Gold World News Flash |
- Gold Seeker Weekly Wrap-Up: Gold and Silver Gain About 3% on the Week
- By the Numbers for the Week Ending October 14
- Is Gold On Its Way to $3,000, $5,000, $10,000 or Even Higher? These Analysts Think So
- Greece's Extortion Game
- Greece's Extortion Game
- The Gold Price, Silver Price and Stocks All Rose While The Dollar Dropped. Gold Price Closed Today at 1,685.10
- Bud Conrad: U.S. Collapse Predicted
- US Dollar getting hit hard as "safe haven" trades are being unwound
- Jim Rogers Sees Devastating Stagflation, Would Quit If He Was A Bond Portfolio Manager
- Gold September-October Trendline Holding…For Now
- U.S. Collapse Predicted
- Casey Research Summit Special Report: Surviving the Death of Money
- Stephen Leeb - We Will Add Another Digit to Gold Price Soon
- Silver's Signals Lean Bearish For Stocks and Commodities
- Rickards on Wall Street protesters, Leeb on China's commodity hunger
- Gold Vs. Miners: The Wrong Question, Part 2
- Gold Daily and Silver Weekly Charts - La Douleur du Monde
- Eric King interviews Harry Markopoulos podcast
- Why We’re Ungovernable, Part 2: Battle Lines
- Is It Time to Load up on Gold Stocks?
- Long Overdue Short Covering In EUR Begins After 7 Consecutive Weeks Of Increasing Bearishness
- COT Gold, Silver and US Dollar Index Report - October 14, 2011
- Fat-Tax Frenzy Expands
- Bill Gross Just Made A Huge Bet On Economic Doom, And Nobody Seems To Care
- Safety and Survival
- In The News Today
- When the Logic of the Bull Market Suddenly Seems Illogical
- Don't Forget About the Dollar Index
- Silver’s Signals Lean Bearish For Stocks and Commodities
| Gold Seeker Weekly Wrap-Up: Gold and Silver Gain About 3% on the Week Posted: 14 Oct 2011 04:00 PM PDT Gold climbed $16.60 to $1683.60 by about 9:15AM EST before it fell back to almost unchanged by late morning in New York, but it then rallied back higher in afternoon trade and ended with a gain of 0.86%. Silver rose to as high as $32.52 before it also fell back near unchanged, but it too rallied back higher in late trade and ended with a gain of 1.1%.
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| By the Numbers for the Week Ending October 14 Posted: 14 Oct 2011 03:31 PM PDT Just below is this week's closing table, followed by the CFTC disaggregated commitments of traders (DCOT) recap table for the week ending October 14, 2011.
Continued… Brief comments: Both gold and silver advanced for the week in USD terms, but gold declined in euro terms on a sharply stronger single currency. Note that even after a 201-basis point drop for the DXY Tues/Tues (to 77.58) ICE commercial traders kept the downward pressure on the greenback index by adding another 3,662 contracts net short the DXY. 53,000 + contracts net short is a very large stand and represents 76% of the open interest. The "ICE coms" were rewarded with another 96-ticks lower by Friday's close to 76.62 – a major reversal for the USD. Minor negative money flow for the largest gold and silver ETFs, barely worth mentioning. Relief bounces evident for mining shares, large and small, up from strongly oversold levels. Follow through required now to be convincing. Higher weekly highs and lows for both gold and silver, a positive sign, but the contraction in the hi-lo spreads suggests growing opposition. Note the much higher weekly low for silver which suggests urgency on the part of buyers. Ted Spread high enough to be worrisome, suggesting that banks are becoming more leery of their banking brethren. When this indicator falls it will be one of the signals that danger is abating. In the DCOT table below a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting "longer" and red figures are traders getting less long or shorter. All of the trader's positions are calculated net of spreading contracts as of the Tuesday disaggregated COT report. (DCOT Table for data as of October 11. Source CFTC for COT data, Cash Market for gold and silver.)
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| Is Gold On Its Way to $3,000, $5,000, $10,000 or Even Higher? These Analysts Think So Posted: 14 Oct 2011 01:34 PM PDT [B][B][B][B][/B][/B][/B][/B][B][B][B][B]143 analysts [B]maintain that gold*will*eventually reach a parabolic peak price of at [/B][/B][/B][/B][/B][B][B][B][B][B]least [/B][/B][/B][/B][/B][B][B][B][B][B][B]$3,000/ozt. before the bubble bursts. Of those 143 a total of 103 see gold achieving a price of*at least*$5,000/ozt.*and*20*predict that gold will reach a parabolic peak price of $10,000 per troy ounce or more.[/B][/B][/B][/B][/B][/B][B][B][B][B]*Take a look here*at who is projecting what, by when and why. [/B][/B][/B][/B]Words:*745 Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com*(A site for sore eyes and inquisitive minds) has identified below*the analysts by name with their price projections and time* frame. Please note that this complete paragraph, and a link back to the original article*,*must be included in any article posting or re-posting to avoid copyright infringement.* 4*Analysts See Gold Reaching These Price...
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| Posted: 14 Oct 2011 12:43 PM PDT By Wolf Richter www.testosteronepit.com These bonuses are now on the chopping block that the bailout Troika (IMF, ECB, and EU) graciously placed in Greece's kitchen. After having reviewed Greece's finances for the fifth time, the Troika inspectors were satisfied—unlike the prior times when they left angry—and recommended that the next bailout installment of €8 billion ($11 billion) be released. In return, Greece must chop off ever bigger parts of its budget as it is now clear that privatizations won't produce the initially expected revenues. Still, the fiscal targets for 2011 won't be achievable. Greece's national debt of €350 billion will continue to balloon and will reach 166% of GDP by 2012. Hopeless, really. The Troika inspectors will submit their official report at the G-20 meeting in Cannes on October 23. And the transfer will likely happen in early November. If not, Greece will go bankrupt by the end of November. However, Greek dates are in flux, like its finances. The original bankruptcy-date the Greek government brandished to extort more money was mid October. But when that didn't result in more money, Greece suddenly "found" €1.5 billion (Greece 'Finds' Treasure, Stays Solvent For Another Month). But on the street, resistance is growing. In Athens, transportation workers, who make up part of Greece's 1.3 million civil servants, have shut down the public transportation system Thursday and Friday. Even taxis are on strike. Lawyers are on strike till October 19. Thursday, civil servants at the state-owned power company occupied its billing offices to prevent it from sending out the new electricity bills that now include a property tax—and a latent threat that if you don't pay your property tax, we'll cut off the juice. Seamen, hospital workers, and others will go on strike next week. It's not just bonuses that are on the chopping block. Salaries of civil servants are too. And now the minimum wage caught the Troika inspectors' eyes—at €750 ($1,050) a month, it's higher than that of Spain, Portugal, and Poland, countries with a similar standard of living. To make Greece competitive, the inspectors will include a demand in their final report that the minimum wage be reduced, on the theory that it would create jobs (L'Expansion, article in French). The reaction on the street will be interesting. But even more hardship is coming down the pike: they're going to have to pay their taxes. "Tax fraud is a national crime, a national plague," announced finance minister Evangelos Venizelos in a speech to parliament on Friday (Zeit, article in German). And apparently, he is trying to do something about it, maybe. An investigation by his ministry revealed that Greeks owe €37 billion ($50 billion) in back taxes. The majority, €32 billion, is owed by companies. To remedy the situation, the finance ministry will publish a list of 15,000 people who haven't paid their taxes. It identified fraudsters who owed more than €1 million. It further determined that 3,718 Greeks moved €5.5 billion out of the country during 2009 alone. Of them, 542 declared income of less than €1,000. That's just for the tax year 2009. The investigations of tax years 2010 and 2011 are ongoing. And for what it's worth, he announced that private companies would be recruited to help in the collection efforts. Half-hearted measures at best. Publishing a list, I mean come on. And years late. They're supposed to mollify the taxpayers in Germany, France, and other Eurozone countries who will be forced to bail out the banks that got fat recklessly lending to the Greek government. American taxpayers will pay via the FMI. And the French banks are now in the hot seat. Yet... "We don't have any doubt about the solidity of French banks," said the French government—a week after the collapse of Dexia. All eyes are now on Société Générale and BNP, which just got downgraded again. BNP is the world's largest bank with assets of $2.8 trillion, dwarfing France's $2.1 trillion economy. And they're desperately trying to sell assets to stay afloat: France's Fishy Denials as Mega-Banks Teeter. Wolf Richter www.testosteronepit.com
