Gold World News Flash

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• Dont Sweat the Correction in Gold
• The Final Straw? Jefferies And Six Other Banks Sued For "Fraudulent" MF Global Bond Issuance
• The Final Straw? Jefferies And Six Other Banks Sued For "Fraudulent" MF Global Bond Issuance
• Update of Alf Field?s Elliott Wave Theory Based Analysis of the Future Price of Gold
• Alf Field is Back! The ?Moses? Generation and the Future of Gold
• Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Almost 4% and 7% on the Week
• Japan Sleepily Triggers While Everyone Is Watching Europe
• By the Numbers for the Week Ending November 18
• The Four Horsemen of the Dollar Apocalypse – There Goes Rickards, Again!
• James Turk Interviews Eric Sprott About Gold and Silver
• Capital Account: Max Keiser on Financial Apartheid, Germany 4.0, and Gold vs. SDR (11/18/11)
• Friday Night Irony: According To The Fed, Just Over One More Year Of ZIRP Will Lead To 38.36% Annual Inflation
• Why Buy Silver in Times of Crisis?
• Whatever Gold Price Downside Risk Remains Here Is Peanuts Compared to the Triple of Quadruple Upside
• Gold 1695 Former Resistance Now Interim Support
• More price suppression on eve of option expiry, Embry tells King World News
• John Embry: Tremendous Manipulation of Both Gold & Silver
• Ford library confirms Fed letter tying Germany to gold price suppression
• Timing the Gold Market
• Whom Can You Trust?
• John Embry - Tremendous Manipulation of Both Gold & Silver
• Guest Post: The Reasons For China's Imminent Bust
• Guest Post: The Reasons For China's Imminent Bust
• Ron Struthers: Timing the Gold Market
• US Deficit-Cutting Talks Appear to Be Near Collapse
• Disquietingly Calm End To Calamitous Week
• Gold / Housing Ratio Falls To Historic Low
• Gold Demand Hits New Record with Central Bank Buying Up Sixfold
• LGMR: Gold Rallies after "Hard Hit", ECB "Now Only Significant Bond Buyer", UK "Has Lots More Scope for QE"
• The Daily Market Report

Dont Sweat the Correction in Gold Posted: 18 Nov 2011 06:56 PM PST Casey Research

The Final Straw? Jefferies And Six Other Banks Sued For "Fraudulent" MF Global Bond Issuance Posted: 18 Nov 2011 05:47 PM PST Pick the odd one out of the following 7 banks, while in the process pointing out what they have in common: Bank of America Corp, Citigroup Inc, Deutsche Bank AG, Goldman Sachs Group Inc, Jefferies Group Inc, JPMorgan Chase & Co and Royal Bank of Scotland Group Plc. As it so happens 6 of the 7 are Bank Holding Companies, and have access to the Fed's various emergency facilities. The seventh, Jefferies, which a few years ago, boasted that it is now the largest remaining true investment bank after all its competitors had converted to BHC status, may soon regret it said that and did not join its peers. Why? For the same reason why on November 1, the day after MF Global filed for bankruptcy, we tweeted: "Here is why Jefferies is in deep doodoo: http://1.usa.gov/uNBhzq" The reference of course is to the now legendary prospectus for the MF Global 6.25% notes of 2016 that had the infamous Corzine key man event: "interest rate applicable to the notes will be subject to an increase of 1.00% upon the departure of Mr. Corzine as our full time chief executive officer due to his appointment to a federal position by the President of the United States and confirmation of that appointment by the United States Senate prior to July 1, 2013." At this point the only appointment Obama may give Corzine is that of a presidential pardon for a criminal felony offense (assuming of course Corzine brings a sleeping bag to Zuccotti square: the only offense for which he may ever be arrested). Alas, Jefferies, and the 6 other banks, do not have that luxury: as of late this afternoon, all six were sued by pension funds "who said the bonds' offering prospectuses concealed problems that led to the futures brokerage's collapse." Precisely as Zero Hedge expected. And unfortunately for Jefferies, this may well be the final nail in the coffin - because while the market had punished the bank for its Exposure, the biggest unknown in the past 2 weeks was whether and when it would be sued precisely for its MF Global liability. That time is now: next up - every single entity that was impaired in part or in whole as a result of the MF Global bankruptcy will follow suit and sue the same 7 banks... of which only Jefferies does not have the benefit of an infinite backstop.  More from Reuters: Other defendants include several officials associated with MF Global, including former Chief Executive Jon Corzine.   Friday's lawsuit may be one of the earliest efforts for investors to recover money from relatively deep-pocketed defendants that they believe may share in responsibility for MF Global's October 31 bankruptcy.   Bank of America spokeswoman Shirley Norton, Citigroup spokeswoman Danielle Romero-Apsilos and Jefferies spokesman Richard Khaleel declined to comment. The remaining banks did not immediately respond to requests for comment.   According to the complaint, the registration statements and prospectuses for about $900 million of MF Global note offerings this year omitted how the company was using high leverage, investing heavily in risky European sovereign debt, and not properly segregating client assets from its own.   It said the seven banks helped draft the offering documents and sell the notes, collecting $21.2 million of fees, but that their "failure to conduct an adequate due diligence investigation was a substantial factor" in MF Global's collapse, as well as in defaults on the notes.   The lawsuit was brought by the IBEW Local 90 Pension Fund in Connecticut, and the Plumbers' and Pipefitters' Local #562 Pension Fund in Missouri, and seeks class-action status.    It seeks damages for investors between February 3, 2011 and October 31, 2011 in MF Global securities, including its 1.875 percent convertible senior notes maturing in 2016, its 3.375 percent convertible senior notes maturing in 2018, and its 6.25 percent senior notes maturing in 2016. And to everyone who may have lost money or had their capital locked up indefinitely by the bankrupt firm, which we are 100% certain will see all of its valuable assets picked off by Goldman Sachs and JP Morgan, we suggest you familiarize yourself with lawsuit IBEW Local 90 Pension Fund et al v. Corzine et al, U.S. District Court, Southern District of New York, No. 11-08401 and enjoin it. Because one person who is getting very familiar with its contents right about now is Jefferies CEO, Dick Handler. Incidentally, if Jefferies in big trouble, our other tweet from November 1 is also true: "And if Jefferies is in trouble, so is Fried Frank, underwriter counsel on the MF Global bond: http://t.co/L5vgjzqA" So investment banks first; law firms next...Just how high will this debacle for the current administration reach we wonder?

