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The 2011 Gold Price: What Correction?
The Truth About Corporate Cash
Interview with Kyle Bass on Gold, Hugely Profitable Asymmetric Bets on US Subprime and Europe
Currency Markets Get Ahead Of Super Committee
Metals crashing hard
Ron Struthers: Timing the Gold Market
$15 Trillion US National Debt ‘Supercommittee’ Impasse to Support Gold
Central banks in gold rush
Extremely controversial post: The gov't could soon begin random searches of our homes
New signs suggest a major bear market has begun
China just issued a serious warning
View From The Turret: Euro-Zone Fatigue
Supercommittee Failure will Support Gold
Gold & Silver Market Morning, November 21, 2011
Some Heretical Thoughts on the U.S. Dollar
Precious Metals ETFs – Positive Money Flow into Gold, Negative for Silver
Satyajit Das: The Main Game Looms – The Problem of US Debt (Updated)
Chris Thompson: Investors Not Quite Ready to Embrace 'Ugly Sister' Silver
Will Dividends Make Mining Shares Glitter More Than Gold?
Shanghai Gold Exchange raises margin requirements
Ford library confirms Fed letter tying Germany to gold price suppression
Gold Market Update
Why Silver For A Monetary Collapse? Part 1
Clive Maund: Silver Market Update – 11.20.11
Precious Metals Charts Point to Higher Prices – Part II
Why gold is better than cash
This past week in gold
Epic Failure: The Supercommittee Was A Super Joke
The US Economy’s Bread and Circuses
MF Global the Broken Dealer

The 2011 Gold Price: What Correction?

Posted: 21 Nov 2011 04:19 AM PST

The price will recover and fetch new highs.

Posted: 21 Nov 2011 03:58 AM PST

By The Financial Lexicon:

The investment firm Pimco coined the term "the new normal" to describe the post-2008 world. A more appropriate description might be, "the era of perpetual uncertainty." Perhaps the uncertainty was always there, and nowadays people are simply recognizing it more often. But the public is constantly being bombarded with things to worry about. Beyond one's own financial, family, and work obligations, it seems as if we have to constantly worry about whether the financial system itself will collapse, destroying with it the very fabric of our debt-fueled society. If we don't increase the U.S. debt ceiling, we're told the financial system will collapse. If Greece, Italy, or Spain defaults on its debt, we're told there will be an economic calamity. If tax rates go up, we're told it will ruin the economy. If tax rates don't go up, we're still told it will ruin the economy.

Are you a CEO

Complete Story »

Interview with Kyle Bass on Gold, Hugely Profitable Asymmetric Bets on US Subprime and Europe

Posted: 21 Nov 2011 03:50 AM PST

Currency Markets Get Ahead Of Super Committee

Posted: 21 Nov 2011 03:27 AM PST

By Emerging Money:

By John Spence

As we head into the shortened holiday week, we see the U.S. dollar gain ground this morning after last week's consolidation from short-term profit-taking. Traders are nervous about the odds of a deadlock in the congressional Super Committee and the very real possibility that U.S. officials will make much meaningful progress toward reducing the massive deficit in any event.

Given these factors, it may seem odd for the U.S. dollar to be the safe haven "risk off" currency, but the U.S. dollar is simply the most liquid and safest currency in the world.

If anything, pressure on the dollar may lift as the euro's latest embarrassments and new enthusiasm over the U.S. economy create new reasons to buy the greenback.

Additional geopolitical uncertainty is also playing a role in price action early Monday, with the Middle East heating up again over the weekend in Egypt, Syria and

Complete Story »

Metals crashing hard

Posted: 21 Nov 2011 03:01 AM PST

Gold down 39.50 tp $1685 and silver down $1.30 to $31.11.

If this keeps up, I will have to load up.

Ron Struthers: Timing the Gold Market

Posted: 21 Nov 2011 01:46 AM PST

$15 Trillion US National Debt ‘Supercommittee’ Impasse to Support Gold

Posted: 21 Nov 2011 01:03 AM PST

Central banks in gold rush

Posted: 21 Nov 2011 12:45 AM PST

Central banks around the globe have joined the gold rush, as the World Gold Council's latest report makes clear. This is especially true of the central banks of rapidly growing emerging countries. Up ...

Extremely controversial post: The gov't could soon begin random searches of our homes

Posted: 21 Nov 2011 12:24 AM PST

From LewRockwell.com:

What will we say when the government announces that "for security reasons," it will begin conducting random checks of our homes? That we will be required by law to open our doors and stand aside while government agents do a walk-through, just to "be sure" and (of course) "to keep us safe"?

It is a serious question, not (as I will be accused of purveying) exaggerated or paranoiac. After all, we are already told specifically that we have no legal expectation of privacy when we're out in public and it's been implicit for years now that we have very little left in the way of Fourth Amendment rights anywhere – even in our own homes.

See, for example, the recent Indiana Supreme Court decision that a homeowner has no right to resist even an illegal, warrantless, and probable cause-free entry by cops. A cop, possibly psychotic, without doubt armed and packing the state's authority to administer lethal violence – can literally kick in your door, for absolutely no lawful reason whatsoever – and if the homeowner resists, it is the homeowner who is in violation of The Law.

If, say, you are asleep in bed and are awakened suddenly by the sound of your door being kicked in and you – fearing for your life – grab the pistol you keep by your bed and shoot the unknown berserker, it's you who will go to prison...

Read full article...

More government outrage:

How to defend your property from out-of-control government

This is the No. 1 threat to the safety and security of most Americans

Must-read: "The entire system has been utterly destroyed by the MF Global collapse"

New signs suggest a major bear market has begun

Posted: 21 Nov 2011 12:20 AM PST

From Gold Scents:

The recent market action has me wondering if the next leg down in the cyclical bear market has begun.

