Gold World News Flash

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• The Euro Is Dead
• Michael Pento - How CB Bazookas Will Impact Gold & Economy
• U.S. likely holds German gold hostage, Rickards tells King World News
• Silver vs Nasdaq: A response to Mr Erik Swarts
• Silver Update: “Something Fishy” November 12th, 2011
• Only Posession is Real Protection
• The Gold Cartel End Game – ‘Ranting Andy' Hoffman Interview
• The G20 and Financial Globalization
• Gold down — no, wait a minute — gold up on Italy debt problem. . .
• Apparently Celente, a major gold proponent, did not own phyzz, but rather COMEX gold futures contracts (starts at 9:30 on vid.)
• SILVER vs the World – Television & Fast Food
• Argentines get itchy amid new foreign exchange controls
• Gold and Silver Miners Lead Market Rebound
• Jeff Nielson (SGTreport EXCLUSIVE): MF Global, Fraud, Debased Currencies & Precious Metals
• Alasdair Macleod: An Austrian economic view
• Gold Has Resumed Its Glitter!
• Gold Investor Opportunities Time
• Gold Bull Market Seasonal Trend Analysis
• Turd Ferguson didn't need GATA to see gold and silver market manipulation
• [OTE131] On the Edge with Charles Hugh Smith
• This Past Week in Gold
• Weekly Bull/Bear Recap: Veteran's Day Edition
• Germany Probably Can't Get Its Gold Back From The U.S. - Jim Rickards
• The Best of the Week
• David Kotok | CDS, Market Turmoil, Asset Allocation
• Latest article at GoldMoney
• Adam Hamilton: Gold Bull Seasonals
• New gold bugs are young and restless
• Out Of The Ashes Of The Collapse Of The Eurozone Will A "United States Of ...
• As The European Debt Woes Spiral Out Of Control

The Euro Is Dead Posted: 12 Nov 2011 04:57 PM PST The 'tragedy of the commons' or 'free-rider' dilemma of game theoretical cocktail parties is a great framework for considering the current tug-of-war between individual sovereign fiscal actions among the European Union and the over-arching monetary policy of the ECB. If the ECB is dovish and too many states decide to suckle on the teat of liquidity - as opposed to fiscally 'behave' - then everyone loses (as we see currently evolving). The lack of any Nash (stable and dominant) equilibrium among the European nations and their hoped-for benefactor is becoming increasingly problematic for both trading and business investment. Nomura's Global Macro Strategy group tackle the problem that is now abundantly clear the euro area as currently constructed is not stable and so it will have to change (hence, the Euro is dead!). The direction of travel is being set out by northern European politicians and is worth noting – more Union not less. But two points are critical to note; first that the new euro area may be so different from the one the current members signed up to as to make a process of voluntary re-application for euro stage II necessary to determine future membership, and second that any new variable geometry euro will take a long period of time to set up. How then to cover the intervening period? Kevin Gaynor, of Nomura, goes on to point out that while the market and global political pressure for the ECB to act as the bridge is now very loud indeed, many feel this option is not likely now. Kevin then sets up the framework for considering how the Euro will change and potentially emerge: Game theory offers a route for thinking about these issues in a fruitful but parsimonious way. We can simplify this complex situation into a repeated "game" between the ECB and the fiscal authorities of the euro area. Each player can choose one of two strategies in this game, setting up four outcomes. The table below sets out the situation.       The fiscal authorities can behave or cheat. "Behaving" means instituting and sticking with substantial fiscal and regulatory adjustment. "Cheating" means avoiding that outcome.   The monetary authority can be hawkish, which in this context I take to mean no QE or dovish, offering full support for announced fiscal programmes that are aimed at guaranteeing future solvency.   Now the critical part is to consider how the actions of each party (ECB or sovereign nation) are dominant (or best) for themselves (or overall) and how that can lead to the free-rider (or unintended consequences) problems we have often discussed:   Let's think about the pay-offs in each box. Behaving on the part of fiscal authorities leaves the ECB deciding whether to support or not. If the ECB takes a hawkish stance then the economy does badly and inflation falls below target – this is not a good pay-off for the ECB and makes the fiscal adjustment harder for the fiscal authority, and so hence I score it -1, -2 for the ECB and governments respectively.   However, if the ECB is dovish in this fiscal scenario then the economy, while doing badly owing to the fiscal tightening, does better than under the hawkish strategy, and so in this context I score it 0,0. This is the best combination of strategies available overall.   Now consider the "cheat on the fiscal stabilisation" strategy. If the fiscal authorities cheat and the monetary authorities go hawkish they both lose. Let's call this the "leave the euro" box. The ECB doesn't want the euro to break up, nor individual (or at least "important") members to leave – its credibility would be lost and its independence could be put at risk. Similarly, we assume most governments would consider "exit" as a fairly substantial negative (we can debate this point of course since some would argue exiting would lead to better medium-term economic outcomes). I score this box as -2, -3 then.    Finally, we have the fiscal cheat and dovish ECB outcome. This is by far the best for the government and the worst for the ECB since its monetary credibility would be considered to be severely eroded in this outcome leading to free-rider problems whereby other governments start to renege as well. You may or may not agree with the scores, but it is how they rank that really matters in any event.   The question then is, is there a stable solution to the game? And the answer, in my view, is no. If the ECB unilaterally decides to go dovish then the fiscal authority is better off cheating which leaves the ECB worse off than if it had remained hawkish. Therefore, it doesn't have a "dominant" strategy. Equally, there is no dominant strategy for the fiscal authority independent of what the ECB does.   But the game does have some important things to tell us. First, the ECB doesn't want to drop into the break-up scenario and so it engages in tentative QE, better known as the SMP. It wants to keep the game alive, in other words. This is akin to the sort of signalling one expects in this sort of repeated game – rather like the USSR and the US at the height of the cold war. Taking the analogy further one tends to see proxy battles being fought in these scenarios – in which case Greece is our cold war Vietnam whereas Italy is the Cuban missile crisis.   How then to move forward? If the ECB is dovish then it invites a free-rider - we-can-ignore fiscal restraints attitude from the sovereigns BUT if the ECB is hawkish it crushes growth expectations and further exaggerates the potential downward spiral austerity-facing nations believe credibility will save them from. Credible pre-commitment on the part of the fiscal authority is required in order for the ECB to decisively move to the dove camp. Fiscal tightening and regulatory reform are necessary but not sufficient conditions for the move to the behave/dove camp, in our view. Given it's a repeated game, good behaviour should be rewarded but only in a marginal and reversible fashion.   That leaves markets facing an asymmetric risk/reward pay-off for the simple reason that the fiscal policies being undertaken are multi-year, painful, difficult to execute and conditional on stable political follow through. A virtuous circle where governments learn about the revealed preference of the central bank is entirely possible but would take time and would offer continual bouts of risk aversion on every opposition speech. Moreover, if the authorities look like they will not be a member of euro stage II then the central bank's commitment should be expected to erode.   The other alternatives are more creative but, we think, entirely plausible. That is to make the cost of cheating much higher or remove the option entirely. In other words you make the behave strategy the dominant one under any ECB strategy. This could be achieved in three ways.   Option one is to ask an external body to take over fiscal powers – most obviously the IMF – in other words give up fiscal independence in the same way these countries have given up monetary independence.   Option two is to give up fiscal independence domestically by setting up a temporary but powerful independent fiscal policy making group (the supposed technocrat approach we are being told is occurring currently) – an option that has been discussed in academic literature before.   Neither of these options are particularly palatable and would be seen as a significant loss of sovereignty.   The final option is make the cost of exit higher in a credible manner. Beefing up contract law on debt wouldn't help since default would still be possible since the debt is owed. Instead, it would be better to take an asset out. The most obvious one is FX and gold reserves. On the most recent IMF data, Italy, for example, has 78 million fine troy ounces of gold on its central bank balance sheet and around USD35bn of hard currency reserves. In contrast, Italy's contribution to the ECB's reserves is around EUR7.1bn. It remains anachronistic that the single currency area still has such an extensive system of national central banks (around 48,000 employees vs 19,000 at the Fed) and the bulk of currency and gold reserves held at the national level. Indeed, taken more broadly the region has around USD607bn of gold reserves at current valuations and USD204bn of hard currency reserves.   Thus, one option for making exit seem even less palatable is to not just withdraw and provide monetary support depending on behaviour but to ask for the national reserves to be pledged to a European authority to be held in escrow. Euro exit or losses for the ECB from support, or indeed financial sector losses from future backsliding could then be paid out of the lost reserves. This would no doubt be hugely unpopular and possibly illegal given central bank independence, but the point is of course that the reserves would not be lost if good behaviour is followed.   These options are highly unusual and politically dangerous, and so are only likely to be used in extremis. Instead, the real situation is likely to continue flopping back and forth between hawk/cheat and dove/behave boxes. Leaving aside whether the game is stable, we must ask whether that outcome is economically stable. And that depends on the fundamentals. A worsening growth environment, tightening private sector financial conditions and balance sheet deleveraging suggest that the short- to medium-term outlook is not conducive to the sort of reforms being promulgated. Moreover, a key component of the adjustment is supply-side reform; by its very nature this is about reducing the price of goods and services at any given level of supply. As such buying time for the fiscal adjustment to take place will be harder not easier. Right now the onus is on new governments setting out their plans, for which the ECB is signalling its pleasure. But the next round of the game will likely be between the populations and the fiscal authorities, with the skew being toward weaker growth and higher unemployment.   And most poigniantly from the perspective of a Euro that stands relatively strong versus many other global fiat currencies - yet whose core faces not just the highest aggregate credit risk of any block but turmoil so potentially binary in nature that - as the title suggests - the euro as we know it now is indeed already dead and simply, slowly morphing to something else: Without credible pre-commitment on the part of either the ECB or the fiscal authorities, the game framework indicates either a loss of independence for the ECB under substantial political pressure to shift unilaterally to the dove camp or EFSF/IMF assistance and the pooling of fiscal risks against the backdrop of a political agenda for a new euro area. Perhaps given our earlier discussion of the EFSF's need to buy its bonds and the proximity of an election cycle (given the implicit US-Bailout that an IMF save would mean), we are more likely to see the ECB fold'em...though this week's schizophrenic EURUSD price action is impossible to know what is being priced in.