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| Posted: 14 Oct 2011 12:43 PM PDT
By Wolf Richter www.testosteronepit.com These bonuses are now on the chopping block that the bailout Troika (IMF, ECB, and EU) graciously placed in Greece's kitchen. After having reviewed Greece's finances for the fifth time, the Troika inspectors were satisfied—unlike the prior times when they left angry—and recommended that the next bailout installment of €8 billion ($11 billion) be released. In return, Greece must chop off ever bigger parts of its budget as it is now clear that privatizations won't produce the initially expected revenues. Still, the fiscal targets for 2011 won't be achievable. Greece's national debt of €350 billion will continue to balloon and will reach 166% of GDP by 2012. Hopeless, really. The Troika inspectors will submit their official report at the G-20 meeting in Cannes on October 23. And the transfer will likely happen in early November. If not, Greece will go bankrupt by the end of November. However, Greek dates are in flux, like its finances. The original bankruptcy-date the Greek government brandished to extort more money was mid October. But when that didn't result in more money, Greece suddenly "found" €1.5 billion (Greece 'Finds' Treasure, Stays Solvent For Another Month). But on the street, resistance is growing. In Athens, transportation workers, who make up part of Greece's 1.3 million civil servants, have shut down the public transportation system Thursday and Friday. Even taxis are on strike. Lawyers are on strike till October 19. Thursday, civil servants at the state-owned power company occupied its billing offices to prevent it from sending out the new electricity bills that now include a property tax—and a latent threat that if you don't pay your property tax, we'll cut off the juice. Seamen, hospital workers, and others will go on strike next week. It's not just bonuses that are on the chopping block. Salaries of civil servants are too. And now the minimum wage caught the Troika inspectors' eyes—at €750 ($1,050) a month, it's higher than that of Spain, Portugal, and Poland, countries with a similar standard of living. To make Greece competitive, the inspectors will include a demand in their final report that the minimum wage be reduced, on the theory that it would create jobs (L'Expansion, article in French). The reaction on the street will be interesting. But even more hardship is coming down the pike: they're going to have to pay their taxes. "Tax fraud is a national crime, a national plague," announced finance minister Evangelos Venizelos in a speech to parliament on Friday (Zeit, article in German). And apparently, he is trying to do something about it, maybe. An investigation by his ministry revealed that Greeks owe €37 billion ($50 billion) in back taxes. The majority, €32 billion, is owed by companies. To remedy the situation, the finance ministry will publish a list of 15,000 people who haven't paid their taxes. It identified fraudsters who owed more than €1 million. It further determined that 3,718 Greeks moved €5.5 billion out of the country during 2009 alone. Of them, 542 declared income of less than €1,000. That's just for the tax year 2009. The investigations of tax years 2010 and 2011 are ongoing. And for what it's worth, he announced that private companies would be recruited to help in the collection efforts. Half-hearted measures at best. Publishing a list, I mean come on. And years late. They're supposed to mollify the taxpayers in Germany, France, and other Eurozone countries who will be forced to bail out the banks that got fat recklessly lending to the Greek government. American taxpayers will pay via the FMI. And the French banks are now in the hot seat. Yet... "We don't have any doubt about the solidity of French banks," said the French government—a week after the collapse of Dexia. All eyes are now on Société Générale and BNP, which just got downgraded again. BNP is the world's largest bank with assets of $2.8 trillion, dwarfing France's $2.1 trillion economy. And they're desperately trying to sell assets to stay afloat: France's Fishy Denials as Mega-Banks Teeter. Wolf Richter www.testosteronepit.com
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| Posted: 14 Oct 2011 12:19 PM PDT Gold Price Close Today : 1,685.10 Gold Price Close 7-Oct : 1,634.50 Change : 50.60 or 3.1% Silver Price Close Today : 3214 Silver Price Close 7-Oct : 3095.8 Change : 118.20 or 3.8% Gold Silver Ratio Today : 52.430 Gold Silver Ratio 7-Oct : 52.797 Change : -0.37 or -0.7% Silver Gold Ratio : 0.01907 Silver Gold Ratio 7-Oct : 0.01894 Change : 0.00013 or 0.7% Dow in Gold Dollars : $ 142.85 Dow in Gold Dollars 7-Oct : $ 140.42 Change : $ 2.42 or 1.7% Dow in Gold Ounces : 6.910 Dow in Gold Ounces 7-Oct : 6.793 Change : 0.12 or 1.7% Dow in Silver Ounces : 362.31 Dow in Silver Ounces 7-Oct : 358.65 Change : 3.65 or 1.0% Dow Industrial : 11,644.49 Dow Industrial 7-Oct : 11,103.12 Change : 541.37 or 4.9% S&P 500 : 1,224.58 S&P 500 7-Oct : 1,155.46 Change : 69.12 or 6.0% US Dollar Index : 76.607 US Dollar Index 7-Oct : 78.792 Change : -2.185 or -2.8% Platinum Price Close Today : 1,555.00 Platinum Price Close 7-Oct : 1,496.60 Change : 58.40 or 3.9% Palladium Price Close Today : 626.00 Palladium Price Close 7-Oct : 590.70 Change : 35.30 or 6.0% Turns out I was completely wrong last week when I expected the GOLD PRICE and the SILVER PRICE to drop. Dollar dropped instead, while GOLD, SILVER, and stocks all rose. PALLADIUM was the week's biggest gainer, up 6%. Stocks are marching along to retirement nirvana, hurrah, hurrah. The GOLD PRICE bewilders me. Look at the weekly chart, and it has done no more than sketch out a range bounded by $1655 and $1685. Nothing plain about the longer term chart, either. Might be a flat topped rising triangle, which is bullish, but then again, might be a rising wedge, which is bearish. Add another complication: the bigg pattern from mid-August thru September forms a falling wedge, which is bullish. Although GOLD is rallying, I expect it to hit the bottom of that peaking area from $1,725 to $1,800 and knock itself out. The two year weekly chart screams that gold will drop further. But when gold hits the 150 dma again (now $1,596) I reckon I'll have to buy some. Waiting is making me awfully nervous. The SILVER PRICE, O, the Silver Price! The weekly chart looks like a head and shoulders top. Monday's left shoulder topped at 3250c, Wednesday's head at 3300c, and today's right shoulder at 3250c. Neckline holds it all up at 3130c. Y'all don't start throwing rocks at me, I'm just reporting what I see. On the other hand, the long term (10 year) weekly chart teaches me that the decline was caught by the uptrend line from the 2008 bottom. How much lower, then, can you expect it to fall? Maybe not much. Top of the range is 3300c, bottom 3130c. Break either way should run like a scalded dog. I will buy on any break below 3100c. There's always a danger that you will "talk your position" and convince yourself you're right, all the while ignoring the reasons you're wrong. The 57.5 GOLD SILVER RATIO, which is my target fro swapping back into silver from gold, lies about at the 62% correction of the fall that began in February 2010. I think we can get it. I hope I haven't missed it already. Stocks are cooking, reached their highest close today since late August. Dow rose 166.36 (1.45%) to 11,644.59 accompanied by the S&P500 up 1.95% (13.64) to 1,224.58. Before you call your brother-in-law and rub it in how smart you are for staying in stocks, observe that stocks, although above their 20 day moving average (11,144) and 50 DMA (11,201), have not quite yet topped their August intraday high at 11,716.84. An optimist might look at the Dow's chart and say, "It's about to break through 11,700 resistance!" A realist might look at it and say, "Let the rejoicing await a close above 11,716 and the previous low at 11,863. Let the Dow prove this is not merely a consolidation, but really a rally. And don't forget that Dow Theory down turn signal a few weeks ago. Wait! And what about that MACD that's drawing so close to overbought?" Let's wait till Monday and see how well the Dow handles this 11,600- 11,700 level. Stocks -- they put the Boo! in boomerang. US DOLLAR INDEX keeps ratcheting down, giving back the gains from the September rally. Today ended at 76.607, down 0.5% or 38.9 basis points. Before its correction ends, it might touch the 200 DMA at 