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Tuesday, September 6, 2011

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Allied Nevada Gold: Growing Like Gangbusters

Posted: 06 Sep 2011 06:51 AM PDT

By David White:

Gold stocks have generally been trending upward as the price of gold has risen on the threat of U.S. and EU currency devaluation. The Central Banks around the world bought more in 1H 2011 than they bought in all of 2010.

India and China have been buying more for jewelry and investment. Some tend to discount Asian demand, but the facts say something else. India and China accounted for 52% of the global investment demand and 55% of the global jewelry demand in Q2 2011. With still fantastic Q2 GDP growth rates (India = 7.7% and China = 9.5%), the inflation rates in their own countries and others are very worrisome to them. China's July CPI was 6.5% (up from 6.4% in June 2011). India's CPI in July was 8.43% (down from 8.62% in June 2011). With inflation rates like those


Complete Story »

What's Behind The Climb In Gold?

Posted: 06 Sep 2011 06:46 AM PDT

By Benjamin Goldman:

With the current bearish market, more and more investors are turning to gold to help hedge their portfolios. Currently, gold prices have gone as high as $1900 per ounce. Anyone who has held gold over the last few years has earned huge returns, and many analysts expect gold prices to cross $2000 pretty soon. The current futures market expects gold prices to taper off, with December 2013 futures trading at $1928.3 and September 2011 futures trading at $1899 at the close of trading on Friday. However, this tiny expected increase is due mainly to low interest rates. The truth is that gold prices can hit $3000 by the end of next year at the rate things are going.

Why Have Prices Increased?

There are two major reasons why gold prices have increased. First, demand for gold jewelry has increased over the past couple of years. This demand increase is not


Complete Story »

UBS Tries To Quantify Euro Break-Up

Posted: 06 Sep 2011 06:30 AM PDT

UBS has tried to beat its competitors to the punch today by publishing some estimates quantifying what it believes could be the cost of a euro break-up.
The estimates are rather vague and are not well supported within the text. Having said that, I think that the estimates are not unrealistic. The reason is that the losses projected in the first year are of a magnitude that is similar, in terms of GDP, to the total losses experienced in banking crises in Asia and Latin America during the 1990s. The total multi-year losses in the euro area should ultimately be worse due to the tight integration of euro-area economic and financial institutions.
Here are the highlights of the report:
The economic cost to "weak" countries. The cost of a weak country leaving the euro is significant. Consequences include sovereign default, corporate default, collapse of the banking system and collapse of

Complete Story »

The Swiss Capitulate

Posted: 06 Sep 2011 06:03 AM PDT

By Calafia Beach Pundit:


This morning the Swiss central bank announced that it will no longer tolerate a continued strengthening of the franc vis a vis the euro, placing a floor of 1.20 on the euro-franc exchange rate. The chart above shows the history of this rate, with the euro now having lost almost 30% of its value against the franc since late 2007.


This next chart shows the value of the dollar vis a vis the yen, with the dollar having lost about 40% of its value against the yen since 2007. Like the Swiss franc, the

Complete Story »

140 Years Of Silver Volatility

Posted: 06 Sep 2011 05:41 AM PDT

Bernanke And The Fed: The Risks And Long-Term Reasons To Hold Gold And Silver

Posted: 06 Sep 2011 05:28 AM PDT

By David Urban:

On August 26th Ben Bernanke joined central bankers, policy makers, and academics from around the world for the yearly economic symposium at Jackson Hole, Wyoming. The key topic on everyone's mind was the turmoil in the financial markets as Europe grapples with problems surrounding the PIIGS and the United States deals with high unemployment, congressional gridlock, and stagflation.

The markets are looking for a panacea in the form of additional quantitative easing but the leaders may not be in the mood to offer up the fix they are seeking. In Europe, leaders of both France and Germany spoke of the need for greater and tighter economic integration, insisting on balanced budgets and a strong EU with the mandate to overrule sovereign nations.

In the US the finger pointing continues as Congress seeks a scapegoat for the countries problems. The financial markets see the gridlock as a reason for concern and


Complete Story »

Switzerland to "Buy Foreign Currency in Unlimited Quantities". Gold is Safe Haven, not francs

Posted: 06 Sep 2011 05:24 AM PDT

GLD trading today at a 2 percent discount to gold

Posted: 06 Sep 2011 05:16 AM PDT

Endeavour Silver Options La Presidenta Silver Property in Chile

Posted: 06 Sep 2011 02:50 AM PDT

Endeavour Silver Corp. (TSX: EDR.TO)(NYSE: EXK)(Frankfurt: EJD.F) announces that it has acquired an option to purchase the La Presidenta silver property in the Copiapo region of northern Chile. La Presidenta has a history of small scale silver mining and appears to be prospective for the discovery of bulk tonnage, low grade silver mineralization.

CEF quotes are gone from Yahoo and MSN?

Posted: 06 Sep 2011 02:26 AM PDT

Quotes for CEF have disappeared from both yahoo and MSN. The message board for CEF on yahoo is also MIA. Does anyone know what's going on? I can still get quotes from google and some others but this seems a little strange to me.

Gold ‘Not in a Bubble’ as Central Banks Keep Printing Money, Faber Says

Posted: 06 Sep 2011 01:45 AM PDT

Gold 'Not in a Bubble' as Central Banks Keep Printing Money, Faber Says

By Chanyaporn Chanjaroen - Sep 6, 2011 3:33 AM MT Marc Faber Sees No Bubble in Gold

Gold's rally above $1,900 an ounce shows no signs of a "bubble" as central banks continue to boost money supply that has helped spur bullion to a record, according to investor Marc Faber.

