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- A Lesson In Gold Price Volatility And Avoiding Future Pitfalls
- Euro And Yen: Opposite Economic Goals
- Silver Update
- Dollar Devaluation Coming, Gold To Be Revalued
- Fear Index Sends Clear Message About GOLD'S Value
- How the U.S. became a nation of debt slaves
- SP500 Poised For A Sharp Pullback Near Term says Dr. Copper
- New CFTC rules weigh on silver and copper prices
- Gold Plummets, "Disappointing" Euro Leaders "Wont Fool Markets for Long"
- Analysts still don’t get the silver price link to monetary inflation
- LISTEN: James Turk talks with Dominic Frisby
- Fear Index sends clear message about gold’s value
- U.S. Can Rent Its Way Toward a Housing Recovery
- Gold and silver prices continue to tread water
- Central Banks Are Engaged in a Desperate Battle on Two Fronts
- Big revaluation of gold is path out of collapse, Paul Brodsky tells King World News
- Bud Conrad: U.S. Collapse Predicted
- Gold & Silver Market Morning, October 20, 2011
- Eric Sprott: “There Has To Be A Big Unwinding”
- Eurozone Leaders Ready €80 Billion Band-Aid for Banking Industry Gunshot Wound
- Gold Symposium
- Analyzing the Australian Dollar - Up, Down, and Under
- U.S. Dollar and Euro - Review and Outlook
- The Quintessential Inflation - The Great Weimar Inflation
- Devaluation of the Words on the Dollar Bill
- Bring back the Gold Standard 2
- Who Will Bail Out the Rescuers?
- Silver COT Most Bullish in Eight Years
- What is a lot of silver?
- What is a lot of Gold?
| A Lesson In Gold Price Volatility And Avoiding Future Pitfalls Posted: 20 Oct 2011 05:39 AM PDT By Macroeco: Gold is an asset which has attracted a lot of attention in this uncertain macro environment. Gold has a history of being an inflation hedge, a strategic reserve asset, and a safe haven. At my blog (macroeco.org) I will be writing a series dedicated to gold and precious metals. This article is one of the first ones in that series. With the ongoing sovereign debt crisis, every portfolio needs to have some capital allocated to gold for strategic diversification. Some skeptics claim that gold is a bubble and some on the other hand love it so much that they don't mind being called "gold bugs." There are a couple of important points about gold one needs to understand before investing in this versatile asset. It is important to be aware of gold price history during the early 1980s for that was one of the most important times for gold (like Complete Story » |
| Euro And Yen: Opposite Economic Goals Posted: 20 Oct 2011 04:51 AM PDT By Carlos X. Alexandre:c Bloomberg reported on Tuesday that "Yen Erases Gain as Nikkei Says Japan to 'Form Team' on Currency Strength."
This comes as no surprise, because this is a very old game played by the Bank of Japan, and understandably a high yen affects the country's exports. And on Wednesday evening we learned that Japan's is getting creative, as reported by Reuters, although the yen was virtually unchanged overnight.
But the unusual excerpt pertained Complete Story » |
| Posted: 20 Oct 2011 01:32 AM PDT Silver is still following the pattern of gold, around its 1980 high, with the exception that, its down-side action is "deeper" than that of gold. The depth (its fall to $26) of the pattern that started forming since it reached the 1980 high again, is deeper ($30 was the deepest that I expected) than what I had anticipated, based on gold's pattern. However, this appears to have been just a flash crash (provided we do not go there again). |
| Dollar Devaluation Coming, Gold To Be Revalued Posted: 20 Oct 2011 01:31 AM PDT From KWN: Paul Brodsky continues: Read more @ King World News |
| Fear Index Sends Clear Message About GOLD'S Value Posted: 20 Oct 2011 01:25 AM PDT Despite the drop in the gold price in September, GoldMoney's Fear Index remains above the 3% level, which should indicate a high alert to anyone paying attention. Growth in the money supply is accelerating, with M2 starting to follow the upward spike in M1, which had been shooting up since 2010. Even M3 is showing accelerating growth for the 8th month running, albeit at a lower pace than the other Ms. Monetarists who have pointed to plummeting velocity as a buffer between monetary inflation and consumer price inflation should take note; money velocity is also showing signs of picking up. Price volatility is to be expected. In fact, an increase in volatility is the easiest factor to predict as a consequence of increased money printing, as new hot-money runs around looking desperately for security and a rate of return, but both are increasingly difficult to find as one market after another falls to interventions or blows up in speculative bubbles.
