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Sunday, October 30, 2011

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WATCH: Adam Fergusson talks with James Turk

Posted: 30 Oct 2011 04:08 AM PDT

Historian Adam Fergusson discusses his cult-classic history of the Weimar hyperinflation, When Money Dies, with James Turk from the GoldMoney Foundation. They discuss the fateful decisions that led to hyperinflation in post-First World War Germany, and how central bankers as well as ordinary members of the public today would be well advised to heed this warning from history.

Fergusson discusses how the hyperinflation affected different groups in German society in different ways — with debtors benefitting and huge numbers of middle-class savers wiped out. Riots, corruption and political extremism were just some of the malignancies encouraged by the hyperinflation. He points out that those who held hard currencies as well as people who held tangible assets like gold and silver were in-large part protected from the worst economic consequences of the hyperinflation. In his words: "gold remained at all times in Germany the measure of what was important to them."

James and Adam discuss whether or not today there is any way for governments in the developed world to repay their huge debts. Both men conclude that inflation is the only politically viable method of repudiating these unmanageable obligations. Fergusson highlights the importance of velocity and the demand for money in determining whether or not inflation turns into hyperinflation — though points out that this tipping point can take a surprisingly long-time to arrive; in Germany, people kept confidence with the rapidly devaluing mark throughout the First World War, despite clear signs that the country was heading for a currency crisis.

Fergusson thinks that we are heading for high inflation in many countries, but is doubtful that Weimar Germany's nightmare currency collapse can be replicated in a sophisticated modern economy. He concludes with a quote from Jean-Claude Juncker, prime minister of Luxembourg, who recently commented with respect of the sovereign debt crisis: "we all know what has to be done; what we don't know is how to get re-elected once we done it."

A Look At Gold Prices From 1800 To 2011 And 10-Year Returns

Posted: 30 Oct 2011 03:31 AM PDT

By David Hunkar:

The price of Gold has soared in recent years and reached record highs earlier this year. In the past few months the price has stabilized slightly. On Friday (10/28/11) the spot price for gold closed at $1,743.40 according to Kitco. In the past 20 years, gold has returned an incredible 2,575% as shown in the chart below:

Click to enlarge

Source: www.goldprice.org

Despite the dramatic rise of prices in recent years, for much of the recorded history gold prices languished. For the period from 1800 to 1933 gold prices remained flat at around $20 per troy ounce according to an article titled Gold-The Fear Index by Somnath Basu in the Financial Advisor magazine.

The following charts show the long-term historical prices of gold:

Somnathu notes that it was only after the Bretton Woods agreement was dismantled in 1967 and globalization began, the traditional global economic order collapsed and the precious


Complete Story »

Where Gold, Silver & The Dollar are Headed Next

Posted: 30 Oct 2011 02:29 AM PDT

From KWN:
With gold, silver and stocks all having big up-moves this week, today King World News interviewed Peter Schiff, CEO of Europacific Capital. Schiff made some great calls recently including the move higher in the euro. When asked about the huge move in gold and silver, Schiff stated, "I think there's more to come. Look at the technical action in everything, in stocks around the world, in commodities. Look at the price of crude oil and look at the dollar, the dollar is breaking down. I mean we had a huge decline against the Australian dollar, but look at that surge back into the 1.40s on the euro."

Peter Schiff continues:
"Today the dollar is at an all-time record low against the Japanese Yen. So you have a weak dollar, you have bond prices now headed lower, commodities up, stocks up, kind of across the board. The message is get out of paper, get into stuff and the worst paper is dollars. Even the euro as a currency is moving up against the dollar.

Continue reading @ King World News

Silver Price Rising On Increased Investment Demand

Posted: 30 Oct 2011 02:27 AM PDT

From GoldMoney:
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 million ounces, the third-highest level since the start of data recordings. Meanwhile, industry demand has also increased significantly, contributing to rising output from silver producers. Nevertheless, there was a large gap between new supply from mines and demand in 2010, which amounted to a total of 319 million ounces worldwide.

Although silver producers have increased their output by 33% since 1999, the rising supply has not helped to meet the growing demand in silver markets. While 667 million ounces of silver were produced in the past year, global demand reached 986 million ounces – a stunning gap of 319 million ounces. Record-high demand from the investment community has proven the main driver for the continuing silver price rally in 2010, with the white metal soaring to a peak of $50 per ounce in the beginning of May this year. Investors are buying silver in order to hedge against continuing currency depreciation. Furthermore, investors' capital flight to the silver sector – comparable to the situation in the gold sector – seems to also to be driven by increasing fears of inflation.

