Gold World News Flash |
- Are Central, Commercial Banks Lending or Selling Gold?
- You Can’t Print More Gold
- International Forecaster December 2011 (#3) - Gold, Silver, Economy + More
- Market News International retracts report about central bank gold sales
- African Gold Prospects Shine
- Gold Shortages Are Real
- Step Sum Analysis Signals Big Losses Ahead for the Dow Jones And Significant Gains for Precious Metals
- You Can’t Print More Gold
- MF Global Disaster
- Inevitable Spiral Equity Collapse, Biderman's 'Better Early Than Late' Call To Sell Into Strength
- Inevitable Spiral Equity Collapse, Biderman's 'Better Early Than Late' Call To Sell Into Strength
- When This Pullback in Gold is Put into Perspective It?s No Big Deal ? Here?s Proof
- Will the Dollar Ruin the Santa Claus Rally in the SP 500?
- Swiss, Germans Set To Unleash Capital Controls As European Companies Prepare For Euro End
- Eurozone Leaders Duck All The Big Issues
- IRAN IS BIG
- Weekly metals review, audio of Sinclair and Davies at King World News
- You Can’t Print More Gold, Price Could Reach $10,000
- Global currency war escalates over Euro: The Pentagon has undertaken war games on currency and finance as countries jostle for survival and position with the Euro in danger of collapse.
- Guest Post: Rick Rule - We're Entering A Great Era For Resource Investing
- Guest Post: Rick Rule - We're Entering A Great Era For Resource Investing
- SILVER SANTA
- BaNZai7'S PoLiTiCS AS UNuSuaL
- BaNZai7'S PoLiTiCS AS UNuSuaL
- Silver Price Pessimism Bottoming Out Ready For The Next Big Rally
- Global Currency War Escalates Over Euro
- Alasdair Macleod: Deflating the derivatives balloon
- Investing in the Stock Market is for Losers! Here?s Why
- WEEKEND REPORT
- Shadow Rehypothecation, Infinite Leverage, And Why Breaking The Tyranny Of Ignorance Is The Only Solution
| Are Central, Commercial Banks Lending or Selling Gold? Posted: 11 Dec 2011 01:00 PM PST The big feature of last week's decline in the gold price has been the lending of gold into the market. Commercial banks could have been doing it, but there is evidence in the past that central banks have leased gold to cap the gold price and bring it down. The gold price declines were so rapid and extensive that some investors theorized that central banks, including the Federal Reserve, were actively selling gold.
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| Posted: 11 Dec 2011 04:00 AM PST What do you get when you mix negative real interest rates with stimulative money supply efforts by global central banks? An exceptionally potent formula for higher gold prices that could send gold to the unimaginable level of $10,000 an ounce. Negative real interest rates and strong money supply growth are two key factors of what I refer to as the Fear Trade.
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| International Forecaster December 2011 (#3) - Gold, Silver, Economy + More Posted: 11 Dec 2011 03:15 AM PST As we reach back into modern European history we see the unnatural amalgamation of 27-European countries, all of which are socially and culturally different. From our point of view the union was doomed from its inception. We lived for years in central Europe, spoke their languages and had a powerful outsider's view of their cultures. Europe's inhabitants generally were convinced that the union would prevent future wars and bring peace to Europe. Unfortunately, all they did was trade Perfidious Albion, Hitler and Mussolini for the Trilateral Commission, Bilderbergs and Goldman Sachs and JPMorgan Chase.
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| Market News International retracts report about central bank gold sales Posted: 11 Dec 2011 03:05 AM PST Market News International, which, on the basis of confidential sources, reported Thursday that the Bank for International Settlements, Bank of England, and Federal Reserve had sold gold that day to reverse an upward spike in the price as the euro zone financial crisis worsened, has retracted the report.
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| Posted: 11 Dec 2011 02:00 AM PST Brock Salier, a mining analyst with GMP Securities Europe, sees plenty of gold coming out of Africa in the coming months and years. In this exclusive Gold Report interview, he says increasing political stability, good geological prospects and governmental recognition of the benefits of mining operations are reasons to look there for growth.
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| Posted: 10 Dec 2011 06:06 PM PST It was actuality a pretty quiet week all in all with no decisions on Europe, just meetings. Of course most all of Europe was put on watch by a prominent U.S. Ratings agency but in my eyes they are so far behind the curve that they nor their ratings matter and the markets largely reflected that view.