75.94. Strange as it sounds coming from me, I still expect further rallying from the dollar. Space aliens landed in Brussels today and pledged to bail out the European banks. On the strength of that promise the euro rose to 1.3877, up 0.73%, and has nearly reached its 50 DMA (1.3936 -- 20 dma at 1.3548). Could rally clean up to 1.42, where its sorrows commenced. But I wouldn't buy euros until I see the color of those space aliens' money. (Don't bother telling me I'm not being serious. Mercy, I'm as serious as all those goofs out there buying euros when the banking system is as broke as the Ten Commandments. What are they counting on to bail them out if not space aliens or something equally likely?) Japanese Yen closed today at 129.54c/Y100 (Y77.2/$1). Yen is sliding down the descending top boundary line of a triangle, but not enough that you could call it anything more than a trading range. Here are a few Peace of Mind Steps y'all can take in the face of today's insane uncertainties. ** Get three months' living expenses out of the bank, in cash, smallish bills, and store them in a safe place with 24 hour access. Don't bother calling me crazy, I've been maligned by professionals, so it doesn't bother me. Banks and your government are the most lethal and ruthless combination running loose today. Remember 1985 when banks and SandLs closed in Maryland and Ohio? Government simply closed 'em, no warning, and if your kids went hunger, tough luck. They will do anything -- including shoot their mothers in front of a cop -- to save their system. Close banks, limit withdrawals ("Oh, sorry you can't live on $300 a week. Eat dirt."), anything. Just give yourself enough cushion to protect your family. ** You and your wife ask yourself: If the place we are living suddenly became Beirut, or Sirte, or Baghdad, where would we go? Remember, a refugee is somebody who is trudging someplace else to die. ** Ask yourselves, "If I couldn't shop at the grocery for a week, what would we eat?" Pick up a couple of 25 lb. bags of rice and dried beans. Ask also what water you would drink -- clean water. ** Inquire of the mirror, How would we defend ourselves if there were no police? If you've never taken a pistol combat course,do that. And buy some ammunition -- it seldom goes stale. Remember, a man with a full magazine sleeps more soundly. Y'all enjoy your weekend! Argentum et aurum comparanda sunt -- -- Silver and gold 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 bubble has burst, primary trend down. 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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| Bud Conrad: U.S. Collapse Predicted Posted: 14 Oct 2011 12:16 PM PDT The Gold Report: At the Casey Research/Sprott Inc. Summit, you gave a presentation called, "A Crisis of Confidence." After all the government stimulus from the U.S. and the rest of the world aimed at injecting liquidity and keeping interest rates low, why didn't any of it work? Why is the economy still hurting? Bud Conrad: First, printing money doesn't create wealth. Putting bits in a computer doesn't create wealth. When politicians hand out money, they are the ones who get powerful and the banks get wealthy. The middle class with savings gets hurt. What creates wealth is people working and creating things. Internationally, the Chinese are papering over their slowing growth rate by providing liquidity, but paper money systems will collapse. That is the reality. The global financial system is supremely unstable. When people wake up to the fact that this is a "king ain't got no clothes" economy, we will see a run to the exits. [B]TGR:[/B] It seems like we are saying that the currency...
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| US Dollar getting hit hard as "safe haven" trades are being unwound Posted: 14 Oct 2011 12:16 PM PDT [url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] Over the last 5-6 weeks, as fears spread regarding the European debt crisis and the resultant impact on the large banks over that way, hedge funds and specs in general, fled out of nearly everything and into the US Dollar and Treasury markets as a safe haven. That made sense seeing that there were some suspicions that the Euro might not even survive and a breakup of the EuroZone was coming. This panic buying took the Dollar from a major support level on the technical price chart and send it skyrocketing higher all the way towards the 80 level. No sooner than rumors began to spread that the Europeans were working on a mechanism to recapitalize the banks and head off the contagion effect that might result from a Greek default, than the Dollar began sliding lower and forex traders went careening back into the Euro. Take a look at the following chart drawn off this week's Commitment of Traders re...
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| Jim Rogers Sees Devastating Stagflation, Would Quit If He Was A Bond Portfolio Manager Posted: 14 Oct 2011 11:04 AM PDT Now that we already had one notorious bond bear in the house with a late afternoon appearance by Bill Gross, who in a very polite way, apologized and said that while he may have been wrong in the short-term, he will be proven correct eventually, it is now time for the second uber-bond bear to make himself heard. In a CNBC interview with Jim Rogers, the former Quantum Fund co-founder, who back in July said he was had shorted US Treasurys, exhibited absolutely no remorse, instead reiterated a 100% conviction in his "bond short" call: "Rogers said when there is a bubble, such as the one being experienced in U.S. Treasurys, prices could go up for long periods of time. Bill Gross of Pimco, who also had a bearish view on Treasurys, threw in the towel earlier this year. But Rogers is sticking to his opinion that Treasurys will eventually fall. "Bernanke is obviously backing the market again and the Federal Reserve has more money than most of us - so they can drive interest rates down again. As I say they are making the bubble worse." The reality is that while Bill Gross has to satisfy LPs with monthly and quarterly performance statements (preferably showing a + sign instead of a -), the retired and independently wealthy Rogers has the luxury of time. And hence the core paradox at the heart of modern capital market trading: most traders who trade with other people's money end up following the crowd no matter how wrong the crowd is, as any substantial deviation from the benchmark will lead to a loss of capital (see Michael Burry) even if in the longer-term the thesis is proven not only right, but massively right. Alas, this means most have ultra-short term horizons, which works perfectly to Bernanke's advantage as he keeps on making event horizons shorter and shorter, in the process killing off any bond bears which unlike Rogers can afford to wait, and wait, and wait. On whether the US is becoming a deflationary Japanese-style basket case:
Ok, so no deflation. What then?
"This time is never different" and why the mother of all stagflations is coming soon:
So yes: he will be right eventually... But what about in the interim?
Rogers even has some career advice for up and coming bond mavens:
Ok, well, make that anti advice. As to where the money will be made...
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| Gold September-October Trendline Holding…For Now Posted: 14 Oct 2011 10:26 AM PDT courtesy of DailyFX.com October 14, 2011 08:07 AM Daily Bars Prepared by Jamie Saettele, CMT Gold has held up for 2 weeks now but the rally may be failing at the 20 day average. A break below the line that extends off of the September and October lows would warn of a run at the September lows (and 200 day average – currently at 1544). Trend Strength (M,W,D) – 1, 0, 0 Latest Video Weekly Forecast COT...
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| Posted: 14 Oct 2011 09:54 AM PDT from GoldSeek.com:
Casey Research Chief Economist Bud Conrad believes the United States is acting as a late-stage empire, acting aggressively on the world stage, lowering its moral standards and debasing its currency. In this exclusive interview with The Gold Report at the Casey Research/Sprott Inc. "When Money Dies" Summit, he explains the options for how the inevitable collapse will occur. The Gold Report: At the Casey Research/Sprott Inc. Summit, you gave a presentation called, "A Crisis of Confidence." After all the government stimulus from the U.S. and the rest of the world aimed at injecting liquidity and keeping interest rates low, why didn't any of it work? Why is the economy still hurting? Bud Conrad: First, printing money doesn't create wealth. Putting bits in a computer doesn't create wealth. When politicians hand out money, they are the ones who get powerful and the banks get wealthy. The middle class with savings gets hurt. What creates wealth is people working and creating things.