Michael Pento - How CB Bazookas Will Impact Gold & Economy Posted: 12 Nov 2011 04:35 PM PST With gold and silver consolidating recent gains, today King World News interviewed Michael Pento, of Pento Portfolio Strategies. When asked what the central planners are up to and how it will impact gold and the markets going forward, Pento responded, "The reason for the latest round of optimism on the part of the MSM was based upon the supposed resolution—once again—of all of Europe's problems.  What was the ultimate solution you ask?  It was the speculation that an epiphany had been reached on the part of the European Central Bank that they would arm themselves with a bazooka to purchase all of the PIIGS distressed sovereign debt." This posting includes an audio/video/photo media file: Download Now

U.S. likely holds German gold hostage, Rickards tells King World News Posted: 12 Nov 2011 03:27 PM PST 11:24p ET Saturday, November 12, 2011 Dear Friend of GATA and Gold: Full audio has been posted of geopolitical analyst James G. Rickards' latest interview with King World News, and it has him asserting that most of Germany's gold reserves is likely being held hostage by the United States, along with much of the rest of Western Europe's gold reserves. You can listen to the interview at King World News here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/11/12_... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Prophecy Platinum Drills 120.9 Meters Grading 1.26 g/t PGM+Au at Yukon Wellgreen Project Company Press Release Monday, September 26, 2011 VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) has announced the drill results received from its 2011 drilling Wellgreen platinum group elements, nickel, and copper project in the Yukon Territory. Borehole WS11-188 encountered 457 meters of mineralization grading 0.47% nickel equivalent (including 0.72 grams per ton platinum, paladium, and gold) from surface to the footwall contact. Within this larger swath of mineralization, the hole encountered a high-grade section of 17.8 meters of 3.14 grams per ton platinum, palladium, and gold, 1.03% nickel, and 0.74% copper (1.77% nickel equivalent). The hole was drilled completely outside of current resource boundaries, between the East Zone resource and the West Zone resource that was reported in the company's press release no July 14, 2011. The high-grade intercept located between the two resources not only demonstrates that the East and West Zone resource form a single, geologically contiguous body but also indicates that the higher-grade material in the East Zone continues to the west and at depth at Wellgreen. For drill result tables and maps, please see the company's full press release here: http://www.prophecyplat.com/news_2011_sep26_prophecy_platinum_wellgreen_... Join GATA here: Vancouver Resource Investment Conference Sunday-Monday, January 22-23, 2012 Vancouver Convention Centre West Vancouver, British Columbia, Canada http://cambridgehouse.com/conference-details/vancouver-resource-investme... California Investment Conference Saturday-Sunday, February 11-12, 2012 Hyatt Grand Champions Resort Indian Wells, California, USA http://cambridgehouse.com/conference-details/california-investment-confe... Support GATA by purchasing gold and silver commemorative coins: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf

Silver vs Nasdaq: A response to Mr Erik Swarts Posted: 12 Nov 2011 01:52 PM PST I recently read an article by Mr Erik Swarts, which I found very interesting. I enjoy reading his articles, since he often identifies fractals on financial charts, in order to forecast, what may or may not happen. This is exactly what I ... Read More...

Silver Update: “Something Fishy” November 12th, 2011 Posted: 12 Nov 2011 09:17 AM PST from BrotherJohnF:

Only Posession is Real Protection Posted: 12 Nov 2011 07:28 AM PST by Chris Horlacher, Mapleleafmetals.ca: With the recent introduction of the Royal Canadian Mint's ETR program, I thought now might be a good time to really explain why I'm in the business that I'm in and why I think that taking physical possession of your precious metals is the safest, most cost effective way of investing in precious metals. This November 28th a new offering of a gold investment vehicle by the Royal Canadian Mint will close. This program, known as an Exchange Traded Receipt ("ETR"), is another in a long line of paper-gold investments that are now trading on securities exchanges worldwide. It, like all of the other programs, comes with a slew of fees, risks and other items that investors need to be aware of because they can have a serious impact on their financial security especially during these volatile times. Fees The number one question investors should ask when participating in ETR's, or any other kind of proxy gold investment, is "What are the costs?" The Mint's program has a number of them that make ETR's unattractive. The first is the 3% agent's fee. What this means is that for every $100 invested in to the ETR's, $97 is used to purchase gold and $3 is handed over to the banks and brokerages as their commission for making a successful sale. The second is the storage fee, which equates to 35 basis points, or 0.35%, per annum. Read More @ Mapleleafmetals.ca

The Gold Cartel End Game – ‘Ranting Andy' Hoffman Interview Posted: 12 Nov 2011 07:15 AM PST

The G20 and Financial Globalization Posted: 12 Nov 2011 06:00 AM PST from GlobalResearchTV: Last week's G20 Summit in Cannes, France is already being written off as a bust by the international financiers who were hoping to bolster the fledgling European Financial Stability Fund with international support and to implement a new global financial services tax which they claim will be the long-term solution to the ongoing global economic meltdown.

