saveyourassetsfirst3

Trading Comments, 12 November 2011 (posted 18h30 CET):
Gold and Silver rise as Risk "off"/MF Global Canada bankrupt/Turmoil continues in Italy
Bullish Outlook for Gold Still Valid Despite the Recent Pause in the Rally
The Gold Investor's Biggest Risk
The new CFTC silver round. Check it out!
Germany Probably Can't Get Its Gold Back From The U.S. - Jim Rickards
King World News Interviews gold fund manager John Hathaway
Germany probably can't get its gold back from U.S., Rickards tells King World News
Gold Traders Most Bullish Since 2004 on Debt Crisis
An Unmitigated Disaster: Theodore Butler
New gold bugs are young and restless: Meet three investors who have been bullish about bullion
Thanks to gold, the U.S. trade deficit for September improved
India : Out of bonds, Savings Spur Record Flows Into Gold
How to Buy Gold Coins: Top Five Do's and Don'ts
Gold Bull Seasonals 6
Financial Times Deutschland joins hunt for Germanys gold
By the Numbers for the Week Ending November11
Gold and Silver Miners Lead Market Rebound
Is It Gold Season?
Thank You
Friday ETF Roundup: GDX Shines, VXX Sinks On Strong Equities
Don’t Be Distracted By Eurozone Drama
Currency Intervention Fears Weigh On Swiss Franc ETF
The Australian Gold Matrix
The US Won’t Give Germany its Gold
Sell Side to Get Slaughtered on Bearish Gold Calls
Gold, Silver Miners Lead The Market Higher

Trading Comments, 12 November 2011 (posted 18h30 CET):

Posted: 12 Nov 2011 03:30 AM PST

The possibility remains that gold and silver may once more test support at $1700 and $32.50 respectively. I recommend buying the dip, or an upside breakout. Gold 1) The position bought at

Gold and Silver rise as Risk "off"/MF Global Canada bankrupt/Turmoil continues in Italy

Posted: 12 Nov 2011 01:25 AM PST

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

Bullish Outlook for Gold Still Valid Despite the Recent Pause in the Rally

Posted: 12 Nov 2011 01:00 AM PST

SunshineProfits

The Gold Investor's Biggest Risk

Posted: 12 Nov 2011 12:34 AM PST

All your eggs in one basket is risky, and diversification helps to reduce that risk, but don't neglect geographical diversification. It may not be necessary to physically move your family to a different area, but it could be a good plan to diversify the location of some of your assets. Plan your work to prepare for worse political times ahead, and then work your plan!

Quote:

The Gold Investor's Biggest Risk

While we're convinced that our gold and silver investments will pay off, they don't come without risk. What do you suppose is the biggest risk we face? Another 2008-style selloff? Gold stocks never breaking out of their funk? Maybe a depression that slams our standard of living?

Though those things are possible, we at Casey Research don't see that as your greatest threat:

Your biggest risk is not that gold or silver may fall in price. Nor is it that gold stocks could take longer to catch fire than we think. Not even the prospect of the Greater Depression. No, your biggest risk is political. As bankrupt governments get increasingly desperate for revenue, any monetary asset held domestically could be a target. It is absolutely essential that every investor diversify themselves politically. In fact, at this point, it is the one action that should be taken before anything else. – Doug Casey, September 2011

I know many reading this are prudent investors. You own gold and silver as solid protection against currency debasement, inflation, and faltering economies. You set aside cash for emergencies. You have strong exposure to gold stocks, both producers and juniors, positioned ahead of what is likely the next-favored asset class. You feel protected and poised to profit. Yet, despite all this preparation, you remain exposed to one of the biggest risks.

Similar to holding a diversified portfolio at a bank without checking the institution's solvency, many investors keep their entire stash of precious metals inside one political system without considering the potential trap they've set for themselves. While storing some of your gold outside your home country is not a panacea, it does offer one important thing: another layer of protection.

Consider the exposure of the typical US investor: 1) systemic risk, because both the bank and broker are US domiciled; 2) currency risk, as virtually every transaction is made in US dollars; 3) political risk, because they are left totally exposed to the whims of a single government; and, 4) economic risk, by being vulnerable to the breakdown of a single economy.

Viewed in this context, the average US investor has minimal diversification. The remedy is to internationalize the storage of some of your precious metals. This act reduces four primary risks:

Confiscation: We don't know the likelihood of another gold confiscation. But we do know that things are working against us – particularly for US citizens. With $14.7 trillion of debt and $115 trillion of unfunded liabilities, the US government will likely pursue heavy-handed solutions. Under the 1933 FDR "gold confiscation" in the US (the executive order was actually a forced delivery of citizens' gold in exchange for cash), foreign-held gold was exempted.

