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• Buy CSX At A Discount To Peers And Fundamentals
• LISTEN: Brien Lundin on Gold
• Will Gold and Silver continue their run up ?
• Gold, Gold, Gold… What About Silver?
• Gold to Top $2,000 on Central Bank Buying: Chart of the Day
• These gold mining stocks could lead the next rally
• All quiet on the gold and silver front
• Gold's Financial Role Likely to Expand - Pierre Lassonde
• Gold ETFs: Don't Panic!
• Foreigners Dump $74 Billion In Treasurys In 6 Consecutive Weeks: Biggest Sequential Outflow In History
• Gold's financial role likely to expand - Lassonde
• Gold vs. Miners: The Wrong Question, Part I
• How to get a true gold standard
• Grassroots distrust of banks powering gold, Hathaway tells King World News
• Return to Gold Standard? Why Price Would Hit $10,000
• Gold, Silver and Stock Prices at their Tipping Points
• Edward Karr Sees Opportunities in Gold: Under the Mattress and in the Ground
• On the Lack of Democratic Consent of Greeks to Austerity Programs
• New Gold, Silver Floor –Should I Restructure my Portfolio?
• Gibson’s Paradox & The Gold Price
• Borrowing Short To Lend Long
• 2011-10-13 BNP Paribas gold price forecast
• LISTEN: Rare 2003 Prediction of Today's Events
• Handout Nation
• THE BIG PICTURE
• Ian Gordon: Hedging Against Economic Collapse
• Bullion Signals the End
• Gold Bullion 'Builds Base above $1650'
• Yes, We Cain? Ummm...No
• The Great Silver Spike of 1980

Buy CSX At A Discount To Peers And Fundamentals Posted: 14 Oct 2011 05:44 AM PDT By Helix Investment Management: For all the concern over consumer confidence, Europe, and the U.S. economy, corporate results have been holding up remarkably well for most companies. Some companies are even able to post record profits and revenues in this environment. But, some companies still trade at a huge discount to their peers, and their growth prospects, despite posting record profits. We have found such a company, and we think it's discount will soon disappear. But, savvy investors will do well to get in ahead of everyone else. CSX Corp. (CSX) is one of America's leading railroads, shipping enormous amounts of goods coast to coast. As such, CSX has a very good feel for the state of the economy, both here at home and to an extent, the global economy. CSX has sold off of its July highs on undue fears about a collapse in profits, which is simply not in the cards. (Click Complete Story »

LISTEN: Brien Lundin on Gold Posted: 14 Oct 2011 04:45 AM PDT From The Korelin Economics Report: Al Korelin and Brien Lundin discuss the week in Gold. More @ KEReport

Will Gold and Silver continue their run up ? Posted: 14 Oct 2011 04:20 AM PDT Investment Advice

Gold, Gold, Gold… What About Silver? Posted: 14 Oct 2011 03:05 AM PDT No good news to deliver so far this year on the eurozone. Just this week Slovakia's government became the first in the eurozone to fall over opposition of bailing out indebted economies after the country's parliament voted down approval for enhancing the zone's rescue fund. Also this week, Jean Claude Trichet, European Central Bank President, warned that Europe's financial crisis has reached "a systemic dimension."

Gold to Top $2,000 on Central Bank Buying: Chart of the Day Posted: 14 Oct 2011 02:30 AM PDT

These gold mining stocks could lead the next rally Posted: 14 Oct 2011 01:16 AM PDT From Frank Holmes of U.S. Global Investors: Since hitting $1,900 an ounce through the beginning of October, gold has declined nearly 11 percent. Over the same timeframe, the NYSE Arca Gold Miners Index lost almost 13 percent. That’s a closer performance correlation than the roughly 3-to-1 gold equities to bullion ratio we've historically seen and could mean the miners are finally closing the gap. However, TD Securities Equity Research points out this interesting fact: Over a period of 18 months prior to hitting $1,900, gold rose 79 percent... But TD's basket of gold equities only increased 57 percent. The firm says this performance gap "ranks as the worst relative performance of gold equities to gold since 2001." During the July through September period of 2008, TD Securities' universe of gold equities declined 46 percent, while gold bullion only lost 24 percent. In October through November 2008, the same gold equities lost 37 percent, while gold decreased 22 percent. What's behind today's record disparity? Part of it may be due to the underperformance of... Read full article... More on gold stocks: Eight top dividend-paying gold stocks Legendary investor Eveillard predicts a gold stock mania An answer to the question every gold stock investor is wondering now

All quiet on the gold and silver front Posted: 13 Oct 2011 09:30 PM PDT Gold and silver prices had another quiet day yesterday, with both metals settling lower at the close of the Comex pit session in New York. Front-month gold futures lost $14 (0.8%) to settle at ...

