Gold World News Flash |
- Germanys Battle with Morality
- What the H ? - ? is Going On With Gold These Days?
- Gold, Silver and Platinum Are Absolutely Essential For a Diversified Portfolio! Here?s Why
- Precious Metals Plunge And India's Industrial Production Crashes
- Precious Metals Plunge And India's Industrial Production Crashes
- Euro Zone: Another Crisis, Another Backdoor Taxpayer Bailout?
- Jim Rogers: “MF Global to Help Push Commodities Business Away from Chicago and Towards Asia.”
- The Tim Tebow Comeback Story Continues But There Will Be No Miracle Comebacks For The U.S. Economy
- A Reminder Of The EURUSD's Response To The Historic Announcement At 2:00 PM On March 18, 2009
- A Reminder Of The EURUSD's Response To The Historic Announcement At 2:00 PM On March 18, 2009
- Indians increasingly monetize gold as collateral for loans
- Forget Copper: Steel Is The True Indicator Of The Chinese Hard Landing
- Currency Wars: “Strong Yen Is Destroying Japanese Industry”
- The U.S. Dollar Could Rise, After the Euro Summit
- Rumor Of Swedbank Failure Results In Second Latvian Bank Run In One Month
- The Denials Begin: Interactive Brokers Is First To Claim It Has Not Engaged In Commingling Rehypothecation
- A Thought Experiment
- Alasdair Macleod: “By End of 2012 Silver May Triple And Gold Should Be Priced Around $3800″
- Gold Continues to Show Lack of Enthusiasm From Speculators
- Stock World Weekly - The Anti-Crisis Bazooka & Other Bedtime Stories
- Chavez flies Venezuela gold home to avoid EU turmoil
- The Land of Anti-Gold Propaganda
- Gold producers rush to boost dividends
- Gold Model Forecasts $4380 Gold Price
- Silver Investors Will Make A Lot Of Money
- Is A Physical Silver Shortage Spike Imminent?
- Got Silver?
- Dramatic new video cites paper market's silver price suppression
| Posted: 11 Dec 2011 07:02 PM PST
During the spring of 1724 in the small city of Königsberg, a boy by the name of Immanuel Kant was born. Kant, an academic prodigy, endured a 'strict, punitive and disciplinary' (Wikipedia) education that would form the basis for his Critique of Pure Reason. Kant's most famous work focussed upon the idea of the Categorical Imperative; the duty that a human must fulfil a certain number of obligatory actions or mannerisms that should become universal laws of society. Or as Kant put it, "Act only according to the maxim whereby you can, at the same time, will that it should become universal law". This ideology is clearly identified in a scenario dubbed "The Inquiring Murderer". In summary, the scenario is the following: If one is hiding an innocent person in his or her house, and a known murderer knocks on the door asking if the innocent person is hiding inside, would it be morally correct to tell the truth at the risk of the innocent person's death, or to lie to the murderer in an attempt to save the innocent person's life? Kant would argue that telling the truth is a Categorical Imperative and as a result should trump all other moral or ideological reasoning. Stay with me here, there is a key point to come. Kant's work, although academically disputed, has had a profound impact on the way that Government's construct ongoing legislation to encourage the "correct" civil virtues in their populations. There is no greater proponent of these beliefs than Germany whose relentless pursuit of human dignity has resulted in enacted constitutional legislation to drive its inhabitants towards a higher regard for human dignity. So much so, that in the wake of the 9/11 it was ruled that a strategic destruction of a hijacked aircraft would be unconstitutional with regards to the human dignity of both the captives and the hijackers in there own right. Economically, this entrenched belief of human dignity has developed into somewhat of a Categorical Imperative towards rescuing the financially bankrupt countries or soon to be bankrupt countries of the Eurozone. Fast-forward to 2011 and lets evaluate economic fundamentals that exist today within Europe. Of the 17 member states that adopted the Euro, we know that roughly 6 of them are broke (Portugal, Ireland, Italy, Spain, Greece and Cyprus); a list that seems to grow by the day as the Euro politicians shake off last nights hang over and finally get a grip with reality. Now some of you may be wondering, hasn't Germany single handedly rescued these countries and made Angela Merkel somewhat of a god like figure in these states…Not exactly. Germany's resilience to letting it's Euro brothers and sisters fall by the wayside seems to have formed somewhat of a Categorical Imperative in itself. If we are to look at the 2008 crisis in detail, the fundamental issues lie between issues of policy, greed and pursuit of profit by individuals and firms alike. This "private sector" contraction, although difficult to swallow, resulted in economic calamity that was in many ways a far better situation than we are in now. For now, it is the governments that are broke and have fallen victim to the endless pursuit of political success and the idea of a relative improvement in quality of life. This rose tinted ideology is the overarching umbrella that sits above the private sector in both an authoritarian and protectionist manner. The reality is that this umbrella has shrunk to such an extent that the private sector sitting beneath it is going to get wet. In some cases, for instance Greece, their umbrella is now so small that countries with a larger protection from the impending storm are lending a place of refuge. The justification for such practices to prevent contagion will eventually lead to the polar opposite outcome.
