saveyourassetsfirst3 |
- Gold Seeker Closing Report: Gold and Silver Fall About 1% and 2%
- Despite Challenges Wal-Mart Is A Hold
- Gold is the Only Winner From the Euro Crisis
- LISTEN: Vince Lanci's Gold Report – 11.16.11
- Investors moving to physical gold as macroeconomic concerns fester
- ECB Slows Italy Meltdown, but No End in Sight
- Save Taxes With Gold And Silver Money
- GEAB N°59 is available! Global systemic crisis: 30,000 billion US dollars in ghost assets will disappear by early 2013 / The crisis enters a phase of widespread discounting of Western public debt
- ukraine needs to be liberated, backs pm for its people
- Rickards: Three Simple Ways to Get Out of Debt
- Arnie Waters: Four Reasons for Gold
- BrotherJohnF: Silver Update – “Sprott”
- Keynote Speech From Sydney Gold Symposium
- Designing a Mechanical Trading System: Part IV
- Gold Resilient Despite Paulson Selling
- Gold Price Tests Resistance on Sovereign Debt Threats
- It’s All About Gold Now
- Euro Gold Outperforming Bunds and Euro Assets / Celente’s MF Global Gold Account ‘Looted’
- "It's All About Gold Now" - Greg Hunter opines
- Precious metals guru Sprott: $100 silver is coming
- Italian default scenarios
- Gold Bull Has Far to Go, Says Agnico-Eagle's Sean Boyd
- Paulson not seen deserting gold after $2 bln ETF sale
- Argentines get itchy amid new foreign exchange controls
- Satyajit Das: In the Matter of Lehman Brothers – Part 2: Well Structured Messes
- LISTEN: Stephen Leeb talks with Chris Waltzek
- Europe’s Credit Crisis
- Adrian Day: Tax-Loss Selling May Hit Gold Stocks Soon
- Thom Calandra: Taking Calculated Yet Extreme Risks in Mining
- What Will Happen to Greece et al (if they leave the Eurozone)?
| Gold Seeker Closing Report: Gold and Silver Fall About 1% and 2% Posted: 16 Nov 2011 07:15 AM PST Gold fell $19.32 to $1762.38 in Asia before it climbed back to almost unchanged at $1778.99 by about 7:25AM EST and then dropped all the way to $1753.52 by a little after 10AM, but it then rallied back higher midday and ended with a loss of just 1.06%. Silver saw a slight gain at $34.605 in London before it fell all the way to $33.622 in New York and ended with a loss of 2.43%. | ||||||||||||||||||||||||||||||
| Despite Challenges Wal-Mart Is A Hold Posted: 16 Nov 2011 05:27 AM PST By Suman Chatterjee: What company has the highest earnings per share as of now? Wal-Mart (WMT). What company has one of the lowest price-to-sales and price-to-earnings ratios? Wal-Mart. And what company has the highest market worth in the US retail market? Wal-Mart Inc. With more than 15,000 stores all over the world (more than 9,000 in United States) and with more than 2 million employees, Wal-Mart is a strong force to the US economy. Here's a quick glance over recent financial highlights.
While Wal-Mart's average return on capital seems to be pretty good, operating margin isn't very inspiring as it shows from the chart. Moreover, it must be Complete Story » | ||||||||||||||||||||||||||||||
| Gold is the Only Winner From the Euro Crisis Posted: 16 Nov 2011 05:22 AM PST Europe is faced with a Sophie's choice; Chaotic breakup of the Euro Zone or endless printing and mass inflation. by Matthew Lynn, MarketWatch.com:
As the euro struggles from crisis to crisis, it isn't hard to identify the losers. Peripheral country bonds have been hammered. Equities have struggled to make any progress all year. The main euro-zone banks have had to make huge write-downs on their holdings of Greek debt and have seen their shares collapse in value as a result. The euro itself has started to fall in value against other currencies, and almost certainly has a lot further to go. But where are the winners? After all, all that money has to go somewhere. German bonds have been the most obvious beneficiary of the turmoil. The yield on the 10-year German bond had fallen all the way down to 1.7%, an all-time low. Back in April this year it was yielding more than 3.5%. In 2008 it was above 4.5%. Clearly, money has moved out of the peripheral euro-zone countries, and been parked in Germany because investors see it as the one safe haven on the continent. But how safe is Germany really? | ||||||||||||||||||||||||||||||
| LISTEN: Vince Lanci's Gold Report – 11.16.11 Posted: 16 Nov 2011 05:17 AM PST Daniella Cambone talks with Vince Lanci in Kitco's 11.16.11 daily Gold report. ~TVR | ||||||||||||||||||||||||||||||
| Investors moving to physical gold as macroeconomic concerns fester Posted: 16 Nov 2011 03:12 AM PST Investors moving to physical gold as macroeconomic concerns fester - Stoeferle Erste Group gold analyst, Ronald Stoeferle, believes that the monetary aspect of gold is becoming more important as investor attitudes toward the global economy shift. http://www.mineweb.com/mineweb/view/...tail&id=92730 Interview transcript and mp3 here: | ||||||||||||||||||||||||||||||
| ECB Slows Italy Meltdown, but No End in Sight Posted: 16 Nov 2011 03:03 AM PST A loss to France's triple-A rating will be merely a psychological event. | ||||||||||||||||||||||||||||||
| Save Taxes With Gold And Silver Money Posted: 16 Nov 2011 02:59 AM PST Regular readers are familiar with my recommendations regarding acquiring and holding gold and/or silver bullion: we are acquiring "monetary insurance" today which could easily become our "money" tomorrow. I have also written about the alleged "capital gains" which are supposedly triggered when we spend our bullion. My advice has been for people to specifically acquire gold and silver "legal tender" coins, since these coins are already officially "money" in our societies. The reason I have made this suggestion is simple: there is no precedent within our taxation system for assessing a "capital gain" when an individual converts one ("legal tender") currency into another – for the express purpose of "spending" the new currency. Indeed, I pointed out that people do precisely this millions of times every day around the world, when they travel to a jurisdiction with a different currency, and thus acquire some of that new currency to spend. Usually this is done during "vacations", but it also occurs in the course of normal business travel with great regularity as well. As a result, people who acquire gold or silver currency with their paper currency should expect no adverse tax consequences of any kind when they choose to spend that currency in the future. The absolute justice in such a legal position can be further reinforced by noting that under no circumstances would our governments ever allow us to claim a "capital loss" in the reverse scenario. For example, suppose I am currently holding gold or silver legal tender currency. I foolishly believe the propaganda I read in the newspaper that gold and silver are overvalued, and so I convert my gold and silver currency to paper currency. If gold and silver prices subsequently rise (i.e. the price of my paper currency falls), I would never be allowed to claim a capital loss on that currency-swap when I spend my paper money (and thus lock-in that loss). No taxation system can legitimately claim to impose a "capital gain" in a scenario where it is not willing to recognize corresponding "capital losses". Thus this interpretation of tax law has logic, justice, and precedent all firmly supporting it. Critics will argue that this is merely some legal technicality which I am seeking to exploit for my own "tax loophole" (and the advantage of other holders of gold and silver legal tender currency). My response to that would be to introduce all of those critics to our tax lawyers. Every year, the very wealthy (and the corporations they own) pay tax lawyers billions of dollars in order to save $100's of billions on their taxes. These tax lawyers "order the affairs of their clients in order to minimize the impact of taxation". Translation: they help their clients take advantage of "tax loopholes". In the two years I spent studying "constitutional law", I pretty much read every word of the Canadian Constitution, and I can assure readers that there is no clause within stating that tax loopholes are only allowed to be exploited by the very wealthy. While I have not read the U.S. Constitution, I would be willing to wager a very large bet that no such clause exists in that document either. When we convert our paper currency into legal-tender gold and silver currency in order to avoid being victimized by the bankers' game of serial dilution (of their paper money), and then we subsequently spend that money there are no "capital gains" triggered by such transactions. We have done absolutely nothing either illegal or unethical in ordering our affairs in that manner. | ||||||||||||||||||||||||||||||
| Posted: 16 Nov 2011 02:52 AM PST - Public announcement GEAB N°59 (November 16, 2011) -  As we come to the end of the second half of 2011, it is evident that 15,000 billion in ghost assets have gone up in smoke since last July, just as was anticipated by LEAP/E2020 (GEAB N°56. And, according to our team, this process figures to continue at the same rate throughout the year to come. Indeed we estimate that, with the introduction of a 50% discount on Greek government debt, the global systemic crisis has entered a new phase: that of the generalized discount on Western public debt and its corollary, the fragmentation of the global financial markets. Our team believes that 2012 will bring an average discount of 30% of total Western public debt (1), plus an equivalent amount in loss of assets from the balance sheets of worldwide financial institutions. Specifically, LEAP/E2020 anticipates the loss of 30,000 billion ghost assets by early 2013 (2), with an acceleration in 2012 of the partitioning process of the global financial market (3) into three increasingly disconnected currency areas: Dollar, Euro, and Yuan. These two phenomena feed into each other. They will also be the cause of a sharp decline of 30% on the part of US currency in 2012 (4), as we announced last April (GEAB N°54, which will occur amidst a sharp reduction in demand for the US dollar and the worsening of the US governmental debt crisis. The end of 2011 will therefore see, as anticipated, the trigger of the European debt crisis detonating a US bomb. In this GEAB N°59 we will analyze in detail this new phase of the crisis as well as the deepening US debt crisis. Moreover, we will begin to present, as indicated in previous GEABs, our forecasts about the future of the United States between 2012 and 2016 (5) starting with a fundamental aspect of Euro-US relations (and more generally the global system that has been in place since 1945), namely the strategic and military relations between the US and Europe. We have estimated that by 2017 the last US soldier will have left European continental soil. Finally, LEAP/E2020 will present its recommendations, dealing this month with currency, gold, capital-based pensions, the financial sector, and commodities. In this public announcement we have chosen to present the various elements that will determine the next escalation of the US debt crisis, while taking stock of the October EU summit and the Cannes G20 summit. As anticipated by LEAP/E2020 for several months, the G20 summit in Cannes turned out to be a resounding failure, resulting in no significant measures, and demonstrating an incapability of addressing the issues of change in the international financial system, global economic recovery, or reform of global governance. If the Greek question took center stage during the summit, it is partly because the latter was lacking in content to begin with. George Papandreou enabled the G20 leaders to carry on "as if" Greek affairs had interrupted their work (6), when in fact the Greek crisis allowed them to disguise their inability to craft a common agenda. Meanwhile, the decisions of the EU summit in the week before the Cannes summit have pointed to the official emergence of Euroland (with now two fixed summits each year) (7), the primacy of which will confer de facto decision-making authority within the EU (8). The pressure from this crisis has, in the last few days, helped to build the capacities of Euroland policies, putting it on the path to greater integration (9), a prerequisite to any positive developments towards a post-crisis world (10).  