"I don't think that gold is in a bubble," Faber, publisher of the Gloom, Boom and Doom report, said in a phone interview yesterday from Chiang Mai, Thailand. "When you buy gold, it's an insurance against systematic failure and problems in the financial markets."

Gold climbed to a record $1,921.15 an ounce today, underscoring Faber's contention that declining equities and weakening currencies will support demand. Speculative buying had pushed the gold market into a "bubble that is poised to burst," Wells Fargo & Co. analysts led by Dean Junkans said in a report last month.
"I'd buy every month a little bit of gold," Faber said.

Manufacturing slowed in the U.S. Europe and Asia, adding to signs of slowing global growth that may force central banks to step up stimulus measures.

The Federal Reserve completed its second round of so-called quantitative easing in June, whereby the central bank purchased $600 billion of Treasuries from November 2010, after injecting $1.25 trillion in the first round. Goldman Sachs Group Inc. and Citigroup Inc. see the Bank of England restarting bond buying as early as this week as the economic recovery weakens and bank- funding costs increase.

Holdings in exchange-traded products backed by gold rose to a record 2,217 metric tons on Aug. 8, and stood at 2,142.4 tons as of yesterday, Bloomberg data show. Trade volume in Comex gold futures and options rose on Aug. 24 to a record 593,405 contracts, according to Jeremy Hughes, Singapore-based spokesman of CME Group Inc.

Gold is in the 11th year of a bull run, the longest rally since at least 1920 in London, as investors seek to diversify away from equities and some currencies. It climbed to records priced in euros, Swiss franc, British pounds and Canadian dollars today on speculation that Europe's debt crisis will worsen, damping economic growth and driving investors to protect their wealth. Futures in India and China, the world's two largest consumers, touched all-time highs.

Spot gold lost 0.4 percent to $1,893.50 an ounce as of 10:28 a.m. London time.

http://www.bloomberg.com/news/2011-0...e-in-gold.html

Mines and Money Australia 2011

Posted: 06 Sep 2011 01:42 AM PDT

James Turk shall be speaking on the outlook for the price of gold at Mines and Money Australia, which will take place in Sydney from 10 to 12th October 2011. Speakers will also include Doug Casey ...

Swiss Franc Collapses 7% Against the USD, EUR and Gold …

Posted: 06 Sep 2011 01:35 AM PDT

Franc plunges as Swiss SET euro-franc floor

Posted: 06 Sep 2011 01:33 AM PDT

The Swiss franc plunged dramatically versus the euro and other major rivals Tuesday after the Swiss National Bank took the extraordinary step of setting a floor for the euro/Swiss franc exchange rate at 1.20 francs and vowed to buy "unlimited quantities" of euros to defend it.

In a breakneck swing, the euro EURCHF +8.47% traded at 1.2033 francs, up from around 1.12 francs ahead of the announcement, a rise of 8.9%, as traders stampeded out of short euro/Swiss franc bets. Other currencies also rose versus the franc, with the U.S. dollar USDCHF +8.78% jumping 8% to trade at 84.85 centimes. There are 100 centimes in a franc...

Read

The world's last "safe haven" currency is no longer safe

Posted: 06 Sep 2011 01:19 AM PDT

From Sovereign Man:

Holy Red Screen, Batman! If you haven't seen the news, the Swiss National Bank has just announced that it is putting a ceiling on the franc's appreciation against the euro… effectively abandoning its economic sovereignty and putting its future in the hands of woefully corrupt and incompetent bureaucrats.

On the news, the franc fell off a cliff, dropping almost 10% INSTANTLY. Gold priced in Swiss francs jumped from 1,497 to 1,620 per troy ounce, all in about 45 seconds.

Precious metals are now all alone as the only forms of sound money that are truly safe havens.

Just six-weeks ago on July 27, in a letter entitled "Should I buy gold at its all-time high," I wrote:

"Even stronger currencies like the Swiss franc have limits to their appreciation. At some point, the Swiss National Bank will impose capital controls to thwart the rise of its currency. . . [Y]ou'll probably feel like a sucker for not buying gold at $1,600 when you still had the chance."

Since then gold has soared roughly 20%, and as of this morning, the SNB has imposed capital controls to thwart the rise of its currency.

This is just the beginning.

The Swiss government has basically told the world that it will print as much money as it takes, and...

Read full article...

More on currencies:

How to buy silver for 10% off

Why fiat currencies are doomed

This "safe haven" currency just hit a new high

Porter Stansberry: An update to my "End of America" warnings

Posted: 06 Sep 2011 01:16 AM PDT

From Porter Stansberry in the S&A Digest:

On Friday, June 17, 2011, I sent all our subscribers the following warning, via the Digest...

We're about to see a return to crisis-like conditions in the world's credit markets. This will devastate financial stocks. It should also hit commodity prices and commodity-related stocks hard. In today's Digest, I'll show you why I believe this will happen…

The next stage in the ongoing global financial crisis will feature the collapse of both the Spanish and the Italian economies. This should occur within the next six months. Concurrently, I believe the "Chinese miracle" will be unmasked as mostly a fraud powered by a huge increase in bad lending from state-controlled banks.