The Final Straw? Jefferies And Six Other Banks Sued For "Fraudulent" MF Global Bond Issuance Posted: 18 Nov 2011 05:47 PM PST Pick the odd one out of the following 7 banks, while in the process pointing out what they have in common: Bank of America Corp, Citigroup Inc, Deutsche Bank AG, Goldman Sachs Group Inc, Jefferies Group Inc, JPMorgan Chase & Co and Royal Bank of Scotland Group Plc. As it so happens 6 of the 7 are Bank Holding Companies, and have access to the Fed's various emergency facilities. The seventh, Jefferies, which a few years ago, boasted that it is now the largest remaining true investment bank after all its competitors had converted to BHC status, may soon regret it said that and did not join its peers. Why? For the same reason why on November 1, the day after MF Global filed for bankruptcy, we tweeted: "Here is why Jefferies is in deep doodoo: http://1.usa.gov/uNBhzq" The reference of course is to the now legendary prospectus for the MF Global 6.25% notes of 2016 that had the infamous Corzine key man event: "interest rate applicable to the notes will be subject to an increase of 1.00% upon the departure of Mr. Corzine as our full time chief executive officer due to his appointment to a federal position by the President of the United States and confirmation of that appointment by the United States Senate prior to July 1, 2013." At this point the only appointment Obama may give Corzine is that of a presidential pardon for a criminal felony offense (assuming of course Corzine brings a sleeping bag to Zuccotti square: the only offense for which he may ever be arrested). Alas, Jefferies, and the 6 other banks, do not have that luxury: as of late this afternoon, all six were sued by pension funds "who said the bonds' offering prospectuses concealed problems that led to the futures brokerage's collapse." Precisely as Zero Hedge expected. And unfortunately for Jefferies, this may well be the final nail in the coffin - because while the market had punished the bank for its Exposure, the biggest unknown in the past 2 weeks was whether and when it would be sued precisely for its MF Global liability. That time is now: next up - every single entity that was impaired in part or in whole as a result of the MF Global bankruptcy will follow suit and sue the same 7 banks... of which only Jefferies does not have the benefit of an infinite backstop.  More from Reuters: Other defendants include several officials associated with MF Global, including former Chief Executive Jon Corzine.   Friday's lawsuit may be one of the earliest efforts for investors to recover money from relatively deep-pocketed defendants that they believe may share in responsibility for MF Global's October 31 bankruptcy.   Bank of America spokeswoman Shirley Norton, Citigroup spokeswoman Danielle Romero-Apsilos and Jefferies spokesman Richard Khaleel declined to comment. The remaining banks did not immediately respond to requests for comment.   According to the complaint, the registration statements and prospectuses for about $900 million of MF Global note offerings this year omitted how the company was using high leverage, investing heavily in risky European sovereign debt, and not properly segregating client assets from its own.   It said the seven banks helped draft the offering documents and sell the notes, collecting $21.2 million of fees, but that their "failure to conduct an adequate due diligence investigation was a substantial factor" in MF Global's collapse, as well as in defaults on the notes.   The lawsuit was brought by the IBEW Local 90 Pension Fund in Connecticut, and the Plumbers' and Pipefitters' Local #562 Pension Fund in Missouri, and seeks class-action status.    It seeks damages for investors between February 3, 2011 and October 31, 2011 in MF Global securities, including its 1.875 percent convertible senior notes maturing in 2016, its 3.375 percent convertible senior notes maturing in 2018, and its 6.25 percent senior notes maturing in 2016. And to everyone who may have lost money or had their capital locked up indefinitely by the bankrupt firm, which we are 100% certain will see all of its valuable assets picked off by Goldman Sachs and JP Morgan, we suggest you familiarize yourself with lawsuit IBEW Local 90 Pension Fund et al v. Corzine et al, U.S. District Court, Southern District of New York, No. 11-08401 and enjoin it. Because one person who is getting very familiar with its contents right about now is Jefferies CEO, Dick Handler. Incidentally, if Jefferies in big trouble, our other tweet from November 1 is also true: "And if Jefferies is in trouble, so is Fried Frank, underwriter counsel on the MF Global bond: http://t.co/L5vgjzqA" So investment banks first; law firms next...Just how high will this debacle for the current administration reach we wonder?

Update of Alf Field?s Elliott Wave Theory Based Analysis of the Future Price of Gold Posted: 18 Nov 2011 04:17 PM PST The Elliott Wave Theory (EW) gives superb results in predicting the gold price.*[While] it is a complicated system with many difficult rules [which]*I explain in simple terms in this article, [I have determined that] once this present correction in gold*has been completed it should [undergo] the largest and strongest wave in the entire gold bull market. The target for this wave should be around $4,500 with only two 13% corrections on the way. [Let me explain how I came to that conclusion.] Words: 1924 So said Alf Field in a recent 6500 word keynote speech* at the Sydney Gold Symposium which has been edited into 2 parts (see the other part here). [INDENT]Lorimer Wilson, editor of [B]www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) portions of the speech to ensure a fast and easy read. The author's views and conclusion...

Alf Field is Back! The ?Moses? Generation and the Future of Gold Posted: 18 Nov 2011 04:17 PM PST I have come out of retirement for this one off, once only, speech to warn that the good ship "Life As We Know It" is sinking. You have the choice of getting into a life boat now or going down with the ship. The life boats consist of precious metals and other assets that will survive the coming currency destruction. [Let me explain.] Words: 1400 So said Alf Field in a*recent* 6500 word keynote speech* at the Sydney Gold Symposium which has been edited into 2 parts (see the other part here). [INDENT]Lorimer Wilson, editor of [B]www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!)* edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) portions of the speech 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 must be include...

Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Almost 4% and 7% on the Week Posted: 18 Nov 2011 04:00 PM PST Gold rose $19.10 to $1737.20 by a little before 8AM EST before it chopped back down to $1712.70 by early afternoon in New York, but then rallied back higher in late trade and ended with a gain of 0.36%. Silver climbed to as high as $32.473 in London before it also fell back off a bit in New York, but it then rose to a new session high of $32.585 at about 1:30PM EST and ended with a gain of 2.31%.

Japan Sleepily Triggers While Everyone Is Watching Europe Posted: 18 Nov 2011 03:49 PM PST I have been closely following the Japanese Nikkei Stock Market Index ($NIKK) lately waiting for it to break down below the neckline of a big "head and shoulder-y"-type topping pattern that has been going on for over 2 years now. Well, this week it finally broke on a weekly basis. Ignoring other important global markets is a mistake for American and European traders. The fact that Japan broke down this week means there should be very little weight given to the bullish case for common equities in my opinion (unless this break down quickly reverses course, which seems unlikely at this point). Here is a 3 year weekly candlestick chart of $NIKK thru today's close with my thoughts: The target for this breakdown is below the March, 2009 lows regardless of which drawn neckline is used! A general rule for technical analysis is that the bigger and longer the formation is, the more significant it is when it finally breaks one way or the other. A second weekly close below the neckline next week would pretty much seal the deal and it may turn into a waterfall-type decline quickly if this happens. We could drop 2000 points in 2 months or less. Japanese traders have been through almost 22 years of a secular bear market with no end in sight. They are going to sell first and ask questions later and so are the international traders and investors that have ridden through the seemingly endless Japanese market storm. This breakdown, if confirmed next week, is bearish for all of the global equity markets and would cement the case for a new, potentially big leg down in the current cyclical global equity bear market in my opinion. Meanwhile, the USA gets ready to come back into the global news flow focus with its "debt committee." It should prove to be just as embarrassing as the summer debt "discussion" debacle. Don't expect any solutions, but there should be lots of finger pointing and chest thumping from the bozos driving the federal fiscal short bus. In the end, the markets should decline once again in a fairly scary fashion, just enough to get everyone panicking. That's when helicopter Ben will ride to the rescue with some new twist on printing money out of thin air (hopefully with a fancy and misleading name to boot). Until then, Gold and silver stocks as well as silver are unlikely to be safe places to hide and the Gold price may well get smacked down a little more, too. However, the next leg up in the secular Gold bull market should be rather glorious and Gold stocks should finally start to participate. In the mean time, though, buckle up for some volatility. I continue to maintain that this isn't 2008, but that's only because it's worse. If you're crazy enough to trade in this environment, consider giving my low cost subscription service a try. If you're actually sane, then just buy physical Gold (and a little silver) on every dip, store it outside the banking system and sleep well. Once the Dow to Gold ratio hits 2 (and we may well go below 1 this secular cycle), then it may be time to consider selling or trading your shiny metal for something else.

By the Numbers for the Week Ending November 18 Posted: 18 Nov 2011 02:37 PM PST HOUSTON --  Just below is this week's closing table followed by the CFTC disaggregated commitments of traders (DCOT) recap table for the week ending November 18, 2011. If the images are too small click on them for a larger version. Continued… Vultures, (Got Gold Report Subscribers) please note that updates to our linked technical charts, including our comments about the COT reports and the week's technical changes, should be completed by the usual time on Sunday (18:00 ET).   Gold and Silver Disaggregated COT Report (DCOT)   In the DCOT table below a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting "longer" and red figures are traders getting less long or shorter.  All of the trader's positions are calculated net of spreading contracts as of the Tuesday disaggregated COT report. (DCOT Table from Friday, November 18, for data as of the close on November 15.  Source CFTC for COT data, Cash Market for gold and silver.

The Four Horsemen of the Dollar Apocalypse – There Goes Rickards, Again! Posted: 18 Nov 2011 01:15 PM PST By SGT Talk about moral relativism! As he has done in past interviews on King World News, Jim Rickards is once again unethically suggesting that the U.S. government ought to consider "confiscating" (that's a synonym for "stealing" for all you home gamers) the 6,000 tonnes of gold currently being stored in the New York Federal Reserve which belongs to European nations, Japan, the IMF, etc. [See 5:40 in this video]. Rickards, who also happens to be an advisor to the Committee on Foreign Investment in the United States (CFIUS) Support Group of the Director of National Intelligence admits "It would solve the problem, but it would not be a good scenario." Mr. Rickard's suggestion, which he has now made on multiple occasions, raises three important questions which we should all feel compelled to ask: 1. How does the theft of our allies physical gold holdings NOT lead directly to war with those nations which are currently our allies? 2. If Mr. Rickards is arguing that it's perfectly acceptable to confiscate the gold of other nation states, what's to prevent the U.S. government from also confiscating the gold of the American people? 3. How exactly Mr. Rickards, is this a moral and honorable course of action? Please weigh in with your thoughts on this issue in the comment section.