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| Posted: 10 Dec 2011 04:56 PM PST Mark J. Lundeen [EMAIL="Mlundeen2@Comcast.net"]Mlundeen2@Comcast.net[/EMAIL] 09 December 2011 After two weeks of vacation, and many letters from my regular readers, I can say it's nice to know that people miss my articles. But I do need to make time for myself, so I won't resume my weekly articles until the second week of January; the 13th to be exact. But I do feel your pain, so I'm writing a little update for you. I haven't covered the Dow and gold step sums for a while, so this is as good a time as any to see what's happening with the ups and downs in these markets, because that is exactly what a step sum is: the advance & decline line constructed from the daily closing prices of the Dow Jones. An up day is equal to a +1, a down day is equal to -1, and then we add up all the +1 and -1, to construct the step sum of whatever price series we're watching. Today it would be gold and the Dow Jones. The table below shows the details in constructing a step sum for ...
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| Posted: 10 Dec 2011 04:26 PM PST December 09, 2011 By Frank Holmes CEO and Chief Investment Officer U.S. Global Investors What do you get when you mix negative real interest rates with stimulative money supply efforts by global central banks? An exceptionally potent formula for higher gold prices that could send gold to the unimaginable level of $10,000 an ounce. Negative real interest rates and strong money supply growth are two key factors of what I refer to as the Fear Trade. Negative real interest rates occur when the inflationary rate, or CPI, is greater than the current interest rate. A quick account of the G-7 and E-7 countries shows that the majority have negative real interest rates. Across the developed G-7 countries, British citizens are the worst off with real interest rates in the U.K. sitting at negative 4.5 percent. U.S investors aren’...
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| Posted: 10 Dec 2011 03:35 PM PST MF Global Disaster Trading with other people's money Collapse of the world's financial system ...
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| Posted: 10 Dec 2011 01:30 PM PST It's the end of deficit spending in Europe as we know it. That's how Charles Biderman, of TrimTabs, rightly describes the unwilling-to-compromise German's (perhaps heroic) attitude to their fellow European sovereigns. From his perspective, this forced austerity will mean slower growth and with that all chance that the European nations can 'grow/tax' their way out of this charade. He notes there is simply no way they can grow fast enough to be able to kick the can far enough down the road for it to matter. Pointing to his 'better early than late' calls on markets over the last 40 years, the man from Sausalito sees it as inevitable that the practical insistence on the elimination of deficit spending will force banks into bankruptcy, leading, as asset values are marked down, to a spiral collapse in equities. He then dismisses the simple-minded decoupling perspective as if no new Keynesian-inspired 'technology shift' occurs, US growth will be in the doldrums as European deleveraging drags global growth down with it. It's not all doom-and-gloom though as he ends on the upbeat notion that this collapse won't happen tomorrow, given balance sheet strength, although selling into rallies is the clear picture he is painting. (h/t @ZH_Crown)
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| Inevitable Spiral Equity Collapse, Biderman's 'Better Early Than Late' Call To Sell Into Strength Posted: 10 Dec 2011 01:30 PM PST
It's the end of deficit spending in Europe as we know it. That's how Charles Biderman, of TrimTabs, rightly describes the unwilling-to-compromise German's (perhaps heroic) attitude to their fellow European sovereigns. From his perspective, this forced austerity will mean slower growth and with that all chance that the European nations can 'grow/tax' their way out of this charade. He notes there is simply no way they can grow fast enough to be able to kick the can far enough down the road for it to matter. Pointing to his 'better early than late' calls on markets over the last 40 years, the man from Sausalito sees it as inevitable that the practical insistence on the elimination of deficit spending will force banks into bankruptcy, leading, as asset values are marked down, to a spiral collapse in equities. He then dismisses the simple-minded decoupling perspective as if no new Keynesian-inspired 'technology shift' occurs, US growth will be in the doldrums as European deleveraging drags global growth down with it. It's not all doom-and-gloom though as he ends on the upbeat notion that this collapse won't happen tomorrow, given balance sheet strength, although selling into rallies is the clear picture he is painting. (h/t @ZH_Crown)
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| When This Pullback in Gold is Put into Perspective It?s No Big Deal ? Here?s Proof Posted: 10 Dec 2011 12:03 PM PST Daily and monthly gyrations in the price of gold are nothing to fret over…The price will recover and, in time, fetch new highs…Here's proof. Words: 264 * So says Jeff Clark ([url]www.caseyresearch.com[/url]) in edited excerpts from his original article* entitled Pullbacks in Perspective. * [INDENT] Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The report’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. [/INDENT] Clark goes on to say, in part: If you’re bullish about the long term for...