Without Germany, the Eurozone would already be a failed experiment and now it seems determined to drag itself down with the pack. In an interview on Bloomberg (9th August), one European politician was quoted in saying "we must chose between more Europe or less Europe. We will choose more Europe". Now this opinion is somewhat sensible for the likes of Greece who seem to have found themselves with an endless piggy bank called Germany but for the rest of the states one must question what exactly are these people smoking. The austerity measures entered into by a vast quantity of these nations are dependant on fixed price imports, improved exports and tourism. If you were to break down what would happen in an economic contraction, one must only conclude that the situation is going to be made an exponential amount worse with the inverse predictions happening.
Last week's plan by the ECB to purchase members states bonds on both the primary and secondary markets should send alarm bells ringing. The reality is that Germany is using it's own economy and low lending rates to fund the whole Eurozone area whilst increasing it's exposure to 133% of GDP (Zerohedge). This is only going to end badly.
If we take a step back for a minute and consider a similar situation that occurs with aid in African nations we know this is the wrong thing to do. The effectiveness of financial relief is solely dependant on the social response of the people that are affected. Don't get me wrong; aid in Africa is the right thing to do, however far more progress has been made through teaching the society better agricultural techniques and encouraging the practice of safe sex than has ever been made financially. Germany is making exactly the same mistake, the relaxed liberal European way of life needs a fundamental slap in the face to awake these societies that believe tax evasion is a birthright and that retirement at 50 is just how it is.
No no no Mr Berlusconi, life isn't quite so much of a party as you make it seem.
What the Euro MP's seem to have missed is that these societal and policy values that will prevent any credulous rescue package from success. A point that George Soros has been clear to advocate in his recent article entitled Three Steps to Resolving the Eurozone Crisis
Instead, Mrs Merkel and Mr Sarkozy seem intent on wasting both time and valuable resources drafting new measures in an attempt to save the Euro from certain collapse. The one area of Soros' article that this writer agrees to surrounds formulating a comprehensive exit mechanism from the Euro.
Although a departure from the Euro may cause economic redress for other Euro denominated countries, the long-term effect would be to reduce the toxicity of the Euro and facilitate the payment of outstanding debts (at a significantly depreciated level). Although difficult to swallow, this is singularly the best option for the likes of Greece who needs to regain control of their monetary policy in order to get their house in order. The process wouldn't be pretty or please the financial community but in many ways this self-sacrifice would provide the all-important Human Dignity to the Greek population that they deserve. Instead, the latest meeting between Merkel and Sarkozy pledged to harmonise corporate tax and potentially introduce further taxes to aid deficit reduction. However, stupid the idea of taxing a faltering economy may sound (especially penalizing your own banks) some common sense did prevail out of Tuesdays meeting. Firstly, Germany seems to have finally checked its bank statements and realized that it is losing money faster than a junkie in Tijuana; this realization led Mrs Merkel to announce that the ECB piggy bank would not be increased to the magnitude previously expected. Secondly, they dismissed the idea of Eurobonds; in this writer's opinion, the best decision ever made by Europe's Punch and Judy. Eurobonds would have effectively bred contagion despite what Mr Soros may believe. A Eurobond is effectively a Collateralised Debt Obligation where Germany is the A game and Greece is the Z, but unlike 2008, the investor friendly A game will risk life a limb to protect Z….You can see where this is going. At this point, one must ask why Germany would even be interested in a Eurobond? Lets suppose, I am Warren Buffett and I go into the market to raise $1bn. The market says, Warren you're a smart guy, we trust you so we will lend to you at 3%. Now lets suppose, I am Warren Buffett's family and I go into the market to raise $1bn. The market says, Warren is a smart guy but the rest of you…not so much; especially Uncle Charles who seems to be very overdrawn and the workers from his business are always striking. The best I can offer we can offer is 5% With or without the intended puns, were we seriously expecting Germany to agree to this? They may have made some pretty stupid decisions but this really would have rocked the boat. So why did we expect it? This deep-rooted answer comes back to the original point of the Categorical Imperative that Germany seems to have developed towards the rest of the Eurozone. The market is pricing in the idea that Germany will be there to stabalise the Eurozone area at least in the short term. But from what we have discussed, there are underlying concerns about the viability of this continuing. One must consider that Germany has already committed tens of billions of Euro's towards helping it's sick brothers with only a handful of overpriced to market rate bonds to show for it. So what happens next? In the coming months, Germany is going to be forced into the situation where they must chose between the blue pill and the red pill knowing that whichever one they take, it is going to cost them an astonishing amount of money. Before we conclude, let's talk through the two competing options.
