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• The End Of The Gold Bull As We Know It?
• Greece, Germany And The History Of The Gold Standard
• 12 International Stocks Worth A Look
• Today In Commodities: Is Confidence Returning?
• 3 Ways To Play $2,000 Gold
• Will Tax Break Lift The U.S. Dollar?
• QuantShares Debuts Market Neutral ETFs
• Gold, Deflation and Krugmans Flawed Analysis
• Central banks smashed gold ahead of Swiss devaluation, Davies says
• Midst of Deflationary Collapse or Brink of Inflationary Disaster? 12 Specific Recommendations
• WATCH – Paul Craig Roberts on Gold
• How do you fight the temptation to buy more PMs?
• False Comparison to 2008
• Deadlines Near For Silver Summit
• The Silver Siren: Reversion To Reality
• $2000 Gold is going to be a tough nut
• Randy Wray: Helicopter Ben – How Modern Money Theory Responds to Hyperinflation Hyperventilators
• Gold Clocked, Big Markets Relieved
• Randy Wray: Helicopter Ben –
• Why the big drop this morning 9-7. Anything particular happen?
• Bull Market In Gold Over With Double Top?
• calm the fuck down
• Gold Falls 2% in Minutes in Asian Trade …
• This is proof even Europe's leaders know the euro is doomed
• Forget today's news... This is all you need to know about Greek bailouts now
• The Death of Liquidity
• Marc Faber: No bubble in gold
• "Real" Facts About Paul Krugman's Gold Prices
• Central Banks Smashed Gold Ahead of Swiss Devaluation: Ben Davies
• The death of liquidity: Ted Butler

The End Of The Gold Bull As We Know It? Posted: 07 Sep 2011 06:41 AM PDT By Ananthan Thangavel: Attention on the gold market has reached a fever pitch, with almost every commentator stating their love for the metal's currency and sociopolitical hedging attributes. However, we believe the risk in holding gold has now reached unacceptable levels, and it is now prone to a collapse. Our reversal of recommendation on the gold market has caught many of our long-time readers by surprise, but we believe it is in keeping with our objective of uncovering opportunity, and gauging market sentiment to make informed decisions. At the beginning of 2011, we were outspoken and vocal in our support of precious metals. At the time, silver traded for $25 an ounce and gold traded for around $1325/ounce. Obviously both metals have taken off since then in accordance with our recommendation. However, the precious metals market has now been altered fundamentally, and these assets are no longer hedges, but instruments of pure speculation Complete Story »

Greece, Germany And The History Of The Gold Standard Posted: 07 Sep 2011 06:36 AM PDT Market Outlook In a recent article I explained that purchasing power parity (PPP) imbalances in the context of a fixed exchange rate are at the heart of the current economic and political predicament facing Greeks, Germans and Europeans in general. It might be worthwhile to pause for a moment to reflect on how this situation arose in the first place. The history of the gold standard has much to teach in this regard. Original Sin How did Germany end up with the PPP advantages vis-à-vis its southern neighbors including Greece? The issue of the initial conditions of the various nations upon adoption of the Euro is an extremely complex one about which many volumes have been published. However, for present purposes, I think it will suffice to understand that the various nations had widely differing inflation rates and inflationary propensities at the time of adoption of the Euro. In particular, Complete Story »

12 International Stocks Worth A Look Posted: 07 Sep 2011 06:22 AM PDT By Brian Gorban: With the continued and justified talk of the continual decline of the US dollar as the Federal Reserve looks to print massive amounts of money for at least another two years, I think it's wise to venture abroad and see if there are any opportunities to put some money to work and benefit from the expected rise in foreign currencies. Needless to say, as the European Union fears are even greater than ours in the States and most other markets experiencing significant economic declines, stocks abroad have been hammered and seem to be a great buying opportunity: 1. Telefonica (TEF) doesn't get any help being based in Spain and being associated as one of the PIIGS (Portugal, Ireland, Italy, Greece and Spain) countries in need of a bailout. However, the stock is trading at levels last seen during the mega-crisis of 2008 and there's some true value here when we Complete Story »

Today In Commodities: Is Confidence Returning? Posted: 07 Sep 2011 06:16 AM PDT By Matthew Bradbard: Money is flowing out of safe havens i.e. gold and 30-yr bonds and back to more speculative plays i.e. Crude oil and stocks. Is confidence returning? Crude is higher by almost 4% as of this post but the next test will be if we can trade above previous resistance just above today's highs. We do expect this to happen but we would not rule out a slight retracement first. That being said, continue to buy dips but we suggest trading November with new entries. Same story with heating oil and RBOB, if they take out previous highs look for the momentum to lift prices even higher. Remember a rising tide lifts all boats. Natural gas remained positive but was unable to hold onto the gains from early in the session. Still under $4 we view natty gas as a buy thinking $4.25 followed by $4.50 in the coming weeks. An Complete Story »

3 Ways To Play $2,000 Gold Posted: 07 Sep 2011 06:09 AM PDT By CommodityHQ: By Jared Cummans Amid all of the turmoil on Wall Street, there is one asset class feeding on the downfall of equities - gold. As recent weeks have brought stiff market volatility, gold has broken through a number of historic barriers, including the newly crushed $1,900 per ounce mark. While gold has always been considered a safe haven in times of turmoil, lately, the precious metal has seen heavy inflows (and outflows as well) as stocks sway back and forth, shaking investor confidence. As it seems that we will surely have hard days ahead of us, at least in the short-term, gold prices hitting $2,000 per ounce seems to be a matter of when, not if. While many have their opinions as to whether or not the metal is overvalued or overbought, gold will continue to remain a popular turning point for as long as markets falter. Below, we outline Complete Story »

Will Tax Break Lift The U.S. Dollar? Posted: 07 Sep 2011 05:54 AM PDT By Market Blog: By David Berman Is the U.S. dollar about to get a boost? Some observers are growing more confident that the U.S. government is going to give companies a tax holiday in an effort to repatriate big profits that are now parked overseas and help stimulate the economy. It's done this before, in the 2005 Homeland Investment Act, and the results were mixed: A total of $360 billion came back to U.S. shores over the course of the 12-month tax holiday, but most of the money flowed into the pockets of investors in the form of dividends and share buybacks, rather than into job-creating schemes. Another tax holiday could yield similar results – and expectations are rising that President Barack Obama could introduce such a measure in his much-anticipated speech to Congress on Thursday. However, the amount of money repatriated this time around could be nearly double the previous amount, and Complete Story »

QuantShares Debuts Market Neutral ETFs Posted: 07 Sep 2011 05:38 AM PDT By Michael Johnston: After a slow month of new product launches in August, the first few days of September have already seen a noticeable uptick in activity. Wednesday was the first day of trading for four new exchange-traded funds from QuantShares, a newcomer to the ETF industry who had filed details on the suite of market neutral ETFs earlier in the year. Each of the new ETFs is linked to an equal-weighted index that is both dollar neutral and sector neutral, offering long/short exposure to sub-sets of the broader domestic stock market. Each of the four new ETFs will seek to replicate an index that consists of both long and short positions, with those positions derived based on various quantitative factors. U.S Market Neutral Momentum Fund (MOM) This ETF is linked to the Dow Jones U.S. Thematic Market Neutral Momentum Total Return Index. That benchmark identifies the securities with the highest and lowest Complete Story »

Gold, Deflation and Krugmans Flawed Analysis Posted: 07 Sep 2011 05:07 AM PDT

Central banks smashed gold ahead of Swiss devaluation, Davies says Posted: 07 Sep 2011 05:04 AM PDT

Midst of Deflationary Collapse or Brink of Inflationary Disaster? 12 Specific Recommendations Posted: 07 Sep 2011 04:57 AM PDT Global Economic Analysis

WATCH – Paul Craig Roberts on Gold Posted: 07 Sep 2011 04:36 AM PDT Tweet Wall Street fell for a third straight day on worries that Europe can't take care of its debt dilemma. Many Europeans are trading in their euros for Swiss francs. Now the Swiss National Bank has put a minimum exchange rate of 1.20 francs to the euro. The reason is the present value of the franc is a danger to the financial system. The SNB said it would implement the minimum rate by buying foreign currency in unlimited quantities. Paul Craig Roberts, former Reagan administration official and columnist, tells RT how this could affect the world economy. ~TVR

How do you fight the temptation to buy more PMs? Posted: 07 Sep 2011 04:32 AM PDT Obviously I ask this tongue in cheek, but do you ever find yourself driving by the PM shop thinking "hmmm, one more couldn't hurt." :biggrin: In the back of my mind I can't help but think, "if everything collapses, then I have acted wisely and protected my family. :36_1_11: However, if the economy recovers, then I have thrown good money away." :banghead:

