Gold World News Flash

Gold & Silver: Pulse of the World Economy
KWN Special - Louise Yamada: Gold & Silver Report
Peter Schiff - Bernanke & Fed to Ignite Gold & Oil
Gold Seeker Closing Report: Gold and Silver Gain Over 1% and 3%
SGTreport Exclusive: DERIVATIVES DESTROYING THE WORLD – Ranting Andy
Wall Street Journal: Where was the CFTC?
Game Over Berlusconi? Italian Anti-Crisis Bill Fails
Silver and Sunshine, the Great Vampire Killers
Whew!
Some Fat For Bulls to Chew On
Silver Is Ready, Are You?
Gold Rebounds, Greek People asked to say "Yes or No" to Euro, FOMC "To Lay Ground for QE2"
Game Over Berlusconi? Italian Anti-Crisis Bill Fails
Gold ready to attack prior highs in the 1900â€™s
Krugman Warns of â€œGigantic Bank Runâ€, â€œEmergency Bank Closingâ€ and â€œNew Liraâ€
In The News Today
Jim's Mailbox
Gold Price Closed at $1,728.70 up 1.0%
Triple Lutz Report–Episode 107
Peter Schiff: Bernanke & Fed to Ignite Gold & Oil
Guest Post: MF Global Shines A Light On Monetarism's Incapacity To Enhance The Real Economy
Guest Post: MF Global Shines A Light On Monetarism's Incapacity To Enhance The Real Economy
Vulture Bargain Update for November-December Posted
Ruinous Symbiosis Between Congress And The Fed
The Politics of Gold Investment
The Greatest Risk for Gold Investors
Waiting for QE3
Fed Chief Defends Actions On Interest Rates, Inflation
Gold Daily and Silver Weekly Charts - La Douleur du Monde
Has Bernanke Lost His MInd?

Gold & Silver: Pulse of the World Economy

Posted: 02 Nov 2011 05:14 PM PDT

.2011 Gold and Silver Pulse of the World Economy. 40 pages ...

KWN Special - Louise Yamada: Gold & Silver Report

Posted: 02 Nov 2011 04:20 PM PDT

With gold still near the $1,750 level and silver roughly $34, today King World News was given the ability to share an extraordinary piece of legendary technical analyst Louise Yamada's "Technical Perspectives" report. This information is not available to the public and we are grateful to Louise for sharing her incredible work with KWN readers globally.

This posting includes an audio/video/photo media file: Download Now

Peter Schiff - Bernanke & Fed to Ignite Gold & Oil

Posted: 02 Nov 2011 04:12 PM PDT

With gold, silver and stocks all having big up-moves today, King World News interviewed Peter Schiff, CEO of Europacific Capital. KWN asked Schiff about gold, oil and more, but to start we wanted to get his thoughts on the mining shares, "Yeah, I think if you look at the underperformance relative to bullion, they (mining shares) are the cheapest they have ever been. To me this is more evidence that this talk of a gold bubble is just that, talk, because if it was real you would see it in the performance of the mining stocks."

This posting includes an audio/video/photo media file: Download Now

Gold Seeker Closing Report: Gold and Silver Gain Over 1% and 3%

Posted: 02 Nov 2011 04:00 PM PDT

Gold gained over $35 to as high as $1744.02 by about 11AM EST before it fell back off by nearly $25 into the close, but it still ended with a gain of 1.06%. Silver rose to as high as $34.40 by early afternoon in New York before it also fell back off a bit in late trade, but it still ended with a gain of 3.31%.

SGTreport Exclusive: DERIVATIVES DESTROYING THE WORLD – Ranting Andy

Posted: 02 Nov 2011 02:52 PM PDT

This our exclusive interview with writer and financial pundit 'Ranting Andy' Hoffman. Andy just joined Miles Frankiln precious metals as the Director of Marketing. In this discussion we touch on the MF Global debacle, silver & gold and current events. If you're interested, the guys at Miles Frankiln will treat you fairly and will help you load up on physical silver or gold. Just a head's up: time's running out.

Wall Street Journal: Where was the CFTC?

Posted: 02 Nov 2011 02:32 PM PDT

From The Wall Street Journal
Thursday, November 4, 2011

http://online.wsj.com/article/SB1000142405297020439480457701222082986529...

How are the regulators going to explain this one?

MF Global, the failed firm whose chairman and CEO is Jon Corzine, has already destroyed the wealth of its investors and roiled the banking world. But now we are learning that it may have lost customer funds as well.

A major Wall Street broker in derivatives markets with $41 billion in assets, MF Global filed for bankruptcy on Monday after Mr. Corzine made disastrous bets on bonds issued by European governments. It initially appeared he was (only) gambling with his firm's own capital, but a federal official tells the Journal that MF Global has admitted diverting money out of customer accounts, which may be a violation of federal law.

... Dispatch continues below ...

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This follows a report from futures exchange operator CME that MF Global was not complying with federal rules on segregating client funds. In bankruptcy court yesterday an MF lawyer said, "To the best knowledge of management, there is no shortfall" in customer accounts. But the Journal reported late yesterday that the FBI is investigating the matter.

If reports of missing funds are true, it's a significant embarrassment for the firm's regulators at the Commodity Futures Trading Commission. CFTC Chairman Gary Gensler has been leading the Beltway chorus for years in reciting the (false) story that the absence of regulation allowed AIG and its credit-default swaps to wreak havoc in 2008.

Never mind that the Treasury Department's Office of Thrift Supervision did regulate AIG, and that an OTS official testified before Congress that the agency signed off on the swaps because it didn't expect Armageddon in the housing market. Mr. Gensler nonetheless succeeded in gaining for himself and his agency broad new powers over the derivatives market as part of Dodd-Frank in 2010.

The MF Global case involves business that was unambiguously regulated by the CFTC long before Mr. Gensler built his new regulatory empire. In fact, the alleged MF Global failure goes to the basic regulatory blocking and tackling that the CFTC is supposed to perform, which includes ensuring that companies aren't raiding customer funds for their own trading.

It is also no small irony that MF Global was among the cheerleaders for Mr. Gensler's plans for new clearing arrangements under Dodd-Frank. Maybe if the regulators hadn't been so busy writing new rules, they would have checked if MF Global was following the old ones.

It was always fanciful to believe that the regulators who failed to prevent the last financial meltdown would somehow prevent the next one. The surprise is that this mirage of regulatory competence has been exposed so quickly.

