave the green flag on the track. The headline number was sufficient to paint on the pace setter car. It stated a 4.0% rise in durable goods orders for July. Yippie!! But please do not bother to read the details, since the audience was both mathematically challenged and in desperate need of good news. The quick hint was given when the huge Boeing order was a key item on the supposedly positive news. The durable goods order figure excluding transportation was up only 0.7%, not good, not bad. Those big one-time aircraft orders do skew the data indeed. Another item skews the data, basic weapon system orders required to sustain the endless sacred wars. They are devoted to destruction and fraud, not nation building, at home or abroad.
Since the Hat Trick Letter began, the focus has been given to the real CAPEX order statistic. It is defined as the ex-defense, ex-transportation capital goods orders. For July this figure came in at MINUS 1.5%, heavily watched by competent economists. The revision for June was plus 0.6% growth. The competent economists were either drowned out, or decided to swallow their integrity. Their voices were not heard, or their mouths were covered. Often they do speak about the more meaningful CAPEX orders. Much more additional extra weight of recession and its pressure comes from the federal and state budget slashing and immediate job cuts. This is basic science that escapes the compromised majority.
Alcoholics Anonymous has a wonderful principle put to practice, which cuts through the maze, the nonsense, and the denials. If a USEconomic recession was not painfully obvious even to the street bums and bank parasites, then why is the question asked 38 times per day?? At the household level, if the chronic question of Uncle Albert being a drunk keeps being asked and repeated in discussion, even at the dinner table, then the question itself is a confirmation of his alcoholic condition. The other rationalization tools often relied upon by the denial experts have been brought forth in the financial press. The bad weather from the spring rains in the Plains and Midwest were a drag. The Japanese supply chain disruption from their earthquake and tsunami disasters, followed by the Fukushima nuclear meltdown, they too were a certain drag. Then came the freeze in business decisions and commitments from the stalemate on the USGovt budget impasse. It also contributed to the drag. Lately, the crutch is Hurricane Irene which slammed the entire eastern seaboard, causing floods and power outages. The storm and its damage are an unmistakable drag. To be sure, monetary policy, fiscal policy, stimulus policy, and economic policy are all fine and dandy. The problem is all the one-off exogenous factors. What a crock!!
A truly perverse dynamic is at work. The expectation of economic recession is widely seen as a byproduct extension of the major US Stock indexes. This is backwards, since the painted tapes and high frequency trading and foreign subsidiary profits and doctored economic statistics are the norm. The S&P500 stock index has become a quintessential leading indicator, and thus the object of manipulative control, a major piece to Management of Perceptual Expectations. The pre-occupation with consumer spending dominates the distorted attention span. In a healthy system, the focus would be on capital spending instead. The nation continues to be stuck in false ideology preached by heretical high priests, a strong remnant from the last decade. The USEconomy was believed in 2001 through 2006 to be dominated by assets as engines, rather than industry and factories. The blockheaded called it the Macro Asset Economy, the latest chapter in their Book of Ruin. Just check the recent data.
THE USDOLLAR LOOKS VULNERABLE The USDollar appears vulnerable from two fronts. Since mid-2010, the US$ DX index has been under siege due to the heavy debt monetization of USTreasury and US Mortgage Bonds, during a hyper monetary inflation exercise of grand debasement. The threat from the other side is a US$ DX decline from a return slide into the quicksand of another USEconomic recession. A recession, whether recognized or not, will result in another round of stimulus initiatives of equally questionable effectiveness. More USDollars will be wasted, used, with certain debasement the outcome. Regardless of the next USFed move, or no move, the USDollar is extremely vulnerable. The only factor keeping it up is the ruin in Europe. Given the double barreled threat of an Inflationary Recession (my forecast), the USDollar is dangerously vulnerable. The biggest upcoming beneficiary to the USDollar and major currency debasement will be Silver. The Gold price made its summer run impressively, reaching 1900. Huge profits are in the process of being switched from gold to silver positions. The 44:1 ratio in price enables sizeable new silver positions to be leveraged. Look out for a significant upward price move in Silver, as its technicals are showing a very positive bullish signal. The simple Moving Aveage is set for a crossover, an event noticed by thousands of commodity and FOREX traders. Silver is unique, being both an industrial metal in shortage deficit, and a monetary metal pursued as a safe haven during a time of crumbling monetary system and rancid sovereign bonds. Always remember that Gold fights and wins the political battles, but Silver rides through the broken phalanx on a white horse to take triple the gains. THE DEAD PRAISE THE DEAD A hilarious display of vested interest, lifting of fellow broken brethren, and market props of bank stocks came last week. The flagship Deutsche Bank has been a primary player with the London, Wall Street, and Swiss bankers for two decades, working diligently to keep the fiat paper game going, to conceal the gold leasing, and other sundry duties like money laundering with the US agencies. The mighty D-Bank was caught in the toxic US mortgage bond trap, was caught in the housing toxic asset trap, was caught in the naked gold shorting trap, and has been caught in the Southern Europe sovereign bond toxic bond trap. Embattled CEO Josef Ackermann might continue his ruinous tenure until 2013, but that will not remove the criminal charges that lurk over his head. The hilarious display last week came in the form of D-Bank giving a strong recommendation to Barclays and Royal Bank of Scotland, two giant banks in deep throes of insolvency. So a dead bank recommends other dead banks. Perhaps intrepid Barclays analysts can recommend Deutsche Bank, and RBS analysts too. Maybe analysts at Bank of America can recommend Barclays, RBS, and D-Bank all. They surely all participate in flash trading to lift in rapid round robin their exchanged stock shares.