I always expected that we would see a very convincing rally out of the October yearly cycle low. I thought it even possible that we would test the 200-day moving average. Most bear markets do rally out of the initial leg down and test the 200-day moving average.

Recently, the S&P made two attempts to close and hold above the 200-day moving average. They both failed. That was a loudly ringing warning bell...

Read full article...

More on stocks:

A BIG reason to avoid buying most stocks today

Top manager Tepper is dumping many of his stocks

This chart could determine where stocks and commodities go for the rest of the year

China just issued a serious warning

Posted: 21 Nov 2011 12:20 AM PST

From The Daily Crux:

The Chinese government just issued a serious warning for the U.S. and Europe.

Chinese Vice Premier Wang Qishan says the government sees a worsening, "long-term" global recession... and must take any steps necessary to "focus on domestic problems."

Translation: If Western governments are looking to China for cooperation and assistance on solving their currency and debt problems, they will likely be disappointed.

Read full article...

More on China:

Jim Chanos: China's "hard landing" has officially begun

China could be the big reason behind yesterday's silver selloff

We now have powerful evidence China is headed for a dramatic slowdown

View From The Turret: Euro-Zone Fatigue

Posted: 21 Nov 2011 12:10 AM PST

It's becoming a bit of a cliche, but the majority of liquid markets are taking their cues from the drama in Europe on a day-by-day basis.

With the correlation of prices approaching 1.0, and many chart patterns looking more like a polygraph or seismograph readout than a tradeable vehicle, it's becoming more difficult to find attractive reward to risk scenarios that make sense.

The key question for nimble traders to ask is "what is actually working in this environment?" On the surface, it is pretty clear that reversion to the mean trades are being rewarded, while trends are less likely to follow through for an extended period. So how do you adapt a trading strategy to hold up in this environment – while also realizing that in time the environment will once again change to allow for more stable trend-following trades?

On the entry side, it's important to realize that breakouts and breakdowns are less likely to continue without a meaningful pullback. So it makes more sense to enter breakouts after an initial reaction in the opposite direction. Nathan O. offers some great insight in how to set up great entry points in Part One of his Mechanical Trading System series.

On the exit side of the trade, markets with mean-reverting tendencies require traders to take profits more quickly and keep risk points relatively tight to protect against snap-back movements. The concept of using half profit targets is especially relevant as we guard open profits more carefully, knowing that the chances are higher for a successful trade to reverse without warning.

Heading into a new week, Europe remains in the limelight as traders focus on rising funding costs for European banks. With the S&P 500 showing a negative return on the year, and more speculative indices like the Russell 2000 trading well below the 2010 year end levels, traders are on edge and it wouldn't be surprising to see the global uncertainty pressure markets into the end of this year.

After a successful weekend full of poker (including a cash in a ring event), we're locked and loaded for a holiday-shortened week of action. Below the jump are some of the trades we are tracking for the week…

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Gold at Trendline Support

First, it was the rising money supply for the US dollar – and the potential for substantial inflation if and when the injected liquidity began to devalue the greenback. Now, the potential for Euro Zone injections – either through ECB bailouts or now with the IMF getting involved – has traders worried about the ultimate purchasing power of the euro.

As currency uncertainty rises, investors are looking for solid ways to protect the purchasing power of their capital, and traders are actively allocating capital into and out of precious metals.

After a washout in September related to portfolio contagion, gold appears to have found its footing and has retained its long-term bullish trend. With the weak holders successfully shaken out, spot gold is now above the 50 day EMA and has pulled back to this support line over the last few sessions.

A successful test of this line would give traders a good excuse to add to their positions, and could very well suck in some of the "shaken" investors who bailed out during the drop last quarter.

Crude Pullback Within Bullish Pattern

Energy prices have been moving higher – likely drawing strength both from improving economic expectations (leading to higher demand) as well as concern for currency spending power.

A pullback in the last few sessions gives us a chance to assess the overall conviction of traders in this market – and potentially establish a bullish position ahead of a continued push higher. The Mercenary Live Feed currently has a pending trade that will give us bullish exposure to energy if the market follows through this week.

Energy is one of a small number of asset classes that is trading in a less correlated manner to the crisis in Europe. Instead of reacting to the constant "risk on – risk off" mentality of traders, oil prices have been more affected by supply and demand dynamics with improving expectations for the global economy leading to stronger demand assumptions.

We're watching this area closely and may very well pull the trigger if crude prices find support and then resume the bounce from the October lows.

Speculative Growth Still Suspect

Some of our most successful trades this year have been bearish bets on high-valuation speculative growth situations. Netflix Inc. (NFLX) self-destructed over the summer as rising competition, cost issues, and stupid management decisions sent the stock plummeting. We also caught a good chunk of the bearish action in Green Mountain Coffee Roasters (GMCR) as concerns for future growth kicked in.

One of our most recent short positions is Amazon.com Inc. (AMZN) which is priced to perfection (at more than 100 times 2012 EPS expectations). The stock is forming what looks like a broad rounding top on the weekly chart, and our open position is already sitting on a 7% profit.

In keeping with the mean reverting tendencies of this environment, I wouldn't be surprised to see AMZN find support in the next week – at least temporarily. We will be carefully managing our risk point to ensure that we don't allow open profits too much latitude to reverse.

As we move through the week, liquidity will certainly taper off. This is a good week for portfolio managers to take off, and trading desks will be under-staffed approaching the Thanksgiving holiday. Less liquidity is a breeding ground for choppy action and listless price action.

Be careful deducting too much information from price trends this week. It's certainly another important week for the Euro Zone debt crisis (as every week is turning out to be), but for US equities the action has more potential to be manipulated.