Capital Controls: Many of us think some form of capital controls lie ahead, limiting or eliminating a citizen's ability to carry or send money abroad. If enacted, all your capital would be trapped inside the US and at the mercy of whatever taxing and regulating schemes the government might concoct. Although you might be able to leave the country, your assets could not travel with you.

Administrative Action: There are plenty of horror stories of asset seizure by a government agency without any notice or due process, possibly leaving the victim without the means to mount a legal defense. Having some gold or silver stored elsewhere provides what could be your only available source of funds in such a scenario.

Lack of Personal Control: Having gold and silver stored elsewhere adds to your options. You will have a source of funds available for business, entrepreneurial pursuits, investment, or pleasure.

Notice above we said these risks can be reduced, not eliminated. There is no perfect solution; US persons could, for example, be compelled to pay a "wealth tax" on assets held worldwide, or even repatriate them in a worst-case scenario. Absent a crystal ball, the political diversity of asset location is an essential strategy against an uncertain future.

Foreign-held assets also require greater awareness and planning:

Access to your metal or sale proceeds may not be quick. Therefore, this option is for those with some gold and silver stored at or near home. We do not recommend storing all your precious metals overseas; that defeats one of its purposes -- to have it handy for an emergency.
While we think the US poses the greatest threat, a foreign government could move to control certain assets as well. The risk varies by country and is generally greater within the banking system than with private vaulting facilities.
Understanding and complying with reporting requirements is essential.
The bottom line, though, is that foreign-held precious metals can mitigate risk and give you more options. And as your metal holdings grows, diversification becomes more crucial.

Given our current rapacious climate, it's likely that simply buying gold won't be enough. We strongly suggest every investor diversify one's bullion storage outside their current political regime. The option may not be available someday, leaving you vulnerable without a secondary source of bullion. We advise taking advantage of the opportunity before it is gone.

http://seekingalpha.com/article/3066...s-biggest-risk

The new CFTC silver round. Check it out!

Posted: 12 Nov 2011 12:33 AM PST

:cry1::cry1::cry1::cry1:

http://www.caseyresearch.com/gsd/edi...s-jim-rickards

Germany Probably Can't Get Its Gold Back From The U.S. - Jim Rickards

Posted: 12 Nov 2011 12:00 AM PST

¤ Yesterday in Gold and Silver

The gold price dipped about ten bucks during the first hour of trading on Thursday night in the New York Access Market, but from there rallied a bit until shortly before 10:00 a.m. Hong Kong time.

Then the price more or less did nothing from that point until the London a.m. fix was in around 10:30 a.m. GMT. From there, the gold price developed a positive bias...which got hit for another ten bucks shortly after Comex trading began in New York.

But once that tiny sell-off was out of the way, a more serious rally began which ended around 1:00 p.m. Eastern time, as what few traders were left, headed for the Hamptons to get an early start on the weekend. From that point, the gold price barely moved into the close of electronic trading at 5:15 p.m. Eastern time.

The price closed at $1,788.50 spot...up a respectable $30.50 on the day. Not surprisingly, net volume was very light...around 87,000 contracts.

Silver spent most of Far East and early London trading day in the $33.50 to $34.00 price range...and its rally began the moment that the London silver fix was in at 12 o'clock noon local time, which was 7:00 a.m. Eastern.

And, like gold, the silver price got sold off shortly after the Comex open, with the New York low coming just a few minutes before 9:00 a.m. Eastern time. The ensuing rally lasted into the lunch hour before it, too, traded sideways for the rest of the day.

The silver price closed at $34.66 spot...up 63 cents on the day. Net volume was a very tiny 24,000 contracts.

The dollar traded flat until around 11:00 a.m. in London before it developed a downward bias...and at 9:00 a.m. in New York, it turned sharply lower. The low came minutes after 12 o'clock noon Eastern time...and basically traded sideways from there.

Except the for the 30-minute sell-off in both gold and silver from 8:30-9:00 a.m. in New York, the gold price was pretty much the opposite of the dollar move. The dollar was down just over a percent...and gold was up just under two percent.

The gold stocks gapped up a the open...and the HUI hit its high of the day around 11:45 a.m. Eastern time...and, like the metal itself, traded sideways until the close of the equity markets at 4:00 p.m. in New York. The HUI finished up a very robust 3.72%.

The silver stocks put in a decent showing as well, as Nick Laird's Silver Sentiment Index closed up 4.03%.

The CME Daily Delivery Report showed that no gold or silver contracts were posted for delivery on Tuesday...only copper.

There were no reported changes in either GLD or SLV...and the U.S. Mint had no sales report.

Over at the Comex-approved depositories on Thursday, they didn't receive any silver, but shipped 150,089 troy ounces of the stuff out the door. The link to that action is here.

I was hoping that the CFTC would have their weekly Commitment of Traders Report posted at their website yesterday at 3:30 p.m. Eastern...but, alas, that was not to be...and we'll have to wait until Monday.

