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Monday, November 14, 2011

Gold World News Flash

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Gold World News Flash

Risk Leaking Off As EURUSD Loses Late Friday Lows And Spreads Decompress

Posted: 13 Nov 2011 07:31 PM PST

Some early excitement in credit markets with XOver and senior financials gapping tighter - trying to catch up to equities - has started to show signs of weakness as EURUSD just lost late Friday swing lows and sovereign spreads start to decompress. Broad risk markets are indicating more weakness for S&P futures as US TSYs are rallying. The shift in EUR has had its largest impact on Silver so far as dollar strength is a drag on commodities (though we note Brent priced in EUR is +1%) - though copper enjoyed the Asia session gaining over 2.5% from Friday's close. With the Italian bond auction later this morning it is no surprise that EFSF bonds are well off their tight spreads of the morning already and as EUR-USD swap spreads adjust, they are pointing to further deterioration in EURUSD from here. This modest pessimism is already reflected in the short-end underperformance across the European sovereign yield curves as flatteners appear popular once again.

CONTEXT, the broad risk asset basket model for S&P futures which can be tracked in real-time here, is starting to leak lower helped by 2s10s30s flattening and EURJPY compression. Given how much EUR and USD swap spreads have shifted, our model for EURUSD exchange rate is looking for further weakness also - and the decompression in sovereign yield spreads and financial and XOver credit spreads reveal a little less risk appetite than some would have hoped.

The swap-spread term structure model for EURUSD is notably weaker having converged nicely on Friday. It seems CAD is the weakest of the majors though since Friday's close as only JPY, SEK and marginally AUD manage modest gains against the USD.

Credit markets are already giving back considerable amounts of their gap tighter open

But most of the attention is rightly focused on sovereign debt and with 10Y Bunds managing a very modest 1bps compression in yield, only Portugal and Greece are achieving any notable compression - and in context these moves are tiny given their huge yield/spread differentials. Italian 10Y spreads are 6bps tighter but are clinging to the 450bps level - though we notice further flattening in the 2s10s curve (a notably bearish technical). Also adding to some of the technical (flow) in ITA bonds is the basis (the difference between CDS and bond spreads) which gapped notably higher on the open suggesting some hungry basis traders snapped up the 80bps differential - buying CDS protection and buying BTPs) - this is not sustainable risk appetite and we are already seeing the basis leak back from its best levels.

Some perspective on the last two weeks may help in not getting too excited about the moves in Italian bonds. Even though they are significantly off their intraday high yields and spreads, every sovereign is wider relative to Bunds for the month of November:

French 10Y has also managed a 4bps compression over Bunds but remains 15bps wider than last Tuesday's close - so hardly impressive - and EFSF 10Y bond spreads just shifted wider on the day (after being 1-2bps tighter early on). Spanish 10Y spreads are now 3bps wider on the day after being 3bps tighter early on - not helped by the rise in Spanish bank's ECB borrowings this month.

The short-end of the curve is definitely underperforming (the 2nd column in the table shows the performance of each sovereign against German Bunds for 2Y maturities) the back-end across most  European sovereigns - the flattener being the low-cost trade of choice for expressing pessimism at EFSF or ECB miracles.

Charts: Bloomberg and Capital Context

Where is Germany’s Gold? James Turk Told Everyone Ten Years ago!

Posted: 13 Nov 2011 06:39 PM PST

and... Central Banks' US Treasury Reserves Mark J. Lundeen [EMAIL="Mlundeen2@Comcast.net"]Mlundeen2@Comcast.net[/EMAIL] 11 November 2011 Everyone but me seemed to be happy about how the stock market ended the week. Well, I'm a bear, and bears are more realistic about things like the approaching end of the world as we now know it. How's that? I don't have data for European bonds, but it seems to me that in the grand scheme of things, Greece is small potatoes. So, how did these Grecian spuds become a fearsome Godzilla marching towards the heart of Europe? Insane leverage via derivative contracts. How does that work? Well, take you and your significant other; the two of you form a small economic unit. Since the loss of one of you would have a direct economic impact on the other, you take out term life insurance policies on each other's lives. The life insurance company agrees to insure each of you for $500K, as you have an insurable risk on each other. B...