Gold down — no, wait a minute — gold up on Italy debt problem. . . Posted: 12 Nov 2011 05:45 AM PST Here was the headline for Reuters gold report on Thursday, November 10, 2011: Gold edges down as Italy worries ease Here was the headline for the Reuters gold report on Friday, November 11, 2011: Gold edges up as Italy fear eases MK comment: If market reports on the financial pages these days seem a bit schizophrenic, it is because they are. How could the same circumstance produce one result on Thursday and the complete opposite on Friday? Perhaps we should be charitable about Reuters confusion though. I, for one, go back and forth in my own mind whether or not gold is following the euro or struck out on its own. Over the past week, gold seems to have reacted to the upside both when things were going well in the European Union and when they were going badly. It looks like there is a group of buyers out there who buy gold when it looks like the euro is going to disintegrate and another that buys it when the euro looks strong. If so, we will sit back and let them battle it out. . . . . (Posted with a wink.)

Apparently Celente, a major gold proponent, did not own phyzz, but rather COMEX gold futures contracts (starts at 9:30 on vid.) Posted: 12 Nov 2011 05:33 AM PST Gerald Celente: My MF Global Gold Positions Have Been Confiscated by the CME

SILVER vs the World – Television & Fast Food Posted: 12 Nov 2011 05:09 AM PST Why do we stage fights between Silver and everyday items? Well… because we like to break stuff and share with the world in a lighthearted way how silver has been and will continue to be an excellent store of wealth!

Argentines get itchy amid new foreign exchange controls Posted: 12 Nov 2011 04:50 AM PST Argentina Bank Dollar Deposits Fell $645 Million After Forex Controls Implemented By Taos Turner Dow Jones Newswires via The Wall Street Journal Saturday, November 12, 2011 http://online.wsj.com/article/BT-CO-20111112-701065.html BUENOS AIRES -- Argentines withdrew $645 million in U.S. dollar-denominated deposits from private-sector banks in the first week after the government made it harder for individuals and companies to buy dollars. The numbers, published by the Central Bank of Argentina late Friday, seem to confirm that the new currency controls have made Argentines nervous and led many to do what they typically do during times of crisis -- buy dollars or withdraw them from the banking system. Private sector banks had $14.833 billion in dollar deposits before the currency controls were imposed on Oct. 31, according to the central bank. Five days later that had declined by 4.3% to $14.188 billion. ... Dispatch continues below ... ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf In the same week, peso deposits rose 4.2%, according to the central bank. Government officials say the currency controls aim to curb money laundering. But most analysts say the real aim of the crack down on dollar purchases is to stem capital flight that has cut central bank reserves to $46.57 billion from $52 billion in early August. Economists say the currency controls themselves are now contributing to the drain on central bank reserves. That's because of the way the bank calculates its reserves, which includes a measure of how many dollars are deposited in the country's banking system. By making it harder to acquire dollars, the government has sparked fears that Argentina's currency, the peso, will lose value quickly, making it even more important to obtain dollars now. Many people have also become worried that in a worst-case scenario the government might freeze dollar deposits, making it impossible to withdraw them. Government officials say that's not going to happen. In fact, on Friday the monetary authority made it easier for banks to give out dollars. But Argentines have seen it happen before in previous crises and many of them simply don't trust the government -- or banks. * * * Join GATA here: Vancouver Resource Investment Conference Sunday-Monday, January 22-23, 2012 Vancouver Convention Centre West Vancouver, British Columbia, Canada http://cambridgehouse.com/conference-details/vancouver-resource-investme... California Investment Conference Saturday-Sunday, February 11-12, 2012 Hyatt Grand Champions Resort Indian Wells, California, USA http://cambridgehouse.com/conference-details/california-investment-confe... Support GATA by purchasing gold and silver commemorative coins: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Prophecy Platinum Drills 120.9 Meters Grading 1.26 g/t PGM+Au at Yukon Wellgreen Project Company Press Release Monday, September 26, 2011 VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) has announced the drill results received from its 2011 drilling Wellgreen platinum group elements, nickel, and copper project in the Yukon Territory. Borehole WS11-188 encountered 457 meters of mineralization grading 0.47% nickel equivalent (including 0.72 grams per ton platinum, paladium, and gold) from surface to the footwall contact. Within this larger swath of mineralization, the hole encountered a high-grade section of 17.8 meters of 3.14 grams per ton platinum, palladium, and gold, 1.03% nickel, and 0.74% copper (1.77% nickel equivalent). The hole was drilled completely outside of current resource boundaries, between the East Zone resource and the West Zone resource that was reported in the company's press release no July 14, 2011. The high-grade intercept located between the two resources not only demonstrates that the East and West Zone resource form a single, geologically contiguous body but also indicates that the higher-grade material in the East Zone continues to the west and at depth at Wellgreen. For drill result tables and maps, please see the company's full press release here: http://www.prophecyplat.com/news_2011_sep26_prophecy_platinum_wellgreen_...

Gold and Silver Miners Lead Market Rebound Posted: 12 Nov 2011 04:43 AM PST Bullets are flying in what has become the new warfare. In the old days wars were fought with Pearl Harbor surprises and outright takeovers of territorial assets. Previously the capital markets have been content to don jackboots and military strikes to control economic developments. With the advent of the nuclear deterrent now being possessed by an increasing number of nations, contemporary wars are morphing away from bullets and bombs.

Jeff Nielson (SGTreport EXCLUSIVE): MF Global, Fraud, Debased Currencies & Precious Metals Posted: 12 Nov 2011 04:40 AM PST Here's my latest interview with Jeff Nielson from Bullion Bulls Canada: Jeff Nielson and I talk shop. The state of affairs in this country has never been more perilous, and as we've seen with MF Global, any paper-based investments you have in this criminal system are at risk.

Alasdair Macleod: An Austrian economic view Posted: 12 Nov 2011 04:38 AM PST 12:32p ET Saturday, November 12, 2011 Dear Friend of GATA and Gold: With his essay "An Austrian Economic View" posted today at GoldMoney, the economist and former banker Alasdair Macleod, who spoke at GATA's Gold Rush 2011 conference in London in August, today challenges the Keynesian and monetarist market manipulators as powerfully and yet as succinctly as ever could be done. Macleod writes that if the market manipulators ever open their minds to an alternative, "The first thing they will learn is that the economic benefits of credit expansion are a myth. All it does, by a process of capital redistribution -- from savers to those who are first in line to receive the new money -- is distort the economy and restrict its long-term potential. By lowering interest rates and diverting private-sector resources from genuine production to government spending, the economy becomes less efficient and malinvestments occur. The mistake has been to consider only the visible benefits, such as short-term job creation, while ignoring the destructive effects of deficit financing." Macleod's essay has been posted at GoldMoney here: http://www.goldmoney.com/gold-research/alasdair-macleod/an-austrian-econ... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT For Continuous Wealth Creation, the Hera Research Newsletter The life cycles of companies that produce natural resources allow investors to allocate assets among companies at different stages of development and to profit from transitions between stages. Based on natural resource company life cycles, the Hera Research Newsletter maximizes profits through deep, fundamental analysis at each stage of development and by moving gains back to earlier-stage companies in a continuous wealth-creation process. Hera Research covers a pipeline of high-quality natural resource companies at different stages of development. The companies span discovery and production of gold, silver, and platinum group metals, select base metals, oil and gas, green energy, agriculture, rare earth elements, uranium, and more. Discover the unique value of the Hera Research Newsletter by visiting: http://www.heraresearch.com/newsletter.html Or call Ron Hera at 360-339-8541x101. Join GATA here: Vancouver Resource Investment Conference Sunday-Monday, January 22-23, 2012 Vancouver Convention Centre West Vancouver, British Columbia, Canada http://cambridgehouse.com/conference-details/vancouver-resource-investme... California Investment Conference Saturday-Sunday, February 11-12, 2012 Hyatt Grand Champions Resort Indian Wells, California, USA http://cambridgehouse.com/conference-details/california-investment-confe... Support GATA by purchasing gold and silver commemorative coins: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT 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...