False Comparison to 2008 Posted: 07 Sep 2011 04:27 AM PDT Whenever it suits Team Titanic from the increasingly tense helm, more phony comparisons are trotted out in baseless news stories posing as legitimate analysis. The latest propaganda plank is that the current financial climate, worse by the week, resembles 2008 and therefore bodes badly for the Gold & Silver prices. The implicit inference has no basis. In the final months of that fateful 2008 year, when Lehman Brothers served as the flagship going down in icy waters, writing the epitaph that marked the historic death event for the US banking industry, not yet recognized, the precious metal price fell by a huge amount in a liquidity drain amidst a grand crisis. While the current climate does resemble that fateful cardiac arrest and death event, followed by the coroner being paid off to falsify the death certificate (see the FASB accounting rules change enacted in law April 2009), the differences are so profound as to warrant a better description. The delineation should help investors to realize that the Gold price will zoom on repeated upward jaunts undeterred, the opposite of the controlled demolition in early 2009. That past raid was led by Wall Street assaults on hedge fund clients and gigantic USFed loans well over $10 trillion to buddy bankers. They engineered a fire sale for a global asset grab, a secretive aggressive shopping spree with illicitly obtained funds without USGovt permission. Nowadays three years later, the same central bankers are on the defensive, presiding over a failed franchise system. We see the exact opposite today. SIDETRACK ON FALSE 1980 COMPARISON Sidetrack for a moment in an amble as preamble. Remember back a few years when the Gold bull market was slamming through several barriers. Take for instance just one such barrier, the $1000 barrier. Numerous clients and acquaintances asked the Jackass if the thousand dollar level would mark the end of the bull market in Gold, as in a psychological end of the road. My response was Hell No!! When pressed further my explanation was that the entire system was going to experience a convulsion that would endure a few years, with recognition coming later on, much later on, with debasement of money to become a veritable public sport in acts of desperation, that would culminate in government debt defaults across Europe and extended finally to the USGovt, the wicked Competing Currency Wars waged in the open even as government deficits spiral out of control. The response from dozens of people listening to the harangue in justification for a $1500 then $2000 Gold price was disbelief, raised eyebrows, and openly stated doubt, and open admissions that they simply could not see that happen. They missed each leg up, and will continue to miss other uplegs. In fact, in a few years, we will sell to them at double and triple the current Gold price, and four to six times the current Silver price. Some people dutifully have recited the nonsense spouted by the US financial press and Wall Street maestros that a repeat of 1980 was underway, certain to fall once again for a decade of fizzle. My rebuttal was full of laughter and accusations of actions like human sheep, led away from the highly nutritious trough. Some even admonished me that the USDollar has done well for the nation. Most expected the system to right itself, to rectify its own imbalances. They did not comprehend the exhausted potential for another virtuous asset bubble (USTBond is a tombstone bubble), and did not comprehend the absent US industrial base (shipped to Asia and China). Without legitimate income sources, the USEconomy will sink in quicksand, as the factories would have served as ropes to pull out. The moves in the Gold price past $1500 put to rest such stupid comparisons to 1980. While the Hunt Brothers tried to corner the paper Silver market, the current marquee billboard title is the drainage of the COMEX of metal inventory, the Asian raids on the metal, heightened global investment metal demand, and lost confidence in the monetary system itself. This chapter has been characterized by a run on metal, not a gathering of paper contracts, daring Wall Street to change the rules. May the 1980 comparison rest in peace, yet another distraction, diversion, and lie. CONVINCING GOLD PRICE PERFORMANCE The performance of Gold in the last three years has proven to demonstrate loudly and visibly that the potential price in future years is likely to be more like $2500, then $3000 and higher. The reason is simple. Nothing is being fixed, no remedy even attempted, the debasement of money continues, the ruin of the monetary system spreading like a Texas wildfire, the bailouts making headline news almost every week, and Gold actually being the ONLY, the ONLY good performing asset. The bigger question is no longer whether Gold will repeat the 1980 decline and multi-year fizzle, but nowadays whether climbing aboard the Gold train at the $1800 to $1900 price will offer much upside potential. In other words, is it too late to enter the Gold investment trade? My answer is that if a rise from $1800 to $2500 and then a zoom past $3000 seems attractive, sure, climb on. By the time $2000 is surpassed, the upward moves in the Gold price will be justified by widespread openly discussed debate about whether the Western monetary system and sovereign debt structure is permanently broken. The next hotly discussed topics will be whether almost all efforts to treat the severe ills actually make the problem worse and actually add to the potentially higher Gold price. The next year will see the arrival of more realistic debate over a Gold Standard, the dreaded solution. In my opinion, as publicly stated in a recent article, the panic phase has begun. The American people have begun to sense the broken nature of the system, the suppose curative cream of new debt actually adding to the debt saturation problem, the USGovt deficit as never to be reduced, the grotesque imbalances growing worse, the global disputes turning uglier, the system fracturing before our eyes. The people are awakening to the systemic failure. They are at last showing fear and sensing some doom. They are painfully and openly more aware that the system cannot rectify itself, due to a broken policy apparatus, due to ineffective economic counsel, due to corrupt bank operations, due to unprosecuted fraud, due to an endless housing decline, due to a vanishing Middle Class in America. These are the elements of systemic failure. In doing so, they have not only pushed aside the stupid comparison of the Gold market to 1980, but are embracing the notion that Gold indeed has no upper limit in price, can rise almost forever, as long as no limitations are put on money creation, debt monetization, federal stimulus, and permitted bond fraud. With each new poorly constructed bailout, the potential Gold price rises further! There will be no end to the stream of futile proposed solutions implemented. The Powerz will try everything except the true solution, a Gold Standard. Yet such a standard imposed would dissolve half the US banking system, ignite hyper-price inflation, result in profound shortages, eliminate large tracts of private wealth, and deliver the United States as a nation into the Third World. Finally, forecasts of Gold reaching over $5000 in price are seen as reasonable, and hardly silly. Such high potential makes a lot of sense, as the PIGS sovereign debt crisis spreads to Italy and the USGovt debt hurtles toward a ripe $2 trillion annually. Both European and US deficits and bailout bills will be staggering, coming down the pike. The tax revenues have turned down in recent months. The levitation support by the USFed has been removed to some extent. The USEconomy has hit the skids suddenly and emphatically. All kinds of federal programs will be hastily put in place to address the problem. My stated Panhandle Doctrine will be applied in another round to consumers. My twin Parasite Doctrine will be applied in another round to the financial sector. The Obama Jobs Plan is taking shape, another gutless errant ineffective exercise in stupidity, futility, and misdirection. Prepare for an annual $2 trillion federal deficit, as all engines for austerity and budget cuts will be abandoned in a bold reversal to address an emergency. The Gold price will zoom past $2000 per ounce when it becomes crystal clear that more USGovt stimulus and spending is next, not less. Ironically, watch the $2 trillion budget deficit go hand in hand with the $2000 gold price arrival. The United States will be last to enact austerity. Heck, the Standard & Poors debt downgrade has been relegated to the back pages. Its ratings agency Chairman has been replaced by a Citigroup executive, the bandaid applied. If truth be told, the USGovt has already exceeded the new debt limit in violation. But the story is not deemed newsworthy. When the additional $1 trillion in USGovt deficit for just the October to December quarter is reported on the books, the debt limit might return as a story, especially when the official debt limit must be lifted to $17 or $18 trillion to give it some wiggle room. That wiggle is the patient going through convulsions and cardiac arrest, legs twitching, body gyrating, with the death of debt default more visible than ever before in future years. The patient's eyes will not turn glassy gray, but rather bold red from red ink. The Wall Street controllers are simply buying time, loading up on USGovt Credit Default Swaps and private gold positions. See the Carlyle Group Initial Public Offering. Jim Sinclair revealed back in March 2009 that the private Wall Street executive accounts reside in the Carlyle Group as investments. Conclude that the investment banks are being gutted with a firm USGovt guarantee and backstop, while the private accounts go long long long in Gold, and probably Silver too. DIFFERENCES FROM 2008 Continue the theme of wrong comparisons. Wall Street desperately