The Many Factors Fueling a Return to $100 Oil

Posted: 13 Nov 2011 06:32 PM PST

By Frank Holmes CEO and Chief Investment Officer U.S. Global Investors Oil prices rose about 5 percent this week to finish only a dollar short of regaining triple-digit status. Since dipping below $80 per barrel on October 3, West Texas Intermediate (WTI) prices have increased almost 28 percent. This increase is nearly twice that of the S&P 500 Index, up 15 percent since October 3, but reinforces a recent trend for oil prices—as equities go, so goes oil. This chart put together by the U.S. Energy Information Administration (EIA), illustrates how WTI crude oil prices and equities have moved nearly in tandem over the past few months. The EIA says “the recent strong relationship between oil and equity prices resembles that seen during the economic downturn and recovery in 2008-2010.” A...


The Gold Investor's Biggest Risk

Posted: 13 Nov 2011 06:30 PM PST

By Jeff Clark of Casey Research, editor, BIG GOLD Saturday, November 12, 2011 While I'm convinced that our gold and silver investments will pay off, they don't come without risk. What do you suppose is the biggest risk we face? Another 2008-style selloff? Gold stocks never breaking out of their funk? Maybe a depression that slams our standard of living? Though those things are possible, I don't see that as your greatest threat. Master speculator Doug Casey summed it up well: [FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=2]Your biggest risk is not that gold or silver may fall in price. Nor is it that gold stocks could take longer to catch fire than we think. Not even the prospect of the Greater Depression. No, your biggest risk is political. As bankrupt governments get increasingly desperate for revenue, any monetary asset held domestically could be a target. It is absolutely essential that every investor diversify themselves politically. ...


International Forecaster November 2011 (#4) - Gold, Silver, Economy + More

Posted: 13 Nov 2011 06:15 PM PST

As Chancellor Merkel and PM Sarkozy search for a solution that doesn't exist they continue to lose credibility. Nothing of substance has been agreed upon that is legal and can be implemented. At the IMF Christina LeGarde is frantically waving her arms like a cheerleader telling anyone that will listen that if the six sovereigns in financial trouble are not aided the euro will fail and peace in Europe will disappear. The elitists are frantic because they cannot find a solution. LeGarde says without help there will be ten years of depression. She obviously hasn't done her homework. Try 30 or more years.


Former German chancellor silent on Fed memo linking him to gold suppression

Posted: 13 Nov 2011 06:10 PM PST

Politicians talk, philosophers are silent. As for gold, Mr. Schmidt seems to be among the philosophers. On the other hand you can take this little story as evidence that we "conspiracy theorists" at least try to be more thorough than some people may want us to be.


Silver vs Nasdaq: A response to Mr Erik Swarts

Posted: 13 Nov 2011 06:08 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 specialize in.


Physical gold to trump ETFs by 500% in 2011 hears Dubai conference

Posted: 13 Nov 2011 06:07 PM PST

Physical gold will outsell ETFs by 500 per cent this year, Standard Bank's Walter de Wet told the 8th Dubai City of Gold Conference today. Two years ago the position was completely reversed with physical gold sales running at only 20 per cent of ETFs.


How to Trade Oil ETFs when $100p/b is Reached

Posted: 13 Nov 2011 05:11 PM PST

Crude oil was THE commodity to trade back in 2007-2008 when prices rocketed above $145 per barrel then dropped like a rock all the way back down to $35 per barrel leaving many investors and traders either greatly rewarded or dead broke. Since then the focus of the world has moved to gold and silver as currencies spiral out of control with more and more reasons why individuals and entire countries should focus on owning physical metals rather than eroding currencies.


CME Offers Backing as MF Brokers Are Fired

Posted: 13 Nov 2011 04:42 PM PST

In an attempt to calm anger among clients of MF Global Holdings Ltd., CME Group Inc. on Friday took the unusual step of promising $300 million of its own money to help those customers.

The move by the Chicago-based exchange operator was aimed at hastening the release of customer cash and other collateral trapped in the securities firm after its bankruptcy. It is the strongest step yet by CME to address an outcry among former MF Global customers over exchanges' response to the collapse of the firm nearly two weeks ago.

"We believe this extraordinary measure is necessary to ensure that all customers are treated fairly during the unique and challenging circumstances surrounding MF Global's failure," said CME Chief Executive Craig Donohue.

The move came as the bankruptcy trustee charged with liquidating MF Global's brokerage unit said that the unit, MF Global Inc., would lay off all of its 1,066 employees, before rehiring 150 to 200 of them to wind down the operation.

Read This & More @ online.wsj.com

2011 The beginning of theEnd

Posted: 13 Nov 2011 03:27 PM PST



2011 – The United States begins its descent from prosperity to economic stagnation / depression in 2011 as the economic recovery stalls and a double dip recession occurs. The expiration of the Bush Tax cuts reinforces the economic decline and unemployment spikes over 10% again. 2011 is just the beginning and 2012 will be worse. Economic Collapse is likely by end of decade. Watch the video


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

Greece's ‘Worst-Worst-Case-Scenario’

Posted: 13 Nov 2011 03:14 PM PST

By Wolf Richter   www.testosteronepit.com

Judging from the stream of rumors and energetic denials, German bureaucrats, experts, and politicians are furiously working on dozens of projects that all deal with the debt crisis, and they go off in as many directions.