* * *

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Golden Phoenix Signs Definitive Agreement to Acquire and Reopen Santa Rosa Gold Mine in Panama

Company Press Release
Monday, September 19, 2011

SPARKS, Nevada -- Golden Phoenix Minerals Inc. (OTC Bulletin Board: GPXM) has signed a definitive agreement to acquire a 60 percent interest, with an option to buy an additional 20 percent interest, in the Santa Rosa gold mine in Panama, now owned by Silver Global S.A., a Panamanian corporation.

Santa Rosa produced more than 100,000 ounces of gold from 1996 to 1998 before being closed in part to low gold prices, which are now more than five times higher.

Golden Phoenix intends to acquire its initial 60 percent interest in Santa Rosa by acquiring 60 percent of the share capital of a recently created company under the name Golden Phoenix Panama S.A., formed to hold and operate the mine.

Tom Klein, CEO of Golden Phoenix says: "The agreement establishes a solid framework from which we can advance Mina Santa Rosa to production-ready status."

For Golden Phoenix's complete statement, please visit:

http://goldenphoenix.us/press-release/golden-phoenix-signs-definitive-ac...

Game Over Berlusconi? Italian Anti-Crisis Bill Fails

Posted: 02 Nov 2011 01:51 PM PDT

from ZeroHedge:

Europe's core, call it Germany, is now caught in a war of reverse attrition on three fronts: with Greece, with Italy, and as of today, with France. And unfortunately for the European monetary union, Europe, call it Germany, is losing. While the focus continues to be on G-Pap for the second day in a row following his shocking referendum announcement, the real diversion remains Italy, where the government is in as much of a state of chaos as that in Athens, and whose bonds, while not yet trading at Greek levels (remember when the Greek 1 year hit 100% two months ago? Today it is at 225%… and tomorrow the two year will be at 100%), are far, far greater in amount, and the only thing preventing their collapse so far has been the ECB, whose monetizing assistance has been contingent on Italy passing and enforcing austerity measures to deal with its runaway debt to GDP of over 120%. Unfortunately, when BTPs open for trading in 7 hours, the ECB bid may not be there, or any bid for that matter, because as the WSJ reports, "Italian Prime Minister Silvio Berlusconi on Wednesday failed to issue growth-boosting measures demanded by European Union authorities ahead of the Group of 20 summit, raising further doubts about the government's willingness to pass economic reforms aimed at restoring investor confidence in the country."

Read More @ ZeroHedge.com

Silver and Sunshine, the Great Vampire Killers

Posted: 02 Nov 2011 01:43 PM PDT

by Szandor Blestman:

If you were a parasite with intelligence, how would you design yourself to survive? Well, if it was me, I'd try to convince my victims that I was a necessary part of their lives. Of course to do that, I'd have to be very charming. I'd have to be able to capture their minds, so to speak, to put them in a trance and to make them believe that what I was doing was good for them. At that point, I'd be able to feed off of them as much as I wanted, so long as I kept them alive. I mean, if I killed one I could always find another one I could attach myself to, but if I killed too many and especially if there were others of my kind hanging around, I could be in trouble if the supply of victims ran low. This is a problem that vampires might run into if their supply of human beings runs low.

Read More @ SzandorBlestman.com

Silver is just one precious metal that can be used to destroy the monster that is the Federal Reserve. The paper money put out by that institution is created from nothing and only good as long as people will accept it in payment for goods and services. The vampiric Federal Reserve has managed to ruin the value of its currency, the Federal Reserve Note (FRN), by flooding the market with its product. This has happened because of the simple law of supply and demand. The supply has been inflated, so those selling products and services are demanding more of it. Silver, however, as with any precious metal, cannot be printed on demand and it is therefore harder to inflate the supply. Its value will go up as the supply dwindles. Producers will ask for less of it as they compete with others supplying similar products and services in the marketplace. If the marketplace begins to demand silver (and other precious metals) instead of paper for their goods and services, FRNs will be forced out of the marketplace and the parasitical Federal Reserve system will be destroyed.

Whew!

Posted: 02 Nov 2011 01:40 PM PDT

from TFMetalsReport.com:

OK, it appears that the coast is clear. The entire MFing Global fiasco had the potential to seriously pressure the commodity markets but…at this moment…it looks like we're going to survive.

It had the potential to get ugly. Yesterday, when we were getting the waterfall declines in the metals, I feared that another September rout was on. Silver could have dropped $5 again and gold could have dropped another $100. This would have ultimately led to more margin hikes and…well, you get the picture. Why, you ask? Simple:

Read More @ TFMetalsReport.com

Some Fat For Bulls to Chew On

Posted: 02 Nov 2011 01:22 PM PDT

I am a secular bear on financial assets like stocks. This is my bias. Although I understand we cannot have a replay of the 1930s in America (unlike Prechter), it has already occurred in Greece with an 87% loss from the 2007 peak to recent lows in October (versus 89% for the Dow in the USA in the 1929-1932 bear market). It is different in America because we can use the printing press while Greece cannot, unless Greece decides to leave the Euro. Hard core Gold advocates need to understand that a paper currency can result in deflation, as long as it is not aggressively debased/abused relative to the needs of the debtor (governments that issue currency are almost always wretched debtors with no intention of repaying their debts in nominal terms).

I have no concerns that America will fail to debase her currency yet again. I laughed at commentators who said we had a few hawks in the last "fed" (not a government institution) meeting and thus there was hope for the US Dollar. The current meeting today had only one dissenter, and he wanted an EASIER monetary policy. These central bankstazs are almost as predictable as crack fiends. Please keep in mind that I remain bullish on the US Dollar relative to other paper currencies for the intermediate term, but this a game of relativity and trampoline jumping, after all.

In any case, I remain bearish on stocks despite knowing that paper heroin will be dispensed at the first sign of trouble. In fact, "Operation Twist [part 2]" by the "fed" was greeted with a Bronx cheer, as the addiction runs so deep that a promise to keep interest rates near zero for a year or two was not enough to get the financial markets high again (until new lower lows were made). Tolerance is a bitch, as any addict can tell you. It used to only require a 0.25% rate cute, but now we are in Wonderland and stronger and stronger doses of currency destruction are needed to keep the party going.

There are some signs that the recent insane rally of 20% or so in less than a month (for US equities) may have been enough to collapse the wall of worry and start the next bear leg down. Seasonals are in favor of us continuing a rally into year end, but these are not normal times. My main concern is that of time. Have we had enough time to correct the bearishness that reigned a short 4 weeks ago? Only Mr. Market knows for sure, but there is data out there that concerns me.