needs bad thinking, distractions from the best paths, and baseless analysis to be promoted. The Boyz have more work to do. The following outlined points serve as merely a preamble to the profound differences between now and 2008. Deutsche Bank CEO Josef Ackerman shocked the continent this week with his frank comments about the financial system teetering once more toward a breakdown just like in 2008. However, many analysts astute in the art of deception have grabbed the story and run in the wrong direction. He was not saying Gold will suffer a 25% price decline. Ackerman was instead saying that a string of Lehman Brother failures lies directly ahead. Although he did not actually make that conclusion in explicit words, that is what he meant, as insolvent trees stand helpless to the financial winds. Consider the numerous changes in the landscape that have taken place in the last three years. This is an impressive list of changes. Nothing is the same, only the proximity of another extraordinary sequence best described as failure events where the Fiat Team suffers more heart attacks in the Emergency Room and Intensive Care Ward. Both selective New York and London banks have been pushed on gurneys through the ER and IC doorways. Next is the string of 20 European Lehman lookalikes, that actually topple some US banks across the big pond. It will make great theatre, but more like a Greek Tragedy. USGovt debt limit breached again and again, to be pushed out forever three years of 0% rates, a skein of QE initiatives for over a full year a ripe $4.7 trillion in rescues, bailouts, stimulus, all failed to right the ship the USFed openly admitting to have no more available tools, a spent arsenal central banks joining the Global QE, showing desperation (Swiss, Japanese) open disputes and revolt between Euro Central Bank and German Bundesbank consolidation of Wall Street banks turns sour, with poster boy Bank of America insolvent big US bank stumbling around, the banks responding to lawsuits Bank of America seeks cash infusions to stave off bank failure Royal Bank of Scotland serves as London poster boy of bank failure Bank of New York Mellon charges fees for bank deposits Western Economy not responding to stimulus, entering recession again budget austerity arrives in force, with attempts to reduce spending advent of sovereign bond busts turned viral after Dubai in November 2009 the Southern Europe sovereign debt crisis spread from Greece to Italy and Spain the spotlight of crisis shines on France, a PIGS lookalike distrust among banks, seen in absence of inter-bank lending Credit Default Swap contracts openly cited, no longer a hidden domain USTreasury long-term bond yields at 2%, not 4% widespread stock market declines usher in panic housing decline turned chronic, causing despair among the people monstrous climb in bank owned homes taken in foreclosure, the Shadow Inventory the MERS title database discredited in court, having zero legal standing hidden rise in strategic home mortgage defaults, as people demand proof of title active avoidance of meaningful home loan balance reductions USGovt files lawsuit against 17 big US banks for bond fraud restitution a hefty $90 billion frozen (stolen) from Libyan Funds a hefty $60 billion sequestered from Egyptian Funds the entire North Africa & Middle East in turmoil the fizzle of the Tax on Air we breathe, as the $trillion fraud Carbon Tax fades the USGovt political gridlock and stalemate prevents progress Too Big to Fail policy toward big US banks becomes a challenged mantra US politicians openly mocked for their empty battle cries for job creation Obama's biggest accomplishment the Health Care plan, a cripple to small business new Gold exchanges open for trade in competition the COMEX being drained of its Gold & Silver inventory abusive diversion of GLD & SLV holdings during backdoor removal of inventory THE ONLY SIMILARITY TO 2008 IS BROKEN CONDITION AGAIN !!! GOLD PREPARES FOR ASSAULT ON $2000 Put aside the Gold correction news. That is today's news, soon to become yesterday's news. It is merely a healthy consolidation, compressing the ground so that it supports more weight and higher prices. The Powerz said in May that Gold was a dead trade, only three months before yet new highs were established. Tomorrow's news will center on USGovt stimulus, heading off a recession, the transition back to bigger deficit spending, the better understood Global QE, and the inability for the USEconomy to find its footing and generate anything resembling growth. Recall that a 0% economic stall in official calculations represents a MINUS 5% RECESSION, since the lie on inflation adjustment is at least 5% conservatively. The most accepted facts in the financial sector going into the autumn months are: a permanent 0% rate providing unending fuel for the Gold bull market economic recession accepted as the next immediate crisis an exhausted USFed without tools, credibility, or spirit a USGovt debt limit always at the doorstep political strangle and useless fiscal policy debt applied as solution to a system saturated in debt an insolvent system unable to respond to amplified liquidity Western banking system ready for 20 Lehman episodes the ruin of money accelerating among all major currencies the USTreasury Bond bubble almost run its course panic setting in across the society, marked by worry, anger, and despair lost trust of public officials, whose talk about jobs and housing is empty giving up on US housing for a recovery ever the powerful grip of hyper-inflationary recession an imminent reality decline in Oil price as signal of the deep recession and lost demand rise in Gold price as signal of inflation and systemic ruin of money Gold seen as the only asset without debt risk, the only bonafide safe haven a divergence between empty COMEX price and premium paid for physical buyers. It helps to take the big picture approach and to ignore the narrow immediate viewpoint actively promoted by the US financial press. They never liked or respected Gold over the entire 2000 decade, despite its 300% gains. They will not like or respect Gold in the next few years when it doubles again. They will be scratching both heads when its price surpasses the $2000 mark, the days of ambushes in May and August long forgotten. The recent breakout occurred with heavy volume, a confirmation signal. More consolidation is needed before an assault on the $2000 level is to be achieved. The certainties are of more ruin of money, continued endless bailouts, and much more stimulus, even misdirected initiatives with wasted money. The benefits will be spurious and vaporous. A healthy bull market will retest the highs. Even if the highs are not overcome, the bull is still alive and well, actually healthy. The consolidation is always doubted and misunderstood, as nothing has changed in this respect in the ten years of the bull run. The Brown Bottom in 2001 was established when the compromised (not mental midget) Gordon Brown sold the British gold bullion in the central bank. The fuller story was that the sale facilitated a secret bailout of Deutsche Bank, which was huge short in gold bullion. That story will be told after D-Bank goes belly up in the next round of bank failures. The Gold top is not yet known, as each round of ruinous monetary and debt creation enables yet a higher potential limit. Some clueless analysts out there who pretend to understand the gold market actually proclaimed a Head & Shoulders bearish reversal pattern in progress in late August. How incredibly clueless, and totally ignorant of the fractured fundamentals! Their following will vanish surely. Instead, the $1900 breakout was revisited and retested. The current consolidation will permit an all-out assault on the $2000 level this autumn, complete with severe psychological damage. What a pleasure to see that the May ambush of Gold is long forgotten, the effect overcome with the passage of time and the pathogenesis of the financial crisis continuing its course. THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS. From subscribers and readers: At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue. "The best money I spend. Your service is the biggest bang for the buck."   (DaveJ in Michigan) "As the nation screams down the mountain out of control into the abyss, it is good to have a guide. Jim Willie helps to understand what is happening and more important, why. With that information, you can make the right decisions to protect yourself from the current apocalyptic catastrophe. Forget the MSM propaganda. Here is offered good in-depth actionable reports that are the most insightful and valuable."   (AlanS in New Mexico) "Your work is by far the most comprehensive, informative, and accurate of all, no question. I cannot overstate how much I have learned from your work. It must be a conscious effort on your part to teach people. Please don't give up on that commitment. Your article on the Petro-Dollar standard is a turning point for any investor or geo-political power observer."    (CurtB in Kansas) "When I initially read your writings, they provoked a wide range of emotions in me from fear and anger to outright laughter. Initially some of your predictions ranged from the ridiculous to impossible. Yet time and again, over the past five years, I have watched with incredulity as they came true. Your analysis contains cogent analysis that benefits from a solid network of private contacts coupled with your scouring of the internet for information."   (PaulM in Missouri) home:  Golden Jackass website subscribe:  Hat Trick Letter Jim Willie CB, editor of the "HAT TRICK LETTER" Use the above link to subscribe to the paid research reports, which include coverage of critically important factors at work during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy. Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at  www.GoldenJackass.com. For personal questions about subscriptions, contact him at  JimWillieCB@aol.com

