Gold World News Flash |
- Gold Royalty Business: The Best Business In An Inflationary Environment
- Silver Update: “Silver versus Stocks” September 2nd, 2011
- Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Almost 5% on the Week
- Jim Rickards: Investors Fleeing GLD into Physical Gold
- $1,500 or $2,000 Gold?
- In The News Today
- Jim's Mailbox
- Phantom gold haunts GLD vault tour
- Trader Dan's Friday's gold update
- Smart Money Accumulating Mining Shares
- Goldman Justifies The Need For More QE3, And Even More Record Wall Street Bonuses
- No Doldrums This August - Is This the End of Action for Mining Stocks?
- Guns vs. Guitars
- Gold Price Closed Today at $1873.70
- Political Promises and Wall Street Tripe
- Peter Schiff: Jobs Report, Gartman on Gold, Gross on Bonds, Government Sues Banks
- Mind-Blowing News from the FHFA
- “The physical limits of growth is one we have to think about because we may have to settle for boring and less volatile and I’m not sure humans want that.”
- Alasdair Macleod is interviewed by GoldMoney's James Turk
- A Peaceful, Stress Free, (Lack of) Labor Day Open Thread
- Things That Make Your Head Explode
- “We had our $120 smash down last week, so that’s over and this is what we expected in our last interview. So I think gold is very clearly heading past $2,000 this time.”
- “We’re seeing things right now on the political stage that we have never, ever seen before and I believe this is tremendously bullish for gold and for silver. I would say gold is going to blow through $2,300 to $2,500 by the middle of next year.”
- Stupid Monkeys
- Gold Daily and Silver Weekly Charts - Smacked By the Invisible Hand
- Jim Grant: Gold Standard Comeback Enjoys Support
- Commanding a Recovery
- Has Gold Really Been So Frantic?
- Rickards sees explicit devaluation of dollar and flight from GLD
- Potential Lawsuit Tanks Banks
| Gold Royalty Business: The Best Business In An Inflationary Environment Posted: 02 Sep 2011 05:53 PM PDT Willem Weytjens Profitimes Buffett has always said that you should find a company that has pricing power that can offer protection in an inflationary environment. What he means with this is you should find companies which can pass higher costs on to its customers. He once said that the ideal asset in an inflationary environment is a royalty on someone else’s sales. If inflation is 3%, so if prices rise 3% per year, and you get a check based on the sales, your income goes up 3% a year without doing anything. Now this is really interesting. Not that we are in an inflationary period right now (at least that is what the statistics in Fantasy land are saying), but gold prices are inflating. So the gold mining companies are in a favorable business right now. What about the Gold royalty companies? I personally think they are in an even better situation. Why? Because the costs for mining gold has increased dramatically over the years, as the easy gold has been mined, c...
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| Silver Update: “Silver versus Stocks” September 2nd, 2011 Posted: 02 Sep 2011 04:08 PM PDT |
| Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Almost 5% on the Week Posted: 02 Sep 2011 04:00 PM PDT Gold jumped to as high as $1880.40 by a little before 9AM EST and ended just $14.70 away from August 22nd's all-time high with a gain of 2.56%. Silver soared to as high as $43.134 and ended with a gain of 3.44%.
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| Jim Rickards: Investors Fleeing GLD into Physical Gold Posted: 02 Sep 2011 01:06 PM PDT from King World News:
With gold and silver taking off to the upside in a big way, today King World News interviewed KWN Resident Expert Jim Rickards, Senior Managing Director at Tangent Capital Markets, to get his take his take on the surge in the metals. When asked about the explosive action in gold Rickards replied, "It's going to continue, Eric. We had our $120 smash down last week, so that's over and this is what we expected in our last interview. So I think gold is very clearly heading past $2,000 this time." Jim Rickards continues: Read More @ KingWorldNews.com
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| Posted: 02 Sep 2011 01:00 PM PDT For the last week and more gold has been on a roller coaster moving between $100 and $200 each way until now where it is hovering above $1,800. A broad spectrum of analysts points to $1,500 or above $2,000. With gold currently just above $1,800 we are around the half-way point for each move. The move each way would represent a move of just over 16%, which is not deeply significant in today's gold world except for the trading fraternity; there is more, however, beneath these moves than meets the eye!
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| Posted: 02 Sep 2011 12:58 PM PDT
On Gold: Team Sinclair-Turk 1, Marc Faber 0 Posted by Dominique de Kevelioc de Bailleul on Sep 02, 2011 | No comment Unless the gold price tumbles $400 in response to a surprise 500,000 rise in the Labor Department's Non-farm Payroll Report, scheduled to be released prior to the NY Continue reading In The News Today
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| Posted: 02 Sep 2011 12:53 PM PDT Jim Sinclair's Commentary CIGA Luis is spot on. There is a quiet but definitive technical turn taking place in the group.
Are Gold and Silver Bubbly? CIGA Eric Are gold and silver extended? Or, as the media often presents them as bubbly? Remember, the media bias towards talking down precious metals Continue reading Jim's Mailbox
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| Phantom gold haunts GLD vault tour Posted: 02 Sep 2011 12:46 PM PDT By Joe Morris Financial Times, London Thursday, September 1, 201 http://www.ft.com/intl/cms/s/0/d90e9d80-d4ac-11e0-a7ac-00144feab49a.html The SPDR Gold Trust (GLD) may have sought to defuse conspiracy theorists by opening up its massive London gold vault to CNBC, but instead it opened up a new line of inquiry. In the segment – http://video.cnbc.com/gallery/?video=3000043030 – reporter Bob Pisani was forced to [...] 
This posting includes an audio/video/photo media file: Download Now |
| Trader Dan's Friday's gold update Posted: 02 Sep 2011 12:22 PM PDT Courtesy of Trader Dan's Gold has solidly taken out resistance centered near $1840 – $1845 and has now moved directly to the next level of chart resistance near $1880. This is the last barrier before a retest of the former all time high near and just above $1900 is in order. That gold is doing this [...] 