I'll start with two charts from Market Harmonics, a site that provides free sentiment data. First up, the daily "NASDAQ Sentiment Index," a proprietary measure of sentiment for the NASDAQ (when the plot is high, sentiment is bullish and vice-versa):

We're not exactly wallowing in bearishness according to this sentiment indicator, eh? Next up, an intermediate term sentiment indicator related to a ratio of money flows into two Rydex mutual funds dedicated to being bearish versus bullish, respectively. When money flows into bullish funds more than bearish funds, this indicator rises. In other words, this indicator is based not on opinion alone, but on actual money flows from investors/traders. Fading the herd is often a good idea at the intermediate-term extremes:

Wow. New all-time highs for the past decade! I guess everyone is a momentum chaser now, huh? We are all trying to make up for losses over the past 10 years from the monetary inflation foisted upon us by central bankstaz and governments around the globe. The volatility and momo chasing is reminiscent of the Weimar Germany experience (i.e. we're all speculators to make up for purchasing power losses), but that's another story altogether.

The $NYSE Summation Index ($NYSI) is also a decent indicator for medium term trend and suggests at least a period of consolidation here if not a significant move to the down side for common equities:

The bullish percentage index for the S&P 500 ($BPSPX) also suggests the need for a rest here if not a new leg down in equities:

In the meantime, Gold is getting set to have yet another year of positive gains. So boring and predictable that paperbugs can only decry its volatility now, which is far less than the volatility for common equities. The so-called "bubble" in Gold can only pop once paperbugs like Krugman capitulate and realize that Gold can save the state from itself. As James Rickards points out, the USA is the Saudi Arabia of Gold, so why wouldn't we play our trump card when the poop hits the rotating blades? Gold remonetization will save the day for the US government and those who hold physical metal outside the banking system will be rewarded for having the knowledge of history required to escape the current slow-motion implosion of the international monetary system taking place right before our eyes.

If you are crazy enough to try and trade in this environment, consider subscribing to my trading service. Otherwise, buy physical Gold, store it outside the banking system and enjoy the fireworks.

Silver Is Ready, Are You?

Posted: 02 Nov 2011 12:31 PM PDT

In my previous silver update, I presented the following chart, which indicated that silver was at a major crossroads:

Gold Rebounds, Greek People asked to say "Yes or No" to Euro, FOMC "To Lay Ground for QE2"

Posted: 02 Nov 2011 12:16 PM PDT

THE SPOT MARKET gold price climbed to $1736 an ounce in early London trading – 3.1% above Tuesday's low – before falling back a bit, while European stock makrets halted recent steep declines but failed to stage a convincing rally following news that Greece's prime minister had been summoned to France to explain himself after calling for a referendum on last week's bailout deal.

Game Over Berlusconi? Italian Anti-Crisis Bill Fails

Posted: 02 Nov 2011 12:15 PM PDT

Europe's core, call it Germany, is now caught in a war of reverse attrition on three fronts: with Greece, with Italy, and as of today, with France. And unfortunately for the European monetary union, Europe, call it Germany, is losing. While the focus continues to be on G-Pap for the second day in a row following his shocking referendum announcement, the real diversion remains Italy, where the government is in as much of a state of chaos as that in Athens, and whose bonds, while not yet trading at Greek levels (remember when the Greek 1 year hit 100% two months ago? Today it is at 225%... and tomorrow the two year will be at 100%), are far, far greater in amount, and the only thing preventing their collapse so far has been the ECB, whose monetizing assistance has been contingent on Italy passing and enforcing austerity measures to deal with its runaway debt to GDP of over 120%. Unfortunately, when BTPs open for trading in 7 hours, the ECB bid may not be there, or any bid for that matter, because as the WSJ reports, "Italian Prime Minister Silvio Berlusconi on Wednesday failed to issue growth-boosting measures demanded by European Union authorities ahead of the Group of 20 summit, raising further doubts about the government's willingness to pass economic reforms aimed at restoring investor confidence in the country." Now that the ejection of Greece is virtually certain, perhaps it would be a prudent idea for what little remains of the healthy European core to kick out all the stragglers before everything becomes infected, and before French bonds trade at yields indicative of a sub-IG credit, thus ending the myth of any European union for good?

Here is what Bunga has achieved so far:

Mr. Berlusconi's cabinet late Wednesday approved a plan to sell state property, slash red tape and roll out infrastructure projects, according to people familiar with the matter, in a bid to cut Italy's €1.9 trillion ($2.6 trillion) debt and revive economic growth.

The plan, however, does not include measures to address the chronic structural weaknesses—such as heavy labor regulation and high taxes—that European officials and investors blame for Italy's economic stagnation, the people said. That means Mr. Berlusconi will head to the Group of 20 in Cannes, France, on Thursday without concrete measures to assuage the concerns of EU leaders.

We use the term achieve very loosely as he still has to pass it through parliament. And for now, all signs point to no:

It is also unclear whether Mr. Berlusconi can muster the political
support to pass in parliament the meager plan approved Wednesday.
Earlier in the day, Italian officials drafted a government decree that
would have implemented the measures with immediate effect, said the
people familiar with the matter. By the time Mr. Berlusconi's cabinet
convened in the evening, however, officials had shelved the draft. Mr.
Berlusconi's foot-dragging is likely to erode support for his government
and increase tensions with Italy's head of state, President Giorgio
Napolitano, who has called for immediate reforms and wields the power to
dissolve parliament.

On Wednesday, Mr. Napolitano held meetings with lawmakers across the
political spectrum to see if Mr. Berlusconi's majority has the political
support to push tough reforms through parliament.

Analysts interpreted the meetings as a sign that Mr. Napolitano might
throw his support behind lawmakers who have called for a government of
technocrats to replace the premier.

A referendum for everyone: first in Greece, next, in Italy.

"The technical government option is what I think everyone, except
Berlusconi, wants," said Duncan McDonnell, an political analyst at the
Florence-based European University Institute.

Granted, Italy, unlike Greece, just may pull a deus ex. But bond investors will likely not stick around to find out.

Investors are shunning Italian bonds, concerned the country's rising
borrowing costs will make it nearly impossible for it to pay down its
debt, which is currently equivalent to 120% of GDP.

And to think it was precisely one week ago that Europe got bailed out. Here is how Italian banks have fared since the day we said only idiots will believe the "bailout" for more than a few hours.

Gold ready to attack prior highs in the 1900â€™s

Posted: 02 Nov 2011 12:14 PM PDT

It’s been several weeks since I’ve written about Gold and we have had a wild ride since the 1910-1920 highs in August. At the time as we approached I forecasted a major correction was nigh and we were shorting the rise from 1862-1910 prior to a huge $208 drop that took place over just a few days. We covered our short at $1725 and then Gold rallied back to a double top at $1920 and then fell back to $1531.