Ironically, the coming wave of financial trouble will probably force people back into U.S. dollars. Gold will also do well. In the currency markets, I believe the euro will collapse in the second half of this year, as will the Australian dollar, which serves as a proxy for the Chinese economy.

I expect this next "down leg" in the world's markets to be more severe than the crisis of 2008, because the balance sheets of the Western democracies are now less prepared to manage the losses...

... We're entering another period of soaring volatility, increasing interest rate spreads, and falling stock and bond prices. How the authorities deal with these problems will set the stage for what happens next. If they try to paper over these continuing crises again – with new money-printing programs from the Federal Reserve – you can expect a massive inflation and what I call The End of America.

In that Digest, I suggested readers avoid European banks (and specifically UniCredit). I explained how, as the Fed ended its second round of quantitative easing (QE2) from the U.S. credit market, it would cause liquidity to dry up and "make issuing debt more expensive across the credit spectrum." And I explained China's banks were likely to experience a major crisis because of rampant fraud... and I named China Life Insurance (LFC) specifically. It's been roughly 10 weeks since I issued these warnings...

In the chart below you can see the relative performance since late June in the shares of UniCredit (blue), China Life (green), Italian stocks (red), gold (GLD), and U.S. financial stocks (represented by Bank of America, in orange). The world's financial system is down roughly 30%. Gold is up 20%. That should erase any remaining doubts about whether or not the financial crisis that began in 2007 and 2008 is still with us...


The huge fall in European bank stocks during August is only a taste of what these future funding problems are going to look like. In August, Europe's banks were forced to accept losses of at least 21% on their Greek bonds, which were actually trading down about 50%. Royal Bank of Scotland's accountants decided to actually mark their bonds to the market and took a $1.2 billion loss. The stock collapsed as a result – falling like a stone from the mid-$10s to less than $8.

There are two key points to understand. First, most of Europe's banks didn't mark their Greek debt to the actual market price. They only took 21% losses. Thus, France's BNP and Belgium's Dexia "only" lost 534 million euros and 338 million euros, respectively. That's less than RBS lost, even though both BNP and Dexia own far more Greek debt.

Most of Europe's banks took this 21% accounting compromise (Societe Generale, Deutsche Bank, and UniCredit) even though Greece will likely default at some point and even though the bonds are trading for much less than the 21%-loss level implies. That means sooner or later, these banks are going to have to take additional losses on these assets, probably more than double the losses they've already taken. That alone would make some of them insolvent. Likewise, almost all of the Greek banks would be left insolvent by a 50% decline in the value of Greece's government bonds.

The second key point to understand is... a Greek default would almost surely trigger defaults in Ireland's, Portugal's, and Italy's bonds... and a downgrade of France's sovereign debt... as investors would flee these markets as sovereign borrowers attempted to prop up the banking system.

The only solution is a massive bailout of Europe's banks. According to a recent study from consulting firm McKinsey & Co., Europe's banks will require $3.5 trillion to $5 trillion in additional capital in order to meet the new Basel III global banking requirements. And that doesn't take into account the current fragility of Europe's bank financing arrangements. Roughly 50% of European bank assets are financed using funds borrowed from the U.S. money market.

The only large sovereign lender with any real credit remaining is Germany, which for political reasons may be unwilling to bail out the entire European banking sector... and even if it wanted to do so, the magnitude of the capital that's needed would push Germany's sovereign debt total to more than 200% of GDP. It is very unlikely Germany will accept this obligation under any circumstance.

So what will happen? I see two possible outcomes. First, Germany and two or three other northern European countries might decide to simply leave the euro altogether and use a reconstituted German mark as their currency. The remaining euro countries would then recapitalize their banking systems through inflation and a massive devaluation of the euro, which would no longer be a reserve currency.

The second option is more likely – the introduction of so-called "Eurobonds." These would be new obligations of the European Union. They would be offered to other central banks around the world and provide the means to recapitalize Europe's banks by a global inflation.

Whatever the outcome... I would continue to maintain the most conservative financial profile as possible. A clear resolution of these problems remains far off. And the risk of a large-scale move away from the U.S. dollar in anticipation of a European bailout has barely begun to register in the markets.

Finally... very late last night, a confidential source sent me a copy of Goldman Sachs' confidential (and very bearish) 54-page report. It details the problems in Europe's banks and the inevitable slowdown in China's infrastructure spending – the same topics I warned you about in June. Given Goldman's reputation, the whispers about this particular report and my own research on these topics, I was eager to see it. There were a few surprises...

The most striking thing to me was how the report led with this question: "Can the U.S. continue to depreciate the world's base currency?" This is the first time I've seen a major investment bank address the risks to the U.S. dollar's reserve status. These are the same concerns I raised in my End of America videos and newsletters. Unfortunately, while the report does contain several pages of charts and facts about the ongoing problems in the U.S. economy, it never touches on that central question again. Even so... that people on Wall Street are beginning to ask that critical question is interesting and shows this crisis is growing and progressing.

Goldman's report raises that critical question. But it comes about 10 weeks after the Digest I cite above. And... quite frankly... I don't think Goldman's work is half as thorough. Perhaps it's good enough for the world's biggest hedge funds... but my subscribers deserve (and get) better.

Crux Note: It's not too late to protect yourself from the crisis Porter is predicting. To learn exactly how to prepare now, click here.

