Gold World News Flash |
- News That Matters
- The Top 100 Statistics About The Collapse Of The Economy That Every American Voter Should Know
- Gold Resource Corp. Increases Q3 Production by 87% - Approx. 25,200 Gold eq.
- Louise Yamada: Gold, Silver & US Dollar
- KWN Special - Louise Yamada: Gold, Silver & US Dollar
- Kerry Lutz Interview with Barry Stuppler
- Dexia Shares Suspended / Partial Nationalization of Dexia / England Resumes Quantiative Easing
- Chinese Move to Control Global Gold Market
- Guest Post: The Way Out Of Our Economic Mess
- Some Sobering Charts
- Gold - Brent Crude Oil Ratio
- Snapback Rally In Metals and Miners?
- 2 OR 3 WEEKS UNTIL GLOBAL MELTDOWN
- Eurozone QE Courtesy Of The US Federal Reserve
- Libertarian Wall Street Protesters Demand End to the Fed
- Silver and Gold Prices Remain in a Correction in an On-going Primary Uptrend (Bull Market)
- John Hathaway - Bank Failures Moving Gold, This is Contagion
- Euro Rumormill Disintegration Begins As Reality Returns: France, Germany Fail To Reach Agreement On EFSF
- The Decline of The Dollar
- Essential Charts Update
- Market Snapshot: Did Credit Just Capitulate?
- BBC Does It Again: "In The Absence Of A Credible Plan We Will Have A Global Financial Meltdown In Two To Three Weeks" - IMF Advisor
- Gold Daily and Silver Weekly Charts
- Gold is Not in a Bubble…Yet!
- This is Short Covering Before the Next Collapse
- The New “Safety”
- Hugo Chavez Issues A Wake-Up Call To Paper Gold Shorts
- Load Up On Gold & Silver as Bernanke Dives Off the Deep End
- Gold Sideways Trading Dominates – Downside Favored Slightly
- ‘Aftershocks’ Author Predicts Another 2008-Style “Meltdown”
| Posted: 06 Oct 2011 08:04 PM PDT
Ft.com The government of Mongolia has backed down from its demand for a larger share of Oyu Tolgoi, one of the world's biggest new copper mines, in an about-turn that boosted the share price of Rio Tinto, the FT reports. In a joint statement, http://ftalphaville.ft.com/thecut/2011/10/07/695851/mongolia-retreats-on...
Banks based outside the US could be dragged into the American "Volcker Rule", which bans proprietary trading, according to the latest draft of the rule and lawyers that were ploughing through leaked copies on Thursday, http://ftalphaville.ft.com/thecut/2011/10/07/695801/volcker-rule-draft-c...
George Soros, the billionaire hedge fund manager, has lost a case at the European Court of Human Rights to have his criminal conviction for insider dealing quashed, the FT reports. The failed appeal at announced http://ftalphaville.ft.com/thecut/2011/10/07/695776/soros-fails-to-quash...
A real-estate fund run by Goldman Sachs has walked away from a $1.26bn deal with Lehman Brothers Holdings to buy a portfolio of 10 office buildings in a suburb of Washington, the WSJ reports. A lawsuit filed Thursday with the US Bankruptcy Court in Manhattan shows Lehman is seeking $100m in damages from the Goldman-run US Real Estate Opportunities fund,http://ftalphaville.ft.com/thecut/2011/10/07/695756/goldman-sued-over-le...
Sony is nearing a deal to buy out Ericsson's stake in their mobile-phone joint venture, the WSJ says, citing people familiar with the matter. By wresting full control of Sony Ericsson, a 50-50 joint venture created in 2001 that is the world's sixth-largest cellphone manufacturer, http://ftalphaville.ft.com/thecut/2011/10/07/695686/sony-shares-fall-on-...
Nervousness is growing in Whitehall that the government might have to inject further capital into RBS as part of a European effort to recapitalise the continent's banking system, the FT reports, quotinghttp://ftalphaville.ft.com/thecut/2011/10/07/695636/whitehall-fears-anot...
Europe's covered bond market is to be shored up by a €40bn purchase programme in a move to boost the continent's economy and provide extra financing for banks, reports the FT. Thursday's decision by the European Central Bank comes 14 months after the end of its last covered bond-buying foray, http://ftalphaville.ft.com/thecut/2011/10/06/695611/european-central-ban...
Rising Chinese labour costs are changing the economics of global manufacturing and could contribute to the creation of 3m jobs in the US by 2020, according to a study being released on Friday. The Boston Consulting Group analysis says the new jobs will be generated by a "re-shoring" of manufacturing activity lost to China over the past decade. "Re-shoring is part of a broad trend that will emerge as … production gradually swings back to the US," Hal Sirkin, a senior partner at the consultancy, told the Financial Times. http://www.ft.com/intl/cms/s/0/e5b774ca-f037-11e0-96d2-00144feab49a.html...
The orderly break-up of Dexia began to take shape on Thursday as the ailing Franco-Belgian bank announced it was in advanced talks to sell its Luxembourg unit. The lender's shares were suspended in the afternoon, having fallen a further 17 per cent, to €0.85. Dexia said Belgian regulators asked for the suspension, which will last until Monday, after extreme trading volatility in recent days and uncertainty over the steps to be taken. http://www.ft.com/intl/cms/s/0/01de8d9c-f014-11e0-bc9d-00144feab49a.html...
Wsj.com Taking a cue from Wall Street's third consecutive rally Thursday, Japan's Nikkei Stock Average rose 1.1%, Australia's S&P/ASX 200 climbed 2.0%, South Korea's Kospi Composite jumped 2.5% to a one-week high, and New Zealand's NZX-50 added 0.9%. Dow Jones Industrial Average futures were down 28 points in screen trade. http://online.wsj.com/article/SB1000142405297020347680457661592223019104...
The Bank of Japan on Friday kept its monetary policy on hold, opting to proceed with its easing steps taken in August as the strong yen and uncertainty about the health of the global economy have yet to derail the nation's recovery. The BOJ maintained the size of its asset buying program–regarded as the central bank's primary weapon for credit easing amid virtually zero interest rates– at ¥50 trillion ($652 billion). http://online.wsj.com/article/SB1000142405297020338880457661597190832258...
The European Banking Authority said Thursday it can't rule out launching a new round of stress tests on Europe's banks, but denied having already done so. Separately, European Commission President José Manuel Barroso said Europe's banks may need recapitalization and work is already underway on some aspects of this. An EBA spokeswoman said "the situation has evolved rapidly and dramatically" since the EBA published the results of its stress tests in July, adding that the body, "as a technical authority, will of course assess all the alternatives." http://online.wsj.com/article/SB1000142405297020347680457661449015080479...
Portugal is trying to prove to creditors that it can cut its budget to the bone, but the governor of this tiny island has plans to keep spending. Despite Lisbon's calls for austerity, Alberto João Jardim, Madeira's governor since it gained autonomy in 1976, vowed more building when he spoke late last month at the opening of a €1.1 million ($1.5 million) road linking a small neighborhood to a new church in the rural district of Calheta. http://online.wsj.com/article/SB1000142405297020483130457659488182469828...
Italian Prime Minister Silvio Berlusconi set off a political firestorm on Thursday by quipping that he would name a new political party after a slang term for female genitalia. Speaking with lawmakers inside the Chamber of Deputies, the lower house of Italy's parliament, Mr. Berlusconi dismissed rumors that he planned to launch a second political party by joking that, if he did, the group would be named after the sexually explicit word, according to Italian media reports that were confirmed by an aide to the premier. http://online.wsj.com/article/SB1000142405297020429450457661508230785456...
Bargain hunters propelled retail sales in September, as chains used deep discounts to clear out back-to-school merchandise ahead of the holidays. While the results were better than expected, the industry remains concerned about its prospects for the key year-end shopping season, when stress on consumers and weaker traffic are expected to blunt sales growth. FedEx Corp., which sees a lot of holiday traffic, expects slower growth this year. Chief Executive Fred Smith said Thursday he expects holiday shipments to climb by 2.5% to 3%, compared with growth of 4.3% in 2010.http://online.wsj.com/article/SB1000142405297020338880457661465313286620...
U.S. leaders took swipes at China on Thursday, as the Senate voted to advance a bill to penalize countries said to be manipulating their currencies and President Barack Obama accused the country of manipulating the yuan. U.S. Trade Representative Ron Kirk separately demanded that China disclose details to the World Trade Organization on a large number of government subsidies to ensure it is complying with global trade rules. The U.S. notified the WTO of almost 200 subsidy programs China has failed to disclose, as well as 50 India measures.http://online.wsj.com/article/SB1000142405297020347680457661485227471912...
Reuters.com Gold headed for its biggest weekly gain in a month as equities regained strength after fresh efforts by Europe to resolve its debt crisis eased nagging worries about a global recession, while purchases from jewellers offered additional support. Gold added $7.44 to $1,656.79 an ounce by 0313 GMT, still down from a lifetime high of around $1,920 hit in early September. U.S. gold futures were steady at $1,658.1 an ounce. http://www.reuters.com/article/2011/10/07/us-markets-precious-idUSTRE78M...
President Barack Obama launched an onslaught against banks and Republicans on Thursday for working to block financial reform, using a populist tone amid public anger over Wall Street practices. Obama, a Democrat who is fighting for re-election in 2012 against a backdrop of high unemployment, said his Republican opponents' primary plan to boost the economy involved rolling back Wall Street regulationhis administration fought to pass. http://www.reuters.com/article/2011/10/06/us-obama-idUSN1E7950UK20111006
European Union moves to shore up ailing banks moved into higher gear on Thursday as President Barack Obama urged European leaders to act faster to tackle a sovereign debt crisis that threatens global economic recovery. The EU's executive arm said it would present a plan for member states to coordinate a recapitalization of their banks, as regulators met in London to reassess the capital buffers of stressed lenders that received a clean bill of health in July. http://www.reuters.com/article/2011/10/06/us-eurozone-idUSTRE7953D520111...
Bloomberg.com Vietnam's central bank increased its refinancing rate for the first time since May, as the nation tries to steady its currency and tame Asia's fastest inflation. The State Bank of Vietnam raised the refinancing rate to 15 percent from 14 percent, effective Oct. 10, it said in a statement on its website yesterday. The central bank weakened the dong's reference exchange rate for the third straight day today, to 20,653 per dollar from 20,648 per dollar. http://www.bloomberg.com/news/2011-10-06/vietnam-central-bank-raises-ref...
Mortgage rates in the U.S. fell, sending longer-term borrowing costs below 4 percent for the first time on record, as stricter credit standards and the slowing economy hold back a housing rebound. The average rate for a 30-year fixed loan dropped to 3.94 percent in the week ended today from 4.01 percent, Freddie Mac said in a statement. That's the lowest in the McLean, Virginia- based company's records dating back to 1971. The average 15-year rate declined to 3.26 percent from 3.28 percent last week. http://www.bloomberg.com/news/2011-10-06/mortgage-rates-in-u-s-decline-w...
A toilet shortfall in Bangladesh that enables diarrheal and other disease-causing germs to spread costs the nation about $4.2 billion annually, a study found. Economic losses tied to inadequate sanitation amounted to 6.3 percent of Bangladesh's gross domestic product in 2007, highlighting an urgent need to invest in better hygiene, a report by the World Bank's Water and Sanitation Program said.http://www.bloomberg.com/news/2011-10-07/toilet-shortfall-costs-banglade...