Krugman Warns of â€œGigantic Bank Runâ€, â€œEmergency Bank Closingâ€ and â€œNew Liraâ€

Posted: 02 Nov 2011 12:09 PM PDT

Gold is trading at USD 1,727.10, EUR 1,254, GBP 1,080, JPY 134,790, AUD 1,669.20 and CNY 10,978 per ounce. Gold’s London AM fix this morning was USD 1,731.00, GBP 1,081.27 and EUR 1,257.35 per ounce.

In The News Today

Posted: 02 Nov 2011 12:04 PM PDT

Dear CIGAs,

When the stand up comedy in Euroland is over the next act is called the US Dollar.

Jim Sinclair`s Commentary

There is only one tool in the toolbox that can be utilized to stop a run on financial institutions possible at any time. It is called QE and will be

Continue reading In The News Today

Jim's Mailbox

Posted: 02 Nov 2011 11:50 AM PDT

Jim,

We were told… And it is starting now!

Regards, CIGA Luis

October Surprise: Can Gold Be The Panama Canal Treaty Of 2012?

Superpollster Scott Rasmussen has pulled the pin and rolled one of his patented hand grenades under the chair of the Political Class. Rasmussen's "October Surprise" is contained in a recent poll

Continue reading Jim's Mailbox

Gold Price Closed at $1,728.70 up 1.0%

Posted: 02 Nov 2011 11:25 AM PDT

Gold Price Close Today : 1,728.70
Change : 17.70 or 1.0%

Silver Price Close Today : 3392.oo
Change : 121.oo or 3.6%

Platinum Price Close Today : 1,598.30
Change : 19.50 or 1.2%

Palladium Price Close Today : 648.55
Change : 13.65 or 2.1%

Gold Silver Ratio Today : 50.96
Change : -1.33 or 0.97%

Dow Industrial : 11,657.96
Change : -297.05 or -2.5%

US Dollar Index : 77.33
Change : 0.84 or 1.1%

Franklin Sanders has not published any commentary today, he will be away until 8th November.

Triple Lutz Report–Episode 107

Posted: 02 Nov 2011 10:59 AM PDT

from The Financial Survival Network:

Worried about gold prices, well don't. You should be more worried about how long the fiat money system is going to hold on. Forces are converging that will soon make precious metals more valuable than ever. Our money system is based on a faulty premise that debt, any kind, begets prosperity. And government budget deficits are the key to wealth. In fact nothing could be further from the truth. We are all debt slaves now and the government wouldn't have it any other way. So don't worry so much about precious metals, there's plenty of other things going on in the world today that should keep you up at night.

Click Here to Listen to the Interview

This posting includes an audio/video/photo media file: Download Now

Peter Schiff: Bernanke & Fed to Ignite Gold & Oil

Posted: 02 Nov 2011 10:56 AM PDT

from King World News:

Peter Schiff continues: Read More @ KingWorldNews.com

Guest Post: MF Global Shines A Light On Monetarism's Incapacity To Enhance The Real Economy

Posted: 02 Nov 2011 10:56 AM PDT

Submitted by Jeff Snider, President & CIO of Atlantic Capital Management

MF Global Shines A Light On Monetarism's Incapacity To Enhance The Real Economy

The temptation to compare any financial institution's failure to those that preceded the 2008 crisis and panic are reasonable. It is easy to classify MF Global as 2011's "Lehman" event, just as it was to use the same term to describe Dexia a few weeks ago. The use of the term "this year's Lehman" is somewhat misplaced simply because its users are looking for an event that kicks off another crisis or panic. Instead of using "Lehman" to describe a potential inflection point that propels the crisis into panic, it might be better to see MF Global as AIG.

The comparison to AIG is not to say that MF Global was as interconnected, that its failure will be as devastating, or that it is the straw that breaks the European camel's back. The urge to see the past in the present is historically valid, but it will never be exactly alike (Mark Twain had this right). Rather I think the comparison is useful in that AIG taught the wider world what was really rotten at the core of modern finance, namely hidden risks that were shockingly existential. MF Global's failure importantly shows that none of the lessons have been heeded in the days since, providing a somewhat unique window into the real dangers that still lurk hidden in the shadows. More than that, though, MF Global demonstrates an obvious shortcoming of the financial system as it relates to the real economy.

ZeroHedge posted the bankruptcy affidavit of MF Global's President and Chief Operating Officer Bradley I. Abelow, drawing attention to Section E, item 33 on page 13. Mr. Abelow makes the following statement under oath:

"On September 1, 2011, MF Holdings announced that FINRA informed it that its regulated U.S. operating subsidiary, MFGI, was required to modify its capital treatment of certain repurchase transactions to maturity collateralized with European sovereign debt and thus increase its required net capital pursuant to SEC Rule 15c3-1." [emphasis added]

The transaction in question was a "repo-to-maturity" financing deal, collateralized with the troubled sovereign European debt that everyone has been talking about in the past few days. What is particularly striking about this is that a "repo-to-maturity" deal is accounted for as a sale, meaning that what is essentially an ongoing collateralized loan is, surprise, hidden off the balance sheet. Maddeningly, MF Global likely booked a profit up front at the transaction's consummation using obviously faulty mathematical expressions of those "reasonable" expectations of profit, thus avoiding the need to post any liability to the balance sheet.

This makes a lot of sense, then, in why FINRA "demanded" it change its capital treatment of the transaction. Though it was "properly" accounted for according to convention, the risks of collateralizing a loan with questionable debt means that MF Global has ongoing liquidity risk attached to it. As the value of the European debt collateral is questioned, or falls, the lender/cash owner counterparty will ask for additional collateral posting as it applies a stricter haircut to that original, troubled collateral. So, even though this transaction has fully cleared MF Global's books, the company is still on the hook should it be required to post additional collateral or cash (which ended up with the company in bankruptcy, just like AIG).

The stink here is that this is not an isolated case of cheating (aside from MF Global's use of client funds). It is a pervasive shadow element to the modern financial system, fully allowed by accounting conventions and regulators. Just like AIG, MF Global was not brought down by bad debt per se, it was brought down by the hidden liquidity risk of the deterioration of off balance sheet arrangements that were allowed by accounting standards. The fact that it was classified as a sale was completely inappropriate in terms of describing the overall liquidity risk of the company, as FINRA belatedly recognized.

