Gold World News Flash |
- The "Gold Beta" Of Mining Stocks and Why We Continue To Avoid Them
- Gold Seeker Closing Report: Gold Drops $40 While Silver Slips 2%
- Guest Post: As The World Crumbles: The ECB Spins, FED Smirks, And US Banks Pillage
- Fukushima: "China Syndrome Is Inevitable" ... "Huge Steam Explosions", or "Nuclear Bomb-Type Explosions" May Occur
- Fukushima: "China Syndrome Is Inevitable" ... "Huge Steam Explosions", or "Nuclear Bomb-Type Explosions" May Occur
- The Bush-era tax cuts that sank the supercommittee
- Discussion Forum
- 35 Seconds Of TV Air Time Explaining Why Austria's AAA Rating Is Doomed
- 35 Seconds Of TV Air Time Explaining Why Austria's AAA Rating Is Doomed
- Corzine's Mafia Ties to Obama Leave Celente & MF Global Clients Wondering
- French and German Eurozone Woes Rock Markets
- 17 Quotes About The Coming Global Financial Collapse That Will Make Your Hair Stand Up
- Capital Account: Economic Hit Man John Perkins on the Failed Global Corporatocracy (11/21/11)
- Free-Market Banking Creates Stability and Prosperity
- Guest Post: The New Price Era Of Oil And Gold
- MF Global may be the next Lehman, Turk tells King World News
- Gold Price Dropped Today, I'm Buying At Each Support Level Not Missing The Low
- Ignore the Noise... Opportunity Here
- Faber: Printing Money Solves No Crises
- S&P Keeps U.S. Rating at AA+ After Panel Failure
- The Economy Has Changed Expect Hopes, Dreams and Lifestyles to Follow
- Turk - MF Global Disaster to Create Another Lehman Crisis
- Freedom: The New and Future Experiment… Part II
- Late-Day Reality Check On Dramatic Risk Off Day
- Gold Daily and Silver Weekly Charts - December Option Expiration Tomorrow
- What's Pushing the Silver Market?
- Foreign Banks Double Dollar Deposits at Fed
- So, Wait, Gold Is NOT Outperforming Stocks By 23% YTD?
- Ignore the Noise…Opportunity Here
| The "Gold Beta" Of Mining Stocks and Why We Continue To Avoid Them Posted: 21 Nov 2011 06:51 PM PST Sk Options Trading
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| Gold Seeker Closing Report: Gold Drops $40 While Silver Slips 2% Posted: 21 Nov 2011 04:00 PM PST Gold fell all the way to $1666.76 by about 2PM EST before it bounced back higher in the last couple of hours of trade, but it still ended with a loss of 2.43%. Silver slid to as low as $30.67 by late morning in New York before it also rallied back higher in late trade, but it still ended with a loss of 2.01%.
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| Guest Post: As The World Crumbles: The ECB Spins, FED Smirks, And US Banks Pillage Posted: 21 Nov 2011 03:47 PM PST Submitted by Nomi Prins As The World Crumbles: The ECB Spins, FED Smirks, And US Banks Pillage Often, when I troll around websites of entities like the ECB and IMF, I uncover little of startling note. They design it that way. Plus, the pace at which the global financial system can leverage bets, eviscerate capital, and cry for bank bailouts financed through austerity measures far exceeds the reporting timeliness of these bodies. That's why, on the center of the ECB's homepage, there's a series of last week's rates – and this relic - an interactive Inflation Game (I kid you not) where in 22 different languages you can play the game of what happens when inflation goes up and down. If you're feeling more adventurous, there's also a game called Economia, where you can make up unemployment rates, growth rates and interest rates and see what happens. What you can't do is see what happens if you bet trillions of dollars against various countries to see how much you can break them, before the ECB, IMF, or Fed (yes, it'll happen) swoops in to provide "emergency" loans in return for cuts to pension funds, social programs, and national ownership of public assets. You also can't input real world scenarios, where monetary policy doesn't mean a thing in the face of tidal waves of derivatives' flow. You can't gauge say, what happens if Goldman Sachs bets $20 billion in leveraged credit default swaps against Greece, and offsets them (partially) with JPM Chase which bets $20 billion, and offsets that with Bank of America, and then MF Global (oops) and then…..you see where I'm going with this. We're doomed if even their board games don't come close to mimicking the real situation in Europe, or in the US, yet they supply funds to banks torpedoing local populations with impunity. These central entities also don't bother to examine (or notice) the intermingled effect of leveraged derivatives and debt transactions per country; which is why no amount of funding from the ECB, or any other body, will be able to stay ahead of the hot money racing in and out of various countries. It's not about inflation - it's about the speed, leverage, and daring of capital flow, that has its own power to select winners and losers. It's not the 'inherent' weakness of national economies that a few years ago were doing fine, that's hurting the euro. It's the external bets on their success, failure, or economic capitulation running the show. Similarly, the US economy was doing much better before banks starting leveraging the hell out of our subprime market through a series of toxic, fraudulent, assets. Elsewhere in my trolling, I came across a gem of a working paper on the IMF website, written by Ashoka Mody and Damiano Sandri, entitled 'The Eurozone Crisis; How Banks and Sovereigns Came to be Joined at the Hip" (The paper does not 'necessarily represent the views of the IMF or IMF policy'. ) The paper is full of mathematical formulas and statistical jargon, which may be why the media didn't pick up on it, but hey, I got a couple of degrees in Mathematics and Statistics, so I went all out. And it's fascinating stuff. Basically, it shows that between the advent of the euro in 1999, and 2007, spreads between the bonds of peripheral countries and core ones in Europe were pretty stable. In other words, the risk of any country defaulting on its debt was fairly equal, and small. But after the 2007 US subprime asset crisis, and more specifically, the advent of Federal Reserve / Treasury Department construed bailout-economics, all hell broke loose – international capital went AWOL daring default scenarios, targeting them for future bailouts, and when money leaves a country faster than it entered, the country tends to falter economically. The cycle is set. The US subprime crisis wasn't so much about people defaulting on loans, but the mega-magnified effects of those defaults on a $14 trillion asset pyramid created by the banks. (Those assets were subsequently sold, and used as collateral for other borrowing and esoteric derivatives combinations, to create a global $140 trillion debt binge.) As I detail in It Takes Pillage, the biggest US banks manufactured more than 75% of those $14 trillion of assets. A significant portion was sold in Europe – to local banks, municipalities, and pension funds – as lovely AAA morsels against which more debt, or leverage, could be incurred. And even thought the assets died, the debts remained. Greek banks bought US-minted AAA assets and leveraged them. Norway did too (through the course of working on a Norwegian documentary, I discovered that 8 tiny towns in Norway bought $200 million of junk assets from Citigroup, borrowed money from local banks to pay for them, and pledged 10 years of power receipts from hydroelectric plants in return. The AAA assets are now worth zero, the power has been curtailed for residents, and the Norwegian banks want their money back--blood from a stone.) The same kind of thing happend in Italy, Spain, Portugal, Ireland, Holland, France, and even Germany - in different degrees and with specific national issues mixed in. Problem is - when you've already used worthless collateral to borrow tons of money you won't ever be able to repay, and international capital slams you in other ways, and your funding costs rise, and your internal development and lending cease up, you're screwed - or rather the people in your country are screwed. In the IMF paper, the authors convincingly make the case that it wasn't just the US subprime asset meltdown itself that initiated Europe's implosion, but the fact that our Federal Reserve and Treasury Department adopted a reckless don't-let-em-fail doctrine. Even though Bear Stearns and Lehman Brothers failed, their investors, the huge ones anyway, were protected. The Fed subsidized, and still subsidizes, $29 billion of risk for JPM Chase's acquisition of Bear. The philosophy of saving banks and their practices poisoned Europe, as those same financial firms played euro-roulette in the global derivatives markets, once the subprime betting train slowed down. The first fatal stop of the US bailout mentaility was the ECB's 2010 bailout of Anglo Irish bank, which got the lion's share of the ECB's Irish-bailout: $51 billion euro of ELA (Emergency Loan Assistance) and $100 billion euro of regular lending at the time. After the international financial community saw the pace and volume of Irish bank bailouts, the game of euro-roulette went turbo, country by country. More 'fiscally conservative' governments are replacing any semblance of population-supportive ones. The practice of extracting 'fiscal prudency' from people and providing bank subsidies for bets gone wrong has infected all of Europe. It will continue to do so, because anything less will threathen the entire Euro experiement, plus otherwise, the US banks might be on the hook again for losses, and the Fed and Treasury won't let that happen. They've already demonstrated that. It'd be just sooo catastrophic. In the wings, the smugness of Treasury Secretary Tim Geithner and Fed Chairman, Ben Bernanke is palpable – 'hey, we acted heroically and "decisively" to provide a multi-trillion dollar smorgasbord of subsidies for our biggest banks and look how great we (er, they) are doing now? Seriously, Europe – get your act together already, don't do the trickle-bailout game - just dump a boatload of money into the same banks – and a few of your own before they go under – do it for the sake of global economic stability. It'll really work. Trust us.' Most of the media goes along with the notion that US banks exposed to the 'euro-contagion' will hurt our (nonexistent) recovery. US Banks assure us, they don't have much exposure - it's all hedged. (Like it was all AAA.) The press doesn't tend to question the global harm caused by never having smacked US banks into place, cutting off their money supply, splitting them into commercial and speculative parts ala Glass-Steagall and letting the speculative parts that should have died, die, rather than enjoy public subsidization and the ability to go globe-hopping for more destructive opportunity, alongside some of the mega-global bank partners. Today, the stock prices of the largest US banks are about as low as they were in the early part of 2009, not because of euro-contagion or Super-committee super-incompetence (a useless distraction anyway) but because of the ongoing transparency void surrouding the biggest banks amidst their central-bank-covered risks, and the political hot potato of how many emergency loans are required to keep them afloat at any given moment. Because investors don't know their true exposures, any more than in early 2009. Because US banks catalyzed the global crisis that is currently manifesting itself in Europe. Because there never was a separate US housing crisis and European debt crisis. Instead, there is a worldwide, systemic, unregulated, uncontained, rapacious need for the most powerful banks and financial institutions to leverage whatever could be leveraged in whatever forms it could be leveraged in. So, now we're just barely in the second quarter of the game of thrones, where the big banks are the kings, the ECB, IMF and the Fed are the money supply, and the populations are the powerless serfs. Yeah, let's play the ECB inflation game, while the world crumbles.