Closer to home, Bank of America is a wreck of a diseased hollow tree, a reflective symbol of the irreparably insolvent US bank sector. A quick glance is useful. BOA is very busy selling off its best and only viable assets. It will be left with the hollow tree incapable of withstanding even a mild storm. They took in the Berkshire Hathaway $5 billion in funds from Warren Buffet. Regard this as a second payment toward syndicate membership for Buffet, the first being the Goldman Sachs preferred stock purchase two years ago. Membership has its privileges, avoided scrutiny, and protection from Wall Street ambushes. Then BOA sold its 5% stake in the Chinese Construction Bank, reaping $8.3 billion. The funny part was that BOA executives claimed they did not need the money. Neither does any dying man need food or water. The latest blow was the Federal Deposit Insurance Corp and their rejection of the $8.5 billion cap on the mortgage bond fraud case payoff. This is the bond fraud restitution ring fence, as BOA rounded up its favorite fraud victims, and attempted to strike a deal to limit its liability. The list of plaintiffs in the accord included Blackrock, MetLife, and the New York City. The only problem is that several important mortgage bond fraud victims were not included, like American Intl Group, the USGovt adopted dead orphan. AIG has filed a $10 billion lawsuit against Bank of America. But never fear, the putrid "BAC" stock shares from the grotesquely insolvent bank are rising. Apparently the whiff of Pine Sol and Glade fresheners can produce a short cover stampede, followed by moronic go-go speculator types. The fact of the matter is that 475 thousand jobs have been lost among Wall Street firms, but not enough for executives. European banks have shed 40 thousand jobs in just the last month. BOA has cut all non-essential businesses. Unfortunately, they cut all lines from profitable businesses. They are left with the more pure rot.
TWO BASIC RECOVERY REQUIREMENTS The path to recovery seems so elusive. The obstacles are obvious to any competent economist, of which there are few. To be an American economist in recent years requires great compromise, since the employer doling out the paycheck or research grant has deeply vested interests to protect. One could provide a long recital of principles of capital formation, of tangled control lines extended to USGovt finance ministries, of profound fraud engrained in programs old and new, but suffice it to be simple. Two requirements are basic in fostering a recovery, apart from necessary tax reform or regulatory reform. Neither required step will remotely occur, since doing so would remove from power the bankers who control the USGovt, the bankers who control the USDollar printing press, the bankers who profit from counterfeit and fraud. They will never order their own removal from power, their own ruin financially, their own exposure to criminal prosecution. Therefore the system will march along down the edges of the abyss. The irony is that with each major bank bailout or bond buy program or organized regulatory lapse or blessed accounting hypocrisy, a new deeper crash bottom potential in the abyss is defined. Here are the two requirements for recovery:
Any bank liquidation would cause the biggest ten US |
| Silver Ready to Breakout - Technicals and Fundamentals Suggest $50/oz in Early Autumn Posted: 31 Aug 2011 01:40 AM PDT |
| What Happens to Gold During a Deflation? Posted: 31 Aug 2011 01:37 AM PDT |
| Columbia has raised its Gold reserves by 2.3 tons in July Posted: 31 Aug 2011 01:27 AM PDT |
| These "leading indicator" stocks are sending a bearish warning Posted: 31 Aug 2011 01:08 AM PDT From Kimble Charting Solutions: High yields can often be a great leading indicator for the stock market. Many investors use long-term moving averages to make buy and sell decisions. The chart below represents six different high-yield mutual funds with popular moving averages applied. The 50-EMA/200-EMA crossover doesn't have a perfect batting average... Yet, the crossover hasn't done too badly over the past few years. Consider the following... Read full article... More on stocks: Five tips for dealing with insane market volatility Top technical trader Roque: More downside ahead This chart could hold the key to the next big move in gold and stocks |
| Gold vs Silver - Monthly purchase Posted: 31 Aug 2011 01:08 AM PDT Trying to decide what to buy this month and my monthly investment is usually between $250 and $300. I've been buying since April and have several silver eagles and one 1/10 gold eagle. I'm wanting to buy some junk silver (90% dimes and 90% quarters) but at the same time I don't want to miss out on the gold. Thoughts about what you would do? |
| Why the New York Times is attacking gold Posted: 31 Aug 2011 01:07 AM PDT From Economic Policy Journal: They ignored the internet bubble and the housing bubble, but they are now talking about stopping the "gold bubble." In the NYT, Steven M. Davidoff writes (my emphasis): ... It is sometimes referred to as the barbarous relic. You can’t eat gold. Its industrial uses are limited. If someone else doesn’t assign the same value to gold that you do, you are out of luck. For those who predict it will be valuable if society completely collapses, guns and canned goods might come in handier... The commodities regulator, though, could force American exchanges to further raise margin requirements, reducing leverage and the ability of investors to buy more gold. The agency would also have to act to limit the gold acquired individually and by the E.T.F.’s. All of these measures would have to be coordinated and put into effect on a global basis... Here are a few things Davidoff doesn't get (or doesn't want to publicly admit) about gold... Read full article... More on gold: Why calling gold a bubble is "idiotic" Three terrible lies you need to know about gold Porter Stansberry: What every American needs to know about gold |
| Don't believe the lies... The real data show inflation is soaring Posted: 31 Aug 2011 01:06 AM PDT From Zero Hedge: There is the CPI... and then there is the MIT's billion price project which, as the name implies, tracks the prices of a billion products in real time. And according to the latter, annual inflation has hit a multi-year high of about 4%. Perhaps someone can advise the talented [Federal Reserve president] Mr. Evans that the 3% inflation he would so love to achieve... has in fact been eclipsed... Read full article... More on inflation: Jim Rogers: This is what QE3 will do Why gold is soaring again this morning Bernanke's "mouthpiece" hints QE3 - or worse - could be coming next month |
| Silver set to Soar? $50 October says so. Posted: 31 Aug 2011 12:01 AM PDT From Zerohedge: Today, the physical supply of silver bullion is much less than in the 1970's. Also there is the 'Asian factor' and 3 billion people with growing incomes, many of whom see silver as a store of value against currency depreciation. Demand for silver in Asia has been increasing and in China alone silver demand is increasing from a near zero base. The demand was not present in the 1970's. Were silver to replicate the performance of the 1970's it would have to rise 32 times or to $130/oz (32 X $4.05). Interestingly, $130/oz is also silver's real high from 1980. Our long held belief that silver could reach the real high, inflation adjusted, of $130/oz remains. However price forecasts should always be taken with a pinch of salt and silver's value is as financial insurance and a store of wealth that cannot be debased. Click here...  |
| Posted: 30 Aug 2011 11:30 PM PDT
It was a four-handed cash game, $3-$5 No Limit hold 'em. The big stack had at least $3,000 behind — the others (including me) around $1,000. The game had previously been seven-handed, but I came in late as others were leaving. The remaining players were happy to see me, as the game might have broken up otherwise. Within minutes of sitting down, I realized something was different — and possibly very wrong. All three of these guys were Maniacs, with a capital "M." One of them, a very friendly local I knew, was a California dentist who threw c-notes around like confetti. (He was the one with $3,000, most of it in a fat sheath of hundred dollar bills.) Another was a young drunk, ordering a Guinness every ten minutes. And the third was a super-aggressive tourist, who apparently learned the game by watching the "big moves" on TV and wanted to prove his manhood to us all.