Cnbc.com While economists have made no secret of their fears that another recession is about to strike, the real danger could be worse. Instead, the country could be headed for a 21st century version of a depression, an economic term that, unlike a recession, defies a standard definition but instead conjures images of soup lines, 25 percent unemployment and a devastated economy. http://www.cnbc.com/id/44802751
For all the confidence in China's resilience to global economic shocks over the past decade, some investors are now starting to worry about a hard landing for the high-flying economic giant. Fears of a Chinese growth shock are compounding a broader sell-off bedevilling emerging markets, prompting many to raise cash levels and reposition portfolios to cope with an end to the China-driven commodities boom and a resurgent dollar. Beyond the obvious impact on Asian markets, commodity-exporters South Africa and Brazil are seen as vulnerable while India and Turkey have been identified as relative beneficiaries should long-gestating fears over China be realised. http://www.cnbc.com/id/44809640
Foxbusiness.com Greece said on Thursday it concluded talks with the IMF on a vital tranche of aid but inspectors said negotiations on the bailout were continuing and that there was no final conclusion with any party. Inspectors from the European Union, the International Monetary Fund and European Central Bank — known as the troika — resumed their review of Greece's progress on a bailout deal last week, and an IMF official said the Fund's latest review of Greece's loan program will be completed within days. The Finance Ministry issued a statement saying Minister Evangelos Venizelos had finalized bailout talks with the IMF and would resume talks with the European Commission on Friday. http://www.foxbusiness.com/markets/2011/10/06/greece-bailout-talks-not-e...
USAtoday.com The federal government will disburse just $432 million from a $1 billion program to help unemployed homeowners avoid foreclosure, a government official said Thursday. The rest of the money will return to the U.S. Treasury because the Emergency Homeowners' Loan Program has ended, and not enough people were approved in time to receive aid. The funding provided forgivable loans up to $50,000 to temporarily help unemployed or underemployed people avoid foreclosure in 32 states and Puerto Rico. http://www.usatoday.com/money/economy/housing/story/2011-10-06/foreclosu...
BBC.co.uk Bank of England governor Mervyn King has said this financial crisis could be the worst the UK has ever seen. His comments came after the Bank authorised the injection of a further £75bn into the economy through quantitative easing (QE). Explaining the move Sir Mervyn told Sky News: "This is the most serious financial crisis we've seen at least since the 1930s, if not ever." http://www.bbc.co.uk/news/business-15210112
The Bank of Japan (BOJ) has extended its loan scheme for banks operating in areas affected by the earthquake and tsunami by six months. The central bank had offered 1tn yen ($13bn, £9bn) in special loans to banks to ensure liquidity for reconstruction efforts after the natural disasters. The loan scheme was due to expire at the end of this month. BOJ also left its interest rate unchanged at 0.1% in a bid to boost growth amid uncertain economic outlook. http://www.bbc.co.uk/news/business-15210097
German factories recorded a 1.4% drop in industrial orders over the month of August, according to government data. It is the second month in a row that demand has weakened, casting further gloom over the prospects for Europe's largest economy. Economists had expected no change after July's 2.6% fall. The German economy ministry blamed "special factors". It said the decline was driven by a fall in domestic demand during the summer holidays. http://www.bbc.co.uk/news/business-15196904
Telegraph.co.uk The Bank of England may have to inject as much as £500bn into the economy to rescue Britain's faltering recovery, economists warned after the central bank shocked markets by restarting its money printing programme. Sir Mervyn King, Governor of the Bank, unveiled plans to increase quantitative easing (QE) from £200bn to £275bn – a sum equivalent to a fifth of the UK economy, as it held rates at 0.5pc. The Bank was taking the "pre-emptive action to prevent the slowdown becoming too serious", he said. http://www.telegraph.co.uk/finance/economics/8812210/Bank-of-Englands-QE...
"Surveys of both economists and market participants suggested that most thought the Bank would wait until November at least," Goldman Sachs pointed out. "The £75bn is also larger than expected: we had expected only £50bn." The pound fell 0.41 cents against the dollar. The FTSE 100 jumped 3.7pc. Gilt yields fell on the prospect of the Bank buying roughly £5bn a week for four months from next Monday. Sir Mervyn King, the Bank's Governor, couldn't have asked for a better reception. http://www.telegraph.co.uk/finance/economics/8812020/Shock-and-awe-may-b...
The revelation came as the Office for National Statistics (ONS) unexpectedly downgraded its estimate of economic growth for the three months to June from 0.2pc to 0.1pc as part of a major recalculation of historical data. At the same time, it revised down its estimate for the three months to March from 0.5pc to 0.4pc. http://www.telegraph.co.uk/finance/economics/8807874/Recession-was-deepe...
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| The Top 100 Statistics About The Collapse Of The Economy That Every American Voter Should Know Posted: 06 Oct 2011 07:44 PM PDT I bolded some of the most discouraging statistics... ~ Ilene Courtesy of Michael Snyder of Economic Collapse
Thousands of businesses and millions of jobs have left the country and poverty is exploding from coast to coast. We are literally becoming a joke to the rest of the world. It is absolutely imperative that we educate America about what is happening. Until the American people truly understand the problems that we are facing, they will not be willing to implement the solutions that are necessary. The following are the top 100 statistics about the collapse of the economy that every American voter should know.... #100 A staggering 48.5% of all Americans live in a household that receives some form of government benefits. Back in 1983, that number was below 30 percent. #99 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office. #98 Since Barack Obama was sworn in, the share of the national debt per household has increased by $35,835. #97 The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration. #96 It is being projected that the U.S. national debt will hit 344% of GDP by the year 2050 if we continue on our current course. #95 The Congressional Budget Office is projecting that U.S. government debt held by the public will reach a staggering 716 percent of GDP by the year 2080. #94 In 2010, the U.S. government paid $413 billion in interest on the national debt. That is projected to at least double over the next decade. #93 According to one new survey, one out of every three Americans would not be able to make a mortgage or rent payment next month if they suddenly lost their current job. #92 State and local government debt has reached an all-time high of 22 percent of U.S. GDP. #91 In 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for 18.4% of all income. #90 U.S. households are now receiving more income from the U.S. government than they are paying to the government in taxes. #89 According to a new study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent. #88 If you can believe it, one out of every seven Americans has at least 10 credit cards. #87 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980. Today they account for approximately 16.3%. #86 The cost of a health insurance policy for the average American family rose by a whopping 9 percent last year, and according to a report put out by the Kaiser Family Foundation and the Health Research and Educational Trust, the average family health insurance policy now costs over $15,000 a year. #85 One study found that approximately 41 percent of working age Americans either have medical bill problems or are currently paying off medical debt. #84 An all-time record 49.9 million Americans do not have any health insurance at all at this point, and the percentage of Americans covered by employer-based health plans has fallen for 11 years in a row. #83 According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States. Of those bankruptcies that were caused by medical bills, approximately 75 percent of them involved individuals that actually did have health insurance. #82 Average yearly tuition at U.S. private universities is now up to $27,293. #81 The cost of college tuition in the United States has gone up by over 900 percent since 1978. #80 In America today, approximately two-thirds of all college students graduate with student loans. #79 In 2010, the average college graduate had accumulated approximately $25,000 in student loan debt by graduation day. #78 The total amount of student loan debt in the United States now exceeds the total amount of credit card debt in the United States. #77 One-third of all college graduates end up taking jobs that don't even require college degrees. #76 In the United States today, there are more than 100,000 janitors that have college degrees. #75 In the United States today, 317,000 waiters and waitresses have college degrees. #74 In the United States today, approximately 365,000 cashiers have college degrees. #73 It is being projected that for the first time ever, the OPEC nations are going to bring in over a trillion dollars from exporting oil this year. Their biggest customer is the United States. #72 U.S. oil companies will bring in about $200 billion in pre-tax profits this year. They will also receive about $4.4 billion in specialized tax breaks from the U.S. government. #71 The United States has had a negative trade balance every single year since 1976, and since that time the United States has run a total trade deficit of more than 7.5 trillion dollars with the rest of the world. #70 The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001. #69 The U.S. trade deficit with China is now 27 times larger than it was back in 1990. #68 Today, the United States spends more than 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States. #67 China has surpassed the United States and is now the largest PC market in the entire world. #66 In 2002, the United States had a trade deficit in "advanced technology products" of $16 billion with the rest of the world. In 2010, that number skyrocketed to $82 billion. #65 In 2010, the number one U.S. export to China was "scrap and trash". #64 Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe? Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts of $110 billion. #63 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000. #62 More than 42,000 manufacturing facilities in the United States have been closed down since 2001. #61 Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost. #60 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs. #59 According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades. #58 If you gathered together all of the workers that are "officially" unemployed in the United States today, they would constitute the 68th largest country in the world. #57 There are fewer payroll jobs in the United States right now than there were back in 2000 even though we have added 30 million extra people to the population since then. #56 Back in 1969, 95 percent of all men between the ages of 25 and 54 had a job. In July, only 81.2 percent of men in that age group had a job. #55 Only 55.3% of all Americans between the ages of 18 and 29 were employed last year. That was the lowest level that we have seen since World War II. #54 Today, there are 5.9 million Americans between the ages of 25 and 34 that are living with their parents. #53 The economic downturn has been particularly tough on men. According to Census data, men are twice as likely
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| Gold Resource Corp. Increases Q3 Production by 87% - Approx. 25,200 Gold eq. Posted: 06 Oct 2011 04:23 PM PDT Gold Resource Corporation's 87% production increase keeps it in line with the current annual target of 60,000 to 70,000 ounces AuEq for 2011. The level of production during the third quarter represents a current annual run rate of over 100,000 AuEq ounces. Continued mill optimization of metallurgical recovery and increasing average head grades from the Arista Mine contributed to these record production levels.
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| Louise Yamada: Gold, Silver & US Dollar Posted: 06 Oct 2011 04:03 PM PDT from King World News:
With gold still hanging around the $1,650 level, today King World News was given exclusive distribution rights to an extraordinary piece of legendary technical analyst Louise Yamada's "Technical Perspectives" report. This information is never made available to the public and we are grateful to Louise for sharing her incredible work with KWN readers globally. Gold – Uptrends Hold
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| KWN Special - Louise Yamada: Gold, Silver & US Dollar Posted: 06 Oct 2011 04:01 PM PDT  With gold still hanging around the $1,650 level, today King World News was given exclusive distribution rights to an extraordinary piece of legendary technical analyst Louise Yamada's "Technical Perspectives" report. This information is never made available to the public and we are grateful to Louise for sharing her incredible work with KWN readers globally.