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| Posted: 21 Nov 2011 03:45 PM PST I've repeatedly noted that we may experience a "China syndrome" type of accident at Fukushima. For example, I pointed out in September:
Nuclear expert Arnie Gundersen said recently that a new built up of hydrogen may cause the reactors to explode again: Hydrogen buildup at Fukushima? What does it mean & why does it happen? from Fairewinds Associates on Vimeo.
Nuclear expert Dr. Ian Fairlie - former scientific secretary to the United Kingdom government's Committee Examining Radiation Risks from Internal Emitters, who advises the European Parliament as well as local and national authorities in several countries - told Dr. Helen Caldicott:
And the architect who actually designed Fukushima Reactor No. 3 - Uehara Haruo, former president of Saga University - told popular Japanese news source Live Door on November 17th that (translation courtesy of Fukushima Diary):
(Or see this Google translation or this Babelfish translation).
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| Posted: 21 Nov 2011 03:45 PM PST
I've repeatedly noted that we may experience a "China syndrome" type of accident at Fukushima. For example, I pointed out in September:
Nuclear expert Arnie Gundersen said recently that a new built up of hydrogen may cause the reactors to explode again: Hydrogen buildup at Fukushima? What does it mean & why does it happen? from Fairewinds Associates on Vimeo.
Nuclear expert Dr. Ian Fairlie - former scientific secretary to the United Kingdom government's Committee Examining Radiation Risks from Internal Emitters, who advises the European Parliament as well as local and national authorities in several countries - told Dr. Helen Caldicott:
And the architect who actually designed Fukushima Reactor No. 3 - Uehara Haruo, former president of Saga University - told popular Japanese news source Live Door on November 17th that (translation courtesy of Fukushima Diary):
(Or see this Google translation or this Babelfish translation).
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| The Bush-era tax cuts that sank the supercommittee Posted: 21 Nov 2011 03:18 PM PST The tax cuts have proved to be the kryptonite that defeated supercommittee set up to tackle the US's $15tn deficit In June 2001, president George W Bush signed into law one of the most sweeping changes in US tax history. More than a decade later the cuts are being blamed for the collapse of bipartisan talks aimed at tackling the debt mountain the built up in the decade that followed. The Bush-era tax cuts are set to expire at the end of next year and have proved to be the kryptonite that defeated a bi-partisan "supercommittee" set up to find ways to tackle the US's $15tn deficit. Republicans dug in against any agreement that did not extend current income-tax rates, Democrats held out for higher rates on families with taxable income over $250,000 a year. Away from Washington the senior economists – and even some senior Republicans - seem to agree that a compromise was needed and that the tax cuts had done more harm than good. "This is going to be the big debate for 2012," said Simon Johnson, professor of entrepreneurship at MIT's Sloan School of Management and former chief economist of the International Monetary Fund (IMF). The tax cuts were "inappropriate, excessive and irresponsible," he said. "Cutting taxes when you are going to war is a pretty silly thing to do," he said. "They were based on extremely optimistic projections that turned out not to be correct. If you don't extend them, the amount of additional cuts you need to make to reach a sustainable debt level are pretty small. If you do extend them, make them permanent, you are looking at a very big adjustment." In a recent report the non-partisan Center on Budget and Policy Priorities concluded government spending under president Barack Obama was not the prime reason for today's massive deficit. "The fact remains, the economic downturn, president Bush's tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years," the center concluded. Read more... 
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| Posted: 21 Nov 2011 03:17 PM PST There is an elephant in the room. Jim Rickards has been making some bold predictions while on his book tour for Currency Wars. He says that in the case of a collapse of confidence in the dollar, the U.S. could confiscate the gold owned by foreign governments, Germany in particular, that is stored in NYC at the Fed. He says the U.S. could then use this gold to dictate a new international
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| 35 Seconds Of TV Air Time Explaining Why Austria's AAA Rating Is Doomed Posted: 21 Nov 2011 02:59 PM PST While we will get into the nuances of why the Austrian AAA rating is the next to go (just after Hungary is downgraded in a matter of weeks if not days, following the country's request for IMF help earlier today) an event which we described ten days ago when the news that Austria's shaky rating was about to be downgraded first broke via the FTD and has since resulted in a major spike in Austrian credit spreads and bond yields, first we wanted to show readers the one ad which explains why the seeds of Austria's credit perfection collapse were sown back in 2007. In the ad, the second biggest Austrian bank, Raiffeisen Bank, explains precisely what its "selection" criteria were to get a loan in Hungary at the peak of the credit bubble (and yes, the ad is real). The ad explains the follow up news, which is namely that Austrian bank supervisors were today told to limit their lending to Eastern Europe. Unfortunately, the horses are out of the barn, and the biggest banks in Austria are about to be at the mercy of the markets, especially once the rating agencies do the inevitable and cur the country by at least 2 notches. The ad in question: As to what the catalytic lit match is that will set the forest ablaze look no further than Hungary. As a reminder, 67% of Hungarian household debt is denominated in foreign currencies, mostly CHF. The average long term entry point is about 155 CHFHUF which now trades 60% higher at 248. bank assets are about 50% of GDP which is at $130bln. Household debt is 39% of GDP. Assuming 50% of fx loans we are talking about an amount of about $10 BN by which loans are under water, and Austrian bank equity is more than wiped out. Which brings us to the actual story of the day, which ties in perfectly with the above, namely an FT story in which we learn that "Austrian central bank said in a statement that Erste Group, Raiffeisen Bank International and Bank Austria, owned by UniCredit of Italy, would be prevented from loaning significantly more in CEE countries than what they raise in local deposits. Subsidiaries that are "particularly exposed" must ensure the ratio of new loans to local refinancing is not more than 110 per cent." In other words, the sins of the fathers have now come back and are haunting the same banks that so willingly doled out cash to anyone with a heartbeat as recently as 4 years ago. Needless to say, Austria's AAA rating is the only reason why its banking system (where as a reminder mega bank Erste recently "uncovered" billions in underwater CDS that had never been reported previously) has been spared the vigilante anger so far. All that is about to change. From the FT:
However, Hungary is first:
And as reported above, the pain for the top three banks is only now starting:
Unfortunately, it is, at this point, too little too late. Once the downgrade comes, most likely before the end of the year, the latest flare up of European contagion will become apparent as the Eastern European flank quickly goes under.
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| 35 Seconds Of TV Air Time Explaining Why Austria's AAA Rating Is Doomed Posted: 21 Nov 2011 02:59 PM PST
While we will get into the nuances of why the Austrian AAA rating is the next to go (just after Hungary is downgraded in a matter of weeks if not days, following the country's request for IMF help earlier today) an event which we described ten days ago when the news that Austria's shaky rating was about to be downgraded first broke via the FTD and has since resulted in a major spike in Austrian credit spreads and bond yields, first we wanted to show readers the one ad which explains why the seeds of Austria's credit perfection collapse were sown back in 2007. In the ad, the second biggest Austrian bank, Raiffeisen Bank, explains precisely what its "selection" criteria were to get a loan in Hungary at the peak of the credit bubble (and yes, the ad is real). The ad explains the follow up news, which is namely that Austrian bank supervisors were today told to limit their lending to Eastern Europe. Unfortunately, the horses are out of the barn, and the biggest banks in Austria are about to be at the mercy of the markets, especially once the rating agencies do the inevitable and cur the country by at least 2 notches. The ad in question: As to what the catalytic lit match is that will set the forest ablaze look no further than Hungary. As a reminder, 67% of Hungarian household debt is denominated in foreign currencies, mostly CHF. The average long term entry point is about 155 CHFHUF which now trades 60% higher at 248. bank assets are about 50% of GDP which is at $130bln. Household debt is 39% of GDP. Assuming 50% of fx loans we are talking about an amount of about $10 BN by which loans are under water, and Austrian bank equity is more than wiped out. Which brings us to the actual story of the day, which ties in perfectly with the above, namely an FT story in which we learn that "Austrian central bank said in a statement that Erste Group, Raiffeisen Bank International and Bank Austria, owned by UniCredit of Italy, would be prevented from loaning significantly more in CEE countries than what they raise in local deposits. Subsidiaries that are "particularly exposed" must ensure the ratio of new loans to local refinancing is not more than 110 per cent." In other words, the sins of the fathers have now come back and are haunting the same banks that so willingly doled out cash to anyone with a heartbeat as recently as 4 years ago. Needless to say, Austria's AAA rating is the only reason why its banking system (where as a reminder mega bank Erste recently "uncovered" billions in underwater CDS that had never been reported previously) has been spared the vigilante anger so far. All that is about to change. From the FT:
However, Hungary is first:
And as reported above, the pain for the top three banks is only now starting:
Unfortunately, it is, at this point, too little too late. Once the downgrade comes, most likely before the end of the year, the latest flare up of European contagion will become apparent as the Eastern European flank quickly goes under.
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| Corzine's Mafia Ties to Obama Leave Celente & MF Global Clients Wondering Posted: 21 Nov 2011 02:30 PM PST On the Monday, November 21 edition of the Alex Jones Show, Alex hosts from the road. He talks with noted trends forecaster Gerald Celente about the latest info emerging on the MF Global swindle and an article published by Forbes over the weekend accusing Celente and Jones of attempting to start a bank run by encouraging people to take their money out of banks and put it in gold and silver.