Want to trade like a Global Macro pro? Learn the secrets of the Global Macro titans. Sign up for your FREE Report now! Normally it's good to have a maniac, or even a handful of them, at your table. Wild and ill-considered action translates to opportunity in the right circumstances. But the best setup is when the maniacs are dispersed among calmer targets, with other, less wild participants around to create a sense of balance. In this instance, it was me and the three crazies. Big bets started flying around immediately, green bills topping off outsized pots. Raise and reraise became standard, even with garbage like Queen-Deuce. I realized fairly quickly that calm, cool methods of strategy assessment were nullified in this environment. The game was like a machine gun firefight — chips spraying everywhere, with no obstacles to hide behind. I stuck around out of curiosity at first, having never experienced such pure unadulterated mayhem in a cash game. The action was even sped up, like a record played at 78 RPM, because it was only four-handed and the button moved rapidly. It quickly became clear I suffered a disadvantage though: I was the only one who cared about my chips!  By "cared about my chips," I don't mean I was attached to the money. Rather, I was attached to the notion of making intelligent, positive-expectation moves, rather than juggling hand grenades for a thrill. In poker, volatility is a weapon. It can be an especially powerful weapon in the hands of the deranged. The ones who wield it most effectively either 1) have a very large stack relative to yours, or 2) have minimal personal regard for their own financial well being. To wit, if your opponent doesn't care about fragging his own chip stack in pursuit of yours, he can use that as an advantage. Even insanity can be an edge — temporarily at least. Having identified the situation, I should have smiled and walked away. Instead I focused on the possibility that the right string of hands could build my stack very quickly. After all, these guys were spewing chips like fire hydrants — taking big chunks from each other and giving it right back. Alas, the stack-building was not to be. I didn't get the right opportunities, and the volatility was just too extreme. My controlled risk forays were rebuffed by the poker gods; I walked away a few hundred bucks lighter and a lot wiser. When guys are happy to raise half their stack on a pair of deuces, you wait for the crystal clear opportunity to snap them off with a monster holding. Other than that, you show patience and stand aside — or you get the fever yourself and lose any semblance of intelligent play. Recent market action brings forth memories of that old maniac session. Consider this from Bespoke:
The Fall of 2008 was great — for those who knew how to sell short, and caught the cascade early, in the waterfall decline portion of the move. After the freefall — during the time of the TARP vote for example — it turned into maniac city. There was time for action and time for stepping back. Wild play can be good. As a general rule you want "action players," or maniacs, at your table. But sometimes wild can be TOO wild. If the 'natural order of things' has bled so far into chaos that it's hard to keep a bead on what's happening, watch out. The short-hand rules for dealing with maniacs are these:
Some poker players feel it is their duty to mix it up with maniacs — just as some traders feel it is their duty to make hay from extremely volatile market conditions. But this blanket assumption — "if the action is hot, I've got to be in" — is not smart. It's a case by case thing, depending on the situation and your particular context within it. For example: A cold maniac can be a beautiful thing, donating rack after rack of chips to your cause, then digging in his pocket to donate more. But a hot maniac, or worse yet a gang of them, can steamroll you flatter than a pancake. Similarly in trading, there are good high volatility environments and bad high volatility environments, depending on factors like how in synch you are with events and whether conditions favor the way you trade. JS  p.p.s. If you haven't already, check out the Mercenary Live Feed! |
| China Ramps Up Copper Purchases Posted: 30 Aug 2011 10:07 PM PDT From: J. Farchy and Javier Blas, Financial Times Chinese companies and investors are stepping up their purchases of industrial commodities such as copper, in a show of confidence in the global economy that stands in contrast to the turmoil in western markets. The wave of buying is providing support for metals and minerals prices after commodities prices fell this month at worries about a double-dip. Senior executives at trading houses, mining companies and banks said Chinese consumers had used the recent drop in prices to rebuild stocks. "China is significantly less pessimistic relative to people in the western world," said Raymond Key, head of metals trading at Deutsche Bank. "On dips they are restocking, especially in copper." An executive at an important Chinese trading house added: "There is no doubt some traders have been buying [copper] recently." The surge in copper buying benefits the largest exporting nations, including top producers Chile and Peru, and miners such as Freeport McMoRan Copper & Gold and trading houses such as Glencore [0805.HK 51.65 2.05 (+4.13%) ] and Trafigura. Copper prices fell to a 8-month low of $8,446 a metric ton in early August, but since then prices have risen more than 9.0 percent to $9,225 on Tuesday. China accounts for 38 percent of global copper demand, and as such has the power to almost single-handedly prop up the market even if companies in the west are holding back. Nonetheless, traders warned that Chinese buyers could rapidly step back from the market if they believed prices would fall further.