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| Casey Research Summit Special Report: Surviving the Death of Money Posted: 14 Oct 2011 09:29 AM PDT Submitted by Jeff Clarke of Casey Research Source: Karen Roche and JT Long of The Gold Report
Companies Mentioned: Extorre Gold Mines Ltd. The Gold Report: Since we are at a conference called "When Money Dies," please explain who killed money and how, after all these years of governments around the world trying everything from quantitative easing to bank bailouts, we are still in the midst of the weakest global economy in this generation's history? Rick Rule: The answer is in an old Pogo Cartoon that reads: "I have seen the enemy and he is us." Collectively in the West, we have lived beyond our means for a substantial amount of time. We rely on a government that we have paid to steal from our neighbors. Money is how we deal with transfers. Dealing with transfers dishonestly by making more of the medium that isn't backed by any value is the process by which money dies. Louis James: The problem is that you are asking the guardian who has stolen the goods to recover them. Government has been in charge of money for hundreds of years. When it is debased, you have to ask: "Who was watching the hens in the hen house?" When you discover who the fox is, you don't want to put him back in charge. TGR: We are looking at quantitative easing 3 (QE3) in the U.S. Europe is considering the same thing. Even China is doing its version. Will money actually die or will it all inflate together? Marin Katusa: I am going to take the contrarian view. With all this quantitative easing, there is actually asset deflation occurring right now if you look at the valuations from an equity standpoint. Trillions will be printed, but look at the deflation in the assets. He who has cash will be king because he can afford to buy these discounted stocks. If you do your homework and be sharp, you will make a fortune in the next three years. TGR: But money is an asset; cash is an asset. If you are holding your wealth in money wouldn't it all deflate? MK: It's all about purchasing power. Look at Canada's largest oil company. It is just as good of a company as it was three months ago, but it has lost half its market cap, which means your dollar will buy more of a great company. It isn't inflationary all across the board. It's an asset deflationary market. That is a current example of equity asset deflation in the market right now. TGR: So cash will deflate less rapidly than physical equities? MK: Yes, right now. RR: It is likely that the purchasing power of Western currencies will lose 5%–7% compounded for a long while, maybe until they go extinct. But in the interim, when you are experiencing incredible volatility, that is demonstrably better than losing 30% per anum in assets that are illiquid. Despite the fact that money is going to die, perversely you have to have lots of it to take advantage of the liquidity crisis. LJ: You see, inflation figures are averages. Asset price destruction in a certain area doesn't negate monetary inflation, nor its impact on other prices. Tremendous money creation is going on. This has economic consequences. The guy at the supermarket can see it even if his house is worth less. It is the worst of all possible models. Necessities cost more, but once trusted assets—the store of wealth in real estate and pensions—are depreciating. This has investment and economic consequences. The government is creating all this money and blowing it out the window. You have to figure out where to stand with a net. TGR: How do you know what way the wind is blowing so you know where to place your net? LJ: It's all about stuff. Stuff people need is, in general, good when paper or theoretical money is bad. In certain asset classes, including real stuff, there will be price destruction. Real estate, for instance, still has a speculative side to it and has not yet bottomed. But fundamentally, real stuff that has value can't just blow away. The world will go forward. People will need food and raw materials. Gold is another vehicle with intrinsic value. These things can't be inflated out of existence. When prices on valuable stuff goes down ridiculously, that should be seen as a godsend. People will still need copper, steel and timber. Buy when that stuff is priced low and wait for it to go high, then sell. TGR: Oil is priced in dollars. Is there a dollar price above which demand stops? MK: Yes, that is why you have to put the price into perspective when considering an investment. Are you valuing a company at $60, $70 or $80/barrel (bbl.) oil? If a company isn't making money at $60/bbl. oil, you don't want to own that stock. TGR: The market in the last six months has been volatile, but it seems to be like a roller coaster coming back to where it started. Is there a bigger trend moving daily prices? RR: Dramatic volatility will lead to higher highs and lower lows. Despite the fact that it may look like a mean on a chart, people who experience it don't experience a mean. They experience extraordinary discomfort. The fact that a $10 stock becomes a $7 stock in a few days causes people to speculate less frequently. It tames the animal spirits. The volatility will act as a depressant on the market. That is why it is important to understand the causes of these fluctuations. QE is a polite way of saying counterfeiting. If you debase the denominator, the numerator doesn't seem to matter much. You are actively debasing the currency by making it less rare. In the process, the government has declared a war on savers, reducing the utility they could get through traditional savings, forcing them to make more speculative investments. The problem is even deeper than that, however. At the same time you have plentiful money, you have restrictive credit. People assume prices get set across the whole spectrum, but they get set on the margin and dramatically on the margin based on the psychology of the participants. It makes no sense. Look at the downdrafts in commodities. Nothing about the utility of copper caused it to fall. But interdraft lending dried up and when credit goes away, fabricators, traders and shippers can buy. Economic dislocations like this cause the market to be really volatile for substantial periods of time, which will unnerve many market participants. I am actually fairly excited about it. I believe if it is going to happen anyway, find a way to enjoy it. TGR: Marin, you are skilled at mathematics. Your models help assess equities. In a market driven by psychology and government policies, how relevant are your models and have you changed the factors you use to value companies? MK: Since so many people are investing on emotion in the resource sector, you have to take your profits in a bull market and have lots of cash on hand to take advantage of deals in a bear market. In the program I created, there are literally thousands of variables you can analyze and interpret, but one of my favorite metrics for the junior exploration sector is the Casey Cash Box Indicator. One year ago, three companies were trading for less than cash on hand. Now I know of a little over 30. But, we are no where near the low of March 2009 when over one-third of all the companies on the TSX and TSX-V were trading less than cash. The Cash Box Indicator is what I use to give me a "feel" of the psychological sentiment in the market. When there are lots of companies trading under cash, people are fearful, and that is good if you're looking for value. For the junior exploration companies that do not have any tangible assets, the models I use for producing projects with cash flow are not as relevant. TGR: Louis, you are out there visiting companies all over the world. In this market, how important is management? LJ: It is and it isn't. Having competent people to run the show is imperative. The alternative is non-competent people. Who wants that? Incompetence shows up quickly in performance. But just because a company has good people and a good project doesn't mean it will do well; nature may not cooperate with exploration, or it could run out of money. When fear is in the driver's seat, people are less willing to take chances, even on good people. In the end, volatility is your best friend because you know that a market that's down will go up again. When your favorite wine or something you value goes on sale, you don't complain. You celebrate and buy two. We have that opportunity now. Wall Street hates volatility, Howe Street loves volatility—or it should, even on the downside, because that is a sign that it's shopping season. TGR: In the 1970s, we saw a bullish precious metals market, followed by a big upside. This time we had a big upside and now extreme volatility. Have we already experienced the extent of the bull side? RR: You have to acknowledge the fact that despite volatility's unpleasantness, it can be an opportunity. Gold and silver still have a long way to go although it may not be straight up. Even if it were to go to $2,500/ounce (oz.) eventually, it could test $1,000/oz. first. You have to have an understanding of history in order to understand what you might face. Keep cash on hand to take advantage of the volatility. Prepare yourself to have the courage to take advantage of the dips. A lot of people have been responsible investors and studied everything about the market except themselves. They haven't prepared themselves. You need the cash and courage to use volatility. Be careful, however. Don't get your information from the market. The market is a mob. It is a facility to buy fractional ownership of businesses. But you have to get a sense of the value of the business to make good decisions. Take advantage of the idiocy of the other players. Other players only drive value of the stock in the short term. In the long term, the company fundamentals will determine the value of the business. What the three people in this room have become good at is buying companies that will be taken over by the industry at higher prices later. Playing foolishness is fun, but that is less important than the fundamentals associated with the valuations of the companies. The safest and most consistent money is made when you find discrepancies in the valuation of a company and the market valuation and play the arbitrage. TGR: How can you value gold in a volatile