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| French and German Eurozone Woes Rock Markets Posted: 21 Nov 2011 02:13 PM PST Germany and France, Europe's cornerstone economies, were dragged into the eye of the debt storm on Monday, triggering a collapse of stock prices around the world. by Louise Armitstead, Telegraph.co.uk:
The Bundesbank sharply lowered Germany's growth forecast for next year to 0.5pc – savagely knocking confidence in Berlin's ability to solve the rapidly intensifying crisis. Meanwhile there were fears that France would succumb to spiralling borrowing costs as Moody's warned that the country could lose its cherished AAA rating. A total of £36.2bn was wiped off the UK's biggest companies on Monday as the FTSE 100 dropped 2.6pc. European markets lost more. The Stoxx Europe 600 index fell 3.2pc; the French CAC and German Dax sank 3.4pc each; Italy's MIB dropped 4.7pc and Spain's Ibex fell 3.5pc. US markets also fell, with the deadlock on plans to cut America's debt driving the declines. The costs of insuring Spanish, Italy and French debt rose. Investors were shocked by the rapid downward revision of the Bundesbank's prediction: five months ago, the central bank forecast growth of 1.8pc in 2012. On Monday in its monthly bulletin it said Europe's powerhouse economy could suffer "pronounced" weakness if the eurozone debt crisis continued.
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| 17 Quotes About The Coming Global Financial Collapse That Will Make Your Hair Stand Up Posted: 21 Nov 2011 02:06 PM PST from The Economic Collapse Blog:
Read More @ TheEconomicCollapseBlog.com
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| Capital Account: Economic Hit Man John Perkins on the Failed Global Corporatocracy (11/21/11) Posted: 21 Nov 2011 01:58 PM PST from CapitalAccount: In this episode of Capital Account with Lauren Lyster, we cover the US super committee's pending failure in negotiations to cut 1.2 trillion dollars from the national budget over the next 10 years, something that we spoke with Cato budget Tad Dehaven about last week. We also cover the occupy wall street protests, and the recent police episode where a cop sprayed unarmed and subdued protestors right in the face with pepper spray at the UC davis campus. Joining us to discuss these issues, and their impact on the economy and society is John Perkins. The former economic hit man tells Lauren about the "mutant form" of capitalism or corporatism that encourages corporations to scour the globe in search of resources and cheap labor irrespective of the ill effects that their actions cause. John Perkins argues that this is a failed system, and that our economy has been stolen from us by modern day Robber Barons. Lastly, we end our show with a special little treat: a twitter war! Nouriel Roubini vs. James Rickards…Gold vs. Fiat Money…Currency wars turn to twitter wars!
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| Free-Market Banking Creates Stability and Prosperity Posted: 21 Nov 2011 01:56 PM PST by Gabriel M. Mueller, GoldMoney.com:
It has long been held that the only way to achieve a "stable" currency is to have a national central bank which issues and regulates said currency. Such a central bank will issue trustworthy money – not too much and never too little – that every citizen can use and, as a result, the economy should grow and thrive because of its solid monetary foundation. This is the ideal. It is an ideal, however, which remains historically false. Take a look at the current situation in the European Union, for instance. Officially established in 1999, the European Central Bank held the responsibility to issue one, common currency – the euro – for all participating European nations to use in order to provide a platform for economic growth, trade, travel, and (most importantly) peace.
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| Guest Post: The New Price Era Of Oil And Gold Posted: 21 Nov 2011 01:10 PM PST Submitted by Gregor Macdonalds of Chris Martenson.com The New Price Era Of Oil And Gold "If society consumed no energy, civilization would be worthless. It is only by consuming energy that civilization is able to maintain the activities that give it economic value. This means that if we ever start to run out of energy, then the value of civilization is going to fall and even collapse absent discovery of new energy sources." ~ Dr. Tim Garrett, University of Utah The New Oil Cycle is Suffocating Economic GrowthThere was a time when central bankers used to fight high oil prices with interest-rate hikes. But we are now in a different era with that equation, and central bankers are more likely to lament, as Ben Bernanke quipped in his spring 2011 press conference, that "the FED can't print oil." Yes, precisely. At the zero bound of interest rates and with debt saturation coursing through the private and public sector, the developed world faces not an inflationary restraint from oil prices, but rather an additional deflationary barrier. Welcome to the new oil cycle. In the old oil cycle, new supply of petroleum was brought online to capture rising prices. In the new oil cycle, declines from existing fields neutralize this new supply, for a net global supply gain of zero. In the old oil cycle, recessions benefited large consumer countries like the United States as oil prices fell, giving a boost to the economy. In the new oil cycle, the price of oil falls only for a short time before resuming a higher swing. In the old oil cycle, the developed world set the oil price through swings in its demand. In the new oil cycle, the developing world, with its much lower sensitivity to high prices now sets the floor on oil. Most of all, the new oil cycle caps growth in the developed world. The new oil cycle kills the economies of the OECD nations. Peak AutosThis week, JD Power and Associates released its 2012 sales outlook for the US light vehicle market. I'm quite thankful that Calculated Risk, the long-time blog on the US economy, keeps an updated chart series of this data, because it will help set the context for JD Power's outlook and where we are in the current oil cycle. The forecast? For the annual rate of US automobile sales to reach 14 million by the second half of 2012. That would make for a healthy advance in auto sales from the current rate, around 13.25 million. Let's take a look then at the multi-decade chart for light vehicle sales from 1967-2011.
Anyone familiar with a chart of the US stock market or US employment will immediately spot the long-arc trajectory here that begins in a very familiar place: 1982. That was the dark place, after twin recessions and a rude (but healthy) Volkering of inflation, from which the great bull market in stocks was born. This reflects current discussions of 1) how much the stock market could recover, 2) how much the employment market could recover, and 3) how much wages or real GDP could recover. The JD Power forecast for next year, if it comes to pass, would only restore vehicle sales to levels last seen in the 1990s. I won't digress (much) toward the enormous mistake the US has made in continuing to invest billions of dollars in public capital into the Auto-Highway Complex. But let's at least disabuse ourselves of the notion that automobile transport has been a free-market phenomenon for nearly all developed nations. Both in Europe and in the US, automobile manufacturing has been a key part of the industrial (and political) structure for decades. And I am merely using this sector as a current example of a beloved and favored means to economic growth that no longer works for economies now that we've entered the new oil cycle. In the old oil cycle, higher prices would have triggered new gains in MPG standards from the automobile industry, no doubt unleashing a new round of higher automobile sales. In the new oil cycle, sales of new autos are hampered as car owners hold on tight to existing vehicles. There isn't enough growth in the wider economy to turn the fleet over. This is precisely the analytical mistake forecasters of future EV sales (electrical vehicles) continue to make when happily predicting broad adoption of electric power. Adoption is glacially slow because fleet turnover is slow. And fleet turnover is slow because the economy has been reduced to a much lower level of operation. I recently showed data which quantifies the dramatic drop in oil consumption since the 2007 highs in the US economy. As usual, the correlation between economic growth and energy consumption is nearly perfect. The drop in European oil consumption has also been quite pronounced. I might add that in the case of Europe -- which enjoys broad coverage in electrified rail transport -- the reduced oil consumption is more notable. The United States entered the current decade with a lot of discretionary oil demand that was fated to come offline, but that was not the case in Europe. The continent has been weaned from casual oil use for decades, mostly through high taxes. But that did not prevent a new low in consumption post-2006, when prices began to soar -- with predictable effects. Stuart Staniford of the Early Warning blog presents the chart below with the latest data. It's notable that Europe's economy, the largest in the world, has shed a million barrels per day (mbpd), from 15.5 to 14.5 mbpd.
The Rescue MythLet's pause here and be as frank as we can be about a rather widespread belief in the Western world shared among economists, policymakers, technologists, and corporations: The price of oil will eventually drop, and the global economy will also grow. Is that right? Well, unless you've been living in a cave, OECD countries are currently in the throes of a debt crisis, with at least 15% of the population unemployed or underemployed. Meanwhile, North American oil prices, as measured by the WTI benchmark, have just rejoined Brent at levels at/above $100 a barrel. And Western economies are now supposed to recover from this position? What price of oil are we to forecast, should the vast spare capacity and idle labor of the OECD come back online? I spoke to this issue back in 2009 in a post called Overhead Crush:
Normalcy Bias and the Problem of GrowthNormalcy bias, rampant in the West, leads most to conclude we'll be rescued. Some magical combination of new technology, new policies, or miracle energy resources will soon arrive. Even on the conventional end of this spectrum, there is still a generalized belief in the inherent ability of the system to resume growth. In a recent paper from the New America Foundation, The Way Forward (Alpert, Hockett, Roubini), we find eminently reasonable solutions that target the system as it once was, but not the way it's operating now. While the authors move beyond either purely Monetarist or Keynesian approaches in their solution set, their attention to energy inputs is far too moderate. Only a policy recommendation that foregrounded energy as the primary lever to apply to Western economies, rather than merely including it, would now have resonance. It is the energy-intensity of America in particular that must be confronted, not only in its domestic consumption but in the global energy inputs it commands through its outsourced production. Let's remember that oil, until it is eclipsed by coal, remains the primary energy source of the world, with a 33.56% share (2010, BP Statistical Review). And now the question: If growth faces nearly insurmountable barriers, absent widespread debt writedowns or even a debt jubilee, then why are German Bunds or US Treasuries currently operating as safe havens? Do Germany and the US not occupy the same economic territory as broader Europe? A demand shock for Asian consumer goods, emanating from a collapsed Europe, would crush Asian demand for the infrastructure goods that Germany produces with such expertise. Global markets are therefore making an enormous mistake. In the midst of a sovereign debt crisis now hitting the developed world, they are pricing the risk as though this were like the 1980s crisis that hit countries in Latin America. But this is not a crisis in which banks in Boston, having lent billions to Brazil or Argentina, write down debt while engines of growth in Japan, Europe, and the US move forward. Rather, this is the endgame of post-war growth in the West. And it would seem that even 'safe haven' bond markets have started to price in this reality. As Morgan Stanley shows in this chart of recent action in German Bunds, the price advance (and thus the yield decline) in bunds has started to slow as the recognition phase gets underway on system-wide EU debt.