This posting includes an audio/video/photo media file: Download Now |
| Kerry Lutz Interview with Barry Stuppler Posted: 06 Oct 2011 02:45 PM PDT from The Financial Survival Network: Barry Stuppler, world renown numismatist and bullion dealer and founder of Stuppler & Company and Minestategold.com joins us for a review of the precious metals. When we first connected with Barry back in July of this year, gold was around 1620 per ounce. Now it's around 1650 and to the uninitiated it would appear that gold hasn't done much for two months. But, oh, what a picture the chart tells. Barry talks about supply of product and demand and concludes that unlike the 1970′s, demand has never been greater. Click Here to Listen to the Interview
This posting includes an audio/video/photo media file: Download Now |
| Dexia Shares Suspended / Partial Nationalization of Dexia / England Resumes Quantiative Easing Posted: 06 Oct 2011 02:31 PM PDT by Harvey Organ: Good evening Ladies and Gentlemen: Gold closed today up $11.60 to $1651.90. Silver had a very good day rising by $1.68 to $31.97. I would like to throw a little caution into the wind as tomorrow is the big jobs report and you know these bums always attack either the day before the report or immediately after its release so be very careful tomorrow. Let us head over to the comex and see how trading fared today. Read More @ HarveyOrgan.Blogspot.com
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| Chinese Move to Control Global Gold Market Posted: 06 Oct 2011 02:24 PM PDT Asian gold buying during the evening in North America is probably a leading indicator of how the Chinese will soon dominate the global gold market. The Chinese Mean To Control The Global Gold Market Robert Lenzner, Forbes Staff Get ready for the Pan Asian Gold Exchange, scheduled to open in June, 2012 in Kunming Continue reading Chinese Move to Control Global Gold Market
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| Guest Post: The Way Out Of Our Economic Mess Posted: 06 Oct 2011 02:03 PM PDT By Terry Coxon, Casey Research
"A rock and a hard place" is a long-running theme of Casey Research publications. It refers to the dilemma the US government has wandered into with its continued policy of rescue inflation. The "rock" is what will happen if the Fed pauses for long in printing still more money – the collapse of an economy burdened by an accumulation of mistakes that rescue inflation has been keeping at bay. The "hard place" is the disruptive price inflation that becomes more likely (and likely more severe) with every new dollar the Fed prints to keep the effects of those mistakes suppressed. When the dollar was cut loose from the gold standard in 1971, the Federal Reserve was freed to create as much new money as it saw fit, whenever it saw fit. Enabled, it turned with enthusiasm to doing what central bankers imagine they are supposed to do – eliminate downturns in the economy. The Fed fancied itself as being on the answering end of a 911 system: whenever the financial markets signaled distress, whenever the economy came down with the flutters, the Federal Reserve would dispatch a van, an ambulance, a fire engine or even an assault vehicle, whatever seemed right but in every case full of cash. To most people, rescue inflation was entirely agreeable. It made their world more comfortable and seemed to make it safer. Comfortable, yes. Safer, no. The pernicious but entirely welcome effect of rescue inflation was to cover up mistakes and keep them going. It allowed people – especially people handling other people's money – to make progressively bigger mistakes. Lending on implausible mortgages and buying securities tied to those mortgages are the most recent examples, follies that required decades of training. Rescue inflation allowed everyone to get away with everything. The assurance that a high-speed vehicle with flashing lights on top would always arrive in time let individuals pay for houses with a little cash and a big mortgage. It let corporate managers rely on borrowing heavily, rather than selling stock, to raise capital. It let investors cheerfully accumulate junk bonds. And it let banks hire and set loose bright young minds to design financial gizmos with astounding leverage guaranteed to deliver excellently profitable results for so long as the economy continued on its excellent and guaranteed way. All of those hang-glider stunts seemed safe because if at any point the prices of the assets underlying anyone's commitment failed to rise... a Federal Reserve rescue inflation vehicle would surely dash to the scene. That's what FedVans are for. And rescue inflation let the politicians dodge the consequences of their own thoughtlessness. The economic drag of the tax rules the politicians found convenient to enact and the effects that deficit spending has on economic growth and on living standards were obscured by the ready supply of that all-purpose balm and lubricant, new money. But problems that are hidden don't go away; they accumulate; and they grow. Answering its most recent 911 call (the one that rang in 2008), the Fed dispatched an entire fleet of trucks stuffed with cash. It increased the money supply by 40%, yet today the economy is barely staggering forward. At this point, creating more cash might buy some time, but it can't buy a solution. The problem, unless you think there isn't one, seems impossible to solve. But rather than dismissing the possibility of a way out, it would be more circumspect to consider how the economy might in fact navigate between the rock and the hard place. That won't happen simply because we've found a way for it to happen. The White House hasn't called me in a long time. But if we understand what it would take to slip past the rock and the hard place, we can judge how likely such a passage is. The economy doesn't need anyone to fix it. It's all that fixing for the last 40 years that is the problem. Unmolested, the economy will right itself. The only thing needed is for the Great Molester, the government, to surrender to a serious regimen of behavior modification and let the economy operate without suffocating interference. Then it would be able to shed its problems – not painlessly but quickly and with a minimum of pain. Here's the protocol. Bring out your dead. Even after catching the trillions in bailout money thrown at them, some financial institutions remain under water – closer to the surface than before but still snorkeling. Let them go. Release them from their zombie state. Bless them with the peace of zero assistance and the promise of unbeing. Paying the dead to mimic the living casts a blight on all the banks that are competently managed, and it leaves trillions of dollars of capital to be allocated by hired hands who've shown by their performance that their talents call them to some other line of work. And give up on mouth-to-mouth for the biggest corpse of all. Stop trying to prop up housing prices by financing the banking system's huge inventory of foreclosed property and by funding programs to slow the foreclosure rate. The housing market won't recover its health until prices reach a market-clearing level. Stop the acknowledged deficits now. That means cutting federal spending drastically. There's already unanimous lip service for doing so, but even if there were a genuine resolve to do it, there are an infinite number of ways to go about it. A clean starting point would be to revert to the last Clinton budget, which would almost certainly require getting by on one war at a time. Stopping the deficits is essential to allowing the economy to heal itself because it slows the wasting of resources and because it eliminates the fear of higher tax rates, which is a fear that retards business investment. Make tax rules a little less stupid. The two most mischievous features of the Internal Revenue Code are the double-taxation of corporate profits and the deduction for home mortgage interest. The former is a powerful and dangerous invitation for high debt-to-equity ratios; make dividends tax-deductible for the paying company, and the problem goes away. The deductibility of mortgage interest has operated as an amplifier for everything the government does to encourage overinvestment in housing. Yes, eliminating the mortgage deduction will be another blow to the housing market, but since we're committed to bringing out the dead, let's think about cremating the remains. Stabilize tax rules. High tax rates are bad enough for the economy. Not knowing what next year's tax rates are going to be is much worse. It paralyzes business decisions. Make the current rates "permanent" in the sense that it would take further legislation to change them. Reduce the legal minimum wage to zero. Minimum wage laws are convenient for labor unions whose members are somewhat skilled, but they toss the unskilled into the economic dumpster. A minimum wage law effectively prohibits the unskilled and inexperienced from working by pricing them out of the market. It's an unemployment guarantee program for millions of the economically weakest people in the country. I'd miss the minimum wage, because there is nothing that shouts louder that government uses the poor as human shields to protect the state. But to let the economy recover, let it go. Destrangulate. Repeal the Sarbanes-Oxley law and its weird spawn, Dodd-Frank. Repeal Obamacare. Allow individual states to license drugs without waiting on the FDA. End all prohibitions on insider trading. Charge banks for FDIC insurance at rates tied to a balance sheet formula – and then free them to make their own lending decisions. (You might like even more deregulation than that, but we're not building utopia, we're only trying to avoid camping in dystopia.) Euthanasia for Social Security and Medicare. Raise the eligibility age by one month every year. The unfunded net liabilities for those programs (variously estimated at $60 trillion to $80 trillion) will evaporate, and everyone who has been counting on impossible promises being kept will have plenty of time to come to terms with reality. That would do it, and that or something similar is what it would take. The economy might need a year or so for the dust to settle. A certain number of mental breakdowns would be provoked by the trashing of heart-felt assumptions, but for the other 99.9999999% of us, the Greater Depression would be canceled. It's not politically impossible. Everyone, politician and politician-afflicted alike, is capable of a 180-degree course change when fear and pain become great enough. It's not impossible at all. And unicorns aren't impossible. Typically, they get started when a pony is fighting a cowlick. At the just-concluded Casey/Sprott Summit When Money Dies, the all-star faculty unanimously agreed that the US economy is in dire straits… and will be for a while. But there are ways to protect your assets and profit from this crisis. Listen to John Hathaway, Mike Maloney, Richard Hanley, Doug Casey, Chris Martenson, and many more expert speakers on more than 20 hours of audio recordings – incl. their best stock picks and hands-on investment advice. Learn more.
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| Posted: 06 Oct 2011 01:54 PM PDT Even a traditionally optimistic Michael Darda, of MKM Partners, is having trouble discovering the silver lining among the flotsam and jetsam that is the global macro-economic ocean currently. The Japanification theme continues with five charts offering too-correlated-to-be-ignored perspectives on equities, money supply/velocity, valuations/multiples, and demographics. An updated chart of Japan versus U.S. equities is breathtakingly grim. This chart originally ran as a Bloomberg "Chart of the Day" back in August. The chart may tell us what is in store if eurozone policymakers fail to forestall a collapse of Italy/Spain. The ECB's reluctance to even take back the errant rate hikes imposed earlier this year—the least it could do, in our view—is not encouraging in this regard.
A high ratio of liquidity doesn't guarantee a rise in risk assets or nominal income, as Japan has found out over the last two decades. Tightening credit markets are an ongoing threat to the velocity of money.
Low long rates have not led to higher P/E ratios in Japan. Moreover, long rates tend to move with expected nominal growth prospects, which is why they have been closely correlated to movements in equity prices over the last several years.
Like Japan, the U.S. is facing demographic challenges, albeit not to the same degree (i.e., we are not headed for negative population growth). However, the Federal Reserve Bank of San Francisco has done work on equity multiples and societal age distribution (middle-aged cohort versus the old-age cohort) and has found a stunningly close relationship that does not bode well for a rise in earnings multiples from here. Indeed, the researchers note that, "the actual P/E ratio should decline…to 8.3x in 2025 before recovering to about 9x in 2030."
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| Posted: 06 Oct 2011 01:50 PM PDT [url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] While not a perfect measurement of gold mining profitability, this ratio does allow us a look into how the final product of a gold mine, (gold), is doing in relation to one of the single largest expenses involved in mining, namely energy. The higher this ratio, the better for mining companies. ...
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| Snapback Rally In Metals and Miners? Posted: 06 Oct 2011 01:17 PM PDT Right now treasuries and the U.S. dollar are viewed as refuges of safety, while gold, silver and miners are sold off. The perceptive investor notes that these U.S. debt instruments are forming a parabolic move as the herd tilts the see-saw in an unsustainable direction.
Again it is Mackay's "Madness of Crowds" repeated over and over again. The panic is reaching such irrational heights that the masses are willing to give their hard earned cash to the Federal Government at negative interest! What greater folly can there be than investors putting their hard earned savings into U.S. debt for the next 30 years? Our country is bankrupt, the money of investors is being sunk in a bottomless pit of a government that can not manage its own finances. Hard earned investor money that may never be seen again are disappearing into the maws of government incompetence and downright malfeasance. Talk about an irrational bubble! Instead, such a money losing procedure would be better invested in palpable mineral assets in the ground. Here we have the spectacle of panic and fear propelling hard working middle class investors willingly leaping as lemmings into one of the most risky assets of them all U.S. Debt and selling real mineral assets for pennies on the dollar. U.S. debt should've been downgraded a long time ago, but for the failure of their crony rating agencies to act in a fiduciary manner. They have a bad record. Remember the subprime fiasco which is one of the causes of the impoverishment of our entire country. Talking about kicking the can down the road-it is a can of worms. Foreign agencies are questioning the validity of the U.S. credit rating being assigned increasingly shaky assets, yet investors flock to them in search of liquidity. A more rational approach would be to purchase a quality gold and silver producers who are posting increasing profits quarter by quarter, return on equity and a growing pipeline of development opportunities.
