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- COT Silver Report - October 28, 2011
- The Good Old Days Of Gold
- Argentina Rule Change Casts Dark Shadow Over Mining Industry
- India Markets Friday Wrap-Up: Sensex Ends The Week Up 6%
- Who is selling this weekend?
- Buying Gold at $1,700?
- Why Have Central Banks Stopped Selling Gold?
- John Hathaway: Bullish on Gold and Gold Equities
- Relative Strength Analysis is Important for Gold Stocks
- Gold Research Again Proves Gold as “Risk Management Vehicle” and “Store of Wealth”
- Silver price rising on increased investment demand
- Silver price surges on improving sentiment
- A Myth Concerning Gold Confiscation
- Dr. Copper Moves Higher
- Eric Sprott on Silver: An Attractive Time to Buy
- China's gold frenzy gives birth to small bourses
- Venezuela scrambles to bring $11 billion worth of gold home
- This is what will move gold and silver higher: Greg Weldon tells King World News
- The BullionBuzz eNewsletter for October 25, 2011 - Bullion Management Group
- Risk Management 101 - Why Wall Street Needs To Wake Up & Tell Its Clients To Own Physical Gold
- Confessions of a Gold Scammer
- The End Of The “GLD” ETF Is Near
- Gold & Silver Market Morning, October 28, 2011
- This Is What Will Move Gold & Silver Higher
- James Dines: Government’s Theft Forcing Violent End
- Links 10/28/11
- LISTEN: John Doody On Gold Stocks 10.28.11
- Grand European Rescue Already Starting to Come Unglued?
- Today’s Winners and Losers
- Gold in the Middle Ages
| COT Silver Report - October 28, 2011 Posted: 28 Oct 2011 06:33 AM PDT COT Silver Report - October 28, 2011 |
| Posted: 28 Oct 2011 06:29 AM PDT By writes:
Complete Story » |
| Argentina Rule Change Casts Dark Shadow Over Mining Industry Posted: 28 Oct 2011 06:23 AM PDT The re-elected President, Cristina Fernandez de Kirchner, wants export revenue from mining projects to be repatriated and converted to Argentine currency prior to their distribution. This rule change by the Argentinian government renders this country less attractive than it used to be to inward investors. It also serves as a reminder of myriad risks involved in any mining operation. This one comes under the heading of Geo-political risk, as the re-elected government seeks to stem the flow of capital out of the country. Having this cash repatriated also gives the government the opportunity, further down the line, to introduce capital controls, which would result in the cash having to be re-invested in Argentina. Whilst we watch developments here we stop to dwell on that much-used word these days, 'contagion' and wonder if these external influences will have any influence on the neighboring states such as Mexico. This threat is not Complete Story » |
| India Markets Friday Wrap-Up: Sensex Ends The Week Up 6% Posted: 28 Oct 2011 06:03 AM PDT By Equitymaster: In what seemed to be a jubilant mood in the Indian stock market the indices had a strong opening today and managed to retain the momentum till the final hours of trade. Metal and auto stocks were particularly in favour. Banking stocks also evinced investor interest after the RBI's rate hike early this week. While the BSE-Sensex closed higher by around 516 points (up 2.9%), the NSE-Nifty closed higher by around 156 points (up 3%). The BSE Mid Cap and the BSE Small Cap indices gained 1.5% and 1% respectively. 10 stocks gained for every decline on the BSE 100 index today. As regards global markets, other Asian markets also closed higher today while European indices have opened on a negative note. The rupee was trading at Rs 48.8 to the dollar at the time of writing. The Reserve Bank of India on Tuesday deregulated the savings deposit rate, the Complete Story » |
| Posted: 28 Oct 2011 03:51 AM PDT With the Pop in PM prices, anyone selling this weekend and going into the dollar? |
| Posted: 28 Oct 2011 02:32 AM PDT Read this first. |
| Why Have Central Banks Stopped Selling Gold? Posted: 28 Oct 2011 02:00 AM PDT The World Gold Council's Natalie Dempster took the time to talk with Kitco News from the Argyle Executive Forum's "2011 Investment Leadership Forum: Outlooks on the Gold Market – New York" to discuss the role of central banks in the gold market. For Kitco News, Terry Wooten reports. ~TVR |