With a government of national unity finally in place in Greece (11), a modern state must literally be built from the ground up, with a proper land registry and an effective administration enabling the Greeks to become "normal" members of Euroland, not subjects of a feudal system where prominent families and the church share the wealth and power. Thirty years after its unconditional integration into the European Community, Greece must go through a five or ten year transitional phase similar to that of the countries of Central and Eastern Europe before their EU accession: painful, but inevitable. Italy, meanwhile, has managed to rid itself of a leader altogether typical of the world before the crisis, characterized by his "bling", his racketeering, his unscrupulous acquisition of money, his unfounded self-satisfaction, his hold on the media, his constant Euro-criticism and junk nationalism (12), not to mention his overflowing libido. The scenes of joy in the streets of Italy show not all is wrong with this global systemic crisis! As we indicated in the previous GEAB, we believe that 2012 will for Euroland be a year of transition on the road to building the world after the crisis, instead of just suffering the woes of the collapsing system. At the same time the United Kingdom has basically been kicked out of the Euroland meetings (13). EU members outside the Eurozone have backed Euroland in refusing to support the British proposal concerning the right of the 27 to veto Euroland decisions. The United Kingdom's drift has been boosted by the efforts of British Eurosceptics (generally the foot soldiers of the City) (14) to try to sever as quickly as possible the strongest ties with continental Europe (15). Far from being proof of their policy's success, it is rather an admission of complete failure (16). After twenty years of continuous efforts, they failed to disrupt the European integration process, which has been revived by the pressures of the crisis. So they are now "dropping hawsers" out of a fear – well founded, by the way (17) – of seeing the UK absorbed into Euroland by the end of this decade (18). All told, it is a desperate march forward which, as pointed out by Will Hutton in a remarkably lucid article in the Guardian on 30/10/2011, can only lead the UK towards a break with a Scotland seeking to recover not only its independence (19) but also its European anchorage, and towards the socio-economic condition of an off-shore financial market without social protection (20) or an industrial base (21): in sum, a Dis-United Kingdom adrift (22). And with its US ally in dire straits itself, that drift may drag on for years, to the great misfortune of a British people growing increasingly discontented with the City. Even veterans are beginning to join the Occupy the City movement (23); obviously, on this point, there is a convergence between the views of the British people and those of Euroland! For consolation, British financiers can say that they hold the largest proportion of Japanese state assets outside of Japan, but when the IMF warns Japan of the systemic risk of maintaining public debt above 200% of GDP (24), is that such a consolation?  Speaking of public debt, it is time to turn to the United States. The coming weeks figure to remind the world that it is this country, not Greece, that is at the epicenter of the global systemic crisis. In one week's time, on November 23, the Congressional "Supercommittee" in charge of reducing the US federal deficit will admit its failure to find 1,500 billion US dollars in savings over ten years. Each side is already crafting arguments that will blame the other side (25). As for Barack Obama, apart from his televised simpering with Nicolas Sarkozy, he now contemplates the situation passively, while noting that Congress has torn into pieces his grand jobs project introduced only 2 months ago (26). And it is not the utterly unrealistic announcement of a new Pacific Customs Union (excluding China) (27) on the eve of an APEC summit where Chinese and Americans are expected to confront one another harshly, which will enhance his stature as head of state, let alone his chances for reelection. The predictable failure of the "Supercommittee", which reflects the overall paralysis of the US federal political system, will have an immediate and drastic consequence: a new series of credit ratings deteriorations. The Chinese agency Dagon has opened fire, confirming that it would once again lower the rating upon the failure of the "Supercommittee" (28). S&P will probably lower one more time the US rating, and Moody's and Fitch will have then no other choice but to get on board, having given the US a reprieve until the end of the year under condition of effective results in terms of public deficit reduction. Incidentally, in order to dilute the flow of negative information in this regard, it is likely that there will be an attempt to reinforce the public debt crisis in Europe (29) by lowering France's rating in order to weaken the European Financial Stability Fund (30). All of this makes for an eventful season for the financial and monetary markets, casting severe blows on Western banking systems and, beyond that, on all US T-Bond holders. But beyond the failure of the "Supercommittee" to reduce the federal deficit, the entire US pyramid of debt will be thoroughly examined, in a context of global – and of course US – recession : falling tax revenues, unemployment increases, increases in the number of unemployed no longer receiving benefits (31), further drops in home values, etc.  Let's keep in mind that the state of US private debt is far worse than in Greece! In this context, we are not far from a panic-inducing situation abount the United States's capacity to repay its debt other than with a devalued currency. The end of 2012, then, will see many US debt-holders seriously considering this ability and of the precise moment when it might suddenly be called into question by all financial players (32). What could the United States offer after the failure of its "Supercommittee"? Not much, particularly in an election year! On the one hand it was created because other actions were not working, and on the other the issue is not so much one of amount but of the very ability to undertake a significant and sustained reduction. The failure of the "Supercommittee" will rightly be seen as evidence of this inability of the US in tacking the deficit problem. In terms of the amounts at stake, a quick calculation by a USreader of GEAB gives some sense of how much the "efforts" undertaken to reduce the budget deficit are ridiculous in relation to the needs : Treating the US federal budget as that of a household, things become abundantly clear. Simply remove 8 zeros for budget that comes to mean something for the average citizen: Annual household income (income tax): + 21,700 Family expenses (federal budget): + 38,200 New credit card debt (new debt): + 16,500 Past credit card debt (federal debt): + 142,710 Budget cuts already made: - 385 Budget reduction targets of the Supercommittee (for one year): - 1,500 As can easily be seen, the Supercommitte (like Congress last August) cannot even agree to a 10% reduction … of the annual increase in federal debt. This is how it is: unlike in Europe, which, over the months, has introduced new mechanisms and takes steps to reduce expenditures and debts (33), the US continues to run full speed into increasing debt. As a matter of fact, ni the next semester, Washington plans to issue 846 billion US dollars worth of Treasury bonds, 35% more than this time last year (34).  With the failure of the MF Global investment fund, we have seen that Wall Street titans can crumble at once due to errors made regarding public debt trends in Europe. Jon Corzine is no Bernard Madoff. In moral terms, he is perhaps close, but as for the rest, there is no comparison. Madoff was a Wall Street maverick, but Corzine was a member of the aristocracy: former CEO of Goldman Sachs, former governor of New Jersey, main donor to the Obama 2012 presidential campaign, sensed to replace Timothy Geithner as Treasury Secretary last August (35), and one of the "creators" of Obama back in 2004 (36). This affair goes to the heart of the incestuous relationship between Wall Street Washington, one which is now being denounced by a majority of Americans (37). In August, it appeared as if he was untouchable, on top of Wall Street; nevertheless he was completely mistaken about the course of events. He believed that the world had not changed, and that private creditors would continue to be paid "cash on the barrelhead". The result: huge losses, bankruptcy, innumerable customers bilked, and 1,600 employers out on the street (38). We announced in the previous GEAB that we have entered a phase involving the decimation of Western banks. This phase is truly in swing, and customers of all financial operators (banks, insurance companies, investment funds, pension funds) (39) are now questioning the soundness of these institutions. As is evident from the Corzine affair, they should not assume that these institutions are a priori stronger than others just because they or their leaders are famous or enjoying a strong reputation (40). It is not knowledge of the rules of the financial game of yesterday, which formed those reputations, that now counts; but rather it is the understanding that the rules have changed that has become crucial. --------- Notes: (1) Amounting to 45,000 billion USD in the US, the UK, Japan, and the Euroland alone. (2) As the crisis worsens, the greater the amount of phantom assets increases. This process will continue until we can find a ratio of financial assets to real assets consistent with sustainable socio-economic functioning, somewhere around the ratios from the years 1950-1970. (3) Engagement with the Greek debt crisis means a quick release of the financial system in Euroland from of the Dollar. The fact that this process was initiated originally by Wall Street and the City in order to "break" the Eurozone only illustrates on the one hand the irony of history, and on the other that at the end of the day all of the actions of world players are coming back to haunt them. (4) Even the Financial Times recognizes that the Dollar has become more fragile than the Euro. Source: FT, 04/11/2011. (5) Our predictions regarding the EU and Euroland will be featured in an upcoming edition of GEAB. (6) The only thing that has been seriously disrupted by the Greek situation is French President Nicolas Sarkozy's plan to use the European and G20 summits as a double springboard to try to regain credibility with the French. This proved, however, a double failure. Far from having been resolved, as he had announced on television, the Greek crisis exploded again on the eve of the G20, handing the summit's organizer a note reading: zero! LEAP/E2020 takes this opportunity to reiterate its prediction of 15 November 2010 (GEAB N°49, maintaining that the candidate of the UMP (Sarkozy or otherwise) will not participate in the second round of 2012 French presidential election, which will be decided between the candidate of the Socialist Party, François Hollande, and the candidate of the National Front, Marine Le Pen. (7) And we can only note that it is decision-makers from the European level (Mario Monti, the Italian former European Commissioner, and Lucas Papademos, Greece's former Vice-President of the ECB) who, in Greece and Italy, are taking the reins power, this providing another signal of the Eurozone's accelerating integration – including at the political leve. This will also reinforce the urgent need of institutional reforms for democratic governance in Euroland, since people will not accept for more than a year that these developments take place as they stand as mere spectators. Note that the majority of Germans, French, Italian, Spanish, etc. have not found aberrant the Greek proposals for a referendum on anti-crisis measures, unlike their leaders. Without realizing it, George Papandreou has probably greatly increased the demand for a future referendum on the trans-Euroland governance of the Eurozone by 2014/2015. For more, see Franck Biancheri's article published in the Forum Anticipolis, 06/10/2011 (8) The UK pays an immediate price (as we discuss in this GEAB), with its marginalization confirmed and reinforced, losing all its ability to influence Euroland. As a sign of the times, Nicolas Sarkozy has severely rebuked David Cameron, saying that the leaders of the Eurozone were tired of hearing Cameron's advice for the proper management of the Euro while being fundamentally against the European currency. Nicolas Sarkozy being only strong with the weak, this is an indicia of the extent to which Cameron has fallen. Source: AlJazeera, 24/10/2011 (9) Source: Business Week, 14/11/2011 (10) This does not mean that LEAP/E2020 believes that the situation is fine in Euroland as a whole, with the EU already in recession (like the United States for that matter), with the challenge of public debt still open even if the tools to address the problem are multiplying (including new public debt discounts), and with popular anger, as elsewhere in the world, being amplified, in particular in countries where no political alternative seems possible. Sources: Le Monde, 17/10/2011; Libération, 18/10/2011; La Tribune, 07/11/2011; ANSA, 08/11/2011; Spiegel, 11/11/2011; Les Affaires, 10/11/2011 (11) A historic premiere. Source: Spiegel, 07/11/2011 (12) Both trends generally go together with political leaders. Their Euroscepticism is mostly the ideological dressing of a much more down-to-earth reality: their desire to continue to wield power as they wish in their country. From Vaclav Klaus in the Czech Republic to the conservative Eurosceptics in the UK, and from Berlusconi's Euro-criticism to that of the Swedish Eurosceptics elite, one thing is in common: let us do as we wish in our country, and do not come and disrupt our citizenry with external ideas. To influence public opinion, just change the majestic "we" to a collective one, and make the people believe that it is their own power that European integration will challenge! This, in general, works rather well, given the current number of citizens | ||||||||||||||||||||||||||||||