MF Global was expressing a bet that it could earn a spread, essentially risk free, on the rate it paid on the repo transaction (the lowest borrowing rate around) and the interest it received on the Euro sovereigns (among the highest rates of the sovereign class), all the while counting on the European politicians and the ECB to provide enough "support" to maintain a relatively constant debt price in order to fool the marketplace into complacency about real risks. So the risk hidden but embedded within the transaction appears long before there is a default, hitting the company once the repo counterparty devalues the collateral (the market was apparently not fooled enough by the ECB's attempts at price stability). This is the essential financial misrepresentation of the age. Repo accounting is responsible for so much hidden risk, yet it has become central to the ongoing survival of the system as it is currently constituted.

The pliability of how the system is allowed to "book" and account for risk is certainly the driving force making repos so vital to modern banking. For instance, a gold or silver lease arrangement is essentially the same as a repo-to-maturity transaction, yet it is accounted for in exactly the opposite way. A gold lease is really a sale transaction since the physical metal is literally removed from the custody of the gold owner, yet it is accounted for as a collateralized loan where the gold remains on the owner's books as if it is really there (since it technically involves a repurchase agreement on the back end, even though these deals are simply rolled over in perpetuity and the repurchase never takes place, nor is it intended to). Both gold leasing and the repo-to-maturity transaction are forms of collateralized loans, yet they receive far different treatment so that they accomplish exactly what the banks want to accomplish, which is disguising the real nature of each transaction. The gold lease presents risks in that metal may not be where everyone thinks it is, and the sale treatment of the repo-to-maturity removes haircut and liquidity risks from what are supposed to be transparent statements of condition.

That is why this system has to change at some point. It is exactly designed to be misleading, and the reason is so very simple. In any fractional system there will be a desire to amplify that fraction to the maximum degree. But in doing so, participants recognize that the process of maximization entails creating negative human emotions and perceptions since history is not really that kind to this manner of fractionalization. So the system has institutionalized, abetted by the very regulators that are supposed to cap fractions and leverage, these methodologies of hiding just how much financial entities have engaged in maximizing themselves under the cover of mathematical precision. Trillions in derivatives are no problem because there are powerful and elegant equations to net and hedge them.

Without any sort of exogenous anchor to credit production and banking, risks are theoretically nearly infinite (since the slightest disruption to expected haircuts renders firms utterly bankrupt!), while at the same time there are multiple avenues for misdirection and disguising those realities. The Panic of 2008 was supposed to correct these excesses and remedy the fact that risks have not been accurately priced for decades. Yet the system has resisted every effort, simply settling for redefining the appearance of safety yet again. Somewhere in that mathematical pursuit of maximum fractions, the very goal of finance changed, as if traditional banking was no longer sufficient to support the pursuit's ever-growing ambitions. So the financial economy has broken away from the real economy, using the ironic cover story of enhancing price discovery to the process of intermediation – complexity is good!

Intermediation is supposed to be about matching the wider (real) pool of savings to worthwhile economic projects that have a real, productive impact on the real economy. MF Global's repo-to-maturity transaction cannot be fairly classified as real intermediation since the firm knowingly advanced credit to an economically unfeasible obligor with the expectation that the price would never reflect that reality (how's that for enhancing price discovery). This crystallizes, I believe, just how far the financial system has moved away from real intermediation and reflects the biggest part of the real problems in the real economy – money is no longer productive in economic terms and has not been for decades.

The Occupy Wall Street crowd sees this as a problem with capitalism. I believe that they are correct in their target, but wrong in their diagnosis. This is not a problem of capitalism since Wall Street is a practitioner of monetarism. A real capitalist system works through real intermediation creating positive opportunities for productive enterprises (scarce money is actually vital here). Our current system of repo-to-maturity and gold leasing is nothing but empty monetarism's habit of regularly forcing the circulation of empty paper. And when the system begins to doubt itself, as it did in 2008, the answer is always about finding a way to restart the fractional maximization process yet again, which means disguising the real risks inherent to that process. There is no real mystery as to why prices and values have seen such a divergence, and why that is a big problem to a system that depends on appearances.

The fact that money is disconnected from the real economy never enters the consciousness of monetarists since money is always the answer. But make no mistake, the primary reasons for this global malaise are that money has lost its productive capacity and its proper place as a tool within the system, not as the ultimate object of that system. MF Global's failure is an apt demonstration of just how far modern finance has strayed, just as AIG was three years ago.

Guest Post: MF Global Shines A Light On Monetarism's Incapacity To Enhance The Real Economy

Posted: 02 Nov 2011 10:56 AM PDT

Submitted by Jeff Snider, President & CIO of Atlantic Capital Management

MF Global Shines A Light On Monetarism's Incapacity To Enhance The Real Economy

Vulture Bargain Update for November-December Posted

Posted: 02 Nov 2011 10:49 AM PDT

Vultures (Got Gold Report Subscribers) please log in to the password-protected GGR subscriber pages for an important Vulture Bargain Update posted today, Wednesday, November 2, 2011. We share our notations for all of our fully fledged Vulture Bargain companies during this small resource company buyer's strike, negative liquidity event as well as some of the delicious bargains we have been devouring. We also name two new Vulture Bargain Companies following the New Orleans Investment Conference.

To continue reading, please log in or click here to subscribe to a Got Gold Report Membership.

Ruinous Symbiosis Between Congress And The Fed

Posted: 02 Nov 2011 10:37 AM PDT

Wolf Richter www.testosteronepit.com

The members of the congressional panel on deficit reduction are struggling to come up with something that will—I mean, let's be realistic—get them reelected and fill their campaign funds. Even if they come up with a plan that will reduce the gargantuan budget deficits a bit, Congress won't follow through. Reason: it doesn't have to, thanks to the symbiotic relationship between Congress and the Fed.

And please, Media, stop using "debt" reduction in your stories on the panel—you're lying to your audience. Even if Congress succeeds in reducing future budget deficits, the cumulative debt, which is now breaking the $15 trillion mark, will continue to skyrocket, just at a slower rate. For Congress to reduce the debt, it would have to produce an actual budget surplus! Here's Exhibit A of your sins: Bloomberg, Yahoo, New York Times, Washington Times, Washington Post....

Despite the grandstanding during the debt ceiling debacle, outlays in fiscal 2011 rose by 4.2% to $3.6 trillion. Excluding the $67 billion surplus from Social Security and other trust funds, the deficit came in at $1.365 trillion, a whopping 8.7% of GDP. A vertigo-inducing 37.9% of every dollar spent was borrowed money.