market like this where the price of gold can vary between $1,000/oz. and $1,900/oz. Do those lows wipe out some companies? LJ: The average cost of production for most companies is $600/oz. Even at $1,000/oz. gold, a 40% margin in any industry is considered pretty good. A lot of mining companies are making lots of money right now, which means they are fundamentally strong. In the face of that, when the market fluctuates, it's a good thing; it brings opportunity. I have stocks in my portfolio that we have been able to take profits on when they were high and buy again when they were stupid cheap. We have been able to make doubles this way multiple times—on the same stock. But not all gold stocks are production stories. How do you value an exploration play where there is no particular asset? That is difficult. You can use peers, or speculate about what the company might have in the ground if it is successful and try to estimate a value. Whatever path you choose, you should have some kind of metric, a sense of what is reasonable. A great example of how volatility can create opportunity and profits is Extorre Gold Mines Ltd. (XG:TSX; XG:NYSE.A; E1R:Fkft), the spin out from Exeter Resource Corp. (XRC:TSX; XRA:NYSE.A; EXB:Fkft), operating mostly in Santa Cruz, Argentina. I have been there and looked at the main asset. I have no doubt the flagship Cerro Moro project is going to be a highly profitable mine, unless the government goes completely insane. Extorre had good exploration success there and has started getting very positive results from a second project. Based on this work, Extorre went from CAD$2 to CAD$14, so naturally we took profits along the way. I love Extorre, but at CAD$12, its market cap was greater than some profitable producers with cash flow and it was still just exploring. Now, with no bad news from the company, the market correction has the stock down to CAD$7. We know more about its assets now than we did when the shares were higher, but it's selling cheaper, so it's a better value now. We don't know when things will go up and down, we just know they will. We know when they are cheap it is a good time to buy; when they are expensive, it's a good time to take profits. TGR: It seems like investors have to be more active now, going in and out of stocks. They can't just buy and sit on them. MK: You have to be careful in this volatile market. An investor needs to understand what type of investor he/she is. If you are a day trader, this is your type of market, because the volatility and big swings are present. I don't believe relative valuation. I think it is important to distinguish between intrinsic valuation and relative valuation. But the answer to your question really depends on what type of investor you are and why you bought the specific stock. In my experience, my biggest gains have been buying big positions in companies where I believed in management and the projects, and bought more when the stock was down, and held the stock for more than a few years. LJ: There is a distinction between resource investing and mainstream investing. Tried and true Graham-Dodd analysis was never applicable to our industry because the underlying commodities change too quickly, making even the biggest companies too fickle for that sort of securities analysis. However, I would posit that Wall Street is becoming more like Howe Street in a post-Lehman Brothers world. Everyone is taking more risk. There is no safe place anywhere in the world where you can buy a stock and forget about it. RR: The two central tenets of Ben Graham's book The Intelligent Investor deal with evaluating the margin of safety and management. You have to speculate in companies that have the financial wherewithal to weather the most immediate risks. In today's volatile market, you are competing against manic-depressive traders who show up one day wanting to pay more than what you have is worth and the next day willing to sell for less than their assets are worth. In a devotion to net-nets, one of the best indicators of when you ought to be all-in is when it is full of people so disgusted in the market they are selling for less than they are worth. It's a great time to be an investor. TGR: If a lot of these companies are worthless, how does the average investor know which companies can go the distance? LJ: You have to make your own decisions based on your risk tolerance. Your mileage will vary. Read the financial statements, talk to management. At some point you have to act, but you can and should wait until you are fully confident in your investment decision, so your confidence won't be easily shaken by market volatility. It's not like baseball; you can wait for the perfect ball, so don't swing until you're sure you're buying low. MK: Great tools are available. Watch the legends and insiders to see what they are buying and selling. TGR: My last question is how does a new investor start in this industry? RR: Go for a walk. Have a conversation with yourself. Do a personality audit. How hard are you willing to work and what is your risk tolerance? If you aren't willing to work and don't like volatility, try owning physical trusts, ETFs or seniors. If you have a longer-term perspective and stomach for volatility, you can take advantage of the opportunities in the junior space. But you need to have a plan. MK: You can't succeed unless you are passionate in whatever you do. If you don't really like the sector, then you won't go as deep as you need to have success and you won't make the best decisions. Make sure you have a passion for mining. And have fun. Life is short. You also have to be willing to make lonely trades. When everyone else says you are wrong, that is when investing becomes very interesting. RR: Just because everyone else's money dies, that doesn't mean your money has to die. You are responsible for your future.
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| Stephen Leeb - We Will Add Another Digit to Gold Price Soon Posted: 14 Oct 2011 09:10 AM PDT  With gold and silver surging today, King World News interviewed acclaimed money manager Stephen Leeb. When asked what he sees happening, Leeb responded, "We don't need gold for any kind of industrial use, gold is a currency. Gold's move this decade has been an anticipation of inflation. Once we get inflation you really have to look at the 1970's as to how far gold could go. I mean no matter how you look at it, Eric, you are going to have to add another digit to the gold quote."
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| Silver's Signals Lean Bearish For Stocks and Commodities Posted: 14 Oct 2011 09:04 AM PDT If we assume silver continues to trace out a similar path to what transpired in 2008, which may or may not happen, what are the possible implications for stocks, bonds, currencies, commodities, and precious metals? Read More...
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| Rickards on Wall Street protesters, Leeb on China's commodity hunger Posted: 14 Oct 2011 08:58 AM PDT 5p ET Friday, October 14, 2011 Dear Friend of GATA and Gold: A couple of things of special interest at King World News today. ... Geopolitical analyst James G. Rickards comments on the Occupy Wall Street protest in New York and finds the protesters a little less screwy than what they're protesting: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/10/14_J... And fund manager Stephen Leeb says the ball game is commodities and China continues to play hardball even if the West isn't: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/10/14_S... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Be Part of a Chance to Discover Multi-Million-Ounce Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada. Check out the exploration program on our Allco gold/silver project : -- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit. -- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries. -- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited. To learn more about the Allco property or Northaven's other gold and silver projects, please visit: http://www.northavenresources.com Or call Northaven CEO Allen Leschert at 604-696-3600. Join GATA here: The Silver Summit http://cambridgehouse.com/conference-details/the-silver-summit-2011/48 New Orleans Investment Conference http://www.neworleansconference.com/ Support GATA by purchasing gold and silver commemorative coins: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT The United States Once Again Can Establish Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, has released a plan to restore economic growth through a stable dollar. The plan, titled "The True Gold Standard: A Monetary Reform Plan Without Official Reserve Currencies," responds to the recurrent economic crises of the last century and outlines a detailed proposal for America's leadership on "how we get from here to there." That is, how we get from the present unstable paper dollar to a stable dollar as good as gold. James Grant, author and editor of Grant's Interest Rate Observer, says of the Lehrman plan: "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman the country has finally found him." To learn more and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit: http://www.thegoldstandardnow.org/gata
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| Gold Vs. Miners: The Wrong Question, Part 2 Posted: 14 Oct 2011 08:44 AM PDT by Adrian Ash BullionVault Friday, 14 October 2011 You don't need to be a gold-mining investor to wish gold would stop outperforming them soon... WHATEVER you think of the gold price right now, gold mining stocks are a raging buy. Everyone says so. There's rarely been this strong a consensus since England were all set to beat France in last weekend's Rugby World Cup. Catch-up can't come too soon. Because lagging the gold price is fast becoming the norm, not the exception, for gold mining shares. Yes, that's contrary to both common-sense and the relentless sales-pitch of brokers. But why? Here come the brokers, fund managers, executives and analysts to explain. First, investment demand for mining stocks has been "cannibalized" by demand for gold, says the FT. Meaning "the guys who created the ETFs are now the losers," as it quotes Peter Munk, chairman and founder of Barrick – the world's biggest gold-mining producer, and so, ummm, one of the companies which backed the...