Gold Has Resumed Its Glitter! Posted: 12 Nov 2011 04:38 AM PST Gold has been almost as volatile as the stock market since August. After becoming overheated in July and early August, it plunged $340 an ounce to its low of $1,592 in late September. In one brief period in September it collapsed $214 an ounce in just four days.

Gold Investor Opportunities Time Posted: 12 Nov 2011 04:30 AM PST “The EFSF is not an adequate safety net to prevent Italian Contagion. Italy may be past the point of no return.”   Barclays, 11/8/11 Chinese Gold Mine Output has finally flattened, with growth estimates for 2012 at only 2.7%.

Gold Bull Market Seasonal Trend Analysis Posted: 12 Nov 2011 04:21 AM PST Gold has just entered its strongest time of the year, embarking on a major seasonal rally.  Naturally this is very bullish for not only this metal, but the companies that wrest it from the bowels of the Earth.  Gold’s well-established seasonality is important for speculators and investors to understand, as it offers many great insights to help fine-tune the timing of precious-metals-related trades.

Turd Ferguson didn't need GATA to see gold and silver market manipulation Posted: 12 Nov 2011 04:12 AM PST 12:21p ET Saturday, November 12, 2011 Dear Friend of GATA and Gold (and Silver): Chris Martenson this week did a wonderful interview with metals market analyst Turd Ferguson, who explained that while he is aware of and respects GATA's work, he concluded from his own trading experience that the precious metals markets are manipulated by bullion banks at the instigation of the U.S. government to protect the dollar's standing as the world reserve currency. Ferguson tells Martenson: "I haven't really ever met Bill Murphy of GATA. We talked once on one of my podcasts. And I've not really read a lot of his work, or Chris Powell's work. It's not like I read that stuff and a light went off, and I said, 'Aha, yeah, these guys.' I respect what they do, but it's not like I'm just simply parroting what they've said. I've come to all these conclusions myself just in years of following gold and silver. What my experience has been just jibes what their experience is and their data show. And so to me it's a quite clear case of what takes place." ... Dispatch continues below ... ADVERTISEMENT Golden Phoenix Completes Operating Agreement for Santa Rosa Gold Mine in Panama Golden Phoenix Minerals Inc. (GPXM) has entered a joint venture operating agreement with Silver Global S.A., a Panamanian corporation, governing the operational and management aspects of their new joint venture company, Golden Phoenix Panama S.A., a Panamanian corporation formed to hold and operate the Santa Rosa gold mine in Canazas, Panama, and explore the mine's adjacent property. Golden Phoenix will be manager of the joint venture company. Silver Global will handle all social programs, political and community relations, and human resource matters for the joint venture company in Panama. Golden Phoenix and Silver Global also have agreed to work together on all future acquisitions within Panama and to bring such new opportunities to the joint venture company. Golden Phoenix will be earning in to a 60 percent interest (and potentially an 80 percent interest) in the Santa Rosa mine. Upon signing the joint venture agreement and completing the corresponding acquisition payment, Golden Phoenix will earn an initial 15 percent interest in the joint venture company. Tom Klein, CEO of Golden Phoenix, says the agreement "creates a solid foundation for the development and planned re-opening of Mina Santa Rosa." For Golden Phoenix's full statement on the joint venture operating agreement, please visit: http://goldenphoenix.us/press-release/golden-phoenix-completes-joint-ven... Ferguson brilliantly refutes observations that gold and silver market manipulation must be failing because prices have been rising for years. As GATA itself often notes, Ferguson says the manipulation has been very successful in keeping the rise "in check." The manipulation, he says, is "probably part of the reason why it has been such a consistent trend higher -- every year almost. It's not like it's 50 percent or 25 percent and it's 50 percent one year and zero the next. It's just pretty consistently 20 or 25 percent a year. And it's because of that presence of what we call the cartel, the bullion bank cartel, or, on my Internet site, we refer to them as the 'evil empire.' It is their suppressive tactics that keep the price in check. We can hope that one day they will exit the market and leave gold and silver free to trade and find a true valuation, but unfortunately that isn't coming any time soon." Ferguson goes on to explain to Martenson how he aims to trade the manipulation of the precious metals markets. A summary and audio recording of the interview can be found at Martenson's Internet site here: http://www.chrismartenson.com/blog/turd-ferguson/64761 The full transscript of the interview is posted at Martenson's Internet site here: http://www.chrismartenson.com/page/transcript-turd-ferguson-inexorable-m... Ferguson's own Internet site, the TF Metals Report, is here: http://www.tfmetalsreport.com/ CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * Join GATA here: Vancouver Resource Investment Conference Sunday-Monday, January 22-23, 2012 Vancouver Convention Centre West Vancouver, British Columbia, Canada http://cambridgehouse.com/conference-details/vancouver-resource-investme... California Investment Conference Saturday-Sunday, February 11-12, 2012 Hyatt Grand Champions Resort Indian Wells, California, USA http://cambridgehouse.com/conference-details/california-investment-confe... Support GATA by purchasing gold and silver commemorative coins: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT For Continuous Wealth Creation, the Hera Research Newsletter The life cycles of companies that produce natural resources allow investors to allocate assets among companies at different stages of development and to profit from transitions between stages. 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[OTE131] On the Edge with Charles Hugh Smith Posted: 12 Nov 2011 03:58 AM PST We interview Charles Hugh Smith about the global economic meltdown!

This Past Week in Gold Posted: 12 Nov 2011 03:21 AM PST Summary: Long term - on major buy signal. Short term - on buy signals. We had new set ups this week but we are fully invested in other ETFs. Read More...