Deadlines Near For Silver Summit Posted: 07 Sep 2011 04:04 AM PDT Time is running out to register for Silver Summit 2011 and take advantage of the special conference rates at the Davenport Hotel. You must contact the hotel directly at 1.800.899.1482 to reserve your room and request the Silver Summit special rate.

The Silver Siren: Reversion To Reality Posted: 07 Sep 2011 03:57 AM PDT According to the World Gold Council – the overall level of global mine production is relatively stable. Supply has averaged approximately 2,497 tonnes per year over the last several years. 2500 tonnes is equal to 80.4 million troy ozs.

$2000 Gold is going to be a tough nut Posted: 07 Sep 2011 02:48 AM PDT Anybody else get a bit overconfident that Gold would breeze past $2000 an oz?~:flute: I'll admit I was all caught in the mosh and figured we were gold and would never stop. Reality Sucks!!!~:cry_smile::bawling: :biggrin:

Randy Wray: Helicopter Ben – How Modern Money Theory Responds to Hyperinflation Hyperventilators Posted: 07 Sep 2011 02:39 AM PDT L. Randall Wray is a Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College. Cross posted from EconoMonitor In the first part of this series on hyperinflation I addressed the critic's view that if Modern Monetary Theory were adopted, this would inevitably lead to hyperinflation. I argued that this is obviously false—MMT describes how any sovereign government that issues its own currency spends. They've all done it for the past "4000 years at least" as Keynes put it. All modern sovereign governments spend by "keystrokes"—making electronic entries onto balance sheets—what most critics somewhat misleadingly call "printing money". There is no other way to spend a sovereign currency into existence. Only the sovereign government can create it. If you try to create US currency in your basement, you go to jail. In the second part, I argued that hyperinflation is a rare occurrence. Obviously, if "keystrokes" inevitably lead to hyperinflation, then hyperinflation ought to be a common feature of just about all economies for the past 4000 years. Instead, we find that experience with hyperinflation is quite limited, and seems to result from very specific circumstances such as unwillingness or inability to impose and collect taxes, with civil war, or with huge external debts denominated in a foreign currency. And while goldbugs and others think that tying a currency to gold (or to a foreign currency) is a sure-fire way to avoid inflation, what we actually observe in the real world is that such systems are inherently unstable and rarely last long before they crash—often with an exchange rate crisis and high or hyper-inflation. In this final part of the series I will address the belief that the US (and other countries with large budget deficits in their own floating rate currency) faces hyperinflation. Many fear that "Helicopter Ben" (Chairman Bernanke) has pumped so much "money" into the economy that high inflation, if not hyperinflation, will be the inevitable result. This is one of the reasons for the run into gold—supposedly an inflation hedge. In reality, there is no surer bet than the wager that the US will not experience significant inflation for many years to come. Let us first deal with the helicopter story. In the aftermath of the financial collapse of 2008, the US government (Fed plus Treasury) spent, lent, or guaranteed to the sum of $29 trillion to save Wall Street. (That, in itself, is the story of the century; but it will have to wait for another day.) What concerns our hyperinflationary hyperventilators is the record increase of bank reserves—created as the Fed lent reserves, purchased toxic waste assets, and bought Treasuries from banks. The Fed makes purchases and lends by crediting banks with reserves (the Fed's liability) in exchange for an asset (either the bank's IOU, or the asset sold by the bank to the Fed). Most of this occurred during QE1 and QE2, undertaken in the Fed's misguided belief that it could pursue a "quantity target" (increasing reserves) rather than simply a "price target" (low interest rate) to stimulate the economy. (That too is an amazing story of self-deception, to be told another day.) It didn't work. Now QE3 seems inevitable, and it will not work, either. But in any case, the banks have got a couple of trillion dollars of reserves that they do not need. The hyperventilators scream hyperinflation! As soon as banks start to lend out those reserves, borrowers will pump up the economy beyond full employment, causing inflation. Worse, banks can lend a multiple of the reserves (the so-called deposit multiplier)—so rather than lending a measly $2 trillion, they might lend $20 trillion or more. That would add trillions to our GDP of about $14 trillion, obviously way beyond the capacity to actually produce goods and services. And all that comes on top of the Federal government's record budget deficits—and its borrowing. So a debt-fueled spending bubble will make us the next Zimbabwe or Weimar. Here's what is wrong with the analysis. First, it misunderstands the relation between bank reserves and lending. Second, it misunderstands the economic situation. Banks do not lend reserves. Indeed, they cannot—there is no balance sheet operation that allows banks to lend reserves to anyone except to another bank that has an account at the Fed. The reason is quite simple: reserves are an entry on the balance sheet of the Fed. When a bank lends reserves, the Fed debits that bank's account and credits another bank's account. You and I do not have accounts at the Fed. No bank can lend reserves to us. Period. What do banks actually lend? Their own IOUs. Let us say that you are credit worthy (maybe a stretch, given the state of the economy—perhaps like many Americans you've lost your job and are delinquent in your house payments). You go to your bank and ask for a loan—for a car, a boat, a house, a TV. You provide your IOU to the bank (promising to make payments) and the bank provides you with a check (its IOU) that you hand over to the seller. The seller deposits the check and gets a credit to a demand deposit. (If it is a different bank, there is a clearing of accounts using reserves—we'll get back to that.) In other words, banks make loans by crediting demand deposits—which are the IOUs of banks. As we MMTers say "loans make deposits". (When you repay a loan, the deposits are debited, or "destroyed". You write a check, the bank debits your demand deposit and your IOU to the bank is simultaneously debited. The process is the reverse of bank lending.) So to be clear: banks create demand deposits when they make loans; they do not lend reserves. Now, what about check clearing? When a bank gets a check from another bank, it credits a demand deposit and sends the check to the Fed for clearing; the Fed credits that bank's reserves and debits the reserves of the bank on which the check was written. The reserves "move" from one bank to another. Again, no reserves have escaped into the economy—they are all safely locked up at the Fed. They cannot get out except through ATM machines, in the form of cash. When you make a withdrawal of cash from your demand deposit, your bank debits your account and the Fed debits the bank's reserves. Of course, you could just have well spent using a demand deposit—you took out the cash for convenience (perhaps to finance illegal purchases?). The only other way that reserves disappear is when the banks buy Treasuries from the Fed or from the Treasury—they essentially "pay for" Treasuries using reserves. That is the end of the story of reserves. Except for cash withdrawals or purchases of Treasuries, they stay locked up at the Fed. What about Helicopter Ben? When the Fed bought all that junk as well as Treasuries from banks, Ben had the Fed credit their reserves. The Fed also changed its practice and began to pay interest on reserves—25 basis points. So effectively reserves became indistinguishable from Treasuries—they are government IOUs that pay interest. Banks can choose to hold a Treasury that pays interest, or reserves that pay interest—it is a portfolio choice. One has a maturity (maybe as short as 30 days), so it is like a time deposit, and the other has zero maturity so it is like a checkable deposit. But since the market for Treasuries is highly developed and liquid, banks have no problem moving from their "time deposits" (Treasuries) to their "demand deposits" (reserves). (No substantial penalty for early "withdrawal"!) The main case for hyperinflation rests on the misguided belief that banks are for some reason more willing to pump up lending when they hold "demand deposits" rather than "time deposits". Clearly they do not lend either one. They use reserves ("demand deposits") for clearing with other banks, and for ATM withdrawals. But Treasuries ("time deposits") serve just as well—banks can always borrow reserves from other banks or from the Fed, using Treasuries as collateral (and they've got other assets that also serve as collateral except in a run to liquidity). Indeed, banks do not need either reserves or Treasuries in order to lend. Recall they lend their own IOUs. If they then find they need reserves for clearing (or, later, to meet required reserve ratios), they borrow them from other banks (fed funds market) or from the Fed (discount window), or they sell assets to obtain them. Turning to the state of the economy, except for the final stages of the speculative boom in commodities (that will surely end soon) there are no significant inflation pressures. Fourteen million people are looking for jobs. Even the most rosy projections see high unemployment for years. As Eric Tymoigne has demonstrated, at the current pace of "recovery" we will not get back to the employment levels of January 2008 before 2017—and meanwhile the potential labor force will have added millions of high school and college graduates as well as immigrants. (http://neweconomicperspectives.blogspot.com/2011/09/after-great-recession-bleaker.html) And the US is in relatively good shape—compared with Euroland and Japan. Further, all the recent evidence for the US shows a "double-dip" is underway. I expect resumption of the financial crisis any day (the lawsuits against the biggest banksters will help hasten that). Even the Chinese economy is slowing—which could increase their efforts to produce competitive exports. Just where are all those borrowers who are willing and able to borrow the $2 trillion or $20 trillion that hyperventilators believe banks want to lend? The US private sector (firms and households) have instead ramped up their net savings—they are not borrowing, they are not even spending their diminished income. They are scared. They are (rationally) tightening belts, paying down debt, and accumulating claims on government and banks. In short, the prospects for inflation have not been smaller since 1930.

