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- The Best Dollar Investment
- Dutch Central Bank responds to questions on gold!
- Engines Revving? A Look Under-The-Hood Of 5 Metals ETFs
- Weekly Market Movers: October 10-14
- Putting The Current Gold Price Correction Into Proper Perspective
- Bank Recapitalization Talk Increases Sovereign Risk
- WATCH: Gerry Epstein – End of the Gold Window
- Hastings Entertainment: Potential 5 Bagger, Deep Value Stock With A Special Situation
- LISTEN: Louis-Vincent Gave on a strong U.S. Dollar
- LISTEN: Peter Grandich on Gold
- Satyajit Das: Economic Dystopia – The “Stick Shaker Moment”
- This past week in gold
- Dexia to be buried by tomorrow/silver and gold OI lowest in many years
- LISTEN: Mickey Fulp on Rare Earth Companies
- LISTEN: John Embry on Gold and Silver
- LISTEN: James Turk on Gold and Silver
- WATCH: Kenneth Rogoff on the Global Economy
- Gold is not an investment
- LISTEN: Bill Murphy With Proof Of Metals Manipulation
- LISTEN: Jason Burack on Rare Earths and Uranium
- LISTEN: Jim Willie on Financial Collapse and GOLD
- What some still don’t get about silver and gold
- LISTEN: An Interview with Ned Naylor-Leyland
- American Silver Eagles Shatter Sales Record
- It’s the money supply stupid, what some investors still don’t get about silver and gold
- Nuclear Power Questions
- China is Now the "Sucker" at the Global Gold Poker Table: Jim Rickards
- GATA conference speakers Ben Davies and Jim Rickards interviewed by King World News: Two Interviews
| Posted: 09 Oct 2011 05:19 AM PDT By Investment U: By Karim Rahemtulla The dollar's recent rally, which began on the first day of September, is likely being aided by how unappealing other world currencies look right now. Consider… The euro is toxic… The British pound is more debt ridden than the dollar, and its proximity to the Eurozone doesn't help… The Aussie dollar is facing a correction, thanks to downward movement in resource prices, commodity prices and a possible slowdown in China… The Japanese yen is treading water – even in the face of government promises to devalue it for export purposes… And the Chinese yuan – well, it could be a good option if it was more transparent. But it's in China's interest to keep it low, making it a slow mover at best. Enter the Canadian dollar. Look to the Canadians for Housekeeping Tips Canada is in the enviable position of having a fiscally strong currency that's Complete Story » |
| Dutch Central Bank responds to questions on gold! Posted: 09 Oct 2011 03:21 AM PDT Dutch Secretary of the Treasury answers questions about whereabouts of the Central Banks gold  (Het Nederlands artikel volgt snel) September 18 we published these questions and here are the first answers. We repeat the questions of the Dutch Socialistic Party with the answers of the Secretary, and follow up with first comments of the Vrijspreker. We think further questions are justified! Question —Answer—Comment 1 Did the Dutch Central Bank (DNB) loan part of their gold? If yes, how much and to whom? No. DNB has informed me that they have stopped loaning out gold as of 2008. Comments Vrijspreker: if so, why doesn't DNB make that clear in the annual report? Why hide such crucial information. 2 Why are gold and gold loans stated as one line item in the annual report 2010 instead of mentioned as 2 separate items? DNB follows the rules for valuation, determination of result and balance sheet presentation of the European system of Central Banks. The asset 'Gold and Gold Receivables' reflects the physical gold inventory. Comments Vrijspreker: good international accounting standards oblige companies to separate cash from receivables, as they're clearly different. Why wouldn't these standards apply to central banks? In times of increasing civil unrest because of opaque financial schemes being set up by governments, central and commercial banks and the demand for more transparency, how would you justify these special rules for central banks? Are they above the law? 3 Can you give an overview of the yearly yields of the gold loans during the past years? No gold has been loaned out over the past years. 4 Where IS the physical gold of DNB? At which locations and how much is where? What is the reason that the gold is still at these locations? DNB has a location policy, which means that the gold has been spread over the following locations: New York, Ottawa, London and Amsterdam. Comments Vrijspreker: why doesn't the Secretary answer all the questions? What is the amount per location? And what exactly is the location policy? Why New York instead of any random other city? Also it's important to know how often and by whom the vaults are audited. 5 What was the most important reason for DNB to sell the gold in the past? Are the storage costs a reason? What are the actual costs to store the gold? By selling gold in the past, DNB has tried to align its gold holdings with other gold holding countries. The storage costs were not a factor in the decision to sell the gold, because they are relatively low. Currently, DNB's total annual storage costs paid to other central banks amount to a few hundreds of thousands of euros. The costs vary per location. Comments Vrijspreker: why would DNB want to align its gold holdings with other central banks' holdings? Is there a coordinated central policy amongst all central banks? Has this been prescribed by the Bank of International Settlements? Are the recent gold purchases by developing countries' central banks not conflicting with this international policy. Could you outline the details of this policy? 6 Can you confirm that since 1991 of the 1700 tons of gold about 1100 tons have been sold? Is the remark of journalist Peter de Waard correct that because of these historic sales there is a loss of about 30 billion euro? If not correct, what is the right amount? Since 1991, 1,100 tons of gold have been sold. Back then it was concluded that DNB held relatively much gold compared to other central banks. Decided was to align the amount of gold with other important gold owning countries. Sales proceeds have been added to DNB's general reserves and have been invested in interest generating investments. Comparing the actual, as a result of the financial crisis, higher gold price with the historical gold price does indeed lead to more or less the amount as mentioned by Mr. De Waard. However, one has to take into account the investment income generated since selling the gold and the fact that the result of said calculations heavily depend of the strongly fluctuating price of gold. Comments Vrijspreker: again, why align the gold holdings with that of other central banks? What exactly is the purpose of that policy? 7 How much of the National Debt has during the past 20 years been paid off with the proceeds of the gold sales? Are you of opinion that the sustainability of the national debt will be improved by paying off the debt and at the same time selling the gold? Gold is an asset of DNB. The sales proceeds have been invested in other assets and have hence not been used to reduce the national debt. The return on investments will flow back to the Dutch government as a result of DNB's dividend payments. 