James Turk Interviews Eric Sprott About Gold and Silver Posted: 18 Nov 2011 12:43 PM PST This posting includes an audio/video/photo media file: Download Now

Capital Account: Max Keiser on Financial Apartheid, Germany 4.0, and Gold vs. SDR (11/18/11) Posted: 18 Nov 2011 12:25 PM PST from CapitalAccount: As the eurozone crisis continues, could the options on the table include a German takeover? A leaked document from Germany's foreign ministry reportedly reveals the country may be preparing for a new European fund that will be able to take over the economies of struggling eurozone countries. Meanwhile, we know regulators have been trying to figure out what happened to the $600 million dollars missing from customers of MF global. And they now suspect at least some of that cash may not be missing, it may be gone. Regulators suspect it may have been used to cover trading losses at the firm that has, of course, now declared bankruptcy. The question remains as to whether more customers will react like Gerald Celente who we talked to this week and created a new interpretation of what MF really stands for. And from working on Wall Street to Occupying Wall Street, we'll talk to Max Keiser on his evolution from broker to leader of the so-called global insurrection against banker occupation. And with 75,000 layoffs expected on Wall Street, will we see more bankers join the fight?

Friday Night Irony: According To The Fed, Just Over One More Year Of ZIRP Will Lead To 38.36% Annual Inflation Posted: 18 Nov 2011 11:54 AM PST Everywhere you look these days, it seems that ZIRP, or the Fed's Zero Interest Rate Policy, is the panacea to all the world's problems. In fact, ask any tenured economy Ph.D. what inflation is and you will get a stare down, be told you are a moron, that banks need to print more, more, more and that we are really roiling in deflation, with some latent mumblings about buying their economics textbook for the inflationary price of $124.95. Everywhere, that is except the Fed itself. Because in an extremely ironic twist, it is none other than the San Francisco Fed, which operates the "Be Fed chairman for a day" simulation, where you try to keep both unemployment and inflation within the "price stabeeleetee" barriers, that reveals the reality of ZIRP. The laughter really begins when one recreates precisely what the Fed is doing: namely the policy of Zero Interest Rates, now well in its third year, that things take a turn for the surreal. We challenge any reader to play the Fed simulation game, and to do what Bernanke has done: namely lock the Fed Funds rate at the legal minimum: between 0.00% and 0.25%. In our personal experience, we were dismissed as Fed Chairman after annual inflation literally went off the charts and hit 38.36% following 4 years of ZIRP. And according to the Fed, inflation would now, 2.5 years into ZIRP, realistically be running at about 17%. Which incidentally is exactly where it is, at least for those who have not mutated sufficiently to be able to metabolize iPads and fly to and from work using their own pair of wings. Of course, every hyperinflation has a silver lining: US unemployment will be just 1.5%. Granted everyone will be making pitchforks and rope, but they would be employed.

Why Buy Silver in Times of Crisis? Posted: 18 Nov 2011 11:50 AM PST [Ed Note: This is a great Silver primer for those to whom this information is new, check it out.] In this video you are about to discover 6 compelling reasons why buying silver and owning precious metals could provide the opportunity of a lifetime. Protecting you from rampant currency inflation and the very real possibility of debt collapse.

Whatever Gold Price Downside Risk Remains Here Is Peanuts Compared to the Triple of Quadruple Upside Posted: 18 Nov 2011 11:05 AM PST Gold Price Close Today : 1,724.70 Gold Price Close 11-Nov : 1,787.50 Change : -62.80 or -3.5% Silver Price Close Today : 3241.3 Silver Price Close 11-Nov : 3467.1 Change : -225.80 or -6.5% Gold Silver Ratio Today : 53.210 Gold Silver Ratio 11-Nov : 51.556 Change : 1.65 or 3.2% Silver Gold Ratio : 0.01879 Silver Gold Ratio 11-Nov : 0.01940 Change : -0.00060 or -3.1% Dow in Gold Dollars : $ 141.39 Dow in Gold Dollars 11-Nov : $ 140.54 Change : $ 0.84 or 0.6% Dow in Gold Ounces : 6.840 Dow in Gold Ounces 11-Nov : 6.799 Change : 0.04 or 0.6% Dow in Silver Ounces : 363.93 Dow in Silver Ounces 11-Nov : 350.52 Change : 13.41 or 3.8% Dow Industrial : 11,796.16 Dow Industrial 11-Nov : 12,152.93 Change : -356.77 or -2.9% S&P 500 : 1,215.65 S&P 500 11-Nov : 1,263.73 Change : -48.08 or -3.8% US Dollar Index : 78.081 US Dollar Index 11-Nov : 76.906 Change : 1.175 or 1.5% Platinum Price Close Today : 1,593.30 Platinum Price Close 11-Nov : 1,643.20 Change : -49.90 or -3.0% Palladium Price Close Today : 606.10 Palladium Price Close 11-Nov : 660.95 Change : -54.85 or -8.3% The GOLD PRICE failed in its second try at $1,800. Reached for it on Monday, but fell back to $1,760 - $1,765 and traded sideways through Wednesday. Once it broke $1,740 on Thursday, gold tumbled all the way to $1,711. Can't interpret that as anything but a breakdown. This should be the second and final leg down we've been waiting for. How far will it run? Support remains at $1,705, and below that at $1,675. The GOLD PRICE caught this week at the 50 dma (1,715.80) but next week might reach $1,675. If that holds not, then look at $1,600, $1,536, and $1,475. Today the GOLD PRICE gained $4.90 to close Comex at $1,724.70, a flat wee bounce after falling $54.00 yesterday. In view of the unsolved European crisis and the ripeness of this gold correction, I am ready to start buying by averaging down. Buy some at $1,705, $1,675, $1,605, etc. BECAUSE I DO NOT KNOW WHERE THIS WILL START BUT I AM CONFIDENT GOLD REMAINS IN A BULL MARKET WITH FAR MORE UPSIDE. Whatever 10% or even 20% downside risk remains here is peanuts compared to the triple or quadruple upside. The SILVER PRICE was taken to the same woodshed as gold. Once it broke 3350c on Thursday, silver never stopped until it hit 3088c. Today it rebounded, but not with anything more than a dead cat bounce to 3250c. To gainsay this breakdown, silver would have to close above 3250c then rapidly above 3400c. Down below several landing zones appear possible. 3000c is one, then 2850, and finally 2600c. Lower prices are possible, but not likely. I expect to see most of the metals' downside in the next two weeks, if not sooner. DON'T MISS THIS: Right now, when every timid heart, including your own, is trembling, audacity and a cool head will pay off. Now is the time to buy, not when all the silly media cheerleaders have discovered a strong upward trend and prices are running away to the upside. GOLD SILVER RATIO swappers should mark that my commentary yesterday contained an error. I meant to recommend you swap silver for GOLD, not vice versa. Ratio is rising, which means silver is growing cheaper against gold, and we always swap from the dear metal into the cheap. If you swapped silver for gold in the spring at any level lower than 42:1, you can swap gold for silver now and realize gains in silver ounces above 28.5%. Me, I would scoop those ounces off the table and into my lap. SWAPPERS who swapped higher than 42:1 keep on waiting for a 57.5:1 ratio, which may come soon. Delude not thyself, neither listen to siren voices blaring that the precious metals bull market has ended. It has not, and will run to yet greater heights in the next 3-10 years. I don't know what happened and can't find out yet, but my commentary for 17 November was not sent out or posted to the website (there was none for 16 November). Whenever they're not posted at www.the-moneychanger.com you can also check at www.goldprice.org, where they are also posted. The week was not kind to the little things, or to anything else, except the US dollar index. Ever-volatile silver and palladium took the deepest wounds, but stocks didn't lag far behind. Never mind the two bank-owned shills who seized power in Greece and Italy, markets are not satisfied. That fear and uncertainty is churning all markets, and will until some real solution is brought forth. By the way, "real solution" includes not "haircuts" for the banks, but "eviscerations." A debt jubilee. Debt is so huge that it can't be paid without perpetual debt slavery. This crisis snowball is fast rolling down hill, and soon will speed out of control, I fear. Before I say anything, I want y'all to know I'm tearing the tops off the charts and reading out whatever they say, good or bad. If y'all don't like it, don't shoot the messenger. Stocks this week fell down out of an even-sided triangle at 11,950 and gives the Dow an initial target of 11,250, below the 50 day moving average (11,523 today). Now looks as if the Dow will NOT make any final push up after all. All this is a breakdown after a Jaws of Death has formed, a most reliable top formation. Bad vibes. Bad karma. Bad juju. Today the Dow gained 25.43 (measly 0.22%) to close at 11,796.16. S&P, on the other hand, dropped 0.48 (0.004%) to 1,215.65, while the Nasdaq Composite and Nasdaq 100 both closed slightly lower. That argument signals bewilderment in the market, and bewildered markets don't rally, generally. Stocks -- somebody (not I) might be able to pick winners in the next 4 years, but there' won't be many. Most will be mauled by the bear. US DOLLAR INDEX dropped 20.1 basis points today (0.26%) to 78.081, but look, folks, it jumped in one week 117.5 basis points 1.5%. Money fleeing Europe is driving it, and will drive it. It is rallying, and could reach 83.15. The Japanese Nice Government Men will have to tame the rambunctious yen, and right soon. Without exports, Japan will become an island of unsalable parked cars. They've hit it twice since the earthquake, but every time it comes right back -- lots of scared money out there looking for a refuge. They must hit it again soon. Today at 129.98c/Y100 (Y76.93/$1). The world is so scared of the Euro that it has gapped down twice in the last two weeks and will continue to fall toward 1.2000. Closed today 1.3515, up 0.39%. We have a beautiful glowing red-orange fall sunset here this evening, better than fine wine. Y'all enjoy your weekend! Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2011, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose.