Gold Clocked, Big Markets Relieved Posted: 07 Sep 2011 02:37 AM PDT SOUTH TEXAS -- As we prepare to make our way back to our Houston-area HQ, we thought we would share a few of the charts we are focused on during this pretty uncertain period.  We won't go on and on about them, but we will give the gist of what has our attention with them this morning. First up, the Big Markets, represented below by the S&P 500.   (S&P 500, 3-year weekly. If any of the images are too small click on them for a larger version.)  Continued… So far it looks to us that despite all the worry, confusion and angst in the world today the S&P 500 has yet to cut a new low since the low three and four weeks prior.  Darn if it doesn't look like the S&P is doing an "echo" to what it did last summer.  Notice, please, that even though momentum on this chart is decidedly negative, that the lows being made are actually rising.  Our view is that if the world was about to plunge off the rails again, we would likely have already seen new, lower lows on this giant-cap index.  Perhaps Dr. Bernanke's making it unattractive to hold bonds for the next two years has helped to put some support under equities? Next up, the AMEX Gold Bugs Index attempted breakout out of a wide consolidation since about December may have been given a body blow by this morning's smash-down of gold.     (HUI, 1-year daily.) The only point we wish to make this morning is that the big-cap mining stocks don't really need gold to be $1,900 the ounce to have a pretty good time.  Our view is that they are likely to be very profitable and throw off strong to enormous cash flow at any gold price above about $1,500 the ounce.  Another way of saying that is if the large cap miners cannot be very, very profitable at $1,500 the ounce, they would have to be sabotaging their business.  We believe that up to now there has been a general disbelief among portfolio managers and large funds that the gold price could be sustained at "high levels."  Thus, mining shares have lagged the gold price.  We believe that we are about to enter a period of convergence, where higher, sustained gold prices and higher cash flows/profits do the money manager convincing. It wouldn't be all that surprising to see one false breakout before the "real deal," kind of like we saw in November of 2009.  Let's hope we don't have to wait nine months for the "real deal" breakout to surface as we did then.  We rather doubt we will be waiting that long for it.   We'll see on that one too.  Finally, as we get back on the road to the ranch and our HQ near Houston, we would just like to remind everyone that this has been the longest period without a significant correction for gold (on a weekly close basis) since the Great Gold Bull began.  Would it be all that surprising to see a period where a negative bias will be 'profitable' for a short period just ahead?     (Gold LT bias chart here please.)   Throughout this entire gold bull move the periods of time that a bearish bias was profitable have been brief.  They are loosely represented by the pink zones on the chart above.  The clear message of the chart above is that a bullish bias has been much more likely to be profitable than the opposite since about 2001.  Is that about to change and for a long period of time?  We are very skeptical that such a change is in the offing.  How about you?      We will leave it there, except to say that in each case where a negative bias worked in the past it was ephemeral and a little bit like running a rattlesnake farm.  Sooner or later one is going to get snake bit running a snake farm.  Sooner or later one is going to get hurt by betting on the short side of gold.  The chart above ... and we think the odds ... still favor a long bias for the most popular precious metal.   Of course the obvious other conclusion of that chart above is that up to now, it sure has paid, and paid handsomely to buy the heck out of the very harsh dips for gold. If we do get a decent correction going here in September/October we can bet there will be legions of people trying to do just that.    That is all for now but there is more to come.

Randy Wray: Helicopter Ben – Posted: 07 Sep 2011 02:33 AM PDT L. Randall Wray is a Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College. Cross posted from EconoMonitor In the first part of this series on hyperinflation I addressed the critic's view that if Modern Monetary Theory were adopted, this would inevitably lead to hyperinflation. I argued that this is obviously false—MMT describes how any sovereign government that issues its own currency spends. They've all done it for the past "4000 years at least" as Keynes put it. All modern sovereign governments spend by "keystrokes"—making electronic entries onto balance sheets—what most critics somewhat misleadingly call "printing money". There is no other way to spend a sovereign currency into existence. Only the sovereign government can create it. If you try to create US currency in your basement, you go to jail. In the second part, I argued that hyperinflation is a rare occurrence. Obviously, if "keystrokes" inevitably lead to hyperinflation, then hyperinflation ought to be a common feature of just about all economies for the past 4000 years. Instead, we find that experience with hyperinflation is quite limited, and seems to result from very specific circumstances such as unwillingness or inability to impose and collect taxes, with civil war, or with huge external debts denominated in a foreign currency. And while goldbugs and others think that tying a currency to gold (or to a foreign currency) is a sure-fire way to avoid inflation, what we actually observe in the real world is that such systems are inherently unstable and rarely last long before they crash—often with an exchange rate crisis and high or hyper-inflation. In this final part of the series I will address the belief that the US (and other countries with large budget deficits in their own floating rate currency) faces hyperinflation. Many fear that "Helicopter Ben" (Chairman Bernanke) has pumped so much "money" into the economy that high inflation, if not hyperinflation, will be the inevitable result. This is one of the reasons for the run into gold—supposedly an inflation hedge. In reality, there is no surer bet than the wager that the US will not experience significant inflation for many years to come. Let us first deal with the helicopter story. In the aftermath of the financial collapse of 2008, the US government (Fed plus Treasury) spent, lent, or guaranteed to the sum of $29 trillion to save Wall Street. (That, in itself, is the story of the century; but it will have to wait for another day.) What concerns our hyperinflationary hyperventilators is the record increase of bank reserves—created as the Fed lent reserves, purchased toxic waste assets, and bought Treasuries from banks. The Fed makes purchases and lends by crediting banks with reserves (the Fed's liability) in exchange for an asset (either the bank's IOU, or the asset sold by the bank to the Fed). Most of this occurred during QE1 and QE2, undertaken in the Fed's misguided belief that it could pursue a "quantity target" (increasing reserves) rather than simply a "price target" (low interest rate) to stimulate the economy. (That too is an amazing story of self-deception, to be told another day.) It didn't work. Now QE3 seems inevitable, and it will not work, either. But in any case, the banks have got a couple of trillion dollars of reserves that they do not need. The hyperventilators scream hyperinflation! As soon as banks start to lend out those reserves, borrowers will pump up the economy beyond full employment, causing inflation. Worse, banks can lend a multiple of the reserves (the so-called deposit multiplier)—so rather than lending a measly $2 trillion, they might lend $20 trillion or more. That would add trillions to our GDP of about $14 trillion, obviously way beyond the capacity to actually produce goods and services. And all that comes on top of the Federal government's record budget deficits—and its borrowing. So a debt-fueled spending bubble will make us the next Zimbabwe or Weimar. Here's what is wrong with the analysis. First, it misunderstands the relation between bank reserves and lending. Second, it misunderstands the economic situation. Banks do not lend reserves. Indeed, they cannot—there is no balance sheet operation that allows banks to lend reserves to anyone except to another bank that has an account at the Fed. The reason is quite simple: reserves are an entry on the balance sheet of the Fed. When a bank lends reserves, the Fed debits that bank's account and credits another bank's account. You and I do not have accounts at the Fed. No bank can lend reserves to us. Period. What do banks actually lend? Their own IOUs. Let us say that you are credit worthy (maybe a stretch, given the state of the economy—perhaps like many Americans you've lost your job and are delinquent in your house payments). You go to your bank and ask for a loan—for a car, a boat, a house, a TV. You provide your IOU to the bank (promising to make payments) and the bank provides you with a check (its IOU) that you hand over to the seller. The seller deposits the check and gets a credit to a demand deposit. (If it is a different bank, there is a clearing of accounts using reserves—we'll get back to that.) In other words, banks make loans by crediting demand deposits—which are the IOUs of banks. As we MMTers say "loans make deposits". (When you repay a loan, the deposits are debited, or "destroyed". You write a check, the bank debits your demand deposit and your IOU to the bank is simultaneously debited. The process is the reverse of bank lending.) So to be clear: banks create demand deposits when they make loans; they do not lend reserves. Now, what about check clearing? When a bank gets a check from another bank, it credits a demand deposit and sends the check to the Fed for clearing; the Fed credits that bank's reserves and debits the reserves of the bank on which the check was written. The reserves "move" from one bank to another. Again, no reserves have escaped into the economy—they are all safely locked up at the Fed. They cannot get out except through ATM machines, in the form of cash. When you make a withdrawal of cash from your demand deposit, your bank debits your account and the Fed debits the bank's reserves. Of course, you could just have well spent using a demand deposit—you took out the cash for convenience (perhaps to finance illegal purchases?). The only other way that reserves disappear is when the banks buy Treasuries from the Fed or from the Treasury—they essentially "pay for" Treasuries using reserves. That is the end of the story of reserves. Except for cash withdrawals or purchases of Treasuries, they stay locked up at the Fed. What about Helicopter Ben? When the Fed bought all that junk as well as Treasuries from banks, Ben had the Fed credit their reserves. The Fed also changed its practice and began to pay interest on reserves—25 basis points. So effectively reserves became indistinguishable from Treasuries—they are government IOUs that pay interest. Banks can choose to hold a Treasury that pays interest, or reserves that pay interest—it is a portfolio choice. One has a maturity (maybe as short as 30 days), so it is like a time deposit, and the other has zero maturity so it is like a checkable deposit. But since the market for Treasuries is highly developed and liquid, banks have no problem moving from their "time deposits" (Treasuries) to their "demand deposits" (reserves). (No substantial penalty for early "withdrawal"!) The main case for hyperinflation rests on the misguided belief that banks are for some reason more willing to pump up lending when they hold "demand deposits" rather than "time deposits". Clearly they do not lend either one. They use reserves ("demand deposits") for clearing with other banks, and for ATM withdrawals. But Treasuries ("time deposits") serve just as well—banks can always borrow reserves from other banks or from the Fed, using Treasuries as collateral (and they've got other assets that also serve as collateral except in a run to liquidity). Indeed, banks do not need either reserves or Treasuries in order to lend. Recall they lend their own IOUs. If they then find they need reserves for clearing (or, later, to meet required reserve ratios), they borrow them from other banks (fed funds market) or from the Fed (discount window), or they sell assets to obtain them. Turning to the state of the economy, except for the final stages of the speculative boom in commodities (that will surely end soon) there are no significant inflation pressures. Fourteen million people are looking for jobs. Even the most rosy projections see high unemployment for years. As Eric Tymoigne has demonstrated, at the current pace of "recovery" we will not get back to the employment levels of January 2008 before 2017—and meanwhile the potential labor force will have added millions of high school and college graduates as well as immigrants. (http://neweconomicperspectives.blogspot.com/2011/09/after-great-recession-bleaker.html) And the US is in relatively good shape—compared with Euroland and Japan. Further, all the recent evidence for the US shows a "double-dip" is underway. I expect resumption of the financial crisis any day (the lawsuits against the biggest banksters will help hasten that). Even the Chinese economy is slowing—which could increase their efforts to produce competitive exports. Just where are all those borrowers who are willing and able to borrow the $2 trillion or $20 trillion that hyperventilators believe banks want to lend? The US private sector (firms and households) have instead ramped up their net savings—they are not borrowing, they are not even spending their diminished income. They are scared. They are (rationally) tightening belts, paying down debt, and accumulating claims on government and banks. In short, the prospects for inflation have not been smaller since 1930.