Trade 'em well this week!
MM

Supercommittee Failure will Support Gold

Posted: 20 Nov 2011 10:36 PM PST

From Zerohedge:

$15 Trillion US National Debt 'Supercommittee' Impasse To Support Gold

Financial contagion in Europe is pushing already fragile global economies towards recessions, and the risk of slipping into global recession are rising significantly. Indeed, as we have warned for many months, there is a real risk of a global Depression given the scale of the debt levels in most western countries and the massive imbalances globally. A senior Chinese official, Chinese Vice Premier Wang, said yesterday that a 'chronic' long term global recession is certain to happen and China must focus on domestic problems. While all the focus has been on Europe in recent weeks, markets may again focus on the not inconsequential matter of the appalling US fiscal position which could see further market volatility and the dollar come under pressure again. Washington's latest fractious effort to come to grips with its mounting debt looks set to end in failure today as negotiators look set to announce they have failed to reach a deal. The Congressional 'supercommittee 'charged with cutting the US government's crushing $15 trillion debt looks set to admit failure which should support gold. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, reported a rise of 3.631 tons from a day earlier to 1,293.088 tons in its holdings, the highest in more than three months. The ETF witnessed an inflow of 24.422 tons last week, the biggest one-week rise in holdings since mid-August. Commerzbank say they expect to see gold trading at $1,800/oz by the end of the year. Barclays says it is sticking with a fairly bullish call for gold and says it sees the price at $1,875/oz in Q4, according to Reuters. Deutsche Bank say they expect periods of risk aversion to remain through 2012 and their strongest conviction trade remains long precious metals and specifically gold, according to Reuters.

Readmore @ Zerohedge

Gold & Silver Market Morning, November 21, 2011

Posted: 20 Nov 2011 09:00 PM PST

Some Heretical Thoughts on the U.S. Dollar

Posted: 20 Nov 2011 07:00 PM PST

Resource Insights

Precious Metals ETFs – Positive Money Flow into Gold, Negative for Silver

Posted: 20 Nov 2011 07:00 PM PST

As gold fell a net $64.71 or 3.6% Friday to Friday in USD terms and about €27.03 or 2.1% in euros, SPDR Gold Shares (NYSE:GLD), the largest gold ETF in the world, once again reported strong positive money flow into the trust (more buying pressure than selling pressure) as traders and investors apparently sought safe harbor where they could. Apparently the U.S. dollar is not the only place people are running to in a rush to liquidity.

The Authorized Market Participants for GLD issued new shares, in return for adding to metal holdings to the tune of another 24.42 tonnes this week, up to 1,293.09 tonnes of allocated, LBMA-approved, so called "good-delivery" gold bars held for investors by a custodian in London.

Source for data SPDR Gold Trust.

As of Friday's close the metal held in trust for GLD was worth about $71.5 billion. Since October 24 (just under one month) there has been consistent positive money flow into GLD, with the trust adding 65.58 tonnes of gold bars as the price of gold move a net $67 higher.

All five of the gold ETFs sponsored by the World Gold Council also reported an increase, of 24.41 tonnes to a collective 1,592 tonnes of gold metal (about 51.18 million ounces worth $88 billion).

GLD and most physical-backed gold ETFs add metal and increase the number of shares in the trading float in response to periods of aggressive buying pressure - when there is more positive liquidity than negative liquidity. The reverse is also true.

iShares COMEX Gold Trust (IAU), now our preferred gold ETF, also reported an increase of 2.43 tonnes to their metal holdings, up to 171.4 tonnes of gold held partly in COMEX warehouses and partly in London. The ETF, whose shares reflect the "action" of 1/100 of an ounce of gold less accumulated fees and expenses, claimed an NAV of $9.47 billion as of Friday's close, about 13.3% the size of GLD, but slowly gaining on it. IAU's expense ratio is lower than GLD's (0.25% vs 0.40%), but liquidity and option depth is better with GLD.

SLV Metal Holdings

Metal holdings for BlackRock's iShares Silver Trust (NYSE:SLV) declined this week, reflecting negative money flow (more selling pressure than buying pressure), likely in answer to the $2.00 sell-down Thursday. Authorized Market Participants arbitrage periods of negative money flow by redeeming shares in SLV (literally buying them out of the market) in return for an appropriate amount of silver from the trust's custodian.

Presumably the Authroized Market Participants (AMPs) then simultaneously sell the silver into the market to recoup the funds used to redeem SLV shares. When the selling pressure is considerably higher (more) than buying pressure the AMPs keep the SLV share price from falling too low (falling faster than the spot price), keeping SLV from disconnecting with the spot price of silver. These market squaring actions are done in minimum baskets of just under 50,000 shares. (As of Friday the minimum basket amount called for 48,643.30 ounces.)

The reverse is also true in periods of heavier buying than selling priessure.

For the week the AMPs redeemed 2,250,000 SLV shares and the trust returned to the AMPs from the custodian 68.08 tonnes of silver. As of Friday's tally SLV reported holding 9,715.63 tonnes of allocated, LBMA-approved commercial good-delivery silver bars, held by SLV's custodian in London (JP Morgan Chase, London).

Source for data, iShares Silver Trust.

Since June, with silver more or less in a downtrend (a series of lower turning highs and lows), metal holdings for SLV have been in a kind of consolidation with as little as 9,500 and as much as 10,010 tonnes of silver held.

It has been our impression just lately (since about June) that periods of positive or negative money flow for SLV do not correlate well with the near-term direction of the spot price of silver. That is to say that additions or reductions in SLV metals holdings have not been very predictive of late.