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| Gold Daily and Silver Weekly Charts - La Douleur du Monde Posted: 14 Oct 2011 08:28 AM PDT |
| Eric King interviews Harry Markopoulos podcast Posted: 14 Oct 2011 08:18 AM PDT Harry Markopoulos on the Bank of New York multi-billion dollar pension scam
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| Why We’re Ungovernable, Part 2: Battle Lines Posted: 14 Oct 2011 08:12 AM PDT It's a pretty straightforward idea: When a country borrows too much money it becomes ungovernable because interest payments eat up the cash that previously went to satisfying voters. Whoever is in charge gets blamed, and every election becomes a "throw the bums out" event. That this is happening in the developed countries with the most debt — and that US discontent is causing groups like the Tea Party and Occupy Wall Street to coalesce around competing narratives — should come as no surprise. Yet it does seem to have caught most of the mainstream media and political establishment flat-footed. Tune into MSNBC or most other liberal outlets and you'll hear about the racist knuckle-walkers who populate the Tea Party, while Fox News and the Wall Street Journal dismiss Occupy Wall Street a bunch of unwashed, economically-illiterate hippies. Rage is met with rage, which leads to neither understanding nor successful governance. I've been swapping emails with a good friend, a New Yorker who was ecstatic when Barack Obama was elected. Three years later, not so much:
And here's an interview with an author who speaks for a growing number of people on the left: So…who's right? But only the Tea Party seems to understand that the root cause isn't the current generation of rich folks, but a financial system that was born in 1913 with the creation of the Federal Reserve and came to maturity when the US left the gold standard in 1971. It is the Fed that has allowed debt to explode at every level of society while corrupting the banks and politicians with easy money. Today's mess couldn't have happened without the ability to create unlimited amounts of currency. And it won't be fixed without a return to constitutionally limited government and sound money. Is chaos inevitable? Is this the first step towards civil war? Right now this is a political civil war with a 1960s feel. But back then the fix was easy: pull out of Vietnam and extend civil rights to easily-identified and undeniably worthy minorities. Today there's no way to resolve an overwhelming debt burden without depression or hyperinflation. So the argument has just begun and will almost certainly escalate. What can individuals do?
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| Is It Time to Load up on Gold Stocks? Posted: 14 Oct 2011 08:10 AM PDT By almost any measure, gold stocks are undervalued. Should we load up? After completing my research on this question, I'm convinced more than ever that we at Casey Research are in the right place. See if you agree… Let's first get a handle on the degree of undervaluation. The more undervalued, the lower the buying risk. A fairly valued stock, on the other hand, requires added caution.
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| Long Overdue Short Covering In EUR Begins After 7 Consecutive Weeks Of Increasing Bearishness Posted: 14 Oct 2011 08:04 AM PDT As predicted earlier today, following one of the most epic moves higher in the EURUSD in the span of 9 short days, driven without a shadow of doubt by the multi-year bearish sentiment toward the European currency, which in turn courtesy of the massive leverage inherent in the FX market, has been used as the catalyst to drive the latest risk on rally across all asset classes, the net bearish exposure in the EUR has finally relented, and after 7 straight weeks of increases in bearishness, hitting a whopping -82,697 net non-commercial contracts in the week ended October 4, the subsequent week finally saw a significant unwind in shorts, up to -73,795. And since there are 3 trading days between the end of the compilation period and Friday EOD, we are confident that by now the actual net bearish count is in the -60k's if not lower. Notable, however, is that while Euro short bets were unwound, bullish bets on the dollar continued to risk, hitting 46,886, a 7th consecutive weekly increase. While the margin covering of the EUR is already priced in, the other question is when the USD megabullishness will relent. For now, it hasn't which will likely be used by market makers to squeeze out highly correlated accounts into even more short covering across equities.
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| COT Gold, Silver and US Dollar Index Report - October 14, 2011 Posted: 14 Oct 2011 08:00 AM PDT COT Gold, Silver and US Dollar Index Report - October 14, 2011
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| Posted: 14 Oct 2011 07:53 AM PDT Synopsis: Denmark is the first country to institute a tax on saturated fat. While public health is the justification, a bit of digging reveals the true reason for it. Also in today's issue, some science-oriented Friday Funnies. Dear Reader, In a recent interview, Doug Casey made an interesting point regarding the fortunes of libertarians and anarcho-capitalists. The majority of them are as poor as church mice. I've also noticed this over the years, but in my opinion, there is a good explanation – as well as a reason why this could drastically change in the near future. I'll start with two less-significant reasons and will then proceed to the main problem. 1. Libertarians with strong moral values are excluded from many professions. I experienced this while working in Washington, D.C. If one is willing to embrace the warfare state and bend one's free-market principles, doors will open. Unless one is employed by one of the few libertarian think thanks, there isn't much work out there. Beyond D.C., many libertarians refuse to work for the government, state contractors, and in some cases even the financial services. The really hardcore ones will complain about any industry with government involvement. These beliefs necessarily cut down the number of opportunities. Of course, I know plenty of libertarians who work in these professions, but their beliefs still hold them back. Is the libertarian anti-war guy really going to put in the commitment and extra effort to become the CEO of a weapons manufacturing company? Probably not. 2. One of my favorite sayings is, "Tell me what you do in your spare time today, and I'll tell you what you'll be doing at work in the future." Many libertarians have an obsession with reading Murray Rothbard, Ludwig von Mises, Hayek, etc. Maybe this isn't the best way to build human capital. This isn't specific to libertarians only, however. If one spends his twenties fishing, I wouldn't be surprised to see that the person hasn't had much career success – unless one starts some sort of fishing-related business. If you're really not passionate about your career and are obsessed with some other activity, your lack of monetary success shouldn't be a mystery. 3. Now, let's get to the main reason, which is directly connected to the economy. Why are businesses not expanding at the moment? Well, there's a huge amount of uncertainty about everything from regulations to taxes to healthcare laws. On top of that, everyone is afraid of another market crash. Given those facts, it's a pretty bad time to start or expand a business. A large number of businessmen feel this way right now, but here's the problem: This is how libertarians feel all the time. They constantly worry about more government and a market crash worse than the Great Depression around the corner. If you believe that the market is going to crash next year, then starting a business doesn't make much sense. Even if the crash is five years away, it's definitely not an encouraging timeline for a prospective libertarian business owner. To plan a business, one has to have some idea about the future economy. If that idea is doom and gloom, the business idea likely won't get off the ground. As a result – and quite ironically – those who are completely blind to the US's fiscal and monetary crisis have prospered for a long time. They started businesses with the assumption that America would always be strong and any recession would only be temporary. Until recently, they have been correct and very successful by mere chance of the tired US economy pushing on just a little bit more. During this time, we've also had a good number of successful libertarians, such our own Doug Casey, Bill Bonner, Peter Schiff, and Jim Rogers. What do these guys all have in common? Their success is centered on a world view that things are getting worse – exactly fitting my theory. In my opinion, it's not that libertarians don't create businesses – it's that their pessimistic world view leads them to invest in businesses modeled for a bear market. I can think of few well-known libertarians with a successful business idea that depends on a bull market… only John Mackey of Whole Foods and Peter Thiel of PayPal come to mind. If libertarians are always planning for the next Great Depression, it's not surprising that they haven't become wealthy in the bull markets over the decades. However, this time the recession is dragging on, and in my opinion, the trend of impoverished libertarians could reverse. Just think about who is getting burned in the economy now… It's not the libertarians; it's the folks who thought America would stay strong forever and that housing prices could never go down. That attitude made piles of money a decade ago; now it's a recipe for disaster. Also, the investors who placed their bets with the financials and leveraged bounce-back plays are now feeling the hurt. Finally, it's the libertarians who are amassing capital in gold and silver. In my opinion, this will extend beyond the investment world. The business owners who think that it's all sunshine and roses ahead will be punished by the market. The folks who start business plans with an assumption of a long, tumultuous recession will be the prosperous survivors this time around. Next, Doug Hornig will report on a saturated-fat tax coming to Denmark. Could it show up here next? Then, it's the Friday Funnies to finish off the week.