The strength of demand by China in the past four-to-six weeks has been buoyed by a jump in the strength of the renminbi, which makes importing commodities cheaper for Chinese traders. Western traders said that some large Chinese buyers had been able to access credit more easily, enabling larger purchases — although they cautioned that credit is still tight for smaller companies. "We have seen our Chinese counterparties [have] been able to open significantly larger letters of credit than in the first half of the year," a senior trading executive in Geneva said, referring to a typical financial instrument used on trading. In a sign of China's increased appetite for copper, the price of the red metal at the nearby hubs of South Korea and Singapore has in the past two weeks jumped relative to the benchmark London Metal Exchange's price, brokers said. ~TVR |
| India's gold and silver demand exploding Posted: 30 Aug 2011 10:00 PM PDT Gold and silver prices continued to rally in India over the past few days. Upcoming Diwali festival of lights normally leads to an increasing demand for precious metals among domestic jewellers, while ... |
| Posted: 30 Aug 2011 09:45 PM PDT Recent activity in the price of gold is put into perspective by Eric Fry: In the span of just a few trading days last week, the gold price plummeted from a high of $1,910 an ounce last Monday to a low of $1,712 three days later. The folks who never owned gold in the first [...] |
| Get Ready For Fall Trading Excitement Posted: 30 Aug 2011 09:38 PM PDT I have been in Asia for one week and of course, as we expected, the markets went nuts the minute I stepped onto the airplane. We knew it was coming and I made advance plans for our trading just in case. It is important to remember August is very non-trending and choppy for the most part. What was different this month was a continuing stream of bad press from Europe, Washington D.C. and of course New York's traders. This pressured many markets and in the U.S., the 100 top corporations stated they will not donate to political campaigns any more until the Washington clowns get serious about rules and ideas for economic repair. You simply cannot run a big company with all of these directional unknowns. Companies are fleeing anti-business states and regions where taxes are too high. This means particularly California, New York and Illinois. Others are not planning any badly needed expansion or hiring. As a result of these events, gold took off like a rocket in a massive wave three per our forecast. But then, of course, the profit-taking hit as traders cashed in on their gains. We would also like to point out for trend that my personal futures account (my only trading account) remains higher than it's ever been for this month and over several years based upon fundamental trends. Yes, we had a hard gold smack down but we've also been warning that the daily trading ranges would go wider and more volatile. They sure did and despite the forecast I'm certain many of our readers, traders and investors were shocked by gold moves in both directions. We are going to have to get used to it as more of this adventure is coming and ranges can go even wider unless the exchanges impose limit-up and limit-down rules to slow things up a bit. Gold futures contract margins are now $7,425. Some have complained this is market fixing but we say its normal business as the exchanges must have adequate trading protection during higher priced volatility. Gold futures on this August 25 seem to have based and recovered. The standard ABC correction is complete. The December futures open this morning was 1753 with a following high of 1771 and a low of 1705, which worried many. The close today was 1757 so in after hours trading we are firm to up. We are rolling into the December silver futures with a last price of 40.85, up 4.1% today; a nice recovery. Resistance remains at 41.85 and we had an open at 39.78 and a high of 41.06. The close was 39.20. Silver was hit hard in the weeks' ago pullback from $50 to $33. The recovery has been slow and steady. After Labor Day we expect both gold and silver to begin new and stronger rallies. Normally, on the cycles, September silver is very fast and, often on a percentage basis is much stronger than gold. Gold should rally too, but not as much as silver should next month in our view. We have some new trading ideas in Trader Tracks this weekend and I plan to be all caught-up on the letter revisions and the balance of our consulting work before the larger, annual, many months' long precious metals rallies re-appear. Grains are firm and prices should go much higher this fall on weather, shortages, and a continuation of La Nina through the end of next year. Watch for rationing in corn in the near future. Also, please be aware that on September 29, the USDA posts a major annual crops report, which is a definite market mover. Since prices are rising on fundamentals and technicals, we think the USDA will try to put a more positive spin on that big news day. We shall see. Whatever is said, pure supply and demand prevails. The general stock markets will continue to be under pressure this fall and the bonds even more so. European troubles are at the heart of the global mess and for now they have no answers. There is no credible way for the European Central Bank to cover and sell non-collateralized bonds. Germany and France are in control but cannot find a reasonable plan to make this thing work. In the midst of all of this there are numerous elections coming and the same old nonsense politics as usual. The end result is more volatility and rising inflation. Precious metals shares were held back in choppy non-trending markets just like every other summer but we expect breakouts in several of our favorite recommendations just before or after the Labor Day holiday in the United States. Rather than trying for new trades right now, we strongly suggest waiting until these markets settle down and then get busy after the holiday. Wave counts suggest our timing could offer new openings August 31 or September 7. Watch for new alerts. – Traderrog
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| Philip Pilkington: Dynamism and Instability – The Search for Profits and Disequilibrium Posted: 30 Aug 2011 09:30 PM PDT By Philip Pilkington, a journalist and writer living in Dublin, Ireland The completeness of the Ricardian victory is something of a curiosity and a mystery. It must have been due to a complex of suitabilities in the doctrine to the environment into which it was projected. That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue. That it was adapted to carry a vast and consistent logical superstructure, gave it beauty. That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commended it to authority. That it afforded a measure of justification to the free activities of the individual capitalist, attracted to it the support of the dominant social force behind authority. In our previous piece on profits we showed how profits ultimately come from investment. There we saw that whether this investment was from the government sector or from the private sector mattered little (once again we leave out the external sector for the sake of simplicity). Either way it was the key factor determining profits. We also saw that this entire system was rather fragile and prone to breakdown. If either sector chose to curtail its investment at any given moment the results would be a chronic deflationary spiral, mass-unemployment and bankruptcies. In this piece we will take another, slightly more theoretical look at this inherent instability. (It should be noted that very little of what follows will make sense to anyone who has not read the previous piece. Not only will we be referring directly to this piece as an example but knowledge of the dynamics inherent in that argument must be fully understood for what follows. If you are unfamiliar with the previous piece or feel that you may not be wholly comfortable with the argument, I implore you to read over it [again]). It was quite surprising that at least one commenter on the last piece claimed that my criticisms of Paul Samuelson – allegedly a member of the Keynesian old guard – were off the mark. After considering it a little I came to the conclusion that the commenter must have meant that Samuelson, since he was in favour of deficit spending during times of economic downturn, must then have somehow been aware of the dynamics I put forward in that article (this even though neither he nor his co-author thought it necessary to explain these to students in their textbook). What's more, if this was true the same could then be said for my relationship to certain other pseudo-Keynesians running popular blogs at the moment advocating fiscal stimulus – notably Brad DeLong and Paul Krugman. These are very dubious arguments. If they were true and if Samuelson and other neoclassicals (yes, I consider Samuelson a 'neoclassical', see: previous piece) recognised the dynamics I am here trying to highlight I would have simply stopped typing by now and redirected the interested reader to their nearest economics department. I obviously do not believe this – in fact I believe that many of these departments engage in something akin to brainwashing or cult-induction – and so I hope that what follows will, among other things, highlight the difference of this approach with that of the mainstream. With that caveat we will now take a look at these problems through the lens of the historical ideas that gave rise to the contemporary neoclassical doctrine – and those that ran against them. The Strange Case of M. Jean-Baptiste Say Most people who are familiar with economic theory have heard at some point of a doctrine called Say's Law. The simplest elaboration of this rather unusual piece of dogma is that supply creates its own demand. So, if the capitalist on the imaginary wizard island that we studied earlier were to hire workers to produce bread, the demand for this bread would always already be there – presumably out of the wages that the workers receive. Perhaps we should quote M. Say in the original just to ensure that we are not misrepresenting him:
Well there it is in black and white. So why do we say that this is such a strange doctrine? Readers of the last piece should have the answer tickling the top of their tongue: there's no place for profits in this formulation! Say was no market socialist. He was a follower in the footsteps of Adam Smith and a firm believer in capitalism. And yet if we take his formulation seriously there is certainly no room for the capitalist in search of profit. Say's market actor – at once producer and consumer (an artisan?) – wants to offload his product as soon as he possibly can at a fair market rate. But then he also seeks to offload the money he receives for this product as quickly as possible in exchange for a new product that he can then consume. We said in the last piece that mainstream economic theory is an 'ideology of truck and barter'. Well, here it is in a nutshell. Any theory that implicitly assumes a Say's Law-dynamic must scrub out the capitalist in search of profit from the theory and carry on as if we are a society of bartering artisans mediated by money. At multiple points this fallacy rears its ugly head in neoclassical theory – such as when mainstream economists must admit that profit is a transitory phenomenon; but we will not go into this here. The key point is that Say's Law gives a picture of an economy of barter wherein the barter is undertaken through the medium of money. I give you the commodity I made; you pay me; I then carry the money to market and spend it all on another product; and so on. When looked at in this fashion we can see why economists require the myth of money simply replacing barter as demolished by economic anthropologist David Graeber in a recent Naked Capitalism interview. This is, in a sense, the 'founding myth' of all classical and neoclassical economics. First men barter; then they invent money to lubricate their barter and make it easier – and it is from there that Modern mainstream economists, when they are aware of the foundations of their theories at all – a rarity among this breed of ahistorical dogmatists – now refer to this fragment of their belief-system as 'Walras' Law'. Walras' Law is simply a rearticulation of the same article of faith by another zealous Frenchman. It states the same thing as Say's Law but gives it mathematical form. Walras' Law essentially says that all excess manifestations of supply or demand, be they positive or negative, must net to zero. So we're back once again to our Of course, this is not even remotely close to grasping how a capitalist economy actually operates. For that we need to begin with Marx. Ironically enough, while the neoclassicals continue to expound their vision of a market socialist utopia, it was Karl Marx – the father of Communism – that gave the world its first glimpse of the true functioning of a capitalist economy. Money… More Money! MORE MONEY! To say that Karl Marx was not fooled by Say's Law would be a vast understatement. Marx was a dynamic theorist and understood that history was not to be thought of as a perfectly balanced phenomenon. Say's Law, on the other hand, was the embodiment of a static society completely at odds with the capitalism Marx studied. For Marx – as for the capitalist – the driving force of a capitalist economy was profits. But Marx detected Say's Law running deep in the veins of classical political economy – an intellectual movement that included the figure of David Ricardo whom Marx admired so much. Reading Say's Law into the writings of Ricardo, Marx writes:
A rather obvious criticism when you think about it. By definition a capitalist is not one who produces in order to consume his product; he is one who produces in order to accrue profit. From this simple observation Marx paints a rather different picture of a capitalist economy. He puts forward the equation:
When translated into English that reads:
The capitalist invests money in order to create a commodity that is then sold on for more money. This is how the capitalist accrues profit. Consider the capitalist on the magical wizard island we looked at in the last piece. He plunges borrowed money into the creation of a bread factory. After this he hires workers to bake bread in the factory and sell it on. But he only does this in order to get profits. As we say in that example, when profits were diminished – due to a lack of investment – the capitalist began to haemorrhage money fast – due to his not being able to finance his interest payments. Of course, this is precisely what occurs in a capitalist economy. But it cannot be accounted for in the balancing act that is Say's Law. Instead the capitalist is portrayed as a disequilibrating element that throws society off balance and into motion. And indeed, isn't this exactly how the entrepreneur is portrayed today? As an innovating agent rather than a static clone? Needless to say, if he were actually caught in the system sketched out by the neoclassicals he would find himself suffocated with more violence than in even the most stagnant bureaucracy. But this is to return us to the point made in another piece that neoclassical theory, far from an ideology of individualism, is, in actual fact, a highly deterministic and conservative doctrine designed to freeze evolutionary movement and preserve the status quo. But for God's sake don't tell Maggie Thatcher! The Metaphysician in Marx: An Unfortunate Historical Non-Event Marx was close to establishing the truth of the capitalist system. Very close. But he stumbled. This was probably due, at least in part, to his ideological convictions. Marx asked himself wherefrom the capitalist derived his profit and came to the conclusion that it must be from the worker. Marx, like Ricardo before him, believed that all value came from labour; that is, the blood, sweat and tears of workers. We might find this a convincing argument from a moral perspective – after all, doesn't the worker do all the work? Or we may not find it a convincing moral argument at all – is that to say that the capitalist literally does nothing? But whether this is morally convincing or not it is, in essence, irrelevant to understanding the processes of a capitalist economy. Michal Kalecki – whose theory of profit we studied in the last piece – called the idea that profit somehow came from the labourer 'metaphysical', and he was right. Marx should have forgotten for a moment abstract questions about where so-called 'value' came from and instead looked a little harder at his equation:
If he had he might have noticed that at a macro-level the profit (M') in fact must have come in some sense from the original outlay – that is, the investment (M). In the last piece we saw that this is precisely the conclusion that Kalecki came to. He showed how all profit comes from investment. We also showed that a constant stream of investment is necessary in a capitalist economy in order for profit to continue to be accrued. (Remember that when the capitalist stopped paying his builders to work – i.e. investing in their labour – they became unemployed and the economy was threatened with massive deflation. It was only because the government stepped in with new investment capital that the economy continued to operate efficiently and bankruptcy was avoided). Some Consequences of a System in Disequilibrium What we have quite clearly laid out above is a picture of a system in a perpetual state of disequilibrium. This is where we rub up against the sore spot of those neoclassicals – such as Samuelson – that call themselves Keynesians. Our model – which is without doubt to be found in Keynes, indeed he credited Marx's M—C—M' equation as fundamental in a 1933 draft of the 'General Theory' – is one that is almost always off-balance; always waiting for that next hit of investment; like a junkie on the verge of withdrawal waiting for a fix. This is not a model in equilibrium where everything flows nicely and demand automatically cancels out supply. If the investment process is interrupted at all the result could be a deflationary depression. There are numerous reasons why the investment flow might be interrupted; reasons such as uncertainty about future expectations or a Minskian collapse of the financial architecture (both of which we will explore in later pieces – and which do not tally with neoclassical/New Keynesian babble at all). New Keynesians, following on from Samuelson, try to veneer over this fundamental uncertainty, together with the importance of debt-relations, by employing the IS-LM model – a garbage-in garbage-out abstraction that its own inventor, John Hicks, referred to as nothing more than a 'classroom gadget' which he thought should only be used for didactic purposes (a practice I would advise against). The IS-LM and its successor seek to turn Keynes' theories into a policy toy by integrating a Say's Law dynamic. In this New Keynesians like Samuelson, DeLong and Krugman are able to maintain their market socialist worldview while recognising the very real need for government spending. (Krugman almost broke his own spell once but quickly retreated back into neoclassical fantasy land). We will explore the triggers might that set off an implosion in a capitalist economy in later pieces. For now it should simply be noted that these economies are fundamentally unstable. Indeed, it is this very instability that gives them their dynamism and their character. And it is this instability that is constantly pushed to one side by the static theories of the neoclassicals. We do not make understatement when we say that these scholars do not even know the nature of the beast they study, let alone its internal processes.