| John Hathaway: Bullish on Gold and Gold Equities Posted: 28 Oct 2011 01:40 AM PDT |
| Relative Strength Analysis is Important for Gold Stocks Posted: 28 Oct 2011 01:38 AM PDT |
| Gold Research Again Proves Gold as “Risk Management Vehicle” and “Store of Wealth” Posted: 28 Oct 2011 01:32 AM PDT |
| Silver price rising on increased investment demand Posted: 28 Oct 2011 01:00 AM PDT According to CPM Group's 2011 Silver Yearbook, investment demand was the main driver behind silver price increases in the past year. Total demand from investors in capital markets reached 142 ... |
| Silver price surges on improving sentiment Posted: 28 Oct 2011 12:42 AM PDT |
| A Myth Concerning Gold Confiscation Posted: 27 Oct 2011 10:30 PM PDT |
| Posted: 27 Oct 2011 09:39 PM PDT "Copper Climbs to Three-Week High After G-20 Talks And U.S. Data." Rising copper means selling bonds. Rising copper means these mines are producing gold and silver by-products. Rising copper signals inflation. This is a very positive signal for our trading ideas. "Copper advanced to a three-week high as base metals gained after Group of 20 finance chiefs endorsed parts of a plan to contain Europe's debt crisis and data showed stronger-than-expected U.S. retail sales." Editor: The rising retail sales number helping markets last week was phony. See our After The Bell Explanation. Also, early retail reports we see from our sources say the big Christmas buying season will be disaster. We suspect one major USA or European retailer will file bankruptcy by spring. "The metal for delivery in three-month gained as much as 1% to $7,619.50 a metric ton on the London Metal Exchange, the highest since September 27. The contract traded at $7,561 as of 10:16 a.m. Shanghai time, after adding +2.4% last week. Copper for December delivery on the Shanghai Futures Exchange advanced +0.7% percent to 56,400 Yuan ($8,846) a ton. "The positive news over the weekend led to a broad market rally today, helping to boost copper prices, even as there are signs of relatively weak demand," Xiong Dabiao, an analyst at Minmetals Futures Co., said today. 'Group of 20 finance ministers and central banks concluded weekend talks in Paris endorsing parts of the emerging plan to avoid a Greek default, bolster banks and curb contagion, setting an October 23 summit of European leaders in Brussels as deadline for delivery." -Ed: If they miss; markets crash. "Managed-money funds held net-short positions, or bearish bets on Comex copper in New York, that increased 80 percent from a week earlier, according to the U.S. Commodity Futures Trading Commission. That left investors with a net-short position of 9,489 futures and options contracts on October 11, the most since June, 2009, the CFTC data showed." -James Poole, Editor, Bloomberg News 10-16-11 In further developments last Sunday evening, it was announced gold bullion will be traded at triple the volume on the Hong Kong Exchange. We think this is a big deal and will further squeeze the shorts. Copper is normally rising along with gold, silver and platinum. Today, prices are going-up.         This posting includes an audio/video/photo media file: Download Now |
| Eric Sprott on Silver: An Attractive Time to Buy Posted: 27 Oct 2011 09:10 PM PDT ¤ Yesterday in Gold and SilverAs has been the case of late, the gold price didn't do much in Far East trading on Thursday...and began to drift gently lower starting shortly before 11:00 a.m. Hong Kong time. By the time the low of the day was in around 11:15 a.m. in London, the gold price was down about twenty bucks from Wednesday's New York close. But, from that low, a rally began that got sold off a bit the moment that Comex trading started at 8:20 a.m. Eastern time. Then...beginning at 9:30 a.m...the real rally of the day got underway...with gold hitting its high of the day at precisely 2:00 p.m. Eastern time. From its high, the gold price got sold off a hair into the close of electronic trading at 5:15 p.m. in New York. Gold finished up $20.20 on the day, closing at $1,745.70 spot. Net volume was about 141,000 contracts, almost identical to Wednesday's volume.