What is the Fear Index telling us? That gold is still very much undervalued in historical terms when viewed in terms of dollars, which is the world's reserve currency. If the dollar money supply had to be once again 40% backed by gold, the average during the classical gold standard, the dollar price of an ounce of gold would have to be more than 10 times what it currently is. Of course that price calculation is based on the unrealistic assumption that there is no more money printing in the future. It also assumes that the US gold reserves are unencumbered and available for backing the dollar, and not just a forgotten and neglected "tradition" for which the American people hold only a pawnbroker's chit. Read more @ GoldMoney.com |
| How the U.S. became a nation of debt slaves Posted: 20 Oct 2011 01:21 AM PDT From Of Two Minds: How did America become a land of debt-serfs? We can trace our debt-serfdom to three core dynamics, which now dominate the American economy. To understand the transition from a state of minimal financial wealth/maximum freedom to one of debt servitude (illusory wealth and sacrifice of freedom for all that lifetime debt can buy), we first need to understand the gradual nature of this transmogrification. It has become a cultural given that major political changes are often wrought by conspiracies, official or informal. Conspiracies – otherwise known as "crony or "cartel capitalism" and "insider manipulation of process and perception" – do exist. However, major cultural shifts are long, drawn-out affairs that result not from conspiracy, but from the steady application of self-serving agendas by wealthy, politically powerful special interests. It may be difficult for many to imagine, but it was once difficult to obtain credit.Two generations ago, "if you want a loan, you have to prove you don't need it." Applications for credit cards, auto loans, and mortgages were... Read full article... More Cruxallaneous: Doc Eifrig: Stop taking this supplement immediately Three ways the government will try to confiscate your gold The man who brought down Madoff has identified another HUGE fraud |
| SP500 Poised For A Sharp Pullback Near Term says Dr. Copper Posted: 20 Oct 2011 01:06 AM PDT David A. Banister- www.MarketTrendForecast.com Back on October 3rd I wrote a public article forecasting a major market bottom at around 1088 on the SP 500 index. I surmised we were about to complete a 5 wave move to the downside that commenced with the Bin Laden highs of 1370 in early May of this year. The following day we bottomed at 1074 intra-day and closed over my 1088 pivot and continued higher as we all know. That brings us to the recent highs of 1233 intra-day this week, a strong 159 point rally off the 1074 lows in just a few weeks. Markets I contend move based on human behavioral patterns, mostly because the crowd reacts to good or bad news in different ways depending on the collective psychology of the masses. There are times when seemingly bad news is ignored and the markets keep going higher, and there are times when very good news is also ignored and the markets go lower. This is why I largely ignore the day to day economic headlines and talking heads on CNBC, as they are not much help in forecasting markets at all. Using my methods, I was able to forecast the top in Gold from 1862-1907 while everyone was screaming to buy. I was able to forecast the April 2010 top in the SP 500 well in advance, the bottom last summer, and recent pivot tops at 1231 and 1220 amongst others. All of this is done using crowd behavioral theory and a bit of my own recipes. That brings us forward to this recent rally from 1074 to 1233, which as it turns out is not all that random. The rally to 1233 will have taken place within a 13 Fibonacci trading day window which ends today. In addition, the rally is leading into the end of Options Expiration week which tends to mark pivot highs and pivot lows nearly every single month. Also, at 1233 we have a 61% Fibonacci retracement level of the 1010 lows of July 2010 and the 1370 highs of May 2011. 1233 was my "Bear line in the sand" I gave out a few months ago to my subscribers as a likely bull back breaker. In essence, the market is having trouble breaking the glass ceiling at 1233 for a reason; it's a psychological barrier for investors now. Near term, I expect the market to have another sharp correction to work off the near 160 point SP 500 rally that has taken hold in just over two weeks and again on 13 Fibonacci trading days as of today. In addition to that, we should follow copper as it tends to be an extremely good indicator for the SP 500 index long and short term. Right now, Copper has dropped 8% this week while the SP 500 levitates on a magic carpet ride within a 30 point range. Copper looks like it has begun a 5th wave down, which will likely take it to the $2.70's per pound from $3.46 last week on its recent bounce from $2.99. Below I offer a few charts showing the projected copper pattern and also one showing the SP 500 relating to Copper.
In any event, we are due for what I call a "B wave" correction of sentiment in the SP 500 and market indices, which should take the SP 500 to the 1149-1167 ranges minimally, and perhaps set up another entry for a C wave to the upside. Caution is warranted near term is my point. If you'd like to receive these types of regular updates during the week covering Gold, Silver, and SP 500 and more, check us out for a coupon or free weekly update at www.MarketTrendForecast.com |
| New CFTC rules weigh on silver and copper prices Posted: 20 Oct 2011 01:00 AM PDT Silver and copper prices were once again under sales pressure in yesterday's trading session, with the euro crisis still dragging on market sentiment. Although silver is a precious metal, it is ... |
| Gold Plummets, "Disappointing" Euro Leaders "Wont Fool Markets for Long" Posted: 20 Oct 2011 12:49 AM PDT Bullion Vault |
| Analysts still don’t get the silver price link to monetary inflation Posted: 20 Oct 2011 12:34 AM PDT If you want to follow the smart money you only have to look at the Most Popular Stories listing on Bloomberg each day. Right this moment Silver Bear Market Seen Ending on Europe Crisis: Commodities is number four. Articles on silver are as rare as the metal itself and just as popular with investors these days. |
| LISTEN: James Turk talks with Dominic Frisby Posted: 19 Oct 2011 10:43 PM PDT In this first ever GoldMoney Foundation Podcast Show, Dominic Frisby interviews James Turk, of the GoldMoney Foundation. They talk about the recent correction in the price of gold from all time nominal highs of 1.923$ per troy ounce and discuss the implications. Dominic points out that there hasn't been a 20% drop in the price of gold since 2008. James explains that these periodic liquidations are a normal part of gold's bull market. They talk about the fundamentals and discuss gold's safe haven status. They talk about how gold suffers in a liquidity event because of the rush to cash and the need to realise profit, while outperforming all other assets. James Turk recommends seeing gold as a form of savings and accumulating while its undervalued, since the trend will go much higher, rather than attempting to trade it. They discuss Lehman, Greece, Dexia and other significant market events. ~TVR |
| Fear Index sends clear message about gold’s value Posted: 19 Oct 2011 10:30 PM PDT Despite the drop in the gold price in September, GoldMoney's Fear Index remains above the 3% level, which should indicate a high alert to anyone paying attention. Growth in the money supply is ... |