Since today is Saturday, I get to empty my in-box into this column. I hope you have time for them over the weekend.

'Da boyz' always show up as not-for-profit sellers the moment that bullion prices start doing what they really want to do...and that's explode to the upside.

An Unmitigated Disaster: Theodore Butler. New gold bugs are young and restless. Gold Traders Most Bullish Since 2004. James Turk interviews Doug Casey.

¤ Critical Reads

Bankruptcy Rarely Offers Easy Answer for Counties

Municipal bankruptcies remain extremely rare: Jefferson County was undone by a major sewer project marred by corruption, Harrisburg, PA by borrowing more than it could repay for a disastrous incinerator project, Central Falls, R.I. by pension problems, and Hamtramck, Mich. by the woes of the auto industry. Viewed another way, though, they show how the downturn has left the nation's most distressed cities with few options for papering over huge problems, and left some desperate elected officials placing their hopes in bankruptcy judges.

Their desire for simple solutions may be in vain, though: for constitutional reasons, the part of the federal bankruptcy code that municipalities use, Chapter 9, sharply limits the power of bankruptcy judges to intervene in local governance.

"Chapter 9 really puts the judge more in the position of being a referee than somebody who can really run the county," said Paul S. Maco, a partner with the firm of Vinson & Elkins who led the Office of Municipal Securities at the Securities and Exchange Commission during the bankruptcy of Orange County, Calif. — the nation's largest municipal bankruptcy until this week. "Chapter 9 doesn't take away the difficult political decision-making needed to address a financial credit problem."

This story was posted in The New York Times on Thursday...and I thank West Virginia reader Elliot Simon for sending it my way. The link is here.

View full GSD edition

Congress Members Took Part in Insider Trading: Abramoff

As many as a dozen members of Congress and their aides took part in insider trading based on foreknowledge of market moving information on Capitol Hill, disgraced Washington lobbyist Jack Abramoff told CNBC in an interview.

Abramoff, who was once one of the wealthiest and most powerful lobbyists in Washington before a corruption scandal sent him to federal prison for more than three years, said that many of those members of Congress bragged to him about their stock trading prowess while dining at the exclusive restaurant he owned on Pennsylvania Avenue.

But Abramoff, whose black trench coat and fedora became one of the most notorious images in recent Washington history after his fall from grace, said he didn't play the stock market himself — he considered it an inherently unfair "casino" in which the house had far more information than the players. Abramoff made most of his fortune representing — and, as it turned out, duping — Native American tribes rich with cash from casino operations.

This cnbc.com story from Friday morning has a 3:21 video interview with Jack Abramoff imbedded in it. This is another offering from Elliot Simon...and the link is here.

View full GSD edition

Why Wall Street Can't Handle the Truth

Longtime bank analyst Mike Mayo tells the inside story of why it's so hard to yell 'sell' in a crowded room—and lays out how Wall Street needs to change to avoid the next financial collapse.

Over the past 12 years, longtime banking analyst Mike Mayo has issued numerous calls to sell bank stocks, a rarity in a system where nearly all stocks are rated buy or hold. His negative ratings have frequently gotten him in trouble with banks, clients and his own bosses, who didn't want to alienate those companies. In this excerpt from his new book, "Exile on Wall Street," Mr. Mayo gives an inside view of the fights, the scolding and the threatening phone calls he received as a result of yelling "sell"—and offers a proposal to fix the banking sector.

Taking a negative position doesn't win you many friends in the banking sector. I've worked as a bank analyst for the past 20 years, where my job is to study publicly traded financial firms and decide which ones would make the best investments. This research goes out to institutional investors: mutual fund companies, university endowments, public-employee retirement funds, hedge funds, and other organizations with large amounts of money. But for about the past decade, especially the past five years or so, most big banks haven't been good investments. In fact, they've been terrible investments, down 50%, 60%, 70% or more.

This tell-all piece of journalism by long-time bank analyst Mike Mayo, is a real eye-opener...but, like the truths that lobbyist Jack Abramoff spoke, it should come as no surprise. It was posted in the Tuesday edition of The Wall Street Journal...and I thank Washington state reader S.A. for sharing this must read story with us. The link is here.

View full GSD edition

Now Growth in Oil Production for 7 Years: Will Alternatives Arrive Soon enough?

As oil prices rose ever higher in the last decade, the optimists kept predicting rising production capacity and plummeting prices. Looks like they got it wrong.

We are entering what may be the longest stretch of no growth in world oil production since the early 1980s. But the reasons for that lack of growth differ in ways that ought to make us all uncomfortable.