Why the big drop this morning 9-7. Anything particular happen? Posted: 07 Sep 2011 02:31 AM PDT Just wondering.

Bull Market In Gold Over With Double Top? Posted: 07 Sep 2011 01:55 AM PDT David Banister- www.MarketTrendForecast.com A few weeks ago I penned a public article and private forecast for my subscribers calling for a major correction in Gold being due. 72 hours after my forecast, Gold had dropped a stunning $208 per ounce in 3 days catching most by surprise. Why did I forecast a top in Gold then? Why did Gold rally back to new highs recently? Is the Gold Bull Market now over? Let's see if I can answer those questions with some level of logic below. I had forecasted a major correction because Gold has had a run of 34 Fibonacci months from October 2008 to August of 2011 from $681 to $1910 per ounce spot price in US dollars. That type of pattern was formed with a clear 5 wave move, with obvious corrections along the way. The reason I was confident of a major correction was due to the confluences of the 34 months of time, the price relations to prior rallies and corrections, and the Fibonacci sequences coupled with the sentiment and cover stories on Gold in major publications. Gold should have entered into a multi-month correction that will consolidate that 34 month move, and the first shot across the bow was the $208 drop in 3 days. Interestingly, that $208 drop over 3 days corrected 50% of the 8 week move from $1480 to $1910. As we can see markets move very very fast these days and can whipsaw even the best of traders. I told my subscribers to cover their short bets at $1724 spot, and since then we rallied to $1920 this week before topping again. The reason Gold rallied back and touched the old highs and then some was due to the German Court pending decision regarding the constitutionality of backing the Eurozone countries with bailout funds. Today we had a positive decision by the court denying claims that the bailouts were unconstitutional. Had the German Court ruled the other way, we would have seen Gold spike to $2000 and the SP 500 and European Bourses tank hard. So if you were getting long Gold on this recent rally, you were taking on a lot of short term headline risk and I told my subscribers it was best to stand aside until we got the ruling. Now that the ruling came out, Gold has topped at 1920 in what typically traders would call a "Double Top" pattern, but it's more involved than that. In the work I do, we call it an "Irregular correction " pattern, where the retracement of the $208 decline runs all the way back up and past where the decline began at $1910. These are very rare patterns and again, I believe exacerbated by the Eurozone issues as they hinged short term on the German decision. What we should see now is what I call a "C WAVE" to the downside, with targets typically at $1620 relative to the rally from $681 to $1910 over 34 months. A drop of $290 is only 15% from the highs and would fill in gaps in the Gold chart. Will Gold drop that low? The fundamentals for Gold are screamingly bullish, but the entire world knows that and it may be priced in for a while. Gold should consolidate those topping highs for a while to let the fundamentals catch up the price action in Gold which ran ahead of them and then some. The Gold bull market should run for 13 Fibonacci years, and I have been bullish since November 2001. I understand the fundamentals are very strong for Gold, so please don't miss-read my comments ore forecast. I use crowd behavior and psychology to help pinpoint major tops and bottoms, and right now we should have some more work to the downside to correct sentiment in Gold and then allow for the base building period before the next leg up towards the highs in 2014. Over at my TMTF service, we called the top in Gold and shorted it and covered at $1724. We also recently forecasted the deep drop in the SP 500 from 1231 highs and warned our subscribers in advance. My methods use contrarian signals and behavioral patterns to warn of pivot highs and lows in advance. Consider checking us out at www.MarketTrendForecast.com and take advantage of a 33% discount or sign up for our occasional free updates.

calm the fuck down Posted: 07 Sep 2011 01:43 AM PDT If it breaks this trend then we are going lower, I just bought the trend line bounce. Fuck. RELAX. Amazing how short peoples memories are. Remember on September 20-21 we may get another $5 trillion printed add in the other lemming central banks...RE FUCKING LAX.

Gold Falls 2% in Minutes in Asian Trade … Posted: 07 Sep 2011 01:38 AM PDT

This is proof even Europe's leaders know the euro is doomed Posted: 07 Sep 2011 01:21 AM PDT From The Economic Collapse:   ... Without massive bailouts, there are at least five or six nations in Europe that will likely soon default. The political will for continued bailouts is rapidly failing in northern Europe, so something needs to be done quickly to avert disaster. Unfortunately, as anyone that has ever lived in Europe knows, things tend to move very, very slowly... If the bailouts end and Europe is not able to come up with another plan before then, mass chaos is going to unleashed. Most major European banks are massively exposed to European sovereign debt, and most of them are also very, very highly leveraged. If we see nations such as Greece, Portugal, and Italy start to default, we could have quite a few major European banks go down in rapid succession. That could be the "tipping point" that sets off mass financial panic around the globe. Of course the governments of Europe would probably step in to bail out many of those banks, but when the U.S. did something similar back in 2008 that didn't prevent the world from plunging into a horrible worldwide recession. Right now, the way that the monetary union is structured in Europe simply does not work. Countries that are deep in debt have no flexibility in dealing with those debts, and citizens of wealthy countries such as Germany are becoming deeply resentful that they must keep shoveling money into the financial black holes of southern Europe. These bailouts cannot go on indefinitely. Political and financial authorities all over Europe know this and they also know that Europe is rapidly heading toward a day of reckoning. The quotes that you are about to read are absolutely shocking... Read full article... More on the euro crisis: Why stocks are plummeting now The euro crisis is officially worse than 2008 Porter Stansberry: An update to my "End of America" warnings

Forget today's news... This is all you need to know about Greek bailouts now Posted: 07 Sep 2011 01:19 AM PDT From Pragmatic Capitalism: If we're to take our cues from the markets, then a Greek default is practically a guarantee at this juncture. The latest cumulative probability of default from CMA and the CDS markets is now 88% in Greece. This is also consistent with action in Greek government bonds, which are now yielding a whopping 88% on a one-year basis. I had to do a double-take when I saw the Bloomberg quote... Read full article... More on the euro crisis: Top bond manager: "Something looks broken" New report says the euro could collapse before year-end Porter Stansberry: An update to my "End of America" warnings