Reports surfaced today that Chancellor Angela Merkel wants to accelerate amending the Lisbon Treaty so that debt-sinner countries that can't get their budgets in order would be dealt with more harshly—through imposition of additional sanctions (just how they'd pay for these sanctions when they're already having trouble funding their deficits hasn't been addressed, apparently).

The Lisbon Treaty is a chef d'œuvre of the 27 members of the European Union. Negotiations started in 2001 to establish the European Constitution, which flopped in 2005 when French and Dutch voters said non and neen. A watered-down compromise treaty was worked out that everyone could agree on. But in 2008, Irish voters didn't agree on it. Then the financial crisis hit. The Irish got scared, and when the referendum was re-run, voters changed their mind. The treaty became effective December 1, 2009, after eight years of struggle. And now, according to Reuters, Merkel wants to rush very unpopular sanctions through the system: amendments on the table by next spring and ratification by all 27 members at the end of 2012. A pipe dream.

Another report surfaced in the Spiegel. Experts at the Ministry of Finance are working on scenarios that incorporate Greece's exit from the Eurozone. The idea that not long ago was part of the official Denkverbot (prohibition to think) became official language at the G-20 after Giorgios Papandreou, prime minister of Greece, had fired his referendum bazooka into the air. And now it has transmogrified into actual scenarios.

The underlying assumption is that Greece will not implement the agreed-upon budgetary measures and economic restructuring. Such a failure would entail Greece's exit from the Eurozone. And when that happens, the experts envision a range of scenarios, according to the Spiegel, from rather benign to, well, rough.

It starts with the basis scenario. Greece reinstitutes the drachma. After some initial chaos, the removal of the weakest country of the Eurozone might strengthen the Eurozone over time. While other countries, like Italy and Spain, would still have difficulties, they would be better able to manage their problems if the source of uncertainty is removed. Spain and Italy aren't bankrupt, the experts claim, unlike Greece.

And further down the line is the "Worst-Case-Szenario." (I'm quoting in actual German. The quantity of English in everyday German never fails to astonish me though it can be helpful ... unless it's not helpful, like the noun handy, which isn't a sexual act but a cell phone.) Italy and Spain would be targeted by global financial markets after Greece's exit. Their yields would rise and their financing costs would reach unsustainable levels. The EFSF, a JELL-O-like structure, would be forced to fund these two countries—but it would have to have lots of firepower, which is increasingly in doubt.

And then there is—I'm quoting again in German—the "Worst-Worst-Case-Szenario." The drachma would be dramatically devalued, which would make Greek exports more competitive and would help tourism. Germans with little money and lots of time off could go for cheap but long and gorgeous vacations.

But Greece's debt is in euros and will have to be serviced and paid back in euros, impossible with a devalued drachma. Hard currency would dry up. International capital markets would close their doors to Greece. Greek banks and companies, whose debt is in euros, would go bankrupt. Massive layoffs would follow. Consumption would collapse. And in the process, it would take down smaller countries, such as Cyprus, that are heavily exposed to Greek sovereign, corporate, and bank debt (Another Eurozone Country Bites The Dust).

Thankfully, according to the Spiegel's government sources, the "Worst-Worst-Case-Szenario" is not the most likely.

Meanwhile, Greek teachers are lamenting their new reality. They've long been ridiculed in Germany for their cush jobs with long vacations, short work days, high salaries, early retirement, and lots of benefits and privileges that have been doled out by various governments as part of their vote-buying binges funded by a seemingly endless stream of borrowed euros.

But now, the cuts are here, and they're real. Salaries got cut by over 20%. Christmas bonuses got cut by 50% (wait a minute, Christmas bonuses?). But prices are about average for the Eurozone, and after tax increases, the purchasing power got slammed. Which raises the question for how much longer the population is willing to go along with these measures—and if there isn't, as the Germans would say, a Worst-Worst-Worst-Case-Szenario waiting to play out.

When Papandreou fired his bazooka.... Greece's Extortion Racket Jumps To The Next Level.