Option 1 – Germany Continues to Bank Roll the Eurozone – Probability 70% § The market reacts positively in the short term but corrects once the fundamentals are evaluated § Germany increases it's long term debt obligations during a contracting economy and finds itself with the mother of all overdrafts § Dream scenario (probability 1%) – Austerity measures prove effective within the PIIGS and Germany becomes the overwhelming power regarding all European matters
Option 2 – Germany Separates Itself from the Eurozone Debt Burden – Probability 30% § Markets contract but are reassured by long term viability of Germany's economy. § Eurozone exit mechanism allows the contagious nations to leave the Euro in order to balance their books over the long term and reduce the toxicity of the Euro § Germany retains free trade environment but looses the long term viability of a singular monetary union
It is clear that whichever choice is made, Germany will experience a significant opportunity cost. Should Germany promote an Exit Mechanism, the fundamental framework surrounding the EU in it's entirety would be on the line. Conversely, should Germany support the Euro, its deficits would slowly constrict its economy and eventually cause a Eurozone Meltdown. This option is further complicated by the lean and organized nature of the German economy that would significantly weaken the effects of austerity and restructuring when compared to the likes of Greece. The conclusion is clear, whichever route Germany takes in this shabacle there are going to be a lot of losers. However, the magnitude of loss will be in many ways dependent on Germany's ability to act whilst time and the economy are on its side.
First published on 9th August 2011
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| What the H ? - ? is Going On With Gold These Days? Posted: 11 Dec 2011 05:22 PM PST What's going on with the price of gold? It would be nice if gold always went up in a crisis but short term it can get just as burnt as everything else. [It begs the question, however,] if gold is the great anti-asset, the thing to hold when everything else is in collapse, why is it now trading…[below $1,700 and] not $2,000? What is next for gold? Words: 765 So asks Merryn Somerset Webb ([url]www.moneyweek.com[/url]) in edited excerpts from her original article*. [INDENT] Lorimer Wilson, editor of [B]www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has further 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 author'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 paragrap...
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| Gold, Silver and Platinum Are Absolutely Essential For a Diversified Portfolio! Here?s Why Posted: 11 Dec 2011 05:22 PM PST The traditional view of portfolio management is that three asset classes, stocks, bonds and cash, are sufficient to achieve diversification. This view is, quite simply,*wrong because over the past 10 years *gold, silver and platinum have singularly outperformed virtually all major widely accepted investment indexes. Precious metals should be considered an independent asset class and an allocation to precious metals, as the most uncorrelated asset group, is essential for proper portfolio diversification. [Let me explain.] Words: 2137 So says Robin Cornwell (www.catalystresearch.ca)*in edited excerpts from his original research report*. [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&...
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| Precious Metals Plunge And India's Industrial Production Crashes Posted: 11 Dec 2011 04:48 PM PST The metals space has had a rather disconcerting start to the week this evening with Silver and Copper dropping almost 2% from their opening levels and then Gold following suit. All this as the USD inches very gradually up tracking almost perfectly with Crude for now. These moves seem very liquidation-like in their velocity but have for now stabilized at the lows. The last few minutes saw some of the ugliest macro data we have seen in a while come out of India as it's Industrial Production growth missed expectations by a mile falling to levels only seen in the middle of the global economic shutdown in Q1 2009. So another leg in the EM-will-save-us-all stool just got kicked out and still we are to believe the US will decouple and 'muddle-through'?
The metals are 'decoupling' from oil for now and it was interesting that the reaction in Gold was 'delayed' a few hours on the simultaneous drop in Copper and Silver. They are extending their losses now after the India IP print...
ES is leaking back from its highs but is trading in a narrow range so far and maybe 3-4pts rich to broad risk assets for now.