| U.S. Can Rent Its Way Toward a Housing Recovery Posted: 19 Oct 2011 09:44 PM PDT This Idea Cannot Work As There Is No Credit Available For New Landlords. "After any financial collapse, housing plays a key role in the hard slog that typically follows: a weak housing market feeds into a weak economy, which then feeds back onto a weak housing market. So even if the European banking system somehow avoids a meltdown, economic recovery in the U.S. will continue to languish unless we act more aggressively on housing." "No matter what the government might try to do to break the housing-economy cycle, the de-leveraging process will still be painful and take some time. But that's not an argument against action; just because a headache can still hurt some even if you take aspirin doesn't mean you should skip the aspirin. One thing the Obama administration could do now — probably with Republican support — would be to attack the oversupply of housing stock by allowing a tax write-off for investors who buy empty properties and rent them out." "To understand why this would help, consider that problems in the residential real-estate sector have two dimensions. First, we have an excess supply of owner-(un)occupied housing, which puts downward pressure on prices. Second, millions of American households now have negative equity in their homes. Dealing with excess inventory by shifting vacant properties into the rental market would help to stabilize prices and thereby mitigate, to some degree, the negative-equity issue — although additional action would also be warranted to attack such "underwater" situations." 'It's normal to have some vacant homes for sale as part of the market process that matches buyers with sellers. On average during the 1990s, for example, the home vacancy rate was about 1.5 percent, according to the Census Bureau. By 2008, the figure had risen to 2.9 percent. And by the second quarter of this year, the vacancy rate had come down only slightly, to about 2.5 percent. With this much supply still available, it's no wonder that prices are still depressed." (Editor: True vacancy rate is 5-10% as millions of foreclosed homes are vacant. "The percentage-point difference between the latest vacancy rate (2.5 percent) and a more normal historical rate (1.5 percent) amounts to an excess inventory of almost 1 million vacant homes. Editor: Our estimate is 5,000,000 to 8,000,000 vacant homes throughout the USA. Banks are holding half of them off the books. (Estimates based on other methodologies are roughly in that range.) If the government does nothing, that extra inventory will be slowly worked off, as the economy gradually recovers and more households are formed. The question is whether the government can do anything to accelerate that process, to support home prices and, ultimately, to promote a stronger economic recovery." "My colleague Richard Wagreich of Citigroup's Financial Strategy Group has estimated the effect of such a tax break. He calculates that annual costs on real-estate investments would be reduced by about a third, given reasonable assumptions about tax rates for investors and the interest they must pay to borrow. The policy would also make more rental units available and lower their price, thereby encouraging more people to move out of existing households and into their own rental units." When all the bad debts both public and private are washed out of the system, then the housing business can begin to recover. However, first the unemployment mess must be corrected by putting people back to work so they can qualify to buy a home and make the monthly payments. We are years from seeing this happen. First, we must complete the last years of Greater Depression II and then the obligatory world war that always follows to exit a depression. Then and only then housing recovers. "Housing Desert Leads Biggest U.S. Homeownership Drop Since 1930s." "Stephanie Santiago moved to a newly built development in Buckeye, Arizona, in 2008, and waited for other families to arrive with playmates for her 8-year-old daughter. Three years later, she's still waiting. "There are a lot of empty neighborhoods," said Santiago, 30, pointing past the five large stucco houses on her block, which are surrounded by cotton fields and vacant desert lots. "They started to build and walked away." "Maricopa County, which added one of every 40 housing units built between 2000 and 2010 in the U.S., had the biggest drop in homeownership among large counties, falling to 64.5 percent of residents from 67.5 percent, the U.S. Census Bureau said yesterday. That was almost three times the national decline in homeownership, which fell 1.1 percentage points to 65.1 percent in the sharpest decrease since the 1930s, the census said. "The Phoenix suburb of Buckeye reflects two other census figures. The nation added almost 16 million homes, a 13.6 percent increase from 2000, as the number of vacant residences rose to 15 million, a gain of almost 44 percent. Buckeye's population grew to 50,876 last year from 6,537 in 2000. The Maricopa County town increased the number of houses to 18,207, an almost eightfold jump from 2,344 in 2000. Vacancies also surged, to 3,783, a 20-fold increase from 186 in 2000. "What you saw in Phoenix and the like were local economies that were built around home construction," Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California, Los Angeles, said in a telephone interview. "So when the housing boom stopped, everything imploded." Editor: Similar stories happened in super-booms like Las Vegas." "The implosion led to mass foreclosures in Maricopa County. There were 558 real-estate seizures by mortgage banks in the county in 2006, according to data compiled by RealtyTrac Inc., an Irvine, California-based real estate data company. The number climbed to 48,072 last year, an 86-fold increase. "Seven of the nation's more than 3,100 counties accounted for 10 percent of the new housing units. Among leading counties, Maricopa was first, with 389,000 new homes during the decade, followed by Harris in Texas, which added 301,000, and Clark in Nevada, which increased its count by 281,000. In California, Riverside County added 216,000 new homes and Los Angeles gained 174,000, while in Texas, Tarrant County increased by 149,000 units and Bexar County added 141,000 homes. "The number of U.S. residences increased by 15.8 million to 131.7 million at the end of the decade, a 13.6 percent growth rate. Almost 90 percent of the gain occurred between 2000 and 2007. There were almost 2.1 million housing starts in 2005. Last year, there were about 587,000, Census figures show. Vacant homes grew rose to about 11.4 percent of all housing units, up from 10.4 million in 2000. "In Arizona, cheap land drove people to less-expensive homes in rural communities such as Buckeye, about 40 miles southwest of Phoenix, and Queen Creek, about 40 miles to the southeast, according to Tom Rizen, 58, of RAN Realty and Property Management in Mesa, Arizona. The town added 7,276 homes, a more than six-fold increase during the decade to 8,557 from 1,281. 'You could get a new home, of a nice size, for a decent price,' Rizen said. "The prices kept going up and builders kept going further out. The inventory was built, the specs were built, and then the bottom fell out of the market." "Jay Butler, a professor emeritus of finance at the W.P. Carey School of Business at Arizona State University, said part of the boom was driven by builders, "always convinced the future is green and glorious." Editor: Our experience has been if builders and developers can get construction credit they will build….always being eternal optimists. This time it back-fired big-time. "In order for the market to recover, you have to make-up for the mistakes and fill-up the empty homes and build the houses in these empty subdivisions," Butler said. "Since you built an inventory for demand that really didn't exist, it takes time." -Frank Bass & Amanda J. Crawford 10-7-11 Bloomberg.net Editor: A recovery might take a decade. First all the bad loans must be written-off then people must get new jobs and credit followed by a chance to re-enter a repaired market. Available credit for the employed is key to the entire business.         This posting includes an audio/video/photo media file: Download Now |
| Gold and silver prices continue to tread water Posted: 19 Oct 2011 09:30 PM PDT Precious metals, commodities and equities slipped again yesterday on news that France and Germany continue to disagree on the best way to expand the European Financial Stability Facility (EFSF). All ... |
| Central Banks Are Engaged in a Desperate Battle on Two Fronts Posted: 19 Oct 2011 09:12 PM PDT ¤ Yesterday in Gold and SilverThe gold price didn't do much at all on Wednesday, with the New York high coming shortly before the equity markets opened in New York yesterday morning. At that high, gold was up about five bucks from Tuesday's close...but then began a long, slow slide into the close of electronic trading at 5:15 p.m. Eastern time. Gold closed at $1,642.70 spot...down $12.40 from Tuesday's close. Net volume was pretty light at around 107,000 contracts. By the way, for you newbies out there, a gold contract on the Comex futures market is 100 ounces of the stuff.