Gold's Financial Role Likely to Expand - Pierre Lassonde Posted: 13 Oct 2011 09:18 PM PDT ¤ Yesterday in Gold and Silver Gold's high of the day came around 9:00 a.m. Hong Kong time during their Thursday morning trading session.  The smallish rally that developed about 2:00 p.m. in Hong Kong lasted for exactly two hours before the selling pressure began at 9:00 a.m. in London...and it was all down hill from there into the London p.m. gold fix at 3:00 p.m. local time...10:00 a.m. in New York. I note that gold got an additional shove at the opening of the equity markets at 9:30 a.m. in New York...and that's certainly not the first time in the last month or so, that we've seen that sort of market intervention at precisely that moment. The absolute low came at the fix...before recovering about fifteen bucks into the close of trading in the New York Access Market. Gold closed at $1,666.60...down $7.90 on the day.  Net volume was pretty light at 110,000 contracts. Here's the New York Spot Gold chart, which shows the trading action in more detail.  Just like in silver, note the 9:30 a.m. Eastern 'shove' in the gold price...followed by the absolute low at the fix.  Aren't managed markets wonderful? Silver's price path was virtually identical to that of gold's, with the only real difference being that silver's low of the day 'appeared' to occur about half-past lunchtime in New York.  Silver also got the same 9:30 a.m. 'shove' that gold got.  Silver closed at $31.82 spot...down 76 cents on the day.  Net volume was a light 30,000 contracts. Here's the New York Spot Silver chart, complete with the 'shove'...and the low.  Which of those three points was the absolute low is a good question.  But it really doesn't matter which one it was. With the gold price getting creamed at the open, the stocks gapped down over 3%...but recovered about half of that by the close of trading...and the HUI finished down 1.83% Of course, with silver down more than gold, their associated stocks got hit a bit harder as well...and Nick Laird's Silver Sentiment Index closed down 2.05% on the day. (Click on image to enlarge) The CME's Daily Delivery Report showed that 72 gold and zero silver contracts were posted for delivery on Monday.  All 72  gold contracts were issued by JPMorgan from their proprietary [house] trading account...and they stopped 55 of them in their client account.  The link to the 'action' is here. The GLD ETF showed a very small withdrawal of 15,519 troy ounces...and there were no reported changes at SLV. The U.S. Mint had a small sales report yesterday...1,500 ounces of gold eagles...and 1,000 one-ounce 24K gold buffaloes.  No silver eagles were reported sold. It was a pretty quiet day over at the Comex-approved depositories on Wednesday.  Only 41,958 ounces of silver were reported received...and 255,140 troy ounces were shipped out the door.  The link to that action is here. Here's an interesting graph that Washington state reader S.A. sent my way yesterday...and it doesn't require any further explanation from me.  With yields at basically zero percent, the end of the fiat currency system that we have all been born under, is in its final death throes. (Click on image to enlarge) I have a lot of stories once again today, so I hope you have the time to pick through most of them. Email Print Just like in silver, note the 9:30 a.m. Eastern 'shove' in the gold price...followed by the absolute low at the fix. Aren't managed markets wonderful? Gold ETFs: Don't Panic! Gold vs. Miners: The Wrong Question, Part I. Grassroots distrust of banks powering gold, Hathaway tells King World News. How to get a true gold standard. ¤ Critical Reads Subscribe Galleon Chief Sentenced to 11-Year Term in Insider Case The fallen hedge fund billionaire Raj Rajaratnam received the longest prison sentence ever for insider trading on Thursday, capping an aggressive government campaign that has ensnared dozens and may help deter the illegal use of confidential information on Wall Street. Judge Richard J. Holwell of Federal District Court in Manhattan sentenced Mr. Rajaratnam, 54, the former head of the Galleon Group hedge fund, to 11 years in prison. A jury convicted Mr. Rajaratnam of securities fraud and conspiracy in May after a two-month trial. Yet the crackdown on insider trading — a crime whose victims are not always apparent — has come at a time when many Americans have questioned why authorities have not pursued charges against bank executives over their role in the financial crisis, which still weighs on the economy. A very good point is made in that last paragraph.  