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| Will the Dollar Ruin the Santa Claus Rally in the SP 500? Posted: 10 Dec 2011 10:44 AM PST Experienced traders recognize that volume typically dries up going into the holiday season. Light volume and the holiday seasonality generally push equity prices higher. The discussion of whether Santa Claus comes to Wall Street has arrived ... Read More...
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| Swiss, Germans Set To Unleash Capital Controls As European Companies Prepare For Euro End Posted: 10 Dec 2011 10:31 AM PST from ZeroHedge:
Even as Eurozone leaders attempted to instill some meager sense of accomplishment following the latest (but certainly not last) Euro summit culminating with yet another 7-page term sheet which achieved absolutely nothing, and in fact succeeded in alienating the UK even more, the real game continues behind the scenes. And it is a game which the euro looks set to lose. As Bloomberg reports, in the aftermath of the Telegraph's latest report confirming what has been said here all about the collateral crunch in Europe, Europe's CEO are now actively preparing for the worst case outcome: the end of the Euro (despite UBS' and other banks' repeated calls that such an event would result in an end of the world). To wit: "Grupo Gowex (GOW), a Spanish provider of Wi-Fi wireless services, is moving funds to Germany because it expects Spain to exit the euro. German machinery maker GEA Group AG is setting maximum amounts held at any one bank. "I don't trust Spain will remain in the euro zone," said Jenaro Garcia, founder and chief executive officer of Madrid- based Grupo Gowex, which provides Wi-Fi access in 15 countries. "We moved our cash and deposits to Germany because Spain will come back to the peseta"…
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| Eurozone Leaders Duck All The Big Issues Posted: 10 Dec 2011 10:28 AM PST The EU treaty agreement reached by eurozone leaders last week isolated Britain and proposed a new 'fiscal compact', but in reality it looks like just a 'lousy compromise'. from Telegraph.co.uk:
Prior to the bad-tempered Brussels meeting, William Hill had priced up the collapse of the eurozone before 2013 at 3/1. The odds post the summit? Also 3/1. "We can't see it's really changed anything," is spokesman Graham Sharpe's verdict on a conflab that produced a more isolationist Britain and a potential two-tier EU – but failed to convince anyone, least of all the markets, that monetary union at last had some durable political oomph behind it. Simon Smith, chief economist at FxPro, says the fate of the eurozone has now become "binary": "Either one or more of the countries will leave or you'll see an accelerated path to fiscal union. But what has been agreed at this summit doesn't go far enough towards fiscal union. The momentum on that is too slow. I'm less optimistic than I was a couple of months ago."
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| Posted: 10 Dec 2011 08:00 AM PST Another good article from http://www.theoildrum.com/. Some interesting charts and maps. The first chart shows that Iran produced 6 million barrels of oil per day in the 1970s. The Islamic revolution and the brutal war with Iraq resulted in a collapse of their oil production. It has barely reached 4 million barrels per day since the [...]