It's not as if high prices haven't sent people looking for more oil and working on more substitutes. The problem is that all of this activity is facing a considerable headwind. It's called depletion. And, as they say in the oil patch, depletion never sleeps. It's going on in every operating well in every country around the clock, 365 days a year. Estimates suggest that the decline in current production capacity might be around 4 percent per year. That means that 4 percent of the current production capacity for oil must be replaced each year just to break even. And, of course, to grow supplies, new production capacity must exceed this amount. But it hasn't, and oil substitutes haven't really grown by any significant amount in the last six years either.

The media loves to announce new seemingly large discoveries of oil as if they are the solution to what is really an unfolding liquid fuels crisis. They point to the Tupi field off Brazil which is purported to have 8 billion barrels of oil in it. And, they point to discoveries in the deepwater Gulf of Mexico thought to contain between 3 and 15 billion barrels. And, they point to the 24 billion barrels in the Bakken Shale in North Dakota. It all sounds like a lot.

When I ask audiences how long a billion barrels of oil will last the world at current rates of consumption, I often get replies that range anywhere from three months to 5 years. The correct answer is 12 days. Just multiply these multi-billion-barrel discoveries by 12, and you'll realize right away that they are not going to overcome the constraints we are experiencing in oil supplies.

Well, dear reader, if I had to pick just one non-precious metal story out of today's column for you to read...this would be it. Eric Sprott called 2005 the peak for world oil production...and so far he's still right. I, for one, would not want to bet against him.

This absolute must read story was posted over at the oilprice.com website on Tuesday, November 8th...and that's the same day that Roy Stephens sent it to me. The link is here...and the two imbedded graphs should tell you all you need to know.

View full GSD edition

Greece and Italy Seek a Solution From Technocrats

Under the white-hot pressure of the bond markets and the glare of European leaders, both Greece and Italy snapped into action on Thursday, looking to technocratic leaders to pull them back from the brink of chaos.

Greece named Lucas Papademos, a former vice president of the European Central Bank, interim prime minister of a unity government charged with preventing the country from default. In Italy, momentum was building behind Mario Monti, a former European commissioner, to replace the once-invincible Prime Minister Silvio Berlusconi as early as Monday.

I mentioned in this column earlier this week that Papademos was a member of the Trilateral Commission. Well, it's even worse for Monti. Wikipedia states the following about him..."Monti is the first chairman of Bruegel, a European think tank founded in 2005, and he is European Chairman of the Trilateral Commission, a think tank founded in 1973 by David Rockefeller. He is also a leading member of the Bildergerg Group. Monti is an international adviser to Goldman Sachs and The Coca-Cola Company."

It sounds like democracy has died in both Greece...and heading that way in Italy. One wonders which European nation will be consumed by the dark side of The Force, next.

This 2-page story was posted in The New York Times on Thursday...and is another Roy Stephens offering. The link is here.

View full GSD edition

Nigel Farage: Greece under Commission-ECB-IMF Dictatorship

King World News Interviews gold fund manager John Hathaway

Posted: 12 Nov 2011 12:00 AM PST

King World News Interviews gold fund manager John Hathaway

Tocqueville Gold Fund manager John Hathaway told Eric King yesterday that most brokerage houses view gold mining shares as if gold will be priced at only $1,300 in five years, even as Hathaway himself sees massive inflation as the only way out for central banks. An excerpt from the interview, headlined "Hathaway - Sell Side to get Slaughtered on Bearish Gold Calls", is posted at the King World News website...and the link is here.

Germany probably can't get its gold back from U.S., Rickards tells King World News

Posted: 12 Nov 2011 12:00 AM PST

Germany probably can't get its gold back from U.S., Rickards tells King World News

Interviewed by King World News, geopolitical analyst James G. Rickards takes note of the speculation about the disposition of Germany's gold reserves and doubts that Germany ever could retrieve the portion held in the United States.

Yesterday, only the blog was available. I received the full audio interview in the wee hours of this morning. It's a must listen for sure...and the link is here. I thank Chris Powell for providing the introduction.

Gold Traders Most Bullish Since 2004 on Debt Crisis

Posted: 12 Nov 2011 12:00 AM PST

Gold Traders Most Bullish Since 2004 on Debt Crisis

Gold traders and analysts are the most bullish in at least seven years as investors accumulate metal at the fastest pace since August to protect their wealth from a widening European debt crisis.

Twenty-one of 22 surveyed by Bloomberg expect bullion to rise on the Comex in New York next week, the third consecutive increase and the highest proportion in data going back to April 2004. Holdings in exchange-traded products backed by gold rose 27.5 metric tons this week, within one percent of the record set almost three months ago, data compiled by Bloomberg show.

An Unmitigated Disaster: Theodore Butler

Posted: 12 Nov 2011 12:00 AM PST

An Unmitigated Disaster: Theodore Butler

Yesterday I 'borrowed' a couple of paragraphs from silver analyst Ted Butler's Thursday column on the MF Global debacle. Ted has seen fit to publish the entire essay in the clear...and it's posted over at the silverseek.com website. Roy Stephens dug this up on our behalf...and it's his last offering in today's column. This, too, is a must read from one end to the other...and the link is here.