I thank reader Roy Stephens for sending me this story out of yesterday's edition of The New York Times...and the link is here. View full GSD edition Sharp rise in foreclosures as banks move in More U.S. homes are entering the foreclosure process, but they're taking ever longer to get sold or repossessed by lenders. The number of U.S. homes that received a first-time default notice during the July to September quarter increased 14 percent compared to the second quarter of the year, RealtyTrac Inc. said Thursday. That increase signals banks are moving more aggressively now against borrowers who have fallen behind on their mortgage payments than they have since industry-wide foreclosure processing problems emerged last fall. Those problems resulted in a sharp drop in foreclosure activity this year. As I said in February 2007...call me in 2013 and we'll talk about the bottom of the real estate market in the U.S.A.  This msnbc.com story was sent to me by reader Matthew Nel yesterday...and is well worth the read.  The link is here. View full GSD edition Temporary Relief: Slovakia Approves Euro Bailout Expansion In a second vote Thursday on the euro bailout fund, the Slovakian national parliament passed legislation approving additional powers for the European Financial Stability Facility (EFSF). In a dramatic move, the parliament in Bratislava had rejected the legislation on Tuesday, unsettling markets and European leaders. Slovakia had been the last of 17 euro-zone members to approve the measure. On Thursday, 114 members of parliament from governing parties and the opposition voted in favor of the EFSF, well above the 76 who were needed. Only 30 voted against it and three lawmakers abstained. The move came one day after three parties in the governing coalition struck a deal with the main opposition party, the social democratic SMER. Prime Minister Iveta Radicova had pegged Tuesday's vote to a motion of confidence, which her government failed. The vote led to the collapse of her government and the coalition, now in a caretaker role, has since agreed to new elections in March in exchange for SMER support of the euro bailout measures. How this second vote came about is beyond me.  I thought the original vote on Tuesday was the real deal.  I guess they had to vote until the EU got the answer it wanted.  This is another Roy Stephens offering from yesterday's edition of the German website spiegel.de...and the link is here. View full GSD edition UK rating downgrade 'unavoidable' Legal & General Investment Management said "the UK's credit rating is likely to be reviewed in the coming years" as it becomes clear that the Government will miss its growth forecasts and fall back into recession. The warning will come as a blow to George Osborne, who has staked his reputation on the UK retaining its AAA rating despite emerging from the recession with the biggest budget deficit in the G20. "We expect the debt-to-GDP ratio to remain on an explosive path no matter what the Government does. [As a result] ratings agencies might negatively review the UK's AAA sovereign rating in coming years." The U.K. is brother-in-arms with the U.S. in their attempts to dominate the world, so I will be amazed to see any U.S. rating agency downgrade Britain until they've downgraded all of continental Europe's countries and banking systems into junk status...which, by the way, they already are...whether the rating agencies say it or not. This is reader Matthew Nell's second offering of the day.  This one if from the Wednesday edition of The Telegraph...and the link is here. View full GSD edition 13 Financial Firms May Be Cut by Fitch Deutsche Bank AG, Germany's largest lender, is among at least 13 financial firms that may have credit or viability grades cut by Fitch Ratings. Goldman Sachs Group Inc., Morgan Stanley and Credit Suisse AG were also among firms that may be cut based on "Fitch's view that these institutions' business models are particularly sensitive to the increased challenges the financial markets are facing," the ratings firm said in a statement today. This very brief story only had two paragraphs...and you just read them.  I thank West Virginia reader Elliot Simon for sending me this Bloomberg piece from yesterday...and the link to the hard copy is here. View full GSD edition Mario Draghi fears Italian debt spiral Italy risks a debt spiral without "drastic" steps to cut spending and restore confidence in public finances, the country's central bank governor has warned. "We must act fast. The sorts of interest rate rises seen over the last three months, if protracted, could lead to an uncontrollable spiral," said Mario Draghi, who takes over as head of the European Central Bank next month. Mr. Draghi said austerity measures must be enacted "immediately" and warned that Italy's €54bn austerity package is "not enough". This Ambrose Evans-Pritchard offering from The Telegraph on late Wednesday night is another offering from Roy Stephens...and the link is here. View full GSD edition G20 finance ministers gather as time runs out As the G20 finance ministers and central bankers gather in Paris this Friday and Saturday, a collective sense of failure will loom large. But France still has time to rescue its G20 presidency. If a deal can be struck to restore confidence in the euro area and settle the baying markets, France will have done the global economy a great service. Work has already begun in earnest, and must continue this we