(chart courtesy of Joe Wiesenthal at the Business Insider) The developments in Germany's "safe-haven" status were addressed by Ambrose Evans-Pritchard on November 17:
The Vulnerability of Having Sovereign Debt As Your Core AssetAll across Europe, the sovereign debt of EU nations forms the core asset base of key institutions critical to systemic cohesion. This debt is a call option on future growth -- a call option that most assumed would never decline so catastrophically in value and that could presumably always be rolled over. In the old oil cycle, such sovereign debt problems were merely a function of profligacy. In the new oil cycle, a debt crisis is no longer solvable with growth. Devaluation or jubilee are the only options. The loss to society will be borne most directly by those who hold sovereign debt as their savings. But in our present situation, it will not be a sub-set of the West that bears the loss, but the entirety of the West. The time of Containment is over. Gold's Critical Role at This TimeThe recognition of dim, future growth has only now begun to unfold. In an earlier report, I explained that the framing of gold prices as insurance against future inflation was, at least for now, wrong. Instead, gold continues to trade along the contours of growth's terminal phase and the unpayable debt now left in its wake. This impending instability, or discontinuity if you like, is what will drive the gold price over the next few years, along with policy maker's response(s) to our decline. In Part II: Understanding Where Gold & Silver Go From Here, I offer two distinct price pathways for gold, specifically in light of the great threshold that we're now crossing in developed-world debt saturation and the end of growth. These two price pathways will be greatly influenced by how policy makers and central banks respond to this final phase of the crisis. In addition, I also offer a view as to silver's relationship to gold along the two pathways I define. Timing is of the essence, because oil prices have just punctured the great reflationary recovery of 2009-2011. Click here to access Part II of this report (free executive summary, enrollment required for full access).
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| MF Global may be the next Lehman, Turk tells King World News Posted: 21 Nov 2011 12:08 PM PST 8p ET Monday, November 21, 2011 Dear Friend of GATA and Gold (and Silver): GoldMoney founder and GATA consultant James Turk today tells King World News that the bankruptcy of the MF Global brokerage house may be the new "Lehman moment" for world markets. Turk speculates that the physical markets for the precious metals now may separate from the paper markets. An excerpt from the interview has been posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/11/21_T... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Golden Phoenix Completes Operating Agreement Golden Phoenix Minerals Inc. (GPXM) has entered a joint venture operating agreement with Silver Global S.A., a Panamanian corporation, governing the operational and management aspects of their new joint venture company, Golden Phoenix Panama S.A., a Panamanian corporation formed to hold and operate the Santa Rosa gold mine in Canazas, Panama, and explore the mine's adjacent property. Golden Phoenix will be manager of the joint venture company. Silver Global will handle all social programs, political and community relations, and human resource matters for the joint venture company in Panama. Golden Phoenix and Silver Global also have agreed to work together on all future acquisitions within Panama and to bring such new opportunities to the joint venture company. Golden Phoenix will be earning in to a 60 percent interest (and potentially an 80 percent interest) in the Santa Rosa mine. Upon signing the joint venture agreement and completing the corresponding acquisition payment, Golden Phoenix will earn an initial 15 percent interest in the joint venture company. Tom Klein, CEO of Golden Phoenix, says the agreement "creates a solid foundation for the development and planned re-opening of Mina Santa Rosa." For Golden Phoenix's full statement on the joint venture operating agreement, please visit: http://goldenphoenix.us/press-release/golden-phoenix-completes-joint-ven... Join GATA here: Vancouver Resource Investment Conference http://cambridgehouse.com/conference-details/vancouver-resource-investme... California Investment Conference http://cambridgehouse.com/conference-details/california-investment-confe... Support GATA by purchasing gold and silver commemorative coins: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: 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: 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: To contribute to GATA, please visit: ADVERTISEMENT For Continuous Wealth Creation, the Hera Research Newsletter The life cycles of companies that produce natural resources allow investors to allocate assets among companies at different stages of development and to profit from transitions between stages. Based on natural resource company life cycles, the Hera Research Newsletter maximizes profits through deep, fundamental analysis at each stage of development and by moving gains back to earlier-stage companies in a continuous wealth-creation process. Hera Research covers a pipeline of high-quality natural resource companies at different stages of development. The companies span discovery and production of gold, silver, and platinum group metals, select base metals, oil and gas, green energy, agriculture, rare earth elements, uranium, and more. Discover the unique value of the Hera Research Newsletter by visiting: http://www.heraresearch.com/newsletter.html Or call Ron Hera at 360-339-8541x101.
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| Gold Price Dropped Today, I'm Buying At Each Support Level Not Missing The Low Posted: 21 Nov 2011 11:34 AM PST Gold Price Close Today : 1678.30 Change : 46.40 or 2.8% Silver Price Close Today : 31.133 Change : (1.300) cents or -4.0% Gold Silver Ratio Today : 53.907 Change : 3.591 or 7.1% Silver Gold Ratio Today : 0.01855 Change : -0.001324 or -6.7% Platinum Price Close Today : 1552.40 Change : -40.90 or -2.6% Palladium Price Close Today : 589.40 Change : -16.70 or -2.8% S&P 500 : 1,192.98 Change : -22.67 or -1.9% Dow In GOLD$ : $142.23 Change : $ (7.18) or -4.8% Dow in GOLD oz : 6.880 Change : -0.347 or -4.8% Dow in SILVER oz : 370.90 Change : 7.19 or 2.0% Dow Industrial : 11,547.31 Change : -248.85 or -2.1% US Dollar Index : 78.08 Change : -0.200 or -0.3% The GOLD PRICE kept on dropping today, losing $46.40 to close Comex at $1,678.30. (Remember it lost $54 last Thursday.) Once it broke Thursday's and Friday's $1,712 low, it plunged to $1,667.71 very quickly. That brings us to the first support at $1,675. Today's low cut through the rising trend line, a leetle-bit, but closed above. If it breaks that line at $1,675, next strong support comes at $1,605, with some mushy support at $1,650. Below $1,605 lies $1,535 and $1,475. Not predicting, just cataloging. The GOLD PRICE could stop at at any of those. You might also bear in mind that the 150 day moving average, now at $1,646.25, has frequently and regularly backstopped gold during this whole bull market. Certainly might catch there, too. As I said, I'm not predicting. Right now, I'm averaging down, buying more gold whenever gold hits a new support level. I've been doing this too long, so I know how you pick your own pocket by holding out for "just a little lower price." Saying is, "Bulls get rich, bears get rich, and pigs get slaughtered." I have no ambition to become bacon. The SILVER PRICE lost 130c on Comex and ended the day at 3111.3c. High came at 3219c, low at 3065c. Recall that Thursday's low was 3088c. That might be a double bottom developing, unless silver gainsays that suspicion tomorrow by trading below 3065c and staying there. Below several possible turnaround targets present themselves. One is 3000c, home of the next to the last low. Another is 2843c, low before that. Then there is 2615c, the spike low in September. All are possible, and my solution for myself is to buy more at each new support level. This tactic leaves me undisturbed and calm, because I expect SILVER and GOLD will roar back to triple or quadruple before this bull market ends, and I won't miss the low. Today the GOLD/SILVER RATIO stands at 53.907. Swappers who earlier in the spring swapped silver for gold at realized ratio of 41.46:1 or lower can swap gold for silver now and realize a 30% or greater gain in silver ounces. Remember that market proverb about bulls, bears, and pigs. We might as well have some fun today. None of us are getting out of here alive anyway. On Friday with the Dow at 11,791 I said it had an initial (beginning the drop, just beginning) of 11,250. Today it logged half of that with a 248.85 drop, falling 2.11% and landing at 11,547.31. S&P500 lagged a tad, falling only 1.86% (22.67 points) to 1,192.98. Today's dive takes the Dow below the 50 day moving average (11,533). Stop waiting for another rise toward 12,400, because it ain't coming. Stocks: signal proof how good the yankee government is at managing the economy. US DOLLAR INDEX today solidified its breakout Friday thru the descending trendline. Today it gained 19.5 basis points (0.25%) to close 78.256. Dollar need only remain above 78.10 to remain in the rally game. Higher dollar coming. Watch for it. Japanese yen lost a minute 0.18% today to close at 129.96c/Y100 (Y76.95/$1). Where are those Nice Government Men when they're needed? Uppity yen needs chastising! The Franken-currency, the euro, dropped 0.2% to 1.3497. Grind, grind, grind, it just keeps on grinding lower and lower toward its 1.2000 target. 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. 
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| Ignore the Noise... Opportunity Here Posted: 21 Nov 2011 10:20 AM PST November 21, 2011 [LIST] [*]Short-term noise: Supercommittee encountering kryptonite, and other not-surprising factors knocking down stocks on a Monday [*]A long-term moneymaker: Far from the noise of Geron’s stem cell failure, Patrick Cox finds “the most successful medical blockbuster in history” [*]Gold takes a beating along with nearly everything else: John Embry on a buying opportunity [*]“Truly an awful currency”... Chris Mayer returns from the road with some useless paper souvenirs and one fabulous investment idea [*]Readers weigh in: Our favorite caudillo, bank failures and the relative merits of U.S. and Canadian border guards [/LIST] “Stocks Move Sharply Lower,” read the headlines this morning on countless financial websites. The reasons cited include... [LIST] [*]The “supercommittee” that’s supposed to solve Uncle Sam’s chronic indebtedness for all time is due to announce after todayR...