Charts: Bloomberg
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| Precious Metals Plunge And India's Industrial Production Crashes Posted: 11 Dec 2011 04:48 PM PST
The metals space has had a rather disconcerting start to the week this evening with Silver and Copper dropping almost 2% from their opening levels and then Gold following suit. All this as the USD inches very gradually up tracking almost perfectly with Crude for now. These moves seem very liquidation-like in their velocity but have for now stabilized at the lows. The last few minutes saw some of the ugliest macro data we have seen in a while come out of India as it's Industrial Production growth missed expectations by a mile falling to levels only seen in the middle of the global economic shutdown in Q1 2009. So another leg in the EM-will-save-us-all stool just got kicked out and still we are to believe the US will decouple and 'muddle-through'?
The metals are 'decoupling' from oil for now and it was interesting that the reaction in Gold was 'delayed' a few hours on the simultaneous drop in Copper and Silver. They are extending their losses now after the India IP print...
ES is leaking back from its highs but is trading in a narrow range so far and maybe 3-4pts rich to broad risk assets for now.
Charts: Bloomberg
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| Euro Zone: Another Crisis, Another Backdoor Taxpayer Bailout? Posted: 11 Dec 2011 03:59 PM PST
By EconMatters
Exactly 20 years to the day after the creation of the European Union (EU) and the Euro currency, German Chancellor Angela Merkel successfully secured an historic agreement from all 27 current members of the EU, except Britain, forging a deeper economic integration in the euro zone on Friday, 9 Dec.
The Euro crunch summit also came away with an agreement to provide up to #222222; font-family: arial, sans-serif; font-size: x-small;">€200 billion ($268 Billion) in bilateral loans to the International Monetary Fund (IMF) to help it tackle the crisis, with 150 billion euros of the total coming from the euro zone countries.
The date that the European Stability Mechanism (ESM), capped at #222222; font-family: arial, sans-serif; font-size: x-small;">€500 billion ($666 billion), operation was also pushed up, the pledge to make private investors absorb losses in any future bailout for a euro nation is also to be scrapped.
While this new pact might be better to prevent future such sovereign debt crisis, others (including the US, andthe IMF) view is that the summit has failed to adequately address the more immediately and urgent issues.
Ticking Euro Debt Bombs
Euro zone has to repay or roll over more than 1.1 trillion euros, around$1.5 trillion, debt due in 2012, with about #222222; font-family: arial, sans-serif; font-size: x-small;">€519 billion, or $695 billion, of Italian, French and German debt maturing in the first half alone, according toBloomberg. (See Graphic below from Spiegel with a shorter time frame sans Germany).
With Euro Zone sovereign bond yield spiking to record levels, probability is quite low for Italy and Spain to refinance next year at a sustainable rate going forward as there's not an effective backstop firewall
Germany, France would most likely need to pay a much higher interest rate due to this debt crisis contagion. Belgium is no GIIPS yet, but its sovereign bond interest rate is closing on the 7% threshold that could require external bailout aid.
European Banks Need $153 Billion in Fresh Capital There are also problems at the heart of the European banking system.
According to the European Banking Authority (EBA) in London (fromBusinessWeek),
Back in July, eight European banks failed the regularly scheduled stress tests with a combined capital shortfall of #222222; font-family: arial, sans-serif; font-size: x-small;">€2.5 billion. And things have deteriorated since then. The updated figures from EBA take into account bank's sovereign holdings through the end of September.
Step-by-step Is Killing The Euro Zone
Europe, even with the aid from the IMF, would have a very difficult time covering between the sovereign debt rollover and shoring up the banks capital structure. Essentially, the 'step-by-step' crisis solution as described by Merkel is a killing the Euro Zone.
The European Union of course is fully aware that markets are unlikely to be in the forgiving mood without some 'bazooka'.
The inaction could suggest
Another Backdoor Taxpayer Bailout Across the Pond?
Germany is reportedly still against the idea of a collective Euro Bond (although Italy's Monti seems confident that Germans would eventually see the light), and does not like the European Central Bank (ECB) embarking on large-scale bond purchases, like the U.S. Federal Reserve have been doing, either.
One of the messages out of the crunch summit is that private investors would not 'absorb losses in any future bailout for a euro nation,' which could suggest banks would get 100 cents on the dollar of the future troubled sovereign debt of Italy and Spain, etc.
So we could also be looking at yet another backdoor taxpayer bailout of the banks -- similar to the U.S. Fed's '$1.2 trillion secret loan to banks, with repayment optional) --so banks would support buying the European sovereign bonds, while keeping the banking financial system afloat.
Somebody, somewhere has to put up the money and take the loss of the Euro Zone, and it does not look like EU would rise up to the occasion. Eventually the markets would get past the Euro crisis and the world would move on. But it seems the European taxpayer, just like their American counterpart, could end up being the last hero standing saving the global financial system,along with the worldas we know it.