Wolf Richter   www.testosteronepit.com

Greece's ‘Worst-Worst-Case-Scenario’

Posted: 13 Nov 2011 03:14 PM PST


By Wolf Richter   www.testosteronepit.com

Judging from the stream of rumors and energetic denials, German bureaucrats, experts, and politicians are furiously working on dozens of projects that all deal with the debt crisis, and they go off in as many directions.

Reports surfaced today that Chancellor Angela Merkel wants to accelerate amending the Lisbon Treaty so that debt-sinner countries that can't get their budgets in order would be dealt with more harshly—through imposition of additional sanctions (just how they'd pay for these sanctions when they're already having trouble funding their deficits hasn't been addressed, apparently).

The Lisbon Treaty is a chef d'œuvre of the 27 members of the European Union. Negotiations started in 2001 to establish the European Constitution, which flopped in 2005 when French and Dutch voters said non and neen. A watered-down compromise treaty was worked out that everyone could agree on. But in 2008, Irish voters didn't agree on it. Then the financial crisis hit. The Irish got scared, and when the referendum was re-run, voters changed their mind. The treaty became effective December 1, 2009, after eight years of struggle. And now, according to Reuters, Merkel wants to rush very unpopular sanctions through the system: amendments on the table by next spring and ratification by all 27 members at the end of 2012. A pipe dream.

Another report surfaced in the Spiegel. Experts at the Ministry of Finance are working on scenarios that incorporate Greece's exit from the Eurozone. The idea that not long ago was part of the official Denkverbot (prohibition to think) became official language at the G-20 after Giorgios Papandreou, prime minister of Greece, had fired his referendum bazooka into the air. And now it has transmogrified into actual scenarios.

The underlying assumption is that Greece will not implement the agreed-upon budgetary measures and economic restructuring. Such a failure would entail Greece's exit from the Eurozone. And when that happens, the experts envision a range of scenarios, according to the Spiegel, from rather benign to, well, rough.

It starts with the basis scenario. Greece reinstitutes the drachma. After some initial chaos, the removal of the weakest country of the Eurozone might strengthen the Eurozone over time. While other countries, like Italy and Spain, would still have difficulties, they would be better able to manage their problems if the source of uncertainty is removed. Spain and Italy aren't bankrupt, the experts claim, unlike Greece.

And further down the line is the "Worst-Case-Szenario." (I'm quoting in actual German. The quantity of English in everyday German never fails to astonish me though it can be helpful ... unless it's not helpful, like the noun handy, which isn't a sexual act but a cell phone.) Italy and Spain would be targeted by global financial markets after Greece's exit. Their yields would rise and their financing costs would reach unsustainable levels. The EFSF, a JELL-O-like structure, would be forced to fund these two countries—but it would have to have lots of firepower, which is increasingly in doubt.

And then there is—I'm quoting again in German—the "Worst-Worst-Case-Szenario." The drachma would be dramatically devalued, which would make Greek exports more competitive and would help tourism. Germans with little money and lots of time off could go for cheap but long and gorgeous vacations.

But Greece's debt is in euros and will have to be serviced and paid back in euros, impossible with a devalued drachma. Hard currency would dry up. International capital markets would close their doors to Greece. Greek banks and companies, whose debt is in euros, would go bankrupt. Massive layoffs would follow. Consumption would collapse. And in the process, it would take down smaller countries, such as Cyprus, that are heavily exposed to Greek sovereign, corporate, and bank debt (Another Eurozone Country Bites The Dust).

Thankfully, according to the Spiegel's government sources, the "Worst-Worst-Case-Szenario" is not the most likely.

Meanwhile, Greek teachers are lamenting their new reality. They've long been ridiculed in Germany for their cush jobs with long vacations, short work days, high salaries, early retirement, and lots of benefits and privileges that have been doled out by various governments as part of their vote-buying binges funded by a seemingly endless stream of borrowed euros.

But now, the cuts are here, and they're real. Salaries got cut by over 20%. Christmas bonuses got cut by 50% (wait a minute, Christmas bonuses?). But prices are about average for the Eurozone, and after tax increases, the purchasing power got slammed. Which raises the question for how much longer the population is willing to go along with these measures—and if there isn't, as the Germans would say, a Worst-Worst-Worst-Case-Szenario waiting to play out.

When Papandreou fired his bazooka.... Greece's Extortion Racket Jumps To The Next Level.

Wolf Richter   www.testosteronepit.com

DOLLAR TEETERING ON THE ABYSS

Posted: 13 Nov 2011 01:43 PM PST

We all better hope I'm wrong on this one, but I think the CRB just put in its three year cycle low in October. I'm also afraid that Bernanke has done irreparable damage to the dollar. If I'm right about both of those assumptions then we are on the brink of a historic inflationary period.