This posting includes an audio/video/photo media file: Download Now |
| Smart Money Accumulating Mining Shares Posted: 02 Sep 2011 11:59 AM PDT Chart by CIGA Luis Ahlborn Sequeira (LAS) Comment by LAS: The accumulation is only starting in my opinion. The performance could follow the same pattern as Internet stocks in the 90s. Indeed, I do believe the upcoming Gold Mania could beat that period in a grand fashion. There is a quiet but definitive technical Continue reading Smart Money Accumulating Mining Shares
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| Goldman Justifies The Need For More QE3, And Even More Record Wall Street Bonuses Posted: 02 Sep 2011 11:41 AM PDT We end this busy day of economic buffoonery with Goldman's scorecard for August ("the US economy has not fallen off a cliff", which we translate as a B+, and "far better than expected"), which in turn explains why Goldman, and everyone else, now assumes QE3 (yes, Op Twist is QE3; get over it) is not only a given, but why in Goldman's esteemed opinion, the Fed has at least 3 rationales for pushing for more QEasing. Incidentally, these are as follows: "First, unemployment is far above the Fed's long-term forecast in the low 5% range; the longer high unemployment persists, the greater the risk that an erosion of skills and labor force attachment will result in permanent supply-side damage. Second, economic growth has been woeful this year and there is no convincing sign of the second-half pickup in growth that the majority of Fed officials seem to expect. The payroll report in particular will weigh heavily in the minds of many Federal Open Market Committee members. Third, there is limited prospect for near-term fiscal stimulus from a gridlocked Washington." The only thing Goldman is avoiding, of course, is the wipe out in stocks that will make QE3 a virtual certainty, as we have been predicting ever since March. Goldman is also avoiding to mention that the only outcome of more QE will be another record year of Wall Street bonuses, all at the expense of more joblessness, higher gas prices, a 120% debt/GDP ratio, and overall sovereign insolvency. Oh well - in the meantime we continue, as we have for the past 2.5 years, to buy gold... or spam for the Econ PhDs out there. Incidentally, just as amusing is our prediction from November 2010:
Oddly enough, it was supposed to be a grotesque form of hyperbole. We are stunned to reread just how close we came to predicting everything to the dot. From Goldman's Keynesian acolytes:
In Search of Labor Day, Fed to Ease Further The US economy has not fallen off a cliff, despite the "confidence shock" precipitated by the debt ceiling impasse, the downgrade of the US sovereign rating, and the financial market turmoil of recent weeks. The August employment report was weak but not recessionary. The payroll survey was very disappointing, with no job growth, a drop in weekly hours, and a decline in hourly earnings. But the household survey posted a decent gain and the unemployment rate held steady at 9.1%. The economy's growth performance so far in 2011 would be disappointing in any year, and is woefully unacceptable given the high level of unemployment. So we expect the Fed to take further action at its September 20-21 meeting, most likely by announcing that it will extend the duration of its securities holdings by selling shorter-dated securities for longer-dated Treasuries. We expect the impact of such a balance sheet "twist" to be similar to QE2. Given widespread speculation of further Fed action, and a very dovish set of minutes from the August meeting, we believe this impact is largely (though not completely) "priced in" to markets at this point. Despite a "confidence shock" precipitated by the debt ceiling impasse, the downgrade of the US sovereign rating, and the financial market turmoil of recent weeks, the economy seems to have staggered through August without a collapse. But with unemployment at unacceptable levels, growth below trend, and no clear evidence of a second-half pickup, we expect the Federal Reserve to take another substantial easing step at its September 20-21 meeting. A Stagnant Labor Market "Labor Day" is anything but in 2011, as the August employment report showed no growth whatsoever in nonfarm payrolls. The workweek shortened, average hourly earnings declined, and prior months' payroll gains were revised down, making for a substantial disappointment that we would characterize as near-recessionary. In contrast, the household employment survey was somewhat more encouraging, featuring a gain of 331,000 jobs in August (134,000 when adjusted to the payroll employment definition) and a slight uptick in the labor force participation rate. The unemployment rate was steady at 9.1% (see top exhibit on cover page). Though the payroll and household surveys often diverge in a given month, both send an unambiguous message of weakness over the past few months, with household employment down slightly and payroll growth barely positive. Little if Any Growth A labor market in the doldrums is the natural result of listless GDP growth so far in 2011. We expect 1% growth for the third quarter, roughly the same pace as the first half of the year. Recent economic news has offered a mixed picture of growth, roughly divided between "hard" indicators of economic activity and "soft" measures of sentiment. The "hard" measures—which include data such as retail activity, industrial production, and durable goods orders—currently imply a bit (though only a bit) of upside risk to our third-quarter growth estimate. Most surprisingly, reports from major retailers showed an uptick in August activity despite dismal confidence. In contrast, "soft" indicators that focus more on sentiment or opinion have been weak for the most part. In particular, surveys of consumer confidence from the Conference Board and University of Michigan are at 30-year lows excluding the depths of the financial crisis. A number of business surveys have been extremely soft as well, in particular the Philadelphia Fed's mid-month manufacturing survey, which fell to recessionary levels. But the bellwether business survey, the Institute for Supply Management's manufacturing index, held roughly steady at 50.6 in August, a level more consistent with the soft-but-not-recessionary "hard" indicators. Our Current Activity Indicator reads -0.5% with the August data in hand. Note, however, that the available indicators are skewed towards "soft" measures thus far. Still Skirting Recession On balance, the economy seems to have skirted recession so far. We recently evaluated a number of "rules of thumb" for recession as well as more formal regression models. The lower exhibit on the cover page shows a model incorporating indicators from the labor market (the change in the unrounded unemployment rate and the three-month change in payrolls), cyclical sectors (housing starts and the ISM manufacturing index), and financial markets (the S&P 500 equity index, the Treasury-Eurodollar spread, and the spread between the Moody's BAA corporate yield index and long-term Treasury yields), as well as the trailing two-quarter real GDP growth rate. This model currently estimates a nearly 40% probability that the economy was in recession in August. For estimating the likelihood of recession a few months from now, financial market variables take on greater importance. Exhibit 2 illustrates our financial conditions index, with and without an adjustment for oil prices. Despite the selloff in equities and widening in credit spreads, lower long-term interest rates and a weaker dollar have kept financial conditions slightly easier than early this year, with little net change in recent months. Thus, forward recession probabilities are lower if policymakers successfully evade additional near-term shocks from fiscal tightening (i.e. the yearend expiration of the payroll tax holiday) or financial stress (in particular, credit shocks related to the European debt crisis). Fed to Try a Further Boost We expect the Federal Reserve to launch another round of quantitative easing beginning at the September 20-21 meeting. Fed officials can offer several rationales for doing more. First, unemployment is far above the Fed's long-term forecast in the low 5% range; the longer high unemployment persists, the greater the risk that an erosion of skills and labor force attachment will result in permanent supply-side damage. Second, economic growth has been woeful this year and there is no convincing sign of the second-half pickup in growth that the majority of Fed officials seem to expect. The payroll report in particular will weigh heavily in the minds of many Federal Open Market Committee members. Third, there is limited prospect for near-term fiscal stimulus from a gridlocked Washington. Given the lack of unanimity on the FOMC and considerable opposition to asset purchases from some politicians, we think that "QE3" is likely to take the form of "going long" (extending the duration of the Fed's balance sheet) rather than "going big" (expanding the balance sheet further), at least for now. We believe the impact of quantitative easing is proportional to the duration of Fed purchases. As we showed in a recent analysis, if the Fed sold all its securities maturing before mid-2013 and invested the proceeds in 10- and 30-year Treasuries based on the amounts available, it could achieve a market impact equal to 80%-90% that of QE2 without changing the size of the balance sheet. A further tilt towards 30-year securities could magnify the impact. Exhibit 3 (above) illustrates the current maturity structure of the Fed's holdings and the market's. Any manipulation of the portfolio is likely to take place over a period of a few months to minimize disruptions. Further, QE is already priced into the market to a considerable extent. After all, the Fed went further than expected at its August 9 meeting, when it issued a conditional commitment to hold the funds rate at "exceptionally low" levels "at least through mid-2013", and indicated the possibility of further action. The minutes from that meeting characterized this as a "measured" action and noted that "a few" members preferred a more aggressive move. A CNBC survey taken shortly after the meeting suggested that roughly half of market participants expected more QE; given the data flow since then and our subjective assessment from conversations with clients, a clear majority now expects it before the end of the year.
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| No Doldrums This August - Is This the End of Action for Mining Stocks? Posted: 02 Sep 2011 11:30 AM PDT This will be an August to remember - no summer "dulldrums" this year. Gold has risen roughly 12% this month and nearly 30% year to date. Gold prices had a trading range of more than $300 in August. Read More...