Gold 1695 Former Resistance Now Interim Support Posted: 18 Nov 2011 10:30 AM PST courtesy of DailyFX.com November 18, 2011 08:43 AM 300 Minute Bars Prepared by Jamie Saettele, CMT Gold has slowly crawled higher for nearly 2 months but has yet to retrace the entire September decline. As long as the channel holds, respect the potential for a continuation of what started in September (sharp declines). Gold has dropped below 1735 thus triggering a bearish bias. Former resistance at 1695 is interim support. Latest Video Other TA Articles...

More price suppression on eve of option expiry, Embry tells King World News Posted: 18 Nov 2011 09:57 AM PST 5:55p ET Friday, November 18, 2011 Dear Friend of GATA and Gold (and Silver): Interviewed today by King World News, Sprott Asset Management's John Embry marvels at the comprehensiveness of gold and silver price suppression on the eve of another futures market option expiry date. An excerpt of Embry's comments is headlined "Tremendous Manipulation of Both Gold and Silver" and you can find it at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/11/18_J... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Be Part of a Chance to Discover Multi-Million-Ounce Gold and Silver Deposits in Canada Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada. Check out the exploration program on our Allco gold/silver project : -- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit. -- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries. -- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited. To learn more about the Allco property or Northaven's other gold and silver projects, please visit: http://www.northavenresources.com Or call Northaven CEO Allen Leschert at 604-696-3600. Support GATA by purchasing a silver commemorative coin: 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 The United States Once Again Can Establish a Stable Dollar Worth Its Weight in Gold Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, has released a plan to restore economic growth through a stable dollar. The plan, titled "The True Gold Standard: A Monetary Reform Plan Without Official Reserve Currencies," responds to the recurrent economic crises of the last century and outlines a detailed proposal for America's leadership on "how we get from here to there." That is, how we get from the present unstable paper dollar to a stable dollar as good as gold. 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

John Embry: Tremendous Manipulation of Both Gold & Silver Posted: 18 Nov 2011 09:56 AM PST from King World News: With gold trading at $1,725 and silver above $32, today King World News interviewed John Embry, Chief Investment Strategist of the $10 billion strong Sprott Asset Management to get his take on where he sees gold, silver, the US dollar and the mining shares headed. When asked about the Australian Conference, where he was a keynote speaker, and the action in gold and silver, Embry responded, "I just got back from Australia last night and I thought the conference was absolutely outstanding. It was a credit to everyone involved in organizing the event, it was first class. As far as the action in gold, I don't want to be arrogant, but I actually know that we have a big option expiry coming up on Tuesday and this is just business as usual." John Embry continues: Read More @ KingWorldNews.com

Ford library confirms Fed letter tying Germany to gold price suppression Posted: 18 Nov 2011 09:51 AM PST Thanks to our friend A.F. in Australia, the Gerald Ford Presidential Library in Ann Arbor, Michigan, has confirmed the authenticity of the letter written to the president by Federal Reserve Board Chairman Arthur Burns on June 3, 1975, revealing the participation of the West German central bank, the Bundesbank, and the chancellor of West Germany at that time, Helmut Schmidt, in the international gold price suppression scheme.

Timing the Gold Market Posted: 18 Nov 2011 09:40 AM PST Every investor knows that it's hard to time the market. But Ron Struthers, editor of Struthers' Resource Stock Report and a 25-year investment veteran, has been able to weave his way in and out of the market with aplomb this year. In this exclusive interview with The Gold Report, Struthers tells what he's seeing in his technical analysis that is signaling it's time to buy back in after selling off many gold equities in April.