More from Porter Stansberry:

Porter Stansberry: The crisis is officially here

Three terrible lies you need to know about gold

Porter Stansberry: Why stocks are plummeting now

AUY Gold Call Options anamolies

Posted: 06 Sep 2011 01:16 AM PDT

The Death of Liquidity

Posted: 06 Sep 2011 01:08 AM PDT

I know I have been on a one-track mission recently about the extraordinary development of the COMEX gold commercials miscalculating in establishing their giant short position. I know I have been virtually alone in depicting the resultant commercial short covering as being the prime price driver behind gold's $300 run from $1600 in early August. But government data still suggest that the unprecedented commercial blunder is very much at the core for explaining the volatile price action we are witnessing. Today, I would like to explore what this means for the future, even though I am on record as warning that the correct explanation for something that has occurred can be different from accurately predicting what may happen next.

Silver and Silver Stocks Forming Bullish Cup and Handle Pattern

Posted: 06 Sep 2011 12:45 AM PDT

A cup and handle pattern is a bullish continuation pattern that represents a period of consolidation followed by an eventual breakout, which is the continuation of the previous trend. Typically these patterns last months and not weeks or days. Cup and handle patterns also entail precise price targets. To find the price target, one measures the distance from the top to the bottom of the cup and then adds the distance to the top of the cup. In some cases analysts can use a logarithmic scale though its best to use a arithmetic scale.

Silver’s Liquidity Risk

Posted: 06 Sep 2011 12:41 AM PDT

It's unlikely that any silver stockpile will go without a buyer. As more and more investors place a portion of their tangible assets in gold and silver, the market for metal grows. However, just like in high finance or even in personal finance equations, liquidity risk is a concern that investors should have on the mind.

Panic.

Posted: 06 Sep 2011 12:19 AM PDT

-rumors of Greek Euro exit
-CDS' of everything moving higher
-Libor ticking higher

2008 all over again x 100.

I'm buying the silver dip as the gap was closed. But I am hedging massively with AIG puts.

Timberline Resources to Sell Drilling Subsidiary – Focus on Mining/Development in Montana and Nevada

Posted: 06 Sep 2011 12:07 AM PDT

Our Vulture Bargain #4, Timberline Resources (AMEX:TLR, TSX:TBR.V), has announced a letter of intent to sell its drilling division (MarketWatch link) in a deal valued at roughly $13 million.

Presumably that will allow the company to concentrate on its exploration efforts at Lookout Mountain in South Eureka, Nevada and concentrate on getting the Butte Highlands mine into production early next year without the distraction of having to also run a drilling subsidiary. 

Continued...

From the company press release linked above: "Paul Dircksen, Timberline's President and CEO, commented, "With gold prices exceeding $1,800 per ounce, we believe that the economic potential of our core business is extremely compelling and requires our uncompromised focus. Our advanced exploration at South Eureka entails significant investment as we work to define a major gold deposit, and the sale of TDI will propel us forward in that effort. Furthermore, gold production from the Butte Highlands Joint Venture is expected early next year, rendering cash flow from TDI operations less attractive relative to near-term monetization. We also welcome the opportunity to become a debt-free company. We are very pleased with this agreement and are optimistic that we can successfully close this sale in a timely manner."


Butte Highlands is in Montana near Barrick's Golden Sunlight Mill.  Ore from Butte Highlands will likely be transported to Golden Sunlight or another nearby mill for processing.

The fact that the drilling subsidiary sale clears TLR's $5 million debt on the drilling company to zero is a good thing in our humble opinion.  Frankly, we had been of the opinion that TLR ought to either divest itself of the drilling company or invest enough capital in it for higher growth, so we are glad to see one or the other. 


We reaffirm our longstanding bullish view of TLR following this important news.  

Company CFO Randal Hardy said in a brief telephone conversation that Timberline's board felt that the future of the company lies in its exploration and mining development segments, not the drilling segment going forward.  We have to believe that the company has the correct focus as they proceed in the transition from explorer/developer to explorer/producer. 

See an unrelated story about Golden Sunlight at this link.  Barrick and the State of Montana are teaming up to reclaim an old mine near Yellowstone Park as part of the re-start of Golden Sunlight.  

That is all for now, but there is more to come.

View From the Turret: A Dangerous Game of Chicken

Posted: 06 Sep 2011 12:06 AM PDT

Buckle up for a volatile holiday-shortened trading week…

Across the US, traders are strapping into their turrets after a much-needed holiday weekend.  Elsewhere, traders are already well into another volatile week as international markets continue to respond to bearish economic data points and a faltering global recovery.

Heading into the open, equity futures point to a sharp gap lower on the indices – following through after Friday's 253 point drop on the Dow.  Our friend and colleague Peter Brandt put together an interesting post on The History of Unfilled Gaps in the US Stock Indexes which paints an ominous picture.

A bearish gap could trap bullish traders who have bought into the "double bottom" formation – or the prospect of a quick recovery from the August lows.  This sets up a dangerous game of chicken where traders buy the dips – continuing to expect a rebound – which works every single time until the one instance where markets don't actually recover.

The danger in this situation is that once the dip buyers realize that they are in trouble, bids can dry up quickly and margin calls can kick in.  Portfolio liquidation into a "no bid" environment becomes self-reinforcing and can lead to a violent move lower before value buyers step in to scoop up equities at fire-sale prices.