Gold ETFs: Don't Panic! Posted: 13 Oct 2011 09:18 PM PDT Gold ETFs: Don't Panic! Here's a little something that appeared in yesterday's edition of Casey's Daily Dispatch.  It's a piece by Alena Mikhan and Andrey Dashkov. The recent correction in gold is often compared to what took place in late 2008. It remains to be seen how similar these two periods will turn out to be, but while we're thinking along these lines, we thought we'd have a look at the data to see what impact the 2008 crash had on the exchange-traded funds (ETFs) and what to expect from the current slump. read more

Foreigners Dump $74 Billion In Treasurys In 6 Consecutive Weeks: Biggest Sequential Outflow In History Posted: 13 Oct 2011 09:18 PM PDT Foreigners Dump $74 Billion In Treasurys In 6 Consecutive Weeks: Biggest Sequential Outflow In History Over the weekend, we observed the perplexing sell off of $56 billion in US Treasurys courtesy of weekly disclosure in the Fed's custodial account and speculated if this may be due to an asset rotation, under duress or otherwise, out of bonds and into stocks, to prevent the collapse of the global ponzi (because when the BRICs tell the IMF to boost its bailout capacity you know it is global). We also proposed a far simpler theory: "the dreaded D-day in which foreign official and private investors finally start offloading their $2.7 trillion in Treasurys with impunity (although not with the element of surprise - China has made it abundantly clear it will sell its Treasury holdings, the only question is when), has finally arrived."I read more

Gold's financial role likely to expand - Lassonde Posted: 13 Oct 2011 09:18 PM PDT Gold's financial role likely to expand - Lassonde "50% of all the gold sold last year went to the financial sector, and it may be even more in 2011 and 2012 as the public essentially decide to use gold as a currency versus putting their money in US dollar or putting it in euro," he says, adding that when you look at the total amount of wealth in the world, only 1% is represented by gold, which works out to about 30,000 tonnes of the yellow metal. As a result, Lassonde remains very positive on the long term growth in the gold. This mineweb.com story posted on Wednesday is well worth your time...and I thank reader Carl Lindfors for sending it along.  The link is here.

Gold vs. Miners: The Wrong Question, Part I Posted: 13 Oct 2011 09:18 PM PDT Gold vs. Miners: The Wrong Question, Part I So why is it that gold mining stocks underperforming the metal so badly? "Gold stocks should be a levered bet on the price of gold...There has been a terrible underperformance," as one UK forum posting said back in June. "Thought this could be a good hedge against market meltdown but doesn't follow gold price," said another gold mining fund holder in August. "Switched my portfolio to Blackrock Gold Acc in Feb. '11 with the naive thinking it would give me a good exposure to gold prices," said a third. "Gold has jumped 30% since then, but the fund is pretty much at the same price. "I know there must be a lot of people in the same situation." read more

How to get a true gold standard Posted: 13 Oct 2011 09:18 PM PDT How to get a true gold standard This is an op-ed piece written by Lewis E. Lehrman for the Washington Examiner. Lewis E. Lehrman is chairman of the Lehrman Institute...and author of "The True Gold Standard: A Monetary Reform Plan without Official Reserve Currencies, How We Get from Here to There." This short read is well worth your time...and I thank Richard Sypher for sharing it with us.  The link is here.

Grassroots distrust of banks powering gold, Hathaway tells King World News Posted: 13 Oct 2011 09:18 PM PDT Grassroots distrust of banks powering gold, Hathaway tells King World News Tocqueville Gold Fund manager John Hathaway told King World News yesterday that grassroots demand for metal is powering gold and silver higher because of distrust of banks and the inevitable monetary debasement that will result from bank "recapitalization" by central banks. An excerpt from the interview headlined "John Hathaway - We're definitely in the end game for the US dollar" has been posted at the KWN website...and the link is here.