Silver's price path was virtually the same as gold's on Thursday. The only significant difference was that there was no sell-off at the opening of Comex trading in New York...and the real rally of the day that got underway at 9:30 a.m. Eastern was just an acceleration of the rally that had started at 11:15 a.m. in London. Silver closed at $35.09 spot...up $1.72 on the day. And, because of the price action, the net volume in silver was around 41,000 contracts yesterday, up from the 34,000 contracts traded on Wednesday.
Here's the 2-day dollar chart. From it's high just before lunch on Wednesday, to it's absolute low at precisely 2:00 p.m. Eastern time yesterday afternoon, the dollar crashed by a bit more than 180 basis points, or 2.38%. That's a huge move for what is supposed to be the world's reserve currency.
I must admit that I was somewhat underwhelmed by the performance of the gold stocks yesterday. The equity markets gapped up big...and stayed up for the rest of the trading day. However, every rally attempt in the gold shares seemed to bring forth a willing seller. This lasted until about 1:00 p.m. Eastern before a sustained rally began. But then out of the blue a seller came along in the last half-hour of trading and spoiled the party by shaving more than a percent off the HUI, which finished up 2.04% on the day. I have my suspicions about this, but I'll leave them unsaid.
With silver up more than five percent on Thursday, one would have expected that the silver stocks would have been roaring to the upside. Well, that wasn't the case at all, but they would have done better overall if they hadn't got sold off along with the gold stocks late in the day. I suppose it may have had something to do with the news out of Argentina yesterday...but that certainly wouldn't have affected that many stocks. But, despite that fact, Nick Laird's Silver Sentiment Index was up a chunky 4.21%.
(Click on image to enlarge) It as a pretty quiet Daily Delivery Report from the CME yesterday, as they reported only 3 gold and 6 silver contracts were posted for delivery on Monday. There will be one more delivery report for October...and that should come late this evening, along with First Day Notice into the November delivery month...which is Monday, October 31st. I'll report on all this in my Saturday column. Despite the price increases in both gold and silver on Wednesday and Thursday, there was actually a small withdrawal of 19,459 troy ounces of gold from GLD yesterday...and no changes at all were reported in SLV on either day. And just as a note of interest regarding SLV...since October 7th there have been five straight withdrawals totaling 8.7 million ounces. Not one ounce has been added since this current silver price rally began on October 20th. Since October 7th, the silver price is up $4.50 the ounce...and since October 20th, the silver price is up a bit more that five bucks. Very curious. When I spoke with Ted Butler yesterday, he mentioned that fact that this current 1-week old silver rally may involve short covering by the big bullion banks...and the possibility exists that there's a short-covering rally going on in SLV shares as well, as 'da boyz' are short that ETF to the tune of 20 million ounces. We'll find out in the fullness of time, but from what I see, the situation is worth keeping an eye on. Today's Commitment of Traders Report will, hopefully, shed some light on this. Unfortunately Thursday's action won't be part of it...and I suspect that some of Tuesday's big silver price action won't be in this report, either. The U.S. Mint had no sales report yesterday. There was a fair amount of in-and-out activity at the Comex-approved depositories on Wednesday. They reported receiving 532,431 ounces of silver...and shipped 658,755 troy ounces out the door, for a net decline of 126,324 ounces. Most of the big activity was over at Brink's, Inc...and the link to all the action is here. Here's the 6-month HUI chart that Scott Pluschau sent me yesterday...and here are his comments that went with it..."Let's see how this pattern on the HUI works out from a traditional technical analysis standpoint. A new 52-week low in early October was followed by a re-test, but could not follow through, and the classic "double bottom" pattern formed when the neckline across the top of the middle peak in the 'W' was broken and closed above. This is a very bullish sign."
I agree that it is, but like I've said before, JPMorgan et al can paint any chart pattern they want, both bullish and bearish. It's possible it could 'fail' here, so we'll just have to wait it out. Here's the 5, 10 and 30-year U.S. bond yield chart courtesy of Nick Laird. Notice how the Fed's "Operation Twist" has had the exact opposite effect intended. Yields are now rising along the entire yield curve. I have a must read zerohedge.com story about that posted a little further down.
(Click on image to enlarge) Here's a chart that was making the rounds amongst the editors over at Casey Research yesterday...and the 'click to enlarge' feature will be very helpful here. You'll note the one percent allocation to gold. BIG GOLD editor, Jeff Clark, pointed out that at the height of the gold mania in 1981, that percentage was 26%...and at the height of the depression, it was 20%. So we've got a long way to go before this bull market it gold breaths its last. I thank Casey Research's own Alex Daley for digging this up.