Whom Can You Trust? Posted: 18 Nov 2011 09:37 AM PST Dave Gonigam – November 18, 2011 "Entire system" is "utterly destroyed"… Broker shuts down her futures and options business to protect clients… "Short banks, " suggests Barry Ritholtz, "long mattresses"… is there any trust left in the system? S&P breaks an important level: down. What's next after 1,225? Goldman takes over the eurozone: Michael Pento on the coming crackup there… and here Canuck reader slams U.S. customs, Yank slams the Canucks… The 5 invokes Rodney King… and more! "I could no longer tell my clients that their monies and positions were safe," a broker named Ann Barnhardt said upon closing her small Colorado firm, "because they are not." We were torn today… show a photo of the pre-holiday deep-fried turkey fest going on downstairs? Or recap the jeremiad Ms. Barnhardt wrote after making the decision to close her firm had gone viral. The jeremiad won. Here's why: The warning "goes not just for my clients," Ms. Barnhardt wrote "but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse." And with that, we're reasonably confident the names MF Global, former New Jersey Gov. Jon Corzine and the Greek sovereign crisis of 2011 have ascended to the pantheon of fiat tragedies right alongside such luminaries as Enron, Jeff Skilling and the Asian Contagion. Welcome… "I have learned over the last week that MF Global is almost certainly the tip of the iceberg," Ms. Barnhardt goes on filling in some insignificant details you may also like to know. "There is massive industrywide exposure to European sovereign junk debt… In short, the problem is a systemic problem, not merely isolated to one firm." Ann had the courage of her convictions to close her firm rather than see her clients get cleaned out. "You do realize that the theft of customer funds is a first," writes a peeved MF Global client to the firm. The letter was reproduced by our friend and Vancouver favorite Barry Ritholtz on his blog The Big Picture. (Barry gives no indication of this individual's identity, except that he used to be a "big swinging Richard" at a major Wall Street firm who now trades his own account and is out $100,000 at MF Global.)" "Outright crude theft — well, that is indeed a new phase in our culture," this individual goes on. "Just for fun, I like to speculate on what the oligarchs think will happen once they get all the loot and leave the smoldering remains of a once great country." "I bet not many have actually tried to set up a bank account overseas — they will find that no one wants American clients!" "They will also find that the pittance they looted won't go too far — maybe a studio apartment on the outskirts of town, a couple of beers and some local hookers — your money is no good here, etc., etc." "Most of all they will be aliens who have to line up to get temporary visitor visas, etc." Barry's reaction: "A paired trade: Short Banks, Long Mattresses." You may recall gold bull Gerald Celente lost a bundle at MF Global buying gold futures, expecting to take delivery of actual metal. Whoops. Bill Fleckenstein, whom we've also published in our pages, was caught up in it too. You may sympathize. Many readers do. At least judging by the survey responses we got last month to Project X: "Wall Street can't be trusted," said one. "Neither can Washington. What's an honest American retiree to do? A $15 trillion unpayable debt, and both Wall Street and the administration are acting like there is no problem." "I no longer trust the government, public companies or the financial industry," says another. "The accounting rules are in shambles and untrustworthy." "It seems like the old rules of finance don't apply anymore," writes a third, "and I don't even know whom to trust for advice." (More from the surveys below…)" U.S. stocks are staging a weak recovery this morning — nowhere near enough to put the major indexes in positive territory for the week. The S&P 500 sits at 1,220 — below the key support level of 1,225 that Penny Momentum Trader editor Jonas Elmerraji has been watching closely. "1,225 has been acting as a barrier above the trading range that stocks were stuck in for most of the late summer," he explains. "Yesterday's break of support is not yet a statistically significant move. That said, it could become one." "It'll be important to see whether stocks can still stage a bounce off of their current levels. If they do, we've got a nice second chance at low prices for equities. If the demand for 'the market' can't exceed supply here around 1,225, investors should expect more churning to end 2011." Helping the weak recovery today — or at least arresting the decline — is a bigger-than-expected increase in the Conference Board's leading economic indicators. They jumped 0.9% in October… and unlike recent increases, this one can't be chalked up to low interest rates and rising money supply. There's real economic activity out there this time. Unfortunately, most of that activity shows up in new housing permits — up nearly 11% from the month before. As if there's not already a glut of housing out there. The dollar index is winding down the week clinging to the 78 level, while the euro sits at $1.352. For the moment anyway, euro matters have stabilized after Italy's new prime minister Mario Monti won a confidence vote today in the lower house of Parliament. For the first time, a Goldman Sachs alum has secured his place atop a European government. There are others in high positions, too — as helpfully pointed out in this infographic from the London Independent. (Click to enlarge.) "The European debt debacle continues to unravel," says our own Michael Pento, keeping an eye on the long term, "yet many investors fail to recognize the profound ramifications of taking the largest economy on the planet offline." "Can there really be any safe haven country when global GDP is on the precipice of a sharp decline? The truth is that Europe, and quite possibly Japan and the U.S., face a recession in 2012 due to a full-blown bond market crisis." Mr. Pento considers Greece and Italy harbingers of what's to come: "Neither country is growing, and their debt to GDP ratios have soared well above 100% and their bond markets are now in full revolt. The sad fact is that their debt levels have become so intractable that both bond markets have now been placed on the life support of the European Central Bank." "However, regardless of central bank intervention, interest rates rise to a level in which most of the country's tax revenue must be used to service the interest payments on the debt. It is at this point where investors fears become a mathematical reality and the country finds paying down the principal of the debt an impossibility." At that point, there are only two options: Default or inflate. Mr. Pento believes both Europe and the United States will opt to inflate. "That is why gold is a buy," he says, "especially when you are fortunate enough to get a pullback." A pullback came after we went to press yesterday. And at last check, gold hasn't staged a recovery — the spot price is $1,725, near its lows for the month. Silver has huffed and puffed its way back above $32. Demand for the Midas metal is outstripping supply, according to the World Gold Council. Gold demand grew to 1,053.9 metric tons during the third quarter — a 6% increase from a year ago. Falling jewelry demand was overcome by demand for ETFs, bars and coins. Supply, meanwhile, couldn't keep up — totaling 1,034.4 metric tons. And that's despite a 5% increase in mine output. The WGC report attributes the growth in demand to — what else? — a flight to safety from the eurozone crisis. "A Chapter 11 bankruptcy filing is possible soon," Dan Amoss warns of American Airlines parent AMR Corp. Six weeks ago, trading in AMR was halted as rumors swirled and shares touched $2. Today, they're $1.80. "In theory," says Dan, "AMR has enough cash to sustain losses and roll over its maturing debts for a few more quarters." But in reality it has few assets it can put up as collateral in a "debtor in possession" loan. "Much of AMR's revenue-generating equipment," Dan explains, "is already pledged as collateral for existing loans. So in order to maximize the chances of a successful Chapter 11 restructuring — and avoid a tragic Chapter 7 liquidation — management would want to enter bankruptcy with as much cash as possible." Readers of Strategic Short Report are already up 73% shorting AMR; Dan's telling them to hold on for even more gains. To our ongoing chronicle of "new taxes and weird fees" we add two more instances of, umm, unconventional revenue-raising measures. Here in Maryland, the comptroller hopes to shame people into paying back taxes, so he's posted the names of the state's top 50 tax scofflaws online. "The Comptroller of Maryland is serious about retrieving unresolved tax liabilities," says a statement accompanying the list. "No one is above the tax laws. If you don't want to see your name posted on our site along with other tax delinquents, be sure to keep up with your tax obligations." Combined, the state says the top 50 owe $21 million. Then there's the crackdown on roll-your-own cigarette machines at tobacco shops. It's a phenomenon most nonsmokers are unaware of — unless they're in charge of collecting tax revenue. Ground zero this week is Worcester, Mass. — where rolling your own is the difference between a $2.50 pack of smokes and an $8 pack, as long as you use a variety of pipe tobacco that's subject to much-lower federal taxes. So there's a move in Worcester to ban the machines. It's a public health thing, you see. "B. Dale Magee, the city's commissioner of public health, told the city council Tuesday the machines could lead to an increase in cigarette smoking because they reduce the cost of a pack of cigarettes by about two-thirds," reports the Worcester Telegram. The logic: Ban the roll your own machines… people can't save the money… they'll stop smoking as much. Easy, peasy. How much tax revenue Worcester stands to lose, the paper does not say. But we're sure the thought never even entered the minds of Worcester's wise stewards. The feds? They've taken their own stand already. Last year, they declared smoke shops with roll-your-own machines are "manufacturers" of tobacco products… and thus must obtain permits and pay taxes on the cigarettes produced. We're sure this too is for the sake of the smoking public. "During my 40-year carrier in the oil patch," writes another Canadian reader fed up with the U.S., "I have traveled by air to the U.S. for business and pleasure more than 2,000 times. I have also held a NEXUS card since the beginning of the program, which is issued by the U.S. government and supposedly identifies me as a 'trusted traveler.'" "I stopped traveling by air to the US about two years ago. But last month I decided to go to San Diego for pleasure, and, against my better judgment, decided I would fly." "After checking in at the airport in Calgary, having my iris scanned to prove I was a 'trusted' traveler and proceeding into US customs, we were pre-cleared in Calgary for entrance into the US. I presented myself to the US immigration officer." "As I handed him my passport and casually remarked that 'the immigration hall was not very busy this morning,' he looked at me with complete disdain and said, 'I have no interest in having any conversation with you' and then proceeded to grill me as to the purpose of my visit, my occupation, how much cash I had on me, etc., etc., etc." "That is the last time I will ever travel to the U.S. by air. The border guards at land crossing are still 'reasonably' pleasant. When they start to act like the border guards in airports, I will stop traveling to the U.S., period." "It's a real shame. The general population in the U.S. seems like most places in the world. The vast majority are really nice people. But [in the airports], the zombies are taking over!" "The man from Canada who didn't like the U.S. Customs officials' attitudes should look in his mirror," writes an American reader as if in response. "After a couple of encounters with Canadian Customs officials, it is my firm contention that no one is hired to be a Canadian Customs official unless they swear that they have an undying hatred for America, Americans and anything to do with America." "The last time I attempted to cross into Canada, the Canadian Customs jackass tore my truck apart, and after tearing my truck apart and searching me finally told me, 'Well, I don't find anything you shouldn't have, but you are not welcome here in Canada. Go back to the USA, and if you ever come back to Canada, you'll be arrested and thrown in jail for the rest of your worthless life.'" "Real friendly those Canadian Customs a-holes." The 5: Can't we all just get along? "Your novel booksafe and all the readers' hiding suggestions," writes our final correspondent, "are very clever — as long as nobody in the criminal realm is reading or knows somebody who is reading The 5." "And of course, we don't assume any 5 reader will one day become desperate enough to go criminal." The 5: We're always surprised to learn anyone is reading The 5! There are only a handful of the booksafes left. If you're still interested, call John Wilkinson at (866) 361-7662. Have a good weekend, Dave Gonigam The 5 Min. Forecast P.S. "I've already spent most of my retirement these last few years, as my business of 25 years has slowed to nothing," writes another reader who replied to our Project X survey." "My trust in the financial system has been broken; what's most troubling is my now deceased father was my financial planner. Leaders in America are purposely destroying its morality, allowing its own destruction. I sense the workings of an evil master that wants to control, steal and destroy." "My biggest concern," writes another, "is that our federal government is fundamentally broken, that very few, if any, in D.C. understand or are capable of understanding; that even fewer have the political will to do anything about it; and that even if anyone did have the political will, the electorate cannot and would not be able to accept or tolerate solutions that address the ROOT cause(s) of the problem(s). "It is far more serious than just trying to fix or patch the economy. It isn't just the financial system, it is the entire way that our government does business." "The financial system," writes another reader, spelling out his top concerns, "will be so filled with fraud, government intervention and insider trading that an average investor will have no chance to earn a reasonable return from any investment." "Picture the next 30 years with no prudent options for investing money: Everything will be high risk and unpredictable except for those who are on the inside." The following letter will be sent to Agora Financial readers later today: By now, I'm sure you've heard Addison mention his super secretive "Project X." "The project is unlike anything we've done before," he's explained. "It's not a newsletter, book, documentary or conference." "Instead, it's a radical new way to help you develop the power and confidence to build lasting wealth." Now… for the first time… he's finally given me the green light to share Project X with you. Click here to discover what Addison's been keeping a secret for so long… Joe Schriefer Publisher, Agora Financial P.S. One more thing… YOUR participation is critical in this project. So after you finally discover what Project X is, we welcome your thoughts on how to improve it. Tell me what you like about the project. Conversely, tell me what you don't like. First though, you need to check out the Project right here.