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| Posted: 02 Sep 2011 11:30 AM PDT If I leave here tomorrow — Free Bird by Lynyrd Skynyrd Bullying small and medium businesses, sending armed goons to American factories, confiscating private property, closing down production and harassing business owners and their employees; a curious strategy for nurturing domestic job creation, wouldn't you say? The above strategies might seem ludicrous, even downright criminal, to we laypeople, but to government officials, it's "all in a day's work." Take, for example, the latest case of The Feds vs. Gibson Guitars. Actually, it's not even a case yet, not officially…but that didn't stop armed agents from the US Fish and Wildlife Service (these guys have guns?) from raiding two of Gibson's production facilities in Tennessee and its Nashville headquarters last Wednesday. The agents confiscated "nearly $1 million in Indian ebony, finished guitars and electronic data," according to the company's CEO, Henry Juszkiewicz. "It was a nightmare," fumed Mr. Juszkiewicz after the incident, "We had people sitting there making guitars. We had no weapons." This is not the first time the feds have actively sought to bum Gibson's vibe (a job-creating vibe, let us not forget — Gibson's Tennessee factories alone employ over 700 people). The feds last crashed the party back in 2009, seizing a shipment of ebony from Madagascar. They claimed they were there — and, again, armed — to enforce the Lacey Act, a century-old endangered species act that was amended in 2008 to include plants and animals. But before activists get their patchouli incense sticks in a knot, it's worth noting that Gibson is not your typical — or even atypical — enemy of the planet. "Agents seized wood that was Forest Stewardship Council controlled," Juszkiewicz noted, in a quote carried on the company's website. "Gibson has a long history of supporting sustainable and responsible sources of wood and has worked diligently with entities such as the Rainforest Alliance and Greenpeace to secure FSC-certified supplies. The wood seized on August 24 satisfied FSC standards." Your editor has no idea where the Forest Stewardship Council, the Rainforest Alliance and Greenpeace stand in this particular case…but we'd bet it's not on the side of the "greedy, seal-clubbing, old growth-uprooting capitalist pigs." "We've been importing this wood for 17 years, consistently, on a regular basis, with no problem," Juszkiewicz told Fox News yesterday. "And our competitors continue to use and buy this wood without any problem today." Juszkiewicz says the government won't tell him exactly how — or if — his company has violated that law. "We're in this really incredible situation," continued Mr. Juszkiewicz. "We have been implicated in wrongdoing and we haven't been charged with anything," he says. "Our business has been injured to millions of dollars. And we don't even have a court we can go to and say, 'Look, here's our position.'" It's also worth noting that the relevant law doesn't actually protect the trees themselves…just how — or, more specifically, where — the wood is finished. It's perfectly legal for Gibson to use the wood, in other words, it just can't use its own workers to fashion the wood into a guitar. That work needs to be done in India. Call it "mandatory outsourcing"…from the same people who will next week bring you their ideas on how best to create jobs in America. In response to their…uh… "treatment," Juszkiewicz and Gibson have mobilized their supporters via social media networks, encouraging people on Facebook and Twitter to write their representatives and demand action. The company also launched a Twitter campaign under the hashtag: "ThisWillNotStand." Tweeted Juszkiewicz last Friday: "Why is big government spending our money to harm ordinary citizens and small businesses?" For the record, your editors here at The Daily Reckoning have no political dog in this fight. That a "red state" company is being harassed by a "blue state" administration may or may not be a "fluke." Either way, the politics of it all is of little interest to us. In the end, we are fans of private action and government inaction, not the other way around. But since the government insists on acting — and acting in the only vulgar, brutish way it knows — we'll return the favor and harass them a little…peacefully, without guns, in the only way we know. As you probably already know, next week Obama is scheduled to deliver his much-lauded "Jobs Speech." We are already getting a flavor of what it might contain as advice from tenured economics professors, leading experts and other well-degreed blowhards begin seeping into the pages of the mainstream press. Unsurprisingly, the proposed solution to having over-spent and under-saved is…you guessed it…more spending! Here's a snippet from The Huffington Post: At the top of many to-do lists is government spending into the tens of billions of dollars to finance large-scale public works projects, a strategy that could address a gaping mismatch: Nearly 14 million Americans are officially out of work, yet a great deal of work needs to be done, from repairing dilapidated roads and bridges, to retrofitting government office buildings with energy-efficient infrastructure. Gary Burtless, a former Labor Department economist and now a senior fellow at the Brookings Institution in Washington, chimed in, "If the government spends the money directly on government-funded projects, that puts people on payrolls." And here's Pavlina R. Tcherneva, an economist at Franklin & Marshall College, echoing Mr. Burtless' brilliance, "We still have mass layoffs in those [manufacturing and construction] sectors. It seems very obvious that we can absorb large numbers of workers in those sectors for the public good." Ah yes…it's all so obvious! More spending!…More public works!…More government involvement! You know, because all this worked so very well for the country with The New Deal… Following the above logic, the government ought to spend billions of dollars it doesn't have undertaking projects it has no demonstrable skill in completing simply to "put people on payrolls." Heck, why stop at billions? Hasn't academia heard? Billions are for wimps. Trillion is the new figure du jour. Why not pay every un- or under-employed American a thousand bucks a minute to scrape gum off the sidewalk? Think of the boost to GDP! Think of the payroll numbers! Think of all that "public good!" And think of all the Chinese-made trinkets and Indian-fashioned guitars those people could then buy with their million-dollar bank balances! One is left to wonder: with thinkers like these, who needs idiots? [N.B.: Lynyrd Skynyrd guitarist, Allen Collins, used a Gibson Firebird, and later switched to playing a Gibson Explorer. Starting in late 1977, he also occasionally used a double-cutaway Gibson Les Paul Junior.] Joel Bowman Guns vs. Guitars originally appeared in the Daily Reckoning. The Daily Reckoning provides 400,000+ readers economic news, market analysis, and contrarian investment ideas. The 5 Best Ways to Invest in Gold was previously featured in the Daily Reckoning.
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| Gold Price Closed Today at $1873.70 Posted: 02 Sep 2011 10:44 AM PDT Gold Price Close Today : 1,873.70 Silver Price Close Today : 43.02 Platinum Price Close Today : 1,884.80 Palladium Price Close Today : 781.10 Gold Silver Ratio Today : 43.55 Dow Industrial : 11,493.57 US Dollar Index : 74.49 
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| Political Promises and Wall Street Tripe Posted: 02 Sep 2011 10:32 AM PDT Ron Smith: Addison Wiggin is with us, Executive Publisher of Agora Publishing. Addison Wiggin: Agora Financial, yes. Mr. Smith: Oh, Agora Financial, which is Baltimore-based, and publishes The Daily Reckoning, which is a newsletter that I subscribe to; it's free, so I like it. Mr. Wiggin: I hope that's not the only reason you like it. Mr. Smith: And co-author with Bill Bonner of how many books? Mr. Wiggin: Two books — Financial Reckoning Day and Empire of Debt. Mr. Smith: Empire of Debt. And I asked you when you came in, whether there was a resurgence of interest in these books because they were, shall we say, on the trail of what was going on relatively early. And you said reviewers are now reviewing Empire of Debt, which has been out how long? Mr. Wiggin: Well, we first published it in 2005, so it was even before the housing bubble took over the news, housing prices were still going up, and in the book we were forecasting that that was the most likely spot that the cracks — Mr. Smith: The weakness. Mr. Wiggin: Yeah, the weakness in the economy would show. But when a bubble's rising most people don't want to hear any kind of bad news. Mr. Smith: Of course not. Mr. Wiggin: So even though we're identifying trends that were in the economy and the book made it onto the New York Times Bestseller List, we didn't get a lot reviewers. We didn't get a lot of mainstream attention. In 2011 a lot of people have been reviewing the book and while we put out an updated edition in 2009, most of the reviews I've seen are of the 2005 edition. What I liken it too is people buy the book and they're like, "this is what I want to read"; and they put in their bed stand, and it says there for five years, six years. Events and circumstances change and they're like, "maybe I should read that one now." Mr. Smith: As we all know the difficulty is timing. You can be totally right on fundamentals, but what I've learned over