I've marked the major three year cycle bottoms in both the CRB index and the dollar in the chart below with blue arrows. (Actually the CRB cycle tends to run about two and half years on average.)




The dollar is now a great risk of forming a left translated three year cycle. A break below the October 27 intraday low would initiate a pattern of lower lows and lower highs of an intermediate degree.That is usually a sign that a major cycle has topped. If the dollar's three year cycle has topped after only five months we will be at great risk of a severe currency crisis in the fall of 2014 when the next three year cycle low is due.

Even more concerning is if the CRB cycle has bottomed. If it has then commodities are poised for a huge surge higher during the next two years as the dollar deteriorates.

The next two weeks are going to be critical for the dollar. It must hold above the October 27 low. Failure to do so would indicate that the cancer has now infected the currency markets, most specifically the US dollar.

 If this scenario unfolds it has the potential to drive the bubble phase of the gold bull market.

$10 trial subscription to the premium newsletter.


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

Oil And Gold Excited As USD Leaks Lower

Posted: 13 Nov 2011 11:00 AM PST

As EURUSD toys with 1.38 and AUD outperforms, the USD is leaking lower (-0.2%) from Friday (after closing the week almost perfectly unchanged Friday-to-Friday). Gold and Oil appear to be basking in the glow of increased macro and geopolitical tensions as $1795 and $99.50 (respectively) have already been broken this evening. It appears Silver and Gold are tracking each other as Oil follows the USD and Copper is the major outperformer so far (in early trading).

 

Commodity (and USD) performance from Friday's close - Gold/Silver (+0.35%) outperforming Oil (+0.14%) as it tracks the USD and Copper outperforms (+1.39%).

 

UPDATE: TSYs just opened (after being closed Friday) with a 4-7bps bear steepener and 2s10s30s rising 8bps. ES is pretty much in line with CONTEXT at 1269 now all the risk drivers are open.

Chart: Bloomberg

Advance Look At This Week's Key Event: Is Europe's Latest Velvet Revolution Credible?

Posted: 13 Nov 2011 09:07 AM PST


From Goldman Sachs

Last week was another milestone in terms of escalating sovereign tensions in the Eurozone. For several days it was not clear who would lead the next Greek government. Similar uncertainty regarding the future of the Italian government triggered a severe BTP sell-off, which then led to a clearinghouse margin call for Italian debt.

But as so often in Europe, looking down the abyss led to a last-minute policy response. Greek and Italy will now both be led by national unity governments under Lucas Papademos and Mario Monti, respectively. Both governments also seem to enjoy broad support to push through urgent reforms – at least for now.

There are still many questions, including the increasing debate about the constitutional set-up of the Eurozone and a possible Treaty change in the future. Moreover, it is possible that even these new governments in Greece and Italy will struggle to push their reform agendas through. But it will take some time before we know. And until then, it is quite likely that sovereign risk premia decline – at least temporarily. Following this logic, we initiated a long EUR/$ recommendation on Friday at a level of 1.3710 for a quick bounce to our initial target of 1.40.

We also added a long RUB/HUF recommendation last week. This was partly driven by the continued upward drift in oil prices, which should boost the Ruble. At the same time, balance sheet pressures for many Eurozone banks potentially creates external funding challenges for countries in the European periphery, like Hungary, with substantial external debt roll-over needs.

Looking ahead in the upcoming week, markets will likely scrutinise the first steps of the new Greek and Italian governments. The appointment of key cabinet positions will be of relevance to establish credibility. However, it may be a bit too early for the first concrete policy steps.

Beyond politics, three themes dominate the data schedule. First, there is a raft of Q3 GDP releases in Europe (Germany, France, Eurozone, Hungary, Poland, Czech Republic). The numbers will likely still be mixed with more uniform weakness expected in the Q4 numbers. Second, we will see the beginning of the monthly survey season with the US Empire and Philly Fed releases. Finally, there is a raft of Fed speakers scheduled to talk about the economy and Fed policy.

Less thematic but also relevant are retail sales numbers in the UK and the US. Of course, we will have a look at the monthly TIC numbers to gauge the capital flow pressures for the Dollar.

Finally, as our weekly idea, we would be short $/MXN, as we think broader Dollar weakness may be more pronounced in a week where a raft of Fed speeches will likely emphasise the dovish outlook for US monetary policy. Declining fiscal risk premia in the Eurozone, combined with high cross asset correlations, could push the Dollar lower as well. At the same time, stabilising oil prices will probably boost the Mexican terms of trade. Last week's short INR/KRW idea returned about +0.8% partly helped by the weak Indian industrial production numbers, which we had highlighted as important.