8 What is in your opinion the present function of the gold stock? DNB's physical gold holdings function as the ultimate reserve and anchor of trust in times of financial crisis. Further, gold is being held for diversification reasons. Comments Vrijspreker: clearly DNB sees value in gold. For that reason, it needs to be more transparent, and so should all central banks. 9 What is the relation between the size of the market of the gold stock and the size of the market of gold derivates? What are the possible consequences of this? The size of the physical gold market and derivatives market cannot easily be compared because of diverging measures for the size. For the trade in physical gold the turnover is measured: in the most important market (London) this amounted to USD 136 billion in the second half of 2010 according to the London Bullion Market Association. For the derivatives market the underlying value of outstanding derivatives (swaps, future contracts and options) is of importance. For the second half of 2010 these amounted to USD 396 billion according to the Bank of International Settlements. In general one can say that the availability of derivatives markets promote efficient price discovery. 10 Can you confirm that recently a number of countries have even enlarged their physical gold stock? Do you have an explanation for this development? Buyers are developing economies that show strongly growing official reserves or where gold traditionally only constituted a small portion of the reserves. There is also a wide group of countries that have sold gold the past decade (including France, Spain, UK and Switzerland) http://www.vrijspreker.nl/wp/2011/10...al-banks-gold/ |
| Engines Revving? A Look Under-The-Hood Of 5 Metals ETFs Posted: 09 Oct 2011 02:42 AM PDT By Investment Underground: by Ann McQueen Uncertain global economy. Europe's debt crisis. Downgraded U.S. debt. Weakening dollar. Inflation. Gloom. Doom. Fear. These factors have formed a perfect storm that has sent investors running for shelter in gold and silver. World economic conditions, U.S. Federal Reserve Board decisions, increased demand, and other factors are driving precious metals to historic high prices. A number of exchange traded funds have emerged that seek to replicate gold and silver prices. They do so by buying bullion outright, by investing in options, futures and swap agreements, or by purchasing shares of publicly traded mining companies in the indices whose performance they attempt to replicate. I examine several of these ETFs to analyze what they do and how they are performing, but first, a snapshot of 20-year gold and silver price trends may help. The price of gold has remained fairly stable from 1991 into 2003, during which time Complete Story » |
| Weekly Market Movers: October 10-14 Posted: 09 Oct 2011 01:24 AM PDT The new quarter began with a very volatile storm in currency trading, but for some pairs, the net change was small. US FOMC Meeting Minutes and US Unemployment claims are the major events this week. Here is an outlook on the major events awaiting us. Last week Ben Bernanke testified before the Joint Economic Committee in Washington saying that monetary policy is not a panacea for the problems currently faced by the U.S. economy, pointing a finger at the US Government to do its share in promoting a healthy recovery in the market by boosting labor markets, taxation and other regulations. Will the Government cooperate with the Fed to bail out the US economy from a near recession? The recent Non-Farm Payrolls report was positive for a change. Let's start:
Complete Story » |
| Putting The Current Gold Price Correction Into Proper Perspective Posted: 09 Oct 2011 01:20 AM PDT  By Tim Iacono: Following another sharp sell-off early in the week, amid signs of strong physical demand in Asia and the U.S. at recently lower prices, gold and silver bullion both posted their first gains in five weeks, starting to make back some of the ground that was lost during a miserable September, during which time the price of gold tumbled 14 percent and silver plunged 31 percent. For the week, gold rose 0.9 percent on the spot market, from $1,624.80 an ounce to $1,638.70, and silver jumped 4.3 percent, from $29.97 an ounce to $31.27. The gold price is now down 14.8 percent from its summer high but maintains an impressive gain of 15.3 percent for the year; silver is down 36.8 percent from its spring peak, now up 1.2 percent in 2011. Anecdotal accounts continue to be heard about hedge funds being forced to liquidate their winning gold positions last month Complete Story » |
| Bank Recapitalization Talk Increases Sovereign Risk Posted: 09 Oct 2011 01:04 AM PDT By Granite Springs Asset Management: In the last week, we have heard increased talk by senior Eurozone leaders that bank recapitalization is on the front burner. The bailout of Dexia (DXBGF.PK) by the French and Belgian governments just highlighted the issue. Although the ECB didn't lower interest rates at its recent policy meeting, it is clear that the ECB will provide enhanced liquidity to the monetary bloc's banks by extending the maturity of credits to 12 or 13 months. That makes it easier for banks to get through potentially difficult reporting periods. This is a positive in that the likelihood of an across-the-board European banking system collapse, which would have made Lehman's demise look like a hiccup, is less likely to occur. Greek Default Increasingly Likely
One implication of these statements is ironically that a Greek default now becomes increasingly likely. If Eurozone governments were sure they could avert a Greek default, there would be Complete Story » |
| WATCH: Gerry Epstein – End of the Gold Window Posted: 09 Oct 2011 12:44 AM PDT Gerry Epstein talks with The Real News about Nixon's (1971) closing of the gold window and how it has contributed to rise of the domination of finance and weakening of the real economy. ~TVR |
| Hastings Entertainment: Potential 5 Bagger, Deep Value Stock With A Special Situation Posted: 09 Oct 2011 12:11 AM PDT By Hedgephone: Hastings Entertainment (HAST) is a company that has been around for over forty years, and is trading at just seventeen cents on the dollar, with low debt and strong cash flows. The business originally started as a discounter with a connection to Wal Mart, and this experience gave Hastings management the drive towards becoming a low cost leadership model and wholesale distributor in their markets. While Hastings used to be largely a retailer of music, today the company has diversified substantially into new and used entertainment merchandise, electronics, coffee, clothing, e-commerce and thrift. Many times, investors misunderstand a company's prospects simply because that business is in a tough industry. While it is true that 20% of Hastings revenues come from books, most investors don't realize that used books for $5 have growth potential, as many people switch to e readers and look to ditch their possessions on the cheap. Music Complete Story » |