a couple decades is that the power of the status quo is quite immense, and that will keep the plates spinning on those sticks for a long, long time. Mr. Wiggin: Right. And what we've seen too repeatedly is the news cycle generates opinions. People change the way that they view the world to accommodate what's happening in the news. And right now we're in a cycle where a lot of people are worried about the economy; they're worried about the United States stature in the world. Mr. Smith: It's a chicken and egg thing. Our markets depend on confidence. But confidence depends on circumstances, so depending on the day, you can either accelerate tremendously or you can spiral downward. Very rapidly and it's like a school of fish turning. Mr. Wiggin: Right. And we got the first big wave of selloffs in 2008, which was a big shock. There were a lot of things happening on Wall Street, and in the economy, that came as a surprise to people: the questionable accounting that was going on in a lot of Wall Street banks, and the "innovations" and new instruments that were being marketed as ways for retirees to gain income turned out to be just smoke and mirrors… Mr. Smith: And the thing is, Addison, you can't really restore, what was driving the global economy for a couple of decades, which is the American consumer's willingness to assume tremendous debt. Addison Wiggin is with us of Agora Financial Publishing, which is a Baltimore firm. One of their products is The Daily Reckoning newsletter, which is terrific if you have a certain mindset. Most Daily Reckoning — what would you call them "reckoners" — is that what you call them? Mr. Wiggin: Yeah, reckoners, daily reckoners. Mr. Smith: Most reckoners are, shall we say, skeptics, right? Mr. Wiggin: That's a fair assumption. Mr. Smith: Realists, not Pollyanna-ish. Mr. Wiggin: No, they have experience with the real world, so they're looking for ways to manage their own money primarily, but they're skeptical of political promises and even the kind of tripe that we get from Wall Street from time-to-time. Mr. Smith: But they tend to be investors, and therefore, with the market wildly gyrating they've indicated a certain amount of concern if not panic, right? Mr. Wiggin: Yeah, absolutely. In fact, we recently convened a teleconference among all our editors. Our editors are scattered throughout the country and even oversees, and we convened them on the phone and did a teleconference because our readers are writing in a panic. They're wondering with the market swings — up 500 one day, down 400 the next — what's going on. We were trying to get a litmus test of what our editors were thinking, but also we have the sense of that kind of volatility leading into September or October, which are historically not good times for the market especially, when the economy looks like it's turning back around down. We wanted to get a sense of what people were doing to prepare their own portfolios because that type of volatility makes people throw their hands up in the year, and then they get nervous and the panic button is hit much easier. And that's what we're expecting going into September and October, is we're probably going to have a much tougher market than we saw even coming into August, which is important because if you compare the three weeks from July 21st of 2011 to today, with 2008, which was the last real tough bear market we saw on Wall Street, the market dropped faster in the past three weeks than it did in those months that that caused the financial panic in 2008. Mr. Smith: And what's disturbing about that is that every effort made by the Fed and by the government acting in concert has been to bolster stock market valuations. Mr. Wiggin: Absolutely. We actually expected the market to begin going down at the end of June when the second quantitative easing program ended. When that came to an end on June 30th, we expected the market to begin falling. It actually peaked on the week before, but because of the sideshow that was going on over the debt ceiling debate; the real selling didn't start until the third week of July. Mr. Smith: For years, you folks at The Daily Reckoning have been recommending buying gold when it dips and selling stocks when they rally, and of course you've had the satisfaction of riding gold all the way up. But do you get nervous about gold being a bubble itself? Mr. Wiggin: I do get nervous, but I do think we're in the beginning of the cycle. Until the deficit situation and the debt that became the source of the political — Mr. Smith: The Empire of Debt. Mr. Wiggin: Exactly, the political theater we saw over the last couple weeks in Washington. Until that's resolved, gold is going to be a flight to safety trade. It's a bet against the system. If people are nervous about the dollar, if they're nervous about the political situation, if they're nervous about the stock market, they buy gold. And we've seen it peak over $1,800 in the last week. Mr. Smith: Another thing, it would seem to me, is that if you park a lot of money in T-bills, you're basically guaranteeing yourself a real loss. So maybe it's a hedge against that as well. Mr. Wiggin: Well, it is a hedge, but an interesting thing happened in 2008, and we're seeing it again, both the dollar index and Treasuries have rallied. Mr. Smith: Because of relative safety. Mr. Wiggin: Right. Mr. Smith: Relative safety. Recently, I mentioned that it was the 40th anniversary of President Nixon removing our currency from the gold standard and basically turning the world currencies into all fiat currencies. That is, in other words, ones that exist only by the faith in the issuers, and this is something near and dear to your heart, right? Mr. Wiggin: Absolutely. That's been the core of much of the work in The Daily Reckoning, and I wrote a book called The Demise of the Dollar, which looks at the launch of what we call the great dollar standard era because the dollar serves as the world reserve currency. Most central banks, most big corporations trade in dollars, and most people around the world use it to preserve their wealth. But in 1971, as you point out, any last link between it and gold was taken apart. Mr. Smith: And the abolition of that link led to us being able to live much higher on the hog than we actually could afford, which led to this trouble. Mr. Wiggin: Right, and if you look at the history of money in the world, 40 years is not that long. And one of our contributors, Dr. Mark Farber, is pretty famous for saying the dollar is going to return to its intrinsic value, which is zero, because it's a piece of paper. It doesn't have any value and that's where we're going over time. To be continued… A WBAL interview with Addison Wiggin, Political Promises and Wall Street Tripe originally appeared in the Daily Reckoning. The Daily Reckoning provides 400,000+ readers economic news, market analysis, and contrarian investment ideas. The 5 Best Ways to Invest in Gold was previously featured in the Daily Reckoning.
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| Peter Schiff: Jobs Report, Gartman on Gold, Gross on Bonds, Government Sues Banks Posted: 02 Sep 2011 09:52 AM PDT |
| Mind-Blowing News from the FHFA Posted: 02 Sep 2011 09:38 AM PDT Some days, what passes for analysis in the news is enough to make your head explode. Today is one of those days. Welcome to the pre-Labor Day episode of your favorite daily source of news, entertainment and investment advice. The Federal Housing Finance Agency (FHFA) — the arm that oversees the government-sponsored entities Fannie Mae and Freddie Mac — announced they plan to sue a list of major Wall Street banks for… drumroll, please… lying about the quality of the mortgages they packaged into securities and sold to Fannie and Freddie. Seriously. If you've been keeping score at home, you already know why this is a joke. The standards by which subprime mortgages were originated, then guaranteed, then packaged and foisted on the investment markets were originally established by Fannie Mae and Freddie Mac. The pertinent facts were relayed in this video. (Warning: When we linked to this video in 2008, our inbox was flooded with partisan rants. If after watching you have an insatiable need to cast blame, please target a buddy or spouse who may actually care enough about the two-party system to debate you.) "While I believe that FHFA is acting responsibly in its role as conservator," one-time Fannie flunky Tim Rood (now a partner at the Collingwood Group) told The New York Times this morning, "I am afraid that we risk pushing these guys off of a cliff and we're going to have to bail out the banks again." Hmmmnn… let's see if we can get this: A bankrupt government is suing on behalf of two bankrupt quasi-government firms… hoping to recover money from bankrupt banks that were already bailed out once by the aforesaid bankrupt government… and as a consequence may yet need to be bailed out again.
If the suit is going to drag Congress into another political quagmire, why, you might be tempted to ask, do it at all… and why now? Well, because the statute of limitations expires next Wednesday. The FHFA will file suit — if not today, then first thing next week. Fannie and Freddie's losses on these deals are estimated to be $30 billion. Addison Wiggin Mind-Blowing News from the FHFA originally appeared in the Daily Reckoning. The Daily Reckoning provides 400,000+ readers economic news, market analysis, and contrarian investment ideas. The 5 Best Ways to Invest in Gold was previously featured in the Daily Reckoning.