Gold Stock Trades sees a snapback occurring imminently. Do not be confused by the machinations of the Wall St. institutions in their age old process as they steer the small investor away from situations which they themselves are picking up at bargain basement prices. Click Here For A Free 30 Day Trial Of Gold Stock Trades Members Only Service. We may now be testing a bottom that may furnish us additional entry points. The current crisis may be just the excuse that the Federal Reserve has been waiting for to inject additional stimulus. Do not be dismayed by violent corrections as investors are forced to sell natural resource stocks in order to meet margin requirements. These liquidity traps may result in declines of 50-90% which are characteristic in the life cycle of junior mining companies. To reiterate, we are possibly being programmed by the authorities to accept yet another stimulus. Recently Bernanke said, "…The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support." It is the old law of the casino: there can not be 100% of winners at blackjack. Perhaps 20% of the winners walk away with the losses of the 80% who go home with empty pockets. Joseph advised the Pharaoh of Egypt thousands of years ago, there are fat years and there are lean years during which as faithful stewards we should prepare ourselves for the hard times during the prosperous years by taking profits as targets are reached. What do all these allusions mean to the subscribers of GST? Witness the panic and fear that now pervades the marketplace. The astute speculator watches and waits as the corrective process wends its way through the markets. It is the age old transfer of wealth from weak hands to strong hands. Let's look at the events of this latest correction. What we are now going through is not novel. As far back as the early civilizations until the present time, the financial markets have created winners and losers. Whether it be tulip madness or the Florida Land Boom fiasco, the markets have always found ways to separate the winners of the losers. Today's bubble is not in mining stocks, but in U.S. treasuries. Click Here For A Free 30 Day Trial Of My Members Only Service.
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| 2 OR 3 WEEKS UNTIL GLOBAL MELTDOWN Posted: 06 Oct 2011 01:08 PM PDT How come you only get truth from foreign media? Shit about to hit the fan. " alt="" />
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| Eurozone QE Courtesy Of The US Federal Reserve Posted: 06 Oct 2011 12:45 PM PDT Shocking... Prelude to a government sponsored Precious Metals massacre LONDON (Dow Jones)--Inflation will likely peak at above 5% in November, Bank of England Governor Mervyn King said Thursday. CFTC lets Morgan get away with rigging silver market By Ned Naylor-Leyland On September 12th 2011, JPMorgan were served an explosive amended Class-Action lawsuit, detailing the individuals accusedof effecting the Silver manipulation and also the methodology used in doing so. The evidence within this document is exactly what the CFTC have sat on since the hearing of May 2010. With this incriminating evidence now in the public domain some very strange things took place. Firstly, the CFTC again decided to delay their vote on Speculative Position Limits, from October 4th2011 to October 18th. Then, on September 16th – 4 days after this lawsuit was served on JPMorgan - the CFTC released thefollowing on their website: September 16, 2011 CFTC's Division of Market Oversight Provides Temporary Relief from Large Swaps Trader Reporting for PhysicalCommodities Washington, DC– The Commodity Futures Trading Commission's (Commission's) Division of Market Oversight(Division) today issued a letter providing temporary relief from the requirements of the Commission's regulationsregarding large trader reporting of physical commodity swaps (§§20.3 and 20.4). Because this is the first time thatswaps data is being collected, this temporary relief is intended to provide sufficient time to enable both the industryand the Commission to develop and refine systems and processes that will be able to report these complextransactions. On July 22, 2011, the Commission published large trader reporting rules for physical commodity swaps andswaptions. The rules require daily reports from clearing organizations, clearing members and swap dealers, andbecome effective on September 20, 2011. The letter issued today provides temporary relief from reporting, as long asparties are making a good faith attempt to comply with the reporting requirements, until November 21, 2011, forcleared swaps, and January 20, 2012, for uncleared swaps. Upon the conclusion of applicable relief periods, suchreporting parties must become fully compliant. This extraordinary and inexplicable 'free-pass' from reporting by the CFTC allowed major players (such as JPMorgan)to go beyond speculative position limits so long as they 'make a good faith attempt to comply with reporting requirements'. What this means in real terms is that the CFTC loosened reporting requirements – where previouslyany position beyond the concentration limit must be proven to be hedged elsewhere, no longer would this be thecase. Just 1 day after this 'relief' was granted, the Silver (and Gold) price went into a tailspin. How the CFTC thinks it is appropriate to continually delay the vote imposing the will of Congress with respect to position limits is anyonesguess, but to provide 'temporary relief' from reporting while the Silver manipulation is still under investigation ismalfeasance under any definition of the word. I look forward to seeing how higher Regulatory and Judicial authoritiesin the US deal with this behaviour by the CFTC, presumably the CFTC itself can look forward to being dragged infrontof Congress to account for itself. Global QE is ALIVE & WELL Load Up On Gold and Silver as Bernanke Dives Off the Deep End By Martin Hutchinson, Global Investing Strategist, Money Morning I first thought U.S. Federal Reserve Chairman Ben Bernanke was being deceitful when he denied the existence of inflation - but now I'm beginning to think he's simply delusional. Anyone who watched or listened to Bernanke's Oct. 4 congressional testimony must have reached the same conclusion. "Persistent factors continue to restrain the pace of recovery," Bernanke said. Then the Fed Chairman promised to consider yet more stimulus "to promote a stronger economic recovery in a context of price stability." The irony, of course, is that we don't actually have price stability, but Bernanke refuses to believe this - thus the added stimulus. And that says nothing of the fact that the first $2 trillion of "stimulus" did little or nothing for the overall economy. This is the same kind of delusion that led the Fed Chairman to proclaim in 2007 that the "the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained." So, with a delusional central bank chairman, an anemic economic recovery, and every indication that prices across the board will continue to soar higher, there's really only one place to put any loose change you have lying around: gold and silver. So far the only thing the Fed's loose monetary policy has succeeded at doing is pushing gold and silver prices steadily higher. Gold has risen by more than 30% this year, and silver at one point in April was trading 300% higher than it was a year earlier. These metals have stumbled lately, but with over-expansive monetary policy still intact, they are likely to experience a strong rebound. Remember, it's not just Bernanke: The European Central Bank (ECB) also has stopped raising interest rates because of the Eurozone's problems. And the Bank of England (BOE) has indicated that it may well drop rates from their current 0.5% level - even though British inflation remains around 5%. The undeniable result will be a renewed surge in gold and silver prices, meaning the present pullback is an outstanding buying opportunity. If gold matches its 1980 peak adjusted for inflation, it will hit $2,500 an ounce. If it matches its 1980 peak adjusted for the world economy's growth since then, it will hit $5,000 an ounce. Similarly, if silver were to match its 1980 peak adjusted for inflation, it could climb as high as $150 an ounce. Ranting Andy makes it clear QE is not just Bumbling Ben Bernanke: Today the Bank of England left interest rates at 0.5% this morning and announced a new 75 billion pound QE program, or roughly $120 BILLION. Given that England's economy is just one-seventh the size of America's, their announcement is the equivalent of the Fed announcing an $840 BILLION QE3 program. http://www.zerohedge.com/news/bank-england-expands-qe-%C2%A375-billion-total-%C2%A3275-billion-keeps-rate-unchanged Similarly, the ECB left rates unchanged at the piddling level of 1.5%, only doing so because it is compromised in trying to maintain Germany's support of the PIFIGS banking system. Irrespective, under the radar it, too, announced another 40 Billion Euro, or $55 BILLION QE program to buy ECB sovereign bonds, and per comments all over the tape this past week (including from Germany), is ready, willing, and able to save any and all banks with more PRINTED MONEY BAILOUTS. http://www.zerohedge.com/news/watch-trichets-last-ecb-press-conference-live Yet Bumbling Ben assures that there is no inflation here in the US... BOE King: UK Inflation Likely To Peak Above 5% Next Month "The number for inflation that we'll see published in two weeks' time is likely to be over 5%. But that, we think, is the peak," King said in a television interview with broadcaster ITV. "We are past the worst. And from now on, we should be in a position where slowly but gradually living standards, real take-home pay, will be able to pick up. That's the world we want to get back to," King said. The BOE's Monetary Policy Committee voted Thursday to expand the central bank's bond buying program by GBP75 billion to GBP275 billion, in an effort to aid the U.K.'s faltering economy. It also kept its key interest rate unchanged at 0.5%, a record low. The central bank said the U.K. economy is threatened by a slowdown in global activity and the sovereign debt problems of the euro zone. Official statistics published Wednesday showed the U.K. economy expanded just 0.1% in the second quarter. "I can't guarantee that the world economy won't change in a way that will make our position very difficult," King told ITV. "But what I do know is taking this measure will make it better than it would have been otherwise. This is the right thing to do and it will improve the position of the U.K. economy." QE goes global, and inflation is obvious...except to our delusional Fed Head. Follow the Money: Behind Europe's Debt Crisis Lurks Another Giant Bailout of Wall Street By Robert Reich Today Ben Bernanke added his voice to those who are worried about Europe's debt crisis. But why exactly should America be so concerned? Yes, we export to Europe -- but those exports aren't going to dry up. And in any event, they're tiny compared to the size of the U.S. economy. If you want the real reason, follow the money. A Greek (or Irish or Spanish or Italian or Portugese) default would have roughly the same effect on our financial system as the implosion of Lehman Brothers in 2008. Financial chaos. Investors are already getting the scent. Stocks slumped to 13-month low on Monday as investors dumped Wall Street bank shares. The Street has lent only about $7 billion to Greece, as of the end of last year, according to the Bank for International Settlements. That's no big deal. But a default by Greece or any other of Europe's debt-burdened nations could easily pummel German and French banks, which have lent Greece (and the other wobbly European countries) far more. That's where Wall Street comes in. Big Wall Street banks have lent German and French banks a bundle. The Street's total exposure to the euro zone totals about $2.7 trillion. Its exposure to to France and Germany accounts for nearly half the total. And it's not just Wall Street's loans to German and French banks that are worrisome. Wall Street has also insured or bet on all sorts of derivatives emanating from Europe -- on energy, currency, interest rates, and foreign exchange swaps. If a German or French bank goes down, the ripple effects are incalculable. Get it? Follow the money: If Greece goes down, investors start fleeing Ireland, Spain, Italy, and Portugal as well. All of this sends big French and German banks reeling. If one of these banks collapses, or show signs of major strain, Wall Street is in big trouble. Possibly even bigger trouble than it was in after Lehman Brothers went down. That's why shares of the biggest U.S. banks have been falling for the past month. Morgan Stanley closed Monday at its lowest since December 2008 -- and the cost of insuring Morgan's debt has jumped to levels not seen since November 2008. It's rumored that Morgan could lose as much as $30 billion if some French and German banks fail. (That's from Federal Financial Institutions Examination Council, which tracks all cross-border exposure of major banks.) $30 billion is roughly $2 billion more than the assets Morgan owns (in terms of current market capitalization.) But Morgan says its exposure to French banks is zero. Why the discrepancy? Morgan has probably taken out insurance against its loans to European banks, as well as collateral from them. So Morgan feels as if it's not exposed. But does anyone remember something spelled AIG? That was the giant