| ukraine needs to be liberated, backs pm for its people Posted: 16 Nov 2011 02:15 AM PST http://en.for-ua.com/news/2011/11/16/174510.html Investment gold coins will become an alternative of foreign currency as means of store of value for population, NBU official Viktor Nesterenko told a session of the NBU board, ForUm correspondent reports. NBU intends to issue unlimited circulation of investment coins of precious metals (gold, silver, platinum). Purchase and sale of investment coins will be made at the price of precious metals with a small margin. The operations will not be taxed with VAT. Prime cost of coins will be significantly lower of the precious metal the yare made of, which makes it inexpedient to use them as payment means. Hence, such coins will become an investment object, Nesterenko explained. Initially, with the purpose of study of demand, it is planned to issue 1500 gold coins, weighting one ounce, and 3000 gold coins, weighting ¼ ounce, as well as 10 000 silver coins, weighting one ounce. Nesterenko also underlined that the goal of this initiative is to improve investment climate of the state, to develop the market of precious metals and to provide alternative for saving of investments. Having real value, precious metals are more resistant to inflation processes, NBU official summed up. ForUm | ||||||||||||||||||||||||||||||
| Rickards: Three Simple Ways to Get Out of Debt Posted: 16 Nov 2011 02:10 AM PST Jim Rickards on Fox discussing currency devaluation, default, and growing the economy. Rick points out, "the banks are the problem". ~TVR | ||||||||||||||||||||||||||||||
| Arnie Waters: Four Reasons for Gold Posted: 16 Nov 2011 02:02 AM PST Arnie Waters discusses four Reasons for Gold to rise on a Euro Break-up ~TVR | ||||||||||||||||||||||||||||||
| BrotherJohnF: Silver Update – “Sprott” Posted: 16 Nov 2011 02:01 AM PST Brother John discusses revising his ($100) silver call and narrates the most recent Sprott interview in the 11.15.11 Silver Update.
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| Keynote Speech From Sydney Gold Symposium Posted: 16 Nov 2011 01:27 AM PST From JSMinset.com: My Dear Friends, You know I have great respect for Alf Fields both as a master of his methods (there are very few) but also for having a mercantile sense which cannot be taught. You know of his accuracy during the two major bull markets for gold. I fully agree with Alf on the potential of the next move. I feel confident the accordion chop that Kenny points out did complete itself on the day of the longest predicted period of consolidation. I see gold headed into the $2000, but only as another steep on its way to Alf's number. Respectfully, The Skinny: KEYNOTE SPEECH AT SYDNEY GOLD SYMPOSIUM 14-15 NOVEMBER 2011 THE MOSES PRINCIPLE God was powerful enough to send numerous plagues to devastate the Egyptian economy until Pharaoh allowed the Israelites to leave Egypt. Later God caused the Red Sea to part so that the Israelites crossed on a dry sea bed. When the pursuing Egyptian army and their chariots were in the sea bed, the waters crashed back and drowned them. If God was powerful enough to do all of these things, why not allow the Israelites to go straight to the "promised land"? Why did Moses spend 40 years traversing the barren desert before leading the Israelites to the "promised land"? Here is the irreverent theory. Every Israelite over middle age when they left Egypt probably died during the ensuing 40 years. The younger people were born in the desert or spent their adult lives in the desert. After 40 years the life experience of the survivors consisted of living in the desert. When they finally got to the "promised land" it appeared to be "flowing with milk and honey" when compared to their prior desert existence.
What has this got to do with gold? Recently we passed the 40th anniversary of 15 August 1971, the date when the last link between currencies and gold was ended by President Nixon. This launched an era of floating "I owe you nothing" currencies. Money was what any government deemed it to be, generally something that the government could create in unlimited quantities. That system, plus the fractional reserve banking system, launched an era of ever increasing debt and credit. It was an era where debt was desirable and money lost its purchasing power. Continue reading @ jsmineset.com | ||||||||||||||||||||||||||||||
| Designing a Mechanical Trading System: Part IV Posted: 16 Nov 2011 01:25 AM PST
Editor's Note: Don't miss Part I of this series (trade entry metrics), Part II (exit strategies), as well as Part III (system enhancements and filters). Today's installment covers determinations of how much risk to take on each individual trade, and the psychological factors that come with trading a mechanical system. This series is part of the Mercenary Vault, an archive of high quality materials available to Mercenary Dispatch subscribers. The Dispatch is our means of direct communication (via email) with Mercenary community members – and it's free! Sign up here – and don't miss out on future exclusives. Part IV: Risk & Trading Psychology Now that we have our basic system and we have enhanced it, now would be a good time to cover risk and trading psychology. If you have read any of my articles or free documents from my website you know I hammer on risk more than most. I believe that it is for very good reasons, as taking too large of risks on individual positions (which in the short run may give some exciting returns) will catch up to you eventually. Honestly, taking your trading to break-even is a great first step. If you can tread water (i.e…not lose any significant capital) on a consistent basis you are actually further ahead than many newer traders that go through wild streaks of big gains and even bigger losses. Typically if you get to that point you are very close to a profitable system. The quickest and most efficient way to do is through management on the risk side.
Looking for a Professional Trading Platform? Check out the DMA platform from TradeStation Prime Services. It's the platform we use for our Mercenary Trader executions. Click here for more information. RISK PER TRADE How much are we going to risk as a percentage of capital on each trade? I recommend between 1% and 3% regardless of your trading approach. Whether you are a day trader, swing trader or long-term trend follower, I still believe this is the range you should operate within. My own personal recommendation is ½% to start. Get used to your new system in real time with as little emotional distraction as possible. Ease into it, as this is not a sprint but a marathon. Take your time and trade an amount per trade that won't give you undue stress. I should also point out this is also relative to the account size you are trading. If trading forex with micro-lots on a $500 account, 3% is probably not the end of the world. If you are trading a $2 million dollar account, ¼% to a ½% probably makes even more sense. My recommend approach is as follows (these are only guidelines):
 At this point I am sure there are many of you screaming "That sounds great for my GRANDMOTHER Nathan, can you please get your skirt out of the way and give recommendations for real traders!" For the women traders out there please don't take offense to the sarcasm above (all scathing emails should be directed to www.mercenarytrader ……). Although such reckless behavior and outrageous risk taking is glorified on the big screen, please save the machismo for the weight room. Sure we take calculated risks every trade, but there is a big difference between smart risk taking and wild risk taking. Jet fighter pilots push the edge of the envelope, but they don't rip and tear it with reckless abandon. As a new or relatively unseasoned trader, you will thank me if things go badly. Don't focus on some wild account returns that could be made if you trade a million dollar account, focus on the pain if you lost half of it in weeks. If you manage the risk properly and your system has a positive expectation, the returns will come. REALISTIC GOALS Now that I have put my purse down I will show you how to earn 100% returns a month……..kidding of course – it is a man bag!! Despite all of the brow beatings and knuckle bashing with my trading ruler, my goal is not to dishearten you or discourage you. YOU can make amazing returns with trading, but I would be doing you a HUGE disservice if I did not cover these two important topics. If you consistently demolish your trading capital by using excessive risk per trade how are you ever going to trade for a living (if that is your goal)? If you continue to blow up trading accounts how are you going to ever attract or trade OPM (other peoples money)? The quickest way to trade for a living is to not lose or lose as little money as possible as you grow your account. I won't bore you with the percentages, but you already know a 50% loss requires a 100% return to get back to break-even. That is hard to appreciate unless you have actually gone from a $2 million dollar account to a $1 million dollar account. That is a tough road ahead of you trying to recoup that million. Although the mechanics of trading don't require a PhD, it is not easy. Look, I will be the bad guy here and tell you everyone is not going to make millions trading. While I believe everyone has the potential to become a better trader (and definitely beat the buy and hold crowd), it will take sweat, tears and hard work. Most of that growth won't necessarily be in your system, but between your ears instead. Now the good news…..if you can master trading psychology the potential for income truly can be unlimited. That coupled with proper risk management to stay in the game is the key. While we are on this subject, I want to cover one topic that will probably bring me more flack than most. The whole idea of trading tuition, while valid up to a point, is overrated. Sure, I made my own mistakes like many others but I don't think you need or should seek to lose $500,000 before you feel you have the right to be successful. You can learn as much from losing $10,000 on a $50,000 account as blowing up three $100,000 accounts. Some traders speak of "trading tuition" like it is a badge of honor. I don't buy into that philosophy, and you should not convince yourself it is some magic requirement for becoming successful. Use good risk parameters and protect your capital as it should be from day 1. Don't feel cheated if you become successful and never paid outrageous fees to the "trading tuition" school. TRADING PSYCHOLOGY & THE CORRECT MINDSET As a trader you must have the right mindset and approach to be successful. Having a large starting capital balance or the fanciest trading software will never guarantee great results. The market is amazingly adept at pointing out your weaknesses and holding you accountable for mental mistakes.