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| Weekly metals review, audio of Sinclair and Davies at King World News Posted: 10 Dec 2011 07:58 AM PST 3:57p ET Saturday, December 10, 2011 Dear Friend of GATA and Gold: The weekly precious metals review at King World News, featuring Bill Haynes of CMI Gold and Silver and futures market analyst Dan Norcini, is 21 minutes long and you can listen to it here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/12/10_... Also, at King World News, full audio of the recent interview with market analyst and mining entrepreneur Jim Sinclair has been posted here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/12/9_J... And full audio of the recent interview with Hinde Capital CEO Ben Davies has been posted here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/12/10_... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Golden Phoenix Completes Operating Agreement Golden Phoenix Minerals Inc. (GPXM) has entered a joint venture operating agreement with Silver Global S.A., a Panamanian corporation, governing the operational and management aspects of their new joint venture company, Golden Phoenix Panama S.A., a Panamanian corporation formed to hold and operate the Santa Rosa gold mine in Canazas, Panama, and explore the mine's adjacent property. Golden Phoenix will be manager of the joint venture company. Silver Global will handle all social programs, political and community relations, and human resource matters for the joint venture company in Panama. Golden Phoenix and Silver Global also have agreed to work together on all future acquisitions within Panama and to bring such new opportunities to the joint venture company. Golden Phoenix will be earning in to a 60 percent interest (and potentially an 80 percent interest) in the Santa Rosa mine. Upon signing the joint venture agreement and completing the corresponding acquisition payment, Golden Phoenix will earn an initial 15 percent interest in the joint venture company. Tom Klein, CEO of Golden Phoenix, says the agreement "creates a solid foundation for the development and planned re-opening of Mina Santa Rosa." For Golden Phoenix's full statement on the joint venture operating agreement, please visit: http://goldenphoenix.us/press-release/golden-phoenix-completes-joint-ven... Join GATA here: Vancouver Resource Investment Conference http://cambridgehouse.com/conference-details/vancouver-resource-investme... California Investment Conference http://cambridgehouse.com/conference-details/california-investment-confe... Support GATA by purchasing gold and silver commemorative coins: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT For Continuous Wealth Creation, the Hera Research Newsletter The life cycles of companies that produce natural resources allow investors to allocate assets among companies at different stages of development and to profit from transitions between stages. Based on natural resource company life cycles, the Hera Research Newsletter maximizes profits through deep, fundamental analysis at each stage of development and by moving gains back to earlier-stage companies in a continuous wealth-creation process. Hera Research covers a pipeline of high-quality natural resource companies at different stages of development. The companies span discovery and production of gold, silver, and platinum group metals, select base metals, oil and gas, green energy, agriculture, rare earth elements, uranium, and more. Discover the unique value of the Hera Research Newsletter by visiting: http://www.heraresearch.com/newsletter.html Or call Ron Hera at 360-339-8541x101.
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| You Can’t Print More Gold, Price Could Reach $10,000 Posted: 10 Dec 2011 07:55 AM PST What do you get when you mix negative real interest rates with stimulative money supply efforts by global central banks? An exceptionally potent formula for higher gold prices that could send gold to the unimaginable level of $10,000 an ounce. Negative real interest rates and strong money supply growth are two key factors of what I refer to as the Fear Trade.
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| Posted: 10 Dec 2011 07:55 AM PST The Pentagon has undertaken war games on currency and finance as countries jostle for survival and position with the Euro in danger of collapse. Press TV has talked with Max Keiser, financial analyst in Paris about the new economic treaty … Continue reading
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| Guest Post: Rick Rule - We're Entering A Great Era For Resource Investing Posted: 10 Dec 2011 07:55 AM PST Submitted by ChrisMartenson.com Rick Rule - We're Entering A Great Era For Resource Investing Recently, we crossed the seven billion threshold for humans on the planet. Most of these people are desperately trying to get up the living standard curve. And that requires resources. Simple math tells us there is going to be increasing competition for a steadily-dwindling -- in both quantity and quality -- global pool of high-grade resources. This 'scramble for stuff' is going to be one of the key defining trends of this century. And while it will have game-changing repercussions across societies, economies, and geopolitics -- we are at a moment in time where tremendous upside awaits investors who recognize today the true future value of key resources and secure meaningful exposure to them. Rick Rule has made a successful and storied career as a resource investor, and has rarely seen as attractive an alignment for the space as he does today. What is there to be so optimistic about?
Of course, there is plenty of bad news to offset the good here, and Rick warns that as attractive as prices may be here for many resource-based companies, they could easily go lower in the short term before powering higher to their true valuations.
So the key here is performing good-old fundamental analysis to find the undervalued opportunities, buying in, and then letting time work in your favor. As for the resource sectors that interest Rick the most?
Click the play button below to listen to Chris' interview with Rick Rule (runtime 32m:58s):
Download/Play the Podcast
Or click here to read the full transcript.
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| Guest Post: Rick Rule - We're Entering A Great Era For Resource Investing Posted: 10 Dec 2011 07:55 AM PST
Submitted by ChrisMartenson.com Rick Rule - We're Entering A Great Era For Resource Investing Recently, we crossed the seven billion threshold for humans on the planet. Most of these people are desperately trying to get up the living standard curve. And that requires resources. Simple math tells us there is going to be increasing competition for a steadily-dwindling -- in both quantity and quality -- global pool of high-grade resources. This 'scramble for stuff' is going to be one of the key defining trends of this century. And while it will have game-changing repercussions across societies, economies, and geopolitics -- we are at a moment in time where tremendous upside awaits investors who recognize today the true future value of key resources and secure meaningful exposure to them. Rick Rule has made a successful and storied career as a resource investor, and has rarely seen as attractive an alignment for the space as he does today. What is there to be so optimistic about?