| LISTEN: Louis-Vincent Gave on a strong U.S. Dollar Posted: 08 Oct 2011 11:56 PM PDT Editors Note: As an outsider (living in Hong Kong), Louie presents a different perspective on the future of the U.S. dollar. From Financial Sense: Much more @ FinancialSense.com http://www.financialsense.com |
| LISTEN: Peter Grandich on Gold Posted: 08 Oct 2011 11:33 PM PDT From The Korelin Economics Report: AL Korelin and Peter Granitch discuss the gold market from the weekend 10.8.11 KeReport. More @ KEReport
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| Satyajit Das: Economic Dystopia – The “Stick Shaker Moment” Posted: 08 Oct 2011 04:41 PM PDT Yves here. Note I beg to differ with Das in his comments on government debt levels for countries that control their own currency. As we've noted, a country can always repay debts in its own currency, and the funding of federal deficits by borrowing is a political constraint and a holdover from the gold standard era. Moreover, there is a great deal of evidence that the solution implicit in that view, of cutting government spending in the aftermath of a demand-depressing, private balance sheet wrecking global financial crisis only makes matters worse. This is a case where you need to steer into the skid to get the car back on course. But this section is not core to Das's discussion. By Satyajit Das, the author of Extreme Money: The Masters of the Universe and the Cult of Risk Powered flight requires air to flow smoothly over the wing at a certain speed. Erratic or slow air flow can cause a plane to stall. Most modern aircraft are fitted with a "stick shaker" – a mechanical device that rapidly and noisily vibrates the control yoke or "stick" of an aircraft to warn the pilot of an imminent stall. The global economy too needs air flow -smooth, steady and strong growth. Unfortunately, the global economy's stick shaker is vibrating violently. The GFC Was Never Really Over… The proximate cause of recent volatility is the down grading of the credit rating US (irrelevant) and the continuation of Europe's debt problems (relevant). The deeper cause is the realisation that future growth will be low and the lack of policy options. In 2008, panicked governments and central banks injected massive amounts of money into the economy, in the form of government spending, tax concessions, ultra low interest rates and "non-conventional" monetary strategies – code for printing money. The actions did stave off the Great Depression 2.0 temporarily, converting it into a deep recession –the US economy shrank by 8.9% in 2008. As individuals and companies reduced debt as banks cut off the supply of credit, governments increased their borrowing propping up demand to keep the game going for a little longer. The actions bought time. But policy makers did not use the time to prepare the global economy for an orderly reduction of debt. There was little attempt to address structural problems, such as persistent trade imbalances between China and the US or within Europe or the role of the US dollar as the global reserve currency. Governments gambled on a return to growth, solving all the problems. That bet has failed. Patient Zero… Greece was always going to be Patient Zero in the global sovereign crisis, highlighting deep-seated problems in public finances of developed nations. While the deep economic contraction was a factor, government financial problems were structural. Much of the build-up in government debt had taken place before the crisis as a result of spending financed by increased borrowing. Like individuals and companies, governments did not always use borrowed money for productive purposes, fuelling consumption and making poor investments. Realising that many European governments had too much debt that couldn't be repaid, investors pushed up the cost of borrowing and then cut of access to funding. Instead of treating the situation as a solvency problem and reducing the debt to sustainable levels, stronger countries within the European Union banded together to lend the distressed countries the money they needed. Within a period of about 12 months, Greece, Ireland and Portugal needed bailouts totalling just under Euro 400 billion. Many European banks, exposed to these borrowers, also lost access to commercial funding becoming reliant on European Central Bank ("ECB") loans. The need to guarantee the weaker countries inevitably increased the liabilities of the stronger countries, weakening them. Greece, Ireland and Portugal will need debt restructuring. Spain and Italy are now firmly in the sights of markets. The bailout strategy cannot continue without affecting the creditworthiness of France and Germany. In the absence of continuing bailout, the European banking system, including the ECB itself, is vulnerable and will need capital from governments – economic catch 22! Going Viral… The sovereign debt problem is global. The US, Japan and others also owe more than they can repay. The recent rating downgrade of the US should not distract from the real issue – the quantum of US government debt and the ongoing ability to finance America. US government debt currently totals over $14 trillion. Commentator David Rosenberg passionately described the problem: "In the past three years…we had the U.S. public debt explode by $5 trillion— the country is 244 years old and over one-third of the national debt has been created in just the past three years. Incredible. The U.S. government now spends $1.60 in goods and services for every dollar it is taking in with respect to revenues which is unheard of — this ratio never got much above $1.20, not even during the previous severe economic setbacks in the early 1980s and early 1990s." America has been able to run large budget and balance of payments deficits because it had no problems in finding investors in US treasury securities because of the special status of the US dollar are aglobal reserve currency. In recent years, the Federal Reserve itself also purchased around 70% of issues, under its quantitative easing programs. As foreign investors, especially China, become increasingly sceptical about the ability of the US to get its economy into order, the ability of America to finance itself is not assured. Japan's government debt to Gross Domestic Product ("GDP") is over 200%. Tax revenues are less than half its outgoings, the remainder must be borrowed. The world's largest saving pool has allowed Japan to manage till now. An aging population and a related slowing in its saving pool will make it increasingly difficult for Japan to finance itself in the future. China's headline debt to GDP ratio of 17% (around $1 trillion) is misleading. If local governments, its state controlled banks, state owned enterprise, and other government supported debt are included, then debt levels increase to 60% ($3.5 trillion), compared to America's 93% of GDP. Some commentators argue that China's real level of debt