(Click on image to enlarge) Is JPMorgan now prepared to pile back on the short side as the tech funds show up to buy once the 50-day moving average in silver is penetrated to the upside? Confessions of a Gold Scammer. Venezuela scrambles to bring $11 billion worth of gold home. China's gold frenzy gives birth to small bourses. Argentina Takes a Turn for the Worse. ¤ Critical ReadsSubscribeForeigners Sell Second Largest Amount Of US Bonds Ever In Past WeekTwo weeks ago when we reported that there had been a record consecutive week dump of US Treasury paper in the Fed's custodial account, as reported by the weekly H.4.1, we made the assumption that this was China preemptively selling US paper. Well, that may or may not have been the case, but it was only part of the full story. We have now learned that Europe, and especially Germany has been just an active seller of sovereign bonds, most certainly including US paper, in recent weeks. I would suspect that this would be the main reason why U.S. bond yields are rising across the curve. This zerohedge.com story was sent to me by reader Roy Stephens...and the link is here.  Europe's Punishment UnionVery quickly, there has been much loose talk about EU fiscal union. What was agreed at 4AM this morning is nothing of the sort. As the statement says, EMU's leaders have learned the lesson of a decade of self-delusion. "Today no government can afford to underestimate the possible impact of public debts or housing bubbles in another eurozone country on its own economy." But none of this is fiscal union. There is no joint bond issuance, no move to an EU treasury, no joint budgets with shared taxation and spending, no debt pooling, and no system of permanent fiscal transfers. Nor can there be without breaching a specific prohibition by Germany's top court, a prohibition that could be overcome only by changing the Grundgesetz and holding a referendum. EMU break-up is Verboten, fiscal union is Verboten, full mobilization of the ECB – either to lift the South off the reefs through reflation, or to back-stop the system as a lender-of-last resort – is Verboten. Germany will have none of it. Please tell me what exactly has been solved. The Telegraph's Ambrose Evans-Pritchard is up on his high horse in this blog. It's well worth the read...and is another Roy Stephens offering. The link is here.  No details, flimsy numbers: VaroufakisEconomist Professor Yanis Varoufakis, from Athens University, says Europe's recovery plan does not resemble reality...but the markets are happy because the politicians have created such low expectations any action is cheered. This 11:30 minute video interview [plus transcript] was conducted by Tony Jones from the Australian Broadcasting Corporation early yesterday...and the good professor picked the EU carcass clean. "The numbers that I saw were flimsy. They were not founded on anything that resembles the reality on the ground in the social economy of the eurozone, of Greece, of Germany, of any of the countries, or the banks for that matter. "At around four o'clock in the morning they hadn't reached any serious agreement, so they decided to give George Orwell his latest triumph by describing their failure to agree, their impasse, as a success, as a triumph of convergence. And they're hoping, I think, that in the next few weeks, probably months, something of a rational plan will emerge magically out of that mess that they found themselves in overnight. Not too many shades of grey in his comments. I thank Australian reader Wesley Legrand for sharing this abc.net.au interview with us. It's well worth watching...or reading...and the link is here.  Europe's rescue euphoria threatened as Portugal enters 'Grecian vortex'Monetary contraction in Portugal has intensified at an alarming pace and is mimicking the pattern seen in Greece before its economy spiralled out of control, raising concerns that the EU summit deal may soon washed over by fast-moving events. Data released by the European Central Bank show that real M1 deposits in Portugal have fallen at an annualised rate of 21pc over the past six months, buckling violently in September. "Portugal appears to have entered a Grecian vortex and monetary trends have deteriorated sharply in Spain, with a decline of 8.4pc," said Simon Ward, from Henderson Global Investors. Mr. Ward said the ECB must cut interest rates "immediately" and launch a full-scale blitz of quantitative easing of up to 10pc of eurozone GDP. The M1 data - cash and current accounts - is watched by experts as a leading indicator for the economy six months to a year ahead. It has been an accurate warning signal for each stage of the crisis since 2007. Ambrose was a busy boy yesterday. This was his second column on Thursday. This one was posted over at The Telegraph late last night. Once again I thank Roy Stephens for bringing this must read story to our attention...and the link is here.  