Of course, there is plenty of bad news to offset the good here, and Rick warns that as attractive as prices may be here for many resource-based companies, they could easily go lower in the short term before powering higher to their true valuations.
So the key here is performing good-old fundamental analysis to find the undervalued opportunities, buying in, and then letting time work in your favor. As for the resource sectors that interest Rick the most?
Click the play button below to listen to Chris' interview with Rick Rule (runtime 32m:58s):
Download/Play the Podcast
Or click here to read the full transcript.
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| Posted: 10 Dec 2011 07:19 AM PST By WilliamBanzai7
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| BaNZai7'S PoLiTiCS AS UNuSuaL Posted: 10 Dec 2011 07:00 AM PST
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. Honorable mention...Barry's Birth Certificate and Linda Green's Driver's License .
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| Posted: 10 Dec 2011 07:00 AM PST
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. Honorable mention...Barry's Birth Certificate and Linda Green's Driver's License .
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| Silver Price Pessimism Bottoming Out Ready For The Next Big Rally Posted: 10 Dec 2011 06:56 AM PST by Peter Cooper, SilverSeek:
Silver it becomes apparent is at the bottom of its range for pessimism: 'The so-called "commitment of non-commercial traders" hit 10,352. That's incredibly low. The last time sentiment numbers were that low was in August 2007. Six months later, the price of silver was 59 per cent higher. It rose from $12 per ounce to $19 per ounce. 'I went all the way back to 2002 and found that silver sentiment bottomed near 10,000 six times… On average, the price of silver rose 33 per cent in the next six months and 54 per cent over the next year. Here's how the silver price performed after each of the last four times silver sentiment bottomed out…'
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| Global Currency War Escalates Over Euro Posted: 10 Dec 2011 06:54 AM PST |
| Alasdair Macleod: Deflating the derivatives balloon Posted: 10 Dec 2011 06:17 AM PST 2:13p ET Saturday, December 10, 2011 Dear Friend of GATA and Gold (and Silver): Economist and former banker Alasdair Macleod, who spoke at GATA's Gold Rush 2011 conference in London in August, writes at GoldMoney today that the collapse of the MF Global brokerage house may herald the collapse of the futures and options markets as investors realize that their money is protected neither by exchanges nor governments. A transfer of trading from futures markets to physical markets, Macleod notes, would be very bad for the big short positions in gold and silver run by bullion banks. Macleod's commentary is headlined "Deflating the Derivatives Balloon" and you can find it at GoldMoney's Internet site here: http://www.goldmoney.com/gold-research/alasdair-macleod/deflating-the-de... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT The United States Once Again Can Establish Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, has released a plan to restore economic growth through a stable dollar. The plan, titled "The True Gold Standard: A Monetary Reform Plan Without Official Reserve Currencies," responds to the recurrent economic crises of the last century and outlines a detailed proposal for America's leadership on "how we get from here to there." That is, how we get from the present unstable paper dollar to a stable dollar as good as gold. James Grant, author and editor of Grant's Interest Rate Observer, says of the Lehrman plan: "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman the country has finally found him." To learn more and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit: http://www.thegoldstandardnow.org/gata Join GATA here: Vancouver Resource Investment Conference http://cambridgehouse.com/conference-details/vancouver-resource-investme... California Investment Conference http://cambridgehouse.com/conference-details/california-investment-confe... Support GATA by purchasing a silver commemorative coin: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Be Part of a Chance to Discover Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada. Check out the exploration program on our Allco gold/silver project : -- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit. -- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries. -- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited. To learn more about the Allco property or Northaven's other gold and silver projects, please visit: http://www.northavenresources.com Or call Northaven CEO Allen Leschert at 604-696-3600.
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| Investing in the Stock Market is for Losers! Here?s Why Posted: 10 Dec 2011 05:56 AM PST [RIGHT][/RIGHT] *This article clearly demonstrate how the millions of investors who invested in the stock market over the past decade*actually fared when their performance was measured in gold instead of dollars. You will be shocked at how poorly they (and you?) have really done and you, too, will come to the consclusion that – *investing in the stock market is for losers. Words: 790 * So says Jeff Clark ([url]www.caseyresearch.com[/url]) in edited excerpts from his original article* entitled Start Thinking in Terms of Gold Price. [INDENT]*Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The report’s views and conclusions are unaltered and no personal comments have been included to maintain ...