Weekly Bull/Bear Recap: Veteran's Day Edition Posted: 12 Nov 2011 02:59 AM PST Submitted by Rodrigo Serrano of Rational Capitalist Speculator Weekly Bull/Bear REcap: Veteran's Day Edition 2011 Bull + The Greek saga ends with the inauguration of a new coalition government; positioned to swiftly ratify the EU bailout package.  Italy's Senate approves economic reforms needed to bring back confidence into markets.  Berlusconi will be out and Monti in.  The bears never thought it could happen.  Officials came through in the clutch.  They will not let the Euro fail.  Italian yields collapse to 6.4-6.5% and well away from the danger zone of 7%.  Slowly but surely the largest headwind for the global economy is weakening on the back of strong and decisive policy actions.  With the Eurozone contagion contained, "we'll have a slowdown in the world economy, but a manageable one."    + Chinese inflation is in a lucid downtrend and sets the stage for additional easing from officials.   The Year over Year (YoY) change in CPI for October prints inline with expectations at +5.5% vs. +6.1% in September and +6.2% in August.  The good news is reinforced by the PPI reading, sinking to +5.0% YoY vs. +5.7% expected.  The soft-landing is materializing before our eyes.  There are absolutely no signs of a hard-landing.  While domestic investment growth may slow, consumption is charging to take its place.  The bears are in for a shock and the bull market will reignite, running shorts over.  Chanos will have egg on his face.   + October shows clear improvement in manufacturing as per the American Association of Railroads.  UPS CEO Kurt Kuehn states that he believes the holiday shopping season "will be solid".  University of Michigan reports that consumer sentiment has recovered to highs last seen in June with a reading of 64.2 in November, vs. 60.9 in October and 61.5 expected.  Momentum in consumer spending has led to increased demand to restock inventories.  Jobless Claims fall under 400K and to the lowest in 7 months.  Finally, exports hit an all-time high in September.  Obama's pledge to double exports by 2015 is proving prophetic.  The U.S. economy is resistent to recession in Europe. + The time to buy for the longer-term is now, due to fundamental, valuation, technical, and sentiment factors. Problems around the world are obviously recognized and have been priced in.  Furthermore, leaders will do everything to avoid an outcome that would put the global recovery at risk.  Besides, events in Europe really don't affect earnings or cash flow growth of domestic companies.  The market is trading on sentiment/psychology, not fundamentals.  The U.S. economy has proven that it's resistent to a Eurozone slowdown.  A Santa Claus rally is coming as Europe headwinds weaken. + "On a four quarter trailing basis, earnings for the S&P 500 are set to total $94.77 (Operating Earnings), which would eclipse the old record of $91.47 set in Q2 2007."  Folks, the S&P 500 is now trading at only 11.6 times next years earnings of $108.01 and at 13.7 times trailing twelve month earnings.  Should normalcy in PE ratios return (15), the S&P 500 would rally roughly 14 and 30% respectively from 1,250.  For the bears, does the graphic below look like a V-shape recovery to you?  With a Eurozone resolution slowly but surely coming and a China soft landing, 2012 will be another record year for U.S. corporate profits.  The time to buy is now as this realization begins to hit in early 2012.      Bear - Political risk continues to grow.  Eurozone governments are becoming sclerotic and ineffable sell-offs in financial markets are boarding on panic.  This time German citizens are asking for a referendum.  Merkozy lays the first hints of a restructured Eurozone (ie the Euro in its current form would be finished) —only to fervidly deny it less than 48 hrs later (what is this high school?).  Slovakia openly ponders a Eurozone split as well.  Italy's 10-yr yield surpasses the 7% level, while the entire Italian bond yield curve inverts.  100% of the time a country's 10-yr yield has surpassed this level, they've requested a bailout.  But Italy is too big to save.  The ECB would need to print with reckless abandon.  However, Germany has said no to the idea (can you blame them after Weimar?).  Besides, inflation is already running hot in the country.  The first EFSF bond-issue receives tepid demand and officials now warn that the EFSF will probably be reduced in size (no longer €1 Trillion in firepower).  An odd sequence of events culminates with S&P maintaining France's AAA rating with a stable outlook; the market gainsays that distinction with OAT/Bund spreads hitting Euro-era highs.  Let's not forget the Bonos/Bunds spread; it just hit an Euro-era high as well. - European economic data disappoints and signals that the region is plunging into recession.  German industrial production falls 2.7%, while Eurozone retail sales fall 0.7%.  Both indicators post their 2nd consecutive decline.  France is entering recession, yet officials are implementing austerity.  Good luck with that.  Italian industrial production falls in September; a "national unity" government, which has the bulls all giddy, is about to make it worse.  Spain's feeble recovery stalls.  Bulls are hoping (there's that word again) for a mild recession in the region.  Really?.         -  U.S economic data refutes bullish hopium…again.  Corelogic reports a second consecutive decline in home prices and they expect the trend to continue.  Delinquencies and foreclosures are back on the rise.  Fannie Mae requests aaaaaaaanother bailout, this time $7.8 billion (a few days after Freddy Mac requested its pound of taxpayer flesh).  1/3 of all mortgaged homes are underwater.  The NFIB Small Business Optimism index remains in recessionary territory, coming in at 90.2 for the month of October vs. 88.9 the prior month.  To put this reading in perspective, the average recessionary reading is 92, while the average expansion reading is 100.  The ECRI sticks to its guns.  Recession is a "fait accompli" according to them. - Chinese data confirms a "synchronized global slowdown" taking place with exports plunging 7.1% MoM.  The YoY growth rate falls to 15.9% YoY in October vs. 17.1% YoY in September, the lowest in almost 2 years.  Weakness will continue.  Lets not forget that exports account for roughly 30% of their economic structure.  Auto sales for October implode 7+% and shows that the consumer is weakening.  Consumption makes up roughly 35% of China's economy.  Furthermore, a property bubble is in the process of popping and will precipitate a collapse in fixed-investment, which accounts for roughly 50% (source IMF) of Chinese economic growth.  If the U.S. and Europe go into recession (Europe's already in one), China will undergo a hard-landing, plain and simple.       - The QE printing train continues in earnest with Swiss National Bank's chief Phillip Hildenbrand reaffirming his commitment to defend the 1.20 level.  Remember how the UK did its own QE?  Well, it's not working.  The bulls are in for a rude awaking when Bernanke unleashes QE3 only to have the U.S. economy go into recession anyways. - The Wall of Worry has crumbled and has given away to a Slope of Hope.  Investors are enthusiastically awaiting the famed Santa rally.  The margin of error for Eurozone officials is very thin.  There better not be any "unexpected" bad news in the coming weeks.

Germany Probably Can't Get Its Gold Back From The U.S. - Jim Rickards Posted: 12 Nov 2011 01:53 AM PST ¤ Yesterday in Gold and Silver The gold price dipped about ten bucks during the first hour of trading on Thursday night in the New York Access Market, but from there rallied a bit until shortly before 10:00 a.m. Hong Kong time. Then the price more or less did nothing from that point until the London a.m. fix was in around 10:30 a.m. GMT. From there, the gold price developed a positive bias...which got hit for another ten bucks shortly after Comex trading began in New York. But once that tiny sell-off was out of the way, a more serious rally began which ended around 1:00 p.m. Eastern time, as what few traders were left, headed for the Hamptons to get an early start on the weekend. From that point, the gold price barely moved into the close of electronic trading at 5:15 p.m. Eastern time. The price closed at $1,788.50 spot...up a respectable $30.50 on the day. Not surprisingly, net volume was very light...around 87,000 contracts. Silver spent most of Far East and...