The issue, as we know from Greece, is serious. But the U.S. has an "advantage" that Greece surrendered when it joined the European Monetary Union: a central bank that is willing and able to force yields to near zero and print whatever it takes to monetize the deficits.

The Fed has a solid record: treasury yields are below the rate of inflation all the way up the yield curve, and so are yields for many municipal bonds, corporate bonds, all money market funds, savings accounts, and CDs. To get a positive real yield, one has to venture into junk with scary probabilities of default. Financial repression of this kind has a devastating impact not only on savers, but also on pension funds, Social Security, insurance companies, etc. And worse: inflation has outrun wage growth for twelve years. Both factors have impoverished the middle class by sapping its purchasing power. That's not the way to rejuvenate the real economy.

But the Fed and the twelve Federal Reserve Banks have a dual mandate: enriching their cronies and pacifying Congress. Congress created the Federal Reserve System, and Congress can unravel it. Already, anger at the Fed's actions has become a distinct chorus. The Bloomberg lawsuits forced the Fed to disclose information on some of the trillions it handed out in secret during bailout mania. Congressionally mandated audits by the non-partisan Government Accountability Office shed some sunlight on certain aspects of the Fed (For more: The GAO Audit of the Fed Doesn't Call It 'Corruption'.... But it should). And now, Ben Bernanke is getting defensive.

To pacify Congress, the Fed issues assurances that it will continue to force down interest rates and print money to enable the Treasury to fund the deficits that Congress produces. Bernanke's talk today included a whole slew of such assurances. As long as this symbiotic relationship continues, Congress won't bring the budget deficits in line; it doesn't have to because the Fed shields congressional decisions from the brutal but healthy discipline of the markets.

Greece ran into trouble because the markets started to impose a bit of discipline. Deficits and debt had gotten out of hand, and the markets rebelled—belatedly, but they did rebel. Market discipline keeps governments (and companies) in line. It's all part of the checks and balances of a well-functioning capitalist system.

But Congress couldn't care less because the Fed and to a lesser extent the Treasury (through ownership of Fannie Mae and Freddie Mac) control the U.S. credit markets. At the slightest squiggle, the Fed prints massively.

The textbook precedent is Japan. The Bank of Japan, the Ministry of Finance, government agencies, and government-controlled financial institutions own or control 95% of all Japanese Government Bonds outstanding. To heck with the unrelenting downgrades; ten-year JGB yields are near 1%. The Japanese system protects politicians, bureaucrats, and Japan Inc. from market discipline and enables politicians to run up huge deficits year after year. As a result, Japan's debt is now 230% of GDP. That this will blow up is clear. That this will be much worse than Greece is also clear. But so far so good....

Over a number of years, the U.S. has perfected this shield against market discipline. Remember the bond vigilantes? Annihilated by the Fed's printing press and rate policies. Congress has been watching the same movie. They know that borrowing 40% of every dollar spent is no problem because the Fed will cover it. And in return, Congress, as an institution, puts shackles on its few members that are too vocal about auditing, restructuring, or even eliminating the Fed.

Now, The GAO Audit of the Fed Doesn't Call It 'Corruption'.... But it should.

Wolf Richter www.testosteronepit.com

The Politics of Gold Investment

Posted: 02 Nov 2011 09:15 AM PDT

I think I know some lab mice that have received less examination than the 2012 Republican primary candidates. It seems with each passing cycle, the campaigning starts earlier, there are more debates, and the media frenzy gets more intense. Read More...

The Greatest Risk for Gold Investors

Posted: 02 Nov 2011 08:42 AM PDT

Author: Vedran Vuk Synopsis: Gold investors worldwide – but especially those in the US – may be overlooking the greatest risk to their bullion investments. Learn what it is and how to minimize it. Dear Reader, With Bank of America abandoning its $5 debit-card use fee, I'm reminded of a deep problem within the US banking system: there's almost no real competition among the banks. Sure, there are many banks, so it appears that there's a lot of competition, but if most of us were to think about the services our bank offers compared to other banks, we'd probably find that many others are very similar to it. Take a few minutes to consider the reasons for being with your current bank. Personally, I don't have a good reason. My bank is just as good as any other bank. Sure, it has some minor reward plans, but other banks have their own too. However, I'm not with my current...

Waiting for QE3

Posted: 02 Nov 2011 08:27 AM PDT

Dave Gonigam – November 2, 2011

Heroin? Coke? Downers? Federal Reserve settles on which drug to administer to the economy for six more weeks
Dan Amoss on what to do when QE3 arrives
Three hedge fund managers reaffirm their commitment to gold: Why one of them is switching out of bullion and into gold stocks
Fed up trying to do business in the United States? If your business is portable, here's where to go…
Overwhelming response: Readers write in to our Project X survey, telling us more of what keeps them up at night…

After nearly a week of markets getting whipsawed by events in Europe, it's the Federal Reserve's turn to keep things interesting.

Many traders hoped the Federal Open Market Committee would launch QE3 today, mainlining more easy-money heroin into the system. In the event, they delivered Quaaludes… and markets are nigh unchanged from where they were before the FOMC issued its lunchtime statement.

In sum…

The fed funds rate will remain near zero till at least mid-2013
Operation Twist: Steady as she goes. The Fed will continue selling short-term Treasuries and buying longer-term ones to bring down long-term yields
Maturing mortgage debt will continue to be rolled over into newer mortgage debt.
Maturing Treasury debt will continue to be rolled over into newer Treasury debt.

They might as well have issued a statement saying, "You know all that stuff we've been doing? It's working so well, we're going to keep doing it!"

And thus, markets yawned…

The Dow has recovered about 100 points of the previous two days' losses. The S&P is back to 1,230
Gold is holding on to most of its pre-announcement gains. The spot price as of this writing is $1,730. Silver's back above $34
The dollar index is off modestly to 77.2
Ten-year Treasury yields are back above 2%. The 30-year bond is back above 3%.

"With today's statement," says Strategic Short Report's Dan Amoss, "the Fed continued to lay the groundwork for QE3."

Chicago Fed president Charles Evans dissented from the decision to keep the current inflationary policies the same. Evans wants "additional policy accommodation at this time." Apparently, two months after Evans' Sept. 7 speech, his hair is still on fire. At that speech, Evans said central bankers should be "acting as if their hair was on fire" about 9% unemployment.

Despite all the extreme Fed policies over the past three years, he still thinks more money printing would lower unemployment. I'm not joking.