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| Faber: Printing Money Solves No Crises Posted: 21 Nov 2011 10:01 AM PST Marc Faber, publisher of the Gloom, Boom and Doom report, yesterday reiterated his criticism of money printing practices, which he believes will continue in the US, Europe and elsewhere, causing bubbles such as those seen in the Chinese real-estate market. "A third wave of quantitative easing by the US Federal Reserve is just a matter of time," said Faber, a contrarian investor who has been referred to as "Doctor Doom" for a number of years. Printing money is the way global governments will evade debt crises, such as the one that is gripping Europe, Faber said in Taipei. That would forestall the crisis rather than solve it, keeping prices elevated for assets like stocks, real estate in some areas and precious metal, he said. Loose monetary policies, including low interest rates, intended as a short-term fix, can have unintended consequences later, Faber said. While central banks can inject fresh funds into the markets, they cannot control where the funds flow, he said, adding that money printing has encouraged speculation on commodities whose prices have gone up faster than real demand in recent years. "Some people will benefit from money printing that deflates the purchasing power of currency … but the middle and lower–income classes are being hurt," said Faber, an investment adviser focused on value investments, who owns Marc Faber Ltd. Countries with resources are basking in the trend in light of their sharp increases in international reserves, which Faber said was symptomatic of monetary inflation and a shift in wealth. The fast-growing economy of China has pushed up its inflationary pressures, with the bubble in the real-estate sector on the brink of bursting, Faber said. "Don't believe China's consumer price index stands only at 5 percent," he said. "The truth is somewhere between 12 percent and 15 percent … The real-estate bubble is so evident that Chinese property shares are very weak as the volume of real-estate transactions goes down and prices fall." Faber said China would follow the practice of quantitative easing if it has to choose between printing money and a concrete recession. The Chinese bubble will burst eventually, in three months or in three years; when it happens, it will have devastating consequences for the global economy, he said. "Chinese invented paper. They know how to print money," Faber said. Still, the ongoing shifting balance of economic power from industrialized countries to emerging economies is building up geopolitical tensions, especially in the Middle East and Central Asia, he said. All the West needs to do to contain China is seize control of oil supplies, but China and the countries dependent on oil imports would not allow that for the sake of self-preservation, Faber said. He recommended risk diversification against the current backdrop, but took a dim view of government bond purchases as they would mean trust in the easy monetary policy. Rather, he suggests owning physical gold, equities and Asian real estate that will prove a better defense against inflation. Greece, Faber said, is bankrupt whether Europe likes to admit it or not, and the European Central Bank will print money to postpone a systematic failure. Source: Taipei Times
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| S&P Keeps U.S. Rating at AA+ After Panel Failure Posted: 21 Nov 2011 09:57 AM PST Standard & Poor's said it would keep the U.S. government's credit rating at AA+ after a congressional committee that was supposed to break partisan gridlock and cut the budget deficit didn't reach an agreement. S&P, which stripped the U.S. of its top AAA grade on Aug. 5, said it decided that the supercommittee's failure didn't merit another downgrade for the country because the failure will trigger $1.2 trillion in automatic spending cuts. While the firm expects the Budget Control Act to "remain in force," easing those spending limits may cause "downward pressure on the ratings," S&P analysts Nikola Swann and John Chambers said today in a statement. S&P, Moody's Investors Service and Fitch Ratings, the world's three biggest providers of debt grades, have criticized the U.S. as Democrats and Republicans in Washington have made little progress in negotiations to reduce the budget deficit. That's had little impact on the bond market with Treasuries returning 6.4 percent last quarter, the most since the three months ended December 2008. "Investors look right through the agencies," Greg Peters, global head of fixed-income research at Morgan Stanley, said today in an interview on Bloomberg Television's "InBusiness with Margaret Brennan." "They're going to invest how they see fit." Both parties have blamed each other for the stalemate, with Democrats saying Republicans wouldn't relent on taxes and Republicans accusing Democrats of rejecting an offer to raise revenue along with spending cuts. Automatic Cuts"After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline," said panel co-chairmen Representative Jeb Hensarling of Texas and Senator Patty Murray of Washington. The supercommittee's collapse triggers across-the-board spending cuts to domestic and defense programs set to take effect starting in January 2013. Some lawmakers were already looking at ways to lessen the cuts. Moody's, which rates the U.S. Aaa and put the country on ''negative outlook" in August, said the committee's deadlock wouldn't on its own cause the U.S. to lose its top rating because of the automatic cuts. Fitch, which also gives the U.S. its highest ranking, said on Aug. 16 that a failure by the committee would "likely result in negative rating action.
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| The Economy Has Changed Expect Hopes, Dreams and Lifestyles to Follow Posted: 21 Nov 2011 09:45 AM PST Not much action in the markets on Friday. It was a helluva week, though. At the beginning it looked like Europe wouldn't make it to the end. Yields were rising to dangerous levels. Greece was clearly bankrupt. Italy would fall too, unless Germany came to the rescue. And investors weren't too sure about France. But as the week progressed investors calmed down. Or, at least they got used to being frightened. "Maybe they'll muddle through after all," they said to themselves. And so the week ended. Nothing decided. Nothing resolved. More questions than ever. Now, almost everyone has come around to our way of seeing things. In report after report, we see economists and analysts conceding that we're in for a long spell of trouble. Official reports and estimates show next year's GDP barely growing. Unemployment forecasts show the number of people without jobs staying high for years. Most analysts now also recognize that 1) the real cause is too much debt, and 2) the feds can't do much about it. Here's the New York Times with a typical hard-luck story:
You see, it's not just the economy that has changed. So have attitudes. Hopes. Dreams. Plans. "Markets make opinions," say the old timers. This market is turning Americans into a nation of pinch-pennies and stay-at-homes. With the whole world economy in a bit of a funk you wouldn't expect oil to be over $100 and gold to be over $1,700. Or would you? As to oil, much of the emerging world is still growing strongly. Over the last 4 years, for example, China has grown 70 times faster than the US. That's a lot more income in a lot more pockets in China. And that's a lot of people who want to use from energy. It's only natural that the price goes up…because supplies are sluggish; they can't increase as fast. There are also growing numbers of people who suspect the US and Israel are about to start another war. The Republican candidates are talking about Big Sticks. They expect to get money from the defense industry…and votes from the lumpen voters… by promising to throw their weight around overseas. A war with Iran might be hard to contain. At the very least, you'd expect the price of oil to soar…which would almost certainly seal the deal on a worldwide depression. As to gold, it appears that governments are buying. Here's the Bloomberg report:
Central banks and other official institutions, by comparison, had bought 66.5 tons of gold in the second quarter and 22.6 tons in the third quarter of 2010. *** A man in India was marrying his daughter. His old friend attended the wedding and noticed that the husband came from a different, and inferior, caste. "Doesn't it bother you that he's from a different caste," he said to the father of the bride. "What? Different caste? She works for the Morgan Stanley. He works for Goldman Sachs. Same caste." And now the global financial Brahmins are on the case. Monti, Draghi, Papademos… 'technocrats,' the papers call them. And US. Treasury Secretary Geithner too. Right schools. Right jobs. Right responses. As head of the New York Fed he was right there when the biggest bubble in history was created. He made no objection. He raised no alarm. And then, when the bubble burst he was at the scene of the crime again…with the rest of his caste. At the height of the crisis in '08, Lloyd Blankfein visited him 39 times. He spoke to the Goldman chief more often than he spoke to his own chief – US president Barack Obama. This elite caste invented derivatives and sub-prime mortgage debt. Now, they pretend to solve the problems they caused. Regards, The Economy Has Changed Expect Hopes, Dreams and Lifestyles to Follow originally appeared in the Daily Reckoning. The Daily Reckoning provides over 400,000 readers economic news, market analysis, and contrarian investment ideas.
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| Turk - MF Global Disaster to Create Another Lehman Crisis Posted: 21 Nov 2011 08:49 AM PST  With stocks plunging, the dollar rallying, gold and silver pulling back and fears of contagion spreading, today King World News interviewed James Turk out of Spain to get his take on what is happening. When asked about the possibility of contagion and the MF Global situation, Turk responded, "First of all investors should be concerned because everything is so inter-connected today. People call it contagion and this contagion is real because the MF Global bankruptcy is going to have a knock on effect, just like Lehman Brothers had a knock on effect."
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| Freedom: The New and Future Experiment… Part II Posted: 21 Nov 2011 08:45 AM PST What if the "best of the States" is always on its way to becoming "the worst of States"? It is true, of course, that certain forms of Statism are more overtly aggressive than others (though all seek to administer the ultimate punishment for political apostasy, one way or another). Some governments exercise control over their citizenry in subtle ways, like granting them the "privilege" of carrying an identifying document when said citizen chooses to exercise his natural right to travel freely. Other regimes, however, are not so subtle in their use of coercion. They stone women to death for baring an inch of skin, force those of a certain race into internment camps, and/or execute political opponents at will…among many other atrocities. This type of the State, according to most folks, constitutes the worst of all evils. But what if the State, itself, is the "worst of all evils?" What if the State is genetically predisposed to malevolent mutations? What if even the "best State" – the one that begins its life, nobly, as a constitutionally constrained republic, dedicated to protecting and promoting "life, liberty and justice for all" – is really, at all times, on the road toward the most evil, militaristic expression possible? What if force can only beget more force, in other words, coercion only more and greater coercion? And, more importantly, where does that leave us, goose-stepping down the road to perdition? Today, in the most powerful nation the planet has ever seen – a mighty behemoth with military arsenal capable of exterminating the entire human population many, many times over – more than 45 million of its own citizens live on food stamps, barely able to get by. That many again are supported directly by the State, that grand experiment we've devoted six thousand years to testing, but which we still don't quite understand. And how is that experiment, however noble its genesis, working out? Well, take a look around. I'd like to cite just a few troublesome data points that appeared as part of a much longer list in a recent Daily Reckoning.