Read more @ goldmoney.com

How Much Gold Stock is There Really?

Posted: 30 Oct 2011 02:21 AM PDT

From goldstandardinstitute.net:
The current estimate for the amount of gold stock in the world is in the region of 170,000 tonnes. As the very first step, it needs to be acknowledged that an estimate is all that is available. Running a worldwide survey on how much gold people own is rather pointless. Even in good times, people are noticeably reluctant to discuss their true wealth. In troubled times, such as now, that becomes an unwillingness to even be interviewed. Nevertheless, it also needs to be emphatically stated that 170,000 tonnes is far too low an estimate and that it is time for a revision. Every single media outlet repeats this same figure, or similar, as though it is gospel.

Included in this 170,000 tonnes is the 10,000 tonnes estimated as being the total amount of gold mined in the history of the world prior to the Californian gold rush of 1848. This was simply a guess.
'David Guyatt, in his article "The Spoils of War", commented that prior to the Californian Gold Rush of 1848 the amount of gold believed to be in existence was about 10,000 tonnes, i.e. it was "the sum total of gold mined throughout the world during the preceding 5,850 years, for which mining records exist." In correspondence with the World Gold Council in 1998, Guyatt says that the WGC admitted that this figure was just an "industry estimate", although as he says: "Nevertheless, this estimate has been incorporated into current day official mining figures and punched out as actual fact."'
The Thunder Road Report

The "industry estimate" of the amount of gold mined in that 5,850 years works out to be 1.7 tonnes a year. The assumption that underpins the idea that not much gold was mined prior to the Californian gold rush is essentially, that if it takes modern methods a whole year to extract 2,400 tonnes then it would take far, far longer for more primitive cultures to extract the same amount of gold.

Read more @ goldstandardinstitute.net

Here Is Why Gold & Silver Skyrocketed This Week

Posted: 30 Oct 2011 02:12 AM PDT

From KWN:
With gold up $111 and silver trading over $4 higher this week, today Michael Pento, of Pento Portfolio Strategies, writes for KWN to explain why the metals surged and why they will continue to surge in the months ahead. Pento states, "Greece has supposedly received a bailout and markets across the globe are soaring. In fact, they are rising in the same manner they did a few months after the bailout of the U.S. financial system, which is now known as the Emergency Economic Stabilization act of 2008. However, the truth is there is no such thing as a complete and genuine bailout, there is only a transfer of burden from the government and banks to the middle class."

Michael Pento continues:
"If this latest example of government interference in the cathartic rebalancing that the free market demands must occur, the troika (ECB, IMF and EFSF) has agreed to leverage their European bailout fund to $1.4 trillion. From what source is this money supposed to come from? Perhaps from the Chinese, but I sincerely doubt they would divert 1/3 of their entire currency reserves to purchase European debt. And even if they did, the Chinese would have to sell bonds they currently hold of another country, most likely the US.

Continue reading @ King World News

Intervention Could Arrest Yen's Rise: Good Time To Take Profits

Posted: 30 Oct 2011 12:29 AM PDT

By Colin Lokey:

If you are lucky enough to have profited from the recent appreciation of the Japanese yen against the U.S. dollar, now might be the time to take your ball and go home. The dollar hit new lows against the yen in three consecutive trading days during the week, culminating in a record low of Y75.64 on Thursday. The yen's rise has largely been fueled by the disappointing pace of the U.S. economic recovery and investor fear over the European debt crisis.

The Japanese central bank has ratcheted-up the intervention rhetoric of late, noting that a rapidly appreciating yen hurts Japanese exports and jeopardizes the country's recovery from the March 11 earthquake. So far this month, the Japanese have stopped short of intervening directly into the currency market, opting instead for monetary stimulus in the form of increases in government bond purchases


Complete Story »

Gold and hyperinflation

Posted: 29 Oct 2011 11:45 PM PDT

Historian Adam Fergusson discusses his cult-classic history of the Weimar hyperinflation, When Money Dies, with James Turk from the GoldMoney Foundation. In this video they discuss how speculators, ...