The truth no one wants to admit: European solidarity is ebbing awayThe thing to understand about the highest-level diplomatic negotiations is this. Basically, there is the bloke in the bar anywhere in the world, railing against the iniquity of what foreigners get up to: "Can you believe what those Germans/Frenchies/Americans/Arabs/Brits/Jews are doing now?! They're trying to cheat us! Do they think we're thick, or wot? Innit!" Then above him (sorry, ladies, it's usually a him) is a vast, unpleasant fog created by supercilious on-the-one-hand-on-the-other-hand people like me. Officials, technocrats, state-fun |
| China's gold frenzy gives birth to small bourses Posted: 27 Oct 2011 09:10 PM PDT  Twenty-four-year-old Xin Wenting stays up until one o'clock on most days, looking after her gold investment during the ebb and flow of global trade. Many small investors in China have turned to gold as high inflation threatens to erode wealth in the world's second-largest economy, leading to small gold exchanges springing up all over the country. The influx of retail investors promises to not only boost Chinese gold demand, but also increase its volatility. |
| Venezuela scrambles to bring $11 billion worth of gold home Posted: 27 Oct 2011 09:10 PM PDT  In a widely criticised move by Venezuela's President Hugo Chavez to repatriate all of its $11 billion worth of gold held abroad, the country's central bank currently awaits the arrival of some 17,000 gold bars from banks in the West. This Reuters piece was filed from Caracas yesterday...and is posted over at the mineweb.com website. It's certainly well worth the read...and I thank reader Steven Green for sending it along. The link is here. |
| This is what will move gold and silver higher: Greg Weldon tells King World News Posted: 27 Oct 2011 09:10 PM PDT  In gold what looks healthy is the fact that you didn't even reach the 38% retracement level on the downside move. The decline, while large in dollar terms, did not even take you back to the first of the Fibonacci levels relative to the bull move dating back to 2009. To me that is a sign of inherent strength. Also the fact that gold held some of these critical moving averages, from a technical perspective this is fairly resilient action. Momentum is pretty strong and there is a lot of dry gun powder on the sidelines, so we will most likely see continued upside action. |
| The BullionBuzz eNewsletter for October 25, 2011 - Bullion Management Group Posted: 27 Oct 2011 09:10 PM PDT  Here's another very short piece that deserves your undivided attention. There's an excellent quote, followed by an even more excellent graph...and a James Grant video interview entitled "Inflation Will Hit Suddenly". I thank reader Eleanor Coats for sharing this blog which is posted over at the bmgbullion.com website...and the link is here. |
| Risk Management 101 - Why Wall Street Needs To Wake Up & Tell Its Clients To Own Physical Gold Posted: 27 Oct 2011 09:10 PM PDT  If gold moves from $1600 to $800 investors would lose 5% of their current net worth [if they had invested 10% of their portfolio in gold], but that will mean that something wonderful has happened in the world. Under such a scenario it is likely conservative to believe that the 90% of one's wealth not invested in gold would probably appreciate by at least 25% from today's levels. Using that potential framework, the net portfolio will have appreciated in value by 20% despite gold's theoretical 50% haircut. |
| Posted: 27 Oct 2011 09:10 PM PDT  A federal judge next month will sentence the man who authorities say took advantage of the booming gold market, by scamming more than 1,400 people out of tens of millions of dollars. But before he goes to prison, the mastermind of the scheme, Jamie Campany, sat down with ABC News' Chief Investigative Correspondent Brian Ross to reveal how he tricked his hundreds of victims out of nearly $30 million. |