The Old Experiment is faltering, even as we sit here today, surrounded by the picturesque landscape of "Doug's Gulch." I suspect it is for this very reason many of you are here today. You see the writing on the wall. So, where to from here? Can we discount the State entirely? There are, of course, those who argue that the solution rests in going back to a gold standard, or back to the constitution. What these people are really saying is that they want to start the Old Experiment over, an experiment that, demonstrably, has not only failed, but will end in absolute disaster for those who cling to its now baron promise of redemption. We had a gold standard. Did that stop the government from abandoning it the moment it needed to inflate the currency to pay for its military misadventures abroad? We had a Constitution. Did that stop the government from abandoning it, from circumventing the restrictions therein? Where is operation "Shock and Awe" in the Constitution? How about the authority to carry out programs like "universal medicine" or "cash for clunkers." Where is the amendment that empowers the Treasury Secretary to send billions of dollars to his former Wall Street employer? Do presidents consult their worn, dog-eared copy of the Constitution when they decide to march off to war or to effectively nationalize this or that sector of the economy? Of course not. Murray Rothbard, the man who coined the phrase "anarcho-capitalist," perhaps summed it up best in his work, For a New Liberty, when he wrote: "The idea of a strictly limited constitutional State was a noble experiment that failed, even under the most favorable and propitious circumstances." (And remember, this is from a book published back in 1973, almost forty years ago. Even then, the course of events was becoming obvious, if only to a few.) "If it failed then," he continues, "why should a similar experiment fare any better now? No, it is the conservative laissez-fairist, the man who puts all the guns and all the decision-making power into the hands of the central government and then says, 'Limit yourself'; it is he who is truly the impractical utopian." Meanwhile, back in impractical utopia… Protesters are arrested by the hundreds in New York and elsewhere across the country. Lemonade stands and bake sales across the nation are being shuttered and reams of rules and nosey-by-nature regulations are strangling small and medium businesses (and, along with them, any hope of genuine recovery). You're subject to indecent searches – "gate rapes" – at the airports and even now, I hear, on State highways and train systems. You are guilty until proven innocent. Due process be damned. The question, then, is how do we escape or avoid the State, this most vicious and insidious enemy to freedom? How do we begin the New Experiment? Well, first we must recognize that, like the monster under our beds when we're children, the State only exists to the extent that we permit it to. Without our continued support, both financially, through failing to protect our private property from expropriation at the hands of the State, the IRS, and politically, through our validating participation at the ballot box, the State ceases to exist. It NEEDS us. And it is up to us, therefore, to starve the monster, to take our own freedom back from the jaws of the beast. How best to do this? However tempting it might be to simply "lynch the bastards" (and, for the bloodthirsty among you, that might be coming anyway) we must realize that force and violence is not the answer, or at least not the best answer. You don't fight fire with fire, unless you want an inferno. In the same way, there's little point in fighting violence with violence. For one thing, it's stupid. It's a no-win game. Violence is the State's specialty. They have the guns, the jails, the cops, the first responders, the TSA goons, the DEA, SEC, FDA, EPA, IRS and all the rest. They have cornered the sociopath market, in other words. Fortunately, we can do much better than that. We can do better than to play right into their clenched fists. Revolution of the kind brewing amid the Occupy Wall Street camp and the Tea Party movement is probably not the answer either. What kind of freedom are we seeking if it may be only be granted by those who appoint themselves our masters? Are we really going to prostrate ourselves on the steps of Capitol Hill or in the foyer of Goldman Sachs like some servile zombie and beg for freedom? That kind of subservience only serves to strengthen and validate the perverse, master slave notion they want to perpetuate. Actually, revolution, in any form, is not the answer at all. We've tried that. We try it when any State begins to falter…then we go and erect another State to replace it. By definition, revolution simply means returning to the beginning, to the point of origin. No wonder they say history repeats itself, or that it at least rhymes…We've been running and re-running the same experiment over and over again, always expecting a different result – the very definition of insanity. You'd think that, after 6,000 years – and a body count in the hundreds of millions – we'd give up on the State and try something different. We don't need to revolve, in other words, we need to evolve. But that takes courage. It's not easy to clap when everyone is booing. It's not easy to stand up when everyone around you seems content to live their lives on their knees. The good news is that the State is already falling apart. The bad news is that it will likely try to take you with it. That has been, and continues to be, the glaring lesson of history. In Europe and the United States, the people are beginning to see that their emperors – and their empires – have no clothes. The welfare/warfare State is broke, broken and fast running out of options. But these people, these occupiers and tea partiers, by and large, are not going after the State…they are going after each other! They are demanding more State power, not less. As such, you ought to expect higher taxes. Expect capital controls. Expect more and greater restrictions on the freedom of your movement. And expect riots, as we are already seeing, of growing intensity. It is not an exaggeration to say your window of opportunity is already closing. And one cannot stress that point enough. But there is a silver lining to this dark, statist cloud. And it comes, in large part, with the power of communication. It comes with the spread of ideas – ideas of freedom and of ways to achieve it. In the same way that Gutenberg's printing press of the late 1400s acted as an "agent of change" in Europe, the Internet is today providing opportunities for the dissemination of ideas like we have never before seen. Love them or hate them, Internet-based, decentralized organizations like WikiLeaks and Anonymous are operating more and more brazenly by the day, exposing the lies and corruption of the State for millions to see. The idea, again, is not to overwhelm with force and violence, but to undermine with truth and ideas. It is true that the State has the guns, but we have the information and, with the advent of the Internet, the means to distribute it. We live in an age where a child in sub-Saharan Africa can access information published on the other side of the world almost instantaneously…where groups of likeminded individuals can coordinate and share ideas in real time across artificial borders erected by warring, small-minded politicians, where young entrepreneurs in South America can do business with start-up companies across the Pacific, trading cyber currencies well beyond the reach of their respective governments, thereby denying these criminal organizations the financial lifeblood they need to exist. Now, like perhaps no other time in history, we have a chance to spread the word of freedom quicker and further than any time before. And freedom, you'll notice by looking around the room, is a catchy tune. Once you've got that idea in your head, you can't shake it. And the world begins to look very different indeed. On a personal level then, what can you do, now…today. You should begin, immediately, diversifying yourself across borders. You should open a bank account in a foreign country. You should do that immediately. Uruguay, sometimes know as the "Switzerland of South America," is a reasonably good option that requires little paperwork. You can set up an account there in a few hours. Maybe that's not ideal for your own circumstances but, in any case, you should look into moving funds abroad quickly. You should also consider working towards obtaining a second passport. And obviously, you should be holding a significant portion of your portfolio in precious metals – real money, in other words. They should be hard to get at. Not for you, but for anyone else, including, especially, anyone brandishing a government badge of some description. How much? That depends on your individual circumstances, but I'm inclined to agree with Byron King, who writes Outstanding Investments, when he says between 15-20% of your portfolio in precious metals, more if your individual circumstances warrant it. I'd also be looking at foreign real estate, mostly because it's difficult, if not impossible, for your government to get its hands on. Plus, it provides you with a "Plan B" if things really go awry…and I think there's a better-than-average chance they will, both in Europe and in the U.S. Other than that, you want some of what my friend and colleague, Chris Mayer, calls "dry powder." That's cash on the sidelines – hedged across multiple currencies – that you can liquidate quickly to take advantage of deep value, crisis investments. And I do believe there will be many such opportunities for geographically nimble investors in the next 3-5 years. And finally, a kind of quirky idea that I think is worth mentioning. Get some mates. I don't mean people you know from work or second cousins…I mean people who are similarly, independently minded, who are curious and who ask questions, who are not prone to imbibe the bread and circus sideshows they see on television. Get these people together and begin an informal meeting group where you can share ideas. They might be start up businesses ideas, investment opportunities or just good book recommendations. Doesn't matter. Find some kindred spirits. You'll see they are an invaluable resource during times of crisis. I'm part of such a group in Buenos Aires, founded, in large part, at Doug's suggestion and introductions. We have doctors, engineers, software technicians, artists, writers, energy consultants, entrepreneurs and a whole host of talented people all sharing ideas and trying to figure ways to live freer, better lives. You can do this at home, in your local communities, online, here in La Estancia, wherever…but I can't recommend the activity highly enough. It's sad to have to say that…but… In a world where violence is the norm, peaceful assembly and voluntarism have become extremist positions. I encourage you, in this respect, to become an extremist. In a world ruled by guns and brute force, ideas of liberty and freedom are indeed our greatest tools. It's time we started sharing them. Thank you. Freedom: The New and Future Experiment… Part II originally appeared in the Daily Reckoning. The Daily Reckoning provides over 400,000 readers economic news, market analysis, and contrarian investment ideas.
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| Late-Day Reality Check On Dramatic Risk Off Day Posted: 21 Nov 2011 08:34 AM PST
ES tumbled back down to its VWAP at the close of the day session after mounting a run back towards 1200 in the afternoon. This equity move was the second total disconnect from credit markets of the afternoon and reverted back to credit's sanity though HYG was clearly the instrument of choice (once again) for credit hedgers looking for lower cost shorts or liquid hedges. The USD was modestly higher from Friday's close and Oil rallied back this afternoon to almost perfectly match the USD shift. Gold, Silver, and Copper all lost significant ground (around 2.5%) though all were well off their early European-close-liquidation lows. TSYs rather interestingly closed near the high yields of the US day-session - though well down on the day - as 2s10s30s and Oil were the main drivers of broad risk-asset strength. CONTEXT remained notably below ES all day - maintained by the weakness in Gold, 10Y, and AUDJPY as the EURJPY ripfest into the EU close helped the risk-on crowd modestly. It was a muddled day with correlations breaking down and dramatically illiquid-looking moves as the late-day drop on very large volume suggests some sense of sanity with the uncertainty we face was priced in.