Truer words were never spoken. The market has no sympathy for lack of discipline or reckless behavior. There is a dangerous amount of freedom available to all traders in any market that can be traded. If you are trading on margin or with leverage you could easily hold a losing position and potentially lose everything. There really are no trading angels or market police to stop you from destructive behaviors. While many of you most likely wouldn't watch your entire capital disappear without taking action, let me ask you the following questions: 1) Have you ever altered your risk percentage arbitrarily or after a big win/loss? 2) Have you ever sought out revenge on the market or a specific stock after a loss? 3) Have you ever not taken valid signals or taken trades with no signal? 4) Have you ever jumped from trading system to system never truly knowing if it even worked? 5) Do you gladly talk about winning trades and conveniently forget about any losing trades? 6) Do you enjoy talking about losing trades as if some sort of trading honor? 7) Do you exit positions early (despite no valid signal to exit) based on outside information? (stock blogs, CNBC, finance columns…etc…etc…) 8) Do you enter positions based on the same outside information despite no valid entry signal? 9) Are you trading the right timeframe with respect to your trading psychology? (Longer term trend trading requires patience, while many people could never be successful at day trading) 10) Would you rather be right 9 out of 10 times and lose $1,000, or be right 2 out of 10 times and make $1,000? This may seem like a sarcastic question but it is not. The only part of the market you can control is your action and reaction to it. Don't spend your time obsessing or craving to determine the markets next move…….instead be as disciplined as a soldier in following your orders (trading plan) when trading it.
I truly believe the market is not your enemy – usually you are your own worst enemy. Early in my trading career I remember specifically placing blame on so many other factors besides myself for losing trades or bad outcomes. 100% of the time I had no one to blame but myself. You have to take ownership and hold yourself accountable. Notice I did not say take ownership or hold yourself accountable if you thought whatever you were trading would go up and it went down. I am not talking about predicting the impossible…I am referring to accepting the results of your actions. You cannot take losses personally and view yourself as a failure. Taking small losses should become like breathing and not ruin your day. It is part of trading and there is no getting away from them. On the other hand……….if you risk 20% of your retirement account on one trade and take a loss then you simply have no one to blame but yourself. The loss shouldn't upset you, but the reckless approach to money management should infuriate you. If you want to gamble, admit you are gambling and go to Vegas expecting to lose money with money you can afford to lose. If you are approaching the markets for a thrill or burst of adrenaline it is only a matter of time until you lose. If you know and can admit to yourself that you just don't have the discipline for trading then save yourself the heartache (and capital). Not everyone can be Michael Jordon and not everyone has the discipline to trade. This is not what most people want to hear, but it is the truth. Scam artists are more prevalent in fitness/weight loss and investing/real estate/money than probably any other industries out there. I cringe when I see the infomercials or ads for trading systems (Green / Red Light) with unobtainable promises and outright lies. Listen to the cold hard truth……..just because it is simple to enter trades does not mean it is easy. When you have a $50,000 or $150,000 open profit on a position then tell me how easy it is to not lock in those profits! Sure it is easy on demo or when the open profit is $3,000, but the larger the position the greater the temptation to stray from the rules. What about after you have had 4 or 5 losing trades in a row in a sideways market and you get an entry signal…….will you take it without hesitation or refuse to take another loss only to miss the big move you have been waiting for? The mental fortitude required as your account and position size grows can be overwhelming to many traders, though it is rarely talked about. Are there ways to help enforce discipline of ease the mental stress……YES! STEPS TO REMOVE EMOTIONS / STRESS FROM TRADING
Weight training is a great tool to relieve stress of any kind. Even a simple walk outside can do wonders for your brain as well as your heart.
I used to track my positions on a spreadsheet and watch them daily……..joyful over open profits or down when in losing positions. As my positions and account balance became bigger I purposely set my trading software profiles to not show account balances or profits/losses on existing positions. I only look at percentages and the charts. Though it may seem childish or strange, removing the money associated with the positions and focusing only on charts and percentages keeps me focused. Seeing the bars moving in your favor just doesn't have the same emotional draw that seeing real dollar profits or losses does. The charts take much of the emotion out of trading for me. If you asked me I couldn't even tell you how much I am up or down on each position in dollars right now…….but I could show you where my trailing stops, profit target and entries were on the charts. Percentages are the simplest way to track progress and get to a common denominator. Being down $10,000 has a completely different meaning relative to account balance. If your trading account started with $20,000 (50% loss) you have serious issues and must gain 100% to get back to break-even. If your trading account started with a $1,000,000 you only lost 1% and it shouldn't make you bat an eye.
Although longer term systems don't require the time or screen time of swing or day trading adventures, all trading takes a toll on you. Two weeks will not make or break your year but will do wonders for you mentally. This is not a requirement, just a suggestion. Go with family/friends anywhere and enjoy your time or do volunteer work in your community. Don't look at one chart or even turn on a TV or computer. Shut yourself off completely from trading and recharge. A great time to consider this is during extremely volatile markets.
Now for mutual funds you don't have a choice but to use mental stops and put your orders in for the next day; however, for exchange traded funds and currencies you should always use stop losses at trade entry. Having your stop loss in place ensures your first loss is your only and smallest loss on that specific trade. This simple act forces discipline with respect to losses. Use the same approach with trailing stop losses and profit targets……….put them in the market. While stop hunting does occur, your stops are typically far enough away that to get to them there is a good chance the trend has actually changed vs. a conspiracy. The advantages of having your stops in the market far outweigh the disadvantages of not using them.
By this I mean if you are in a Gold, Silver ETF avoid the bull and bear web blogs predicting tripling of prices and the end of the world. Although it is easy to pretend these opinions would never affect your trading decisions, the subconscious has a sneaky way of interfering with rational thought. For every trade you can easily find at least 10 analysts/bloggers/financial experts that support and at least ten that are against your position. These should not give you any confidence or any fear about your position. Let price and your system rules based on what price does alone determine your actions. Never let an opinion of anyone alter your trading decisions.
Only you know what amount you can risk and still sleep at night. I recommend never going above 3%, but if 1% keeps you relaxed and allows you to follow the rules 100% with conviction then there is absolutely nothing wrong with that. I don't think the potential profits should have any bearing on your decision for risk percentage. EQUITY CURVE EXAMPLES The potential loss amount should determine what percentage of capital you risk. By that I mean if you have a $100,000 account and (let's assume your system averages a 40% win rate and a profit factor of 3) we have the following trades – L L L W W L W L L W, can you deal with the following equity curve fluctuations?
Equity curves don't just go straight up……..think of going up a muddy hill in a jeep – you slide and slip while catching traction at times and eventually you make your way to the top. Throw in some unexpected rain and your slides become more severe before you hit paths of solid traction and lurch back in your intended direction. Many traders assume they can handle this type of equity curve with no sweat. Be honest with yourself……if after the first three losing trades do you easily take the next trade (not knowing it will be profitable of course) without hesitation? You need to know in advance if this is too much for you to bear. While you are only down slightly less than 8%, I can't answer whether you would panic and start avoiding trades or start betting higher amounts to get it back (which is the wrong thing to do). Only YOU can answer this question!! Don't look at this chart and think I can definitely do whatever it takes to gain over 15% in my account…….look at this and know for a fact you can take a 9% or higher account loss (draw down) without it affecting your trading decisions. With a demo account I am sure you can (5-10% is no problem with imaginary paper)……..real money is a different ballgame. I am sure it seems like I am beating a dead horse, but there are very good reasons for doing it. Let me show you how a few simple trading mistakes and lack of discipline can easily start an ugly spiral down in your account. Assume after your first loss you become upset and double your next bet to 6% and then the following to 12% (doubling again). With only three losing trades coupled with awful money management you are now down 20% in your account. You now need 25% account growth just to get back to break-even. You need what most would consider a very profitable annual return by taking your eyes of the road for only two trades. Months and years of account growth/trading profits can vanish if you don't take this concept to heart.