is far higher in reality, well above 100%. At best, governments will cut spending or raise taxes to stabilise government debt as public-sector solvency becomes the priority. Reduction in government spending will slow growth, making the task of regaining control of government finances more difficult. This may require deeper cuts in governments spending and ever higher taxes, miring the developed world in low growth for a protracted period. At worst, some governments overwhelmed by their debts will default, causing a major disruption in financial markets, perhaps setting off a deep global recession. Unreal economies… Government actions affected the financial economy far more than the real economy. Low interest rates boosted financial asset prices, while underlying economic activity remained weak. Having shrunk by over 12% in 2008 and 2009, American output has yet to reattain its 2007 peak. On a per-person basis, inflation-adjusted basis, output stands at virtually the same level as in the second quarter of 2005 – in effect America has stood still for six years. The same is true of many countries. Given consumption is 60-70% of individual developed economies, unemployment, under employment and lack on income growth will reduce growth. In the four years since the recession began, the US civilian working-age population has grown by about 3% but the economy has 5% fewer jobs — 6.8 million jobs. The real unemployment rate – people without work, people involuntarily working part time, people not looking for work because there is none to be found – is around 15-20% in the US. Long-term unemployment has left millions of people out of work with poor prospects of finding jobs. Americans in work are generally working less and, adjusted for inflation, personal income is down, not counting payments from the government like unemployment benefits. American household income has declined since the recession began in December 2007, falling to $49,445 in 2010, a total 6.4% decline. According to latest figures, the number of American families living in poverty rose 2.6 million to 46.2 million, the largest increase since Census began keeping records 52 years ago. Income falls were particularly large for the less well off. In 2010, the bottom fifth of households that make $20,000 or less saw their incomes decline 3.8% after inflation. Poor people, minorities were hit hardest. According to the National Women's Law Center, the poverty rate for women climbed to 14.5% in 2010 from 13.9% in 2009, the highest level in 17 years. The extreme poverty rate for women jumped to an all-time high of 6.3% in 2010 from 5.9% in 2009. The poverty levels have reached the highest levels in over 15 years. The same is true in Europe where the average official unemployment is above 10%. In many countries like Greece, Ireland, Portugal and Spain, unemployment is around 20%, youth unemployment is around 40-50%, as the economies have shrunk by 10-20%. Understandably, consumer spending is weak. Key sectors, which employ workers, such as housing are frozen. In the US, housing starts are running around 400,000 to 600,000 units annually well below the level of the 1960s, down a staggering 70%+ from the peak and 50%+ from more normal levels. With home prices down 35% from the peak and predicted to fall further, the Americans do not have a wealth buffer in housing equity to fall back on. Low interest rates and indifferent returns from investments mean that the ability of retirees to consume is also low. The same is true of many developed economies. Emerging Problems…. After a sharp decline in economic activity in 2008, emerging nations – China, India, Brazil and Russia– recovered through massive domestic investment, aggressive expansion of domestic credit and, in some cases, strong commodity prices. They benefited from the stimulus packages of developed nations, which helped fuel exports. Money fleeing the developed world looking for higher returns and elusive growth provided cheap and easy capital. That cycle is coming to an end. China provides an example of the problems. Over-investment in infrastructure produced short term growth but many of the projects are not economically viable and will drag down future growth. Many are funded by debt that is already creating bad debts within the banking system, requiring diversion of funds to bail out troubled institutions. Tepid growth in the US and Europe, its two largest trading partners, will slow Chinese exports. China's foreign exchange reserves, invested in US and European government bonds and denominated in dollars and Euros, are increasingly worthless, as they cannot be sold and, if held, will be paid back in sharply devalued currency with lower purchasing power. Printing money as the US has done, devalues the dollar creates additional pressure on China. Strong capital flows overwhelm smaller markets creating destabilising asset price bubbles. Commodities traded in dollars increase in price creating inflation. Domestic inflation forces higher interest rates, slowing down the economy. The high proportion of spending on food and energy in emerging countries means a higher proportion of income is needed for essentials, reducing disposable income and creates wage pressures. These factors all choke off growth. While improving American competitiveness and reducing its outstanding debt, a policy of devaluation of the US dollar may trigger trade and currency wars. There are already accusations of protectionism, currency manipulation and unfair competition. Many emerging markets have already implemented capital controls. These will be strengthened and supplemented by other measures such as trade sanctions. Even the Swiss National Bank recently announced moves to stop the flow of money into Swiss Francs seeking a safe haven, crimping growth and Switzerland's exporter's ability to compete. Currency intervention may trigger tit-for-tat retaliation, reminiscent of the trade wars of the 1930s and will retard global growth. Exit Via The Japanese Door … Current concerns, most readily observable in wild gyrations of equity prices, are driven by the identified concerns but also the lack of credible policy options. The most likely outcome is a protracted period of low, slow growth, analogous to Japan's Ushinawareta Jūnen – the lost decade or two. The best case is a slow decline in living standards and wealth as the excesses of the past are paid for. The risk of instability is very high; a more violent correction and a breakdown in markets like 2008 or worse are possible. Frequent bouts of panic and volatility as the global economy deleverages –reduces debt- are likely. Problems created gradually over more than the last three decades can only be corrected slowly and painfully. The eerie sound of the stick shaker can sometime be heard on cockpit voice recordings of doomed flights just before they crash. The global economy's control stick is shaking violently. It remains to be seen whether the economic pilots can regain control and land the flight safely or whether it ends in a crash.