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

Satyajit Das: The Main Game Looms – The Problem of US Debt (Updated)

Posted: 20 Nov 2011 06:00 PM PST

Yves here. As much as I am a big fan of Das, this post is a classic example of arguing that the US, a sovereign issuer of currency, is in the same position as a household. The problem is first, unlike a household, a sovereign issuer of currency cannot go bankrupt (it can always issue more currency to pay off its IOUs). It can VOLUNTARILY default, as Russia did in 1998 (which shocked the international markets, the Russian government debt outstanding was a very small % of GDP and widely seen as sustainable). The real economic danger is inflation, not default. But with considerable deflationary pressures underway via private sector deleveraging, government deficit spending is actually desirable to accommodate the private desire to save more (as in the private sector is not generating sufficient use for incremental savings in the way of new investments). Second, a household can cut spending without affecting its income. This is not true of a modern government, whose spending is a meaningful portion of GDP. In an economy, everyone's income is someone else's spending. Cutting government spending has a contractionary effect greater than the amount of the deficit reduction (we've seen this proven again and again in Europe, as the imposition of austerity is making debt to GDP ratios worse).

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 the first of three articles, the problems of US debt are outlined. The next two articles look at how America needs to control its public debt and how given political exigencies it may actually be dealt with.

Greece and the other debt burdened European countries are merely the first carriages in the derailment of the "Sovereign Debt" Express train service to nowhere. The big carriage has 'USA' painted in red on it.

To understand the US financial position, just remove 8 zeros and pretend it's a household budget (The analogy was originally suggested at http://www.globalresearch.ca:80/index.php?context=va&aid=27707):

Annual family income: $21,700

Money the family spent: $38,200

New debt on the credit card: $16,500

Outstanding balance on the credit card: $142,710

The US is trying to bring their budget under control. This year they implemented total budget cuts of $385. Assuming they don't spend more than they raise in taxes, it will take them 370 years to pay back this debt. The bi-partisan US Super Committee is currently discussing proposals to cut spending by $12,000 over 10 years. At $1,200 in saving per year and assuming they balance the budget, it will then take them a mere 119 year to pay back the debt.

That should clarify the position.

At Debt's Door

Ralph Waldo Emerson wrote: "The World owes more than the world can pay." The US certainly owes more than it can repay.

US government debt currently totals over $14 trillion. The US Treasury estimates that this debt will rise to around $20 trillion by 2015, over 100% of America's Gross Domestic Product ("GDP"). Even these dire forecasts rely on extremely robust assumption about US growth around 5-5.5% per annum. Lower growth will translate into higher debt levels.

The rapid increase in debt will require Treasury to borrow heavily each year to repay maturing debt and raise new money. Annual interest payments will eventually exceed all domestic discretionary spending and rival the defence budget.

There are other current and contingent commitments not explicitly included in the debt figures reported by the government. Since July 2008, the US government has supported Freddie Mac and Fannie Mae (known as government sponsored enterprises (GSEs)). This totals over $5 trillion in additional on or off-balance sheet obligations.

The debt statistics do not include a number of unfunded obligations – the current value of mandatory payments for programs such as Medicare ($23 trillion), Medicaid ($35 trillion) and Social Security ($8 trillion). Projections show that payouts for these programs will significantly exceed tax revenues over the next 75 years and require funding from other tax sources or borrowing.

In addition to Federal debt, US State governments and municipalities have debt of around $3 trillion.

Apolitical Debt Blues

US public finances deteriorated significantly over recent years. Pimco's Bill Gross observed: "What a good country or a good squirrel should be doing is stashing away nuts for the winter. The United States is not only not saving nuts, it's eating the ones left over from the last winter."

In 2001, the Congressional Budget Office ("CBO") forecast average annual surpluses of approximately $850 billion from 2009–2012. With the budget balanced and forecasts of ever-larger annual surpluses indefinitely, the CBO estimated that >Washington would have enough money by the end of the decade to pay off everything it owed. The surpluses never emerged.

Instead, the US government has run large budget deficits of approximately $1 trillion per annum in recent years. The major drivers of this turnaround include: tax revenue declines due to recessions (28%); tax cuts (21%); increased defence spending (15%); non-defence spending (12%) higher interest costs (11%); and the 2009 stimulus package (6%). German finance minister Wolfgang Schäuble told the Wall Street Journal on 8 November 2010 that: "The USA lived off credit for too long, inflated its financial sector massively and neglected its industrial base."

The US budget deficits and debt problems are apolitical, with bipartisan contribution to the accumulated mess in public finances.

Prior to the election of Ronald Reagan, deficit spending largely from military conflicts such as Vietnan and economic downturns created a national debt of around $1 trillion. President Reagan held firm views on government and the welfare state: "Government is like a baby. An alimentary canal with a big appetite at one end and no responsibility at the other." He quipped that: "Welfare's purpose should be to eliminate, as far as possible, the need for its own existence." But between 1981 and 1989, tax cuts and peacetime defence spending contributed to an increase in the debt of $1.9 trillion. The President was disappointed at the growing national debt, joking that: "[The deficit] is big enough to take care of itself."

Under President George Bush Senior, the national debt increased a further $1.5 trillion, driven by the costs of the first Gulf War and fall in tax revenues from a recession.

Under President Bill Clinton, national debt increased $1.4 trillion. There were large budget surpluses in some years, but increased spending added to the debt. The surpluses were driven by increased tax revenues from corporate and personal tax revenue gains due largely to the Internet bubble. In addition, Treasury Secretary Robert Rubin's "carry trade", shortening the maturity of US debt to take advantage of lower short term rates, resulted in interest costs savings.

Between 2001 and 2009, President George Bush Junior added $6.1 trillion in debt, driven by the wars in Afghanistan and Iraq, tax cuts and revenue losses of the economic downturn that started in 2007.

President Barrack Obama added a further $2.4 trillion in debt. The major contribution came from stimulus spending to counter the effects of recession, tax revenue losses due to the downturn, extension of the Bush tax cuts and the continued cost of two military actions.