This is a much more boring ride (especially to the gambler) as you are only up 5% vs. 15%, but getting to an account balance low of $97,000 vs. $91,000 after three losing trades will not affect everyone the same. Some of you can e | ||||||||||||||||||||||||||||||
| Gold Resilient Despite Paulson Selling Posted: 16 Nov 2011 01:20 AM PST from King World News:
Peter Schiff continues: Read More @ KingWorldNews.com | ||||||||||||||||||||||||||||||
| Gold Price Tests Resistance on Sovereign Debt Threats Posted: 16 Nov 2011 01:18 AM PST from GoldMoney.com:
However if there's one lesson that we should not forget is that the first consequence of money printing is increased volatility. Read More @ GoldMoney.com | ||||||||||||||||||||||||||||||
| Posted: 16 Nov 2011 01:17 AM PST by Greg Hunter's USAWatchdog.com:
At the beginning of this month, the G20 met in France to try to find a way to solve the European sovereign debt crisis. It ended with world leaders in disarray over a way to come up with a solution. At first blush, it appears that nothing of any importance came of the meeting of the 20 leading economies of the world, but that is not the case. It was widely reported the G20 came up with the idea that Germany might put up its gold reserves to back a bailout fund called the European Financial Stability Facility or EFSF. Of course, Germany, with its more than 3,400 tonnes of gold (number 2 in the world), quickly shot that idea down. End of story? Quite the contrary–the gold story is just beginning to get interesting. You see, the G20 did something accidentally that was very important, and that was confirm that gold has a place in the monetary system, especially in times of extreme turmoil. Why doesn't the EU use sovereign bonds to back the EFSF? They are considered a store of value and are held as reserves in many European banks. The simple answer is the world is waking up to the fact that debt can't back up debt. Europe finds itself in a tough spot, and the leaders there know it. Reuters reported Monday, German Chancellor Angela Merkel said, "Europe is in one of its toughest, perhaps the toughest hour since World War Two," she told her Christian Democrats, saying she feared Europe would fail if the euro failed and vowing to do anything to stop this from happening." | ||||||||||||||||||||||||||||||
| Euro Gold Outperforming Bunds and Euro Assets / Celente’s MF Global Gold Account ‘Looted’ Posted: 16 Nov 2011 01:17 AM PST | ||||||||||||||||||||||||||||||
| "It's All About Gold Now" - Greg Hunter opines Posted: 16 Nov 2011 12:38 AM PST I think we know most of this but the world is starting to wake up "to the fact that debt can't back up debt." http://usawatchdog.com/it%e2%80%99s-all-about-gold-now/ fyi, R. | ||||||||||||||||||||||||||||||
| Precious metals guru Sprott: $100 silver is coming Posted: 16 Nov 2011 12:23 AM PST From SHTFplan: Contrarian investor Eric Sprott of Sprott Asset Management, who, among other things, manages some of the largest precious metals exchange-traded funds backed by actual physical gold and silver, says gold may have seen unprecedented growth over the last 10 years, but silver is the investment of the next decade. ... For now, there seems to be enough silver to meet industrial demand, but there are certainly differing opinions out there about whether or not there is enough physical silver available to meet investor demand (and/or industrial demand as new technologies emerge). As Mr. Sprott points out, any number of things could cause a "run on silver"... Read full article... More on silver: The "smart money" thinks silver is going higher now A new gold and silver threat you need to watch out for The world's best silver company just reported a huge increase in profits | ||||||||||||||||||||||||||||||
| Posted: 15 Nov 2011 11:16 PM PST Cross-posted from Credit Writedowns The most important debate of our lifetimes is now ongoing. For many, the answer will be existential. First, the question: Should the ECB "write the check' for the euro area national governments? In thinking about the answer to this all-important question, I prefer to shift the focus by changing the verb "should" to "will". Answering this slightly different question is much more important than answering the first question for you as an investor, a business person and as a worker. If the ECB writes the check, the economic and market outcomes are vastly different than if they do not. Your personal outlook as an investor, business person or worker will change dramatically for decades to come based upon this one policy choice and how well-prepared for it you are. The right question to ask then is: Will the ECB "write the check' for the euro area national governments? To date, my answer to this question has been yes. See, for example, my thoughts on why questioning Italy's solvency leads inevitably to monetisation and why Investors will buy Italian bonds after ECB monetisation. But what if the ECB doesn't write the check? What if the ECB let's Italy default, what then? Here's my thinking on that score. Italian death spiralLet me start off with what I have previously written from two posts from November 7th.
Here's what I am saying.
Conclusion: Italy will face a liquidity-induced insolvency without central bank intervention. Investors will sell Italian bonds and yields will rise as the liquidity crisis becomes a self-fulfilling spiral: higher yields begetting worsening macro fundamentals leading to higher default risk and therefore even higher yields. Soft depressionI believe the global economy is in a cyclical upturn within a larger depression. Two years ago, I wrote:
Last week I wrote that this is "a soft depression scenario where the countries with a true lender of last resort can backstop without problems." The problem, however is that the ECB is not a true lender of last resort as we are now seeing.
Outlining the Armageddon scenarioThis is the crucial piece in understanding how to protect yourself in the event the ECB decides to not act as a lender of last resort for the euro area national governments. This is a true Armageddon and Depression scenario. The reason no real alternative to the ECB's acting as a lender of last resort is offered by hawkish types is because the alternative is economic collapse – and recognising this is not politically palatable. We know that Italy will default without the central bank based on the analysis above. Italy's default would trigger a cascade of interconnected bank runs default and Depression as did the insolvency of Creditanstalt in 1931. Could Italy unilaterally exit the euro zone and redominate euro debts at par into a new Lira currency to forestall the default? Perhaps. That is something to consider at a later date. For now, here's what will happen if Italy defaults.
There are a lot of other potential areas where this could go like capital controls, civil unrest, eurozone breakup, government coups, etc, etc. All of that is speculation. But above are the six parts I see as a sure thing: credit event, Italian bank run, Spain and Slovenia insolvency, contagion into Eastern Europe, some euro bank insolvencies and credit default swap triggers. Clearly, this would mean an economic downturn of at least the magnitude of the Great Depression. I also tend to think contagion will spread throughout the eurozone until it breaks apart – and we do see yields rising right across the euro zone, today in France, Austria and even the Netherlands:
Protecting your wealthHedging against this outcome means preparing for black swan scenarios in stocks, government bonds, currencies, commodities and precious metals. This is a world of unpredictable policy paths that will certainly involve civil unrest, government repression and economic nationalism, but may also involve competitive currency devaluations, currency controls, and trade wars. My view is that such a scenario will mean significant dead weight economic loss due to debt deflation dynamics. Economic output would decline significantly, as would stocks and high-yield debt. Commodity prices would also decline. But depending on the policy response of governments, bonds and precious metals are wildcards. Governments like Norway's are protected because of low debt and rich natural resources. On the other hand, governments like Australia's and Canada's are exposed because of significant household sector indebtedness and high property valuation. In essence, there is nowhere to hide in the sovereign bond area. As a foreign investor in sovereign debt, you want to know where the currency and the interest rate are going and neither is foreseeable in this train of events. If governments try to inflate their way out, precious metals might be a good safe haven, although paper gold presents a problem of reliability and physical gold is subject to confiscation. On the farmland front, as Jim Grant testifies, yields are already very low, so you have to wonder how much upside there is to that trade. Obviously, in a world of financial repression and competitive currency depreciation, those investments won't necessarily lose value. Highly rated corporate bonds and high quality dividend paying stocks may well be the best safe havens. Those are my thoughts on what an Italian default would mean. The overall thrust of the arguments here is that a default would be economically catastrophic and put into play a lot of outlier scenarios. The potential for large losses would be significant, and, therefore it pays to think about how to protect your wealth in such an environment, given that serious policy makers believe letting Italy default is a justifiable policy choice. P.S. – after I wrote this post, I noticed a piece by David McWilliams, a well-known Irish economist, which ran through an Irish euro exit scenario like the one I had speculated about for Italy above. See my article highlighting McWilliams main points here.
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| Gold Bull Has Far to Go, Says Agnico-Eagle's Sean Boyd Posted: 15 Nov 2011 09:03 PM PST ¤ Yesterday in Gold and SilverStarting in early morning trading in the Far East yesterday, gold got sold off about fifteen bucks...with the low of the day coming shortly after 9:00 a.m. in London. That low was re-tested shortly before lunchtime local time...and then a rally of some substance developed from there. This rally ran the price up about twenty-five dollars to its high of the day...and the price got capped at what might have been an early London p.m. gold fix around 9:45 a.m. Eastern time. The gold price struggled to advance from there...and finally gave up the ghost about 10:50 a.m. Eastern time. Gold then got sold off back to its Comex opening price by 11:35 a.m. Then another bit of a rally developed...and that came to an end at 1:00 p.m...and from there the price more or less traded sideways into the close of the New York Access Market at 5:15 p.m. Eastern time. The gold price closed at $1,781.10 spot...up the magnificent sum of eighty cents from Monday's close. Tuesday's net volume was almost double Monday's volume...around 111,000 contracts.
It was pretty much the same story in silver, with only slight differences in timing. For instance, silver's low came around 10:00 a.m. GMT in London...and the big rally started about an hour after that. Silver's rally was far more substantial as well...but it, too, ran into a not-for-profit seller at the early London p.m. gold fix. Silver then got sold off for 70 cents during the next two hour time period...and, like gold, gave up every penny of its gains from the Comex open at 8:20 a.m. Eastern time. The subsequent rally that followed ended at 1:00 p.m. Eastern, just like gold's secondary rally. Silver also traded sideways from there into the close of electronic trading. Silver closed at $34.57 spot...up thirty-three cents on the day. Net volume was around 33,000 contracts.
Here's the New York Spot Silver [Bid] chart, so you can see the trading day in more detail. Note how silver got sold off for every penny of its 70 cent gain that occurred between 8:20 and 9:45 a.m.
The New York Spot Gold [Bid] chart looks virtually the same. The dollar gained about 40 basis points during the Tuesday trading day...and just a cursory glance at the chart below shows that the dollar price action had no bearing on what the precious metals did [or wanted to do] yesterday.
The gold stocks pretty much followed the price of the metal itself...and the HUI finished up a smallish 0.32%.
Even though silver finished up about a percent on the day, the associated stocks turned in a very mixed performance...and Nick Laird's Silver Sentiment Index closed down 0.45%.