The silver price was somewhat more 'volatile' during the Wednesday trading day. Like gold, silver headed south shortly before 2:00 p.m. during the Hong Kong afternoon...and was down about seventy cents by 10:00 a.m. in London. Then, the price rallied into the London silver fix at noon local time...and the New York high came at the same moment as gold's...minutes after 9:00 a.m. in New York. It was all down hill from there...with the New York low coming in the very thinly traded New York Access Market at 3:30 p.m. Eastern. Silver rallied a bit from there, but still closed down 81 cents at $31.23 spot. With price movements like that, net volume was naturally pretty high at 42,000 contracts. A silver contract is 5,000 troy ounces....five Comex good delivery bars.
The dollar appeared to be a factor yesterday...but that doesn't explain the out-of-all-proportion drop in the silver price.
And if you're looking for some explanation for the slaughter in the precious metal shares yesterday...I don't have one...at least not one that I'm prepared to 100% hang my hat on. I was just as shocked and amazed as you were. But, back in the bad old days five or ten years ago whenever we at GATA saw an out-of-the-blue price drop in the shares that was totally counter to what the metal price was doing, meant that it was a forerunner to a price smash-down by the JPMorgan et al...as the insiders unloaded their positions in preparation for what was to come. I'm not suggesting that is the case here, but it's the only explanation I can come up with. We'll find out pretty quick if this theory holds any water this time...and I'd be delighted to be proven wrong. The HUI finished down a whopping 5.72%.
The same can be said for the silver shares, as Nick Laird's Silver Sentiment Index got clocked for 6.37%
(Click on image to enlarge) The CME's Daily Delivery Report showed that 25 gold and a rather large 153 silver contracts were posted for delivery on Friday. In silver, the big short/issuer was Jefferies...and they, along with JPMorgan in both their proprietary and client account, were the big stoppers. The action is worth a quick look...and the link is here. There were no reported changes in GLD and SLV yesterday. The U.S. Mint sold another 2,500 ounces of gold eagles...along with another 1,000 one-ounce 24K gold buffaloes. On Tuesday, the Comex-approved depositories reported receiving 636,985 ounces of silver...and shipped 402,140 ounces of the stuff out the door. Virtually all of the activity was over at Brink's, Inc...and the link to the action is here. Here's an interesting chart that Washington state reader S.A. sent me yesterday. The only question to be asked is when will these companies fall the other 50% that's left.
Here's another chart. This one from reader Scott Pluschau. The chart pattern that was looking so positive last week has 'failed' at the breakout point. 'Da boyz' sure know how to paint 'em...don't they? As Scott said in the covering e-mail..."Not much to be bullish on in this chart."
Silver analyst Ted Butler's mid-week commentary was posted on his website yesterday...and there was so much about the CFTC and position limits, that I'd literally have to post the entire essay to do it justice. I just hope that he'll have it put up in the public domain next week...and I'll let you know if he does. But here's a free paragraph anyway... "The meeting itself was a bit flat (as I think was intended) and if you missed witnessing it live, please allow me to furnish the highlights. The vote, 3 to 2, followed along strict partisan political lines, with the two Republican commissioners objecting strongly to the measure. Commissioner Dunn provided to swing vote, joining Chairman Gensler and Commissioner Chilton to approve the staff's proposed formula for position limits. There was some disappointment in the final ruling, but there was much more for which to be encouraged. One quick note – I don't know what the short term impact might be on the silver market, as I'm sure both the regulators and the manipulators of silver want no big short term effect on price as a result of the vote. It would not surprise me if silver was kept under price pressure so as not to draw a connection to the vote. Then again, it would never surprise me if silver were to start to fly. That said, the long term implications for silver are exceedingly favorable because of the vote." The stories just keep on coming. By this time of the week, things have normally slowed down a bit...but, as you know, these aren't normal times. As always, I just post them, the final edit is up to you. We are living in very dangerous times. It matters not whether the whole system collapses before Hallowe'en...or before Christmas...we're pretty much done for anyway. Conversations With Casey: Eric Sprott, Founder, Sprott Securities. The Perth Mint: Bron Suchecki speaks. As bunco artists go in the financial world, GATA is pretty small-time. ¤ Critical ReadsSubscribeCitigroup to pay $285 million to settle fraud caseThe SEC said the bank's Citigroup Global Markets unit misled investors about a $1 billion collateralized debt obligation by failing to reveal it had "significant influence" over the selection of $500 million of underlying assets, and that it took a short position against those assets. It said one experienced CDO trader called the portfolio "possibly the best short EVER!" while an experienced collateral manager said "the portfolio is horrible." In a statement, Citigroup said the SEC did not charge the unit with any "intentional or reckless misconduct" and that the settlement "resolves all outstanding SEC inquiries into those activities." If you get the distinct impression that this fine was just a licensing fee to continue screwing the average investor...you would be right about that. I thank Florida reader Donna Badach for sending me this Reuters story...and the link is here.  Bank of America Bosses Find Friend in the Fed: Jonathan WeilOne of the reasons so many Americans are ticked off at the Federal Reserve is a lingering sense that it puts big banks' interests above those of ordinary taxpayers. The news that the Fed is taking Bank of America Corp.'s side in a dispute over where to park some of the company's holdings only reinforces that impression. Here's the gist of the story, broken two days ago by Bloomberg News. Bank of America, which got hit with a credit- rating downgrade last month by Moody's Investors Service, has moved an undisclosed amount of derivative financial instruments from its Merrill Lynch unit to its biggest commercial-banking subsidiary. The latter is loaded with insured deposits and has a higher credit rating than Merrill or the parent company. The Federal Deposit Insurance Corp. is objecting to the transfers. That part is easy to understand: More risk for the retail lender means more risk for FDIC-insured deposits, which ultimately are backstopped by the U.S. government. I posted the story about it in this column yesterday...and Jonathan's op-ed piece on this was posted on the Bloomberg website yesterday evening...and is an absolute must read. I thank Washington state reader S.A. for bringing it to my attention...and the link is here.  QE3 'Certainly a Possibility': Boston Fed PresidentAnother round of quantitative easing by the Federal Reserve is "certainly a possibility" if there is a "bad economic shock," Boston Fed President Eric Rosengren told CNBC Wednesday. "It depends on what you think is the likelihood of what a bad economic shock is," he said. "So if you think there's a shock from Europe, or you think that some of the fiscal discussion is gonna break down, those might be the types of incidents…[that] might affect how likely you think it is that we'll have additional quantitative easing." Deflation would be another condition "under which it would make sense to have additional quantitative easing," he added. He might as well have said that it's just a matter of when...not if. I thank West Virginia reader Simon Elliot for sending me this cnbc.com article/video...and the link is here.  