The Best of the Week Posted: 12 Nov 2011 01:10 AM PST Author:  Vedran Vuk Synopsis:  Welcome to the weekend edition of Casey Daily Dispatch, a compilation of our favorite stories from the week for the time-stressed readers. Dear Reader, Welcome to the weekend edition of Casey Daily Dispatch, a compilation of our favorite stories from the week for the time-stressed readers. Of course, if you want to read all of the Daily Dispatches from the week, you may do so in the archives at CaseyResearch.com. Like Attracts Like By Vedran Vuk I'm back from a trip to New Orleans to attend a Mises Institute event. It was a great time, and I was happy to meet several readers there. This was one of my first extended trips back to the city since graduating from Loyola University, and the experience led me to reflect on many subjects – one of them being the importance of people in companies and organizations. Often when I mention my college degree from a New Orleans university, someone will say, "Wow, attending college in New Orleans must have been a crazy time." I can't say that it wasn't, but the city isn't to blame. Sure, there are bars everywhere – and the French Quarter and Bourbon Street are a special class of temptation – but that's not what makes the college "party central." Rather, it is the people – a large part of the student body attends Loyola simply due to its location. They're attracted by the party lifestyle and the reputation of New Orleans. You could have thrown the same group into the middle of Kansas, and it would still go wild and get in trouble. The same sort of thing keeps the entire city going. New Orleans is not a destination for career ambitions – unless those ambitions are of the culinary sort. Decent college-degree jobs were practically nonexistent even prior to the recession. The city has always attracted miscreants and outcasts, from the South as well as the whole country. The previous residents of the city attracted others like them… and the process keeps repeating itself. As a result, New Orleans remains "the Big Easy," where the music never stops and neither does the party. Beyond cities, the same thing happens in organizations. In one of my previous jobs, I noticed right from the start that things weren't going to work out for me. To make a long story short, my superiors were basically clueless on economics. Their backgrounds were more focused toward communications and political science. Despite their lack of an economics background, they were responsible for assigning various research projects on the subject. One assignment best illustrates the problem: I was told to use a particular model from an academic journal to prove one of our talking points. After struggling with this model all night, I finally realized that it was incorrect. It had been published in an academic journal and was authored by two economics professors; it had been peer reviewed by other academics… yet somehow, there was still a mistake in it. I was pretty happy with myself for finding the mistake. It was definitely a notch on my belt. So, the next day, I presented the results to the boss. He thought I was wrong and in fact was angry that I didn't make the model work. He wasn't even interested in my explanation. The company culture didn't value any sort of intellectual effort; understanding a model was considered a waste of time. As a last resort, I sent my work to one of our contractors, a Ph.D. economist. About a month later, he wrote to my boss explaining that I was in fact correct and that my findings were amazing. And what was my superior's reaction? Rather than being happy to have an employee able to correct Ph.D.-level economists, he was angry and pissed off at being proven wrong. Needless to say, I quickly began searching for a new job. It became apparent why the company was so quirky. Actual skills or knowledge were not valued at all. The folks at the top came from lobbying backgrounds and hustled their ways to their positions. They weren't the best nor brightest on practically everything – but they knew their way around D.C. politics. Not surprisingly, with this lobbying mentality, the entire company had a culture of backstabbing, blaming others, and the most complex office politics that I've ever witnessed to date. It was no wonder that the average employee lasted less than a year at that company. The ones who remained longer were the most cutthroat of them all. The management's culture defined the working environment throughout the firm and removed anyone who didn't fit the mold. In Doug Casey's eight Ps of resource investing, he lists people as a key component. Often, we think of this element as some genius leading the company; however, the CEO isn't the only person responsible for a company's success. Bill Gates and Steve Jobs aren't the sole reasons for Microsoft's and Apple's many accomplishments. There are other vitally important employees as well. However, the CEO does often set the culture for the rest of the company, as well as attract other important team members. In physics, we're told that opposites attract. In the corporate world, the opposite is true: likes attract. If the guy at the top is an extremely intelligent and competent person, the whole organization will attract others of the same type. If the head of the company is full of it, the rest of the team will be too. One of the best examples of this is Jack Welch of GE. Sure, he's known for his success, but consider that 39 former GE executives became CEOs of other Fortune 500 companies. Great talent attracts yet more great talent. It's not just the CEO who's important; it's his ability to attract other great employees to the company. A Battle for Oil Production Is Brewing By the Casey Research Energy Team High oil prices have put record earnings into the coffers of the world's big oil companies, but those splashy headlines are masking an industry-wide decline in oil production. Exxon Mobil (N.XOM), Royal Dutch Shell (N.RDS-A), BP (N.BP), ConocoPhillips (N.COP),Chevron (N.CVX), and others reported surging third-quarter profits alongside production decreases – an unsustainable situation that is setting the stage for a battle to buy producing assets. Almost across the board, major oil companies are producing less oil now than they were a year ago. It's not due to a lack of exploration and development – these companies have all devoted billions of dollars to finding new oil deposits. The problem is that for the most part it will still take years – and many more dollars – before those investments start producing. In the meantime, big oil's output will keep declining unless majors start using some of their record profits to buy up producing assets from smaller companies. Oil wells produce less each year; Exxon's oil fields, for example, are declining by 5 to 7% each year, which means the company needs to add 200,000 to 300,000 barrels of production a day just to break even. This year, Exxon has not come close – its production levels are down 8% compared to a year ago. Some of the production decline stems from contractual limits on Exxon's production, but even without those limits production would have still been down more than 1%. Over the first nine months of the year, Exxon's production averaged 2.33 million barrels of oil per day, the company's lowest average since 2005. Things are even worse for other major oil companies. BP said oil production dropped 10.6% in the quarter, in terms of barrels of oil equivalent (BOE). Shell's BOE production fell almost 2% in the quarter. ConocoPhillips produced 6% fewer BOEs. There's an important note to add about BOEs. The BOE concept combines a company's oil, natural gas, and condensate output into a single production number, based on energy equivalence. It takes roughly 6,000 cubic feet (cf) of natural gas to release the same amount of energy that is in one barrel of oil, so companies book gas reserves as "barrels of oil equivalent" using a ratio of 6,000 cf:1 barrel. A problem arises when a company then values its reserve books using oil prices. One barrel of oil may have the same energy content as 6,000 cf of natural gas, but in North America the barrel of oil is worth something like US$86, while the 6,000 cf of gas is worth only about US$22. Adding lots of natural gas to the books is an easy way to make it appear that oil reserves are growing, but at a fraction of the typical cost. And there are lots of inexpensive shale gas deposits for sale. The Casey energy team hates being misled in this way, so we've created programs that calculate the real value of a company's reserve book; using our methods often gives some very different results when it comes to company valuations. We think this is one of the biggest frauds to hit the energy sector in decades, and we make sure to steer our subscribers away from companies that try to pass off gas reserves as equivalent to the black gold that is crude oil. Getting back to the story, oil output may be stalling but oil prices have remained high enough to more than cover the cracks. Exxon's profits jumped 41% in the third quarter to US$10.3 billion because the company sold oil in the US for an average of $95.58 a barrel, a 35% increase compared to Q3 2010. For the same reason, Shell doubled its earnings this Q3 compared to last, bringing in $7.3 billion. BP earned $4.9 billion in the quarter, a 175% year-over-year increase. Chevron pulled in $6.2 billion in the third quarter, 74% more than last year. ConocoPhillips exited Q3 with $3.5 billion in earnings, a 59% increase over 2010. The pattern is pretty clear: big oil companies are producing less but profiting more. With oil prices expected to remain range-bound for the medium term (assuming no major supply disruptions), these majors cannot rely on rising prices to keep their profits aloft in the future. They need to boost production instead, especially given that global oil demand is expected to increase by approximately 1.5% annually for the next five years. Since it takes years to bring new discoveries online, the short-term fix is to buy production. With big oil's bank accounts full to the brim with cash, the stage is set for some significant acquisition activity… or, to put it another way, for a battle to buy producing assets. There are quite a number of contestants in the battle – big oil companies are not only competing against each other to sweep up good assets but also against the national oil companies of developing, energy-hungry nations like China, South Korea, and India. Oil demands are rising in these nations so quickly that just to cover expected annual demand increases those three countries would have to jointly spend $30 billion on acquisitions each year. BHP Billiton's (N.BHP) move last quarter to buy Petrohawk Resources for $15 billion is exactly the kind of purchase we are talking about. So is Statoil ASA's (N.STO) recent $4.4-billion acquisition of Brigham Exploration. And the stars are aligning just perfectly for big oil: They are making record profits; oil prices are expected to remain strong; and the world's market turmoil has only pushed their share prices down by some 20% over the last six months. Small to mid-sized oil companies, on the other hand, have fared much worse, losing an average of 35% to the economic uncertainty. The Statoil-Brigham deal is a perfect example: Statoil offered a 34% premium over Brigham's 30-day average trading price, yet the offer was still almost 4% below Brigham's 52-week high. With that kind of discount available, the time for majors to start bidding on small and mid-sized producers is ripe. The Casey Research energy team is analyzing all of these small and mid-sized producers to determine the most likely takeover candidates. We will publish our results in a special edition of our flagship publication, Casey Energy Report. [Make no mistake, the end of easy oil is looming ever closer. But savvy investors can profit handsomely from this turn of the tide… learn how you can be among them.] 'Tis the Season for Gold? By Jeff Clark, BIG GOLD Most gold followers know the metal has a seasonal tendency to perform better in the fall and winter than in the spring and summer. Indeed, since 2001, the annual high for the gold price has occurred after Labor Day every year except two (2006 and 2008). Further, that peak was hit in November or December in seven of the last ten years. So, are we destined for new highs in the gold price between now and New Year's Eve? And what about gold stocks? Perhaps one way to answer the first question is to determine if gold has been following its seasonal price trends so far this year. If it has, we might have a reasonable expectation of higher prices ahead. Let's take a look… The following chart shows the average monthly performance of the gold price from 2000 to present, along with its returns so far this year. (Click on image to enlarge) As you can see, this year's gold price has followed the typical seasonal pattern in every month but three. This is actually a strong correlation, because seasonal patterns are adhered to only about two-thirds of the time. (The performance appears more volatile than normal, but it's not; the averages are a composite of eleven years' worth of data.) You'll also notice that gold has had only three losing months this year. If this trend were to continue, it suggests that gold's 2011 high may yet be ahead, meaning the September 5 price of $1,895 (London PM Fix) would be eclipsed. Here's the picture for gold stocks (as measured by the AMEX Gold Bugs Index). (Click on image to enlarge) As a group, gold stocks have performed in the opposite direction of the seasonal pattern in six of ten months so far this year. This might speak to some of the frustration we gold stock investors have had, particularly after they bucked the trend in May and August with big sell-offs. This doesn't mean, of course, that gold stocks won't rise over the next two months. In fact, the average cumulative gain of gold stocks during this 60-day period is 11.8%. You'll also see that November is typically the second strongest month of the year. Perhaps another way to determine if a new high for gold is just ahead is to look at its average return from the summer low to the fall high. (We detailed this measurement previously.) To summarize, since the bull market began in 2001, the average gain in the gold price from the summer low (June, July, or August) to the autumn high (September through December) is 20.7%. Our summer low this year was $1,483 on July 1, so $1,790 would match the average… a price we've already exceeded. Of course, this ignores the effect of another country in Europe blowing, up or the Fed instituting another QE program, or Israel attacking Iran, or… The largest autumn gain has been 33.5% (2009); if this year's climb mimicked it, the price would hit $1,979 before year-end. That's a 10.7% jump from $1,787, a relatively big climb in a short period of time, but I wouldn't dismiss it given the precarious state of the world's economies and finances. In the big picture, though, all this talk about where gold might go in the short term is just for fun. It's clear that sooner or later we'll be looking in the rear-view mirror at a $2,000 gold price. And even that level is well short of any inflation-adjusted price. The ocean barge of inflation hasn't hit our beach yet – but it's been spotted offshore. Buy gold and silver – along with their stocks – because higher prices are ahead, regardless of what they do in any given month. And because if you don't own enough gold, it is definitely your season. [Check out the newest issue of BIG GOLD, where we list Shopping Season Specials for our stock recommendations and reveal a discount on a gold coin that you won't find anywhere in the industry. Hurry because coin supplies are limited. Start your risk-free trial subscription today.] Gold Stocks Are Cheap – Dirt Cheap By Alena Mikhan and Andrey Dashkov Despite the pullback this fall, gold has been performing well this year. The price of the yellow metal is up 28% YTD, driven in large measure by strong demand in Asia and the dim economic outlook in the west. Gold miners are reporting good third-quarter bottom lines. In this ointment, however, there is a fly: gold stock performance, which has massively lagged the underlying commodity price surge over the year. This has been ongoing for months, now bringing us to the point where gold mining stocks look notably undervalued. Technically, we might say, they look dirt cheap. Even Doug Casey, who's a serious bottom feeder, is admitting that compared to the metal itself, gold stocks are looking cheap again. Consider these charts: (Click on image to enlarge) (Click on image to enlarge) The average price/earnings ratio in the industry – a valuation ratio of a company's current share price compared to its per-share earnings (quarterly figures are used here) – is going down while the price of gold is increasing. This situation has persisted for several quarters; and now gold stocks look cheap on a P/E basis. This big divergence between companies' earnings and the underlying commodity price won't last: Either gold will retreat or P/Es will catch up, or both. Since the fundamental trends driving gold upward are still very strong, the second scenario looks more probable, raising the prospect of a huge rally of mining stocks somewhere in the short- to mid-term. Comparing changes in the AMEX Gold Bugs Index against gold leads to a similar conclusion: in the second half of 2011, gold stocks have been lagging. See the chart below. (Click on image to enlarge) If they are on sale, why aren't we seeing a rush into these equities? One opinion on why gold stocks are not recognized by the general investing public as being cheap is concealed in the way stocks are estimated. Most analysts prefer to use an unrealistically conservative gold price, which is far below what we have been observing for quite a while now. From Pierre Lassonde, in a Mineweb article: "Most analysts are using their economist's projections for gold and for the last 10 years it's always been way under the reality. For example today the average is probably looking out five to 10 years as they're using $1,100 gold vis-à-vis a real gold price of $1,600 so what do you expect... they put out recommendations using $1,100 gold, so therefore the price that most of the stocks are trading at on a net asset value is around $1,100 to $1,200 gold and that is not going to change until, either the street uses todays' [sic] gold price, or even the contango." This is a fancy way of saying that a price-moving plurality of gold analysts and investors don't expect gold prices to stay this high, let alone go higher. In our view, these people are driving forward looking in the rear-view mirror, rather than understanding what's going on in the global economy and therefore what's likely to happen in the future. We see global economic uncertainty and currency crises sweeping the whole planet, providing investors – and even some central banks – with incentives to build positions in bullion. In their turn, gold stocks have a leverage effect on the underlying asset prices, courtesy of our friend volatility. This conflu