(Click on image to enlarge) The CME's Daily Delivery Report was another yawner, as only 30 gold and 1 silver contract were posted for delivery on Thursday. There were no reported changes in either SLV or GLD yesterday...and the U.S. Mint reported selling only 500 ounces of gold eagles. There was some activity over at the Comex-approved depositories on Monday, as they only reported receiving 75,628 ounces of silver...but shipped 836,762 ounces out the door. The link to that action is here. Yesterday I discussed the 50-day moving average in silver in 'The Wrap' section of this column...and the obvious [and successful] attempts to keep the price below that critical moving average. Silver analyst Ted Butler wrote a few paragraphs about this in his Saturday column...and here's one of them... "Leaving aside the fact that silver is more manipulated than gold for a moment, there are some ready explanations for why silver has been somewhat of a relative drag recently. For one thing, since the September price smash, silver has not been able to penetrate to the upside its important moving averages (50 and 200 day), while gold has been able to climb or remain over all its important moving averages. I'm not a technician or chartist, but many market participants are heavily influenced by such indicators. That makes it important to be aware of what these technical traders are up to. The fact that silver is below the moving averages while gold is above keeps these technical traders from buying silver and encourages them to buy gold. I think this explains, more than anything, the recent relative punk price performance in silver compared to gold. But the nature of this technical moving average approach portends changes ahead." I have slightly fewer stories for you today than on Tuesday, so I hope you're able to at least read what I've cut and paste from each one so you can get a flavour for each article, even if you don't have the time [or inclination] to read the whole thing. Silver and gold obviously want to break above these price levels, but it's just as equally obvious that they're not being allowed to. Paulson not seen deserting gold after $2 billion ETF sale. China reduces 2012 silver exports by 5%, could boost prices. Gerald Celente has become a casualty of MF Global's bankruptcy. ¤ Critical ReadsSubscribeCongress: Trading stock on inside information?Steve Kroft reports that members of Congress can legally trade stock based on non-public information from Capitol Hill. Why am I not surprised. This 15:20 minute story was on the CBS News program 60-Minutes on Sunday. I thank reader Brad Robertson for sending me this video...and the link is here.  Regulators Should Split 'Behemoth' Banks: FisherFederal Reserve Bank of Dallas President Richard Fisher said regulators should break up so- called too-big-to-fail financial institutions to curtail the risk they pose to financial stability. "I believe that too-big-to-fail banks are too-dangerous- to-permit," Fisher said in the text of remarks given in New York today. "Downsizing the behemoths over time into institutions that can be prudently managed and regulated across borders is the appropriate policy response. Then, creative destruction can work its wonders in the financial sector, just as it does elsewhere in our economy." I'll believe it when I see it. This Bloomberg story is courtesy of West Virginia reader Elliot Simon...and the link is here.  'Only massive debt restructuring can save EU' - Kyle BassKyle Bass is a hedge fund founder who saw the financial crisis coming and made a fortune from it - first from America's sub-prime mortgage crisis and then from betting that Greece would default. Mr. Bass told the BBC's Sarah Montague that Germany cannot be expected to bail out the PIIGS countries - Portugal, Ireland, Italy, Greece and Spain, and that only a massive write-down in those countries' debts will solve the crisis. This short 2:50 minute BBC video clip is a must watch. As usual, Kyle takes no prisoners. I thank Washington state reader S.A. for sharing it with us...and the link is here.  Truth SHOULD be a high duty of central banking, ex-Fed Governor Alan Blinder saysFor years many Internet sites have attributed to the economist Alan Blinder, now a professor at Princeton University in New Jersey, a provocative comment reportedly made on a Public Broadcasting System program in 1994 during his service as a member of the Board of Governors of the Federal Reserve System: "The last duty of a central banker is to tell the public the truth." Alan Binder sets the record straight in this GATA release from yesterday evening. This is well worth reading...and the link is here.  Saving the Euro: Germany's Central Bank against the WorldJens Weidmann, the new president of Germany's Bundesbank, is strongly opposed to making the European Central Bank the lender of last resort in efforts to prop up the common currency. It's a lonely fight, however, and the pressure from Germany's European partners is intense. Some warn that Weidmann's course could end up destroying the euro. This very important 3-page essay was posted over at the German website spiegel.de yesterday...and it's well worth your time if you have it. I thank Roy Stephens for sending it along...and the link is here.  'Now Europe Is Speaking German' - Merkel Ally Demands that Britain 'Contribute' to EU SuccessMany EU countries are unhappy about Germany's growing dominance in the euro crisis. Some in Chancellor Angela Merkel's party, however, seem unaware of such concerns. Volker Kauder, a senior member of the Christian Democrats, declared in no uncertain terms on Tuesday that Germany should be a model for Europe. "Britain also carries a responsibility for the success of Europe, " he said. "Just looking for their own advantage and not being prepared to contribute -- that cannot be the message we accept from the British," Kauder said, referring to Britain's opposition to the financial transaction tax that Germany has been lobbying for in order to raise revenue for future bank bailouts. This is the second of four stories in a row from spiegel.de that are courtesy of Roy Stephens...and the link to this one is here.  Accidental Downgrade or Glimpse of Future? - Why France Should Be Worried About Its RatingIn the best-case scenario, the Standard & Poor's analysts just made a stupid error [last] Thursday when they sent out an e-mail downgrading France's credit rating. In the worst-case scenario, they did it on purpose. But regardless of the motivation behind the email, the Standard & Poor's analysts may be simply anticipating reality. The link to this third spiegel.de story is here.  Paulson not seen deserting gold after $2 bln ETF sale Posted: 15 Nov 2011 09:03 PM PST  Hedge fund manager and long-time gold bull John Paulson's move to slash ETF bullion holdings by a third does not appear to be a sign that he is abandoning his upbeat view of the metal, industry sources and analysts said. The move is likely a combination of two unrelated factors: end-of-year client redemptions equalling about 8 percent of his total holdings; and a desire to reduce his exposure to the regulated U.S. ETF in favor of less visible swaps, forwards or physical holdings that are not reported in quarterly 13-F filings, a person familiar with his thinking said. | ||||||||||||||||||||||||||||||
| Argentines get itchy amid new foreign exchange controls Posted: 15 Nov 2011 09:03 PM PST  Argentines withdrew $645 million in U.S. dollar-denominated deposits from private-sector banks in the first week after the government made it harder for individuals and companies to buy dollars. The numbers, published by the Central Bank of Argentina late Friday, seem to confirm that the new currency controls have made Argentines nervous and led many to do what they typically do during times of crisis -- buy dollars or withdraw them from the banking system. This story was posted in The Wall Street Journal on Saturday...and is posted in the clear in this GATA release...and the link is here. | ||||||||||||||||||||||||||||||
| Satyajit Das: In the Matter of Lehman Brothers – Part 2: Well Structured Messes Posted: 15 Nov 2011 08:49 PM PST By Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2006 and 2010) In this two part paper, the issues regarding settlement of complex derivatives arrangement revealed by the failure of Lehman Brothers is outlined. Many of the failures affect new regulatory proposals such as the rapid resolution regimes under consideration. The First Part dealt with terminating and settling derivative contracts. The Second Part deals with effects of the bankruptcy on structured products and collateral. Structured Messes… Lehman's bankruptcy filing also affected structured products. Typically, these products are notes, bonds or deposits that use derivative technology to provide investors with higher interest rates than traditional instruments or "bespoke" structured returns on equity, currency, credit or commodity assets. Exposure to Lehman derives from multiple sources. Lehman itself was the basis of the underlying commercial bet in some transactions. Lehman issued the notes in some cases. Lehman was the derivative counterparty in other transactions. Structured products involving Lehman were frequently "white labelled"; that is, packaged and sold by unrelated banks and brokers as their own. This form of "own brand products", common in financial markets, creates multiple problems, especially where sold to retail investors in non-English speaking jurisdictions. The level of disclosure of details of the structure and risk is variable. Words like "loss" and "risk" do not appear to exist in many emerging market languages. In addition, the direct exposure to Lehman, the product manufacturer, may not be obvious or even disclosed. Following the demise of Lehman, many investors in Europe and Asia were surprised to discover indirect and hitherto unknown exposure to the collapsed investment bank. Lehman was a common reference entity in the CDS market. When the firm filed for bankruptcy protection, losses were triggered in CDS contracts but also a variety of structured credit products, such as Collateralised Debt Obligations ("CDOs") and credit linked notes. Where Lehman had issued or guaranteed the structured product, the investor was directly exposed to the investment bank. Upon the bankruptcy, the investors suffered losses. The most complex exposure was where Lehman was the counterparty to derivative transactions incorporated within a structured product. One example is the Lehman's Minibond product sold to Asian retail investors. The Minbonds entailed investors purchasing a bond or note issued by a special purpose vehicle ("SPV") located in the balmy Cayman Islands or British Virgin Islands. The funds were then placed in highly rated (AAA) securities ("the collateral"). The SPV then entered into a credit derivative contract known as a first-to-default ("FTD") swap. The SPV received fees in return for insuring the risk that no entity within a basket of 7-8 firms defaults during the life of the contract. As the product evolved, the investor's money was increasingly invested in more risky collateral such as complex structured securities, including asset backed securities ("ABS"), CDOs and CDO2s. In addition, many structures involved layers of other derivative contracts, such as interest rate swaps and currency swaps, to allow the notes to be denominated in the required currency or pay fixed or variable coupon. The investor received an interest rate, higher than on normal deposits of bonds of a comparable maturity. This enhanced return was the combination of the interest on the AAA collateral and the fees on the FTD swap. The investor took the risk that one of the insured entities may default resulting in the investor losing all or part of its principal. This risk was frequently highlighted in the marketing material as the "primary" risk. The investor also took less obvious risks, which could be equally damaging to the investor's wealth. The most important additional risk was to the potential default of the counterparty to the derivative contracts, the role played by Lehman in the Minibonds. Consistent with the procedure described, when the investment bank filed for bankruptcy, the derivative contract between the SPV and Lehman terminated necessitating determination and payment of a settlement amount. If this amount was payable to Lehman then the entire structure had to be unwound. The collateral had to be sold and the cash released distributed to the derivative counterparty and the investors in accordance with a nominated hierarchy. This process exposed the investor to a potentially toxic combination of credit, market and liquidity risk. The Lehman filing triggered a significant rise in credit margins and volatility, which resulted in significant mark-to-market losses on the FTD swaps and also the underlying collateral. This meant there was a large amount owing to Lehman upon termination of the derivative contract. It also meant that the value of the collateral was lower than face value. The investor lost when the SPV realised its collateral. It then further lost under the FTD swap. The investor's losses were especially egregious as they were triggered by Lehman's collapse, rather than the risks that the investor assumed that they had taken. In many cases, if the Minibond been held through to maturity, then the investor would not have suffered any losses. There had been no defaults by any of the entities that the investor had insured under the FTD swap. The underlying collateral, which is generally matched to maturity of the notes, would have matured, at face value. In some transactions, the losses were exacerbated by the use of highly structured securities as collateral. These securities lacked liquidity and attempts to realise them to unwind the arrangements as required sharply increased investor losses. Perversely, the structure of the transactions allowed Lehman to benefit from its own bankruptcy in relation to these specific transactions. Living up to their names, the MiniBonds provided mini returns and maximum losses. Investors shared American author Bill Watterson's lament: "I know the world isn't fair, but why isn't it ever unfair in my favor?" Back Flips… There were documentary problems as largely untested legal arrangements failed to work as intended. In most structured notes such as the Minibonds, the documentation sets out a system of priority of claims against the underlying collateral. Normally, the derivative counterparty, such as Lehman, has first claim over the collateral to meet amount owed to it. Where the derivative counterparty itself is in default, as when Lehman filed for bankruptcy protection, the priority reverses with the innocent investor having the first claim on the collateral. Such arrangements – known