The US equity and credit day had 4 clear episodes today from our perspective. 1) pre-open ramp in ES into the open to entice would-be dip-buyers - credit ignored it almost completely and CONTEXT remained significantly down; 2) As selling picked up, HYG became the instrument of choice for shorts/hedgers and notably underperformed both stocks and HY spreads, markets converged back at the lows into the European close and were helped a little of the lows by a completely news-less 60 pip ramp in EURUSD; 3) Some chatter about the possibility of the super-committee still coming up with something pushed a little risk-on but in our view this was much more algo-driven in low volumes as we reverted perfectly and stalled at VWAP -note that HYG did not move on this rally at all; and 4) another surge for 1200 and the open of the day session moved everything higher but ES was the highest beta and most extravagantly out of sync - only to revert back in line with IG and HY credit. At the close HYG was marginally off its lows while ES, HY, and IG were about mid-session levels. We urge a close inspection of shares outstanding for HYG as if we start to see the destruction of units (as opposed to creation units) then we know the secondary HY bond market cannot withstand that pressure and could quickly deteriorate. We have warned of the extreme level of the advance-decline line for HY debt recently and remind readers that we also noted the 'stuffing' of the HYG ETF which we suspected was going on. The last few days has seen HYG underperforming, shares-outstanding stable (not rising anymore) and Advance-Decline rolling over very fast - worrisome.
Today's secondary bond trading was thinnish (technical term) with HY seeing balance (modest net-selling) and IG modest net-buying). The focus seemed to be on up-in-quality as HY rotations into AA-BBB was most evident. The rise in TSY 2s10s30s was mirrored in Corporates with the 1-3Y most net sold and the <1Y and >12Y seeing the most net buying. It was clear that short-dated financials (BAC, JPM, BNP, ALLY) were among the largest net sold (get me out!) and there was modest duration extension into the 1-3Y higher quality (low spread names).
FX markets saw three regimes, flattish overnight, higher volatility during the European hours, and then flattish during late day US. This makes sense and we suspect the late surge in EUR against the USD was more liquidity-based USD liquidation and EUR repatriation - TSYs did sell-off into that period also. AUD was the currency today as carry trades were tossed.
Commodities in general rallied from around the end of the European day - suggesting the liquidations were European-firm-driven. Oil managed to scamper all the way back up to perfectly sync (its loss) with the dollar's gain today and Copper, Gold, and Silver (while notably volatile intraday) seemed to miraculously converge into the close at around 2-2.5% losses from Friday's close. Silver managed a 3% rally off its intraday lows. Taking into account CONTEXT and the empirical relationship between HY and equity markets through various business cycles, the S&P 500 got its closest to some semblance of value relative to credit in over a month. 1164 is the current expected fair-value for the S&P (which can be monitored intraday here).
Charts: Bloomberg
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| Gold Daily and Silver Weekly Charts - December Option Expiration Tomorrow Posted: 21 Nov 2011 08:26 AM PST | ||
| What's Pushing the Silver Market? Posted: 21 Nov 2011 08:23 AM PST Author: Vedran Vuk Synopsis: The silver market appears to be at a crossroads, with economic trends and investor interest being only two factors likely to influence where it goes from here. Also in today's issue: 3D-printed chocolates and Stradivarius violins. Dear Reader, Today, I'm excited to bring you a brief but important announcement. Starting next week, we will be introducing an entirely new format to Casey Daily Dispatch. You'll still receive insightful commentary from all of our editors on topics ranging from global economics and politics to the resource and energy markets, as well as links to the news and opinions that we feel deserves your time and attention. However, the new format will be more organized and focused. I'll refrain from providing too many more details here, as later this week we'll be sending you an official run-down of the new format. The...
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| Foreign Banks Double Dollar Deposits at Fed Posted: 21 Nov 2011 08:07 AM PST 21-Nov (Bloomberg) — Foreign bank deposits at the Federal Reserve have more than doubled to $715 billion from $350 billion since the end of 2010 amid Europe's debt turmoil, buttressing the dollar's status as the world's reserve currency. Forty-seven non-U.S. banks held balances of more than $1 billion at the New York Fed as of Sept. 30, up from 22 at the end of 2010, according to a survey of 80 financial institutions by ICAP Plc, the world's largest inter-dealer broker. The dollar has appreciated 7.2 percent since Standard & Poor's cut the nation's AAA credit rating Aug. 5, the second-best performance after the yen among developed-nation peers, according to Bloomberg Correlation-Weighted Currency Indexes. [source]
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| So, Wait, Gold Is NOT Outperforming Stocks By 23% YTD? Posted: 21 Nov 2011 08:06 AM PST
Listening to all the mouth foaming commentary out of assorted TV channels and economics professors which have apparently suddenly woken up from their deep hibernation regarding the imminent death of the gold market, one could be left with the impression that gold was wiped out, collapsed, imploded and will never rise again. After all: what does it really bring to the table aside from complete lack of monetary dilutability and a safe haven to hundreds of trillions in derivative counterparty risk (in its physical form that is, as Celente recently found out), not to mention a hedge to human idiocy as Kyle Bass said a few days ago? Well nothing really... So we were shocked, shocked, when we ran a simple chart comparing the performance of gold and the S&P Year to Date to discover that outperforming by a margin of about 23% is... gold? Huh. But wait, the real safe haven are bonds many would say. After all, the US has no counterparty risk and it has prudent fiscal and monetary authorities. So how do they compare? Well, as of today: flat, with gold actually outperforming modestly. That's right - gold and the US long bond, even following the recent "drubbing" in gold have generated the same price return. So... what were we talking about again? Gold vs ES:
and Gold vs the Long Bond:
Source: BBG
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| Ignore the Noise…Opportunity Here Posted: 21 Nov 2011 07:51 AM PST Dave Gonigam – November 21, 2011
Or maybe, as we indicated on Friday, the case of MF Global is making people wonder if their funds are safe anywhere other than the First National Bank of Serta. Whatever… Time to take stock of opportunities yet explored on The 5's desk.
"The company's technology for acquiring therapeutic stem cells is flawed and obsolete," says Patrick Cox, who wasn't surprised at all. "It's somewhat amazing to me that it's taken this long for the company to admit it bet wrong, but it finally has. "Financial and nonfinancial media, however, have inevitably treated the company as if it is the only really important stem cell company." Thus does ABC declare: "Many experts say the announcement signals a symbolic end to the era of embryonic stem cell research that many researchers worked so hard to launch." Which is true… but the article leaves the reader with the impression that embryonic stem cells are the only kind worth researching.
BioTime has pioneered its own pure stem cell production technology. "Known as ACTCellerate," Patrick goes on, "it involves the mapping of stem cell development shepherding cells through the phases of development to produce large, pure quantities of identical purified stem cells." BioTime CEO Dr. Michael West presented the genetic evidence that he can do this during our Vancouver conference last July.
In time, they build you a like-new heart. "The patients' own cells are first converted to become induced pluripotent stem cells," Patrick explains, "identical in function to embryonic cells. They are then potentiated to become endothelial precursors, suitable for rejuvenating the heart and vascular and immune systems." "This technology will, I believe, be the most-successful medical blockbuster in history. As heart disease kills most of us, it will significantly extend healthy life spans. Moreover, it will happen much sooner than almost anybody believes." "If you believe, as I do, that Dr. Michael West and BioTime are the true innovators, then we will probably have a valuable opportunity to buy BioTime at artificially depressed levels." [Ed. Note: And that's after BioTime shares have appreciated 501% from Patrick's initial recommendation. Don't feel bad if you missed out. Patrick is equally, if not more, enthusiastic about another company he's been following in his premium advisory, Breakthrough Technology Alert. Access here.]
"This sort of action isn't unusual for small biotech companies," adds Patrick's associate Ray Blanco. "With scarce resources, putting programs with longer time horizons on hold in favor of lower-hanging fruit that can pay off in the nearer term makes economic sense. It helps prevent the dilution of the shares, and preserves capital for advancing programs that can produce revenues sooner. It is a shareholder-friendly move."
Not so with Geron's drug: It "takes the popular commercial chemotherapy compound paclitaxel and links it to a proprietary peptide molecule," Ray explains. "Since many peptides — which are small protein molecules — are allowed to pass through the blood-brain barrier by the body, paclitaxel gets to hitch a ride into the brain, where it can then do its work on cancer tumors." Early clinical trials are promising. Ray advises readers of his entry-level newsletter Technology Profits Confidential that Geron's still a keeper.
The S&P has given up not only 1,200, but 1,190. All the gains of the last six weeks — poof.
Mr. Embry subscribes to the theory that powerful forces manipulate the price of gold — which in this case is working to your advantage. "I think it's spectacularly bullish that sentiment is so incredibly weak in the metals. I can't believe that people are basically being influenced to this degree by price action and they are just ignoring the fundamentals. "That is exactly what the people who are creating the price action want… Gold and silver prices are going to multiples of the current prices in the not-too-distant future. And if you don't own this stuff, you're going to get killed."