What the 1 tonne coin tells us about the gold bubble (not)

Posted: 29 Oct 2011 10:08 PM PDT

All weekend I've been getting heaps of google alerts about the 1 tonne coin, over 90 at last count. Interestingly they have all been mainstream media outlets picking up on the few source Australian media reports about it but next to nothing from the gold bloggers. You'd think such a story would get more coverage within the gold community than mainstream. The fact that it hasn't is starting to cement a view I've had for a while that the gold bloggers treat the Perth Mint like the mainstream media treats Ron Paul - don't give em any publicity, unless it is negative.

Anyway, ignoring that paranoid diversion, I've been particularly interested in the comments left to the mainstream media outlet articles on the 1 tonne coin. Lots of funny ones like "where can I order it", a few calling it obscene waste of money (to be fair, you can't expect average person to understand the concept of pooled physical backing unallocated) but most importantly the "gold, what a stupid thing to buy" comments outweigh the pro-gold. Secondly, there aren't many of those anti/pro comments anyway. More proof that we are no where near a gold bubble, if we were then I'd expect it to generate more comments about gold as an investment.

I also love this opportunistic website http://1millioncoin.com/ which was up in a couple of days. Whatever you do don't click on any of its ads, we don't want to encourage these people.

Latest Leak on State Attorney General Mortgage Settlement: A Shameless Sellout to the Banks

Posted: 29 Oct 2011 06:53 PM PDT

There have been so many rumors about the so-called 50 state attorney general settlement (which now is more like a 43 state settlement) being on the verge of having a deal that we've discounted them. We've said from the beginning that this was a cash for release deal. Basically, because the Federal regulators and state AGs, by design, had done no meaningful investigations, they didn't have any threats to bring the banks to heel. So they'd have to offer a bribe, and the bribe has always been a "get out of jail free" card.

Put it more simply: The banks got bailed out, and the rest of us got left out. Yet all levels of government are actively trying to find a way to release from wrong doing for the banks, when everyone knows that they violated a host of laws every step of the way in the mortgage business.

We said the only way a deal would get done is if the state AGs capitulated completely. There have been enough leaks about state AGs being uncomfortable with a broad release, plus the banks greatly overplaying their hand, that it looked like no deal would happen. Tom Miller, the Iowa AG who is the lead negotiator for the states, has been saying a deal is imminent since last January, so his credibility is pretty thin. But the Obama administration is moving heaven and earth to get a deal done, since they seem to think the public can be snookered into thinking motion is progress.

Nevertheless, the negotiations appear to be grinding forward. And it isn't the banks that are giving ground. Gretchen Morgenson tells us at the New York Times what an utter joke the settlement has become.

The $25 billion being bandied about is about as solid as AIG's credit default swaps. Of that total, only $3.5 to $5 billion would be paid in cash. That's spread across 12 or more companies, with Bank of America presumably paying the most. So how do you get to $25 billion? Smoke and mirrors, natch. Per Morgenson:

The rest — an estimated $20 billion — would consist of credits to banks that agree to reduce a predetermined dollar amount of principal owed on mortgages that they own or service for private investors. How many credits would accrue to a bank is unclear, but the amount would be based on a formula agreed to by the negotiators. A bank that writes down a second lien, for example, would receive a different amount from one that writes down a first lien.

I hope you can see how insulting this is. How many mortgage modification programs have we had so far? And what has the result been? In every case, the number of mods done has fallen well short of the target and the banks have gamed the programs massively. And the Treasury Department has seemed remarkably unembarrassed by their glaring failures. Even if everyone involved knew that these programs were merely to placate the public, the banks were not supposed to make it so bloody obvious. But the Treasury hasn't bothered to pretend either. For instance, one of the few things it could do under its limp wristed voluntary HAMP program is claw back incentive payments. Has it bothered? No.

Morgenson highlights another feature of the plan:

One of the oddest terms is that the banks would give $1,500 to any borrower who lost his or her home to foreclosure since September 2008. For people whose foreclosures were done properly, this would be a windfall. For those wrongfully evicted, it would be pathetic. Roughly $1.5 billion in cash is expected to go into this pot.