Return to Gold Standard? Why Price Would Hit $10,000 Posted: 13 Oct 2011 09:18 PM PDT Return to Gold Standard? Why Price Would Hit $10,000 All the major countries in the world are in a race to debase their currencies in order to restart their economies. Either economic growth returns or—as some doomsayers predict—the 40-year run of fiat currencies ends. And if under this worst case scenario the solution was to return to the gold standard of the Nixon years, the price of bullion would be worth $10,000-plus, six-times the current price, according to Paul Brodsky, co-managing member of QB Asset Management company and a self-professed 'Gold Bug.' "Economic policy makers across the political spectrum have successfully maintained the debt-based monetary system since 1971," said the money manager. "To do this they have had to marginalize the one competing currency capable of displacing it: gold." read more

Gold, Silver and Stock Prices at their Tipping Points Posted: 13 Oct 2011 07:51 PM PDT

Edward Karr Sees Opportunities in Gold: Under the Mattress and in the Ground Posted: 13 Oct 2011 07:00 PM PDT According to Edward Karr, CEO of RAMPartners, the band is tuning up and the guests are just starting to arrive. Instead of selling before the party really gets going, he advises keeping a "decent... Visit the aureport.com for more information and for a free newsletter

On the Lack of Democratic Consent of Greeks to Austerity Programs Posted: 13 Oct 2011 06:49 PM PDT Michael Hudson, in the Real News Network segment, stresses that the bailouts (with tons of hairshirt measures) being imposed on Greece do not have the consent of the population. Hudson exaggerates a bit on how the debt was entered into. However, a critical aspect is that, as Floyd Norris pointed out, the overwhelming majority of the borrowings are subject to Greek law. That means Greece could repudiate that with no legal consequence. And collecting on the portion under English law would not be a party. But a far more serious issue is the Greek banking system would collapse unless there was an immediate (or done over the course of a one week banking holiday) switch back to the drachma. Even then, the planning would need to be done in absolute secrecy, since if the public were to get a clue that this sort of move were in store, you'd see immediate capital flight. This is, to put it mildly, daunting. Martin Wolf has argued in conversation that the ferocity of Greek protests (as opposed to, say, in Ireland) is due to the fact that it is the continuation of an unresolved civil war. Even so, civil disobedience has a way of being contagious, and if the Greeks are perceived to accomplish something, it may change attitudes in formerly complacent but unhappy groups in other countries. From Real News Network:

New Gold, Silver Floor –Should I Restructure my Portfolio? Posted: 13 Oct 2011 06:27 PM PDT Gold Forecaster

Gibson’s Paradox & The Gold Price Posted: 13 Oct 2011 04:00 PM PDT

Borrowing Short To Lend Long Posted: 13 Oct 2011 04:00 PM PDT Gold University

2011-10-13 BNP Paribas gold price forecast Posted: 13 Oct 2011 03:22 PM PDT BNP Paribas adjusted its gold price forecast for 2012 from $2,080 to $1,950. Arguments for further rise from today's ($1,670) levels: strong Asian physical bullion demand and ongoing central bank demand. Source: Wall

LISTEN: Rare 2003 Prediction of Today's Events Posted: 13 Oct 2011 03:20 PM PDT From Jim Puplava and Financial Sense: Years Ahead of it's Time: A Rare 2003 Roundtable Predicting Today's Events Topics discussed: Housing bubble leading to a stock market collapse, an explosive move in gold, the threat of massive derivatives holdings in major banks, tariffs, trade wars, and eventual protests/social unrest. In a rare roundtable discussion, Richard Russell, Peter Eliades, Tim Wood, and the late Kennedy Gammage forecast the future bursting of a housing bubble precipitating a stock market collapse, problems in the derivatives market, an explosive long-term bull market in gold, protests, trade wars, and an extremely accurate prediction of a major stock market bottom between 2006 and 2010. About the Guests: Richard Russell began publishing Dow Theory Letters in 1958, and he has been writing the Letters ever since (never once having skipped a Letter). Dow Theory Letters is the oldest service continuously written by one person in the business. Peter Eliades has been a regular panelist on ABC's weekly Sunday show, Business World, and has made guest appearances on FNN, CNBC, Wall Street Week, and Nightly Business Report. He has been featured in some of the nation's most prestigious publications including Barron's, The Wall Street Journal, Forbes and Futures Magazine among others. Tim Wood is a technical analyst whose studies are based on his knowledge of both Market Cycles and Dow Theory. His knowledge of cycles is based on the methods he learned from Walter Bressert. His knowledge of Dow Theory has come from studies of the original works of Charles H. Dow, William Peter Hamilton, Robert Rhea, E. George Schaefer, and Richard Russell. Kennedy Gammage passed away Jan. 3, 2006 and was the editor and publisher of The Richland Report. He was a familar guest on CNBC, to readers of Barron's, and as a nationwide lecturer and commentator. Graduating from Harvard Business School he wrote extensively on gold, the financial markets, and was an expert on the Kondratiev Wave. Much More @ FinancialSense.com