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| Posted: 02 Sep 2011 09:36 AM PDT Chris Whalen – Still Bullish Gold Because of Fear & Uncertainty
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| Alasdair Macleod is interviewed by GoldMoney's James Turk Posted: 02 Sep 2011 09:14 AM PDT 5:15p ET Friday, September 2, 2011 Dear Friend of GATA and Gold: Alasdair Macleod, economist, former banker, and speaker at GATA's Gold Rush 2011 conference in London last month, was interviewed there by fellow speaker James Turk, founder of GoldMoney. They discussed government's erosion of savings through monetary debasement and central banking's creation of a boom-and-bust cycle through interest rate manipulation. The interview is 14 minutes long and you can watch it at the GoldMoney Internet site here: http://www.goldmoney.com/video/macleod-turk-interview.html?gmrefcode=gat... Along with your secretary/treasurer, Macleod will speak at the October 20 meeting of the Committee for Monetary Research and Education, to be held at the Union League Club in New York: http://www.gata.org/node/10334 CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf Join GATA here: Toronto Resource Investment Conference http://cambridgehouse.com/conference-details/toronto-resource-investment... The Silver Summit http://cambridgehouse.com/conference-details/the-silver-summit-2011/48 New Orleans Investment Conference http://www.neworleansconference.com/ Support GATA by purchasing gold and silver commemorative coins: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Lewis E. Lehrman on How to Solve the U.S. Debt Problem Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, advises that to reduce the $1 1/2 trillion U.S. deficit, the Republican Party must initiate an investment program. Working Americans are not saving, which enables the banks to lead the country into a cycle of debt, leverage, boom, panic, and bust. Lehrman says: "Eliminating the budget deficit of a trillion and a half dollars cannot be done overnight. The proposal by U.S. Rep. Paul Ryan was very dramatic -- one Republican called it radical -- but it was not happily received. The solution, of course, is to design an American program for prosperity, because you can solve these entitlement problems with a growing economy. We need a tremendous program of investment, and investment comes from savings. When you pay savers, middle-income professionals, and working people 0 percent at the bank, you are not going to encourage them to save. Then we are left with a bank cycle of debt, leverage, boom, panic, and bust." To read more and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit: http://www.thegoldstandardnow.org/gata
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| A Peaceful, Stress Free, (Lack of) Labor Day Open Thread Posted: 02 Sep 2011 09:10 AM PDT Two weeks ago we had a "bear market" open thread in which we lamented the arrival of the recession, or the resumption of the depression, depending on one's proclivity for dramatic flair. It took the rest of the world about two weeks to catch up to what our commentators already knew. Today, in turn, we want to celebrate a peaceful, calm, (lack of) labor day holiday following which we are positive the markets will reopen calmly, in an orderly manner, with modest volume, declining 3M USD Libor, a collapse in the Libor OIS and with no invocation of Rule 48 whatsoever, by opening it up to our readers' very cool, calm, collected and politically correct stream of consciousness.
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| Things That Make Your Head Explode Posted: 02 Sep 2011 09:05 AM PDT Addison Wiggin – September 2, 2011
Today is one of those days. Welcome to the pre-Labor Day episode of your favorite daily source of news, entertainment and investment advice.
Seriously. If you've been keeping score at home, you already know why this is a joke. The standards by which subprime mortgages were originated, then guaranteed, then packaged and foisted on the investment markets were originally established by Fannie Mae and Freddie Mac. The pertinent facts were relayed in this video. (Warning: When we linked to this video in 2008, our inbox was flooded with partisan rants. If after watching you have an insatiable need to cast blame, please target a buddy or spouse who may actually care enough about the two-party system to debate you.) "While I believe that FHFA is acting responsibly in its role as conservator," one-time Fannie flunky Tim Rood (now a partner at the Collingwood Group) told The New York Times this morning, "I am afraid that we risk pushing these guys off of a cliff and we're going to have to bail out the banks again." Hmmmnn… let's see if we can get this: A bankrupt government is suing on behalf of two bankrupt quasi-government firms… hoping to recover money from bankrupt banks that were already bailed out once by the aforesaid bankrupt government… and as a consequence may yet need to be bailed out again.  If the suit is going to drag Congress into another political quagmire, why, you might be tempted to ask, do it at all… and why now? Well, because the statute of limitations expires next Wednesday. The FHFA will file suit — if not today, then first thing next week. Fannie and Freddie's losses on these deals are estimated to be $30 billion.
The economy also lost no jobs. The number was: zero. If you plot it on a chart, it looks as if there's an empty space for data that hasn't yet come in.  This is the first time since 1945 a figure bereft of meaning as such has ever shown up in monthly numbers. Here's the quick and dirty on how the quants derived their conclusion:
Voila, zero.
Take that away and the economy lost… 87,000 jobs. Meanwhile, the equally gamed U-3 unemployment rate is unchanged at 9.1%. Oddly, the two numbers the statisticians can't fiddle with showed modest improvement. Those are the percentage of the working-age population in the labor force… and the employment rate of the overall population. Considering both numbers hit early-1980s lows last month, that's cold comfort.
Economists polled by Bloomberg, MarketWatch and the like were counting on a modest five-figure gain — not enough to keep up with the natural growth of the population, but at least, well, something. The Dow plunged 200 points in the first five minutes of trading, and that's where it remains as we write. The drop comes on the tail of a 120-point loss yesterday, attributed widely to a sick feeling that the jobs number would disappoint.
"Analysts have not cut their 2011 and 2012 earnings estimates for many stocks far enough to reflect the recent dramatic deterioration in forward-looking indicators. The stock market typically looks cheap on a trailing earnings basis ahead of a recession." "Low interest rates on bonds should lessen the depth of another bear market (especially for high-yield, blue chip stocks), but low rates can't really send stocks surging, either. In the coming months, I expect most stocks to slowly grind lower, interrupted by bursts of central bank-fueled rallies."
"The franc has been strong for quite some time," comments our currency trading specialist Abe Cofnas. "It's considered a safe-haven currency, so it has attracted a lot of attention stemming back to October 2007." "The Swiss economy's main trading partner is the eurozone, so imagine the difficulty of Swiss exports to be competitive. It's no wonder the Swiss National Bank is warning that it may intervene." "The handwriting is on the wall: The Swiss franc will weaken in the coming year," Abe concludes. "In fact, it has the capability of decreasing in value more than 10% in one week" — which is what it did in mid-August. Abe recently suggested a way to play the trend to readers of Strategic Currency Trader. For access, look here.
That would have to be a first: people fleeing gold because they expect more stimulus — the very action that causes political gridlock and a declining dollar — from the White House and the Federal Reserve? Still, in a bid for clarity (we think), less than 24 hours later, the same reporter wrote: "Gold prices were skyrocketing Friday after the worst jobs number in almost a year triggered a rush into safety." AHHHH! 
During the storm, flooding near 13 different towns in Vermont cut those communities off from the rest of the state. Under ordinary circumstances, the Vermont 'National' Guard would use its six helicopters to haul in food, water and medicine. But these are not ordinary circumstances. All six of the helicopters are guarding things in Iraq. "We'd be in a very different scenario if they were here," said Guard spokesman Lt. Lloyd Goodrow, speaking of local rescue efforts. Always ready to assist, New Hampshire, next door, sent over a couple of helicopters… but instead of carrying supplies, they were pressed into service to ferry the head of FEMA and Vermont politicos around the state for a photo op — er, excuse us, to "survey the damage." Heh. Help finally arrived on Wednesday when eight choppers came in all the way from Illinois.
Gibson's Memphis and Nashville factories were targeted because the firm has, apparently, run afoul of environmental laws by making its guitars with ebony imported from India. "We've been importing this wood for 17 years, consistently, on a regular basis, with no problem," CEO Henry Juszkiewicz told Fox News yesterday. "And our competitors continue to use and buy this wood without any problem today." Why Gibson has been singled out among domestic guitar makers the Justice Department isn't saying. Bonus irony: It's perfectly legal for Gibson to use the wood. It just can't use its own workers to fashion the wood into a guitar. If the same work is done by an Indian? Well, that's OK. The law effectively requires Gibson to outsource — a phenomenon Joel Bowman explores in greater depth in today's Daily Reckoning. Just imagine: If the Feds had delayed the raid on Gibson for one more week, maybe the BLS number would have come out one or two jobs to the positive! That would be too simple.
We introduced you to him on Wednesday. He's the California artist whose painting depicting a burning Chase bank branch earned him a visit from cops with delusions of stopping the next Sept. 11.  But he's hoping it'll fetch more than $7,500 before all's said and done. We're only intrigued by how he arrives at that figure. "Legend has it," Schaefer writes in the listing, "that Vincent van Gogh sold one painting in his lifetime, The Red Vineyard at Arles, for 400 francs, which would have equaled 116.129 grams of gold, or 4.1 ounces of gold." "Today, an ounce of gold costs $1,835, so 4.1 ounces of gold is $7,523.50. Not a bad price adjusted for inflation and given the amount of money his work auctions for nowadays quite a steal!" Do you suppose he'd take payment in gold?