insurance firm that went bust when Wall Street began going under. Wall Street thought it had insured its bets with AIG. Turned out, AIG couldn't pay up. Haven't we been here before? Republicans and Wall Street executives who continue to yell about Dodd-Frank overkill are dead wrong. The fact no one seems to know Morgan's exposure to European banks or derivatives -- or that of most other giant Wall Street banks -- shows Dodd-Frank didn't go nearly far enough. Regulators still don't know what's happening on the Street. They have no clear picture of the derivatives exposure of giant U.S. financial institutions. Which is why Washington officials are terrified -- and why Treasury Secretary Tim Geithner keeps begging European officials to bail out Greece and the other deeply-indebted European nations. Several months ago, when the European debt crisis first became apparent, Wall Street banks said not to worry. They had little or no exposure to Europe's problems. The Federal Reserve said the same. In July, Ben Bernanke reassured Congress the exposure of U.S. banks to European nations in trouble was "quite small." Now we're hearing a different tune. Make no mistake. The United States wants Europe to bail out its deeply indebted nations so they can repay what they owe big European banks. Otherwise, those banks could implode -- taking Wall Street with them. One of the many ironies here is some badly-indebted European nations (Ireland is the best example) went deeply into debt in the first place bailing out their banks from the crisis that began on Wall Street. Full circle. In other words, Greece isn't the real problem. Nor is Ireland, Italy, Portugal, or Spain. The real problem is the financial system -- centered on Wall Street. And we still haven't solved it. The answer is so simple: TARP - EuroStyle EU Says It "Will Propose" Bank Recapitalization Action BRUSSELS (Dow Jones)--The dire situation facing Dexia S.A. (DEXB.BT) and rising turmoil in financial markets have convinced European Union authorities that more forceful action is needed to shore up the bloc's banking system. Just last week, European officials said the 24 banks that failed or came close to failing this summer's stress tests might need more capital--but that other banks are in good shape and shouldn't need more help. One of the banks given a clean bill of health was Dexia, the Belgian-French lender that will almost certainly be broken up in the coming weeks. Dexia is facing a liquidity squeeze, sparked by a warning by Moody's Investors Service Inc. on Monday that the bank's heavy reliance on wholesale funding and its large euro-zone sovereign debt portfolio threaten its stability. Dexia's problems, combined with levels of economic pessimism and fear not seen since the collapse of Lehman Brothers three years ago, have led officials to concede that governments will need to prepare to recapitalize banks beyond the 24 identified as shaky by the stress tests. "There is a change of course," said an EU official. "The Dexia situation is not an isolated incident, as some would like to believe. We could have more Dexias in the short or medium-term." The European Commission, the EU's executive arm, will propose "coordinated action" on the recapitalization of banks in the EU, a spokesman said Thursday. The "commission will propose coordinated action on bank recapitalization to member states," a spokesman for the commission's President Jose Manuel Barroso said during a regular press briefing. "We now need to take a step beyond [the finalization] of the process of cleansing balance sheets of impaired assets, which has been under way since 2008," he said. It's still unclear what the commission's proposals will be. One option, the EU official said, would be for national governments to strengthen the "backstops" for banks that they are supposed to have in place. The commission is also seeking to improve coordination between governments over how to deal with problems at large cross-border banks that are common in Europe. Fighting between Belgium and France over how much of Dexia's debt guarantees will be provided by each country shows the process still needs to be improved three years after the rash of EU bank failures following the collapse of Lehman Brother, the official said. ...and the price of Gold doubled following TARP - USA Style. Could the bottom be in for Gold and Silver prices as physical supply continues to disappear? Physical silver running out because its spot price does not reflect true investment demand By: Peter Cooper, Arabian Money Several readers of ArabianMoney have written to us over the past two weeks to express their astonishment at the current price of silver because demand where they live is so high that stocks have run out. Consider this comment: 'I used to buy silver from a shop in Kobar in Saudi. From the last four weeks they said they ran out of silver. I cannot find anyone who sells silver in Saudi now. I asked them from where do they get their silver. They said the UAE. The problem is they only have 1kg bars…and I still cannot find any supplier.' No stock Well don't bother coming to the UAE. Our information is that the 1kg bars mentioned here and featured in a video on the website last month (click here) are all sold out too. We've also had feedback about low or no stock in Texas and Australia from big private bullion dealers there. Now what would normally happen when a commodity is in short supply is that the price would go up to encourage sellers to put some more into the market. That is presently not happening because the silver price is being artificially suppressed in the Comex futures market by the bullion banks acting on instructions from the Fed presumably, so why would you sell that silver cheaply if you happened to own some? But something has to give and it is the price of physical silver rather than the Comex price of the shiniest of metals. If you can find any silver these days you will pay quite a substantial premium over the spot price. But pay it because that is probably still a bargain compared to where silver prices are going. The truth is that silver is a rare metal, more rare than gold. Silver reserves have been estimatated at one-hundredth of gold reserves. Silver is after all consumed by industrial processes and reserves have dwindled over the years because the price has been kept so low for so long by market manipulation. Why is that? Silver price fixing This market manipulation dates back to the last silver boom of the late 70s and the spectacular $50 spike in the price in 1980. The central banks then saw suppression of the silver and gold price as a part of their war on inflation. They clearly lost that war but kept gold and silver prices down until this decade. Thirty-one years later and we are still not back to those silver prices despite a seven-fold increase in the global money supply. On that reckoning silver ought to be $350 an ounce, not $30 today. However, the snap back for silver prices now has the capacity to be sensational, and far beyond the mini-spike in the first few months of this year from $30 to almost $50 again. So those who go seeking out physical silver to buy at current prices are going to be very well rewarded and soon, not in 31 years! 
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| Libertarian Wall Street Protesters Demand End to the Fed Posted: 06 Oct 2011 12:30 PM PDT
Ron Paul says that the Wall Street protests are legitimate, and that they are really protesting against the Federal Reserve. One of the protest organizers tells me that a large proportion of the protesters are Ron Paul supporters. Most of them believe that ending the Federal Reserve is the most important step to restore our country's prosperity. See this and this. Remember, even the Wall Street Journal has called for the Fed to be broken up. As I have extensively documented, the Fed is largely responsible for the economic crisis, and has failed to meet a single one of its stated mandates (let alone its implied ones). The Fed has been enabler-in-chief for the corruption rampant on Wall Street. And as I noted Tuesday: Obama Is Not the Answer Libertarians also point out that – while the Obama campaign and Democratic National Committee are trying to hijack the Wall Street protests – they have been part of the problem, not part of the solution. They point out that Obama has appointed Wall Street insiders to all of his key economic posts, and accepted more money from Goldman Sachs and the other big Wall Street banks than anyone else (and is still raking it in). As such, despite his populist rhetoric, he's with Wall Street, not the protesters. Indeed, he is Wall Street. They point out that Obama has continued the process of turning the U.S. into a banana republic, and whether you call it communism, fascism or crony capitalism, Obama has been at least as bad as Bush. They point out that Obama has been a wolf in sheep's clothing, someone who thinks high levels of unemployment are good. They point out that Obama has been more brutal than Bush and has destroyed our liberties even faster than Bush. For these reasons, libertarians correctly state that re-electing Obama is not the answer. And they note that Ron Paul's consistent, decades-long positions are much closer to the American peoples' demands than Obama's. Postscript: Anyone who still thinks Obama will save us is high. On the other hand, libertarians have been out of power for a long time. Neoliberals and Neoconservatives – two masks on a single face of corruption – have been in the driver's seat for decades. Libertarians should welcome the protests as a chance to challenge the status quo, to promote liberty and to end the Fed – the chief enabler of corruption in our country today. Folks dismissing the Occupy protests as being Obama propaganda or left-wing haven't yet learned the facts, are blaming the fact that the mainstream Democratic party is trying to infiltrate the movement on the protesters, or are letting Fox, Drudge or other mainstream news sources blow a sub-set of the overall protests out of proportion. See this, this and this. Indeed, as the Associated Press notes, the protesters are fed up with BOTH mainstream parties.
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| Silver and Gold Prices Remain in a Correction in an On-going Primary Uptrend (Bull Market) Posted: 06 Oct 2011 11:27 AM PDT Gold Price Close Today : 1651.90 Change : 11.60 or 0.7% Silver Price Close Today : 31.970 Change : 1.653 or 5.5% Gold Silver Ratio Today : 51.67 Change : -2.435 or -4.5% Silver Gold Ratio Today : 0.01935 Change : 0.000871 or 4.7% Platinum Price Close Today : 1515.60 Change : 19.60 or 1.3% Palladium Price Close Today : 606.50 Change : 29.50 or 5.1% S&P 500 : 1,164.97 Change : 20.94 or 1.8% Dow In GOLD$ : $139.20 Change : $ 1.34 or 1.0% Dow in GOLD oz : 6.734 Change : 0.065 or 1.0% Dow in SILVER oz : 347.93 Change : -12.92 or -3.6% Dow Industrial : 11,123.33 Change : 183.38 or 1.7% US Dollar Index : 78.53 Change : -0.393 or -0.5% Today stocks, GOLD, and SILVER built on bottoms struck on Tuesday and Wednesday. Dollar stumbled again. Having finished the first leg of a rally, the Dollar Index is correcting. Right now its trading 78.526, down 39.3 basis points or 0.51%. None of this clouds the dollar's rally picture. It's quite overbought, so is experiencing merely a routine correction It will come back, doubt it not. Nothing has changed on the euro's chart, although today it rose 0.68% to 1.3438. Still looks sorry as gully dirt, but may rally to the 20 dma, now 1.3564, or to 1.3800, the bottom line of the trading channel it broke down from. Around the globe the Japanese yen still has made no decision and continues dancing sideways with its 20 dma. Closed today at 130.49c/Y100 (Y76.63/$1), up 0.17% The GOLD PRICE added $11.60 to yesterday's Comex close to settle the day at $1,651.90. Back on 3 October gold closed $1,655, only to fall off the next day. That $1,655 area is the resistance to beat right now. The GOLD PRICE will likely pierce that tomorrow and push toward the next barrier at $1,675. At $1,675 the GOLD PRICE will meet the top boundary of the flag it has formed since 26 September, AND it will run head on into the downtrend line from the September $1,923.70 peak. If gold can break through that strong resistance, it could rise to $1,725 very quickly, scattering the shorts like quail in an open field, and yet fall back once again. I am still not satisfied GOLD has done sufficient penance. We may see lower lows yet. SILVER is showing tighter and tighter supply, with wholesalers quoting delays now even on US 90% silver coin. That certainly implies higher prices, but I could write off silver's gain today -- up 165.3c to close Comex at 3197c) -- as merely a rally to the top of the flag it has formed. Breaking through 3100c earns my respect, but can the SILVER PRICE break 3350c? I know, I know, it sounds like I'm constantly moving the goal line back, but in truth nothing has happened until the SILVER PRICE beats 3350c, and pushes up to 3900c. In it favor, however, are tightening supplies and rising premiums, and a most overbought condition in the RSI and MACD. SILVER and GOLD PRICES remain in a correction in an on-going primary uptrend (bull market). More downside is likely before the correction ends. I may be wrong as a tuxedo at a cockfight, but I reporting what I see. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2011, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. 