The US debt problems resemble Agatha Christie's Murder on the Orient Express – everybody did it but no one is responsible.

Drowning by Debt

No borrower can incur debt on this scale without the complicity of its lenders.

The US government holds around 40% of the debt through the Federal Reserve ($1.6 trillion), Social Security Trust Fund ($2.7 trillion) and other government trust funds ($1.9 trillion). Individuals, corporations, banks, insurance companies, pension funds, mutual funds, state or local governments, hold $3.6 trillion. Foreigner investors hold the remainder including China ($1.2 trillion), Japan ($0.9 trillion) and "other", principally oil exporting nations, Asian central banks or sovereign wealth funds ($2.4 trillion).

Until the global financial crisis, foreign lenders, especially central banks with large foreign exchange reserves, led by the Chinese, increased their purchases of US government debt as part of a giant global liquidity scheme.

These reserves arose from dollars received from exports and foreign investment that had to be exchanged into local currency. In order to avoid increases in the value of the currency that would affect the competitive position of their exporters, the exporting nations invested the reserves in dollar denominated investment, primarily US Treasury bonds and other high quality securities. By the middle 2000s, foreign buyers were purchasing around 50% of US government bonds.

During this period, emerging countries, such as China fuelled American growth, both supplying cheap goods and providing cheap funding to finance the purchase of these goods. It was a mutually convenient addiction – China financed customers creating demand for exports and America received the money to buy cheap Chinese goods. Asked whether America hanged itself with an Asian rope, a Chinese official told a reporter: "No. It drowned itself in Asian liquidity."

Following the global financial crisis, foreign purchases have decreased to around 30% of new issuance. Around 70% of US government bonds (US$ 0.9 trillion) have been purchased by the Federal Reserve, as part of successive rounds of quantitative easing.

The large stock of US debt and seemingly uncontrollable US budget deficits now pose several problems. Is the level of debt sustainable? How is it going to be funded? How can the deficits and debt be brought under control? What happens if the US finds itself unable to finances its requirements? The answer to these questions will shape the global financial economic landscape for a long time to come.

Chris Thompson: Investors Not Quite Ready to Embrace 'Ugly Sister' Silver

Posted: 20 Nov 2011 06:00 PM PST

Volatility in the markets overall, and particularly in the silver price, continues to deter investors, even the major producers, from stepping in on silver juniors. However, Chris Thompson, equity...

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Will Dividends Make Mining Shares Glitter More Than Gold?

Posted: 20 Nov 2011 05:53 PM PST

Gold Forecaster

Shanghai Gold Exchange raises margin requirements

Posted: 20 Nov 2011 05:50 PM PST

Ford library confirms Fed letter tying Germany to gold price suppression

Posted: 20 Nov 2011 05:48 PM PST

Gold Market Update

Posted: 20 Nov 2011 05:44 PM PST

Why Silver For A Monetary Collapse? Part 1

Posted: 20 Nov 2011 05:01 PM PST

We are at the edge of a major economic crisis. Our monetary system is the underlying cause of this major crisis. The massive debt bubble created by our monetary system is about to burst. The demonetization of gold and silver, has over the years diverted value from these metals, to all paper assets (such as bonds) linked to the debt-based monetary system.

Clive Maund: Silver Market Update – 11.20.11

Posted: 20 Nov 2011 05:00 PM PST

From Clive Maund:
We have had a major rethink since the last update was posted, which was one reason why no update was posted last weekend. This rethink has been occasioned by the rapid tilt towards deflation of the past couple of weeks. In the last update you may recall that we assumed that politicians and world leaders would follow the easiest route of QE which would lead in the direction of hyperinflation, but we really should know by now that you can't assume anything in this business. For sure, most of them would like to follow this route, for it buys them the maximum time before they end up at the end of a rope, but unfortunately for them they are losing control and things are starting to fall apart at alarming rate. Details of the latest thinking re the deflation/hyperinflation arguments are set out in the parallel Gold Market update, to which you are referred, and it will suffice here to give as examples of the tilt towards deflation the moves in the US to rein in the deficits and of course the spiking bond interest rates in Europe – if we do not see dramatic large scale intervention by the European Central Bank (ECB) involving a massive blast of QE, Europe will be finished shortly as a united economic entity, and after a possible temporary party to celebrate the demise of Europe, the US Treasury market will collapse.

CLICK IMAGE TO ENLARGE

On the 4-month chart for silver we can examine recent action in detail. In the light of the latest thinking the rally from late September following the brutal plunge is now viewed as a weak relief rally, which failed on Thursday with a breakdown, which was anticipated on the site with a warning being given, and for a break lower by the broad stockmarket. Volume on this rally was weak, and after struggling beneath heavy resistance centered on $35 and its falling 50-day moving average for more than 2 weeks, silver broke down from the uptrend in force from late September. The MACD has dropped down through its moving average, which is a bearish development. We cannot hope to grasp the big picture of what is going on in silver on a 4-month chart, so now we will look at an 18-month chart.

CLICK IMAGE TO ENLARGE

The 18-month chart for silver shows all of the action from the start of the big ramp that began in August of 2010. Earlier thinking was that as a 3-wave decline, involving 2 crashlets, had completed by the September low, a new 5-wave major uptrend would follow, and of course it would if politicians obliged with a globally coordinated QE campaign, but unfortunately it doesn't look like they are going to get that together and we are instead looking at the specter of a deflationary implosion triggered by the collapse of Europe. This realization has prompted a reexamination of the charts which has led to the discovery of a large Head-and-Shoulders top in silver completing above an upsloping neckline as shown. Other technical factors suggesting that an H&S top is indeed completing are the volume pattern – there was no increase in volume at all on the latest rise to mark out the Right Shoulder of the pattern and a particularly ominous development is the strongly downtrending MACD indicator which is showing that the major trend is swinging steadily from up to down – and we are already firmly in down territory.