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| Posted: 10 Dec 2011 05:35 AM PST I think the weekend report is probably one of the most important reports I've written for gold traders and investors as to what I think is in store the next couple of months. I'm going to make the report available over the weekend for $1. Actually you will have access to the entire site for the next two days for the price of one George Washington. You can either keep your subscription and it will convert to a monthly on Monday morning or cancel it Sunday night and you won't be charged another dime. Either way you will get access to a report that I think is important for every gold investor to read. If you decide to cancel do so by following the directions on the home page of the website. Click on the link above to go to the premium website and then click the subscribe link on the upper right side to link to the subscription page.       
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| Posted: 10 Dec 2011 05:10 AM PST In the aftermath of the "rehypothecation" analysis exposing the quantum differences between the US and the UK, where the former at least tries to put some breaks on "fractional reserve" synthetic liquidity creation by Prime Brokers (which these days would be virtually anyone) while the latter believes that virtually boundless risk is a welcome thing, there has been a barrage of inquiries seeking further clarification of the nuances of shadow banking, a topic Zero Hedge has covered since July of 2010 (for much more see here) and which we will update on tomorrow for the latest Flow of Funds report (spoiler alert: in Q3 US shadow banking declined by at least $300 billion, a trend started at the credit bubble peak, over $6 trillion higher). In order to bring some clarity to the matter we present two of the seminal pieces on the topic: first, fro the IMF: "The (sizable) Role of Rehypothecation in the Shadow Banking System" and then from one of the best scholars of shadow banking, Gary Gorton, "Haircuts." We will let readers digest the wealth of information contained in these two pieces on their own, however, we will point out the two key messages: on one hand we get a definitive explanation of why not NY but London is true hub of financial engineering and infinite leverage (recall that the UK is in fact the most levered nation on a GDP basis in the world when one takes into account all outstanding debt, not just sovereign - a fact well known to S&P and explaining why the UK will be the last to be downgraded as this would bring attention to the last domino in the chain) as follows: "Mathematically, the cumulative 'collateral creation' can be infinite in the United Kingdom" - that's from the IMF basically telling everyone that courtesy of no rehypothecation haircuts one can achieve infinite shadow leverage. And the other one comes from Gorton who explains why haircuts are the functional equivalent of information arbitrage: "Increases in repo haircuts are withdrawals from securitized banks—that is, a bank run. When all investors act in the run and the haircuts become high enough, the securitized banking system cannot finance itself and is forced to sell assets, driving down asset prices. The assets become information-sensitive; liquidity dries up. As with the panics of the nineteenth and early twentieth centuries, the system is insolvent." And the punchline: "Liquidity requires symmetric information, which is easiest to achieve when everyone is ignorant. This determines the design of many securities, including the design of debt and securitization." Reread the last statement as it explains perhaps better than anything, the true functioning of modern capital markets and why they are terminally broken: in order to preserve the system, the banking cartel need to make everything of virtually infinite complexity so that no one has a clear understanding of what is going on! Which is where sites like Zero Hedge step in - to expose "shadowy" places where things are best left unseen. Incidentally one of the catalysts of the market collapse in the Lehman aftermath was not some market scalar metric being breached, or a bunk shutting down physically, but the seminal report by Citi's Matt King "Are The Brokers Broken" from September 2008 which explained all of the above (and below) in clear and concise detail, in effect bringing the proverbial Eureka moment to every market participant, of why everything was terminally broken. Since we are now again at the same stage, we will shortly repost the same report from King to stop "everyone from being ignorant" and comprehend just how broken both the traditional and shadow banking systems are ... But first: "The (sizable) Role of Rehypothecation in the Shadow Banking System" and "Haircuts"
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If in doubt, ask a bookmaker. So much noise has accompanied the latest EU crisis summit that it's easy to miss the main point. Is a eurozone break-up now more or less likely?
There is an intriguing commentary in The Daily Reckoning by Matt Badiali on silver. In particular he cites Jason Goepfert's SentimenTrader readings for silver. This service tracks investor sentiment towards different asset classes.| You are subscribed to email updates from Save Your ASSets First To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
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