The Death of Liquidity Posted: 06 Sep 2011 10:46 PM PDT The Death of Liquidity by Theodore Butler - Butler Research Published : September 06th, 2011 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. Restating what I feel is the obvious; the dramatic gold rally was caused by aggressive buying by the group of speculative traders which are classified as commercials by the CFTC. Many make the mistake of assuming that just because these traders are classified as commercials that means their trading is purely for legitimate hedging purposes. Nothing could be further from the truth, as the bulk of their trading is speculative in nature. Therefore, while it would be technically correct to say that the gold rally has been caused by speculative buying, most would assume that meant new buying of long positions by easily-identified speculators such as hedge funds and momentum traders. That is definitely not what has transpired in gold recently, as the "normal" hedge fund and technical fund speculators have been selling COMEX gold contracts, not buying them. Instead, the big COMEX gold speculative buyers have been the commercials who were previously heavily short. Correctly identifying the true speculators driving a market is a distinction that makes all the difference in the world. That so few see it is amazing to me. There is little doubt that the commercial gold shorts have taken a horrific beating in buying back their short contracts. My guess is that the collective loss on the covered gold contracts so far is on the order of $1.5 billion. Such a loss, even when spread among the roughly 40 traders classified as COMEX commercial gold shorts, amounts to a hefty per entity average loss of $37.5 million each. And I'm speaking of closed out losses only; there is still a large number of open gold shorts that the commercials are holding whose resolution remains to be seen. Those "open" losses run to an additional $8 billion at current gold prices. It is imperative to recognize the unprecedented magnitude of these closed out and open gold losses. It's not enough to say that these commercials lost big-time; having never lost before on such a scale, the turnabout for these commercials must be shocking to them. As such, I'd like to explore what this may portend in the future. The commercial COMEX gold shorts are banks and trading companies, not individuals. Every commercial trading corporation maintains some financial controls and is overseen by corporate treasurers and financial risk officers. The amount of loss generated in this recent gold short debacle dwarfs the gains recorded in prior years. (Same as with silver earlier in the year). Because of the suddenness and extent of the commercial gold short losses, it is not plausible that the corporate risk controls have not kicked in. For sure, the chief financial officers and corporate risk officials have restricted the traders responsible for the gold losses. Unlimited margin money is not being extended; quite the contrary – traders are undoubtedly being ordered to reduce risk and close out positions. Anything else would be irresponsible. If my analysis as to what has just transpired in gold is close to the mark, what does this portend in the future for gold and, especially, for silver? The one result that looks almost certain to me is a severe loss of liquidity or true market depth. In fact, it looks like the death of true liquidity for COMEX gold and silver, the signs of which are increasingly evident. I can assure you that I am very much aware of the recent high volume statistics recorded on the COMEX and despite what may appear to be high volume and great liquidity; the real level of actual market depth may be near death. Please allow me to explain. The big reporting COMEX commercials' modus operandi has always been to serve as counterparties to almost all other market participants, particularly the technical funds which buy and sell based upon price signals. In this role, the commercials served as market makers, providing liquidity to the market. The tech funds buy and the commercials sell to them and vice versa. This is the rhythm of the market that I try to analyze in the COT reports. Since commodity markets are supposed to be open auction type operations and not a market dominated by specialists, I always thought this market making function of the commercials was bogus. It is also no secret that I have found the uniform dealings of the commercials to be collusive and manipulative. My personal feelings aside, there is no question that the big commercials have functioned as market makers on the COMEX. Therein lies the problem for liquidity; the dominant commercial market makers on the COMEX just got creamed in the gold price rally and are sharply restricting their activities. This is what is behind the great price volatility in gold. The former big sellers of last resort are sellers no more. Concurrent with the withdrawal of the coordinated selling of the commercials is the rise of computerized High Frequency Trading. The mindless HFT activity does wildly increase daily trading volume, but the nature of this super-charged day trading only adds to price volatility while providing no true depth to the market. Legitimate hedging, the economic justification behind futures trading, is ill-served by HFT. In other words, there has been an immense increase in mindless second -to-second trading which adds little real benefit to prospective hedgers and a sharp drop off in the actual market making on which hedgers depend. This is the very worst of both worlds. And this development was made possible due to the activities of the CME Group, owner of the COMEX, which is hell-bent on expanding HFT. Thanks a lot, guys. Just like commercial short covering was the prime driver of the gold price rally, it is also behind the increase in volatility. As these commercials withdrew from the market, not only did it drive gold prices higher, it also created a void in true liquidity. If the commercials don't sell on higher prices, who will? Someone must take their place, as there must be a seller for every buyer, but it is increasingly obvious that the sellers replacing the commercials have not sold with the same force and power that the commercials formerly sold. To date, the noted sellers have been the technical funds and other long speculators who have cashed in on enormous profits. As a result, the gold price is subject to sudden spurts in price both up and down, as I have suggested previously. On the one hand, the lack of additional commercial shorting has provided a lift to gold prices. On the other, the lack of technical fund buying allows for sharp downdrafts in the price as well. The withdrawal of the commercials and the cessation of buying for now by the technical funds (as we're so much above all technical fund buy signals) have created a market devoid of real liquidity. Hence, we get great price swings on not much real overnight buying and selling. Yes, we get high volumes from HFT, but that's garbage volume to everyone except the HFT web-bots themselves and the greedy pigs at the CME who collect on every contract traded, garbage or otherwise. What does this all mean to regular investors? It means get used to the volatility, because it isn't going away. Surprisingly, I think it means a lot more to silver investors than it does to gold investors, even though I have been talking more about gold than I have silver. There's a reason for that. What I've described is a process that has already occurred in gold and to a much greater extent than in silver. There may be more commercial short covering to come in gold and if there is, that will exert continued upward price pressure. But the process is fairly well advanced and having already launched the gold price upward, it's hard for me to predict what happens next, other than almost nothing would surprise me price-wise for gold. I see something very different for silver. I believe we have also lost true liquidity in silver, as we have in gold. This can be seen in the volatility of the silver price, same as in gold. Back in April, the commercials panicked in silver and bought back shorts, causing prices to explode into the end of that month. Then, a giant manipulative takedown occurred, starting May 1. Recently, the commercial shorts in silver haven't panicked as they have in gold. In fact, JPMorgan, who I believe to be the largest COMEX silver short, added to short positions in the last COT, as I reported on Saturday. Considering what has occurred in gold, I believe it is only a matter of time before the big commercial shorts also panic in silver. But the panic in silver will be much more profound than it has been in gold. The prime driver in the gold rally was commercial short covering on the COMEX. In silver, if the commercial shorts panic, it will trip off other powerful forces as well. That's due to the basic difference between gold and silver, namely, that silver is an industrial material in addition to being a precious metal investment. Gold and silver can go sky-high in price, due to commercial short covering or investment buying. But since gold in not an industrial material, it is most unlikely that it could experience a shortage or a rush to buy by industrial users. How can industrial users panic if there are no gold industrial users? In silver, there are great numbers of industrial users throughout the world, who are like a vast herd of wildebeests grazing on an African plain. The wildebeests will panic at the first scent of lions. The scent that will cause the silver industrial users to panic will be sharply higher price along with delays in receiving silver deliveries. A commercial short covering on the COMEX will certainly increase prices, just as it has in gold and previously in silver. But given the consistently tight signals emanating from the wholesale physical silver market, it will take little to set off a scramble for physical material which will cause delays to industrial users. As the first few silver industrial users panic and buy physical inventory to insure continued production, this will further tighten supply lines and exacerbate delays in deliveries, thereby inflaming additional user buying. It's impossible to say when such a process will start in silver, but we surely are closer to that than ever before. This is more a case of inevitability than it is of timing. It will come when it is least expected, but it will come. It is lamentable that real liquidity seems to be dying on the COMEX, but that is of secondary importance to long term silver investors. Of more importance is that the death of liquidity will likely also signal the death of the ongoing silver manipulation. That's because liquidity and manipulation are rooted in the big commercial shorts on the COMEX. If there is one thing that could put the price of silver to the stars, it would be the end of the silver manipulation. The message from gold is that the commercials are capable of miscalculating on a massive scale, causing prices and volatility to soar. The message from silver will be not just that, but also that the inevitable physical shortage will cause prices and volatility to soar far higher than any of us can comprehend. Theodore Butler Butlerresearch.com

Marc Faber: No bubble in gold Posted: 06 Sep 2011 10:45 PM PDT Marc Faber, renowned fund manager and editor of the Gloom, Boom and Doom report, said on Monday that there is no bubble in the price of gold. Faber explained that at $1,900 per troy ounce gold ...

"Real" Facts About Paul Krugman's Gold Prices Posted: 06 Sep 2011 10:07 PM PDT "Just about everything you read about what Gold Prices mean is wrong..." read more