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| Bill Gross Just Made A Huge Bet On Economic Doom, And Nobody Seems To Care Posted: 14 Oct 2011 07:40 AM PDT by Robert Reich, BusinessInsider.com:
This week, bond god Bill Gross just made a super-long bet on the long end of the yield curve, coming right after a historic rally in fixed income. It was a gigantic shift from his stance earlier this year, when he bet against Treasuries — a bet that famously worked out badly for him. The interesting thing about this is that his short bet got TONS of attention (including a big story in The Atlantic), whereas his new long bet is only getting a little. The funny thing about this is that in terms of implication for the economy, the new long bet is much more significant. Going super-long the long end of the curve implies that Gross thinks yields will collapse even more, which would likely happen in a major economic collapse of some sort. Read More @ BusinessInsider.com
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| Posted: 14 Oct 2011 07:39 AM PDT Dave Gonigam – October 14, 2011
Which would place it right around where it was at its high in January 2000. Where we stand today, four years into the credit crisis, is "really just the beginning of an extended period of turmoil," Addison suggested this morning before a gathering of several hundred Reserve members at our Safety & Survival Summit. "We're not going to have a feel-good economy for a very long time, until we've forgotten what it feels like." Welcome to a special edition of The 5, coming to you from the Grand Ballroom of the Marriott Waterfront in Baltimore. The insights you're about to read come to you in near-real time…
"When the government steps away from borrowing lots of money, and Bernanke steps away from QE, you get what happened the last couple months, when oil falls from $114 to $75. Then, all of a sudden, 'We gotta borrow, we gotta print.'" "Bernanke's next move," Mr. Pento says, "is to stop paying the banks interest on their excess reserves. Once he does that, banks will send loans out through the drive-through window. That's when we get intractable inflation. Bernanke's going to go down kicking and screaming, so we get our runaway inflation before the deflation." Meanwhile, "in five years, we're going to be paying 30-50% of our revenue just to service the debt, and that's assuming interest rates don't climb higher." That means, in Michael's estimation, "we're three-four years away from a failed Treasury auction. "If you look at money supply, Fed statements, to see where we are on the tightrope, we can make a lot of money." Look for much more from Michael as we approach the launch of his newsletter Michael Pento's Survive and Thrive.
The Dow opened up 150 after a better-than-expected retail sales report from the Commerce Department. The number grew 1.1% in September, the highest since February. But about half of that gain vaporized with a worse-than-expected consumer sentiment figure from Reuters and the University of Michigan. Still, the S&P is comfortably above 1,200 as we head into the final hours of Friday's trading.
"Except for a brief blip during 2008, the S&P 500 dividend yield is now higher than the 10-year Treasury for the first time since 1958." "You've got an opportunity to invest in the best companies on the planet, those that can respond to government decrees by picking up stakes and moving if necessary. You can buy them today at yields higher than the fragile promises of government."
The bid on silver is up to $32.12.
Copper has a reputation as an economic bellwether — a reputation our resource trader Alan Knuckman thinks is overblown. "The interest in copper as a key indicator was void of logic. Its standing has declined as the housing market imploded." Copper prices dropped by a third during the August-September market swoon. "Many Monday morning analysts viewed this as foresight for an impending global economic calamity. 'The end is near' was the ill-construed viewpoint from a surefire future slowdown in China, said to crush all commodity demand." But Alan cautions, "Individual commodities do not operate in a vacuum. The relationships between the price movements in related markets are sometimes as telling as anything else." "Gold and silver had major increases in volatility and had dropped back from the all-time highs. The metal sales were (much needed) unwinding before a possible move higher, and copper simply got caught up in it." Looking at his charts, Alan points out "the fall from $4.50 to $3.00 is almost an exact 50% retracement of the 2009-2011 rise from the lows." 
"New extreme lows last Tuesday at $75 a barrel have rebounded 15% in a week back to the $86 level. Oil has been in a wide sideways range since the August decline." "A breakout above the $90 resistance will be confirmation of an overall asset rally. The upside objective in crude is $105, which is nearly another 25% higher from here."
A poor economy notwithstanding, the winds of change keep blowing: People are reading books on Kindles, and not buying them at Borders. And that's just a small example. Patrick says the real transformation is coming in the field of "bioinformatics." That's the application of information technology and computer science to the field of biology. Think of Moore's law, the doubling of transistor density every two years, applied to life itself. Example: "endothelial precursors." One of the companies Patrick follows can convert a few drops of your blood to stem cells, and then into endothelial precursors — which can build you a like-new heart. This is one example of what Patrick calls "the Phoenix Event — the end of life as we know it due to dramatic increases in life expectancy." Patrick even sees these developments overcoming some of the things politicians do to foul up the economy. "Every five years of added life span adds 1% to the growth rate." He named several companies in the vanguard of this Phoenix Event. They're familiar to readers of his premium advisory Breakthrough Technology Alert. [Ed. Note: You can learn those names for far less than a BTA membership… and have a virtual seat at the table here at our Safety & Survival Summit. You can listen in to every session — Patrick's, Alan's, Michael's, Eric's, plus Chris Mayer's and Byron King's. And you can hear every recommendation from each of these editors. Your editor is listening to Chris Mayer rattle off a half dozen ticker symbols as this issue comes together. All of this can be yours for a stunningly low price. The MP3 files will be professionally edited early next week, and then delivered straight to your email inbox. The information will still be fresh and ready for you to move on right away. Thing is, the conference is in the process of wrapping up… and the price of these recordings goes up as soon as the final gavel falls. So your window of opportunity to grab the lowest price is about to slam shut. Take advantage of your very last chance at this link.
The Covert's Crossing bridge in western Pennsylvania — a century-old, 50 feet long, 40 tons heavy — is no more. It wasn't well traveled, which explains how thieves managed to come in with blowtorches and dismantle the whole thing sometime between Sept. 27 and Oct. 7.  Estimated value of the stolen steel? $100,000. Bonus irony: New Castle Development, the owners of the bridge, closed it earlier this year in an effort to stop some copper thefts in the area.
"There is so much wrong with this country that it is well beyond repair, yet we are instructed by the media to listen to the Gentle Bens and Geithners of this moronic administration. People are sick of it."
"But it seems they have come up with a good sound bite that many can rally around or at least understand: 'outrage against crony capitalism and bought government.' Chanting a slogan in unison: 'Down with bought government… Down with crony capitalism.'" "Maybe replace 'crony capitalism' with 'corporate greed' or ???. The chant may have a broader appeal. Whether you are from the left or the right or the center, we all agree that American democracy has been hijacked by greed."
"All the gnashing of teeth over the economy, the terrible policies of the government, the huge benefits given to those with lots of money or lots of votes, etc., are the result of the sordid combination of a willingly corrupt business class and a power-hungry governing one." "However, the ire of those in the streets, including the Tea Party, are misdirected unless it is in confronting the political class, the only ones with the power to divert from an honest and ethical way. Who is most to blame: the one offering the bribe or the one with the power to give favors who accepts it?" "If our political representatives weren't corruptible (or, at best, fools), as most apparently are, very few of these economic or fiscal cancers could exist. Removing the basic tool of the means of corruption would end much of this for the most part, which would mean returning to a nonreversible gold standard and the elimination of the Fed." "It is the only way left to protect the individual from the government and those to whom they provide favors."
"It's just a sign of desperation, and the legislative equivalent of looking in the cracks in the sidewalk for pennies." The 5: Well, we're not expecting SWAT teams to break down the doors of moms selling clothes their kids have outgrown on Craigslist. At least not yet. The problem is that broadly written laws in the hands of ambitious prosecutors can be easily twisted in ways no one can foresee. Witness our chart showing how the Patriot Act been seldom used to prosecute terrorism, but frequently is used to pursue drug cases.