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| Posted: 08 Oct 2011 03:55 PM PDT 10/08/2011 GDX – on sell signal. Summary Here is a chart we posted for our subscribers recently, quite a shocker for gold bulls. This is not a prediction or forecast, just the chart telling us to be cautious. Disclosure End of update
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| Dexia to be buried by tomorrow/silver and gold OI lowest in many years Posted: 08 Oct 2011 03:46 PM PDT |
| LISTEN: Mickey Fulp on Rare Earth Companies Posted: 08 Oct 2011 12:32 PM PDT
AL Korelin and Mickey Fulp discuss companies involved in the rare earth element sector, from the weekend 10.8.11 KeReport. More @ KEReport
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| LISTEN: John Embry on Gold and Silver Posted: 08 Oct 2011 12:11 PM PDT
AL Korelin and John Embry discuss metals from the weekend 10.8.11. More @ KEReport
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| LISTEN: James Turk on Gold and Silver Posted: 08 Oct 2011 12:07 PM PDT From The Korelin Economics Report: AL Korelin and James Turk discuss metals from the weekend 10.8.11. More @ KEReport
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| WATCH: Kenneth Rogoff on the Global Economy Posted: 08 Oct 2011 12:00 PM PDT Menaka Doshi chats with Kenneth Rogoff, professor of economics at Harvard University on the global economy and whether the U.S. is heading for a recession, the downgrade of 12 U.K. banks and Fitch downgrade of Italy and Spain. He also sheds light on the core problems of the European Union and what must be done to prevent a complete MELTdown. From 10.7.11. ~TVR |
| Posted: 08 Oct 2011 12:00 PM PDT With gold appreciating against nine of the world's major currencies, one could easily conclude that gold has been an attractive 'investment', but appearances can deceive. Gold does not ... |
| LISTEN: Bill Murphy With Proof Of Metals Manipulation Posted: 08 Oct 2011 11:48 AM PDT From The Korelin Economics Report: Bill Murphy provides, what he believes, is proof of manipulation in the precious metals from the weekend 10.8.11. More @ KEReport
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| LISTEN: Jason Burack on Rare Earths and Uranium Posted: 08 Oct 2011 10:57 AM PDT
Much more at ContraryInvestorsCafe |
| LISTEN: Jim Willie on Financial Collapse and GOLD Posted: 08 Oct 2011 10:55 AM PDT
Much more at ContraryInvestorsCafe This posting includes an audio/video/photo media file: Download Now |
| What some still don’t get about silver and gold Posted: 08 Oct 2011 10:51 AM PDT By Peter Cooper of Arabian Money: Having just read another article by an able job-smithing hack in The National newspaper purporting to explain the gold and silver market to readers my toes curled up at the lack of understanding about the most crucial factor that investors in these precious metals need to grasp. It's the money supply stupid! The focus is always on demand for gold jewelry or the industrial uses of silver. But really the rising price of gold and silvet is all about money and the devaluation of paper money against the one money that nobody has ever succeeded in manufacturing. Rare Metals Silver is actually more rare because it does get used up in many industrial processes, particularly these days in electronics and medicine. The estimate is that all the silver in the world is roughly one hundredth of the value of gold or in volume terms roughly half. Scarcity does not of itself confirm value but it does when you are dealing with the only two monetary metals. Silver and gold have been used as money at least since the pharoahs built the pyramids. The US has its gold and silver reserves stashed in Fort Knox. Indian ladies are reckoned to have a similar amount in their personal possession as jewelery. Central banks of the world include gold and silver in their reserves and have recently been net buyers of gold. It is the ultimate money with no third party risk. Now let us consider what global central banks have been doing to the money supply, especially in the past decade. There has been an orgy of money creation. Last week the Bank of England did it again with $110 billion more in quantitative easing. The upcoming eurozone bailout may well involve a fund that can create $2.7 trillion. And to bail the world out after the 2008 crisis the Federal Reserve created $16 trillion and that is an audited fact. Increase the money supply and you automatically reduce the value of money. Does that make sense? Basically you have more paper and the same number of goods so they cost more in paper. That is textbook inflation, too much money pursuing too few goods. Gold Supply Static Ah, but let us not forget that as money is created more and more investors seek protection against this devaluation of their savings. So actually you have more and more buyers for gold and silver, and that will push the price up way beyond the actual rate of inflation. It is true this upward movement in price for precious metals is seldom a straight line. Sometimes the market enthusiasm overreaches itself and prices dip back, like silver in April or gold last month. Would a global asset sell-off like the one in late 2008 pull gold and silver prices down for a while? Yes but not for long as central banks will fear deflation and print even more money. Unless there is a signal that central banks are moving to seriously reduce the money supply then there is only one way for precious metal prices to move over the medium term and that is up and up. It's the money supply stupid! Read more @ SilverSeek.com |
| LISTEN: An Interview with Ned Naylor-Leyland Posted: 08 Oct 2011 10:43 AM PDT From TFMetals Report: Much more @ TFmMetalsReport.com This posting includes an audio/video/photo media file: Download Now |
| American Silver Eagles Shatter Sales Record Posted: 08 Oct 2011 10:15 AM PDT From CoinNews: 2011 officially holds the record as the best year ever for American Eagle Silver bullion coins, according to United States Mint sales figures. American Silver Eagle year-to-date sales hit 34,673,500 Thursday, October 6, blasting past the annual record of 34,662,500 achieved in 2010. The coins soared another 400,000 Friday, rising to 35,073,500 for the year.
Lower silver prices have been a factor in influencing the large number of bullion coins purchased in the last two weeks. The precious metal nose-dived during the third week in September, plummeting more than $10 an ounce to below the level it had maintained throughout most of the summer. Until then, September Silver Eagle sales had been sluggish. They immediately took off. September ended as the second best month ever for the series with the United States Mint selling 4,460,500. The United States Mint has not always been able to keep up with demand. To change that, one of the big improvements made by the Mint was working with suppliers to increase the number of silver planchets used in producing Silver Eagles. Another significant step was adding another facility to strike the coins. At the end of May 2011, the mint facility in San Francisco began striking bullion Silver Eagles in addition to the facility at West Point. West Point had been handling the responsibility exclusively for more than a decade. The changes have paid off with better inventory.