John Embry - Tremendous Manipulation of Both Gold & Silver Posted: 18 Nov 2011 09:25 AM PST With gold trading at $1,725 and silver above $32, today King World News interviewed John Embry, Chief Investment Strategist of the $10 billion strong Sprott Asset Management to get his take on where he sees gold, silver, the US dollar and the mining shares headed. When asked about the Australian Conference, where he was a keynote speaker, and the action in gold and silver, Embry responded, "I just got back from Australia last night and I thought the conference was absolutely outstanding. It was a credit to everyone involved in organizing the event, it was first class. As far as the action in gold, I don't want to be arrogant, but I actually know that we have a big option expiry coming up on Tuesday and this is just business as usual." This posting includes an audio/video/photo media file: Download Now

Guest Post: The Reasons For China's Imminent Bust Posted: 18 Nov 2011 09:00 AM PST Guest Post via ChrisMartenson.com The global dominant narrative about China is wrong, claims Gordon Chang. Don't expect it to be the 'pocketbook of last resort' that will rescue world markets from their current malaise. And don't expect its remarkable economic growth to continue. In fact, expect a "hard landing" for China - and soon. Forbes.com columnist and international lawyer Gordon Chang has spent much of his time since the early 1980s working and living in China. His primary knowledge of the country and his relationships there give him a superior understanding to how its economy is actually faring than many analysts based in the West. And what he sees today doesn't inspire confidence. We are seeing the first real signs of slowdown in China's economic growth looking at the year-over-year numbers for the past several months. Car sales have decreased nearly 5% since last year, and property values are beginning to plummet in key markets (30% in October alone in Shanghai). Gordon sees these as the inevitable harbingers of a coming collapse in China due to excessive stimulus policies the government undertook starting in 2009. The bubbles and malinvestment created by this stimulus have not been addressed, and increasing weakness and transitions inside the political system are making it less likely they will be before market forces intervene. On The Repercussions of Excessive Stimulus Inefficiency eventually catches up with every economy. They have a semi-closed system so that they are not necessarily subject to the principles of economics in the same way that we are, but they can only delay the inevitable. They cannot prevent it entirely, and that is really going to be their problem. Because they have done a lot which just does not make economic sense. I mean it might make sense in terms of rapid buildup of an economy, but they have to pay a price. And they have not paid their price yet.   The one thing that people say is "These Chinese leaders are so great at economic management because they got through 2008-2009 and they had enormous double-digit growth while the rest of us were suffering." Well yes, they did that but they did that at great cost.   And so for instance in 2009, the first full year of their stimulus plan, they dumped something like $1.1 trillion into a then $4.3 trillion economy. And so did they create growth? Yes, they did, but they also created a stock market bubble, a property market bubble, and inflation. And they have yet to deal with the property market and the inflation problems. Those are dislocations that they do not have the answers to. I would rather have our economic problems than theirs any day of the week.      On Growing Political & Social Instability Starting at the end of next year, the Communist party is going to change the officers of their Politburo Standing Committee, the apex of political power in China. We are going to have a new General Party Secretary. And then in the early part of 2013, the government officers change. And sometime after that, the all-important Central Military Commission has a revamp of membership. And so at this time of political transition, the important economic decisions are not being made. But it is even worse than that, because corruption indeed is engulfing the political system. It is causing so much friction in society. The Communist Party is not able to mediate conflict and its only answer is to increase coercion.   And that is why you have survey after survey of the rich and the super-rich, they talk about leaving China. It is not the poor who are going, which we have seen in many waves throughout the last couple hundred years, now the rich are thinking of getting out. They are getting passports, they are putting their families offshore, and this is of concern because this is a leading indicator.   If you go about 25 miles south of where I live, and go to Princeton, New Jersey, you will see a lot of beautiful homes. I mean, they are all paid for, they have got a wife there, they have kids, and they have one or two Mercedes in the driveway. It is the perfect American family, except one thing is missing, and that is Dad. Dad is a senior official in Beijing and he is stealing as much money as he can. And at maybe not the first sign of trouble, but perhaps the second sign of trouble, he is on the United flight to New York, because he is not going to stay to defend a regime that is shaking. And that is one of the reasons why I think we have to be concerned about the way the Chinese economy is going, because the Chinese rich are starting to see the signs and are beginning to bail out.   We are talking about the people who have benefited the most from this system. And they can see the problems at the top of society. We have now a weak General Party Secretary, Hu Jintao, and he is going to be followed by probably by someone who is just as weak, especially in his beginning years, Xi Jinping. This is a political system that will not be able to make the decisions and to implement them that everyone knows have to be made. And that is why, for instance, we have not seen much in the way of reform over the last five years. In fact, we have seen a reversal of reform. And most of the conditions that have given rise to China's extraordinary growth either no longer exist or are disappearing fast. And so this is an economy in trouble.   On The Popping of China's Real-Esate Bubble There was just too much money in the economy and so people then poured money into apartments. And China has gone on a tear building ghost cities and all the rest of it. And now the progression that you talked about -- skyrocketing prices and then stable prices, selling volume, and then property price declines -- is what we are seeing in China.   In October, last month, prices in places like Shanghai declined 30%, as we saw developers start to offer these enormous discounts. And by the way, these discounts were so big that people who bought at earlier stages in these same developments, where these discounts were being offered have now taken to the streets complaining if you are giving 30% discounts to these other guys, then give it to me as well. And so we have not got a little bit of social unrest because of falling property prices.   In Wenzhou, which is in prosperous Zhejiang Province, which was perhaps the most prosperous province up to about a year ago, developers are, one developer is now offering BMWs to the first 150 buyers of apartments. And this is just a sign that property prices have not only softened, but they are starting to fall quickly.   You know, every market has to go to equilibrium. There are too many apartments in China and not enough buyers and occupiers. And it was going to go to equilibrium in some fashion. What is really surprising observers is that the rapidity at which we see this move to equilibrium. Last year there were, in about I guess it was April or May, the state grid in China reported there were 64.5 million apartments that showed no electricity usage for six consecutive months. That is enough housing for 200 million people, but yet Beijing was decreeing the building of 30 to 50 million more apartment units....   But at the end of the day, there has got to be a correction. And what goes up fast comes down fast. And what we are seeing is the down phase. The only issue is whether Beijing can stop the down phase by administrative measures. But so far the Chinese leaders, Premier Wen Jiabao, last Sunday said "nope, we are going to stay with these tightening measures." And that has really created great pessimism in the Chinese property market...   And so really what we have is a government now that is really trying to bring the property market down. And of course it wants to do so gradually, you know, orderly. But as you say, it is a bubble, there is a pin and the problem is that Chinese leaders cannot manage the process of bringing the property market down to equilibrium....   When China's elite analysts start talking about prices being 50% of where they are this year that means that they are probably privately thinking that no, prices will not halve: they might go down even further than that. And that is really a problem because that mentality, once it gets embedded in people's minds in China really means that, Chinese leaders then have very few tools in which to prop up the property market.       Click the play button below to listen to Chris' interview with Gordon Chang (runtime 40m:55s):  iTunes: Play/Download/Subscribe to the Podcast Download/Play the Podcast Report a Problem Playing the Podcast Or click here to read the full transcript.