The product, derived from a compound found in tomatoes and peppers, can arrest the inflammation that comes with nearly every disease of aging — heart disease, cancer, autoimmune disorders, Alzheimer's. "Our own immune systems turn on us as we age," Patrick explains. And this product "is the most powerful anti-inflammaging strategy to date. "It's going to disrupt practically every aspect of our lives." If you're over 50, or if your knees hurt in the morning, or if you take cholesterol pills, or if you're diabetic… imagine those no longer being an issue, and all because you can take a simple supplement. And don't let the word "supplement" put you off. Patrick is a skeptic. Like you, he's seen crazes come and go. Beta-carotene. Resveratrol. But on this account, Mr. Cox has reviewed the science and is convinced the benefits are real. "What penicillin did for bacterial diseases," Patrick asserts, "this substance will do for the diseases of aging." Please allow Patrick to share his enthusiasm for the breakthrough — and its investment implications — with you here.
"I have been through it all and could blame everything on the situation I find myself in today. The past 2½ years have been one tough slog. Try making a living building things today — it ain't easy." "We face all of the above: rigged markets, government red tape, blah, blah, blah… What we discovered by working our tails off is a unique market niche that demands our special skills, and no one else has discovered it yet." "It has been real tough getting it going, but by continuing to work our tails off, we will completely mothball our 'old' operations and be working exclusively in our new niche within the next six-12 months." The 5: Congratulations. "What Obama or the Fed say really doesn't matter," says an email yesterday from Ray Blanco of our tech team, and your experience bears that out. "Over the long run, good investments will pay off. If they do not arise in the U.S., they will do so elsewhere. "Investing in transformational technology over the long run will overcome the personal economic damage inflicted by arrogant clowns who think they can manage a $14 trillion economy." "All that matters," adds Patrick Cox, "are the big technological innovations that are moving like floodwaters through the old economy. They can't be stopped, but they can be harnessed. "Those who invest in these enormous transformational technologies are going to do very, very well. Those obsessed with market fluctuations are playing against the casino." This is why, for instance, Patrick is unfazed by the ups and downs of the company he described above. He knows it's now on the market with a revolutionary product that can halt the onset of everything from cancer to Alzheimer's. He knows the CEO — a hard-charging, bursting-with-ideas Steve Jobs type — has sunk his own money into the company to the tune of a half-million shares. In other words, Patrick knows over the long haul the company is destined to multiply your money many times over. He's marshaled in impressive array of evidence to make the case. You can examine it for yourself here.
"Your team is not only spot-on, exceptionally brilliant and humorous, but need not be overly concerned with the mindless chatter from readers in Wednesday's issue who remain clueless to the rest of us. That narrow-minded few need to unsubscribe and go back to their TV network shows." "As for the rest of us adults that vote and care about Americas' freedom erosion, please hang onto your whiskey, guns and business and investment spirit and come visit us in Guam. You can watch the beautiful sunsets from our patio. Bring your own cheesecake and adult beverage. We look forward to meeting you. You do not have to escape to Paris, Vancouver or Central America… at least until after the next election." The 5: Heh… and what are you going to do at that time? Thank you for the tempting invite. Cheers, Addison Wiggin P.S. Markets in the United States are closed Monday for Labor Day. For their part, our friends to the North will observe Labour Day. The 5 returns on Tuesday. P.P.S. Some holiday weekend humor, courtesy of our friend and Vancouver compatriot Rick Rule: "The English language has some wonderfully anthropomorphic collective nouns for the various groups of animals." "We are all familiar with a herd of cows, a flock of chickens, a school of fish and a gaggle of geese." "Less widely known are a pride of lions, a murder of crows, an exaltation of larks and, presumably because they look so wise, a parliament of owls." "Now consider a group of baboons. They are the loudest, most dangerous, most obnoxious, most viciously aggressive and least intelligent of all primates." "What is the proper collective noun for a group of baboons?" "Believe it or not… a congress!"
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| Posted: 02 Sep 2011 08:45 AM PDT Jim Rickards – Investors Fleeing GLD into Physical Gold
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| Posted: 02 Sep 2011 08:40 AM PDT Barron – "There's Not Enough Gold to Go Around Right Now"
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| Posted: 02 Sep 2011 08:20 AM PDT Synopsis: Stupid is as stupid does… and there's a lot of stupidity going around in the hallowed halls of Washington; David Galland gives some examples. Also in this edition: The Fed squanders $1.2 trillion and no one cares – Doug Hornig explains Bailout Fatigue. The human ape has any number of qualities not often found in other species of mammalia, including opposable thumbs and the ability to fashion and use tools. Continuing the list, I would add a tendency to form all manner of mental constructs and to then act in accordance with those constructs, even when those constructs have little or no connection to reality. Thus, for instance, I stride confidently onto the golf course with the firmly held conviction that I am a solid striker when, in fact, on most days I am a wild-hitting duffer of the lowest order. But an over-elevated opinion of one's golf game is harmless compared to some of the delusions humans are capable of. For instance, the teenager who becomes convinced that by blowing himself up in a crowd of innocents, he is serving some sort of higher purpose… or that his reward will be an eternity highlighted by bedding virgins. A more widespread delusion is a tendency to believe in the status quo. Simply, that tomorrow will be roughly on par with today, a construct that extends out as far as the mind's eye can see. This particular construct is entirely understandable – it's this expectation that things will be more or less constant that allows us to make plans and take the steps necessary to execute those plans. In other words, it is a lynchpin to human progress. Conversely, when the controlling force of the economy that sustains us in our businesses and lifestyles is ever changeable – and these days that controlling force is the government – sensible humans become wary and start squirreling away nuts in preparation for an uncertain future. This is, of course, not conducive to a vibrant economy. What will Team Obama dream up next in their flailing attempts at reinvigorating an economy that more than anything needs certainty? It is literally anyone's guess. Are we going all in on the whole carbon credit thing, or is that now a passing fad? Will the Dodd-Frank Act, with its 400+ new rules for financial institutions and everyday businesses, such as automobile dealers who offer financing, help or hurt? Will the government, having bailed out the big banks, now turn around and sue them out of existence… or just until they squeal? Is it any wonder that the banks now have upwards of $1.6 trillion in reserves sitting on the Fed's balance sheet? Sure, they are earning a whopping 0.25% interest rate while taking no risk, as they would do if they put the money out as loans to the public. But the real implication – at least to me – is that they are keeping their capital on hand against the uncertainty of future government action and to deal with the hundreds of billions in toxic loans still on their balance sheets. Another large subset of the human herd has become brainwashed to the point of delusion by a combination of state education, misinformed college professors, mainstream media, religious leaders and high-talking politicos into believing that they as individuals are little more than pawns, knee-benders, set on this planet to follow a path proscribed by the power elite. As a consequence, when social trials arise on that path, they look first to the government for solutions. And they cling stubbornly to false beliefs, such as the myth of anthropogenic global warming, even though the truth of the situation would be readily apparent if they trusted in their instincts and did some actual research. And so it is that while the world is dominated by the human ape, the species is greatly hindered in its progress by stupid monkeys. Let anywhere near the levers of power, it is a certainty these stupid monkeys will start pulling madly, and keep pulling even as the machine begins to shudder and smoke. Making the point, I would like to share with you – a more sensible species of simian, I am sure – a few examples of stupid monkeys at their dumb deeds; deeds that can only make one shake one's head in dismay. For example…. The stupid monkeys at the Justice Department decided to block a merger between AT&T and T-Mobile because