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| John Hathaway - Bank Failures Moving Gold, This is Contagion Posted: 06 Oct 2011 10:38 AM PDT Europe is going to print the euro and we are going to print the dollar. We had a bank go down today and France is making contingency plans...
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| Posted: 06 Oct 2011 09:52 AM PDT In our previous post we warned, indirectly through the IMF, that the biggest risk for Europe is the inability to reach consensus over anything from the most complicated, to the simplest matter. As noted previously, one of the main initial drivers of the market surge which has since translated into yet another short covering rally of epic proportions was the belief that Europe can actually come together in agreement over the simplest thing - like its own survival. Alas, it appears even that is not the case. As Bloomberg reports, "Germany and France are at odds over whether the European Financial Stability Facility should have limits on government bond purchases, Handelsblatt reported, citing an unidentified high-ranking European Union diplomat. France doesn't want to restrict the EFSF on how much of its funds it can use for such purchases, the newspaper said in a preview of an article to appear in tomorrow's edition. Germany wants to limit the amount EFSF can spend for bonds per country and is also considering whether there should be a time limit for bond purchases, Handelsblatt said." Said otherwise, here comes the latest cause of discord within Europe. Unfortunately, it also means that any rumor, innuendo and speculation that Europe has finally reached a coherent union over its own bailout can be promptly discarded. As if there was ever any doubt in the first place. From Handelsblatt:
Cue the FT, Liesman, and/or some IMF guy we have never heard of with attempts to deny what is painfully obvious: Europe will never reach a consensus because the ultimate price of a European bailout is the absolutely certain suicide of the currently ruling political class. Alas, none of those bureaucrats wants to (or can) do anything else but "rule"... And if the IMF advisor is right, Europe has less than a month to prove us wrong.
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| Posted: 06 Oct 2011 09:43 AM PDT In 1910, some of the Nation's most powerful bankers met secretly off the Continue reading the article . . . Solari Report Blog Commentaries THRIVE: What On Earth Will It Take?
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| Posted: 06 Oct 2011 09:22 AM PDT
With Manic Markets, it is crucial to evalue both long and short term charts and levles often. We wrote of the Squeeze set up three days ago. Once again, the markets bounced off the support levels, and fooled too many of the new "smart" shorts. Our long term scenario is intact, and we still believe the big dynamics on the downside will evolve later this autumn. There is a big risk of a Collapse happening, just when everybody is sucked into the long trade, and shorts have given up. For now, let's review the short term charts, all hitting resistance levels. Let's just wait for Biggs to turn bullish, again.
SPX
Stoxx 50  DAX 
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| Market Snapshot: Did Credit Just Capitulate? Posted: 06 Oct 2011 09:03 AM PDT Another day, another 12 swings of greater than 0.75% in S&P futures as volume slid to the lowest in a week and second lowest in two weeks. Credit and equity markets stayed largely in sync (as they have for the last few days - with slight beta-adjusted underperformance of credit) until around lunchtime and then a funny thing happened to investment grade credit.
At around 12:30ET, the most liquid credit index, IG17, gapped tighter as ES and HY reversed briefly off the highs and then IG did not stop - compressing 3-4bps more into the close - notably outperforming HY and ES (its far higher beta cousins).
At the same time, the less liquid but hugely levered (and exposed to correlation traders, tail-, and jump-risks), IG9, cracked very notably tighter (from our runs around 15bps) to 147bps. IG9 had held up as markets rallied but this move's magnitude and velocity suggest more than just some hedge adjustments and while the rest of the risk assets we cover were all levitating, this 'capitulation' stands out among them. Certainly that move in IG9 - with its accompanying on-the-run hedging - is likely what helped IG17 dislocate from equities today and we wonder if it was the ammo the market needed to exhaust as we head into tomorrow's NFP extravaganza.
After Europe close, FX markets went into drift mode as the dollar just leaked to one week lows with EUR managing to hold well above 1.34 and all the majors (apart from swissy and cable) made new highs (vs USD) for the week). CAD is the best performer since Friday and once again we note JPY's stability - something perhaps Mr. Trichet should look t.
TSYs never looked back once Europe had closed and are now notably higher in yield on the week with 2s10s30s at 75bps now 8bps higher on the week and an impressive 25bps off Tuesday's lows. We suspect the 2s10s30s carry trade that we discussed so much last year (and prior to Twist) is back in play again, helping fuel some of this re-risking of the last few days. Arguably at current levels, 2s10s30s suggests ES should be 1175-80 so perhaps the underperformance of ES suggests that early fuel is running low.
Commodities kept on trucking today with oil taking out $82.50 (up 9% from Tuesday's lows) and Silver clearing $32 (up almost 12% from Tuesday's lows). Gold is behaving relatively well given the chaos surrounding it - stabilizing around $1650 and holding around 1.75% higher on the week, which compared to only a 0.45% loss in the USD seems reasonable for anyone.
After leading risk down, ES seemed to be leading it higher also in CONTEXT over the medium-term and in the short-term, thanks to the moves in 2s10s30s and oil (as well as AUDJPY), equities remain cheap here - believe it or not. However, the correlations have been incredible and this feels like a light switch wil flick and reverse it. The most clean signal we have of relative performance is longer-term against HY and equities remain expensive. Moreover, a model we often look at with regard to SPY in the context of TSYs and IG credit (IEF and LQD) is very much at the top of its highly mean-reverting channel - suggesting if nothing else that equity needs to pause for bonds to catch up. It seems that tomorrow's NFP will be the center of attraction though little action this week seems predicated on any fundamental analysis of what is an increasingly concerning endgame overseas - the focus on a localized domestic (US) point-in-time print when all around us is asunder, seems fickle at best and ignorant at worst. Charts: Bloomberg
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| Posted: 06 Oct 2011 08:40 AM PDT
A week after the BBC exploded Alessio Rastani to the stage, it has just done it all over again. In an interview with IMF advisor Robert Shapiro, the bailout expert has pretty much said what, once again, is on everyone's mind: "If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system. We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere because the global financial system is so interconnected. All those banks are counterparties to every significant bank in the United States, and in Britain, and in Japan, and around the world. This would be a crisis that would be in my view more serrious than the crisis in 2008.... What we don't know the state of credit default swaps held by banks against sovereign debt and against European banks, nor do we know the state of CDS held by British banks, nor are we certain of how certain the exposure of British banks is to the Ireland sovereign debt problems." But no, Morgan Stanley does, or so they swear an unlimited number of times each day. And they say not to worry about anything because, you see, it is not like they have any upside in telling anyone the truth. Which is why for everyone hung up on the latest rumor of a plan about a plan about a plan spread by a newspaper whose very viability is tied in with that of the banks that pay for its advertising revenue, we have one thing to ask: "show us the actual plan please." Because it is easy to say "recapitalize" this, and "bad bank" that. In practice, it is next to impossible. So yes, ladies and gentlemen, enjoy this brief relief rally driven by the fact that China is offline for the week and that the persistent source of overnight selling on Chinese "hard/crash landing" concerns has been gone simply due to an extended national holiday. Well, that holiday is coming to an end. By the way, Reuters, Shapiro is not a Yes Man -we'll spare you the ruminations. h/t Scrataliano
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| Gold Daily and Silver Weekly Charts Posted: 06 Oct 2011 08:35 AM PDT |
| Posted: 06 Oct 2011 08:33 AM PDT Jeff Clark, editor of BIG GOLD, caught up recently with Mike Maloney, founder of GoldSilver.com to get his latest thoughts on the gold and silver market. Was the recent selloff in the precious metals sector the beginning of the end of the Great Gold Bull Market? Or merely the end of the beginning? Mike's perspective may surprise you… Jeff Clark: For those who don't know you, why is Mike Maloney such a big believer in gold and silver? Mike Maloney: Around 1999, my mother needed help with the estate my father had left her. My sister and I interviewed a dozen financial planners and picked the one that had the most glowing recommendations and gave him control of the assets. He lost about 50% of them in the next year and a half. What I've found is most financial planners get it wrong. They're always chasing yesterday's news. To be fair, there was a market crash, but with 50% of her assets gone by 2001, I ripped everything away from him, moved it to cash, and started studying the economy like crazy. I discovered that the people concerned about budget deficits and trade imbalances at that time were in the precious metals sector, the hard money advocates. All the rest of the economists and newsletter writers didn't really care. Concerns about international trade imbalances and how they were going to come back to bite us one day were coming from the hard money analysts. They also wrote about monetary history, something I just fell in love with. The fact that things just repeat over and over again is amazing. I have hard data from 1918 to today, and anecdotal evidence before 1918, that shows that throughout history a society has a certain amount of real money — gold and silver. Then they either come out with debased coinage, or paper representations of gold and silver and expand the currency supply, which eventually cause prices to rise. People then realize there was something wrong with the currency and they rush back toward gold and silver to protect their purchasing power…and in doing so, they bid up the value of the gold and silver in the country until it matches the value of the circulating medium. It appears to me this process has been going on since 407 BC, with the first great inflation in Athens. I have charts in my book, Guide to Investing in Gold and Silver, starting in the year 1918, showing the value of the gold held at the United States Treasury compared to the value of all of the base money or paper currency, and it was a 1:1 ratio. Jeff: So history shows that the value of gold eventually equals the value of all paper money in circulation? Mike: Yes. Back then, the US dollar was a claim check on real money — gold. Base money was the number of US Treasury gold notes in circulation. Before World War I, base money equaled the value of the gold held at the US Treasury. Then we established the Federal Reserve and did a bunch of deficit spending for WWI, expanding the currency supply, so now there wasn't enough gold to cover all the dollars they printed. In 1934 the price of gold was changed to $35 per ounce and the values of base money and gold at the Treasury were once again in equilibrium. Then we expanded the currency supply to pay for WWII, Korea, and Vietnam, and in the '70s the price of gold rose until its value at the Treasury exceeded base money. But, for a short time in 1980, the value of gold at the Treasury not only exceeded the base money, it surpassed base money plus outstanding credit card balances. This is important because credit cards are replacing cash in circulation, so you must include it if you want to estimate a price target. Jeff: So how high do gold and silver go? Mike: When I finished the book, it required a $6,000 gold price to cover base money plus outstanding revolving credit. I'm not saying that that's going to happen, but if history were to repeat, that would be the price. However, since the book was written, Bernanke created a whole bunch of base money to bail out the banks, and now it takes a $15,000 to $20,000 gold price. One caveat is that $1.6 trillion of excess currency is sitting on banks' balance sheets. It has yet to enter circulation, and if it never does, then this price target changes. My point is that prices are a moving target. Putting a dollar figure on them is an exercise in stupidity, I think, because the dollar is always changing. You can't use it as a measuring stick. My target for gold is that it should be equivalent to 1/40 of a single-family, medium-priced home, or two shares of the Dow. So gold will probably buy you about 12 times more stocks and 3 times more real estate in the future than it does now. So those are my prices. And silver will leverage you to that. There is more gold on the exchanges and with the dealers that investors can buy than there is silver. Their current prices do not reflect this. Gold is way too cheap compared to dollars, and silver is too cheap compared to gold. Jeff: Sounds like it's not too late to buy gold and