Ron Paul: Blame the Fed for the Financial CrisisTo know what is wrong with the Federal Reserve, one must first understand the nature of money. Money is like any other good in our economy that emerges from the market to satisfy the needs and wants of consumers. Its particular usefulness is that it helps facilitate indirect exchange, making it easier for us to buy and sell goods because there is a common way of measuring their value. Money is not a government phenomenon, and it need not and should not be managed by government. When central banks like the Fed manage money they are engaging in price fixing, which leads not to prosperity but to disaster. Ron really lets it all hang out here in this piece posted over at The Wall Street Journal in the wee hours of this morning. I thank Washington state reader S.A. for providing this rather short read...and the link is here.  Bud Conrad: U.S. Collapse PredictedCasey Research Chief Economist Bud Conrad believes the United States is acting as a late-stage empire, acting aggressively on the world stage, lowering its moral standards and debasing its currency. In this exclusive interview with The Gold Report at the Casey Research/Sprott Inc. "When Money Dies" Summit, he explains the options for how the inevitable collapse will occur. This interview, posted over at The Gold Report website last week, is well worth the read...and the link is here.  Police clash with protesters outside Greek parliamentGreece's parliament gave initial approval on Wednesday to a new round of belt-tightening needed to avert default, despite violent protests during the biggest rally in two years against the bitterly resented measures. Hours after Greek police clashed with black-clad demonstrators outside parliament, all 154 of the ruling Socialist PASOK party's lawmakers voted in favour of the measures, which must secure a second vote on Thursday before the new wave of austerity is enforced. The view of the ancient Acropolis was obscured by smoke from burning piles of rubbish and a bank building was evacuated after being set on fire by petrol bombs as a strike called by Greece's two main unions degenerated into violence outside parliament. This Reuters piece was posted over at the france24.com website yesterday...and I thank Roy Stephens for providing this story. The link is here. A similar, yet different story on the same issue is posted over at spiegel.de...and the link to that piece is Big revaluation of gold is path out of collapse, Paul Brodsky tells King World News Posted: 19 Oct 2011 09:12 PM PDT This is a GATA release from yesterday afternoon. It contains a couple of links. One is to the KWN blog mentioned...which is certainly worth reading...and the other is to an essay very similar to that published back in 2006. That piece is an absolute must read. I'll leave the preamble to Chris Powell...and the link is here. |
| Bud Conrad: U.S. Collapse Predicted Posted: 19 Oct 2011 09:12 PM PDT  Casey Research Chief Economist Bud Conrad believes the United States is acting as a late-stage empire, acting aggressively on the world stage, lowering its moral standards and debasing its currency. In this exclusive interview with The Gold Report at the Casey Research/Sprott Inc. "When Money Dies" Summit, he explains the options for how the inevitable collapse will occur. This interview, posted over at The Gold Report website last week, is well worth the read...and the link is here. |
| Gold & Silver Market Morning, October 20, 2011 Posted: 19 Oct 2011 09:00 PM PDT |
| Eric Sprott: “There Has To Be A Big Unwinding” Posted: 19 Oct 2011 08:51 PM PDT Eric Sprott: "Forces are at Work that can Move the Prices Down."
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| Eurozone Leaders Ready €80 Billion Band-Aid for Banking Industry Gunshot Wound Posted: 19 Oct 2011 06:14 PM PDT I must confess I don't stay on top of the blow by blow of the ever-devolving Eurozone mess. The broad lines of the trajectory look all too predictable. The officialdom could patch up things for quite a while if the powers that be let the ECB monetize the debt (eventually, you could have an inflation problem, but with the EU and global economy so slack, "eventually" will take quite a while to show up). However,everyone in positions of authority seems to believe in certain-to-fail-much-faster austerity instead. So the permissible short-to-medium term fixes involves lots of complicated programs, multi-party negotiations, and in some cases, political approvals. The timeline for the governmental maneuvering seems badly out of line with what Mr. Market requires. And to make matters worse, an earlier deal on a Greek funding, which involved bondholders taking a 21% haircut, is now deemed not to be punitive enough to banks. While that is narrowly true, having this deal come unglued could be the detonator that sets off a crisis chain reaction. And from a wider vantage, none of these remedies address the real issue: Germany wants to keep running big trade surpluses to the rest of Europe, but does not want to keep funding its partners' current account deficits. It can't have both wishes but is unwilling to give either one up. Things have gotten so ludicrous that you can now read contradictory stories in the Financial Times mere days apart (I'm not criticizing the FT but the apparatus that does the messaging). The day before yesterday, Eurozone banks "threatened" that they'd have to be nationalized if the haircuts on the aforementioned Greek funding deal were increased from 21% to 50%. Note credible estimates as early last year put the level of writedowns needed on Greek debt at a minimum of 50% (75% was not an uncommon number) and Greece has undershot forecasts repeatedly since then. The idea that nationalization is a horrible outcome to anyone other than bankers shows how far down the rabbit hole we've gone. But aside form that, recognize the implication: increasing the haircuts from 21% to 50% on Greek debt would tank banks. Even if we use the total amount of Greek debt outstanding, €350 x .29, we get €102 billion. But that figure is high, since what is relevant is the debt held by banks, not the total. A FT Alphaville story reported the private debt target for participation in the earlier restructuring plan (the goal was 90% participation) was €135 billion. Gross that up and you get €150 billion, and take 29% of that, and you get €44 billion. If a mere incremental €44 billion loss across Eurobanks is such a devastating event, the banks are pretty wobbly as it is. Mind you, we all know that, but the banks have just said that, loudly and publicly. And pretty much no one expects the resturcturings to stop with Greece. Yet today, the FT tells us that European officials thinks the level of recapitalization needed is a mere €80 billion. Earth to base, if they are so fragile that €44 billion in losses will allegedly put a lot over the edge, they need a lot more dough than that. The prevailing estimates of the magnitude of the combined banking/sovereign is in the €2 to €3 trillion range. This measure is not a solution, and it falls so far short that it's an embarrassing and dangerous admission that the European financial leadership isn't merely politically constrained, it's utterly clueless. At best, the authorities must view this action as tantamount to administering a shot of adrenaline to the heart of a failing patient. The pink paper continues with this surreal account:
So we know where this absurd figure came from, the Eurzone's phony stress tests. They are now making the mistake of believing them. And get this part:
There is duly discouraged coverage in a separate FT story that recaps the current state of play, in case you like studying self-immolation. The key section:
The faulty logic is that this disaster is the result of recent actions. It was bound to happen when the banks were not brought to heel in the wake of the 2008 crisis. But even now, no one seems to be drawing the right lessons or focusing on the real issues. In ECONNED, we discussed four possible reasons for the failure to undertake fundamental reforms. The last one was:
If this view is correct, we are in a protracted period of muddled and futile to damaging policy actions until the old system is proven to be beyond redemption. If we are lucky, a combination of new thinking and successful experiments will put us on the road to a new order. But at this juncture, it's hard to find reasons to be optimistic.