Handout Nation Posted: 13 Oct 2011 01:41 PM PDT The Dow rose 102 points yesterday. Gold rose $21. Nothing to get excited about...so let's move on. "Ireland is the only country that has been able to pull off any significant amount of austerity," said Chris Hunter, an analyst with the Bonner Family Office here at its Irish headquarters. "And it seems to be working. The Irish are remarkably passive about it. We haven't had any riots. Not even a lot of complaining. "I guess we realized it was a bit of a lark all along. I mean, building big houses all over the country. There was a time when property in Dublin was more expensive than property in London. We knew it couldn't last. We knew we'd have to pay for it someday. So, here we are...and we all seem to accept the fact that it's going to be difficult." We drove up to Kilkenny to have lunch with economist David McWilliams. He gave us a simple explanation of the European economy: "If the Germans expect us to continue to borrowing money from them so we can buy their big cars, they're going to have to accept the fact that we won't always pay them back. It's going to be like it was in ancient Israel. Every 50 years, debt was forgiven. It was a jubilee year. We need to do something like that." Later in the day, we went to look at a house for sale. Your editor has a weakness for old piles of stones. Especially if they are in bad shape. This qualified on both points. It was an Italianate mansion built in 1841. And it is falling down. The wind and rain blow through the broken windows. Dry rot eats through the floor joists. Horses trot over the once-gracious lawns. Vandals and thieves have attacked the houses. Fireplaces are missing. Upstairs, they tore up the floor to take out the lead pipes. And in the front, someone is using the front steps as a stone quarry. Huge slabs of stone have been stolen. Anything that could be easy sold has been picked up and taken away. "What price would you put on something like this," we asked a local architect. "Well, three years ago you could have gotten millions for it. There were plans to turn it into a hotel and a resort. But now, it's not worth anything. The owner went broke. It's in the hands of the bank. And the banks want to get rid of these places as fast as possible. "You can see why. It's falling down. They stole the lead off the roof so water is getting in. Another winter and it will probably not be restorable. And right now, it's actually worth less than nothing. It's a liability to the owner because he has to spend money to protect it. I'm sure you could get it for nothing. But if I were you I'd put in a bid for less than nothing. I'd make them pay me to take it off their hands. Because it is going to cost a fortune to fix it up." Is your editor fool enough to fall for another old fix-up special? He's done it before. Several times. And he's lost money almost every time. Will he do it again? Stay tuned! Yesterday, Jose Manuel Barroso, president of the European Commission, lauded Ireland for having stuck to its austerity program. Ireland seems to be getting back on its feet. But wait. What's this? The WSJ reports that Ireland will have to cut another $5 billion: DUBLIN — Ireland's Fiscal Advisory Council Wednesday said the Irish coalition government will require four billion euros ($5.5 billion) of budget adjustments to meet a key 2012 target demanded by its bailout lenders, adding the country ought to consider even deeper cuts to impress financial markets. The European Union and the International Monetary Fund lenders require the government reduce a budget deficit of about 10% of gross domestic product this year to 8.6% in 2012. To reach that target, government ministers have said it will consider "at a minimum" €3.6 billion in spending cuts and tax rises in its 2012 budget. However, slower-than-expected economic growth will require an additional €400 million in adjustments for 2012 and total cuts of €4 billion, the fiscal council said. The council was set up to provide independent non-binding advice to the government after the country last November needed an EU and IMF bailout when the cost of rescuing its banks got too much to bear. And urging the government to cut even deeper, the council said cuts of as much as €4.4 billion should be considered in order to pare the budget deficit to 8.4% of GDP in 2012. It urged the government to also exceed its bailout targets in future years by reducing the deficit to only 1% of GDP through 2015. That is much lower than the nearly 3% target set by the EU and IMF. So