Every American Eagle Silver coin is struck from .999 fine silver and shares the same obverse (heads) and reverse (tails) designs. Three versions are currently available. One is for investors, the bullion coins, and the other two are for collectors. Key differences include the finish and the mint mark. Bullion coins lack a special finish and a mint mark. The numismatic versions have either a proof or uncirculated finish and bear a West Point "W" mint mark. Read more at CoinNews.net |
| It’s the money supply stupid, what some investors still don’t get about silver and gold Posted: 08 Oct 2011 07:50 AM PDT It is true this upward movement in price for precious metals is seldom a straight line. Sometimes the market enthusiasm overreaches itself and prices dip back, like silver in April or gold last month. Would a global asset sell-off like the one in late 2008 pull gold and silver prices down for a while? Yes but not for long as central banks will fear deflation and print even more money. |
| Posted: 08 Oct 2011 02:59 AM PDT Germany's Top Engineering Company Siemens Is Abandoning Nuclear Power Business. The aftermath of Japan's nuclear disaster has halted new installations all over the world. Further, many standing plants that were in operation are shut down for inspections and remodeling to make them stronger. In Japan there are 56 nuclear plants shut-down. Germany is in a major revision of their nuclear power plans. "BERLIN — Siemens, the largest engineering conglomerate in Europe, announced Sunday that following the German government's decision to phase out nuclear power by 2022, it would stop building nuclear power plants anywhere in the world. "The chapter for us is closed," Peter Löscher, the chief executive of the Munich-based conglomerate, said in an interview with Der Spiegel, the weekly news magazine. He emphasized the company's commitment to the rapidly growing renewable energy sector. He said the decision was also "an answer" to political and social opposition to nuclear power in Germany. Siemens, which built all of Germany's 17 nuclear power plants, is the first big company to announce such a shift in strategy. But other German companies involved in the nuclear energy industry are also reconsidering their options." -Judy Dempsey 9-18-11. Operation Twisted sure didn't help did it? Key Point: None of the MAJOR SUPPORT PRICE LEVELS FOR GOLD AND SILVER ON THE YEARLY CHARTS HAVE BEEN VIOLATED. Dec gold futures are 1691 and have supported at 1683.20. Dec silver futures are 33.25 with a low of 32.31. That low low on silver was slightly beneath the old pullback low when silver sold from $48-$49 back to $33.00 or so but, that is only interday trading and we remain in the safe zone. Gold futures might support today at the close at 1675. This is ok. The very important gold trend breaker is 1507 support. A gold close today at 1707 is possible. Other signals we found for new supports: The Swiss, Canadian and Euro currency futures are all in the green with the US Dollar mildly selling and peaking at 78.86. We alerted yesterday the dollar would run for 80.00 and then sell back. This has now happened. Long bonds are selling-peaking with the dollar as expected at 145.00 resistance. Crude oil we watch closely and it has hit a futures low of 7755 but is now trading at 7981 with 80.00 being new resistance. Grains were sellers but the very important 9-29-11 announcement is next Thursday. Since these markets took such a pounding reversal on the weak and futile Twist idea, ( I think this was a Bernanke test and it failed) we are expecting the NEW AND FORMAL ANNOUNCEMENT OF QE3, WHICH HAS BEEN UNDERWAY IN STEALTH FASHION SINCE JUNE 31, 2011. The one smart thing Bernanke did was to hold-off on the QE3 formal announcement saving that market pumper for when we hit very dire markets which is now. The central banker gang, IMF, World Bank, BIS, and the rest of the usual suspects will huddle this week end to solidify a new strategy for next week. Watch for the NEW QE3 FORMAL ANNOUNCEMENT COUPLED WITH POTENTIAL S&P BUYING-PUMPING. THE MARKETS WILL THEN BE RE-SETTLED AND MOVE BACK UP. This is all just games to keep the system afloat and keep it afloat they will. Traders and investors should nothing presuming they installed the trade management systems we suggested and have only open trades with stops or using spreads. BULLION HOLDERS CONTINUE TO HOLD AND DO NOTHING. YOU HAVE A GOOD POSITION. Do not let the whiners scare you. I can see some excellent futures, commodities and stocks trades coming after the new lows are in and settled. We did forecast this volatility and it will continue over the next few weeks. -Traderrog         This posting includes an audio/video/photo media file: Download Now |
| China is Now the "Sucker" at the Global Gold Poker Table: Jim Rickards Posted: 08 Oct 2011 12:32 AM PDT ¤ Yesterday in Gold and SilverThe gold price didn't do much in initial Far East trading on Friday morning, but by 11:30 a.m. Hong Kong time, the gold price was up nearly twenty bucks. That proved to be the high of the day...and from there the price declined into the London a.m. gold fix at 10:30 a.m. BST...which is 5:30 a.m. Eastern. At that point the price flat-lined...and the 8:30 a.m. Eastern time spike when the jobs numbers were released, got sold off immediately. Then, at 12:15 p.m. for reasons unknown to me, a not-for-profit seller came along...and within an hour had sold the price down about $25. The low of the day came around 1:10 p.m. in the New York Access Market. The subsequent rally regained about half that loss. Gold finished down $11.60 spot on the day...and volume was pretty light at 122,000 contracts.
The silver price path was very similar to gold's, except the price spike at the release of the jobs report was much more pronounced...and that spike [up to $32.94 spot] proved to be the high of the day. From there, silver's price path was virtually identical to gold's...including the not-for-profit seller's arrival at 12:15 p.m. Eastern. Silver finished down 66 cents on the day, closing at $31.27 spot. Net volume was also pretty 'light' at 39,000 contracts.