So what next? "Since the Fed seems incapable of learning from mistakes," Dan continues, "we'll probably see QE3 by early 2012."

"QE3 would further inflate the cost of business in the U.S., which would probably lead to higher unemployment — the opposite of the unemployment/inflation tradeoff that Fed officials hold sacrosanct."

"One wonders if they have a control panel at the Marriner Eccles building with a dial labeled 'heat things up with more inflation' at one extreme and 'cool things off with more unemployment' on the other."

"If only the real world were so simple. Human action determines the course of the economy. The economy isn't a physics lab experiment under the control of mad scientists. When that human action does more to defend itself from central planners rather than work to serve others and allocate scarce resources in a free market, we're in trouble."

Dan's recommendation: "Gold and gold stocks are a buy on dips. And hold your open short positions in companies that will continue to suffer from the Fed's inflationary policies."

Even when gold tumbled $40 yesterday, Bill Fleckenstein points out it rose in other currencies.

The Fleckenstein Capital president and MSN Money columnist is one of three hedge fund managers reaffirming their commitment to gold this week.

"What's the alternative?" he asked radio host Eric King rhetorically. "None of this paper is worth anything, and they are just going to debase it some more. The Japanese, the British, the Swiss, the Americans are all printing money."

Yesterday's drop? Just noise. "If somebody has to liquidate their account because it's related to MF Global or some other problem related to losses in another market, when there is this much chaos on any one day, what a market does on any one day doesn't tell you that much."

Meanwhile, John Paulson thinks gold is still an underowned asset.

Yes, we know. Paulson doesn't look nearly as brilliant this year as he did shorting subprime in 2007. He got burned on Bank of America. He got singed to a crisp on Sino-Forest.

But we won't dismiss anyone who says "I view gold as currency," even if he adds the caveat, "I was not interested in it as currency until quantitative easing."

OK, so he was late to the party, buying 31.5 million shares of GLD in early 2009.

Now he's GLD's biggest shareholder. And he expects institutional investors to join him, sooner or later.

As evidence, he trotted out some charts during a speech to the Chinese Finance Association. Trader Brenna Hartman took a few low-resolution snaps of his presentation and posted them on Twitter.

Check this out: The chart on the left shows gold ETF holdings relative to U.S. money market funds. The second chart shows how much — or little — gold is held by U.S. pension funds relative to other asset classes.

Hard to make out the exact numbers from this picture… but the proportions tell the whole story.

David Einhorn is shifting from bullion to gold stocks. "A substantial disconnect has developed between the price of gold and the mining companies," he said this week on a conference call — echoing a theme heard in these virtual pages.

Thus, in the third quarter, Einhorn's Greenlight Capital moved funds out of the metal and into GDX, the big gold miner ETF. GDX fell 5.4% during the second and third quarters, while bullion gained 11%.

"With gold at today's price, the mining companies have the potential to generate double-digit free cash flow returns and offer attractive risk-adjusted returns even if gold does not advance further," Einhorn said. "Since we believe gold will continue to rise, we expect gold stocks to do even better."

[Ed. Note: Kyle Bass is another famous "hedgie" who's been ahead of the curve on gold. But he's just as enthusiastic about the potential in another metal.

It's not a precious metal, but it offers what the folks at Whiskey & Gunpowder call "the last legal hard money loophole in America." They even worked up a report about it. Want access? Look here.]

Interest in U.S. Silver Eagles is abating… at least for the moment. The U.S. Mint reported purchases at a record pace in early October, but at month's end the total reached "only" 3,064,000.

Any time before last year, that would have been impressive. Now it's below average.

Private payrolls jumped by 110,000 last month, according to the payroll firm ADP. The number was roughly in line with the "expert consensus." It's also not enough to keep up with the growth in population.

This is the first of two previews we'll get before the Bureau of Labor Statistics delivers its always-massaged monthly jobs report on Friday.

Once again a record number of Americans are getting by on food stamps — 45.8 million, according to the latest monthly numbers from the Agriculture Department.

That's nearly 15% of the country. In five states, the figure is over 20% — Louisiana, Mississippi, New Mexico, Oregon and Tennessee.

The number of food stamp recipients is up 8.1% year over year. Look for it to go up: The latest figures are for August, so they haven't accounted for the knock-on effects from Hurricane Irene.

The FBI has taken an interest in the collapse of MF Global, the futures broker run by Goldman Sachs alum and former New Jersey Gov. Jon Corzine.

Yesterday the news emerged that MF Global was mingling its clients' money with its own. Today a number has been attached to the missing money that belongs to clients — $600 million.

Exactly what the FBI is looking for, no one's saying. Probably because they don't know yet.

Then there's the matter of Mr. Corzine's severance package. Is he really in line to collect $12 million for having turned a 230-year-old firm into the eighth-largest bankruptcy in U.S. history?

Under the federal bankruptcy code, severance payments to insiders are barred unless 1) severance is generally available to all full-time employees, and 2) the insider severance must not exceed 10 times the average amounts awarded to nonmanagement workers in the same calendar year.

Unless the average desk jockey at MF Global stands to collect $1.2 million in severance, Mr. Corzine will likely collect something less than the full amount due.

Looking for a business-friendly country, and the United States doesn't meet your definition? Consider Panama.

"Panama is the most business-friendly country for expatriates anywhere in the Americas," according to our friends at International Living. They're out today with their Business Index 2011, evaluating nations by eight stringent criteria.

"Panama was our standout performer," says Eoin Bassett. "Its government has set up a number of programs and special zones in order to attract foreign investors and business people."

He continued, "It's not just an attractive place for big businesses — Panama is a great option for expats looking to set up anything from a restaurant to an import-export business to a B&B."

Belize came in No. 2. Readers of The 5 might be shocked at who came in number three. It's not Venezuela, but… Well, check out their report.

"I fear our political class will never face facts and tell us the truth," writes a reader who replied to our Project X survey — where we asked what their biggest concerns were about America and their retirement.

"We need a new paradigm going forward. Can we ever escape the mountain of debt they've laid on our nation? They frequently claim they do things only 'for the good of our children,' when, in reality, they do it for themselves."

"I never relied on Social Security or Medicare for more than a third of my retirement, like we've always been told, yet now that is, clearly, in jeopardy. Who and what can we trust any longer? I've already warned my (now grown) children they should think like immigrants themselves and be willing to do things that others won't to get ahead."

"I fear that government will break most if not all the promises it has made. Beyond shortchanging us on Social Security, I expect they will mandate purchase of govt. debt in my IRA and SEP. I expect they will end the Roth IRA and attempt to tax them as well. I'm afraid there may be no answers for anyone who isn't interested in selling everything and moving to a foreign hideaway."