the knife goes deeper. How long before the Irish howl? And more thoughts... Zombies to the right of us. Zombies to the left. Zombies everywhere. When Ronald Reagan first entered the White House only 30% of US households were supported by government benefits. Then came the Morning in America years — which were supposedly a lurch to more free-market policies. And then came the Bush years...the Clinton years...the Bush II years...and now the Obama years. And year after year, Republican or Democrat, there was a constant...or near constant: more and more zombies. The only exception was a brief period at the end of the Clinton years. In all other years, the zombies multiplied. And now we find that nearly half of all households get some form of government handout. The Wall Street Journal reports: Families were more dependent on government programs than ever last year. Nearly half, 48.5%, of the population lived in a household that received some type of government benefit in the first quarter of 2010, according to Census data. Those numbers have risen since the middle of the recession when 44.4% lived [in] households receiving benefits in the third quarter of 2008. The share of people relying on government benefits has reached a historic high, in large part from the deep recession and meager recovery, but also because of the expansion of government programs over the years. Means-tested programs, designed to help the needy, accounted for the largest share of recipients last year. Some 34.2% of Americans lived in a household that received benefits such as food stamps, subsidized housing, cash welfare or Medicaid (the federal-state health care program for the poor). Another 14.5% lived in homes where someone was on Medicare (the health care program for the elderly). Nearly 16% lived in households receiving Social Security. High unemployment and increased reliance on government programs has also shrunk the nation's share of taxpayers. Some 46.4% of households will pay no federal income tax this year, according to the nonpartisan Tax Policy Center. That's up from 39.9% in 2007, the year the recession began. Most of those households will still be hit by payroll taxes. Just 18.1% of households pay neither payroll nor federal income taxes and they are predominantly the nation's elderly and poorest families. The tandem rise in government-benefits recipients and fall in taxpayers has been cause for alarm among some policymakers and presidential hopefuls. Benefits programs have come under closer scrutiny as policymakers attempt to tame the federal government's budget deficit. President Barack Obama and members of Congress considered changes to Social Security and Medicare as part of a grand bargain (that ultimately fell apart) to raise the debt ceiling earlier this year. Cuts to such programs could emerge again from the so-called "super committee," tasked with releasing a plan to rein in the deficit. Republican presidential hopefuls, meanwhile, have latched onto the fact that nearly half of households pay no federal income tax, saying too many Americans aren't paying their fair share. Of course, this only refers to those who get "benefits" from the feds. Millions more live directly on salaries paid by the feds. And then there are the millions more who live on salaries paid to them because of federal subsidies, tax angles, legal requirements and so forth. Think of the lawyer working for Goldman Sachs whose job is to keep the company from running afoul of the SEC. Think of the paper shuffler working at the University of Maryland whose job only exist because the feds subsidize education. Think of the private contractor getting paid billions to build the biggest embassies in the world. They are all zombies...all doing things that probably shouldn't be done at all...all draining the economy of real wealth. And there are so many of them that the mathematics of democracy have now turned against it. More zombies than productive citizens. More people with a stake in further federal spending than people with a keen interest in stopping it. And so, the feds borrow. The feds spend. And more and more of the real economy shifts away from real production...and towards the zombie economy...of pretend work and make-believe production. Regards, Bill Bonner, for The Daily Reckoning Australia Similar Posts: The US Federal Budget How the US Government Deals With Debt in the Post-Bubble Era Obama Plans to Do Away With Ireland's Tax Advantage Spending Cuts in the Age of De-Leveraging Losing Faith in the Zombie-Run Government