The gold stocks gapped up about a percent at the open of the equity markets, but came under immediate selling pressure. The HUI spent virtually the entire day in the red...and there is almost no hint of the 12:15 p.m. twenty-five dollar drop in the gold price anywhere on the HUI chart. The HUI finished down 2.36%.
With the silver price down a bit more than 2%, it was no surprise that the shares finished down as well. Nick Laird's Silver Sentiment Index closed down 3.04%.
(Click on image to enlarge) The CME Daily Delivery Report was a yawner, as only 9 gold and 4 silver contracts were posted for delivery on Tuesday. There was no reported change in GLD yesterday...and a smallish increase of 486,710 troy ounces was reported in SLV. The U.S. Mint had a decent sales report. The sold another 9,000 ounces of gold eagles...and 400,000 silver eagles. Month-to-date [which is only five business days old] shows that 23,500 ounces of gold eagles...5,000 one-ounce 24K gold buffaloes...and 1,662,000 silver eagles have been sold. The Comex-approved depositories did not receive any silver on Thursday...and reported shipping out 597,617 troy ounces. The link to the action is here. Yesterday's Commitment of Traders Report was a big surprise in both metals. The big surprise in silver was that there was another huge drop in the Commercial net short position. This time it was a chunky 5,339 contracts, or 26.7 million ounces. The Commercial net short position is now down to 94.6 million ounces of silver. I don't remember the last time that this number was below 100 million ounces...but I'm sure it's pushing ten years ago. As of the cut-off on Tuesday, the '4 or less' Commercial traders are now short 150.1 million ounces of silver...and the '5 through 8' are short 45.0 million ounces. The total short position of the '8 or less' adds up to 195.1 million ounces, or 39,020 contracts To show you how extreme this Commitment of Traders report is this week, the total Commercial short position in silver sits at 58,500 contracts...and the above 39,020 contracts held short by the '8 or less' traders represents 66.7% of that total Commercial short position in the Comex futures market. If that isn't a concentrated short position, I don't know what is...and the SEC and CFTC say nothing...and do nothing. In total, there are 39 traders that hold short contracts in the Commercial category. The '8 or less' hold 66.7% of that short position...and the remaining 33.3% [19,480 contracts] is held by the other 31 traders...Ted Butler's raptors. On average, this translates into 628 contracts held short by each of these traders. I would bet a fair amount of money that virtually all the remaining 19,480 short contracts are the short side of a spread trade within the Commercial category. The '8 or less' Commercial traders are the Commercial category!!! In gold, the big drop in open interest all last week did turn out to be mostly spread trades as Ted Butler said they might be. The open interest also fell because of gold deliveries on the first two days of the October delivery month. Don't forget that a delivery of a metal contract by a short to a long holder, fulfills the contract...and the open interest declines by the number of contracts delivered. The Commercial net short position in gold declined by a smallish 1,932 contracts...or 193,200 ounces. This is barely a rounding error. Total open interest declined about 28,500 contracts as the spreads were lifted and deliveries made. The Commercial net short position now stands at 16.5 million ounces of gold. As of the Tuesday cut-off, the '4 or less' traders are short 15.3 million ounces...and the '5 through 8' traders are short 4.3 million ounces. These eight traders are now short 19.6 million ounces, or 118.8% of the entire Commercial net short position in gold. In silver, the '8 or less' traders are short 206.2% of the entire Commercial net short position. Ted Butler said that the raptors are now long about 20,000 contracts in silver and about 31,000 in gold. On the next price rally they will be selling for a profit...and that will certainly subdue the price pattern. It will be interesting to see who the buyers are. Maybe it will be the Commercial shorts, which are mostly bullion banks. We'll see. Pretty pictures of the COT reports for both gold and silver for the last year can be found linked here for silver...and here for gold. It will be more than worth your while to spend some time on them. A derivative of the data used for yesterday's COT report is the Bank Participation Report. It shows the long and short position of U.S. and foreign banks in all commodities that trade on the Comex. This BPR is generated once a month from COT data from the first Tuesday of the month. The COT report appears from this data on Friday, as does the BPR. So, once a month, we can compare apples to apples. In the September report, two U.S bullion banks were short about 23,900 Comex silver contracts. In the October report [from last Tuesday's COT data] the two U.S. bullion banks had reduced their Comex short position down to 14,400 contracts...an absolutely stunning one month reduction of 9,500 Comex contracts! That's a reduction of their Comex short position by 40% in just one month! The 12 non-U.S. banks that hold silver positions on the Comex have held a tiny net long position of about 300 contracts for the last couple of months. Their small net long position was virtually unchanged from the September report to the October report. So let's put this in perspective. As of the Tuesday cut-off of Comex trading, two U.S. banks held a net short position of 14,400 Comex contracts...and twelve foreign banks held 315 contracts net long between them, which works out to just under 26 Comex long contracts per foreign bank. Any questions so far? Returning to the COT report...and comparing apples to apples...the Commercial net short position was reported as 94.6 million ounces. The 14,400 contracts that the two U.S. bullion banks hold converts into 72.0 million ounces. Using Grade 3 arithmetic, these two U.S. bullion banks are short 76% of the entire Comex net short position all by themselves. At a minimum, 90% of that short position is held by JPMorgan...and the balance would be held by HSBC USA. This is not rocket science, dear reader. In gold, 4 U.S. bullion banks were net short 7.44 million ounces as of the Tuesday cut-off for the October BPR The September BPR showed that their Comex short position was 8.44 million ounces. So, despite the huge drop in the gold price, these four U.S. banks only managed to shave one million ounces off their short position on the Comex over the past reporting month. The big change came in the 18 non-U.S. banks. Their September short position on the Comex was 3.83 million ounces...but the October BPR from yesterday showed that their short position on the Comex was down to 2.12 million ounces. That's just about a 45% decline in one month. But, despite these changes in the Comex short positions in gold by all banks, both domestic and foreign, the fact of the matter is this. Four U.S. banks, on average, are short about 1.86 million ounces of gold apiece...while the 18 non-U.S. banks are short [on average] 117,800 ounces of gold each. Visiting the COT report one last time, the Commercial net short position in gold as of the Tuesday cut-off stood at 16.5 million ounces. The four U.S. bullion banks are short 45% of that amount. So you can see that even though the four U.S. bullion banks' short positions in gold are the tallest hogs at the trough in the Comex futures market, they are almost of no consequence compared to the to the two U.S. bullion banks that hold 76% of the Commercial net short position in the Comex futures market in silver, of which over 90% is held by JPMorgan. Like I said, this ain't rocket science. Here's an interesting graph that reader Jon Macy sent me yesterday. It's the evolution of the 'too big to fail' banks over the last twenty years. It was posted over at the motherjones.com website...and it makes more interesting reading.