silver. Mike: No. What investors need to be aware of is that we are on the last legs of our currency system. History shows that the world sees a brand-new monetary system every 30-40 years — and ours is 40 years old. Right now all currencies on the planet are backed by debt. All of the previous transitions were baby steps from something (gold) to nothing (debt). In order to give confidence back to the currencies, we'll have to go from nothing (debt) to something (most likely gold again) in one big, huge, gigantic leap. This will cause an economic convulsion the likes of which the world has never seen. The end of this precious metals bull market will be marked by panic buying. Gold and silver will be going into an astronomical bubble one day, probably the biggest bubble in financial history. That is why I think gold and silver are still fundamentally undervalued. Jeff: Investors reading this might be a little skeptical that a bullion dealer is telling them to buy gold and silver. Do you mind sharing what percentage of your assets is held in gold and silver? Mike: My personal portfolio is 100% in gold and silver. I have no other investments. I am completely committed to this because I absolutely believe it. I spent 2-1/2 years writing what is now a bestselling book on gold, and I opened a precious metals dealership. There isn't anything I do, no action I take, that isn't somehow connected to gold and silver. Jeff: What separates GoldSilver.com from other bullion dealers? Mike: Everybody at GoldSilver.com invests in gold and silver. They have all been invested in precious metals since I started the company in 2005. Everyone is absolutely committed and very knowledgeable. So we are all on the same side of the boat as Casey Research. If you become a gold and silver client, you'll know we're invested just like you are. We're walking the walk and talking the talk. We also have a team of researchers who are constantly analyzing where we are in this bull market. It's in our best interest to try to find the top of this bull market and sell when the time is right. I believe we can multiply your winnings by letting you know what we're doing when it comes time to sell. The way I've set up my company is that if you don't win, I don't win. Another thing you should know is that I am not a gold or silver bug. I couldn't care less about these metals. They are just in their cycle right now and will be the best performing asset for the coming years — period — just based on history. There are these brief moments in history where the safe-haven asset also becomes the asset class with the single greatest potential gains in absolute purchasing power. We're in one of these cycles right now; as the currency supply gets ramped up and people realize there is something wrong with it, they'll rush back toward gold and silver and bid the price up until it matches the value of the currency supply. Jeff: You're increasing the number of storage facilities outside the US; why should a US citizen consider storing bullion outside the country? Mike: Some investors are concerned about "confiscation," which is technically incorrect. The US government never confiscated gold; they "nationalized" it. In 1933, they bought it from US citizens at full face so that the Treasury could hold it as an asset for the entire nation. That's the very definition of nationalization. Jeff: Are you saying you don't think gold could be confiscated? Mike: It's possible, but I don't believe it would happen in the United States. More than half of our currency resides outside the border. We're the only country in that situation. If Obama passed an executive order today once again nationalizing gold, I believe that banks and brokerage houses around the world would suspect something was wrong with the dollar, and they would immediately dump their dollars and buy gold and silver. That would cause the dollar to fall to zero and send gold and silver to infinity in a matter of weeks. I would hope there is someone in the government smart enough to know this. If so, then it makes nationalization very unlikely. Jeff: Good point. Mike: But I do believe that it is good to have some geographical diversity. I think we're going to see governments trying to limit our financial freedom even more than we've seen since 9/11. They'll do this by instituting such draconian capital controls that today's IRS will seem magnanimous by comparison. I want to be able to travel freely and have access to my funds no matter what happens. Therefore, I keep some of my gold in offshore storage accounts in several countries. Jeff: But why go to the hassle and bother with the reporting requirements? Mike: Because if you've got ownership outside the country, you may be able to retain it, even in a nationalization. The point is, we don't know the future. All we can do is look at what's happening, try to figure out what governments are going to do, and then protect ourselves with a little bit of diversity. And of all the assets you could own offshore, I believe none are safer than physical gold or silver. Jeff: Do you think foreign storage puts a target on my back with government officials? Mike: Well, they want to make sure you're declaring any capital gain. And I do think that precious metals investors will see some sort of windfall profit tax when the government tries to punish those nasty gold speculators that caused the dollar to crash. They will always point the finger anywhere but where it belongs — which is squarely at the government and the Federal Reserve. People are just trying to protect themselves from government stupidity and the Fed by buying gold and silver. I think the reason they require the reporting is to make it difficult for people to cheat on their taxes. I don't think it's going to make you any more of a target than anybody else if you report everything. If you play within the rules, you're not a target. I myself walk the straight and narrow. I make sure I comply with everything the IRS and the Treasury require. Jeff: What about the small investor? Do you have any advice for the person who has limited funds? Mike: Yes. It only takes $40 to become a silver investor. Regardless of what your income level is, you're going to come out much better in the end. And once you take the leap and become an investor, your mindset changes and you find yourself starting to plan. A lot of people are not really planning on the future that much — but once you buy an ounce of silver and become educated, you give yourself a tremendous advantage over the rest of the population. So just buy small quantities of silver. It has such leverage to it. And silver will probably go into some sort of super-spike that you will want to catch, which means you probably need some sort of guidance. That's where subscribing to newsletters such as yours is very, very important for anybody who's going to get into this. Jeff: Thanks for your time, Mike. And we appreciate the discount you're offering our readers. Mike: You're very welcome. Regards, Gold is Not in a Bubble…Yet! originally appeared in the Daily Reckoning. The Daily Reckoning provides over 400,000 readers economic news, market analysis, and contrarian investment ideas.
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| This is Short Covering Before the Next Collapse Posted: 06 Oct 2011 08:14 AM PDT
The market action of the last few days reeks of short-covering more than anything else. I realize that rumors abound of more European bailouts (what is this… the 12th rumor?), Microsoft buying Yahoo! (an outright lie), and other items… but the reality is that the market is telling us plain and simple that this is just short-covering and a snapback.
For one thing, short interest today is at levels comparable to those of March 2009… when everyone thought the whole world would end. So there's plenty of fodder for a sharp short-covering rally to occur.
We're also seeing market action that indicates a short squeeze is on. Case in point, consider Tuesday's action in which an unfounded rumor concerning yet another European bailout produced a 4.2% move in the S&P 500 in the span of 40 minutes:
The effect was even more pronounced in the Russell 2000. In that case the market moved over 6% in the span of 40 minutes:
That's a 6% move… in less than one hour... based on another rumor pertaining to a European bailout (what is this… the 12th?). This is absolutely extraordinary and shows in no uncertain terms just how broken ad fragile the market is.
Indeed, the whole thing smells of 2008. Back then we saw rallies of 11%, 17%, even 20% too… how'd those work out? Did the market going up then mean that things were fixed and we had made a bottom?
Do not be fooled. This move is short-covering and a snapback and nothing else. We've seen several of these in the last two months alone. Every time the market rolled over quickly and collapsed.
So let the traders play their games. Based on retracement levels this move could go to 1,182 or 1,200 on the S&P 500. But this rally should be used to get even more defensive than before.
The reasons are clear: the European banking system is facing systemic failure. Bailouts will not solve this mess. The banks are all insolvent based on toxic debt exposure.
Meanwhile, the US economy is rolling over in a BIG way. The ISM purchasers managers' index, the Philly Fed index, payrolls, and the ECRI weekly leading index are all at or about to break into recessionary levels AGAIN.
Nearly half of Americans receive Government aid in some form or another. Food stamp usage is at a record high. The labor participation rate continues to fall.
And on and on.
In plain terms, the financial system is getting hit from all side. And the markets are setting up for a Crash on par with the 2008 collapse.
If you have yet to prepare yourself for what's coming, now is the time to do so. Whether it's by moving to cash and bullion, opening some shorts, or simply getting out of the markets altogether, now is the time to be preparing for what's coming (remember, stocks took six months to bottom after Lehman… and that was when the Fed still had some bullets left to combat the collapse).
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| Posted: 06 Oct 2011 08:13 AM PDT Dave Gonigam – October 6, 2011
It's starting to really smart. Financial repression, you may recall from previous issues, is government's practice of using "negative real interest rates" to reduce its debt load. Thus, you can park your money this morning in a 3-year CD, and you get paid a paltry 1.5% a year. With consumer prices rising at a 3.8% annual clip — even by the Bureau of Labor Statistics' skewed figures — you're losing more than 2% a year. Before taxes. When Addison wrote about financial repression in late July, the yield on a 10-year Treasury note was just under 3%. This morning — after two months and change of the "safety trade," and the Federal Reserve's overt attempts to bring down long-term interest rates — it's at 1.93%. Even if you lent your money to Uncle Sam for 30 years, your yield would come to a mere 2.88% — still not enough to overcome a rising cost of living.
That's a record low in 40 years of weekly record keeping by Freddie Mac. But for savers, this is a nightmare. "This is absurd," says our income specialist Jim Nelson. "And is going to start — if it hasn't already — a redefinition of 'safety.'"
"It's tough to say when these risk-averse investors' breaking point will come. But it most certainly will happen." Don't look for this redefinition to take place within investment-grade corporate bonds. Even those yields, in many cases, are getting chewed up by financial repression.
Yes, you say, but they're… stocks. Their prices can go up or down. True enough. But here's the lingering problem with Treasuries, as Addison explains in the most recent issue of Apogee Advisory: "Once bond investors start demanding higher interest rates in exchange for taking on the risk of investing in U.S. Treasuries, you are a sure loser if you're invested in those Treasuries. "If you hold them to maturity, you get 100 cents on the dollar, but that dollar has vastly diminished purchasing power compared with when you bought. If you sell them early, you'll get less than face value because the yield is so low compared with a new Treasury issue."
"But what is now being lauded as a success by the interest manipulators at the Federal Reserve will very soon prove to be this country's Waterloo. "The problem is that America's addiction to artificially produced low interest rates is becoming permanently cemented into the economy. By definition, artificially low interest rates cannot last forever. Once debt supply and inflation pressures overwhelm the Treasury market, as they inevitably must, yields will soar. "If you doubt that fact, ask the Greeks if the ECB is capable of holding down yields forever. The interest rate on their 2-year note is now above a staggering 70%."
"They dominate their industries, so they have pricing power. They have cash flow and access to financing. And they have a global presence. So if the economy tanks in one part of the world, it'll continue to flourish elsewhere."
"The market hit the bottom in early March 2009. Look at how the S&P Dividend Aristocrats index did compared with the regular S&P 500:"  "We all remember the bull market that occurred. But not many people took note of just how much faster dividend payers were growing in share price compared with the market as a whole — 81.9%, against 68.5%. "It could be even more obvious this time around. Of course, we don't know when that breaking point — that redefinition of safety — will come. But we do know how to profit once it does." Best of all, you don't have to wait for that breaking point to arrive. "The point of income investing," Jim goes on, "has little to do with speculation or 'finding the bottom.' It's about making sure you get paid for your investments."