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| Posted: 19 Oct 2011 05:25 PM PDT A bit remiss of me not to mention that I will be attending the Gold Symposium in Sydney, November 14 and 15. If you are in Sydney it is really a must go to event considering the speakers: Ben Davies, Dan Denning, David Evans, Egon von Greyerz, Eric Sprott and John Embry, Kris Sayce, and Louis Boulanger. Remiss because Friday is the last day to get tickets at $199, after which they go up to $299. There is a draw for a natural nugget worth $2000 from Focus Minerals and the Mint is also throwing in a 25th Anniversary 1oz Proof coin as well. This isn't going to have thousands of attendees so good odds on winning. Let me know if you are going, would look forward to catching up with you at the end of each day for drinks.  |
| Analyzing the Australian Dollar - Up, Down, and Under Posted: 19 Oct 2011 04:39 PM PDT SirChartsAlot |
| U.S. Dollar and Euro - Review and Outlook Posted: 19 Oct 2011 04:31 PM PDT Merk Fund |
| The Quintessential Inflation - The Great Weimar Inflation Posted: 19 Oct 2011 04:30 PM PDT Gold Forecaster |
| Devaluation of the Words on the Dollar Bill Posted: 19 Oct 2011 03:00 PM PDT |
| Bring back the Gold Standard 2 Posted: 19 Oct 2011 03:00 PM PDT Ferdinand Lips |
| Who Will Bail Out the Rescuers? Posted: 19 Oct 2011 02:39 PM PDT Yesterday, rumors circulated that the Europeans had their problems in hand. The Dow rose 180 points. The euro went up too, and now trades at $1.37. For all the talk of a disintegrating Europe, the euro has been holding together pretty well. Gold fell $23 for no apparent reason. As the day went on, however, the euro solution looked less and less like a solution and more like a disaster. Moody's took Spanish debt down two notches...and warned that it was looking at France. The New York Times has the story:
Moody's warned late Monday of a possible downgrade to France's flawless credit rating. French finance officials worry that any such move would make it hard for Paris to negotiate solutions, according to an official who was not authorized to discuss the situation publicly. Now that the rating agencies are circling France, the whole rescue project is in danger. It is one thing for the big, strong nations — France and Germany — to rescue the little, marginal nations, such as Greece and Ireland. But who's going to rescue France? At some point, the Europeans are going to be forced to either default honestly and painfully...or to bail themselves out boldly and fraudulently, like the Americans. Here in Paris, sitting in the Café Vavin, we watch disasters develop on two continents at once. As to the US mess, we think we understand what is going on. The Americans are on the path of self-destruction. They'll pick up speed, until they finally reach their destination. But as to what is going on in Europe, we have no better idea than Nicholas Sarkozy or Angela Merkel. We stick to our guns. Yes, dear readers, guns are what you are probably going to want. Right now, the revolutionaries are mostly peaceful. That's how revolutions begin. The elites think they can manage the situation. They express their sympathies to the protestors. They promise reforms. "We are on their side," says President Obama. New Yorkers are overwhelmingly behind them. And the press — which ignored them for weeks — suddenly finds nice things to say about their cause, when they can figure out what their cause is. Later on...when the protestors become more violent and more determined...and after the elites push back...then you'll wish you had guns. The police will shoot the protestors. Then, the protestors will shoot the police. They'll probably both be shooting at you. It will be a real revolution! And what's behind it? Forty-six million people on food stamps. One hundred million who have not had a real raise in 40 years. Twenty-five million without real jobs. Twenty million who will never have real jobs. One out of five mortgaged homeowners who are underwater. But that's just the beginning. Wait until the hoi polloi begin to realize how things work. We remember when the government was throwing money at "minority" contractors back in the '70s and '80s. Politicians and lobbyists hustled to find a 'person of color' who could be a front man. Savvy businessmen formed new enterprises in their wives' names. How women got to be a minority we never did understand, but that is how it worked. Maybe it still does. If you were a 'minority' you could get special treatment... You could become a zombie. The next big feeding frenzy was the 'War on Terror.' Billions were being spent. Again, the insiders got on the phone and invented businesses to take the money — 'security' firms...logistics support...armor and equipment...food...training. Software was a favorite. You could spend billions developing software. Who knew if it worked or not? Arnaud de Borchgrave describes how the supply chain worked:
Billions have vanished into the offshore accounts of American and foreign contractors. In Iraq, an estimated $6.6 billion are unaccounted for. Pretty sweet, huh? You start a business. The feds get behind it. The business never makes a penny. But you leave with a cool $20 million. Good work if you can get it. And the people who can't get it — the people without connections to the elite — are getting pretty upset about it. Regards, Bill Bonner,
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| Silver COT Most Bullish in Eight Years Posted: 19 Oct 2011 02:32 PM PDT Wednesday, October 19, 2011 Special GGR Excerpt – Silver COT Most Bullish in Eight Years HOUSTON – In a moment we share an excerpt of the full Got Gold Report which was delivered to subscribers Sunday evening, October 16, and posted on the password protected subscriber pages by the intrepid staff of GGR, but first a brief comment. With the markets still kind of going through a giant sausage grinder; with a premium on uncertainty and a discount currently for confidence; with Greek people chunking rocks and Molotov cocktails at police in Athens – because they are "shocked, shocked" that their government can't continue to cook the books and get away with it. Greek pols have been coddling Greek voters with an Aegean Sea of borrowed Euros. Instead of being "real" with the people, they have been "real sweet" to them for a very long time. Naturally the Greek people now want and demand to be kept in the "style to which they have become accustomed." Thus, a hissy-fit eruption in the land of Vesuvius - even though the government is broke and likely broken by their own hand. (Not unlike people everywhere that get sucked into the socialist model government dependency trap.) We hear of plans to expand the EFSF, and if the talk proves to be true, we are indeed talking about a new form of Q.E., another major expansion of liquidity, further debasement of fiat currencies and a guaranteed continuation of uncertainty for the foreseeable future. Continued… Confidence in Currencies or Metal? Very short term who knows what to expect from gold or silver as liquidity rushes to and fro in