"This is why the Vietnamese buy more gold per capita than anyone else in the world. They even pay 9-11% premiums over the world gold price to get it. They want to get out of the dong, the value of which rots like Mekong catfish left in the sun."  "It takes about 21,000 dong to get one dollar. In 2008, it was about 16,000. So it's falling off a cliff against a currency that is not exactly a pillar of strength. This makes it tough for foreign investors in Vietnam. You need to overcome this depreciation before you make any real money!" "In Cambodia, the coin of the realm is the riel. 'It's not a serious currency,' my contact told me. It takes about 4,000 riels to buy a dollar. But it seems people use riel only for transactions less than a dollar. Otherwise, they use U.S. dollars." "The Thai baht is the most stable of all these Asian currencies. On my way home, I went through Bangkok again. I forgot to change all my dong before I left Vietnam. So I went to the money-changers in Bangkok to convert my dong to dollars. The Thai money-changers would have nothing to do with the dong. It made me think well of the Thais." Thus did Chris bring back some dong as souvenirs. He also met up with an investor he called "the Warren Buffett of Thailand." It's this individual who turned him on to the idea so lucrative he wouldn't even tell us back in Baltimore what it is. But now he's written it up and the information can be yours right away with a membership in Mayer's Special Situations.
"I am utterly appalled by this. Too bad we don't have a Mr. Chavez to run for president. Then things would really turn around. FYI, President Chavez is/was always elected by the people, and furthermore respects to the last 'we the people.' (Have we all forgotten the meaning of this very important phrase?)" The 5: Aha! Thanks for the good belly laugh.
The 5: No, but they've slowed down appreciably. The number peaked last year at 157. So far, this year the number is 90, including two last Friday. At that pace, the final tally for the year should be around 100. Curiously, 23 of those come from one state — Georgia.
"If it did actually happen, I'm guessing that either this guy was himself such a jackass that he provoked that response, or at worst he encountered a jerk who may have been on the verge of snapping, which as we know can happen just about anywhere." "Seems to me that lots of people that are involved in any kind of security field either have big chips on their shoulders or are bored $#!+less and come across with poor attitudes, but my experience at the Canadian border has been no different than anywhere else. Canada is a great country, our ally and neighbor, and I won't hesitate to keep visiting."
"We all have bad days, but there is a limit. I have had a bad experience with a U.S border guard. I'm sure he wanted to be a cop, but couldn't get in. However, the majority of guards are great, and have even made me laugh. I will always travel to the States, and I hope our friends in the USAcome visit us always."
"In the hundreds, and possibly over a thousand times, I have dealt with immigration and customs officials, they have been very professional and ask all the questions they need to satisfy their respective laws. However, very early in the morning, or even late at night, one of them will act as if there is a chip on the shoulder and you are invited to knock it off, only to start a verbal war that you will always lose." "Bear with them, keep your remarks professional and you will get through the process with little fuss and perhaps a second thought about the dull, somewhat simplistic routine that such an agent has to follow just to satisfy the regulations. They do not have time for 'small talk,' and by the nature of their job cannot appear to be friendly or inclined to make you, the tourist, feel special."
"We have been in a Cold Civil War in this country, aided and abetted by the above-mentioned Elite, for a very long while, at least since the '60s, and it is going to enter a hot period before it has its conclusion." "The Federal Criminal Cabal in Washington is rapidly installing a police state in this nation, and some are not going to accept it without a vibrant fight." "If We the People want to impact the Elite Ruling Criminal Class and reassert OUR Constitution, then one very simple way is to buy gold and silver and make the Elite Ruling Criminal Class eat their worthless paper." The 5: He didn't say they'll go down without a fight.
The 5: No. Only that it pays to do your due diligence. Gerald Celente, who lost a bundle with MF Global, didn't even realize he was doing business with MF Global. His account was with Lind-Waldock, which was acquired somewhere along the line by MF Global and continued to answer the phone, "Lind-Waldock."
"Whatever you believe, the facts show the NWO is alive and metastasizing. Do a baker and his pals eat better than his clients? Do those who print fiat currency and their pals enjoy a similar advantage? Of course." "Hey, they control the money, what's next…food, military, governments, corporations, education, oh crap. Either way, the reality of the progress of macroeconomic global domination tyrants will continue, and it's not likely to collapse until the Second Coming." "Or, just keep pointing out the mouse holes for us." The 5: Yes, we're much more comfortable seeking out pockets of refuge. Cheers, Dave Gonigam P.S. "It's important that there's a private initiative to do something," said Addison during the lunch hour on Baltimore's NPR affiliate. He was talking about Starbucks' "Jobs for USA" program. If you've been in a Starbucks this month, you know what it's all about: Collecting donations of $5 or more to put in a kitty for lending to small businesses. Contribute, and you get a wristband:  "I'm skeptical that more credit is the route to creating more jobs," says Addison echoing a theme from the introduction to The Essential Investor, which we unveiled over the weekend, "but this gets the thing going in the right direction. If we can have a private conversation separate from the political football kicked around in Washington and up to Wall Street, that's a good thing." Addison says he riffed on the topic at the Mt. Vernon Club — a local hangout for the wives of Baltimore's muckety-mucks — Thursday night too. He hasn't said anything about being on a community outreach program lately… but neither has he been editing The 5 much lately, either. Between these engagements and the above-mentioned Essential Investor launch, he's been busy. If you'd like to listen to the local radio discussion, Addison was playing nice with Moody's Mark Zandi. The discussion will be archived later today at this link. The discussion begins about 40 minutes into the 12:00 hour.
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Is the world on the verge of another massive global financial collapse? Yes. The western world is drowning in an ocean of debt unlike anything the world has ever seen before, and our financial markets are gigantic casinos that are dependent on huge mountains of risk and leverage remaining very stable. In the end, this house of cards that has been built on a foundation of sand is going to come crashing down in a horrifying manner. Usually in this column I go on and on about why things will soon get much worse. But today I am going to take a bit of a break. Today, I am going to let some of the top financial professionals in the world tell you why things will soon get much worse. Many of the quotes that you are about to read just might make the hair on the back of your neck stand up. Most people out there have no idea what is about to happen. Most people out there are working hard and are busy preparing for the holidays and they are hopeful that the economy will turn around soon. But that is not going to happen. We are heading for another major global financial collapse, and when it happens the U.S. economy is going to get even worse.
On the twenty-seventh of February, 1818, [the Suffolk Bank] was organized which was destined to exert upon the currency of New England an influence little dreamed of by its projectors, but so wholesome that it gave uniformity and stability to the circulation [currency], reduced the discount [rate for redemption of paper notes] to a minimum, and by holding [over-issuing of paper money] in check tended to keep [the American economy] in a sound and healthy condition. ~
isually, we can think of demand in this phenomenon as being in a kind of contracting triangle. Every time consumption resumes after a previous demand crash, it hits the ceiling at a lower level. This is the point where, if you find yourself living in the age of biomass and wood, you get rescued by coal. For example. This is also the point where, if you are living in the age of oil, it's less likely you get rescued.
"Stocks Move Sharply Lower," read the headlines this morning on countless financial websites. The reasons cited include…
"Scientists Think Embryonic Stem Cell Research," says a headline at ABC News. It's an especially weak attempt to "advance the story" a few days ago about Geron Corp. dropping the world's first clinical trial using human embryonic stem cells.
"Geron's failures on the stem cell front were, actually," says Patrick, "evidence that BioTime Inc. is the real leader in regenerative medicine."
More recently, BioTime linked up with Cornell University to produce commercial-scale quantities of "endothelial precursor stem cells." Essentially, they convert a few drops of your blood to stem cells, and then into endothelial precursors — a proto-cell of the kind that lines the inside of your arteries and veins.
So what of Geron's future? "The company still has important assets," says Patrick — including a sizeable portfolio of stem-cell intellectual property. It will continue to generate revenue for the company even as it turns its attention to its cancer treatment."
What's more, Geron's cancer treatment holds out great promise: "Many cancer drugs," says Ray, "will not treat cancers located in the brain or central nervous system. The blood-brain barrier, which protects the brain from foreign substances, filters out many chemotherapy drugs and renders them ineffective."
Better yet, both of the stocks mentioned above are on sale today because traders are unloading both the bad and the good. The Dow is down 300 as we write.
Gold has sunk below $1,700 for the first time in nearly four weeks. As of this writing, the spot price is $1,694. Silver has surrendered $31.
"We have a big option expiry coming up on Tuesday, and this is just business as usual," says Sprott Asset Management's John Embry of gold's price action.
With gold on the way down, Treasuries are the last refuge of the safety trade. The yield on a 10-year note is back below 2%, the yield on a 30-year bond back below 3%.
Even the dollar doesn't look that perky today. At 78.2, it's up only fractionally from Friday.
"The Vietnamese dong is truly an awful currency," says Chris Mayer, now back from his investment-scouting trip to Southeast Asia. "The Vietnamese inflation rate is officially 20%."
"In your comment concerning a 'dictator' in Thursday's issue, I presume you are referring to President Chavez."
"You folks used to mention on a regular basis how many banks were closed in a given week and the accumulated number for the year. We have not seen anything for a while. Have the bank failures stopped?"
"I'm inclined to call B.S.," writes a reader of the American who says Canadian Customs threatened him with jail if he ever tried to visit again. "I'm an American who has been crossing into Canada a few times a year for the last 20 years."
"The customs officer that treated and spoke to the American as described should be fired and then kicked in the ass, hard, on his way out the door," writes a Canadian reader who finds the story believable.
"As a Canadian, I've been dealing with customs agents and immigration officers on both sides for many years."
"Mr. Benko does not know what he speaks about," writes a reader who rejects Ralph's 90-second manifesto. "In fact, the Elite Ruling Criminal Class will take a complete and incendiary effort to remove them from their position of Swindle, Embezzle, Murder and Mayhem, in my opinion."
"So what's up?" writes a reader who saw Friday's "can't-trust-the-system" issue. "I have an account with optionsXpress, and I trade options. Are you saying along with Ann Barnhardt that we need to get out now?"
"Go long New World Order and go short personal freedom," writes a reader who saw Barry Ritholtz's remark about going short banks and long mattresses.| You are subscribed to email updates from Save Your ASSets First To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
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