Of course long-time readers should know that we're not "predicting" this kind of bearish liquidation.  There are a number of different ways that the current scenario could play out.  Instead, our focus is on protecting our capital and trading profitably through a number of different potential scenarios – and using price action to identify opportunistic entry points and risk points for existing positions.

Heading into this week, Mercenary Portfolios are still relatively light in terms of exposure, with a number of new bearish positions set to benefit from the lower prices.

Rather than initiating new trades in a turbulent "gappy" environment, we'll likely be using the action to manage risk points as our profit accumulates.  Below are a few of the areas we're watching carefully as the action unfolds this week.

Consumer Finance Resumes Downtrend

Friday's weak jobs report raised concerns for Capital One Financial (COF).  Not only did the August payroll report come in at a big-fat zero, the previous two months were revised lower as well.

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Capital One has both transaction risk as well as credit risk – which makes it fundamentally vulnerable to a double-dip recession environment.  Consumer confidence has dropped to historically low levels, likely to drag on spending with the holiday spending season just around the corner.

In addition to cutting back spending, consumers are also using any extra capital to beef up savings or pay down debt.  For Capital One, the result is that their quality borrowers are more likely to be decreasing their balances (resulting in lower interest charges), wile the low quality borrowers are now even more likely to default.

After rebounding from the early August lows, COF looks vulnerable once again and Friday's gap lower could not only scare the "dip-buyers" out of new positions, but could also invite fellow short-sellers to add pressure to the stock.

Gold Miners Are Still A Safe Haven

On Friday, gold miners as a group broke to a new high.  The Market Vectors Gold Miners (GDX) cleared a resistance area which had been in place since early 2011, and could turn out to be an important inflection point.

This is a tricky market for breakouts.  With plenty of volatility and uncertainty, there have been a number of breakout patterns that have quickly reversed lower.  So while we have a number of bullish positions in gold mining companies, we're aware of a few different ways the scenario could play out.

The most obvious result would be a sustained rally for gold miners as resistance is cleared and new highs are hit.  With spot gold prices hitting new highs on a near daily basis, it would make sense for the miners to follow suit.  If this happens, we will focus on maintaining our bullish positions – tightening our risk points along the way.  In this case, the key is to leave enough room that a minor pullback doesn't take us out of a longer-term trending position.

On the other hand, if Friday's breakout turns into a reversal, we want to protect our unrealized profits in gold mining names.  So depending on the action this week, we could be very aggressive in tightening our risk points (protecting against a failed breakout) or more loose as we participate in a sustained bullish trend.

As a side note, we have been working behind the scenes on an exciting trend-following project.  Whether trading an actual trend-following system, or using trend-following principles as an overlay to a discretionary trading approach, the concepts should help improve profitability and risk management for a broad assortment of traders.

Stay tuned for more news on this project very soon…

Retail Reset Provides New Entry Points

After breaking down sharply in early August, a number of key retail names have rallied back to key technical pivot points.  From a technical perspective, this is a great risk / reward opportunity.

Setting up short positions as retail names test their breakdown points gives us a narrow risk envelope.

If we enter a short position and the retail stock rallies through resistance, our trade will quickly be stopped out for a minimal loss.  On the other hand, if the resistance point holds and retail names once again head lower, the profit potential is many multiples of the actual capital originally at risk.

In this case, our batting average (win to loss ratio) doesn't have to be tremendously high.  In fact, we could easily realize a net gain where two out of every three short positions winds up losing, but the third trade books enough of a profit to more than cover the unsuccessful trades.

Panera Bread (PNRA) is a good example of this.  The stock broke down in late July / early August on increasing volume.  Since that time, PNRA has rallied back up to the 50 EMA (gold line) which roughly coincides with the former support area from June.

The Mercenary Live Feed shorted PNRA Thursday as the stock moved lower, and our risk envelope is just above the late August highs.  If we are stopped out, our loss will be minimal.  But if PNRA continues lower, we could realize a significant profit on the breakdown.

The futures are very near their extended-weekend lows as we approach the opening bell.  Expect plenty of volatility as traders react and positions are adjusted.  We're giving our positions a little bit more elbow room given the swings, while still looking carefully for points to tighten risk levels and opportunities to pull profits off the table.

Trade 'em well this week!
MM

Goodbye Swiss Franc

Posted: 05 Sep 2011 11:30 PM PDT

According to one of the online newsletters I receive...

"...the Swiss National Bank has just announced that it is putting a ceiling on the franc's appreciation against the euro... effectively abandoning its economic sovereignty and putting its future in the hands of woefully corrupt and incompetent bureaucrats."

In other words, the franc will NOT skyrocket in value beyond a certain point against the euro. The Swiss will print francs and buy crappy sovereign debt to ensure it stays at a certain level in valuation with the euro.

BUY GOLD AND SILVER.

Power slam on metals this morning (9-6-11)

Posted: 05 Sep 2011 10:48 PM PDT

Man! That was another huge drop inside of a few minutes. Gold's basically recovered from it, but silver's lagging.

Price of gold in India over 28,000 rupees

Posted: 05 Sep 2011 10:00 PM PDT

India's gold price is on the rise due to continuing capital flight among domestic investors into safe havens such as gold. The yellow metal exceeded the mark of 28,000 rupees per 10 grams for the ...