"My biggest concern about America," another writes, "is that we are about to extinguish the greatest light that has ever shown over this planet. We are proving ourselves too stupid to deserve its benefits. Worse, as the greatest positive influence in history, the failure of America will condemn the planet to a modern version of the Dark Ages, where aspiration is extinguished and most human life becomes essentially pointless daily grubbing for existence. A fine legacy."

"On my retirement, my concern is that I will be unable to derive financial performance sufficient to overcome the impacts of government action, which one should be able to reasonably expect to be the most stable, prudent force in the financial world, but which has become the riskiest aspect of any portfolio."

"I love my country," says one more, "it's my government I don't trust. What concerns me is the dissolution of our Founding Fathers framework, subversion of the Constitution and the Bill of Rights."

"We're heading toward a situation that will trigger revolution. Our ancestors put themselves on the line for ideals held dear. The day is fast approaching when we'll once again be forced to consider anarchy as the only course to resurrecting freedom. I firmly believe that fiat currency, oppressive regulation and illegal taxation are to blame."

"There is only one alternative before anarchy, and that is to vote with our feet. I see no way to 'fix' these problems within the framework as it exists today. The only prudent course of action is to seek a lifestyle/location where can one mitigate the extent of control exerted upon us."

The 5: This is fascinating. As of a week ago today, we'd collected fewer than 900 Project X survey responses. This morning, we're over 5,200. And there's absolute consistency to the issues that concern readers the most once we plug the survey responses into a word cloud:

It's still about your retirement… and what the government might do to foul it up.

This tells us we're on the right track in putting Project X together… something that will live up to our pledge that it will transform the way you look at investing, at your retirement, even how you provide for your family.

Fewer than 36 hours remain in which you can sign up to stay in the loop about Project X. After midnight tomorrow night, Addison will send any future updates about the project only to those people who've signed up. You can do so yourself right here.

Regards,

Dave Gonigam
The 5 Min. Forecast

P.S. You don't have to answer the survey when signing up for Project X, by the way. In fact, most people don't. That's totally OK. And you won't be committing yourself to spending any money.

There's no obligation that comes with signing up. But signing up is the only way to make sure you'll continue to have access. It takes all of 30 seconds. Here's where to go.

Fed Chief Defends Actions On Interest Rates, Inflation

Posted: 02 Nov 2011 08:05 AM PDT

02-Nov (CNBC) — Federal Reserve Chairman Ben Bernanke defended the central bank's record on keeping inflation low, in the face of criticism that the central bank's weak-dollar policies have driven up consumer prices.

Speaking at a post-Fed meeting news conference, Bernanke rejected claims that the Fed's various moves to keep interest rates low and monetary policy accommodative will lead to high levels of inflation.

…Bernanke refused to get too far into the politics but said the committee is comfortable with the current level of inflation, which is around 2 percent excluding volatile food and energy prices but 3.9 percent including gasoline, groceries and similar items.

[source]

Gold Daily and Silver Weekly Charts - La Douleur du Monde

Posted: 02 Nov 2011 08:03 AM PDT

This posting includes an audio/video/photo media file: Download Now

Has Bernanke Lost His MInd?

Posted: 02 Nov 2011 07:52 AM PDT

I just saw this headline come across the tape: "Low interest rates benefit savers too: Bernanke." He goes on to explain that low interest rates are stimulating economic growth and savers won't get decent returns on their savings until the economy strengthens. Here's the LINK The dude lost me on that one. In fact, that has to be one of the most insanely idiotic statements I have ever heard - and everyone who heard and believed it is dumber for having done so.

One of the exercises I try to do is, when someone says something that seems stupid on the surface, I try to intellectually understand why they are making that particular statement. Let me get this straight: if I have my money in a CD earning a fixed 1%, my money will grow in value if the economy by some miracle of some other-world higher power grows? I can understand trying to sell an idea by spinning the logic, but Bernanke's reasoning there is outright retarded. I truly think the guy has lost his mind. Either that or he's treating some malady with high grade medical marijuana. Okay maybe he's not stoned because he would not be able to make that statement and keep a straight face - perhaps he takes copious amounts of prozac or xanax.

But nonsensical logic aside, let's look at some facts. Regardless of interest rates, the Fed is devaluing the dollar. Since Bernanke's QE began in 2009, the dollar index has lost 13% of its value. That doesn't reflect the lost purchasing value of a dollar due to real inflation, not the bullshit CPI data served up by the Government and shoved down our throats by Bernanke. All I know is that the cost of everything I use on a daily basis has gone up substantially over the last year, and now peanut butter is going up 30% this month.

I'm sure Bernanke knows the true rate of inflation. I also believe that the last shred of intellectual and academic integrity that supposedly comes with being the El Jefe of an Ivy League economics department is what is standing between Bernanke and his desire to send the printing press into overdrive. Furthermore, the fact of the matter is that if Bernanke pulled a Volcker 1980 and jacked rates up to where they should be, which would indeed benefit savers and would stimulate savings to an extent that might help fund real investment, we all know that it would throw the economy into a depression that would make the 1930's depression look like a Bernankean bong hit party.

And here's an even bigger problem: 15% of the country is now on food stamps: LINK I saw a news report the other day that depicted the trouble farmers in some southern States are having hiring labor to help harvest crops because of strict illegal immigrant laws being enforced. If the Government cut off food stamps to everyone except the worst of the hardship cases out there, I can guarantee you that these farmers would not have a problem finding domestic labor. In fact, I would argue that if the Government cut back on all welfare entitlement programs by at least 50%, it would solve BOTH the high unemployment problem AND the illegal immigrant problem.

But given that real interest rates will continue to be very negative for the foreseeable future and that the Government will continue borrowing and printing money and handing it out to potential voters, gold and silver will continue onward and upward. Jame Turk and John Embry are calling for $60 silver to happen a lot sooner than most people think it can happen. In the past few days I have come around to agreeing with them. I don't have a specific time frame for that other than to say that I think we could see $60 silver by May. That would imply $2400 gold if you think the gold/silver ratio can trade down to the 40 area.

What will drive this? Bernanke's zero interest rate policy which he says benefits savers and the massive monetization of European and U.S. banking and Government debt...In the spirit of trying to shed some humor on the tragedy that is our system, this clip from Billy Madison comes to mind after reading Bernanke's comments today:

Save Your ASSets First

Thursday, November 3, 2011

Gold World News Flash

Gold World News Flash

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