CLICK IMAGE TO ENLARGE

A reason for our bullishness in the recent past was the COT charts, which showed a very low Commercial short and Large Spec position. However, the COT has deteriorated in recent weeks with little to show for it in the way of a rally. Currently it still looks rather bullish, and it is difficult to reconcile this with the bearish picture we have just described which correlates with the potential for a brutal collapse in world stockmarkets associated with deflationary forces coming to the fore again.

Silver Precious Metals Chart:

Silver is currently in a down trend and may be starting another leg down this week. Long term I am bullish but for the next couple months I am remain neutral to bearish for silver until it forms a base to start a new uptrend from.

Precious Metals Charts

Gold Precious Metals Chart:

Currently I am neutral/bearish on gold. If it can trade sideways for a few weeks then I will become bullish.

Precious-Metals-Charts

Precious Metals Charts Conclusion:

In short, I feel there is a good chance the US dollar will continue higher and if that happens we should see strong selling in North American equities, commodities and likely on the precious metals charts.

Financial markets around the world are at a tipping point meaning something really big is about to take place. The question is which way will investment move. The only thing we can do is trade with the current trends, price patterns and volume.

At this time I still see a higher dollar and that means lower stocks and commodities. This could change at the drop of a hat depending on the news that comes out of Europe so the key to trading right now is to remain cash rich and taking only small positions in the market.

If you would like learn more about etf trading and receive my daily pre-market videos, intraday updates and detailed trade alerts which even the most novice trader can follow then join my FREE trading education newsletter and my premium trading alert service here:

http://www.GoldAndOilGuy.com

Chris Vermeulen

Why gold is better than cash

Posted: 20 Nov 2011 04:00 PM PST

This past week in gold

Posted: 20 Nov 2011 02:36 PM PST

GLD – new sell signal.

SLV – new sell signal.

GDX – new sell signal.
XGD.TO – new sell signal.

CEF – new sell signal.

Summary
Long term – on major buy signal.
Short term – on sell signals.
No harm done as we were invested on the short side and did not trade the recent buy set ups.

Disclosure
We do not offer predictions or forecasts for the markets. What you see here is our simple trading model which provides us the signals and set ups to be either long, short, or in cash at any given time. Entry points and stops are provided in real time to subscribers, therefore, this update may not reflect our current positions in the markets. Trade at your own discretion.
We also provide coverage to the major indexes and oil sector.
End of update

Epic Failure: The Supercommittee Was A Super Joke

Posted: 20 Nov 2011 02:23 PM PST

Does anyone need any additional evidence that our political system is completely broken? The bipartisan congressional supercommittee that was given two months to come up with at least $1.2 trillion in deficit cuts over the next decade has failed to reach an agreement. It is an epic failure and a national embarrassment. The truth is that they never even came close to an agreement. In fact, as you will read below, the two sides on the panel have been barely even talking to each other. In the end, the supercommittee was a super joke. Meanwhile, the U.S. national debt has passed the 15 trillion dollar mark and we are facing trillion dollar deficits as far as the eye can see. We are heading directly for a national financial disaster, and our "leaders" seem powerless to do anything about it.

According to the supercommittee's rules, any plan would have had to have been submitted to the Congressional Budget Office by Monday in order to give the CBO 48 hours to analyze how much the plan would reduce budget deficits over the coming decade.

When the supercommittee was announced, it made headlines all over the world, but now it is ending with a whimper.

The supercommittee was never a good idea in the first place, but you would have thought that they could have come up with something over the course of two months.

But instead all they are giving us are a whole bunch of excuses and a whole lot of hot air.

What a joke.

Is it really that difficult to come up with $1.2 trillion in cuts over a decade?

It isn't as if they would even be cutting very deeply. $1.2 trillion in cuts would not even cut the budget by $150 billion a year. We would still be talking about trillion dollar deficits way into the future.

But instead of agreeing to some token cuts, they have chosen to do nothing and to blame each other.

So now $1.2 trillion in "automatic budget cuts" will go into effect starting in 2013. But even that $1.2 trillion figure contains a lot of "fuzzy math". For example, it includes $169 billion in "projected savings" from "reduced interest costs" on the national debt.

I would love to see how they came up with that figure.

In any event, the truth is that none of these numbers really matter at all.

Why?

None of the budget cuts go into effect until after the 2012 election. That means that this Congress can vote to repeal the automatic cuts well before then.

Some in Congress are already pushing for this. For example, U.S. Senator John McCain said the following recently....

"It's something we passed. We can reverse it."

Or, even more likely, once the new president and the new Congress are elected in 2012 they will almost certainly choose to abandon this agreement.

When it comes to politics, the only thing that matters is what happens before the next election.

All of this talk of future cuts is just an illusion. When the next president and the next Congress come to power, they will want to do their own thing.

So after all of the huffing and puffing over the last couple of years, what has actually been accomplished as far as reducing our horrific budget deficits?

Not much at all.

We racked up a $1.3 trillion budget deficit during the fiscal year that just ended, and this fiscal year we will be somewhere in the same neighborhood.

We have been living in the greatest debt bubble in the history of the world, and at some point all of this is going to end very, very badly.

The total amount of debt in this country (government, business and consumer) has been rising much, much faster than our national income has. If you don't believe this, just check out this chart.

In particular, government debt is totally out of control. When Barack Obama first took office, the national debt was 10.6 trillion dollars.

It is now over 15 trillion dollars.

We are in debt up to our eyeballs and we desperately need our leaders to do something about it.

But according to a recent Politico article, the members of the supercommittee haven't even been talking to each other....