"Pathetic" isn't strong enough. Let's look at the damages sought by Nevada attorney general Catherine Masto in her second amended complaint against Bank of America: civil penalties of $5000 per violation, or $12,000 for elderly or disabled borrowers. An individual loan can, and likely does, have multiple violations. The suit also seeks restitution, costs for wrongful foreclosures, plus the cost of damage to municipalities and homeowners from unnecessary vacancies. Note that an AG victory on the issue of wrongful foreclosure would pave the way for private lawsuits, and here the damages would be massive, particularly if state law or precedent allows for penalties (as we've noted, Alabama has statutory tripe damages for wrongful foreclosure, and recent rulings have had applied penalties in excess of nine times).

And what did Masto get from a different servicer, Morgan Stanley's Saxon? The settlement is estimated to average somewhere between $30,000 and $57,000 per borrower. And the basis of action wasn't erroneous or fraudulent foreclosures, but deceptive practices in mortgage lending and securitization.

Look at the MERS compplaint filed by Delaware AG Beau Biden. He's suing MERS over deceptive practices, at $10,000 per violation. It's quite possible that he may find more than one violation per mortgage. And I would imagine that success against MERS would pave the way for actions against servicers who relied on MERS in the face of knowledge of its deficiencies.

In other words, the suits filed by two AGs alone make a mockery of these negotiations. We discussed that the $25 to $30 billion settlement figure which the AGs have become fixated upon was derived from a bogus analysis performed by the CFPB for Tom Miller in February:

The critical part comes on the third page, "Calibrating the Size of Potential Penalties". You'll note it assumes that the cost of special servicing of delinquent loans would have cost 75 basis points a year more than actual costs incurred. That drives the entire analysis…

Now….is this "75 basis points a year" a knowable figure, ex doing a lot of real nitty gritty work, which certainly has not taken place? We can debate whether this is the right figure, and whether the CFPB has also captured the actual costs correctly…Our Tom Adams has estimated that servicing now costs 125 basis points versus the banks' typical fees of 50 basis points, plus another 30 to 50 basis points in late and junk fees.

If you take this analysis at face value, the biggest question is what standard of servicing is implied by "effective special servicing of delinquent loans"? If they mean loan modification, that's the same as a new underwriting of a mortgage. That cannot be done through the current platform and would require new staff with different skill sets and software/systems support. So any estimates are at best finger in the air exercises. And given that some servicers are far more abusive with junk fees than others, Tom Adam's comment above suggests that a one-size-fits-all estimate is misleading too.

But arguing over a pretty much made-up figure misses the critical point: the money the servicers saved is not even remotely the right basis for thinking about the appropriate settlement level. Settlements are based on potential liability. For instance, in 1998 the tobacco settlement, the tobacco companies agreed to pay a minimum of $206 billion over 25 years to be released from liability on Medicare lawsuits on health care costs plus private tort liability.

The saved costs bear no relationship to the banks' legal liability for servicer-driven foreclosures, nor to the damage they have done to homeowners or broader society through their actions. It's like basing the penalties in a robbery on the unpaid parking fees and rental costs of the car used to make the heist.

But all is not lost. First, Morgenson tells us a lot of mortgages are excluded from this deal, in particular, Fannie and Freddie mortgages. Second, her story says nothing about the terms of the release. The objective of the negotiations now seems to be to get the true economic value of the deal to be so small that the banks will agree to a relatively narrow release. I would not bet on that.

It's important to keep the pressure up, particularly on state AGs who might walk from a too bank friendly deal. States whose AGs might decamp include Oregon, Washington, Arizona, and Colorado. It's also key to let the AGs in states who have left the talks and are under pressure to return that voters are watching and will be unhappy if they reverse themselves. Those states are New York, Delaware, Massachusetts, Kentucky, Nevada, Minnesota, and of course, California. You can find their phone numbers here.


The Shadow Pyramid : Derivatives made easy

Posted: 29 Oct 2011 05:00 PM PDT

Gold University

WATCH: Sprott on Silver Shortages

Posted: 29 Oct 2011 01:01 PM PDT

Patrick MontesDeOca chats with Eric Sprott in this exclusive interview that took place at the Silver Summit in Spokane, Washington the week of October 17, 2011. Mr. Sprott speaks in riveting detail about the Silver Market and it's outlook through this year and next, in this not-to-be-missed interview.

Occupy your Money, Buy Silver.

~TVR

US Gov't To Replace Paper Dollars With Coin?

Posted: 29 Oct 2011 10:11 AM PDT

Gold and Silver's Christian Garcia with your the 10.29.11 Gold and Silver news and an ABC clip on how to curb government spending by replacing cotton money with coin. ABC clip start around minute 3:00.