Monday 14 November

Japan GDP (Q3): Output is likely to show a notable rebound on the back of the post-earthquake rebuilding effort. Consensus expects +1.5% qoq after -0.5% qoq in Q2.

Eurozone Industrial Production (Sep): Following weak national IP numbers in a number of countries, Eurozone IP will likely drop by about -2.3% mom, according to consensus.

Polish GDP (Q3): Consensus expects a contraction of -0.7% qoq after a flat reading of 0.0% in the second quarter.

Also interesting: Indian wholesale prices (Oct); New Zealand retail sales (Q3).

Tuesday 15 November

UK CPI (Oct): With the BOE still in QE easing mode and inflation running at 5% and above, it is always interesting to see if there is any sign of abating price pressures. Consensus expects a reading of +5.1% yoy after +5.2% yoy in September.

German, French, Eurozone GDP (Q3): There will be a raft of Eurozone GDP data covering the third quarter, though higher frequency data suggest that most of the recent slowing in activity data will only be reflected in the next GDP release. For Q3, consensus expects the following qoq non-annualised numbers: France +0.4%, Germany +0.5%, Euro Area +0.2%.

Fed Speeches: With the rising focus on the Fed policy options going forward, Chicago Fed President Evans' speech on the Dual Mandate may be interesting. Evans is also scheduled to appear on CNBC, while Fed's Bullard, Williams, and Fisher will all make public appearances.

US Retail Sales (Oct): After a strong reading last month, consensus expects some slowing to +0.3% mom after +1.1% in September.
Also interesting: US Empire survey, Polish GDP.

Wednesday 16 November

Eurozone CPI (Oct): Despite the elevated readings in CPI in recent months and consensus expectations that the October number will again come in at +3.0% yoy, the focus is probably slipping away from inflation fears. With more fiscal contraction and slower growth in many Eurozone countries, inflationary pressures will likely abate over the medium term. Only a substantially higher reading than expected would change market expectations of further ECB rate cuts to 1.00%.

UK Labour Market Data (Oct): Consensus expects a slight increase in the unemployment rate to 5.2% from 5.1%.
US CPI (Oct): Market expectations are for a stabilisation in core and headline inflation pressures. The expected small uptick in the year core reading to 2.1% from 2.0% yoy will likely be offset by a decline in the headline component to 3.7% from 3.9%.

US TIC Flows (Sep): More than the headline number, the composition of TIC flows will be important. With risk aversion still very high during September, we would expect more inflows into USTs, but at the same time small net outflows in all other categories.

US Industrial Production (Oct): Consensus expects a small improvement to +0.4% from +0.2% mom in September, and a small increase in capacity utilisation.

Also interesting: BOE Inflation Report, Fed speeches from Lacker, Rosengreen.

Thursday 17 November

Indian Wholesale Prices (weekly): With clear signs of slowing economic activity in India but still-high inflation rates, it will be interesting to see how higher frequency indicators of India inflation evolve.

UK Retail Sales (Oct): Consensus expects a notable slowing in UK retail sales growth to -0.3% mom (ex auto fuel) from +0.7% in September.

US Philly Fed Survey (Nov): With the Empire earlier this week and the Philly fed index, the monthly survey season starts again. Consensus expectations are for a stable reading of +9 from 8.7 in October.

US Jobless Claims (weekly): After better readings in recent weeks, there will be some focus on whether US activity is starting to accelerate further.
Hungary GDP (Q3): Consensus expects notable slowing to +0.7% from 1.5% qoq in Q2. Industrial production will be released as well.

Also interesting: Czech GDP (Q3), US housing starts, Fed Speech by Dudley, RBA Minutes.

Friday 18 November

Canada Consumer Prices (Oct): Consensus expects consumer prices to drop notably to +2.7% yoy from 3.2% in September, while mom core readings are also expected to decline, to +0.1% from +0.5%.

More Fed Speeches: After a week full of public appearances by Fed officials, Friday will see the second appearance this week by Dudley (on the economy), as well as Fisher and Williams.

Also interesting: Philippines Balance of Payments, Chile GDP (Q3).

In The News Today

Posted: 13 Nov 2011 08:03 AM PST

My Dear Friends,

Alf Fields' outlook on gold is coming Tuesday morning.

Regards, Jim

 

Jim Sinclair's Commentary

Gold is headed to the $2000s and that is for starters.