Gold price heads to $2,000 on rush to safety

Posted: 05 Sep 2011 09:30 PM PDT

The spot price of gold set a new all time record nominal high of $1,920 per troy ounce in early trading. The long awaited $2,000 per ounce level is now well within reach in a very short timeframe. ...

Employment Number Spooks Markets

Posted: 05 Sep 2011 09:19 PM PDT

Market close as of September 2, 2011

Dow Jones Industrial Average: Closed at 11240 -253.31 after bad news regarding employment, Europe's messes, American bank lawsuits and a long list of other negative USA reports. This bad stuff landed right on the day when traders go flat too down for a holiday weekend, exaggerating the selling. Despite all of that, the chart is in a four week up-trend, the volume was 95% of normal and momentum is still on the upswing. Resistance is 11414 and support it 11,200. If you look at this time last year we saw the beginnings of a strong fall rally that didn't fade until mid-November. We forecast a repeat but this time look out for 9-23-11 when the German parliament votes on bailouts; and the cycle from the last three days of September through the first three days of October. All of this adventure hits within ten days and we say a bigger sell is coming here from -12% to -23% for the Dow during the cycle time mentioned. In the interim, we go long and stay in the game.

S&P 500 Index: Closed at 1173.97 -30.45 with a chart pattern much like the Dow. Volume was a little lower at 80% of normal on rising momentum. The chart trend is up for the past four weeks. However, there is lots of overhead resistance as price is under all the moving averages. Do not forget Wall Street still has a ton of IPOS to get out the door and they are struggling for now. I think the PPT will intervene to help them sell all that stock. Resistance is 1194 on the 20-day average and support is 1150-1165, which is quite strong. I have confidence the stock markets get some artificial lifting and propping along with some made-up media pap and shares will rise 150 to 200 points on this index by the first week of November. One caveat; look out for Europe's problems coming very soon.

S&P 100 Index: Closed at 528.88 -13.10 on a bullish rising chart pattern and momentum. Volume was about 80% of normal, which is not bad for these larger companies on a Friday prior to a holiday weekend. It is difficult to positively forecast this index group for this month when price is on a negative Friday close and under all moving averages. However, if the S&P 500 has a lot of power and the Nsadaq does not fail in the next three weeks, we might see a breakout to 560 against 563 on the 200-day moving average. That is the best I can see for now on this index this fall. Some of the others ought to do better.

Nasdaq 100 Index: Closed at 2167.83 -51.22 on 65% of normal volume (lower) and a small rise in momentum. Price fell under two key supports at 2200 and all the moving averages. New support is 2150 and resistance is 2200. Worse, Hewlett-Packard got a bad report and a reduced Oracle lawsuit award by nearly $1 Billion dollars sure did not help this index. We forecast an internet companies' market crash just like the year 2000. And today, this index dropped in a larger price gap lower that looks scary on the chart. The Nasdaq must somehow recover quickly this month or we are going to see a very bad selling month in all the stock markets, not only in the USA but in the world.

30-Year Bonds: Closed at 140.67 +2.92 as bonds had a price rally breakout on selling stocks. The bonds were trading around 135-137.50 for most of August but had a huge day today on the nearly 3 point rally. Resistance is 141.00 and support is 139.50. Momentum had been peaking and was ready to sell but today's trading action gave the bonds a bigger boost. Also there is rumor of the president offering -2.5% mortgage rate cut to all across the board in his speech next Thursday evening. Maybe so and maybe not but I think this helped this market that was threatened with huge wipe-outs. Should the rumor be true bondholders might retain at least about 75% of their investments. Watch for a stock rally next Tuesday and bonds should slide back to 138.50-139.50 support.

GDXJ Junior Gold Miners And XAU: GDXJ our favorite closed at 38.28 +0.99 rising on bullish gap up on higher volume and rising momentum. The breakout signals better metals and shares prices just ahead and this index should go to 40 and then resist at 42.50 by mid-October. The XAU had a top channel breakout with price above all moving averages on rising momentum. The XAU close was 222.79 +3.50 above all moving averages but the very accurate metal to shares ratio is still flat and did not react. This signal tells me the shares rise will be more gradual taking some time as the metals rise further and faster. It's all bullish for shares but a few extra days might be needed to make the rising move serious.

Gold: Closed at 1882.60 +57.30 after rising smartly on a very good day. We are stalled at 1885 resistance but that should be broken next week after the holiday. Price is far above all moving averages but the next major resistance will be at 1900+ near where we topped out in the third week of August. Support is 1865-1875 and resistance is 1885 followed by 1892.50, 1896.50, 1898, and 1907 for next week. We will be re-doing all the gold support and resistance levels after the next top is established. Momentum was up but has paused and is going sideways. More buying next week and if we can break through the recent high over 1900 we could see some real adventure with gold flying up 100 to 150 more points in the bigger wave three just ahead.

Silver: Closed at 43.29 +1.70 after a major breakthrough of 41.85 that has been stalling silver prices. Momentum is supported but flat. Next week I am expecting a glide through $44-$45 quite easily. Then things get tougher near the 48.50-$51.00 very hard resistance point. Support is now 41.85 (former resistance) and resistance is $44-$45 for Tuesday. Price is above all moving averages and we forecast a minimum of $48.50 by the end of the quarter. Depending upon global politics and central banker games we might even see $59.85 resistance by November 15th near the time all the December gold and silver options near expiration.