as the "flip" clause – are commonplace. They are a feature of many structured finance arrangements, buttressed by appropriate "legal opinions" from "learned" counsel. When Lehman filed for Chapter 11 protection triggering termination of derivative contracts with SPVs in structured products, the operation of the flip clause should have ensured the change in priority for payment under the swap in favour of Lehman's swap counterparties. On 25 November 2008, Weil, Gotshal & Manges, Lehman Brothers' legal counsel, notified all swap counterparties that, in their opinion, the flip clause breached several provisions of the US Bankruptcy Code. This was despite the fact that many of the relevant transactions were governed by English law. The argument was that the change in priority deprived Lehman of an asset (being the priority to amounts owed under the swap) because of its bankruptcy. Section 365(e)(1) of US Bankruptcy Code provides that an "executory" contract may not be terminated or modified solely as a result of debtor filing for bankruptcy. Lehman also argued the application of the basic English law proposition that the property of a person cannot be taken away on insolvency. The operation of the flip clause became the subject of complex and expensive litigation between a trustee (Perpetual Trustee Co Ltd) and Lehman Brothers Special Financing ("LBSF"). Perpetual is acting as the trustee of Mahogany Capital, an Australian SPV, which issued A$125 million (US$120 million equivalent) credit-linked notes to retail investors. The money received from the retail investors was invested in CDOs issued by Saphir Finance Ltd (a SPV associated with Lehman). The financial arrangements and collateral for Mahogany Capital are similar to the arrangement described above for structured products generally, such as the Minibonds. Perpetual initiated legal proceedings in the UK claiming priority over LBSF to the underlying collateral (Noteholder Priority). Perpetual took action in the UK Court to order the custodian (Bank of New York Mellon ("BNY")) to release the underlying collateral to Perpetual. In proceedings before the UK High Court from 7 to 9 July 2009 and Court of Appeal from 13 to 15 October 2009, Perpetual's position was upheld. The UK court ruled that Perpetual had priority over LBSF to the collateral under the English Law, that is upheld the Noteholder Priority). Upon appeal, the UK Supreme Court confirmed that Perpetual had priority over LBSF. Parallel to the progress of the Perpetual case in UK, LBSF commenced a separate legal action against BNY in the US Bankruptcy Court on 20 May 2009 by filing a two-count complaint. The US Bankruptcy Court on 25 January 2010 ruled in favour of LBSF. The court decided that the provisions in the swap agreements that seek to modify LBSF's payment priority upon an event of default constitute unenforceable ipso facto clauses that violate Bankruptcy Code. It also ruled that any action to enforce such provisions as a result of LBSF's bankruptcy filing violates the automatic stay under US Bankruptcy Code. The later makes it difficult for counterparties to prosecute their right or deal with assets. The conflicting position creates significant uncertainty for all parties seeking to settle terminated transactions. Judge Peck in his judgement which was at odds with the UK Courts noted that: "This decision places BNY in a difficult position in light of the contrary determination of the English Courts confirming that Noteholder Priority applies to claims made against it in English by Perpetual. This is a situation that calls for the parties, this Court and the English Courts to work in a coordinated and cooperative way to identify means to reconcile the conflicting judgments." BNY subsequently appealed the decision. The appeal process was made difficult by Judge Peck's refusal to seal his orders, normally a key step in allowing appeals and judicial reviews of a lower court decision. After much legal manoeuvring, BNY received leave to appeal Judge Peck's decision. In giving leave for BNY to appeal the decision contradicting the UK Court ruling, the appellate Judge (McMahon J.) referred to a number of articles cited by BNY questioning the correctness of Judge Peck's decision and comments that "LBSF meekly responds, citing a single article, that the commentary on the Bankruptcy Court's decision has, in fact, been "mixed"." Judge McMahon was critical of Lehman and the bankruptcy court's conduct: "it is not difficult to see LBSF's arguments for what they are: an attempt to use the English proceedings to insulate Judge Peck's decision from appellate review for as long as possible … LBSF's efforts to shield Judge Peck's unprecedented and – for LBSF – extremely favourable decision from review are, of course, not surprising; indeed, LBSF does not deny that, since the decision was handed down, it has used it as leverage in settlement negotiations concerning billions of dollars worth of similar transactions." In December 2010, Judge Peck approved a settlement between Lehman and BNY and Perpetual. A condition of the settlement was that the US and UK lawsuits involving Lehman, BNY and Perpetual would be dismissed and the parties would release their claims against one another. Under the settlement, Lehman paid £280,320 ($440,000) to cover Perpetual's cost costs in the English case. The settlement may have been motivated by Lehman's desire to enable the bankrupt firm to continue to use the uncertainty as leverage in it settlement negotiations. Losses for investors in structured products will sharply increase if the flip clause is not upheld. This would rub further salt into fresh and extremely raw wounds given that investor losses were largely the result of Lehman's default under its contract. A&M and Lehman's comments about "bankruptcy opportunism" are self serving. When it has suited them as in the case of the flip clause, A&M and Lehman have been quick to indulge in opportunism of their own. As French playwright Moliere noted: "Hypocrisy is a fashionable vice, and all fashionable vices pass for virtue." In Life and In Death… The Lehman's matter highlights the weakness and complexities of derivative contracts and related transactions, such as the use of collateral. For the most part, regulators, industry bodies and policy makers have failed to acknowledge, understand and deal with these issues. Like John Cash (Of IdSoftware fame), regulators have taken the view: "I want to move to theory. Everything works in theory." There have been attempts to address some issues in relation to collateral. For example, the Dodd-Frank Wall Street Reform and Consumer Protection Act provides for the segregation of margin. The legislation requires dealers to notify counterparties of their right to require "segregation of the funds or other property supplied to margin, guarantee, or secure the obligations of the counterparty". It is unclear whether segregation of collateral is likely to become widespread as it will increase the costs to dealers which, in turn, will be passed on to clients. Many documentary problems of derivatives, especially around the termination and calculation of settlement amounts, remain. In addition, there are equity issues where counterparties and investors in structured products suffered large losses as a result of the operation of the termination provisions. The opportunity for Lehman to benefit from its own default in many transactions has also not attracted attention. The complex legal proceedings around the enforceability of the flip clause have significant implications for securitisation. In the short, run it creates uncertainty that will make it difficult for policy makers to resuscitate the moribund market. If the flip clause was to be ruled unenforceable, it could have consequences for other financial contracts, including provisions within the ISDA Master Agreement itself. For example, there could be challenges to various contracts where provisions purport to modify rights following the insolvency of one party to the contract. In the extreme case, some lawyers have suggested that it could call into question the efficacy of bankruptcy proof SPV, central to most structured finance. A key problem has been the financing of legal actions. In many structured transactions where the ultimate investors are individuals, Trustees have been reluctant to initiate and continue legal proceedings because of the lack of available funding to finance such actions. The problem has been exacerbated by actions of Lehman/ A&M to initiate and prosecute expensive, lengthy legal proceedings aggressively. While perfectly legal, these strategies take advantage of the inadequate financial resources of counterparties, forcing early settlements that may be favourable to Lehman and unfavourable to the investors. It is only in rare cases that Trustees have been able to take the necessary legal steps to clarify the legal issues. In Hong Kong, the Trustee of the MiniBonds was provided with the ability to (if necessary) initiate legal action by a funding arrangement, established under the supervision of Hong Kong regulators. Under the arrangements, the banks, which distributed the Minibonds, were forced to buy back the Minbonds sold to retail investors at an agreed price. The banks were also forced to disgorge commissions earned on the transactions to effectively create a pool of funds to finance potential litigation against Lehman to recover amount owed. For the foreseeable future, lawyers for the Lehman estate and acting for counterparties in transactions with the collapsed investment bank are likely to test contractual provisions and bankruptcy laws in many jurisdictions as they attempt to gain access to collateral, valued at billions of dollars. Who said there were no winners in the Lehman's collapse? No Exit… The problems identified have significant implications for a key element of proposed new financial regulations– the rapid resolution plan, christened the "living will" or "financial death plans". In essence, systematically important financial institutions ("SIFIs") would be required to file a plan for dismantling the institution in case of serious financial distress. The concept is driven by fear of widespread systemic failure following the failure of a SIFI. In reality, it is also a "soft option" avoiding the need to deal with the real issue – the size, scope and complexity, especially the network effects of trading, of large "too big to fail" financial institutions. Promoted by regulators and academics with little or no practical familiarity with the complexity of derivative trading or dealing with failed or bankrupt financial institutions, the concept may be in the words of The Economist "a little fantastical". One institution promoting the idea is the US Federal Deposit Insurance Corporation ("FDIC") which already has powers to wind down some banks. However, the FDIC procedures are not suited to large complex financial institutions. While the FDIC's procedures may work for smaller institutions with little of no derivative exposures operating primarily in America, it is difficult to see similar approaches being successful for larger institutions with more complex, cross border operations. For example, Lehman Brothers had 2,985 legal entities operating in around 50 countries. In hindsight, it is also abundantly clear that neither Lehman nor its counterparties had a thorough grasp of its credit exposures under derivative contracts, credit enhancement used or the required process to terminate the contracts. No resolution process will be effective unless the fundamental issues relating to termination of derivative contracts are clarified and resolved. Similarly, no resolution process will be effective unless the procedures around the use of collateral and other forms of credit enhancement are strengthened. The imposition of a central counter party ("CCP") will not be effective without resolution of these issues. A key problem that will remain is the application of different laws and regulations in different jurisdictions. "International" when solvent, complex financial institutions quickly become "national" in distress. As was evident in the case of Lehman, when a firm collapses, it quickly fragments into its individual legal entities that must be dealt with separately around the world. There is no current effective system for dealing with this fragmentation. The proceedings around the flip clause are instructive. If the US court ruled in favour of Lehman but failed in the UK courts, then one option for the estate would be to invoke measures in the United Nations Commission on International Trade Law (Uncitral) Model Law of Insolvency. This would entail requesting the English courts to apply provisions of the US Bankruptcy Code. To date, the UK courts have not indicated whether this would be possible. It seems likely that the UK courts would recognise the insolvency, but only insofar as it is consistent with English law. It is unlikely that the English courts would adopt US bankruptcy law where there are conflicts with English law, for example, in the case of the flip clause. If the US Court decides for and the UK Courts against Lehman, then there would be a stalemate. The trustee and custodians would be in the unenviable position of having to reconcile the diverging rulings. They would probably refuse to release assets or meet claims without full indemnities, further extending the delay. The reality is that any functioning global resolution regime is "light years" away as international agreement on critical issues and a coordinated approach is unlikely. In fact, under the law of unintended consequences, the resolution regime may perversely make matters worse. For a large international institution which is active globally, local regulators may correctly decide to insist on "ring fencing" local operations to protect local creditors and the integrity of national financial markets. In effect, deposits and contracts with a local operation would have to be segregated from cross border dealings, enabling local regulators to have surety of access to assets to meet local claims. This would have the effect of vastly complicating bankruptcy and also dealing with derivative risk and unwinding positions. The Hippocratic oath specifies "do no harm". It would be more sensible to focus on addressing the clear problems in derivative documentation, termination and credit enhancement processes. Unfortunately, regulators and policy makers have embarked on a reformation process without understanding key aspects of the problem or even the appropriate framework of reference. In a celebrated exchange between two technologists, Trygve Reenskaug says: "In theory, practice is simple." Alexandre Boily asks: "But, is it simple to practice theory?" The matter of Lehman raises precisely this question.