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| Gold & Silver Market Morning, August 31, 2011 Posted: 30 Aug 2011 09:00 PM PDT |
| Gold 2011 - A CNBC Special Report - The Golden Age of Gold Posted: 30 Aug 2011 08:57 PM PDT ¤ Yesterday in Gold and SilverThe gold price made several attempts to break above the $1,800 spot price level during Far East and early London trading yesterday, but never quite made it. Then, about half past lunchtime in London, a real serious buyer appeared...and in less than an hour, the gold price was up about forty bucks. This happy state of affairs lasted until minutes after the Comex open in New York, then the buyer either disappeared, or a seller of some note showed up. From there, the gold price got sold off about fifteen dollars going into the London p.m. gold fix at 10:00 a.m. Eastern time. Then a smallish rally got squashed...but at precisely 12:00 noon in New York, a somewhat more substantial rally developed that lasted until just about the end of electronic trading at 5:15 p.m. Eastern. Gold was up $46.60 on the day...and volume wasn't overly heavy once again...whatever that means these days.
Silver's price pattern was very similar to gold's...except it was more 'volatile'. The low for the day came around 1:00 p.m. Hong Kong time in the thinly-traded Far East market, but really began to fly shortly after London opened for trading. From there, the trading pattern was the same as gold's...price rise halted minutes after the Comex open...down into the London p.m. gold fix...subsequent rally got crushed...and the final rally beginning at precisely 12:00 noon in New York. By the time the smoke cleared, silver was only up 47 cents on the day. Net volume was decent.
I must admit that I was underwhelmed by the performance of the gold stocks yesterday. Considering the size of the gain in the metal itself, I was expecting better. The low at the London p.m. gold fix stands out like a sore thumb...as does the low at 12:00 noon Eastern time. But considering the fact that the HUI is almost back at its old high...and the gold price is a long way from its old high, I guess I should be grateful. The HUI finished up 1.55%.
The silver stocks did very well for themselves again yesterday...and a lot of the junior producers chalked up some really impressive gains. Nick Laird's Silver Sentiment Index was up a respectable 2.07%. This is the second day in a row that the silver stocks have outperformed their golden cousins.
(Click on image to enlarge) Well, the CME's Daily Delivery Report that came out late last night showed the deliveries for First Day Notice. There were 1,323 gold contracts, along with 173 silver contracts posted for delivery tomorrow. In gold, the big shorts/issuers were the 'usual suspects'...with the Bank of Nova Scotia and JPMorgan delivering 1,311 of those contracts. The biggest longs/receiver with 1,204 contracts, was JPMorgan in its client account. All the other issuers and stoppers were of no consequence. And it was the same short list of 'usual suspects' in silver as well. Of the 173 silver contracts posted for delivery on September 1st, the biggest short/issuer was JPMorgan [153 contracts] in its client account...and the biggest long/stopper was the Bank of Nova Scotia with 64 contracts received. The list of issuers and stoppers in both metals is well worth a look...and the link is here. The GLD reported receiving a smallish 48,680 ounces of gold...and there was no report from SLV. The U.S. Mint had no sales report. There was more activity over at the Comex-approved depositories on Monday, as they reported receiving 596,377 ounces of silver...and shipped 625,758 ounces of the stuff out the door, for a net decline of 29,381 ounces troy. The link to that report is here. Here's a chart comparing the S&P today to the Nikkei in Japan's lost decade. The chart deserves your attention. This zerohedge.com graph was posted in yesterday's King Report.