New gold bugs are young and restless: Meet three investors who have been bullish about bullion

Posted: 12 Nov 2011 12:00 AM PST

New gold bugs are young and restless: Meet three investors who have been bullish about bullion

Gold's spectacular, decade-long run, coupled with the sovereign-debt crisis in Europe, an uncertain outlook for the U.S. dollar, and worries of worldwide recession, has tapped a new vein of investors in their 20s and 30s.

The popularity of gold among young investors speaks to the metal's impressive role as a store of wealth — and says a great deal about a generation that has seen its share of stock market booms-and-busts, a housing market collapse, and, over the past few weeks, government debt of Greece and Italy trading at yields more akin to junk bonds.

Thanks to gold, the U.S. trade deficit for September improved

Posted: 12 Nov 2011 12:00 AM PST

Thanks to gold, the U.S. trade deficit for September improved

The U.S. trade deficit unexpectedly improved in September, but a significant part of it appears to have been related to flight to safety to gold during September's weak financial markets. The September trade gap shrank to $43.1 billion from $44.9 billion in August. The latest shortfall was narrower than analysts' expectations for a $46.3 billion deficit. Exports gained 1.4 percent after edging up 0.1 percent in August. Imports rose 0.3 percent in September, following a 0.2 percent decline the prior month.

India : Out of bonds, Savings Spur Record Flows Into Gold

Posted: 11 Nov 2011 11:25 PM PST

How to Buy Gold Coins: Top Five Do's and Don'ts

Posted: 11 Nov 2011 11:00 PM PST

Since 1989, the Gold Information Network, a division of Austin Rare Coins, Inc. Our list of do's and don'ts on this page are not criticisms of others, but warnings to collectors on how to buy gold coins and how you can avoid rip-offs, problem coins and overpaying for coins. Gold Buying Do's and Don'ts: 1. [...]

Gold Bull Seasonals 6

Posted: 11 Nov 2011 06:35 PM PST

Financial Times Deutschland joins hunt for Germanys gold

Posted: 11 Nov 2011 05:00 PM PST

By the Numbers for the Week Ending November11

Posted: 11 Nov 2011 02:40 PM PST

HOUSTON -- Just below is this week's closing table for the week ending November 11, 2011.

If the image is too small click on it for a larger version.

Commitments of traders (COT) data from the Commodity Futures Trading Commission (CFTC) is delayed until Monday, November 14 this week due to the Veterans Day Holiday.

Vultures, (Got Gold Report Subscribers) please note that partial updates to our linked technical charts should be completed by the usual time on Sunday (18:00 ET). Our notations on the COT data are obviously delayed until Monday evening or Tuesday.

That is all for now, but there is more to come.

Gold and Silver Miners Lead Market Rebound

Posted: 11 Nov 2011 02:22 PM PST

Bullets are flying in what has become the new warfare. In the old days wars were fought with Pearl Harbor surprises and outright takeovers of territorial assets. Previously the capital markets have been content to don jackboots and military strikes to control economic developments. With the advent of the nuclear deterrent now being possessed by an increasing number of nations, contemporary wars are morphing away from bullets and bombs. The elites have a good thing going. It is to their interest that the nuclear option be avoided at all costs. Ergo bonds, yen(FXY) and francs have become the new bullets. The Keynesian option has never really worked and has resulted in a series of conventional wars that have had questionable results. Now nations can be brought to their knees by skillful currency manipulations.
Witness how Soros became wealthy by his operations in crippling the Malaysian and English Currency. Such a maneuver is a poignant display that economic stimulus based on Lord Keynes socialist/palliative measures are at best doomed to eventually fail. It is sad to see the Swiss being mobilized to put a futile floor under the Euro. However, they are being drawn into the swirling vortex of the Eurozone currency convulsions.
In reality, we question the sustainability of the German and Swiss interventions. In fact, the markets as we speak have responded with severe volatility in the general equity markets over 2011. A rally has been expected in equities, however, this incredible market rebound since our October 4th buy signal may indicate that investors are getting wise to the efforts of the European and U.S. Central Bankers to prime the pump.
Investors may well be running from the Euro(FXE) into the U.S. dollar (UUP) and long term treasuries(TLT). It is curious that the Euro is not being buoyed by the Swiss intervention. This may be signaling trouble in Eurozone survival. The U.S. dollar is undergoing a rise which we believe is a cosmetic response to the weakness in the Euro. All short term currency manipulations produce technical gaps which inevitably is filled.
At the same time, the gold miners (GDX) are approaching interim upside targets as the upward breakout in the miners accelerates as it reaches new all time record highs. It is now playing catch up to the underlying bullion which we have been predicting for several weeks. There will be a shrinking of the divergence between miners and bullion to the advantage of the miners.
Although we may see some short term profit taking in the miners this extended 12 month base may lead to a more extended long term move. In 2010, we did not see this decoupling of gold miners from equities in such a dramatic fashion. But that fear driving investors away from mining stocks may be reversing as miners regain safe haven status.
It has become a common occurrence to see general equities down yet the gold(GDX) and silver(SIL) miners up significantly. This demonstrates investors are beginning to look at the gold miners as leaders in a market which is desperately looking for strength.
As gold reaches these technical conditions it is important to remind readers of the gold:silver ratio. Silver may go up in a higher percentage terms than gold in this inflationary environment over the long term and has done so over the past three years. In 2011 silver has been in retreat. Nevertheless, we are confident that silver will also gain recognition as a hedge against global financial instability sooner rather than later.