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| LISTEN: Stephen Leeb talks with Chris Waltzek Posted: 15 Nov 2011 08:37 PM PST
About Gold Seek Radio: More interviews @ radio.goldseek.com | ||||||||||||||||||||||||||||||
| Posted: 15 Nov 2011 08:30 PM PST Europe's Credit Plan Euphoria Lasted about 48 Hours. Now Reality Sets In. "So, EZ leaders–after having already triggered a mini-Depression in the PIIGS with no end in sight–are on course to intensify the downturn by forcing the banks to dump hundreds of billions of dollars of assets onto the market thus pushing down prices and increasing financial market distress. Sounds like a plan. The alternative to this would be that the individual governments recapitalize the banks at their own expense which would mean higher taxes, diverting revenue from public services, and (here's the corker) a steep downgrade by the ratings agencies. So, it's a lose-lose-lose situation. Everything is worse. The Euro-zone is imploding, and it's imploding because the policies they're implementing are, well, stupid, which is to say, they won't work. And investors know they won't work which is why they keep fleeing Europe en masse. Can you blame them?" http://www.counterpunch.org/2011/10/28/the-never-ending-eurofiasco "China's Rich: Primarily, driven by a sense of insecurity are taking money out of their country. Many are actually preparing to move elsewhere. According to a new study, almost 60% of China's "high net worth individuals," defined as those possessing more than 10 million Yuan in investable assets, are either considering emigration through investment programs or, are completing the emigration process. The survey, conducted by China Merchants Bank and Bain & Co., also reports that 27% of those with more than 100 million Yuan in investable assets have already emigrated and 47% of them are thinking about leaving the Motherland. The stunning results correspond to reports that the U.S. Treasury unit monitoring illegal money flows has, since the beginning of last summer, detected a surge in hidden cash transfers out of China." – Forbes "Groupon IPO A Must as Cash Needs Climb." We recently warned of new bubbles in social networking websites. This service-related site is one of our top candidates for a huge multi-billion disaster. While the bad economy suggests the business plan of selling discount coupons on the web by advertisers seems like a good idea with great timing, we say, the math makes no sense. As this Bloomberg report suggests, if the company fails to make a bundle on the new offering, they are in a heap of trouble. We say this one is doomed as are many of the other social networking and service-related sites. Their PE's are off the charts nuts and there is no more room for many of these companies. When the Nasdaq as a whole takes a tumble, it will wipe-out many of these companies in the crash. Watch it happen in late 2012. "Groupon Inc.'s decision to push ahead with an initial public offering as other startups hold-off may be driven more by necessity than choice: The company needs cash to keep growing and is nearing the number of shareholders that requires it to report financial results." "Groupon is seeking to raise as much as $540 million, saying it won't need to use the money for at least a year and has no urgent cash needs. Even so, the biggest provider of online daily deals owed almost twice as much to merchants at the end of September as it held in cash. Marketing costs rose +37% in the latest quarter, four times as quickly as its cash pile.' Editor: On Friday, 11-4-11, Groupon's IPO opened at $20 moving to $27.00+ "Proceeding now may cushion Groupon against slowing sales growth and ballooning costs and give the company time to tweak it strategy, including cutting its marketing expenses, according to research firm PrivCo. Groupon is taking its chance amid the biggest IPO backlog since 2000, as other startups delay offers because of stock-market volatility. "They may have a cash flow problem and need the funds," said Ed Ketz, an associate professor of accounting at Pennsylvania State University. "At some point they have to change the business model in some way." Groupon, based in Chicago, remains unprofitable. The company had $243.9 million in cash at the end of September and still owed merchants $465.6 million." – Ari Levy 10-31-11 Bloomberg.net "Crumbling American Bridges' $140 Billion Tab Leaves Business Paying." Your editor had a mild detour around three miles of new, local road being built this past summer. Two local businessmen, one a convenience store owner and the other a garden center provider took hard sales hits in those 3-4 months of inaccessibility. They had entries and exits but when those become inconvenient, their sales dropped dramatically. This Bloomberg reporter says all bridges combined have an average of seven years' life remaining. They are going to be falling like ten-pins along with the businesses they serve in Greater Depression II. Isolated retail will fold-up for good. "A log bridge in the French Alps near Vallorcine." –Wikopedia Most USA bridges are obviously better than this old beauty, but remember the freeway that collapsed new Minneapolis, Minn. not that long ago? "Jim Benton, a Jeffersonville, Indiana, jewelry-store owner, says sales fell -40% in two weeks after the Sherman Minton Bridge connecting his border community to customers in Kentucky closed September 9. Fifteen miles from the bridge's Kentucky side, officials at United Parcel Service Inc. (UPS)'s Worldport, the world's largest automated package-handling facility, say they've used software to reroute trucks with no substantial impact. That's not so easy for Benton, who's been keeping longer hours and buying less holiday merchandise." "Benton's plight is playing out for small businesses across the U.S., where 3,538 bridges were closed in 2010, as customers shop elsewhere rather than take detours. With the average U.S. bridge seven years from the end of its useful life, and one- fourth of 600,000 crossings classified by regulators as "structurally deficient," more places will be hurt by closings, said Barry LePatner of a New York-based construction law and consulting firm." "Bridge failures throw a monkey wrench into the economic life of communities," LePatner said. "Things aren't going to get better; things are going to get much worse. The Minneapolis-St. Paul regional economy lost as much as $73 million after the collapse in August, 2007 of the Interstate 35W bridge, according to a 2008 study by the University of Minnesota. Thirteen people died and 145 were injured when the bridge, Minnesota's busiest, collapsed. It was rebuilt and reopened in September, 2008." -Carol Wolf 10-31-11 Bloomberg.net         This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||||||||||||
| Adrian Day: Tax-Loss Selling May Hit Gold Stocks Soon Posted: 15 Nov 2011 06:00 PM PST After a big spike up and an overdue correction in the gold price, Adrian Day, chairman and CEO of Adrian Day Asset Management, says that the king of metals is settling back into the steady rise in... Visit the aureport.com for more information and for a free newsletter | ||||||||||||||||||||||||||||||
| Thom Calandra: Taking Calculated Yet Extreme Risks in Mining Posted: 15 Nov 2011 06:00 PM PST Thom Calandra, a long-time journalist and mining investor, knows what risks to stomach in search of jaw-dropping returns. Geopolitical risk, for one. Karen Roche of The Gold Report caught up with him... Visit the aureport.com for more information and for a free newsletter | ||||||||||||||||||||||||||||||
| What Will Happen to Greece et al (if they leave the Eurozone)? Posted: 15 Nov 2011 05:50 PM PST Gold Forecaster |
A total generational change had taken place so that the survivors had no knowledge of anything other than the desert. There was nobody who could remember what Egypt was like. The Moses Principle recognizes the fact that over any 40 year period, a generational change takes place.
"Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.
With gold and silver still consolidating recent gains, today King World News interviewed Peter Schiff, CEO of Europacific Capital. When asked about recent developments in the gold market, Schiff remarked, "I thought it was interesting we found out that John Paulson eliminated at least a third of his position in the gold ETF GLD. So that took off some of the overhang. There were a lot of people that were worried and saying, 'Oh how is he going to get out? That's going to be very disruptive.'"
The price of gold continues to trade in a range between 1,750$ and 1,800$ per ounce, although after several attempts to break 1,800$ per troy ounce bode very well for the immediate future, with several trusty analysts predicting new all-time highs soon. They have good reasons to do so; economic fundamentals continue to undermine the foundations of gold's main competitors, with the euro facing a cascade of sovereign defaults that threatens its very existence and the dollar now looking at the 1970s turmoil as a best-case scenario. It does not help that policy makers continue to see cheaper money as the panacea.
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