US Dollar: Closed at 74.73 +0.23 touching 75.00 briefly today as the Euro sank to 141.83 in messes on Euroland credits and bailouts. Momentum has been flat but has turned up. Price popped up and out of a bear triangle apex. New resistance is 75.50-75.00 and support is 74.50. As the intermediate view of the Euro is negative, the dollar should rise to 76.00 on the 200-day moving average later this month or in October. Our forecast is for 75.00-75.50 for the dollar over the next two trading weeks beginning next Tuesday.

Crude Oil: Closed at 88.75 +0.03 after bottoming out and rising on price and stronger momentum. The cycle time is long for energy and it is running right on cue. Gasoline is over $4.00 and we see oil going to 92.50 resistance on the 200-day average within the next two trading weeks. Price is above the 20-day average but under the more important 50 and 200 day averages. Heating season is coming, we have Gulf of Mexico shutdowns on storm news and energy demands-prices will be rising on new inflation. Crude oil rises to $92.50 resistance by 9-15-11 and $117-120 by mid-November. Annual highs will be posted in later February, 2012 on the cycles.

CRB Index: Closed at 338.06 -2.59 on rising momentum primarily from crude oil, metals and grains. The pattern was selling since an April 2011 sell-off. We are stalled against upper resistance at 350 over four months. Next week begins not only the best annual cycle of several months but also the best quarter of the year. All energy will be higher along with grains, and precious metals. Base metals will rise until stocks begin to stumble and then they will sell also on the fundamentals. Once past 350 hard resistance, we'll get 360 and then 370 as a minimum for this fall. –Trader


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FLASH: China Knows About Gold Price Suppression, and the U.S. Knows China Knows

Posted: 05 Sep 2011 09:08 PM PDT

¤ Yesterday in Gold and Silver

The gold and silver markets were open on the Globex most of Monday...even after Europe was closed for the day.  The Kitco gold trace finally flat-lined at 1:15 p.m. Eastern time when, theoretically, there should have been no one trading at all.

The gold price didn't do much in early Far East trading, but caught a bid about forty-five minutes before the London open.  From that point, gold rose about twenty tucks, just sticking its nose above $1,900 spot at the London a.m. gold fix around 10:30 a.m. British Summer Time.

Then it got sold off as London trading progressed, but finally closed a hair over $1,900 spot long after the Globex trading system should have been closed...because North American was celebrating the Labour Day long weekend and wasn't supposed to be open.  That begs the question of who was doing the trading after the London close at 4:00 p.m. local time...11:00 a.m. in New York.  Volume was pretty decent for a holiday.

I was more than happy to see gold in the plus column during European trading on Monday, as their stock markets got smoked.

Silver got sold off slowly during Far East trading...and the London 'high' came at precisely 9:00 a.m. local time in London.  Then, around 11:30 a.m. in London, someone decided to mark down the silver price about 65 cents going into the London silver fix around noon local time.

That proved to be the low of the day.  The 'New York high' [around $43.10] came at precisely 10:00 a.m. Eastern time.  From there, silver got sold off a bit...and closed a hair under the $43 mark at 1:15 p.m. Eastern.  Volume was very light.

With the markets closed in North America yesterday, there was no HUI, Silver Sentiment Index, or any other report.

Here are a couple of paragraphs from silver analyst Ted Butler's weekly commentary on Saturday.

This week's Commitment of Traders Report (COT) for gold and silver came in roughly as expected, although not perhaps to the extent I was looking for. The total net commercial short position declined in both markets. The commercial net short position in COMEX silver futures was reduced by almost 2,000 contracts during a reporting week that included a sharp $3 interim price sell-off. All three commercial categories bought; the big 4 (JPMorgan) covered 650 shorts, the 5 thru 8 covered 1,000 contracts, while the raptors added around 200 to a net long position now at 2,200 contracts. I thought there would be more commercial buying on such a sharp and artificial sell-off, but this may indicate the speculative longs who were the sellers may be holding stronger than anticipated. The current level of the commercial net short position in silver, although up from levels before the recent price rally, still looks bullish to me.

The concentrated short position of JPMorgan and the other entities in the big 4 still looks manipulative. JPM's still controls 23% of the net open interest (minus spreads) in COMEX alone, while the big 4 control over 43% of the market.  This level of concentration should be alarming in any market, but in silver especially so, since there is little economic reason to have been so short for so long in a market that has risen dramatically amid worldwide demand. A while back, when JPMorgan's silver short position did decline noticeably, it was thought they could continue to cover and even get net long considering the pace of their short covering.  I'm sure JPMorgan would have loved to buy back the entire concentrated short position if that were possible at that time and price. But it appears it will take much higher prices for them to do so, in my opinion. In the meantime, they still appear to be stuck with a short position they'd rather not have.

The main reason that I've publishing a column today is because of the number [and quality] of stories that I've managed to accumulate over the long weekend.  If I don't post them today, I'll have an even bigger number for my Wednesday column...and I wish to avoid that at all costs.  Not only for your benefit, but mine as well.

It will be interesting to see if the shorts, who continue to bleed red ink from every body orifice, are going to continue covering their short positions in gold...and move prices even higher.
Historic event as gold surges while stock markets tumble: James Turk. Mining stocks – On the runway, ready for take-off. CNBC's Bob Pisani and the Gold Bar Silliness

¤ Critical Reads

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California Employment at Record Low 55.4 Percent as Fewer Women Find Jobs

My first two stories of the day are courtesy of reader Scott Pluschau.  The first is a Bloomberg piece from yesterday.