Gold (GLD) and silver (SLV) have undergone one of its characteristic declines in the month of September. As a runner settles backwards in his starting block in order to propel himself forward so does precious metals undergo healthy corrections in order to once again move into new highs in what is its upward secular pattern.
The world is beset by a deluge of multiple macroeconomic problems ranging from the Eurozone Crisis to the Middle East Cauldron, which the media either mischaracterizes or totally ignores. These issues are long term concerns and will not be solved overnight.   Add to this list of woes, rising U.S. unemployment and the malaise in housing and we have the perfect storm for precious metals as a long term haven.
President Obama is slated to present his ideas to hopefully institute corrective measures to extricate the floundering global economies from its quagmire of fiscal quicksand. Bernanke comes to bat again in a few weeks. The 2012 election is right around the corner. This might be an inflationary signal.
We refuse to be thrown off the bucking bull of precious metals.   We share such sentiments as do astute buy and hold investors such as John Paulson, John Hathaway and Ron Paul whose portfolios are represented by a large percentage of gold miners which will be discussed in an upcoming essay.
What about the U.S. dollar? The Swiss National Bank has put a cap on the Swiss Franc which had been viewed as a safe haven. This leaves the field up to gold/silver as well as the U.S. Dollar. The dollar might move upward as it represents the best of breed in a tepid brew of weak currencies.    Remember the U.S. dollar's status of safe haven is an optical illusion in comparison to a backdrop of tired, old, fading beauties such as the Euro. Currency interventions produce gaps which are inevitably filled. Therefore we will continue on our long term path of wealth in the earth assets in the form of miners in gold(GDX), silver(SIL), rare earths(REMX) and uranium(URA).

Is It Gold Season?

Posted: 11 Nov 2011 02:00 PM PST

Thank You

Posted: 11 Nov 2011 12:02 PM PST

An Awakening
In the summer of 2008, Freedom turned me on to King World News (KWN), thank you to Eric King and guests. Within a few weeks of listening I began to reposition assets, gold was selling for around $950 an ounce, silver at about $15. I was so compelled by the story, I not only began to move my money around, with the help of an old friend and now neighbor (chance relocated two guys who hadn't talked in years, from a small central Pennsylvania borough to the same block in the Philadelphia burbs) started The Victory Report (TVR). Thanks Marcus. TVR was intended to provide observations and raise awareness of the end of the great Keynesian experiment to a couple of close friends.

Thank You
Since the end of April, TVR traffic has risen steadily and tonight topped 50K.
Thanks to everyone who has appreciated my efforts and mania.

Currency Wars
This also seems like a good opportunity to thank a new friend James Rickards. After listening to "Rick" for about a year on KWN, I emailed him to thank him for sharing his opinions. I was siked to get a quick reply back and began following him on Twitter. Over the past few months I have reposted a few his Tweets like India Makes Buying Gold Easier and Trump, Apmex, & Goldilocks. I'm a high school business teacher and a few weeks back wrote Jim and told him I was thinking about referencing his new book in an economic lesson and was curious to his thoughts. Thursday I received two signed copies of Currency Wars for my classroom.
Totally Stoked.
Thank you Jim.

Thanks to Tyler for granting me access, and special thanks to guys like Randy N., Paul Prentice, TheGoodDoctor, Hawkins, Freedom, and my brother for inspiration.

Let us continue to raise awareness as we are all in this together.

~MV

Friday ETF Roundup: GDX Shines, VXX Sinks On Strong Equities

Posted: 11 Nov 2011 09:23 AM PST

By Jarred Cummans:

Major indexes are, as AC/DC once said, "back in black" for 2011, as Friday's trading session brought a welcomed performance with strong gains. As Veteran's Day came to a close, the Dow jumped 259 points while the S&P tacked on nearly 2% in trading. Despite the abysmal performance on Wednesday, both of the aforementioned indexes finished the week up, marking the fifth weekly gain over the last six weeks. But the end story hardly tells how the week unfolded as equities endured a brutal session on Wednesday that had investors fleeing for higher ground. Oil posted strong figures as it closed above $99/barrel and has a good chance of breaking triple digits as next week plays out. Gold also had a good day with an appreciation of over $30/oz. as it makes its way toward $1,800/oz.