Central Banks Smashed Gold Ahead of Swiss Devaluation: Ben Davies Posted: 06 Sep 2011 08:56 PM PDT ¤ Yesterday in Gold and Silver Gold didn't spend much time below $1,900 the ounce in Far East trading on Tuesday morning...and by the time London opened for business at 8:00 a.m. BST, gold was up about twenty dollars from Friday's New York close....a new record high price tick. Then the selling began...and the bids got pulled at 9:00 a.m. in London...and gold was down $50 in just minutes, but rallied back to just about unchanged almost immediately.  The gold price continued to get sold off until shortly after 12 o'clock noon in London...7:00 a.m. in New York...but from there a rally began that took gold back over its Friday closing price. The New York high was at the London p.m. gold fix at 10:00 a.m. Eastern time...and gold hung onto the $1,900 spot price level until London closed for the day at 11:00 a.m. Eastern.  Then a not-for-profit seller showed up at precisely 11:00 a.m...and the gold price got hit for around $35 during the next hour.  Gold didn't do much after that...closing the trading day down $26.70 from last Friday's close.  Volume was huge. Silver pretty much followed the same price path as gold...but the price was more 'volatile'...with silver's absolute low of the day coming shortly before 2:30 p.m. Eastern time in the thinly-traded New York Access Market, where only the New York bullion banks can play. From its high shortly before the London open, to it's low in New York, silver got hit for about $1.75...but only finished down 91 cents from Friday's close.  Volume was very heavy as well. All the precious metals got hit pretty hard.  Gold was down 1.41%...platinum down 1.75%...palladium down 1.45%...and silver down 2.12%.  Silver had the biggest intra-day price swings of all the precious metals by a country mile. I'm including Tuesday's dollar chart.  It had its low at 9:00 a.m. London time...and then climbed pretty steadily from there.  By the time trading closed the dollar was up about 100 basis points.  If you check the dollar chart against the gold chart, it's a real stretch to say that there was much co-relation. The high for the gold stocks was the London p.m. gold fix...and even though gold got hit really hard from that point on, the gold stocks spent virtually the entire day in the black.  The HUI finished up 0.61% despite the pounding gold took...and despite the fact that the general U.S. equity markets got smoked.  I'm super impressed by the performance of the gold stocks in the face of the multiple headwinds they faced yesterday.  This positive price action has been going on for a couple of weeks now.  As I keep saying, what do these deep-pocketed buyers of precious metal mining shares know that we don't know...yet? I'll have more on this in 'The Wrap'. And despite the fact that silver got it in the neck yesterday, Nick Laird's Silver Sentiment Index only finished down 1.04%. (Click on image to enlarge) The CME Daily Delivery Report showed that 69 gold and 10 silver contracts were posted for delivery tomorrow.  Nothing to see here, folks...please move along. There were no reported changes in GLD or SLV yesterday. The U.S. Mint had a smallish sales report yesterday, selling another 81,000 silver eagles. And, for the first time in a very long time, the Comex-approved depositories didn't receive or ship a single ounce of silver last Friday...so they made a four day long weekend out of it. My bullion dealer did a roaring business in silver yesterday, as there were lots of dip-buyers out there just waiting for a day like yesterday. I had an interesting e-mail from one of my readers yesterday that I felt was worth sharing...and here it is... Hi Ed, "I bought gold on the Australian market on Monday [by phone] and I had trouble getting a trader they were so busy." "We didn't buy coins in Edmonton after all because we found out just in time how difficult the search by customs is on the way back.  And indeed on the border of Vancouver Island and Washington State, on getting off the ferry in our car, we were quizzed at length about whether we had bought more that $10,000 worth of goods while we were in Canada.  We were glad we could answer no, or I suspect we would have been slammed with a customs duty bill.  Or worse. I wonder if anyone knows what they would have done about gold coins in excess of $10,000." Here's a graph the Nick Laird over at sharelynx.com just whipped for us. It shows that the intervention in the gold market started about 4 minutes before the Swiss broke the news on the devaluation yesterday. (Click on image to enlarge) It should be obvious to just about anyone that the intervention in the gold market and the revaluation of the Swiss franc was a co-ordinated move by the central banks of the world.  You'll read more about it in a King World News story where Eric interviews Ben Davies. I'm sure glad that I decided to post a column on Tuesday, as I have just as many stories today as I had yesterday.  The really big news yesterday was the surprise devaluation of the Swiss franc by pegging it to the euro...and I have quite a few stories about that. Email Print The central bank intervention yesterday has now been trumped by what happened in the thinly-traded Far East market during the lunch hour in Hong Kong earlier today. Swiss franc's devaluation, impending disaster make gold look good: Marc Faber. Romania wants to double gold reserves, maybe by buying domestic production. The death of liquidity: Ted Butler ¤ Critical Reads Subscribe When it comes to the crunch with the euro, economics will trump law As the euro crisis has intensified, so the previously unthinkable has become the subject of widespread discussion. People have woken up to the idea that the euro could break up. There is no provision in any European Treaty for a country to leave the eurozone. That was deliberate. It was intended to make it clear that the eurozone was forever – like the Soviet Union and the Holy Roman Empire. But in fact you cannot legislate for changing economic conditions or changes in peoples' attitudes. Countries have left monetary unions before. When the Soviet Union broke up in 1991, several new currencies had to be invented out of nowhere. Yes, there was chaos – and there would surely be chaos for a time in the eurozone. But it could be done. When it comes to the crunch, what is and is not in the European Treaties will become irrelevant. Economics will trump law. Roy Stephens sent me this story from The Telegraph late last night...and the link is here. View full GSD edition Swiss bid to peg 'safe haven' franc to the euro stuns currency traders The Swiss National Bank in effect devalued the franc, pledging to buy "unlimited quantities" of foreign currencies to force down its value. The SNB warned that it would no longer allow one Swiss franc to be worth more than €0.83 – equivalent to SFr1.20 to the euro – having watched the two currencies move closer to parity as Switzerland became a "safe haven" from the ravages of the eurozone crisis. The move stunned currency traders, and sent the Swiss franc tumbling against other currencies. Jeremy Cook, chief economist at currency brokers World First, said it was "intervention on a grand scale", and the start of a "new battle in the currency wars". This story was in yesterday afternoon's edition of The Guardian...and I thank Swiss reader G.B. for sending this along...and the link is here. View full GSD edition Yesterday's intervention against gold was as brazen as the intervention against the Swiss franc But no central bank acknowledged the intervention against gold. It is still a covert action in the currency war. At least the currency war itself is starting to be acknowledged. The Swiss National Bank shocked markets on Tuesday by setting an exchange rate cap on the soaring franc to stave off a recession, discouraging investors anxious about flagging global growth from using the currency as a safe haven. Using some of the strongest language from a central bank in the modern era, the SNB said it would no longer tolerate an exchange rate below 1.20 francs to the euro and would defend the target by buying other currencies in unlimited quantities. I borrowed the title, the first paragraph...and the Reuters story from a GATA release yesterday.  The Reuters headline reads "Swiss draw line in the sand to cap runaway franc"..and the link is here. View full GSD edition Another Reason to Buy Gold: Franc Losing Safety Status Just as talk had begun to intensify about a gold bubble building, the metal got another boost today when the Swiss National Bank announced measures to decrease the value of the franc. The SNB's move was widely viewed as positive for gold because the metal will gain even more popularity as a safe-haven investment of choice. "With Japan massively intervening in the (currency) market and the Swiss effectively curbing the safe-haven status of the Swiss franc today, we only really have gold as the last-standing safe-haven currency around," David Rosenberg, senior economist and strategist at Gluskin Sheff in Toronto, wrote in his daily note. "While the US dollar has liquidity, it unfortunately has a debt burden alongside it that gold does not." This must read cnbc.com story came from another GATA release...and the link is here. View full GSD edition Central banks smashed gold ahead of Swiss devaluation, Davies says Hinde Capital CEO Ben Davies remarked to King World News yesterday about the suspicious pounding of gold in the minutes just prior to the announcement of the Swiss franc's devaluation, which would have seemed hugely supportive of gold as the only remaining safe-haven currency. In regard to gold, Davies says: "Why was it selling off just ahead of a really bullish announcement? You have to believe that there was some coordinated action. The central banks will all have been in on knowing ahead of time that the Swiss were going to announce this. So there was central bank selling because they really didn't want the price of gold to skyrocket on what is incredibly bullish news for gold." I borrowed the preamble from another GATA release...and the link to this must read KWN blog is here.  The KWN title is "Silver headed to $65 and gold to soar". View full GSD edition Gold is leaving other markets behind, Naylor-Leyland tells CNBC Europe Ned Naylor-Leyland, investment director of Cheviot Asset Management in London, was interviewed on CNBC Europe this morning. Naylor-Leyland emphasized that gold is dissociating itself from other markets, going higher when other markets are going lower. Chris Powell has more to say in his introduction to this video...and the link to the GATA release is here. View full GSD edition Swiss franc's devaluation, impending disaster make gold look good, Faber says Financial letter writer Marc Faber told King World News last night that gold is a good hedge against financial assets and will start to look better still now that the Swiss franc has been pegged to the euro. An excerpt from the interview is headlined "This Will End in Disaster and You Must Own Gold"....and I once again I thank Chris Powell for providing the introduction.  The link to the KWN blog is here. View full GSD editi

The death of liquidity: Ted Butler Posted: 06 Sep 2011 08:56 PM PDT The death of liquidity: Ted Butler Volatility in gold and silver futures prices reflects a worsening decline in liquidity in those highly manipulated markets, silver market analyst Ted Butler writes. That decline in liquidity, Butler believes, shows that the manipulation is coming to a close. This is Ted's commentary from a week ago.  I urged him to post this in the public domain...and here it is.  This is about a clear a picture as you'll ever get as to what may be going on under the hood over in the Comex futures market in both gold and silver. The story is posted over at silverseek.com...and the link to this absolute must read essay, is here.

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