The supercommittee last met Nov. 1 – three weeks ago! It was a public hearing featuring a history lesson, "Overview of Previous Debt Proposals," with Alan Simpson, Erskine Bowles, Pete Domenici and Alice Rivlin. The last PRIVATE meeting was Oct. 26. You might as well stop reading right there: The 12 members (6 House, 6 Senate; 6 R, 6 D) were never going to strike a bargain, grand or otherwise, if they weren't talking to each other. Yes, we get that real deal-making occurs in small groups. But there never WAS a functioning supercommittee: There was Republican posturing and Democratic posturing, with some side conversations across the aisle.

Can you believe that?

Could it really be true that they have not met since November 1st?

Is Congress really that much of a joke?

According to Real Clear Politics, the approval rating for Congress is sitting at about 12 percent right now.

After this, it may get even lower.

Instead of working on a solution to our problems, the members of the supercommittee have been busy going on television and telling us who to blame.

The following is a short exceprt from a recent article in the Washington Post....

Republicans on the supercommittee held a conference call Saturday morning, and aides said members from both parties continued to talk by phone. But neither side was predicting a last-minute breakthrough. Instead, seven panel members booked appearances on the Sunday talk shows, as both sides readied their best arguments for why the other is at fault.

Our politicians are obsessed with finding someone else to blame and with getting ready for the next election.

Meanwhile, the ship is going down and people are starting to panic.

And this is not going to look good to the rest of the world at all. There is a very real risk that one of the other major credit rating agencies will decide to downgrade U.S. debt.

The second downgrade of debt is often more important than the first. When the first downgrade happened, U.S. debt still had a AAA rating from the other two major credit rating agencies.

But after another downgrade, the average credit rating of U.S. debt will be less than AAA. That will mean that U.S. debt will no longer be a cash proxy. A lot of transactions that take place right now in the financial world would not be able to happen if that takes place.

So what do our leaders need to do?

Well, the truth is that we should recognize that they are in a really, really tough position. Decades of nightmarish decisions have left us out of good options under our current financial system.

The reality is that members of Congress are damned if they do and they are damned if they don't.

This is what I mean - if we don't deal with our national debt now, everyone agrees that a massive day of reckoning is coming down the road. Greece is an example of what happens when debt catches up with a nation.

However, if we did cut the federal budget very deeply right now, it would almost certainly bring on a huge economic contraction.

Right now, insane federal spending is one of the only things keeping this economy afloat. If you were to suddenly pull half a trillion dollars (or more) of federal spending out of the economy, it would have a devastating impact.

A lot of people out there correctly argue for a huge reduction in federal spending, but they greatly underestimate the amount of pain that it would cause.

Let there be no doubt, all of this federal debt has enabled us to enjoy a "false prosperity" for several decades, and when we dramatically cut back on spending a lot of that "false prosperity" is going to disappear.

Our "real economy" is rapidly being gutted and America is becoming poorer as a nation every single day. One way that we have been making up the difference is by going into almost unbelievable amounts of government debt. When the government debt bubble pops, the pain is going to be enormous.

If you do not believe this right now, you will believe it soon enough.

Not that we should keep going into huge amounts of debt.

Every dollar that we "borrow" is actually being stolen from our children and our grandchildren.

In fact, that is what Thomas Jefferson believed. According to Jefferson, when the federal government borrows money in one generation which must be paid back by future generations it is equivalent to stealing....

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

We have got to stop stealing from future generations. If they get the chance, they will curse us for what we have done to them.

Anyone out there that supports our current system of running endless budget deficits is supporting a horrific crime against our children and our grandchildren.

But once again, we all need to clearly understand that when the borrowed money stops flowing out of Washington D.C., our economy is going to get much worse.

Are you prepared for the unemployment rate to double?

Are you prepared for foreclosures to soar to unprecedented heights?

Are you prepared for economic pain unlike anything you have ever seen before?

According to the New York Times, there are 100 million Americans that are either living in poverty or that are considered to be among the "near poor" right now.

So how bad will things get if we plunge into a depression?

Anyone that believes that we can drastically cut the federal budget and improve the economy at the same time under our current system is not being rational.

Just look at what is happening to Greece. They implemented substantial budget cuts (although not nearly big enough to bring them to a balanced budget) and they have plunged into a nightmarish economic depression.

Right now, we are in a position where we are going to experience a horrific amount of pain whatever we do. If we keep piling up debt at this rate we will experience a nightmare, but if we pop the debt bubble and try to live within our means we will also experience a nightmare.

There is a way out of this, but our politicians are not talking about it. As I have written about previously, if the federal government abolishes the Federal Reserve and starts issuing debt-free money, we could eliminate our federal budget deficits, cut taxes and improve the economy all at the same time.

But nobody is even talking about debt-free money.

Instead, all of our politicians are talking about "fixing" the current system.

Well, let me tell you, it is impossible to solve our problems under the current system. If we insist on maintaining our current debt-based financial system, it will only end in a massive amount of pain.

The American people need to get educated about our financial system. They need to learn that the Federal Reserve and the debt-based currency that they issue are at the very heart of our economic problems.

Back in 1913, prior to the passage of the Federal Reserve Act, the national debt was only about $2.9 billion.

Today, our national debt is over 5000 times larger.

Debt-based central banking is a perpetual debt machine. It is at the heart of our financial problems and it is also at the heart of the financial problems that Europe is experiencing.

Unfortunately, the American people don't understand this, and there are virtually no politicians out there that are even talking about this.

Very dark days are ahead for America.

You had better get prepared.

The US Economy’s Bread and Circuses

Posted: 20 Nov 2011 02:22 PM PST

When it comes to the US Economy, there aren't so many questions. Nobody doubts the full faith and credit of the US government. Not yet anyway. And nobody doubts the Fed will backstop America's public debt...by printing as much money as it needs to.