The past week was dominated by European headlines, a trend that will likely continue

Complete Story »

Don’t Be Distracted By Eurozone Drama

Posted: 11 Nov 2011 09:17 AM PST

The headlines continue to be all about the European financial crisis, heads of governments falling on their swords in order to ensure passage of austerity packages and the looming threat of a debt-induced collapse. But many economists and analysts maintain that the real danger to the global economy is not the Eurozone, but the United States.

Investor Jim Rogers has been warning for weeks that the U.S. economy is in worse shape than Europe's—despite U.S. Treasury Secretary Tim Geithner's penchant for scolding his Eurozone peers about their need to shape up.

"Europe has a few bad, bankrupt states, so does America," Rogers said in a September CNBC interview. "We've got Illinois, which is bigger than Greece, we've got California, we've got New York; you know those are pretty big states that have serious economic problems. We have pension plans in America that are terribly under water."

The CNBC report continued:

Description:

U.S. unsustainable debt means its economy is worse off than Europe.

Currency Intervention Fears Weigh On Swiss Franc ETF

Posted: 11 Nov 2011 09:11 AM PST

By Tom Lydon:

An exchange traded fund that tracks the movements of the Swiss franc versus the dollar has become less desirable as a safe-haven asset after the Swiss National Bank pegged the currency to the euro currency. Now, currency traders are worried that the central bank may take further actions in weakening the franc.

CurrencyShares Swiss Franc Trust (FXF) was up 0.5% at last check Friday (11/11/2011), and is down 13% over the past three months.

Ever since the Swiss National Bank took actions to weaken the Swiss currency by pegging the franc to the European euro, the Swiss franc has been closely mirroring movements in the euro against the U.S. dollar, lessening the currency's appeal as a safe-haven asset. Uncertainty in Europe has sent the franc sliding alongside the euro.

"This is clearly a reflection of the 'fear,' if you like, that the SNB are going to raise the floor –

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The Australian Gold Matrix

Posted: 11 Nov 2011 09:11 AM PST

Things continue to boil over in Europe.

On Wednesday, Italy's fiscal crisis worsened to the point they staged a media blackout. SBS informed viewers hoping to catch the Italian news that their Italian broadcasting partner had failed to submit anything. As if to mark the fall of Italy, SBS played sad opera music and weather maps instead.

Meanwhile, gold has snuck past the financial news, recovering from its recent poor performance. Is gold proving its metal in this time of financial uncertainty?

We finished last weekend's Daily Reckoning pondering how governments might ruin your gold investment. And promised to discuss how they might do it.

Some readers staged a pre-emptive strike, writing to tell us there is no need to write about the confiscation of gold. 'Government won't do it', they said, for all sorts of reasons. But they missed the point. As pre-emptive strikers often do...

It's not confiscation the average gold investor should worry about. After all, as another reader pointed out, we live in an Ineptocracy.

Ineptocracy (in-ep-toc'-ra-cy) - A system of government where the least capable to lead are elected by the least capable of achieving, and where the members of society least likely to succeed or even to sustain themselves, are abundantly rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers.

The Ineptocrats and their dependents have long figured out how to bleed others dry without confiscating gold. But there is another kind of risk gold owners face. One much more worth thinking (and reading) about.

It has to do with the Gold Matrix. Not the movie The Matrix, where a computer nerd comes to realise the world we live in is a computer program created by machines that now rule the earth. If it was about that Matrix, we'd write about people suddenly waking up to the reality that fiat money is a scam. That fractional reserve banking is a fraud. And that interest rate setting by a central bank causes the business cycle.

Maybe that's what it should be about.

Anyway, we mean the other kind of matrix - the mathematical one.

It looks like this:

Each number in the table represents one of four different scenarios you face as a 'non-American' gold investor in the future. You can insert your currency of choice in the top right-hand box, as long as it's not the US dollar.

Why do people who don't use US dollars to buy gold need a special matrix for their gold investments? Because gold is priced in US dollars. In order to obtain the gold price in a currency other than the US dollar, gold is first priced in US dollars and then converted to your currency. That means there is currency risk for non-US-dollar-based investors. This adds to the scenario of possible outcomes for gold investors. The value of their gold depends not only on the gold price, but also on the exchange rate. And governments are increasingly messing with exchange rates. In other words, governments can meddle with the value of your gold without actually meddling with the gold itself.

Let's go through each scenario in the matrix, step by step.