The percentage of working-age Californians with jobs has fallen to a record low, and employment may not return to pre-recession levels until the second half of the decade, according to a research group.

Just 55.4 percent of working-age Californians, defined as those 16 or older, had a job in July, down from 56.2 percent a year earlier and the lowest level since 1976, the Sacramento- based California Budget Project said in a report released late yesterday.

The link is here.

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Postal Service Is Nearing Default as Losses Mount

The United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.

"Our situation is extremely serious," the postmaster general, Patrick R. Donahoe, said in an interview. "If Congress doesn't act, we will default."

Scott's second offering comes from yesterday's edition of The New York Times...and the link is here.

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North Dakota Fights Wall Street's Influence With a State Bank

If its secret isn't oil, what is so unique about the state? North Dakota has one thing that no other state has: its own state-owned bank.

Access to credit is the enabling factor that has fostered both a boom in oil and record profits from agriculture in North Dakota. The Bank of North Dakota does not compete with local banks but partners with them, helping with capital and liquidity requirements. It participates in loans, provides guarantees, and acts as a sort of mini-Fed for the state.

This very interesting story showed up posted at the alternet.org website yesterday...and I thank Roy Stephens for his first of many stories today.  The link is here.

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Deutsche Bank Pessimism: Ackermann Warns of Renewed Financial Crisis

That, at least, was the message offered by Deutsche Bank CEO Josef Ackermann on Monday in comments delivered at a conference in Frankfurt. "We should resign ourselves to the fact that the 'new normality' is characterized by volatility and uncertainty," Ackermann said. "All this reminds one of the autumn of 2008."

The volatility was on full display on Monday as the leading German market index, the DAX, plunged to a two-year low and stocks of European banks, including Ackermann's Deutsche Bank, lost value. The price of gold once again spiked upwards as investors sought security.

In addition, the European Central Bank reported that European banks on Friday parked €151 billion ($213.3 billion) overnight with the ECB, the highest total in more than a year. The increase reflects growing distrust on the financial markets, with banks shunning the higher interest rates they would earn by depositing money with each other.

This short article...Roy Stephens second offering of the day...was posted over at the German website spiegel.de yesterday...and the link is here.

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Markets plunge across Europe

European shares tumbled to their lowest close in more than two weeks overnight amid renewed recession and eurozone debt worries and threats to the banking sector.

Britain's FTSE 100 ended the day 3.6 per cent lower, while Germany's DAX fell 5.3 per cent and France's CAC40 dropped 4.7 per cent.

The STOXX Europe 600 Banks index fell 5.9 per cent and hit a 29-month low. It has lost more than one-third of its value in 2011, and is the worst performing European sector. Deutsche Bank fell 8.9 per cent, extending a decline from Friday, when news of the lawsuit first hit shares in the sector.

Reader Rob Bentley sent me this news item that was posted over at abc.net.au in Australia late yesterday.  It's a very short must read story...and the link is here.

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German endgame for EMU draws ever nearer

You can feel the storm brewing in Germany. Within days of each other, President Christian Wulff accused the European Central Bank of going "far beyond" its mandate and subverting Article 123 of the Lisbon Treaty by shoring up insolvent states, and Bundesbank chief Jens Weidmann said bail-out policies had "completely gutted" the EU law.

Both believe the EU Project has taken a dangerous turn. Fiscal powers are slipping away to a supra-national body beyond sovereign control. "This strikes at the very core of our democracies. Decisions have to be made in parliament in a liberal democracy. That is where legitimacy lies," said Mr. Wulff.

Otmar Issing, the ECB's founding guru, fears that the current course must ultimately provoke the "resistance of the people". Instead of evolving into an authentic union with a "European government controlled by a European Parliament" on democratic principles, it has become deformed halfway house.

This Ambrose Evans-Pritchard offering from yesterday's edition of The Telegraph was sent to me by reader Martin Arnest...and is well worth your time.  The link is here.

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Greek finance minister rejects alarming debt report

On Thursday of last week, Greece's finance minister Evangelos Venizelos rejected a report that suggested the country would likely miss budget targets, saying the body that issued the damning report lacked experience and responsibility.

The Greek finance ministry backpedalled on Thursday after a new budget watchdog released an internal report warning that debt was "out of control" just as officials held critical talks with creditors.

This AFP story was posted over at the france24.com website late last week...and I thank Roy Stephens once again.  The link is here.

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IMF says global economy faces a 'threatening downward spiral'

The International Monetary Fund has called on the US and Europe to abandon fiscal austerity and switch to stimulus measures, warning that the global economy faces a "threatening downward spiral".

"There has been a clear crisis of confidence that has seriously aggravated the situation. Measures need to

CNBC's Bob Pisani and the Gold Bar Silliness

Posted: 05 Sep 2011 09:08 PM PDT

CNBC's Bob Pisani and the Gold Bar Silliness

An interesting article at Zero Hedge today, which has a story about Bob Pisani's visit to the GLD vault.  The thrust of the story is that the Rand Refineries bar with serial number ZJ6752 does not appear in the GLD bar list.  Our database has records from June 20th...and I can confirm that the bar doesn't appear in the last 45 published documents.

We're happy to announce that we found the bar, but just not in the GLD data.  The bar currently belongs to ETF Securities.

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