THE BIG PICTURE Posted: 13 Oct 2011 11:12 AM PDT More often than not we as investors get caught up in the day-to-day action and never take the time to step back and look at the big picture. Today I'm just going to post some long term charts with appropriate annotations. THE LIGHT AT THE END OF THE TUNNEL. This posting includes an audio/video/photo media file: Download Now

Ian Gordon: Hedging Against Economic Collapse Posted: 13 Oct 2011 11:00 AM PDT The founder of Longwave Analytics and Longwave Strategies proposes physical gold and certain gold stocks will be investors' best hedge and overall solution shares his thoughts on the current economic mess.

Bullion Signals the End Posted: 13 Oct 2011 11:00 AM PDT According to fractal analysis, it appears that gold has reached a critical point where it is expected to rise really fast. The analysis suggests that we could peak as early as the end of 2012 to 2013, and we should, at minimum, reach $4,000/oz. by then.

Gold Bullion 'Builds Base above $1650' Posted: 13 Oct 2011 11:00 AM PDT Gold bullion prices rose to $1,679 per ounce Friday morning in London – 0.7% off Wednesday's high for the week – before easing back, as industrial commodities rallied and stocks edged up, while government bond prices fell.

Yes, We Cain? Ummm...No Posted: 13 Oct 2011 11:00 AM PDT Gold's opening gains were trimmed to about only $3 per ounce (and silver's to a dime), despite a further dip in the greenback on the index. Buoyed by a better outlook among currency and equity specs, the commodities' complex also received a lift.

The Great Silver Spike of 1980 Posted: 13 Oct 2011 10:59 AM PDT The Great Silver Spike of 1980 By: Silver Analyst | Wed, May 10, 2006 Share Print Email We are getting excited about the things that lie ahead of us. Before us is a rising slope heading off to a barely perceptible mountain top that is shrouded in the mist of a new dawn. It rises imposingly above us yet its height remains uncertain due to our inexperience and uncertain memories of a prior peak. Many speak of that last ascent, but few had personally ascended it, save a few veteran mountaineers. What can we say of it now, a mountain that is far behind us yet still standing out majestically in the distance against the foreground of lesser peaks and hills? It is the mountain against which all other silver peaks are measured. It is the Silver Peak of 1980. Attachment 11767 On that fateful Monday of the 21st January 1980, Silver Peak ascended to the dizzying heights of $130 as measured in 2006 dollars. How do we come by that "height"? According to the Bureau of Labor Statistics, the Consumer Price Index for all urban consumers was 77.8 in January 1980. In March 2006, it was 199.8. Also, there is the matter of how high that grand silver peak actually ascended to. Various numbers gravitate around $50 give or take a dollar or two. According to Paul Sarnoff's book "Silver Bulls", January silver contracts topped out at $49 with a low of $37 and a close of $44. However, Stephen Fay's work "The Great Silver Bubble", suggests that it went as high as $50.50 on the COMEX exchange but goes on to state that the record was actually set three days earlier on the CBOT exchanges where it topped out at $52.50. For historical purposes we go with the $50.50 on that notable Monday afternoon. I guess the peak is always that harder to discern when the wild snowstorms of the naked short sellers are suddenly blowing through the freezing are. One thing you do not want to be is naked at the top of a mountain. The chart below shows the Silver Peak in all its glory. It has a certain symmetry about it as well as the crags and steep falls that we associate with the hazardous enterprise of commodity mountaineering. In fact, and sad to report, there were indeed fatalities as investors tumbled down this sheer precipice thinking that they were well-equipped for such a steep gradient. Some lived to tell the tale but others have become rather scathing in their regard to any silver rock climbing. Attachment 11768 But now we have a new mountain and a new set of climbers. At a height of $14, we have barely left base camp as far as the old heights of $130 are concerned. In fact, one could say we have barely started at all. We have this new mountain before us, but we have no clue how high it really is or what kind of incline we are going to encounter. One also wonders how many obstacles and boulders will block our way. But for now, we are striding up the relatively gentle slopes but some are already beginning to get fatigued and are taking their mountaineering profits. We think they are premature in their capitulation. In fact, reversing our CPI numbers, a silver height of $14 today translates to about $5.50 in 1980 dollars. That happened to be silver's price on the 19th January 1979 and way to the left and beyond on our Silver Peak map. Can Son of Peak Silver really ascend such fantastic heights? How high can it go before the other side of the mountain range is revealed to us? Will a sheer drop await more investors at the other side, or will the ascent be that more gentle with the occasional plateau upon the way? We can hazard some guesses but one thing is sure, you can either go up the mountain to achieve the zenith of mountainous profits or you can get in your low risk car and drive around it. The choice is yours. Roland Watson is the author of the "Silver Spike Report" which analyses the technical and fundamental data from 1979 to 1980 to look for lessons that may help exit strategies if another jagged peak is upon us. This report can be purchased by visiting the blog site www.newerainvestor.com. He also writes the investment newsletter The New Era Investor that can be purchased for an annual subscription of $99. To view a sample copy of the newsletter, please go to www.newerainvestor.com and click on the "View Sample Issue Here" link to the right. Comments are invited by emailing the author at newerainvestor@yahoo.co.uk. Attached Images 5133_a.jpg‎ (41.3 KB) 5133_b.gif‎ (5.2 KB)

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