(Click on image to enlarge) I have a lot of stories today...and since it's Saturday, I'm cleaning out my in-box, so I hope you find the time to run through most of these. The engineered price decline by the bullion banks has decimated the long positions of both the technical funds and the small traders...and they're currently licking their wounds. Gold shines amid gloom of 'worst economic crisis ever'. U.S. Mint sells 1,662,000 silver eagles in five business days. Our world is now ruled by finance: Its presence has displaced real value in the economy. ¤ Critical ReadsSubscribeOur world is now ruled by finance: Its presence has displaced real value in the economyToday's first offering is from reader Howard Brown...and it was posted in The Montreal Gazette yesterday. A glaring problem is hiding in plain sight. Although it towers over us all, the financial industry doesn't actually make anything. You can't eat a mutual fund or build a house with derivatives, and the glossy brochures don't burn very well. The sudden explosion of finance has displaced real value in the economy. It's arguably itself a kind of massive stock market bubble. Now we have continuous economic volatility and stock markets like casinos because at the very core of Western economies, there's just a glossy brochure. So when we see the spectacle of people in streets of New York screaming "we have to stop being a debt economy and go back to being a production economy," they have a point. This is a pretty short read... and it encapsulates all that is wrong with our world today. The short positions that the banks hold in commodities that I talked about at length above, is one of the more visible aspects of the problem. I highly recommend this piece...and the link is here.  Fitch downgrades Italian and Spanish debt ratingsThe Fitch agency downgraded its sovereign credit rating for Italy and Spain today and said its long-term outlook for both countries was negative, citing high debt and poor prospects for growth. Separately, Fitch also said it was keeping Portugal's debt rating on watch for a possible downgrade, with a decision due by the end of the year. Portugal was the third and latest eurozone country to receive an international bailout package after Greece and Ireland. Fellow ratings agency Moody's warned on Friday night that it has put Belgium on watch for a possible downgrade. So the beat goes on. The U.S. will continue to downgrade Europe until the cows come home. This keeps everyone focused on Europe's problems...and away from the equally, if not more serious, problems that the United States has. This story was posted late last night in The Telegraph...and is Roy Stephens first offering of the day...and the link is here.  Moody's downgrades a dozen British banksCredit rating agency Moody's has downgraded 12 British financial institutions, including Lloyds and Royal Bank of Scotland, claiming the government has become less inclined to step in when banks get into trouble, even though Britain's finance minister said UK banks were well-placed to cope with a European debt crisis. This Reuters story was posted over at the france24.com website last night. I thank Roy Stephens once again...and the link is here.  Banks are warned not to rely on future bailouts to surviveGeorge Osborne, the Chancellor, spoke out after a major credit ratings agency downgraded 12 British banks – a move that is likely to lead to them having to pay more to borrow money. "As I understand it, one of the reasons they are doing this is because they think the British government is actually moving in the direction of trying to get away from guaranteeing all the largest banks in Britain. "In other words, how we are going to avoid Britain and the British taxpayer bailing out banks in the future, this Government is taking steps to do that and therefore credit rating agencies and others will say actually these banks have got to show that they can pay their way in the world." This short piece was posted in The Telegraph just befor |
| GATA conference speakers Ben Davies and Jim Rickards interviewed by King World News: Two Interviews Posted: 08 Oct 2011 12:32 AM PDT  Hinde Capital CEO Ben Davies tells King World News that fractional-reserve banking is dying, that massive money printing is the only way for governments to recapitalize banks, and that gold has bottomed. The link to the KWN blog is here. |
Louis-Vincent Gave, CEO of GaveKal Research joins Jim Puplava from Hong Kong to discuss the debt crisis in Europe, the future of the Euro and the implications of a US recession.
Tekoa Da Silva speaks with investor Jason Burack, founder of Wall Street for Main Street, co-publisher of the Dragon Metals Report on rare earth stocks, and contributor to Treasure Hunting for Precious Metals Stock. Jason shares his thoughts on bargains in the junior resource sector.
Tekoa Da Silva speaks with Golden Jackass / Hat Trick Letter newsletter publisher Jim Willie. Jim's expectations are for Goldman Sachs & Morgan Stanley to go down the Lehman Bros. path, amid an acceleration of the financial collapse similar to what we saw in 2008. Gold & Silver in this environment, according to Jim, are your only lifeboats.Jim Willie: US Treasuries Sanctioned Gov.'t Bubble, Financial Collapse Returning, Gold Targeted But Holding Firm.
This week Turd Ferguson I had the great opportunity to visit with Ned Naylor-Leyland of Cheviot Asset Management in the U.K.Ned is a tireless advocate of sound money. He is also a wise and learned ally in the battle against the Evil Empire.
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