David Kotok | CDS, Market Turmoil, Asset Allocation Posted: 12 Nov 2011 12:27 AM PST Latest from David Kotok of Cumberland Advisors -- Chris CDS, Market Turmoil, Asset Allocation David Kotok David.Kotok@CUMBER.COM Let us consider this week's credit default swap (CDS) debacle in the following manner.  People purchased CDS with the understanding that they had a type of insurance policy against the default of a sovereign debtor.  Now they have learned that what they thought they had is something they do not have.  The European Greek debt deal and the International Swaps and Derivatives Association, www.isda.org (ISDA) have clarified that. What do they do?  They must realign their positions.  First, they have to face the reality that they were misinformed or misadvised.  They must accept that their position has changed.  Second, they must take action. The spike in yields on sovereign debt of Italy was attributable, only in part, to the Italian political turmoil we are witnessing.  The other aspect dealt with CDS on Italian debt.  Those holders thought they had one type of CDS protection.  They realized from the events in Greece that they had something else.  This is true of other sovereign CDS as well, and this change has roiled the markets.  Interest rates have risen as bond prices have fallen.  The cost of finance for Italy has gone up to levels that are deemed unsustainable.  This is what one would expect with CDS realignment. Does that mean the world is ending?  No.  In fact, there is a considerable possibility that the current stock market rally has the outlook correctly discounted, after this turmoil runs its course.  If you examine Italy's budgetary characteristics, you realize the country is headed for a primary surplus in 2013.  "Primary surplus means after you deduct interest payments." Will Italy be able to complete the plan?  Will they be able to implement it?  What is going to happen?  What about other exogenous shocks?  All these questions are fair and they are additive to the uncertainty premium.     Italy may have a difficult issue when it attempts to roll its present debt, and that debt roll of maturities is coming up very quickly.  However, with the help of the European Central Bank (ECB) Italy is likely to have some market access and be able to roll that debt on the heels of budgetary action   How will it roll?  What will the yields be?  These and more questions await answers.   Another crunch is coming up on for the debt roll of Greece.  That is why the referendum threat dates were December 4 and December 11: the second half of December is when Greece must roll billions of euro-denominated debt.  The authorities in Europe know they need sufficient structure in place so that this debt can roll without market access by Greece.  Greece has been shut out of market access.  The market believes it is an insolvent sovereign.  In addition, there are the continuing operational demands for cash by the Greek government.  This money will be provided with institutional lending, through one of the forms we presently see discussed.    Does this mix of European debt roll condemn the US to a recession?  We think not.   The United States is not in recession.  It is in a very slow-growth environment.  Uncertainties are very high and uncertainty premiums are large, but decisions about US portfolios are based upon whether you are betting on recession, or slow growth.    If it is slow growth, stocks are inexpensive and markets are headed higher.  That is the position of Cumberland Advisors.  If a double-dip recession is coming, then stocks are headed lower and you should not own them.    The course of action to take in global portfolios is a different matter.  In our global multi-asset class, we have taken our precious metal positions to 6% of the total deployment.  That is very, very high and it is a considerable overweight for us.  Precious metals are a tiny weight in global asset allocation under normal circumstances. We use several ETFs to reach that position, and they reflect an amalgamation of precious metal exposure.    We have this precious metal weight very high because, we are able to see a monetary policy transmission effect that reaches into precious metals.  That supports our view that precious metals are likely to be priced higher in US dollar terms in the future.  There is a considerable time lag between central bank actions and monetary effects and resultant higher precious metal prices; we measure that somewhere between nine and eighteen months.   We do not find the same relationship with commodities.  Commodities are driven by other extensive factors in addition to liquidity flows from the creation of credit.  Central bank balance sheet expansion has a weak link to commodities in this current environment, where central banks are attempting to provide as much liquidity as possible to avoid systemic meltdown.   When it comes to global stock markets, our international positions in Europe are far below the 24% weight that Europe holds in the benchmark index.  Our exposure is limited to Germany, France, the Netherlands, and a broader-based international ETF.  For Europe as a whole, we are very much underweight.  In our international models, that weight is 11%, with all of it in Northern Europe.    In our global multi-asset class, we have only 3% exposure to the Eurozone stock markets.  So clearly, we have a bias against Europe and in favor of other locations around the world, as well as other asset classes.  In our global multi-asset class, we have 6%, or twice the exposure, in precious metals than we do in the stock markets of the Eurozone.  That is a remarkable statement to make.  It reflects the high degree of uncertainty given the times we are experiencing.   David R. Kotok, Chairman and Chief Investment Officer