thin and thinning, very choppy markets. But longer term, and looking ahead into the coming U.S. election year it seems to us that the fundamental factors which have underpinned the precious metals markets are likely to remain as robustly bullish as they will be dangerous for anyone trading using leverage. As we have said so many times over the years, we shall remain bullish on gold and silver so long as these conditions prevail and until we see increasing confidence in fiat currencies generally (not just short-term capital flight into them) and a lessening of disdain for the governments that print them. If one believes that confidence in fiat currencies and in governments is or will be ascendant from now on, then the time to be involved with precious metals has passed and it is time to convert precious metals into the paper mediums of exchange or buy "stuff" with them. We don't believe that right now, how about you? Meanwhile, we remain in a nasty negative liquidity event where it is very difficult for any of our chosen mining or exploration companies to sustain advances and the Vulture Bargain battlefield is a very target rich environment. Difficult except for when our issues see takeover bids, such as our Vulture Bargain #9, Trade Winds Ventures recently did (thank you very much Ian, at Trade Winds!) or like our Vulture Bargain #2, Hathor Exploration, just announced this morning – a higher bid than the Cameco offer by none other than Rio Tinto (Thank you very much Tony, at Hathor!). By the way, Vultures (Got Gold Report Subscribers) please see the related note on Hathor in the VultureInReview section and our disclosure note at the bottom of it. We are out on the pop with all of our Trophy Shares.) We won't go on and on about the news today. Just remember that the markets are not really pricing in today's news. The markets are trying every moment of every day to discount the news we will be reading three, six and nine months hence. At times it is easy to forget that or to become morose and disenchanted by the news of the day, but that's why the majority of our time is spent tracking technical charts and consuming the data behind them rather than glued to a TV screen watching cable TV. Emphasis on the word "majority" in that last sentence as we admit to being CNBC and Bloomberg junkies too more than we'd like these days. Metals Also Uncertain Short Term Just below is an excerpt from Sunday's full Got Gold Report, the section that looks at the legacy commitments of traders report for silver as we hinted at earlier in the week. Since Sunday neither gold nor silver, which are consolidating after harsh corrections, have shown their hand definitively. Gold is currently, near the close on Wednesday, October 19, 2011, grinding through the $1,640s and silver is drifting lower in the $31 arena. Yesterday, as we reported here, the silver ETF gapped lower but recovered all the gap, which is anything but bearish. Today, however, silver shows us "bupkiss" and is a limp-wristed "sister kisser." We suspect that both will "show their hand" before long, if for no other reason than they don't usually go sideways very much longer than they already have and trend-following traders cannot participate until there is a trend to follow. We are personally in a strange, but okay place with regard to silver. Our attitude is that if it were to break lower here and retest the panic lows of September (near $26) that would be great, because we would feel comfortable adding to our own physical position there or below there. On the other hand, if silver were to break out of its $32.50 resistance and keep on trucking higher, that would be great too, because we have some. We think that's a good 'place' to be. But if we didn't own any silver at all, and knowing what we know and report just below, we'd just about have to be adding at least some physical silver on any significant to strong dips right here and right now – in tranches. The cheaper the better, of course. Excerpt from the October 16 Got Gold Report Silver COT Most Bullish in Eight Years The Commodity Futures Trading Commission (CFTC) issued its weekly commitments of traders (COT) report at 15:30 ET Friday, October 14. The report is for the close of trading as of Tuesday, October 11. GotGoldReport.com is focused on the changes in positioning of the largest futures traders in that report – the traders the CFTC classes as "commercial," including the bullion banks, large dealers and swap dealers combined. We refer to those commercial traders as "LCs" for "Large Commercials," or sometimes the "Big Sellers," because they are the largest sellers of gold and silver futures. Remember that the COT trading week is from Tuesday to Tuesday and for this COT week gold traded in a tighter band of between roughly $1,600 on the low side to about $1,680 at resistance, ending the COT week stronger, with a test of the $1,680s early Tuesday, near resistance, before settling in the $1,660s – down on the day, but still closer to the highs than the lows for the COT week. Silver COT Like gold, silver traded in a much narrower range this COT week, consolidating a bounce the previous week up from what may have proven itself as near-support in the $28s. Indeed, for all of this calendar week silver found consistent support above $31, with determined bidding showing up on Monday right after a faux 90-cent selloff Friday Oct 7 to $31.10. Silver, daily, 3-month courtesy of Finviz.com Interesting to note that the weekly low for silver rose by $2.75 to $31.16 while the weekly high only rose 33-cents to $33.06, suggesting ample opposition just above, but also a sense of urgency on the part of bidders underneath. When we see the lows increasing quickly but the highs staying relatively steady it usually means we are in an ascending triangle (AT) or a similar formation. ATs are either continuation or reversal patterns. A break either way out of the formation is usually followed hard upon by significant follow-through. Our experience is that ATs are more often than not continuation patterns, which is to say that in silver's case (and very short term) our technical expectation would be for silver to break to the downside out of the current AT, say six or seven times out of ten tries (intuitively, we don't have the data to back it up). If we were looking at an AT following an upsurge, our expectation would be for the resolution to be a breakout, for silver to continue on higher. Having said that, when combined with the very, very bullish COT data we have to review just below, we just about have to expect this particular AT to resolve in the form of a near-term reversal - higher. Once the data is clear, see if you agree. For the COT week, as silver added $1.98 or 6.6% Tues/Tues, from $30.04 to $32.02, the combined COMEX large commercial traders added to their collective net short positioning (LCNS) for the first time in five weeks by a relatively small 1,905 contracts or 10.1% from a very low 18,923 to a still quite low 20,828 contracts net short. As shown in the chart below, we are at very low levels of