Gold traders most bullish since 2004 on debt crisis Bloomberg Nov 12, 2011, 10.12am IST

LONDON: Gold traders and analysts are the most bullish in

Continue reading In The News Today

Haynes, Norcini review precious metals' week at King World News

Posted: 13 Nov 2011 05:26 AM PST

1:24p ET Sunday, November 13, 2011

Dear Friend of GATA and Gold (and Silver):

In the weekly precious metals market review at King World News, CMI Gold & Silver proprietor Bill Haynes says the gold bull market has entered its second phase, likely to be its longest phase, as the public and Wall Street are far from being involved in it. And futures market analyst Dan Norcini identifies key price points for the gold and silver futures markets. You can listen to their comments 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.


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James Grant, author and editor of Grant's Interest Rate Observer, says of the Lehrman plan: "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman the country has finally found him."

To learn more and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit:

http://www.thegoldstandardnow.org/gata

Nothing Has Changed: The Smart Money is STILL Bullish on Gold

Posted: 13 Nov 2011 04:30 AM PST

With continued strong investment demand for physical gold in the face of heightened macro uncertainty and unprecedented, globally-coordinated monetary stimulus and a US dollar that will continue its path lower, the best performing assets at present are gold, emerging market equities denominated in local currencies, and commodity related stocks. [Let me explain why that is the case.] Words: 560 So says Matthew T. Schroeder ([url]www.anomalousinvestments.com[/url]) in an article* that highlights aspects of a report from Paul Tudor Jones of Tudor Investment Corporation which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) below for the sake of clarity and brevity to ensure a fast and easy read. The author's views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph ...


Continuing High Unemployment = More Money Printing = Higher Gold & Silver Prices

Posted: 13 Nov 2011 04:30 AM PST

The Federal Reserve has a dual mandate set by Congress of maximum employment and stable prices. During Chairman Bernanke's most recent press conference he indicated that the Federal Reserve has done a better job of maintaining price stability while falling short of fostering maximum employment. [As such,] we believe the Federal Reserve will continue to increase the monetary base and weaken the dollar as long as unemployment remains elevated. While the economy (measured by real GDP) and the unemployment rate have not benefited from a substantial increase in the monetary base, the price of gold and silver have benefited from money printing. We believe this statement is quite important for monetary policy and for investors. [Let us explain further.] Words: 388 So says an article* by Parsimony Investment Research ([url]http://www.parsimonyresearch.com/[/url]) posted on SeekingAlpha.com which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([ ]), a...


Now Back To The Collapse

Posted: 13 Nov 2011 04:26 AM PST

The nation that once held the creed that greatness is achieved by production is now told that it is achieved by squalor  - Francisco D'Anconia, Altas Shrugged
Against my better judgement I posted on the Penn State tragedy Friday.  But this blog serves as "couch therapy": for me and I had to get that off my chest.  Interestingly, it generated the highest amount of comments of any post in the history of this blog (since late 2009).  The only other one that came close is when I skewered Glenn Beck and his defenders came out of the woodwork.  Glenn Beck just happened to be essentially fired from Fox a few months later...

But the fact of the matter is that the Penn State tragedy, the collapse of MF Global and the fraud and theft engulfing that situation, the fact that a sexual assault perp like Harold Cain can persist as a Republican Presidential candidate front-runner and the fact that the people who control the big banks and manufacturing companies can openly and illegally steal $100's of billions from the public with very little resistance all have the same common underlying dynamic:  the collapse of an empire.
When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and lose their lives for the purpose of becoming the fodder of the immoral. Do not expect them to produce, when production is punished and looting rewarded. Do not ask, 'Who is destroying the world?' You are.  (Francisco D'Anconia, Atlas Shrugged)
Enjoy what you can, while you can, as much as you can, because the way of life we have come to take for granted in this country for the last 50 years is not going to be around much longer...

Platinum: The “Cheapest” Precious Metal…

Posted: 13 Nov 2011 02:35 AM PST

Historically, precious metals (such as Gold & Silver for example) had an important role as currency, but are now regarded mainly as investment and industrial commodities. Gold, silver, platinum, and palladium each have an ISO 4217 currency code.
With the ongoing crises in the Western World, precious metals are regaining their role as "currency", as they cannot be printed out of thin air unlike fiat money.

The best-known precious metals are the coinage metals gold and silver. While both have industrial uses, they are better known for their uses in art, jewellery and coinage. Other precious metals include the platinum group metals: ruthenium, rhodium, palladium, osmium, iridium, and platinum, of which platinum is the most widely traded.

The demand for precious metals is driven not only by their practical use, but also by their role as investments and a store of value. Historically, precious metals have commanded much higher prices than common industrial metals.