Guest Post: The Reasons For China's Imminent Bust Posted: 18 Nov 2011 09:00 AM PST Guest Post via ChrisMartenson.com The global dominant narrative about China is wrong, claims Gordon Chang. Don't expect it to be the 'pocketbook of last resort' that will rescue world markets from their current malaise. And don't expect its remarkable economic growth to continue. In fact, expect a "hard landing" for China - and soon. Forbes.com columnist and international lawyer Gordon Chang has spent much of his time since the early 1980s working and living in China. His primary knowledge of the country and his relationships there give him a superior understanding to how its economy is actually faring than many analysts based in the West. And what he sees today doesn't inspire confidence. We are seeing the first real signs of slowdown in China's economic growth looking at the year-over-year numbers for the past several months. Car sales have decreased nearly 5% since last year, and property values are beginning to plummet in key markets (30% in October alone in Shanghai). Gordon sees these as the inevitable harbingers of a coming collapse in China due to excessive stimulus policies the government undertook starting in 2009. The bubbles and malinvestment created by this stimulus have not been addressed, and increasing weakness and transitions inside the political system are making it less likely they will be before market forces intervene. On The Repercussions of Excessive Stimulus Inefficiency eventually catches up with every economy. They have a semi-closed system so that they are not necessarily subject to the principles of economics in the same way that we are, but they can only delay the inevitable. They cannot prevent it entirely, and that is really going to be their problem. Because they have done a lot which just does not make economic sense. I mean it might make sense in terms of rapid buildup of an economy, but they have to pay a price. And they have not paid their price yet.   The one thing that people say is "These Chinese leaders are so great at economic management because they got through 2008-2009 and they had enormous double-digit growth while the rest of us were suffering." Well yes, they did that but they did that at great cost.   And so for instance in 2009, the first full year of their stimulus plan, they dumped something like $1.1 trillion into a then $4.3 trillion economy. And so did they create growth? Yes, they did, but they also created a stock market bubble, a property market bubble, and inflation. And they have yet to deal with the property market and the inflation problems. Those are dislocations that they do not have the answers to. I would rather have our economic problems than theirs any day of the week.      On Growing Political & Social Instability Starting at the end of next year, the Communist party is going to change the officers of their Politburo Standing Committee, the apex of political power in China. We are going to have a new General Party Secretary. And then in the early part of 2013, the government officers change. And sometime after that, the all-important Central Military Commission has a revamp of membership. And so at this time of political transition, the important economic decisions are not being made. But it is even worse than that, because corruption indeed is engulfing the political system. It is causing so much friction in society. The Communist Party is not able to mediate conflict and its only answer is to increase coercion.   And that is why you have survey after survey of the rich and the super-rich, they talk about leaving China. It is not the poor who are going, which we have seen in many waves throughout the last couple hundred years, now the rich are thinking of getting out. They are getting passports, they are putting their families offshore, and this is of concern because this is a leading indicator.   If you go about 25 miles south of where I live, and go to Princeton, New Jersey, you will see a lot of beautiful homes. I mean, they are all paid for, they have got a wife there, they have kids, and they have one or two Mercedes in the driveway. It is the perfect American family, except one thing is missing, and that is Dad. Dad is a senior official in Beijing and he is stealing as much money as he can. And at maybe not the first sign of trouble, but perhaps the second sign of trouble, he is on the United flight to New York, because he is not going to stay to defend a regime that is shaking. And that is one of the reasons why I think we have to be concerned about the way the Chinese economy is going, because the Chinese rich are starting to see the signs and are beginning to bail out.   We are talking about the people who have benefited the most from this system. And they can see the problems at the top of society. We have now a weak General Party Secretary, Hu Jintao, and he is going to be followed by probably by someone who is just as weak, especially in his beginning years, Xi Jinping. This is a political system that will not be able to make the decisions and to implement them that everyone knows have to be made. And that is why, for instance, we have not seen much in the way of reform over the last five years. In fact, we have seen a reversal of reform. And most of the conditions that have given rise to China's extraordinary growth either no longer exist or are disappearing fast. And so this is an economy in trouble.   On The Popping of China's Real-Esate Bubble There was just too much money in the economy and so people then poured money into apartments. And China has gone on a tear building ghost cities and all the rest of it. And now the progression that you talked about -- skyrocketing prices and then stable prices, selling volume, and then property price declines -- is what we are seeing in China.   In October, last month, prices in places like Shanghai declined 30%, as we saw developers start to offer these enormous discounts. And by the way, these discounts were so big that people who bought at earlier stages in these same developments, where these discounts were being offered have now taken to the streets complaining if you are giving 30% discounts to these other guys, then give it to me as well. And so we have not got a little bit of social unrest because of falling property prices.   In Wenzhou, which is in prosperous Zhejiang Province, which was perhaps the most prosperous province up to about a year ago, developers are, one developer is now offering BMWs to the first 150 buyers of apartments. And this is just a sign that property prices have not only softened, but they are starting to fall quickly.   You know, every market has to go to equilibrium. There are too many apartments in China and not enough buyers and occupiers. And it was going to go to equilibrium in some fashion. What is really surprising observers is that the rapidity at which we see this move to equilibrium. Last year there were, in about I guess it was April or May, the state grid in China reported there were 64.5 million apartments that showed no electricity usage for six consecutive months. That is enough housing for 200 million people, but yet Beijing was decreeing the building of 30 to 50 million more apartment units....   But at the end of the day, there has got to be a correction. And what goes up fast comes down fast. And what we are seeing is the down phase. The only issue is whether Beijing can stop the down phase by administrative measures. But so far the Chinese leaders, Premier Wen Jiabao, last Sunday said "nope, we are going to stay with these tightening measures." And that has really created great pessimism in the Chinese property market...   And so really what we have is a government now that is really trying to bring the property market down. And of course it wants to do so gradually, you know, orderly. But as you say, it is a bubble, there is a pin and the problem is that Chinese leaders cannot manage the process of bringing the property market down to equilibrium....   When China's elite analysts start talking about prices being 50% of where they are this year that means that they are probably privately thinking that no, prices will not halve: they might go down even further than that. And that is really a problem because that mentality, once it gets embedded in people's minds in China really means that, Chinese leaders then have very few tools in which to prop up the property market.       Click the play button below to listen to Chris' interview with Gordon Chang (runtime 40m:55s):  iTunes: Play/Download/Subscribe to the Podcast Download/Play the Podcast Report a Problem Playing the Podcast Or click here to read the full transcript.

Ron Struthers: Timing the Gold Market Posted: 18 Nov 2011 08:50 AM PST The Gold Report: Ron, you said in your report that you're buying back most of the equities you sold in April. Why is it time to get back into the market? Ron Struthers: Most of these stocks have been valued at $1,100/ounce (oz) of gold. They're not pricing the rise in the price of gold at all yet. There's a disconnect or disbelief in the market. Precious metal stocks have corrected way too far, to valuations we have not seen since the 2008 credit crisis. Following that crisis our average yearly return on my precious metal picks was 155% in 2009 and 99% in 2010. I see this opportunity again. TGR: Is that because the market is expecting the price for gold to come down? RS: That is the expectation, of course not among a lot of the goldbugs, myself included. Some see higher prices, but the general view of the mainstream investment community is the gold price is expected to come down. It is seen by them as rising too far, they do not understand what influences the gold market, and th...