| The End Of The “GLD” ETF Is Near Posted: 27 Oct 2011 09:00 PM PDT By Jeff Nielson of BullionBullsCanada: It can be thought of as the "twin" of the iShares Silver Trust (or "SLV"). Because of the much more complex nature of the gold market versus the silver market, it is not as easy to draw inferences on the true purpose of this banker trading vehicle in the gold market based only on the trading taking place in that market. However, unquestionably it shares much in common with its silver twin. As with SLV, the "custodian" for all the gold claimed to be held in this trust is the largest short-seller of gold in the world, UK banking behemoth, HSBC. Thus as with SLV, on its very surface GLD represents a massive conflict of interest. Any small gains for GLD unit-holders translate into enormous losses for the custodian, meaning that HSBC has a huge financial interest in limiting the profits of unit-holders as much as possible. Further evidence that GLD was a creation for the benefit of bankers (and specifically HSBC) rather than shareholders can be obtained by any close scrutiny of the prospectus. Back in July 2010, I engaged in such an analysis, which I titled The Seven Sins of GLD. Regular readers will recall that I made several startling discoveries upon such scrutiny. To begin with, there is no absolute requirement for the fund to invest all (or any) of the proceeds from the sale of units into the purchase of gold. The official "investment objective" of the fund is merely to "reflect the performance of the price of gold bullion" [emphasis mine]. In other words, rather than being structured as a genuine "gold trust" it is actually a self-described index fund – required to only track the price of gold, rather than being required to fully invest in bullion. Read more @ BullionBullsCanada.com |
| Gold & Silver Market Morning, October 28, 2011 Posted: 27 Oct 2011 09:00 PM PDT |
| This Is What Will Move Gold & Silver Higher Posted: 27 Oct 2011 08:48 PM PDT From KWN: Greg Weldon continues: Continue reading @ King World News |
| James Dines: Government’s Theft Forcing Violent End Posted: 27 Oct 2011 08:45 PM PDT From KWN: James Dines continues: Continue reading @ King World News |
| Posted: 27 Oct 2011 08:43 PM PDT The risks of believing that the Mayan calendar ends December 21, 2012! Carl Johan Calleman (hat tip Richard Smith). The Mayan end of the world is really today! Hope you are prepared. Conservatives Are More Squeamish than Liberals LiveScience (hat tip reader Aquifer) The Most Anal CEO Ever Gawker How a Jellyfish Protein Transformed Science LiveScience (hat tip reader Aquifer) Astronomers discover complex organic matter in the universe e! Science News (hat tip reader peak oil not) Decreasing Inequality Under Latin America's "Social Democratic" and "Populist" Governments: Is the Difference Real? CEPR (hat tip reader Thomas R) China spoils the party MacroBusiness CDOs on the brink of collapse: report BusinessSpectator (hat tip reader Crocodile Chuck). The impact of the seizure of US mortgage insurer PMI hits Australian investors. Art world thumbs its nose in Paris at economic crisis DailyStar (hat tip reader 1SK) Roger Bootle on the European Crisis Deal: Get Austere or Die Trying Credit Writedowns The Path Not Taken Paul Krugman, New York Times. On Iceland. $6.6 billion in lost Iraq cash now accounted for, inspector says The Envoy (hat tip reader Aquifer). Hhhm, a story on CNBC on at least $40 billion being handled in a lax manner, and suddenly we are told everything is hunky dory. Obama Backers Tied to Lobbies Raise Millions New York Times (hat tip Joe Costello). Quelle surprise! Obama lied! House Passes the "Even Obama Supported" Non-Jobs Jobs Act Dave Dayen, FireDogLake On Occupy Oakland and Policing in America Abigail Field. Money quote:
Occupying Struggle Street MacroBusiness (hat tip reader Aquifer) Occupy Phoenix's most devoted protesters Salon Mayor Quan Left #OccupyOakland's GA Rather Than Wait Turn to Speak. But Veterans Showed Up! [Video] Daily Kos (hat tip reader Deontos) NYPD Union Warns of Lawsuits Against 'Occupy' Supporters Wall Street Journal. You cannot make this stuff up. The police union is threatening to sue any organization associated with OWS if cops are hurt. The big questions raised by anti-capitalist protests Martin Wolf, Financial Times. More support for OWS. It's Time for Debt Forgiveness, American-Style William Greider, The Nation Mr. Hoenig Goes to Washington Simon Johnson (hat tip reader Carol B) Senators press Obama for swifter REO strategy Housing Wire (hat tip Lisa Epstein) How Ed DeMarco finally cried fraud Moe Tkacik, Reuters Rakoff queries Citi's settlement with SEC Financial Times. I love Judge Rakoff. And one of his questions (I read the claim) was one we raised: what were the losses? The SEC only provided the low end of a range! He also, as before, wants individuals to be punished. How gross and net CDS notionals really work Lisa Pollack, FT Alphaville (hat tip Richard Smith). The NYT Touts the Fact That GDP Data Show the World Did Not End Dean Baker Antidote du jour:
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| LISTEN: John Doody On Gold Stocks 10.28.11 Posted: 27 Oct 2011 08:43 PM PDT