Latest article at GoldMoney Posted: 11 Nov 2011 08:32 PM PST This article is posted at Goldmoney, here.     An Austrian economic view 2011-NOV-12 In the last two weeks the headlines have switched from Greece to Italy. Financial and economic commentators who dismissed Greece as a small cog in the Euroland machine are now seriously alarmed and see no solution to Europe’s sovereign debt crisis other than the short-term expedient of getting the European Central Bank to print lots of money. They castigate Germany’s sound money approach, ignoring the fact that it has been central to Germany’s economic success, preferring to commend the loose-money economics of the unsuccessful “PIIGS” (Portugal, Ireland, Italy, Greece and Spain). And when listening to them, just remember that none of them foresaw this crisis, when it was obvious to Austrian economists in the early days of the banking crisis. Keynesian and monetarists believed that the problems surfacing in the PIIGS would be resolved by economic growth, which would follow so long as governments maintained their deficit spending. As events are now proving, this analysis was flawed, which is why Keynesians are now confused. They should open their minds and absorb Austrian economic theory to gain a proper understanding of human actions and how people are affected by money and credit. The first thing they will learn is that the economic benefits of credit expansion are a myth. All it does, by a process of capital redistribution – from savers to those who are first in line to receive the new money – is distort the economy and restrict its long-term potential. By lowering interest rates and diverting private sector resources from genuine production to government spending, the economy becomes less efficient and malinvestments occur. The mistake has been to only consider the visible benefits, such as short-term job creation, while ignoring the destructive effects of deficit financing. The distortions created by easy money and deficit spending will naturally try to reverse themselves as surely as night follows day. The recession that follows the temporary boom is the way an economy cures itself from unsound money and government intervention. This is hard for interventionist governments to accept because it strikes at the heart of their existence. And while printing money and credit is always popular with an electorate that does not understand what is happening to their money, reversing the process is readily noticed and immensely unpopular. This brings us back to Euroland’s problems. The creation of the euro twelve years ago allowed banks to expand credit massively in the mistaken belief that sovereign risk had been eliminated. The result was that spendthrift governments availed themselves of cheap credit. Eurozone governments, particularly the PIIGS but also France and Belgium, have squandered huge sums to prevent the unwinding of malinvestments and other economic distortions, preferring to perpetuate existing malinvestments. The only solution is for them to let the unwinding happen, which is what the financial markets (for which read reality) are now forcing them to do. What we are seeing, the markets unwinding economic distortions from the past, is a necessary process and therefore beneficial, a point which goes completely unrecognised. If only governments had the sense to understand this, it is not too late to plan wisely for regenerated economies and a sounder Europe. Unfortunately, the gut reaction of the political class and its advisors is to continue as before at all costs, deferring this necessary adjustment and increasing its eventual severity. There is no joy for the informed spectator in seeing continuing economic destruction. However harsh it may be in the short-term, the EU elite needs to start paying attention to Austrian School remedies to Europe’s financial woes – and fast. Tags: ECB, euro crisis, Germany, PIIGS, sovereign debt Author: Alasdair Macleod Alasdair Macleod macleod@financeandeconomics.org www.financeandeconomics.org

Adam Hamilton: Gold Bull Seasonals Posted: 11 Nov 2011 08:00 PM PST Gold has just entered its strongest time of the year, embarking on a major seasonal rally. Naturally this is very bullish for not only this metal...

New gold bugs are young and restless Posted: 11 Nov 2011 08:00 PM PST Gold is attracting many younger investors who have become disillusioned with stocks and other traditional options for their money.

Out Of The Ashes Of The Collapse Of The Eurozone Will A "United States Of ... Posted: 11 Nov 2011 08:00 PM PST The stage is being set for the coming financial crisis in Europe. All over the EU, media outlets are priming Europeans to expect the worst.

As The European Debt Woes Spiral Out Of Control Posted: 11 Nov 2011 07:00 PM PST A search for a european solution, candor at Cannes, Italy under pressure, european banks howling, debt spiraling out of control, collapse will push up metals.

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