it would "harm competition." "Gawd's blood!" I cry out loud to no one. The whole idea of such a business combination is, of course, to "harm the competition" by enhancing profitability with a combination of larger market share and reduced redundancies. Maybe the Justice Department should require AT&T to shut down, because the very act of staying in business is clearly damaging to the competition. And while they are at it, the feds should also clamp down on the burgeoning Internet telephony companies that are now slashing into the market share of all the big telecoms. A sub-species of particularly stupid and destructive capuchins in the California legislature appear poised to pass a bill that will effectively put an end to hiring an adult babysitter or anyone seeking casual employment doing odd jobs. Here's the state's own legislative summary of the bill's intent: Existing law requires employers to secure the payment of workers compensation for injuries incurred by their employees that arise out of and in the course of employment. The failure to secure workers compensation as required by the workers' compensation law is a misdemeanor. Under existing law, employers of persons who engage in specified types of household domestic service and who work less than a specified number of hours are excluded from that definition of employer and are therefore excluded from the requirement to secure the payment of workers' compensation, as specified. This bill would remove that exclusion and require all domestic work employers, as defined, to secure the payment of workers compensation and would make conforming changes. By expanding the definition of a crime, this bill would impose a state-mandated local program. In lay terms, the bill – which already overwhelmingly passed in the Democrat-controlled assembly and just passed unanimously through the California State Assembly Committee on Appropriations, precedent to passage by the Senate and therefore into law – will require you as a parent (or otherwise casual employer) to follow formal employee reporting protocols and, among other disincentives to employ, provide your babysitter with worker's compensation benefits, regularly scheduled rest and meal breaks and even paid vacation time. Failing to do so will open you up to lawsuits from disgruntled help and being dragged into court by the nanny's nanny (state). Now, a monkey with even average intelligence might conclude that passing this law in the grips of an unemployment crisis – and California's unemployment rate is over 12%, versus the nationwide average of 9.1% – would curb enthusiasm for hiring and so should be avoided. But not the stupid California capuchins. Vermonters want to block the shipment of oil from the tar sands through the state. This next example is particularly ripe, providing evidence of just how badly the US educational system has failed its pupils. Quoting a supportive article in Vermont's Burlington Free Press… A tar sands oil developer might be planning to pipe its product to Montreal – and then across Vermont's Northeast Kingdom in an existing pipeline to Portland, Maine, according to Canadian and American environmental groups. That threatens the region's air, water and wildlife habitat, the environmentalists say. Egad, a reader might decide, the region's environment is at risk. Break out the placards, fuel up the lawyers! We are all aware, of course, of the principle of NIMBY – as in Not in My Back Yard. But even the most simple of simians might want to rethink the notion that Ft. McMurray, Alberta – the hub of the Canadian tar sands and source of the hateful oil – is in Vermont's backyard. Unless one also considers, say, Phoenix, Arizona to be similarly a part of the neighborhood: Ft. McMurray is about 2,750 miles from Vermont, and Phoenix just 2,600. And how is it that feeding processed oil into an existing pipeline constitutes such a dire threat? Oh, what folly these enviro-monkeys are capable of. It it's positively laughable, but only if you like laughing in the dark. Then there's this, from the Stupid-Monkey-In-Chief (SMIC) This week, our own President Obama, the SMIC, has confirmed his intention to tune up his vocal chords in order to create the jobs that have so far gone missing in this crisis, and which, according to today's again dismal unemployment data, remain nowhere in sight. Said the SMIC: "It is my intention to lay out a series of bipartisan proposals that the Congress can take immediately to continue to rebuild the American economy by strengthening small businesses, helping Americans get back to work, and putting more money in the paychecks of the middle class and working Americans, while still reducing our deficit and getting our fiscal house in order," Obama said. "We're saved!" shout the staunch few that still believe the SMIC is cut from superior cloth. But even the stupidest of the stupid monkeys might be tempted, after so many disappointments, to raise their hands and ask, "What's the plan, chief?" In answer to which I provide the following preview of "the plan," courtesy of Bloomberg… Obama's plans include more infrastructure spending, tax incentives to spur hiring, a reduction in the employer portion of the payroll tax credit and changes to unemployment insurance to subsidize worker retraining. Did you just get an overwhelming sense of déjà vu? If so, it's probably because the SMIC's latest plan is pretty much the same as the previous plan, and the one before that. Sure, there are a few tax breaks here and there – but companies don't hire people based on tax breaks. They do so because there is work to be done and people are needed to do it. And in the real world, a $5,000 tax credit for hiring someone – the amount being bandied about in the new plan – will be burned through in a couple of months of (now mandatory) health insurance payments. Still in the real world, if the country is to pull itself out of the muck, the government needs to stop spending itself into a deeper and deeper fiscal hole. And it needs to undergo radical reforms in regulatory and tax regimes (to attract businesses and capital here, versus over there). And it needs to remake the monetary system on a foundation of something more tangible than political promises. But first of all, the government has got to acknowledge the simple reality that it cannot meet its obligations and begin, in earnest, the restructuring of those obligations. Of course, only a stupid monkey would look at the state of our degraded democracy – where half of the monkeys pay no taxes while complaining about the half who do – and believe that the government will willingly make any significant reforms, versus just handing out more bananas. Therefore, smarter-than-average monkeys are actively taking steps to protect themselves from the coming currency debasement – the only way the government knows to reduce its debt in a politically acceptable way. Back in 2001, Doug Casey and very few others were waving their arms and hooting about the need to buy gold – had you acted then, you would have outperformed even the legendary Warren Buffett. And as the chart here shows – thanks, Dominick! – you would have outperformed them, decisively so.
(Click on image to enlarge)
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| Gold Daily and Silver Weekly Charts - Smacked By the Invisible Hand Posted: 02 Sep 2011 08:10 AM PDT |
| Jim Grant: Gold Standard Comeback Enjoys Support Posted: 02 Sep 2011 08:07 AM PDT
An age-old idea — the gold standard — is attracting new fans, amid growing investor concern that enormous government borrowing is weakening the dollar and spark hyper-inflation. The day of realization is coming, James Grant, editor Grant's Interest Rate Observer told CNBC Thursday. "What can be said for the gold standard is that it is time tested. It has monetary properties. It worked imperfectly but consistently for a 100 years until it was interrupted," said Grant The old standard, which fell out of use by the 1930s, was conceived to control money supply growth (and thus inflation and asset bubbles) by requiring currencies be backed by physical gold.
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| Posted: 02 Sep 2011 08:03 AM PDT Bill Bonner View the original article. September 02, 2011 10:43 AM We're in the Charles de Gaulle airport, in Paris, en route to the USA. Not much to report anyway…at least not to you, dear reader. The Dow went down 119 points yesterday. Gold lost 2 bucks. Nothing revelatory…no burning bushes…no booming voices from the heavens. But, the rest of the world is waking up to what you've known for years. Here's the headline in The Financial Times today: Hopes for global recovery take a hit Yes, the world's financial elite still believe in the recession/recovery concept. What a pity it never seems to work out. The report continues: The global manufacturing recovery appear[s] to have come to a grinding halt in August, activity surveys suggested on Thursday, undermining hopes of a vigorous economic recovery in the second half of the year. And what's this? Martin Wolf, chief economist at the FT, has finally realized… This is no normal recession. Of course, Dear...
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| Has Gold Really Been So Frantic? Posted: 02 Sep 2011 07:46 AM PDT There's been a lot of talk about how volatile gold's been this summer. The numbers tell a different story... Read More...