US Deficit-Cutting Talks Appear to Be Near Collapse Posted: 18 Nov 2011 08:38 AM PST 18-Nov (Reuters) — A high-profile effort to trim stubborn U.S. budget deficits appeared near collapse Friday as Democrats and Republicans were unable to agree on tax increases and benefit cuts. A 12-member "super committee" in Congress has until midnight Wednesday to strike a deal that would save at least $1.2 trillion over 10 years. Members say they think a deal is still possible, but privately aides are more pessimistic. Friday is shaping up to be a make-or-break day, one super committee member said. "We should know by end of today, and I'll give myself until 11:59 p.m., as to whether or not there will be a deal," Democratic U.S. Representative Xavier Becerra of California said at a renewable-energy conference. [source]

Disquietingly Calm End To Calamitous Week Posted: 18 Nov 2011 08:26 AM PST The middle of the week appeared to be the storm before the quiet of today before the potential storm of next week with aggressive action by the ECB this morning seeming to calm fears (and raise hopes of more) as risk assets were generally calmer today. Amid dismally low volumes, ES ended the day very marginally lower (led by Tech and Energy), commodities were mixed, IG credit outperformed TSYs and HY credit, and FX vacillated back to unchanged in general capping another week of strengthening USD vs the Majors (except JPY). US equities shrugged off a broad risk-off shift early in the day (driven by Oil and TSYs mainly) as OPEX seemed the focus of controlling intraday vol with CONTEXT and ES closing the week in almost perfect agreement (leaving cash S&P -3.3% YTD vs Gold +21.3% YTD). Before considering global risk assets and US markets specifically, it seems appropriate to reflect on the movements in Europe that were so critical to this week's risk appetite globally. Spain ended the week 80bps wider relative to Bunds as it appeared the ECB was focusing all its buying power on France and Italy. French 10Y bond spreads miraculously ended the week unchanged (after being over 50bps wider early Thursday) and BTPs rallied 70bps (in spread) from early Thursday to end the week a mere 10bps wider. EFSF spreads were clearly soaking up this risk transfer ending the week 20bps or so wider (and peaking over 200bps at their worst). 10Y TSY-Bunds spread compressed 14bps on the week also (and over 20bps from their wides) as Bunds dramatically underperformed TSYs - this is noteworthy as it was not rotation from peripheral debt to core but from Europe to non-Europe. Using CONTEXT as a proxy for global risk-assets, US equities generally tracked very well this week with three notable moves. The orange oval shows US equities were sold aggressively but not supported with generalized risk-asset selling, however the next day (red oval) was marked by a very broad-based derisking across every risky-asset class. This morning saw Oil and TSYs cause what would have been expected to be a more significant sell-off (green oval) in US equities but notably we did not (as European spread stability and OPEX vol compression perhaps enabled stocks to halt the fall for now). Risk assets strengthened and reverted back in line with equities by the close and we note that it looks like FX carry (EURJPY specifically) and TSY 2s10s30s that are the bigger driovers for now of any potential down-leg. With the USD rallying around 1.6% on the week, it is perhaps not totally surprising that Oil and Copper lost around 1.6% on the week (despite all their volatility). PMs underperformed with Silver rallying off liquidation lows today ending the week -7% and Gold -3.7%. JPY remained the only major currency to strengthen against the USD as AUD (carry / high-yielding currency) was on eof the weakest against the USD. A 1.5% gain in the USD overall was trumped by EUR's 1.7% loss against the USD - as we suspect given the divergences in swap-spread-based models for EURUSD that reptration flows stalled a little later in the week. After considerable divergence mid-week, US equities sold off back in line with credit - especially HY (though remain expensive on a medium-term basis). The end of the week saw a clear risk preference for IG credit as HY and stocks (and HYG) largely sold off in sync while IG spreads managed a small compression. And rather interestingly equity sector performance shows the high beta Materials, Energy, and Financials clustered very narrowly around -5.6% on the week while Staples and Utilities outperformed.   Charts: Bloomberg

Gold / Housing Ratio Falls To Historic Low Posted: 18 Nov 2011 08:20 AM PST SafeHaven

Gold Demand Hits New Record with Central Bank Buying Up Sixfold Posted: 18 Nov 2011 08:20 AM PST Kitco

LGMR: Gold Rallies after "Hard Hit", ECB "Now Only Significant Bond Buyer", UK "Has Lots More Scope for QE" Posted: 18 Nov 2011 08:19 AM PST London Gold Market Report from Ben Traynor BullionVault Friday 18 November, 08:30 EST Gold Rallies after "Hard Hit", ECB "Now Only Significant Bond Buyer", UK "Has Lots More Scope for QE" SPOT MARKET prices to buy gold regained some ground on Friday morning – following a sharp drop on Thursday, which saw a disappointing Spanish government bond auction and sustained losses on European and US stock markets. At one point on Thursday, gold prices fell 1.9% in just one hour – with several analysts suggesting investors ha to liquidate gold holdings to cover positions elsewhere. An auction of Spanish 10-Year bonds earlier in the day saw the government pay 6.97% to borrow €3.56 billion – a Euro era record, and up from 5.43% when Spain last auctioned 10-Year debt on October 20. "Precious metals have been hard hit by renewed concerns over the Eurozone, as evidenced by soaring borrowing costs in Spain," says Marc Ground, commodities strategist at Standard Bank. ...

The Daily Market Report Posted: 18 Nov 2011 08:15 AM PST Gold Defensive as European Bailout Rumors Swirl A swirl of rumors on Friday, centered on possible resolutions to the European crisis, prompting gold to trade in a choppy manner at the low end of Thursday's range. There was simultaneous talk that the Germans were mulling an "orderly" default clause to eurozone treaties once again, along with a rumor that the ECB might be allowed to make "unlimited" bond purchases in exchange for "significant" reforms in the countries whose bonds would be bought. Clearly the latter doesn't differ materially from the current situation — where bailouts are traded for austerity — other than it conceivably negates the need for the ECB to sterilize their bond purchases. And of course size. "Unlimited" is potentially a really big number. Providing bailouts in exchange for austerity has also arguably been an abject failure, as evidenced by the need for multiple bailouts for Greece and the lack of meaningful improvements of the situations in Ireland and Portugal. It also fundamentally fails to address the underlying issue of too much debt. Creating more debt to solve a debt crisis may kick the can down the road, but at the end of the road you're even deeper in debt. Meanwhile the imposed austerity weighs on the economy and increases the level of unemployment, reduces tax revenue, adds to the cost of social safety nets, creating bigger deficits. On the other hand, creating a mechanism for orderly defaults, paves the way for more defaults than Greece alone. While policymakers in this camp continue to maintain that a Greek default would be a one-off event, how that would be enforce once the precedence has been set is beyond me. The European banking system may well be able to survive a Greek default — although the notion that bond haircuts are "voluntary" is ridiculous — but, if the dominoes start falling, the risk of a catastrophic collapse of the eurozone escalates dramatically. It will be anything but "orderly". Along with these two diametrically opposed "solutions," the proposal that the ECB lend money to the IMF, which would then affect the bailouts seems to be gaining traction. There is a chance that this plan would provide the necessary political cover in Germany, but it is a complete end-run around the no bailout clause of the Maastricht Treaty. The ECB would not be bailing out sovereign nations, the IMF would be doing that, with euros printed and borrowed from the ECB. This too fails to address the underlying root problem and piles more debt on top of already too much debt. Nor does it address the underlying concern of the Germans that have kept them pretty adamantly opposed to both direct purchases of periphery bonds and issuance of euro-bonds. In this scenario, the monetary base in Europe is still dramatically expanded, raising the specter of inflation. Debt is still monetized, creating a moral hazard, but that debt just ends up on the balance sheet of the IMF rather than the ECB. This creates liabilities presumably for all IMF members, everyone from Afghanistan to Zimbabwe, obviously inclusive of the United States. What ends up on the ECB balance sheet are the loans to the IMF. It's just a big shell game. Round and around the debt goes, where the risk is nobody knows… Until it's too late. Bottom line, there is no easy way out of this mess. Europe can forestall some of the pain by following along the path of least resistance blazed by the quantitative easers before them, or they can bite the bullet now and hope to come out of the resulting recession/depression in a position to generate long-term sustainable growth. The former will likely condemn Europe to a decade or more of low growth, high unemployment, the periodic reemergence of crises and perhaps social unrest. The latter, would be intensely painful initially and would likely include social and geopolitical unrest as well. And while it may be the only true path toward a long-term solution, it a path that is very unlikely to be chosen.

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