(Click on image to enlarge) I'm delighted to report that I don't have a lot of stories for you today. We are in the midst of an historic short-covering rally by the Commercial traders who are covering their short positions...and booking huge loses in the process. I'm Now 100% in Gold, Roubini is Wrong: Gerald Celente. Consumer confidence plunges as hope dims. Secret Exemptions Allowed Speculators to Distort Futures Markets: Michael Greenberger ¤ Critical ReadsSubscribeConsumer confidence plunges as hope dimsConsumer confidence plunged in August as expectations dived, with worsening views on future business conditions, jobs and income, the Conference Board reported Tuesday. The nonprofit organization said its consumer-confidence index fell to 44.5 in August, the lowest level since April 2009, from a slightly downwardly revised 59.2 in July. It was the sixth-largest one-month decline in the past 21 years. The only surprise about this report is the fact that it's taken this long for it to happen. I thank Florida reader Donna Badach for sending me this marketwatch.com story...and the link is here.  EU rules out fresh capitalisation for Europe's banksThe officials poured cold water on calls from Christine Lagarde, head of the International Monetary Fund for "mandatory" re-capitalization to avoid another financial crisis but acknowledged that the EU economy was continuing to weaken. Jean-Claude Trichet, president of the European Central Bank, said there was no shortage of liquidity in the European banking system. EU economic commissioner Olli Rehn insisted that the health of EU banks had improved over the last year. I 'borrowed' this story from yesterday's edition of the King Report. It's a story that was posted over at The Telegraph on Monday...and the link is here.  Secret Exemptions Allowed Speculators to Distort Futures MarketsHere's your only absolute must watch/listen item for the day. It's a video posted over at therealnews.com...and was sent to me by reader Keith Hodge yesterday. In this interview, Paul Jay talks to Michael Greenberger, who was the former Chief of Staff to Brooksley Born, who was chairperson of the CFTC from August 26, 1996 to June 1, 1999. I was so impressed with this interview, that I sent it off to Ted Butler for his approbation. He thought it was first rate as well but, as he pointed out, Greenberger makes the same mistake that everyone else makes when talking about price manipulation on the Comex...that it can only happen on the long side of the market. The possibility of a short-side corner on any commodity is never discussed. But, having said all that, watching this 18-minute video should be right at the top of your "To Do" list...and the link is here.  Fed to hasten currencies' race to the bottom, Leeb tells King World NewsI stole the following preamble from Chris Powell's GATA release yesterday, mainly because it saved me the trouble of wordsmithing an introduction myself, as Eric had already sent me the link. Money manager and market analyst Stephen Leeb told King World News yesterday that the monetary metals are beginning to fly again in anticipation of more money creation by the Federal Reserve and other central banks in a race to devalue currencies. An excerpt from the interview is posted at the KWN website...and the link is here.  Gold 2011 - A CNBC Special Report - The Golden Age of GoldThis 11-part gold report is rather an ambitious undertaking for a mainstream media outlet like CNBC. True, there is certainly some disinformation in here, but you know that the general public is now getting on board once you start seeing things like this. There are also three slideshows in the right side-bar that are worth your time as well...so this story should keep you off the streets for quite a while. I thank West Virginia reader Elliot Simon for sending this along yesterday...and it's certainly worth spending some time on. The link is here.  Here is Why Gold Shorts are Worried: Michael PentoHere's a short blog posted over at King World News that Eric sent me yesterday. In it, Michael Pento says that the reason that gold is rising again is because of the fact that the Fed will announce more monetary stimulus at the FOMC meeting in September. I suppose there's some truth in that, but I don't agree entirely...and I will explain why further down in 'The Wrap' section of this column. The link to the KWN blog, is here.  I'm Now 100% in Gold, Roubini is Wrong: Gerald CelenteWhen asked what he was doing with his own money, Celente replied: "What did [Nouriel] Roubini say? Gold would be lucky to go to $1,100 an ounce. Where is it now? Flirting between the high of $1,780s and $1,900s. There are a number of people like myself and others that believe it's going much higher. You know, I used to be in Swiss francs [along with gold], I am not in Swiss francs anymore. I got into Swiss francs about a year and a half ago and did very well, but I've transferred everything I own into gold. I'm now totally invested in gold." Eric sent me this story late yesterday...and the link to the King World News blog is here.  ¤ The Funnies
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| Here is Why Gold Shorts are Worried: Michael Pento Posted: 30 Aug 2011 08:57 PM PDT  Here's a short blog posted over at King World News that Eric sent me yesterday. In it, Michael Pento says that the reason that gold is rising again is because of the fact that the Fed will announce more monetary stimulus at the FOMC meeting in September. I suppose there's some truth in that, but I don't agree entirely...and I will explain why further down in 'The Wrap' section of this column. The link to the KWN blog, is here. |
| Gold price ready to climb the helicopter Posted: 30 Aug 2011 07:00 PM PDT The price of gold has resumed its climb. After hovering around $1,800 per troy ounce for a few days, spot gold is now trading at $1,830 per troy ounce, $59 per gold gram. This summer has been ... |
| Posted: 30 Aug 2011 06:06 PM PDT Irene was not so bad. She knocked down a few trees, flooded a few basements. But, in the end, she was a good girl who left quietly when her time came. Traders, players, speculators and mid-night ramblers drifted back into Manhattan as soon as they could clear the fallen trees. They must have felt they had been spared for some great purpose. They must have looked to the heavens as clouds parted and rays of golden sunlight struck their uplifted faced. Whatever got into them, they rushed to the stock exchange and bought US stocks! The Dow rose 254 points. If you believe the stock market, the storm is over...all is well... But US GDP grew at only a 1% rate last quarter. That is a small number. Don't look too carefully or it will disappear altogether. If you deflate the latest 'growth' number by the inflation rate published by the Bureau of Labor Statistics (actual year-to-year CPI-U is 3.6%) you get negative real growth. Recession, in other words. And then, you have to wonder. Suppose you were to adjust that number for population? US population is growing at something just under a 1% rate. What you would see is that the average American is getting poorer (his share of GDP) at about 3% or 4% per year. And then you are able to make sense of a lot of the other economic information that comes your way. For example, a report out yesterday tells us that the personal savings rate in America keeps edging up — just as you'd expect. From next to zero, it has moved up over 5%. Households continue to cut back on spending...and increase savings. In the last quarter, they paid down $50 billion of debt. A drop in the bucket...but at least it was the right bucket. The Wall Street Journal:
In a marked shift from their borrow-and-spend behavior during the boom, US households are now by and large prioritizing saving and debt reduction. On Monday, the Commerce Department is to release July figures likely to show the personal saving rate, or proportion of after-tax monthly income unspent, in the 5% to 5.5% range... We also learned that gasoline use is at a 9-year low. Labor Day weekend is less than a week away. But this year, forecasters believe more Americans are going to stay home. They can't afford the cost of filling up the tank for a long road trip. We hope this is true. We're driving up to New York from Baltimore to attend a wedding. We don't want to get stuck in a lot of traffic. But it is sad to think that people can't afford to visit friends and relatives because they don't have the cash to pay for gasoline. Oh, for the good old days! We remember buying gasoline for 25 cents a gallon back in the early '70s. Sigh...but that was before Richard Nixon came up with the funny dollar we have today. Let's see...suppose Nixon had done the right thing? Suppose he had honored America's commitment to settle her debts in gold? There would have been Hell to pay in the mid-'70s...but isn't it better to pay Hell sooner rather than later? After all, the entire amount of foreign claims against the dollar at the time was something on the order of $50 billion. Now, it is around $4 trillion. Maybe more. So, just for fun...let's imagine what would have happened. Of course, there would have been this aforementioned period of wailing and gnashing of teeth. And then? And then, US producers would have had to get busy making and exporting products...while consumers would have been forced to curtail their reckless spending. America's trade deficit would have remained under control...and the US would still have jobs in manufacturing. And it wouldn't have debt equal to 370% of GDP. But how much would people pay for a gallon of gasoline? Well, let's see...let's assume that gold has done a fair job as real money, of holding its purchasing power steady. Back in the early '70s you could have bought 160 gallons of gas with a single ounce of gold. And today? At $1,800 an ounce, and gasoline at $4, you can buy 450 gallons. It's as if the price of gasoline had fallen to about 10 cents a gallon! Hmmm....go figure. Either gasoline is too cheap. Or gold is too expensive. If we were a trader we'd short the latter and go long on the former. And since we're always just guessing, we'll take a guess as to what this means... Gasoline is weak because the economy is fundamentally weak. Gold is high because Richard Nixon destroyed the integrity of the dollar, the US economy, and the world's monetary system. Each of these trends will have to play itself out. In the meantime, gasoline...and/or gold...may need a little adjustment. And the storm continues... And more thoughts... At least the feds aren't cutting back. The private sector spent itself silly in the '00s. Now it's the feds' turn. With all the talk of 'cuts' and 'budget reduction' you might have the idea that the feds are putting the same screws to their budgets as everyone else. You might have thought, too, that much of recent government spending was temporary 'stimulus' spending, intended to kick the US economy in the derriere, in order to get it moving faster. That spending might have been expected to taper off as the emergency passed. If you thought that you would be as dumb as a voter. The 2011 budget is on target to hit an all-time high of $3.6 trillion, more than $100 billion up from last year. Total outlays are increasing at a breathtaking pace — up by a third in just four years. And now that the debt ceiling has been cracked...the sky's the limit. Whee! *** Baltimore. Our home town. What a dump. But what a nice place to study "stimulus" projects. Baltimore has been drawing money from the feds for years...presumably to redress one failure or another. Of course, one failure only led to another....and to more federal funds! In fact, the city is an urban example of the old maxim — you get what you pay for. The feds paid for education programs...infrastructure programs....police programs...welfare programs... And they all worked beautifully. Now, the city is more failed than ever — and getting more federal funds! Steve Hanke has the report:
How Property Taxes and the 'Curley Effect' Are Killing Baltimore Regards, Bill Bonner, |
| Posted: 30 Aug 2011 05:44 PM PDT |
| ECB: decrease of oz 3152,72 in gold and gold receivables Posted: 30 Aug 2011 05:38 PM PDT |
| Posted: 30 Aug 2011 05:34 PM PDT |
| Posted: 30 Aug 2011 04:35 PM PDT |
| Posted: 30 Aug 2011 03:09 PM PDT By Damon van der Linde – Exclusive to Silver Investing News So far, 2011 has been an eventful year for silver, with massive investor demand, a climb to near-historical highs followed by a sudden drop, and a new trading range that is leaving many analysts cautiously optimistic about the future of the metal, as well as the companies mining it. Silver made a gradual climb in tandem with gold through 2010, nearly doubling to around $30 an ounce by the beginning of 2011. As gold continued its steady assent, this partnership was abruptly broken when the silver fell from a peak of $49.85 on April 28 to a low of $32 less than three weeks later. This shock was largely attributed to the COMEX margin rate increases, though silver is historically considered a much more volatile asset than gold. This also further fuelled proponents of the contentious silver price conspiracy, who believe silver prices are being undervalued due to manipulation. In spite of this dip in price, some analysts say the silver market is actually better off than before, because it represents a higher, more comfortable, new trading range, from which it has the potential to make significant gains in the near future. "The best way to look at it at the moment is that a new trading range has been established for silver in the 30-50 area. If trends and silver acts like they have historically, then we could see a wide trading range for an extended period where 30 on the low end and 50 on the upper end could become a range for a while. The past has shown it takes a while to work off these types of plunges," said Bill Downey, an independent silver and gold price analyst, and author of Goldtrends.net. "The analysts who have called for these prices have been correct so far over the past few years and we should continue to respect their forecasts, with patience as a virtue." As with gold, demand for silver has been growing for its use as a hedge against inflation in an environment of global economic uncertainty and silver is filling a role as a more affordable alternative to the yellow metal which for some has become prohibitively expensive. The first crucial issue that has been driving investors to safe-have investments is the Eurozone debt crisis, beginning first with Greece in late 2009, then hitting Ireland, Spain and Portugal. This finally culminated in changes to the European Financial Stability Facility, which further spurred fears of the Euro currency's inflation. Later, when the S&P downgraded the US credit rating for the first time in nearly a century, stocks and commodities immediately suffered – except silver and gold which made significant gains. Though silver has been adopted by many investors for its store value, the majority of silver usage, unlike gold, is for its use as an industrial metal. There are certainly many emerging technologies that incorporate silver, but analysts say that its store value has been by far been the greatest driving force. Much of this demand for precious metals is growing in emerging markets like China and India, with silver being no exception. Chinese silver demand rose sharply in 2011 and the country is currently the leading purchaser of the metal. As discussed mentioned in a previous article, analysts see growing demand for silver in China, as well as India, rising by as much as 30 percent on the year. "China imported 245.6 metric tonnes of silver in February. The figure was so close to the 260.6 metric tonnes that the country imported last February and it showed that China was willing to shell out money for the white metal at over $30 per ounce," stated Manikbhai Shah, a silver retailer in Mumbai. In terms of silver mining equities, many have stayed quite flat even while the metal price has gone up and down. One reason these mining stocks have lagged their underlying commodity is that investors are piling into physical silver and ETFs as a safer way to invest in the metals. Moving into the future, investors could expect a rise in many silver mining share prices if demand overtakes supply, allowing more and more operations to become financially viable. http://silverinvestingnews.com/8392/...er-trends.html |
| Ned Naylor-Leyland talks to James Turk Posted: 30 Aug 2011 02:49 PM PDT This interview was recorded on August 5 2011 in London. Ned Naylor-Leyland talks to James Turk http://www.youtube.com/watch?v=6d9WbjEmfQY info from youtube: Ned Naylor-Leyland (http://www.cheviot.co.uk ) and James Turk, Director of the GoldMoney Foundation, talk about how the new Pan Asia Gold Exchange (PAGE) will change the price discovery mechanism for gold. Ned explains that the futures market currently takes the lead in price discovery over the much larger spot market and how this may change once PAGE starts to operate. PAGE will provide a valuable alternative because its fully backed, allocated gold contract will provide a better title, closer to physical, than unsecured unallocated contracts. This interview was recorded on August 5 2011 in London. |
Let me tell you about one of the most eye-opening poker sessions I ever had. (This was some years back.)
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