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| Rickards sees explicit devaluation of dollar and flight from GLD Posted: 02 Sep 2011 07:38 AM PDT 3:37p ET Friday, September 2, 2011 Dear Friend of GATA and Gold: Geopolitical analyst Jim Rickards, who spoke at GATA's Gold Rush 2011 conference last month, today tells King World News that inflation targeting -- explicit devaluation of the dollar -- is likely to be the focus of the next meeting of the Federal Reserve's Open Market Committee and that investors are moving out of the exchange-traded gold fund GLD and taking delivery of real metal. An excerpt from the interview has been posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/2_Jim... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Platinum Drills 49.5 Meters Grading 1.27 g/t PGM+Au at Yukon Wellgreen Project Company Press Release Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) announces results from its 2011 drilling program for its first completed hole on the Wellgreen Project in the Yukon Territory, Canada. Borehole WS11-184 encountered 472.6 meters of mineralization grading 0.43% nickel equivalent from surface to the footwall contact. Within this larger swath of mineralization the hole encountered 49.5 meters of 1.27 grams per ton platinum group metals plus gold, 0.71% nickel, and 0.45% copper (or 1.11% nickel equivalent). The geology transitioned from blebby disseminated to net-textured to massive sulphide approaching the footwall contact grading 6.3% nickel, 1.7% copper, 2.7 grams per ton platinum, 1.6 grams per ton palladium, 0.17 grams per ton gold, and 3.4 grams per ton silver. The drilling zones and results are tabulated here, with more information: http://www.prophecyplat.com/news_2011_aug22_prophecy_platinum_wellgreen_... Join GATA here: Toronto Resource Investment Conference http://cambridgehouse.com/conference-details/toronto-resource-investment... The Silver Summit http://cambridgehouse.com/conference-details/the-silver-summit-2011/48 New Orleans Investment Conference http://www.neworleansconference.com/ Support GATA by purchasing gold and silver commemorative coins: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Golden Phoenix Q2 2011 Conference Call Posted at Company Internet Site The second quarter 2011 conference call of Golden Phoenix Minerals Inc. (GPXM) has been posted at the company Internet site for immediate playback. The call includes updates on the start of gold production at the company's Mineral Ridge gold project in Nevada, the letter of intent to acquire the Santa Rosa gold mine in Panama, and the company's due-diligence efforts to secure a senior stock exchange listing. The conference call is 18 minutes long and you download an mp3 of it here: http://www.goldenphoenix.us/audio/GPXMCC071211.mp3 Or play back the call here: http://goldenphoenix.us/conferencecalls/ Golden Phoenix is a U.S. mining company with international exposure to gold, silver, and strategic metals. The company's business model combines project generation and royalty mining that offers the potential for exploration upside, coupled with the backing of production and future royalty streams. View company videos here:
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| Posted: 02 Sep 2011 07:37 AM PDT
Potential Lawsuit Tanks Banks$30 Billion - that's bound to get their attention! According to the WSJ, the Federal Housing Finance Agency is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble. The suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter. The suits stem from subpoenas the finance agency issued to banks a year ago. If the case is not filed Friday, they said, it will come Tuesday, shortly before a deadline expires for the housing agency to file claims arguing the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers' incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value. Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers. In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope. Tim Rood, who worked at Fannie Mae until 2006 and is now a partner at the Collingwood Group, which advises banks and servicers on housing-related issues, agrees with what I told Members in last night's chat:
In other words - MADNESS! What was the point of spending Trillions of Dollars bailing out the Banks if you are going to turn around and sue them for $30Bn and drop their stock price another Trillion, causing them to need another bailout? Perhaps this is the denouement of a week of scary market rumors that seem to have been designed to stop the markets from breaking too high. We were speculating on this last night in Members' Chat before this latest bit of news even happened. Clearly this is not really "NEWS" as the UBS suit was filed a month ago (July 27th), sending that bank's stock from $17.50 to $13.50 on Aug 8th (down 23%) along with the rest of the Financials as XLF fell from $15 to $12 (20%) and BAC, whose Countrywide unit is the poster child for fraudulent behavior, fell from $10 to $6.50. Since then, UBS came back to $14.50 (up 7.5%), XLF made it to $13.50 (up 12.5%) and BAC hit $8.50 (up 30%) aided by a loan from Warren Buffett. Unless we assume Buffett and the rest of the investing community were unable to put 2 and 2 together from the UBS suit - I would say that this is very much old news and this dip that incites retail panic will be a good opportunity to buy like Buffett and pick up some of these stocks on the way down. 8:30 Update: No jobs were added in the US in August. Not the figurative "no" but ZERO, the Non-Farm Payroll number was exactly zero. That has sent our futures off a cliff and we are down 1.5% now, still trailing Europe, which is down more. This will send Treasuries flying and we will short TLT up around $111, hopefully selling the Sept $112 calls for $1.60 and buying the $114/111 bear call spread for $2 for net .40 on the $3 spread. That's a fun way to sell into the initial excitement on that trade. Keep in mind that 45,000 jobs were subtracted due to the Verizon Strike. Those jobs will be added back next month. The only other sectors that had significant lay-offs were Government, with 17,000 (the brilliance of austerity!) and Retail, which shed 7,800 jobs. 35,500 Health Care Jobs were added along with 34,000 Temporary Workers, and 28,000 Professionals Workers gained jobs - this is exactly the kind of overreaction to a headline number that we like to go long into! We'll see what else looks oversold at the open so expect some trade ideas in the Morning Alert to Members (we already hedged for this drop earlier in the week). Yesterday's alert had the SDS weekly $22 calls at $0.70 and they finished the day at $1.06 (up 51%) after a wild ride at the 10 am ISM report. Unfortunately, our other trade idea of the morning was GLD Oct $160 puts at $1.50 and those finished the day at $1.33 (down 11%) but our plan was to roll those to a higher strike and double down if gold took off towards $2,000 (we have a long spread from last week for that). This morning gold is up another $50 at $1,877 as EVERYONE is panicking into gold. We're not going to catch any falling knives into the weekend but we do look forward to being able to fill out some of the September's Dozen picks that got away from us. Obviously, with the economy stalling and jobs at ZERO, this should push our expectations for QE3 from "probably" to "how much." Unless the Fed is going to blow off their mandate, we are in danger of both deflation and 10% unemployment (U-6 Unemployment is already 16.1%) if they fail to act quickly and decisively. All in all, it's a good morning for some bottom fishing - they certainly look like they'll be biting! Have a great weekend, - Phil Pic credit: Jr. Deputy Accountant Try out Phil's Stock World here >
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Some days, what passes for analysis in the news is enough to make your head explode.
The Federal Housing Finance Agency (FHFA) — the arm that oversees the government-sponsored entities Fannie Mae and Freddie Mac — announced they plan to sue a list of major Wall Street banks for… drumroll, please… lying about the quality of the mortgages they packaged into securities and sold to Fannie and Freddie.
The August unemployment data, out this morning from the Bureau of Labor Statistics (BLS), hit a milestone. After running reams of data through its various and sundry models, the BLS concluded the economy added no new jobs last month.
But wait: We must also account for the birth/death model. That's the BLS' statistical invention that conjures up jobs created by brand-new businesses. That added 87,000 completely hypothetical jobs.
After the BLS figures hit the transom, traders on Wall Street threw a tantrum. Zero was a "miss" in Street lingo.
"Most economic data point to a recessionary environment over the next few quarters," says Strategic Short Report's Dan Amoss, managing to keep his head together.
The dollar index is ending the week on the high end of its recent trading range, at 74.6. The index's major component, the euro, has weakened to $1.423.
The Swiss franc, meanwhile, is strengthening again. After touching a record $1.386 on Aug. 9, and sinking below $1.22 on Monday, the franc is back to $1.272 as we write.
Gold is up big today. The spot price added $25 in overnight trading… and another $25 after the jobs report came out.
Here's a little fun at someone else's expense. Yesterday, a reporter at the TheStreet.com gave this explanation for a flat market in the Midas metal:
Meanwhile, in its determination to improve lives in foreign countries, the U.S. government seems to have overlooked a few items back home.
We also learned this morning the Fed's staged a raid on Gibson Guitars on Tuesday. The iconic American company supplies musicians like B.B. King and AC/DC's Angus Young with their instruments.
Ah, well, at least Alex Schaefer will get the last laugh.
The revolutionary "nutraceutical" Patrick Cox has been raving about in 
"You are so right," says a reader after we declared yesterday there will always be entrepreneurs building businesses in spite of market manipulators, government regulations and depreciating currency.
"We have been loyal readers of your publication," comes an email unique for its origins, "for over seven years out here in Guam, USA… 'Where America's Day Begins.' We always enjoy the worldview and political insight that goes with long-term investing."
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