In Scenario 1, the Aussie dollar and gold both go up in value. (The Aussie measured in US dollars.) In this situation, the increase in the Aussie dollar will offset the gains in the US dollar gold price. If gold goes up more than the Aussie, the gold price in AUD will go up. And vice versa. So the net outcome is uncertain for Aussie gold buyers. Regardless of gold going up, their Australian dollar denominated asset could go either way depending on the move in the exchange rate.

Scenario 4 is similar. If gold and the Aussie dollar both go down, the price of your gold in Australian dollar terms depends on which goes down more. Australian dollar gold could go either up or down.

The remaining two scenarios are more conclusive. If the Aussie dollar goes down and gold goes up (Scenario 2), the Aussie dollar gold price will rise even faster than the US gold price. If the Aussie goes up and gold down (Scenario 3), Australian gold investors lose out on both counts.

Navigating the Matrix

What's interesting here is how likely each of these scenarios is to play out. And what kind of economic situation will lead to which scenario. Remember, gold is a macro play, meaning your decision to invest is probably based on how you expect the world economy to perform. So it's the economic situation that is relevant to gold investors.

Scenario 1 - Gold and AUD both go up
This scenario is likely to occur with high inflation in the US, coupled with an economic recovery around the world. Gold rises in price because people buy it to protect themselves from inflation - the buying power of an ounce of gold today is roughly the same as it was 5,000 years ago. The Aussie dollar is likely to rise if there is a recovery, as the world buys our resources when times are good. This creates demand for the Australian dollar, both to invest in us and to buy our resources. Whether gold or the Aussie rises more is hard to know. But, in real terms, an Australian gold investor will be better off, as their money and assets rise in value relative to other nations' currencies. Holidays overseas and online shopping would become cheaper for you.

Scenario 4 - Gold and the AUD fall
Mild deflation, or another financial crisis, is likely to cause this scenario. Gold will be in less demand during deflation and so will the Aussie dollar, so the price of both will fall. It is likely that gold will fall less than the Aussie in this situation, as gold is perceived safer than many assets when banks are struggling (which happens during deflation). This is probably the reason gold didn't collapse in 2008. As a commodity-based currency, the Aussie dollar would have much to lose in an economic downturn. People wouldn't want to buy our resources or invest in Australia. So in this scenario, the Aussie gold price may outperform other investments.

Scenario 3 - Gold down, AUD up
This is the worst-case scenario for Australian gold investors. Gold falling in price and the Australian dollar rising would crush the Australian dollar gold price. For this to happen, central bankers would have to pull off the greatest tightrope walk in history. Upside down. (Your editor used to teach people to tightrope walk. (Proving that those who can't do, teach.) We never saw anyone but a clown manage to do it upside down.) Anyway, it is safe to say this scenario is rather unlikely. Still, it's interesting to explore. A sizeable economic recovery, coupled with low inflation and the vanishing of crushing debt loads would see the demand for gold diminish. And the demand for Australia's dirt grow like only the Australian government's tax forecasts dare to hope for. It is the low likelihood of this scenario that makes gold buyers buy gold.

Scenario 2 - Gold up, AUD down
This is the best-case scenario for Australian gold buyers. The fall in the Aussie dollar will add to the gains in the gold price. Some inflation in the US combined with a slowdown in global economic growth would see this scenario happen. In other words, in order for this to happen money printers need to print money and unemployed construction workers need to stop building buildings. The two are usually linked in that the money printers are called into action when the builders stop building. Economists call such a scenario 'stagflation' - a combination of low growth, high unemployment and inflation.

Which scenario are you betting on?

Right now, foreign governments are doing their damndest to manipulate exchange rates. The US senate, for example, has put tariffs on Chinese goods as a retaliation for the Chinese policy of a devalued currency. The Japanese recently intervened to lower their currency and even the Swiss have been trying to lower theirs.

And as an Australian gold buyer, you need to watch these developments carefully. Will Australia join the so called currency wars? And will the Americans succeed in lowering the value of the US dollar?

One thing is clear. Currency manipulation could make or break your gold investment. But that manipulation is mostly hedged in buying gold. The US price of gold should go up about the same amount that the Australian dollar rises because of US currency devaluation. After all, the US dollar is being debased against both gold and the AUD at the same time. Similarly, if the Australian dollar falls, the Australian dollar gold price will hold up.

Gold is an excellent asset for Australians who agree with the idea that there will be inflation in indebted nations and tough times ahead for Australia. We're pretty sure all of the editors here at Port Phillip Publishing own gold bullion. But after its impressive rally since the Daily Reckoning first suggested it as the trade of the decade over a decade ago, is it still a good investment?

And if yes, should you go with bullion? Or stocks?

We'll leave that for you decide. Click here to find out more about the case for bullion. And click here for stocks.

Nickolai Hubble.
The Daily Reckoning Weekend Edition