~TVR

WATCH: Halloween Hyper Report 10.29.11

Posted: 29 Oct 2011 10:10 AM PDT

In the 10.29.11 Hyper Report:

  • Dollar Decline in Full Swing in Risk-On Environment
  • U.S. to Decide on Anthrax Vaccine for Kids
  • Halloween


Please prepare now for the developing economic and social unrest.

LISTEN: Bob Chapman talks to Alex Jones

Posted: 29 Oct 2011 10:05 AM PDT

Bob and Alex address European issue, because soon it will debut in the US. The comprehensive policy response, which we have been told existed, really doesn't exist. We found that out last Friday. All the lies of the past two weeks by various European governments and bureaucrats, as well as Mr. Sarkozy and Mrs. Merkel, were just more delaying tactics to attempt to find a solution to Europe's financial dilemma. As part of this display of smoke and mirrors, these hopeful signs, generated large gains in US and European stock markets, of course, with the assistance of the "President's Working Group on Financial Markets." At the same time as usual gold, silver and commodities markets were attacked viciously. This is how markets and economies are manipulated when in control of our corporatist fascist government.

Part One

Part Two

Part Three

Following the lead of the Federal Reserve two weeks ago both the Bank of England and the European Central Bank added more wood to the fire by expanding their issuance of money and credit. As we have previously pointed out the system cannot function without perpetual quantitative easing or stimulus. That is because no attempt has been made to solve the problems of the economy and unemployment. In the US, UK and Europe only the financial sectors and governments have been recapitalized. That is ongoing. This is the solution offered by the Fed.

~TVR

LISTEN: Gold Seek Radio with Chris Waltzek

Posted: 29 Oct 2011 10:03 AM PDT

From GoldSeek Radio:
This week 10.28.11 Chris Waltzek interviews:
Richard Daughty and Gary Cope

About Gold Seek Radio:
The 2 hour Goldseek.com Radio show is the brainchild of Chris Waltzek & Peter Spina, President of Goldseek.com, the world's leading precious metals network. Goldseek.com Radio was a contender for the prestigious, 2009 Peabody Award for internet radio.

More interviews @ radio.goldseek.com

Need Coin Show Advise--for a Newbie Seller

Posted: 29 Oct 2011 08:28 AM PDT

There have been threads for what to do as a newbie buyer at a coin show. How about getting advise for a NEWBIE SELLER?

I've been collecting since I was 12--which is over half a century ago--but I want to go to the next local show as a seller. My main goal is to get a shot at buying there, as well as expand my limited network. I'm in a small town (<10,000 pop), and have had a little success at buying around here. Along with the coins and bars I have purchased are some numismatics and other pieces I'd just as soon sell in order to reinvest in the things I want more.

I'd appreciate your advise, especially on competitive buying at a coin show. I'd expect it to be different than someone answering my ad in the local rag...? What sort of buy prices will be encountered? Is there a ratio to spot or Coininfo, for example? What about saying "no" to undesirable items?

TIA for your posts!

Would PMs hold value in a collapse?

Posted: 29 Oct 2011 05:34 AM PDT

I'm not sure they would. Giving it some thought recently, and I've noticed a few things lately that have been happening in the news....

Whenever bad economic news come along, such as more unemployment or less economic activity than expected, or a bad forecast of what is to come, including things such as a collapse in Greece that could hurt the US economy, PM's take a plunge in price! So what would happen to them if these collapses actually happened???

I know PMs have been a store of value for thousands of years, but not as much as you'd think. In the past, gold was only $35 an ounce. Now it's over $1700. What has changed since it was only $35? Technology and industry is something that uses plenty of PMs. Those are 2 things that didn't exist until just recently in human history. Now what if the economy collapses and industry is no longer there developing new technologies? Well, PMs wouldn't have the same demand anymore. They wouldn't be as valuable. So, their prices would collapse along with the economic system that propped them up. Of course, they'd still have monetary value as they did in the past, but nothing like the prices they command now.

I recently heard a news story that jewelers were going to start making the bands of wedding rings out of titanium instead of gold because of gold's high price. Immediately, the price of gold fell. That's just one example of industry demand being what props up PM prices.

These are just my thoughts and you are free to comment either way. I'm open to your ideas.
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