Trouble is, the thing they count on to save them from having to ask questions comes with a whole bag of question marks too. When the Fed starts printing again, investors will begin to wonder how long it can continue...before all Hell breaks loose.

We don't have an opinion on it. And we don't need one. That's a question, as the judges say, that's not ripe for a decision.

So let's move on...

And here's another question. What gives? Bread...or circuses? Social Security, Medicare, and other domestic spending. Or, the military circuses abroad? In order to bring federal deficits under control...and avoid the bankruptcy of the country...something has to go.

You'd think the military spending would give way. Who really cares what happens in Iraq? Or the South China Sea?

But here we have another unstoppable force running into another immoveable object. And we'll make a prediction. Neither will give way. Neither the bread nor the circuses. The super committee will not be willing to battle it out with the voters...nor with the military contractors. And if it did, it would get no support from the president...or Congress.

Social Spending Cuts in the US Economy

Polls show more than 75% of Americans oppose any cuts to Social Security or Medicaid. Since it takes only a majority of voters to decide an election, the chances of any candidate winning on a "cut social spending" platform is nil.

Cutting Military Spending in the US Economy

But don't expect any candidate to win on a "cut the military" platform either. The social services may have the votes, but the military has the money. That's why major Republican candidates are trying to out-hawk each other with preposterous claims and absurd proposals. They're all Teddy Roosevelt mixed with Thomas Friedman...blowhards and dimwits, almost every one of them.

Small wonder. The campaign contributors demand it. The lobbyists insist on it. And the voters deserve it.

But won't the bond vigilantes stop them from borrowing a trillion dollars + a year? Won't the dollar's guardian angels prevent them from printing money to cover America's deficits?

Oh, dear reader. How long have you been reading these chronicles? If you've been reading for a while you know that the gods — and Mr. Market too — are fun loving, mischief-makers. What kind of a trap could they set that didn't let their prey get in it? What kind of a flim-flam could they play if their mark always showed good judgment?

US Economy Budget Cuts

The Super Committee is considering budget cuts of between $330 and $400 billion per year over the next 10 years (you can bet that any cuts they come up with will be heavily loaded on the backend of the 10-year period). First, those sums are peanuts. The feds will probably run deficits in excess of a trillion a year even if they make those cuts. Second, the cuts are not from current levels of spending but from projected levels...higher levels, that is. And those projections are worthless. They systematically underestimate expenses and overestimate revenues. Third, they ain't gonna happen anyway.

This will leave the feds in need of lots of money. But with so many question marks in the Eurozone, investors think they can sleep easy at night by moving their money to America. All things considered, the dollar and the US bond market looks like the best games in town. This makes it easy for the feds to continue borrowing at low rates...continue going into debt...and keep their bread and circus program going almost indefinitely.

The end of this phase may be many years ahead. Japan has been at it for 20 years. The US economy could pile up debt for another 10 years. But when the end comes...it will be something to see!

Regards,

Bill Bonner
for The Daily Reckoning Australia

MF Global's Australian Break Down

Take just one example that bears directly on Australian stock prices and the value of the Australian dollar. The collapse of broker-dealer MF Global Holdings Ltd. The firm declared bankruptcy on October 31st after making a $6.3 billion bet on European government debt. And that was the good part of the story.

The bad part of the story is that prior to declaring bankruptcy, some $600 million in client funds went "missing". They may have been transferred to the firm's own proprietary trading arm. Investigations continue. Meanwhile, some $3 billion in customer assets are still frozen as liquidators try to and clear things up. And the Australian branch of MF Global was shut down over the weekend after no buyers for the business could be found.

There's a lot to be worried about here. The alleged and outright theft of customer funds is hard to fathom. Australian customers have had funds locked up. And Australian employees of MF Global are now out of work. Those are two direct impacts.

But there are indirect impacts too. The bad bet on Italian debt is sadly familiar (think LTCM). But the systemic issue is how many other firms are sitting on bad sovereign debt bets. And how many other firms are using government bonds for collateral?

MF Global and the Future of Markets

The big systemic risk is that a blow-up in Europe forces a big unwind in futures markets. MF Global's problems were caused by making the wrong call on government bonds. But thousands of traders and hundreds of firms and dozens of banks have their balance sheets stuffed with those same European government bonds.

If the value of those bonds falls - and every day you get a new European government watching its bond yields go over 7% - then the owners of those bonds will watch their assets fall, their equity get wiped out, and their capital base shrink. The very small pile of assets supporting a much bigger pile of leveraged positions in financial markets will become even more unstable.

This status quo is what makes it hard to take the current market action seriously. It really is like dancing to the band on the Titanic playing "Nearer, my God, to thee" as the boat went under. They went to their maker in style.

By the way, there WILL be dancing at the Doomers' Ball this Friday at the Windsor Hotel, but only if you're one of the 300 ticket holders. The event sold out quickly. But one reader would only confirm her purchase of a ticket if we could guarantee dancing. There will be a pianist. And if your editor has anything to say about it, there will be dancing.

If we were on the Titanic, we couldn't guarantee we'd get across the ocean of time that stands between now and Friday. But as our feet are firmly planted in St Kilda, we'll take the rest of the week to look at what other systemic issues beset the financial system, and whether there are any chances to wring a profit out of it (get a lifeboat).

Until then, we trundle along in the wake of the bewildered policy makers. They are trying to solve the world's big debt problem with more debt and leverage. You do what you know, after all. But it reminds us of an image used by the German philosopher, Friederich Nietzsche.

Nietzsche was writing about a particular problem, which he described as trying "to pull oneself up into existence by the hair, out of the swamps of nothingness." Europe is trying to maintain the existence of its single currency and its political union by pulling off just such an impossible feat. They have to try it. But it probably won't work. More tomorrow on why.

Dan Denning,
for The Daily Reckoning Australia