Unfortunately, some of the biggest dividend names are among the more-stingy dividend payers — especially in the energy sector. "For instance," says Jim, "take Royal Dutch Shell. In 2010, Shell had a banner year. And 2011 was even better. They've posted a 77% jump in profits." "But how much of that have they given back to their shareholders? About 4.5%." "Then you've got British Petroleum. I'm sure you remember how BP froze their shareholder payouts during their gigantic Gulf oil disaster. But they're back to paying shareholders now. How much? About 3.7%." "There's also the American oil giant Exxon. Last year, they saw their income spike 41%. How much do their shareholders get? Just 2.2%." But thanks to a bill President Ronald Reagan signed into law 25 years ago this month, you have the chance to collect energy payouts with up to triple the yields of other income plays. Around the office, we've taken to calling them "10-86" plans, after the month they became law. The ultimate irony: "The funds for these '10-86' income streams," Jim explains, "ultimately get covered by none other than 'Big Oil' — companies like Exxon, Chevron, Shell and others who are usually a lot more tightfisted with shareholder cash." So it goes like this: You can collect income streams in the high single digits… and collect them indirectly from some of the biggest energy names out there. Not a bad way to compensate for gas prices that persist well above $3 a gallon, no? Jim explains how to take advantage in his new presentation. Give it a look here.
Bank shares rallied after Treasury Secretary Tim Geithner told Congress there was "absolutely" no chance of a U.S. bank blowing up the way Lehman did in 2008. Seriously. "The direct exposure of the U.S. financial system to the countries under the most pressure in Europe is very modest," he said. "Our firms — and this is true across the largest institutions in the United States — again are in a much stronger position if you look at their capital levels, levels of leverage, how they're funded." Sure, if you can make up numbers about what the assets are worth. Which is what the Financial Accounting Standards Board more or less authorized when it suspended mark-to-market accounting in early 2009. Yikes.
Not sharing in the rally was the French-Belgian bank Dexia, our candidate for 2011's version of Creditanstalt. Trading in Dexia shares was suspended today after word got out the Belgian government wants to nationalize the Belgian portion of the firm.
The euro has firmed to $1.342 after the European Central Bank held the line on interest rates, refusing to reverse its two increases this year.
The latest number is 401,000. And the previous week's figure was, as is now customary, revised upward.
Silver is up 2.5%, to $31.28.
Assuming that pace can be maintained the rest of the month, sales would top 6 million. That's a feat achieved only once before — last January. September wasn't too shabby, either, with sales totaling 4,460,500 — the second-highest monthly total after the aforementioned January record. [Ed. Note: The intense demand for Silver Eagles this year is handing an unexpected gift to collectors. The Mint is now minting the coins at its San Francisco location, in addition to West Point. Our friends at First Federal have a limited supply of this San Francisco issue, certified "Early Release," with the highest possible grade from the independent grading firm NGC. Learn more about this one-of-a-kind offer here.
"As we all know, we all must be loyal to our chosen political party. According to current statistics, no matter how repugnant the choice may be, approximately 95% of the sheeple will still vote in 2012 to re-elect their local congressperson who campaigns for office with Wall Street contributions, who then votes for bank bailouts and special corporate privileges, and repeat this process every two years." "Unless you strike the root, the weed will continue to flourish. These protesters are fighting the symptom, not the disease." The 5: For whatever it's worth, and it might not be much, 48% of registered voters polled by CNN in August said their own congressmember does not deserve reelection. That's up from 33% five years ago.
"But, a day or two ago, the WSJ said that the total of 'derivatives,' etc., of U.S. banks was $332 trillion. Which is almost a third of the way to a quadrillion. "Who is right? Either is unimaginable, but the paper's is more so." The 5: The $2.7 trillion figure — which comes from the Bank for International Settlements — accounts for direct lending to European governments, banks and businesses. The WSJ piece discusses derivatives — futures, forwards, swaps, options, etc. Not all of them are connected to Europe, but yes, the total, according to the Office of the Comptroller of the Currency, is $332 trillion — almost 22 times U.S. GDP.
 "It's out in the middle of frigging nowhere 10 or so miles southeast of Silver City, N.M. And, yes I drug my whole family to see it on our move from Chicago to San Diego in 1993. I just had to give my three daughters something to talk about regarding their tortured (but very comfortable) childhood." The 5: As wide-open spaces go, that looks truly commodious. Cheers, Dave Gonigam P.S. There's little we can add to the many tributes being paid to Apple co-founder Steve Jobs… except to note it's still possible for the CEO of a mega-company to (mostly) steer clear of the Washington, D.C., cesspool. "Despite being a $100-billion-a-year company in a rapidly changing industry," writes Tim Carney at the Washington Examiner, "Apple never formed a political action committee." "Also," adds Carney, "Apple spent less on lobbying than its competitors." In 2010, the total was well under $2 million. Google spent north of $5 million, and Microsoft's total approached $7 million. "They've been very focused on their own innovation, and they don't have a history of coming to town to get their competitors regulated," said Jonathan Zuck, president of the Association for Competitive Technology, to Politico last summer. In Washington, this is considered a cardinal sin. It was the route Microsoft took for many years, until it was duly punished with an antitrust lawsuit. Bill Gates, having learned the error of his ways, now hobnobs at the World Economic Forum in Davos, Switzerland, every year. Against the odds, Jobs stuck to his knitting — for which the world's a better place. With Jobs' passing, Simon & Schuster is moving up the publication of Walter Isaacson's biography by nearly a month… to Oct. 24. You can pre-order your copy from Laissez Faire Books — as always, at a 20% discount when you enter the site via The 5 — at this link. P.P.S. "The notion that there isn't enough gold to institute a new gold standard is just silly. It's not even worth discussing." You'd expect to hear something like that at a conference on sound money. You wouldn't expect to hear it from a former Federal Reserve governor. But that's what Jerry Jordan, formerly of the Cleveland Fed, said today at a Heritage Foundation gathering in Washington. Addison is in attendance. Look for his account here tomorrow.
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| Hugo Chavez Issues A Wake-Up Call To Paper Gold Shorts Posted: 06 Oct 2011 07:36 AM PDT Venezuela will begin repatriating its gold reserves from Western nations by mid-November, the central bank head said on Wednesday...first boat laden with reserves would be back by mid-November. "It will be here as soon as possible, no later than in a month-and-a-half," he said...Venezuela's gold abroad is in England, Switzerland, the United States, Canada and FranceHere's the reuters LINK I've been wondering when we would next hear about this ever since Chavez first announced the move during the summer. Interestingly, the nations who hold VZ's gold are the very same nations who participate in active "fractional" bullion safekeeping storage operations. This means that there are many multiples of paper claims - futures, forwards and OTC derivatives - issued against the actual known - i.e. "officially reported" - physical inventories held by the bullion vault banks in these countries. Anyone worried about counter-party default risk? Ask Madoff investors and AIG counter-party banks (Goldman, JP Morgan, et al) how they feel about counter-party default risk...know where your gold is? 
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| Load Up On Gold & Silver as Bernanke Dives Off the Deep End Posted: 06 Oct 2011 07:03 AM PDT The undeniable result will be a renewed surge in gold and silver prices, meaning the present pullback is an outstanding buying opportunity.
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| Gold Sideways Trading Dominates – Downside Favored Slightly Posted: 06 Oct 2011 07:00 AM PDT courtesy of DailyFX.com October 06, 2011 07:17 AM 300 Minute Bars Prepared by Jamie Saettele, CMT “Gold’s plunge reversed just shy of its 200 day average, which hasn’t been reached in over 2 years! An impulse is unfolding from the high so expectations are for this rally to reverse near the current level and for gold to drop in a 5th wave to a new low.” Look lower in a 5th wave towards 1500 and 1478 (July low). Exceeding 1677 would shift focus to 1720 and 1762. Trend Strength (M,W,D) – 1, 0, (1) Latest Video Weekly Forecast COT...
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| ‘Aftershocks’ Author Predicts Another 2008-Style “Meltdown” Posted: 06 Oct 2011 06:51 AM PDT With troubles in Europe's banking system threatening to contaminate the global financial system, it's beginning to look a lot like 2008 to many observers. History doesn't repeat, but it often rhymes which is why Robert Wiedemer of Absolute Investment Management believes investors need to prepare for another 2008-style maelstrom — or something even worse. "I do think we'll have another meltdown within 2 to 4 years," Wiedemer says, forecasting major averages will fall "quite a bit" below their March 2009 lows. The money manager and author does not, however, forecast an imminent decline or crash to S&P 666 (the 2009 low) and below. "We're going net long if we see the Fed printing money again, which I think is likely," he says. "After that, the sugar high will wear off and we'll be net short." In Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown, Wiedemer details how to navigate through the market's gyration via what he calls the "Dynamic Diversified Aftershock Portfolio" that includes dividend stocks, gold, bonds, inverse ETFs, agricultural commodities and some foreign currency. "You not only have to be diversified but dynamic," he says. For example, Wiedemer is currently long Treasuries but expects to get short in the not-so-distant future when that market turns. "It's a bubble economy, fundamentally," he says. "Stocks in another year or two will be valued very different then they are today because the rest of the economy is going down. The forecast is not very good for the future." Source: The Daily Ticker
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It began as a minor, nagging pain. But this week the boot of "financial repression" is stepping on our collective toes with even more force than it did during the summer.
Sure, this is swell for anyone who's still in the market to refinance a mortgage: The rate on a 30-year fixed is down to 3.94%, according to new figures out this morning.
"For a considerable amount of time now," Jim explains, "the market has been grumbling. It wants safety, no matter what the cost. And that won't change. But the place people will look for safety will change.
"Instead," says Jim, "we'll see investors turn to dividend-paying stocks. I'm not talking about the risky ones or ones closely tied to the economic problems of the day." Rather he's talking blue chips.
Think this is unlikely? Think again, says our newest analyst Michael Pento. "Bernanke's 'Operation Twist' has succeeded in sending yields on longer duration maturities to record lows," he acknowledges.
"In contrast to Treasuries," Addison says, "blue chip dividend-paying stocks have several advantages."
"We've seen this before," says Jim Nelson. "We've seen the flight to safety followed by a boom for dividend payers. This couldn't be clearer if you look at the 12 months that followed the 2008 crash."
Of course, you need to make sure you're getting paid enough to overcome the effects of financial repression.
Stocks are adding to yesterday's modest gains. As of this writing, the Dow has pushed back above 11,000 and the S&P above 1,150.
European stock indexes closed at five-week highs today. Improbably, the rally was driven in part by news that the French government is drawing up plans to take stakes in the nation's biggest banks, including BNP Paribas and Credit Agricole.
The greenback is weakening slightly relative to the world's other fiat currencies. The dollar index at last check was 78.7.
So much for the recovery in jobs: First-time unemployment claims moved back above 400,000 this week, according to the Labor Department.
Gold is holding onto gains made late yesterday. At last check, the spot price was $1,644.
The U.S. Mint is off to a spectacular start in October selling Silver Eagles. Through yesterday, the total number of coins sold was 1,012,000.
"OK," a reader writes, "so all these protesters are going to occupy Wall Street. So what?
"You said in Wednesday's 5 that Wall Street's total exposure to Europe is $2.7 trillion.
"If the Toto biogas trike ever gets to America," a reader muses after yesterday's issue, "a great start of an 'intercontinental' roadshow would be none other than Toilet Rock in City of Rocks State Park, New Mexico."
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