These days, gold is trading near all-time highs, while platinum is trading about $700 below its all-time high reached in 2008.
Since 1972, Platinum traded at about 1.35 times the price of Gold on average. Right now, Platinum is even cheaper than gold, trading at only 0.92 times the price of Gold. As we can see in the chart below, this is a rather "rare" situation. It only happened in the early 80′s and for a short time in 1974. In 1972, 2000 and 2008, it even traded as much as 2.30 times the price of Gold (monthly basis).

Based on this ratio over the last 40 years, we can say that Platinum is "cheap" relative to Gold.

I also made the calculations for Platinum relative to Silver.

Over the last 40 years, Platinum traded at about 76 times the price of Silver (monthly average). Right now, it is trading at only 47.26 times the price of silver, far below the historical average ratio. In 2003, it even traded as high as 150 times the price of Silver.
In 1979 however, it traded as little as 20 times the price of Silver, but that was rather an "exception", as silver jumped from $6/oz to $48.70/oz, as the Hunt Brothers tried to corner the silver market. Taking out this exception from the chart below, I think it's fair to say that Platinum is also cheap compared to Silver:

A similar thing can be said about Platinum relative to Palladium.
Over the last 40 years, the average Platinum-to-Palladium ratio was 3.17.
Right now, it is 2.53. In 2001 however, it was a low as 0.60 (Palladium was trading much higher than Platinum, because of rumours that the Russian Stockpile of Palladium was almost depleted).

Leaving this "exception" of 2001 aside, I think it's fair to say Platinum is cheap relative to Palladium, based on this ratio of the last 40 years:

Now let's have a look at the "Gold-to-Silver" ratio. Many argue that the Gold-to-Silver ratio is headed back to 15, a level not seen since 1979. However, as explained above, this move in silver was rather "exceptional", as the Hunt Brothers tried to corner the market.
When we look at the historical average of the Gold-to-Silver ratio over the last 40 years, we can see that the ratio now (51.60), is just slightly below the monthly average of the last 40 years (56.42). This means Gold is not cheap, nor expensive compared to Silver.

When we look at the daily Gold-to-Silver ratio going back to 1920, we can see that the daily average (52.32) doesn't differ that much from the monthly average of the last 40 years (56.42). This tells me that 55 is a good estimate of the average Gold-to-Silver ratio.
In the chart below, we can see that Gold was expensive compared to Silver when the Gold-to-Silver ratio was higher than 80, and that Silver was expensive to Gold when the ratio dropped below 30′ish. In April earlier this year, the ratio dropped towards 30, meaning Silver was getting expensive relative to gold, and has now reversed sharply, back towards its 90 years average.

Based on the charts in this article, we can conclude that:
* Platinum appears to be cheap relative to Gold
* Platinum appears to be cheap relative to Silver
* Platinum appears to be cheap relative to Palladium
* Platinum thus appears to be the cheapest Precious Metal discussed in this article.

However, this all doesn't mean Platinum is CHEAP.
I am just saying that when we look at historical averages, platinum looks cheap relative to the other precious metals.
When the precious metals bull market would come to an end, it is very well possible (and even likely) that Platinum will drop along with other Precious Metals.

However, if this Precious Metals Bull Market continues over the next couple of years, I think one would do well by diversifying some of his/her assets in Gold/Silver into Platinum.

Europe’s Debt Crisis Spirals out of Control Towards Economic Collapse

Posted: 12 Nov 2011 10:39 PM PST

As Chancellor Merkel and PM Sarkozy search for a solution that doesn’t exist they continue to lose credibility. Nothing of substance has been agreed upon that is legal and can be implemented. At the IMF Christina LeGarde is frantically waving her arms like a cheerleader telling anyone that will listen that if the six sovereigns in financial trouble are not aided the euro will fail and peace in Europe will disappear.


Michael Pento - How CB Bazookas Will Impact Gold & Economy

Posted: 12 Nov 2011 08:00 PM PST

Central bankers around the globe consistently coming up with plans to destroy paper currencies, can someone justify a reason not to buy more gold


Silver Update 11/12/11 - Something Fishy - Pt 1 & 2

Posted: 12 Nov 2011 08:00 PM PST

Will Gold Offer Protection from a Thanksgiving Feast?

Posted: 12 Nov 2011 06:51 PM PST

Earlier this month, the Federal Open Market Committee released its latest statement regarding the economy. Although there were some differences in the November statement, the Fed’s view on inflation is consistently different from reality. As consumers already know, inflation is on the rise. Protecting themselves by allocating a portion of their portfolio in gold may be the best decision one can make for the next several years.


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


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