This week Jim welcomes back John Doody of the Gold Stock Analyst to discuss his views on gold stocks as well as the recent tax legislation in Argentina and how it may affect mining companies. Jim welcomes back John Doody of the Gold Stock Analyst to discuss his views on gold stocks as well as the recent tax legislation in Argentina and how it may affect mining companies. John brings a unique perspective to gold stock analysis. With a BA in Economics from Columbia, an MBA in Finance from Boston University, where he also did his PhD-Economics course work, Doody has no formal "rock" studies beyond "Introductory Geology" at Columbia, taught by the University's School of Mines. An Economics Professor for almost two decades, Doody became interested in gold due to an innate distrust of politicians. In order to serve those that elected them, politicians always try to get nine slices out of an eight slice pizza. How do they do this? They debase the currency via inflationary economic policies. |
| Grand European Rescue Already Starting to Come Unglued? Posted: 27 Oct 2011 07:48 PM PDT This site has had plenty of company in expressing doubts about the latest episode in the continuing "save the banks, devil take the hindmost" Eurodrama. The same issues came up over and over: too small size of rescue fund, heavy reliance on smoke and gimmickry to get it even to that size, insufficient relief to the Greek economy (the haircuts will apply to only a portion of the bonds), no assurance that enough banks will go along with the "voluntary" rescue, and way way too many details left to be sorted out. But it is a particularly bad sign to see disagreement within the officialdom about the just-annnounced deal. The Telegraph (hat tip reader Jim Haygood) reports that the Bundesbank, which has considerable influence on the ECB, is trash talking a critical part of the pact:
We've pointed out the only way this scheme might work is if it attracts enough new money, which as the Telegraph indicates, is presumed to be the BRICS (I gather the sovereign wealth funds are too smart for this sort of thing, and even if they went along, their aggregate contribution would not be big enough). The Financial Times reports that China is being courted, but wants "assurances":
If the Chinese think the Europeans can provide meaningful foreign exchange guarantees, they are smoking something very strong. The austerity programs being put in place will put Europe on a deflationary path. The only way to deleverage the private and government sectors at the same time and not see GDP contraction is to run a large trade surplus. And that means the Eurozone as a whole, not Germany within Europe. To do that, the currency needs to be much lower. The Financial Times' Wolfgang Munchau has argued the euro will need to fall to between .6 and .8 to the dollar, roughly a 50% depreciation from current levels. This guarantee is a classic wrong way risk. China is asking Europe to make promises it won't be able to honor if its policies result in a cheaper currency or other bad results for China. And in general, China's expectations are unreasonable. Its currency is undervalued. Even ex the undervaluation, the normal state of affairs for a maturing economy is to see its value rise. Any foreign currency investment can be expected to show large foreign exchange losses. And just because you shift your risk on the other party does not mean they can perform. As the example of AIG and the monolines showed, underpriced insurance has this nasty way of blowing up. Japan was the dumb money in its bubble era. But at least they had an excuse: they yen was super high so everything looked cheap. At least the foreign exchange part of the equation worked in their favor, but they had insufficient knowledge of foreign investments to make good picks. The Chinese may be shrewder about their targets, but they seem woefully in denial on the magnitude and inevitability of foreign exchange risk on some of their plays. So they may rescue the Europeans and continue to resent funding their trade partners, just at the Germans do. He warned that the scheme could be hit by market turbulence with taxpayers left holding the bill for risky investments in Italian and Spanish bonds.
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| Posted: 27 Oct 2011 04:49 PM PDT GDX gained by 1.81% while GDXJ gained by 2.40% and SIL gained by 4.41%
Here are today's best performing Silver stocks:
Here are today's best performing Gold stocks
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| Posted: 27 Oct 2011 04:30 PM PDT Goldipedia |
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