"In New York, there were some shops that accept euros as payment. For crying out loud, a guy on eBay was selling a car and accepting gold as payment. "Got one even better for you! In Florida, a used car dealer accepted a horse as a down payment for a car! What do we need the paper for other than wiping our noses?" The 5: Heh, excellent point. And all of your examples were first cited in The 5. Good show! Have a good weekend, Dave Gonigam P.S. Only a few short hours remain in which you can grab the recordings of all the sessions at today's Safety & Survival Summit at the lowest available price. Addison, Eric Fry, Michael Pento, Patrick Cox, Chris Mayer, Alan Knuckman, Byron King… You can hear them all next week when the MP3 files are delivered to your inbox. But only if you act here and now.
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| Posted: 14 Oct 2011 07:25 AM PDT
Jim Sinclair's Commentary The latest from John Williams at www.ShadowStats.com. - The Great Downturn Deepens as Household Incomes Collapse - September Retail Sales Gain Exaggerated by Poor-Quality Seasonal Adjustments - Trade Deficit Still Suggests A Positive Contribution to Third-Quarter GDP www.ShadowStats.com
Jim Sinclair's Commentary You think this is limited to Euroland? Continue reading In The News Today
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| When the Logic of the Bull Market Suddenly Seems Illogical Posted: 14 Oct 2011 07:00 AM PDT Nothing much to talk about in the markets yesterday. We had been expecting a bigger sell-off in the price of gold. The metal went down, about $300 if we recall correctly, but not as much as we expected. In the last major bull market in gold, in the '70s, the price declined by about 50% before going on to set a new record. The pullback in 1974 caused investors to question the premise of the whole bull market. Many dropped out and missed the big payoff. Markets always test their admirers. The old-timers — such as Richard Russell — refer to the "50% principle." A bull market can be expected to retrace as much as 50% of its gains…before going on to fulfill its destiny. If it goes down more than 50%, however, the bull market may be over. Unfortunately, these are not hard and fast rules. Just old timers' tales. Still, they are useful for understanding how markets work…and for keeping you from making a big mistake. This gold market barely corrected 20% of its gains. Is that all there is? We don't know. Doesn't seem like enough. We didn't feel tested at all; did you? That was part of the reason we thought the economy was sliding into a Rip Van Winkle slumber. It would be a real test. Imagine that China slows down. Imagine that Europe lurches from one crisis to another. Imagine that the US economy follows Japan down that long, slow, slumpy road. What do you have? Falling prices for almost everything — including gold. And with falling prices for other assets, investors, savers, insurance companies, pension funds all put their money into US Treasury debt. This keeps rates low and it allows the US to fund its deficits almost indefinitely. The economy never recovers, but it doesn't die either. Bernanke and crew may want to do something dramatic and foolhardy. But they wouldn't have to. As in Japan, they could just bide their time… Pretty soon, people would come to think that the world economy had entered a more or less permanent phase of low growth and low inflation. And then, what would happen to the price of gold? It would fall. People buy the inert metal to protect themselves from very ert humans. But if the humans who run central banks and Treasury departments sit still, why hold gold? The logic of the gold bull market is that the feds have done, and will do, stupid and disastrous things to the monetary system. Perhaps they will. But as long as they are able to finance large deficits painlessly, they have no reason to do so. Instead, they will take economist Richard Koo's advice and use deficit financing to pay for fiscal stimulus projects. Infrastructure projects…transfer programs…tax the rich…bread and circuses for the poor — this could go on for a long time. When speculators and savers realize that they need not hold gold to protect themselves from the feds, they will sell it. The price will fall — perhaps below $1,000. Then, we will have a real test. If the economy is stuck in a low-inflation phase, why own gold? If the feds do not have to print money, why would they? If prices — in dollar terms — are stable or going down, why not just stick with dollars? We can see the headlines now: "Investors give up on gold." "Even gold-bugs are disappointed by the yellow metal." "No need for gold as world economy enters 7th year of stable prices." And then, you, dear reader. What will you do? The logic of the bull market will have disappeared. Will you give up on gold too? In the near term, things are actually looking up for gold. In fact, since it didn't fall as much as we expected…perhaps our Japan-like disinflationary slump has been delayed…or derailed? Right now, the central banks are all itching to meddle. Bernanke's "twist" program is a waste of time. It merely takes the Fed's money and switches it from short-term US Treasury debt to longer-term Treasury debt. It is a very bad idea — leaving the Fed itself exposed to huge losses. But that's another story. But it is unlikely to have any advantage for the economy. Mortgage rates are already the lowest in half a century. Pushing them down a little more isn't going to make any difference. Several members of Bernanke's FOMC group are already calling for more forceful intervention — some form of QE III. If the economy deteriorates, there is bound to be more action from the Fed. Meanwhile, the Europeans are "recapitalizing" their banks. So are the Chinese. The capital has to come from somewhere…or they have to invent it. The more new money they create, the less their old money is worth…and the more attractive gold becomes. Bill Bonner When the Logic of the Bull Market Suddenly Seems Illogical 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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| Don't Forget About the Dollar Index Posted: 14 Oct 2011 06:52 AM PDT
Figure 1 is a weekly chart of the Dollar Index. Figure 1. Dollar Index/ weekly
The strength of a month ago has given way to weakness over the past two weeks. But the price structure is still bullish, as price has only pulled back to test support levels at 76.65. This would represent a very good low risk entry for those looking to get long the Dollar. As stated previously, the Dollar remains in a bullish up trend, and such Dollar strength has not been kind to equities over the past 10 years. thetechnicaltake offers a free e-newsletter:
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| Silver’s Signals Lean Bearish For Stocks and Commodities Posted: 14 Oct 2011 06:37 AM PDT Before we review current bull/bear signals from silver, Bloomberg had an on the money comment relative to the efforts in Europe: “Recapitalizing the banks is not the solution,” said Justin Bisseker, who helps manage 205 billion pounds as a European bank analyst in London for Schroders, Britain’s largest independent money manager. “Sovereign risk is the principal concern. Once investors’ confidence in sovereigns returns, then confidence in the banks will follow.&rM.
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When the currency system as we know it dies, some people will become very wealthy. In this special report from the Casey Research/Sprott Inc. Summit "
It's been a good week for the U.S. stock market. The Dow might well tack on 500 points over a five-day span.
"America is balancing on a narrow tightrope between a deflationary depression and a runaway hyperinflation," declared our newest analyst, Michael Pento, in a talk that had everyone riveted.
Away from the conference today, U.S. stocks are in rally mode as the week wraps up. But it's a muted rally.
One sector of the stock market intrigues our investment director Eric Fry. "Dividend yields on large, successful, multinational companies are higher than on typical government bonds," he told our Safety & Survival Summit.
Gold is rebounding to the three-week highs reached on Wednesday. At last check, the spot price was $1,678.
Copper prices are back to $3.40 a pound today, once again bumping up against the ceiling it's hit three times since late last month.
Want a more telling economic indicator? "Crude oil," says Alan, "has become the straw that stirs the commodity drink as a worldwide resource that demonstrates the 'ability to pay' concept."
"For investors who know the basic truth 'Buy low, sell high,'" our tech maven is telling the assembled audience in Baltimore, "our time is here."
To our ongoing chronicle of scrap metal thefts, we add a doozy… an entire steel bridge.
"You mentioned yesterday," writes a reader returning to our Occupy Wall Street-Tea Party comparison, "that readers' comments are 'all over the place.' Listen to your readers — the protests are coming from everywhere and anyone because of the breadth of the issues, not because they are all married to a single cause or reason."
"The reasons for the OWS protest have been quite diverse and contradictory at times. It comes off more like a 'rebel without a cause.' It has been difficult to deduce their grievances in simple terms."
"I'm astounded that only your newest analyst, Michael Pento, seems to get the true picture here."
"I wouldn't overanalyze this one," writes a reader about the Louisiana law targeting scrap metal thefts that effectively outlaws the cash sale of used goods.
"That's OK," says a reader taking the Louisiana law with equanimity. "People don't have to take cash (U.S. currency)."
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