commercial net short positioning in silver futures. Indeed we are at 8-year lows for the silver LCNS, meaning we have to go back to 2003 to find a period when the commercial traders were less confident in the price of silver moving lower. The opposite way to say that is that we have to go back to 2003 to find a period where the commercial traders of silver futures held so few downside bets on silver and then the price of silver was in the $4.40s (not a misprint). The open interest for silver actually declined again, for the sixth consecutive week, by 1,404 contracts to just 99,698 lots open. The COMEX open interest for silver futures has not been this low since August 4 of 2009 with silver then $14.63. Just below is the nominal LCNS graph for silver futures. Source CFTC for COT data, Cash Market for silver. Needless to say that now, with silver near the $32 mark, we are currently very near the lowest commercial net short position for silver futures since the bull market began in 2003. As of Tuesday (and as of the prior Tuesday), COMEX futures veterans the CFTC classes as "commercial," including the bullion banks and the Swap Dealers combined are not positioned as though they believe that silver has very much downside action left in it. Part of the reason for that is that the more mercenary Swap Dealers currently hold the largest net long position in silver futures they have held in our records as we will see in a moment. As we do with gold, we compare the nominal silver LCNS to the total open interest. We think that gives us a better idea of the relative positioning of the largest hedgers and short sellers – the Producer/Merchants and the Swap Dealers combined into a single category – compared to all the other traders on the COMEX. When compared to all contracts open, the relative commercial net short positioning (LCNS:TO) for silver rose for the first week in five, from an extremely low and very bullish 18.7% to a higher, but still extremely low and should be very bullish 20.9% of all COMEX contracts open. The silver LCNS:TO graph is just below. Source CFTC for COT data, Cash Market for silver. Amazingly, five reporting weeks ago the silver LCNS:TO reached 41.7%, the highest LCNS:TO of the year, with silver then in the $42 arena. We've wiped out roughly $10 or, call it 23.5% in price since then, but goodness, look at the huge, enormous, historic net 26,478-contract (56%) get-out of the short-side of silver futures by the Big Sellers as a group since then (no matter if part of that is because one class of commercial traders went net long in a big way – it counts, brothers and sisters). That has the LCNS:TO down to levels not seen since silver traded under $5.00 (actually under $4.50) the ounce eight years ago! However one wants to look at it, and regardless of what silver does very short term in the days and weeks just ahead, the graphs above are screaming at the top of their lungs like a bullish klaxon. The graphs tell a tale of longer-term opportunity with a high degree of confidence. There are never any guarantees in this business. The price of silver is governed by lots of factors, not the least of which is the much larger and more opaque physical and OTC markets in London, Zurich, Tokyo, Hong Kong, and lest we forget, New York, etc. The price of silver is affected by more than just the futures markets by themselves, in other words. But, friends and fellow Vultures now hear this: Under these extraordinary COT conditions, when so much of the bullish firepower has been swept out of the futures market (and is therefore at the ready to return at the first sign of a new uptrend) – when even after a huge exodus of speculators we can document the apparent reticence of the commercials to take on more downside bets - when indeed one class of commercial traders now holds the largest net LONG position in years – and after all that, with the price of silver still sporting a $30+ handle, it is most definitely a sign that the normal Big Sellers of silver futures are not, repeat not confident in the price of silver falling all that much farther. If their positioning in futures is any guide, we have to note that the Big Sellers have very strongly and decisively positioned for the opposite. Look closely at the charts above – both of them. Note the few times in the past when the LCNS and the LCNS.TO have reached even close to this low on the graphs and see if there is one and only one common occurrence following those spikes down so low (and continuing for quite some time thereafter in each and every case). And how about if we look farther back in time than just those two graphs? If we look back to the beginning of the bull market for silver, all the way back to the last time that the silver LCNS touched as low as it has this past two weeks, we see the same story, except it is reinforced by just how rare it is for the LCNS to travel under 25,000 contracts. Very simply, the market has sold out and is attempting to re-set very similar to the way it did after the 2008-Panic, but at a much higher starting level for the price, apparently. As we are wont to say at times like this, it would be arrogance of the first order to predict the very near term direction of the price of silver. The market is unsettled, finding its footing, potentially still hyper volatile and so on, but if pressed to wager, we'd give very high odds that the price of silver will be considerably higher in price two months and four months from now. The charts above suggest that we should expect that, so we do indeed. Naturally, if we were to short-term trade based on our confidence it would only be with the appropriate new-trade trading stops in place for peace of mind and for protection against unforeseen calamity, sudden exogenous events and our being dead wrong, of course! We can read the signs we can see pretty well, but it is never those signs, the signs we can see and understand, that end up biting us in the caboose. *** End of this excerpt. Original from Sunday, October 16, 2011. Thanks for investing your valuable time with us here at Got Gold Report. We hope to meet with and talk with as many of you as possible at the New Orleans Investment Conference next week. For last minute information, reservations and other information about the conference, please click on the ad link on the NOIC link on the right side of the Home Page. That is all for now, but there is more to come. http://www.gotgoldreport.com/2011/10...ht-years-.html |
| Posted: 19 Oct 2011 01:38 PM PDT At what point does some Silver turn into a lot of Silver? This should be fun too, once again the numbers will be as different as we all are. ~:biggrin: |
| Posted: 19 Oct 2011 01:07 PM PDT At what point does some Gold turn into a lot of Gold? Everybody has an opinion on this I just wonder how different they are. ~:biggrin: |
With continued worries surrounding the metals markets, today King World News spoke with the firm that is calling for $10,000 gold. Paul Brodsky, who co-founded QB Asset Management Company, explains
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