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| Jim Rogers: “MF Global to Help Push Commodities Business Away from Chicago and Towards Asia.” Posted: 11 Dec 2011 03:45 PM PST from Tekoa Da Silva's Bull Market Thinking:
I was lucky enough to catch Jim Rogers on the phone again for a few minutes to discuss MF Global's affect on the commodity markets, the direction of the U.S., plus an emerging southeast Asian country which presents an "enormous opportunity". In regards to the recent MF Global collapse and it's impact on commodity markets Jim said,"MF Global is causing forced liquidation right now, but longer term people will forget about it. People still need to trade wheat, they need to trade oil. In the longer term it will be like many other disasters in markets, it will be a blip–an unfortunate blip." Jim added that, 'This event will be another push to move commodities business away from Chicago and towards Asia." In terms of where the U.S. is going fiscally, Jim said, "The U.S. is the largest debtor nation in the history of the world, and we're setting ourselves up for terrible, terrible, problems. No country which has gotten itself in this bad of shape has gotten out without a crisis." Read More (and Listen to the Interview) @ BullMarketThinking.com
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| The Tim Tebow Comeback Story Continues But There Will Be No Miracle Comebacks For The U.S. Economy Posted: 11 Dec 2011 03:30 PM PST from The Economic Collapse Blog:
Never in the history of the NFL has there ever been anything like this. Today, Tim Tebow engineered yet another miraculous 4th quarter comeback. Almost everyone has been expecting this unprecedented string of comebacks to come to an end, yet Tebow just keeps pulling off miracle after miracle. It seems like nearly every week now we are talking about another unbelievable Tim Tebow comeback. It is truly a great story, and what is wonderful about Tebow is that he is not out to glorify himself. He is very humble, he always recognizes his teammates and he is a terrific role model for a generation of American youth that is in desperate need of one. Unfortunately, there is not going to be a similar comeback story for the U.S. economy. It is late in the 4th quarter, we have accumulated over 50 trillion dollars of total debt as a nation, and our economic guts are being ripped out at a rate that is almost impossible to believe. The game is essentially over and we are headed for an incredible amount of economic pain as a nation. We desperately need a "political Tim Tebow" to come along to dismantle our current debt-based economic system. But instead, the corrupt politicians in Washington D.C. just keep patching up our current system and hope that somehow it will recover. Read More @ TheEconomicCollapseBlog.com
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| A Reminder Of The EURUSD's Response To The Historic Announcement At 2:00 PM On March 18, 2009 Posted: 11 Dec 2011 02:51 PM PST Zero Hedge has been lucky to have reported from the front lines on that historic day, March 18, 2009, when at precisely 2 pm the Fed formally expanded its LSAP program to include Treasuries, and more MBS, in what become formally known as Quantitative Easing (Episode 1). On that day, nearly three years ago (when gold was trading at $925) our commentary was the following: "Maybe one should really start buying stocks ahead of the uber-hyperinflation that will imminently ensue. We recommend wheelbarrow stocks.This is textbook back against the wall. But at least the stock market takes another crutch up." and of course: "Print, print, print... God help us." Needless to say it has been downhill ever since, and even though the global economy now is in the worst situation it has ever been precisely due to this unbridled printing, it is somehow conventional wisdom that all in Europe will be well... if the ECB does what the Fed did on that Wednesday in March nearly three years ago. The sheer idiocy of the logic is dumbfounding. Yet what we wanted to demonstrate is the intraday kneejerk response in the EURUSD which we caught just as it happened: the European currency moved by 400 pips from 1.31 to almost 1.35 in minutes. Which begs the question: in order to prevent a dollar spike, much as the situation of pre-QE March dictated, is the low 1.30s level the magical threshold where if the ECB does not, then the Fed will print? We make no forecast, and merely want to show that should the Euro proceed to tumble, the Fed has more than enough weapons, well, weapon, in its arsenal to reset the global devaluation game all over again. Because a soaring dollar will be the next inevitable step in the global liquidity collapse, which can and will be delayed (if only briefly) in only possible way: the "way" which will see gold doubling yet again over the next three years (if not far shorter).
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| A Reminder Of The EURUSD's Response To The Historic Announcement At 2:00 PM On March 18, 2009 Posted: 11 Dec 2011 02:51 PM PST
Zero Hedge has been lucky to have reported from the front lines on that historic day, March 18, 2009, when at precisely 2 pm the Fed formally expanded its LSAP program to include Treasuries, and more MBS, in what become formally known as Quantitative Easing (Episode 1). On that day, nearly three years ago (when gold was trading at $925) our commentary was the following: "Maybe one should really start buying stocks ahead of the uber-hyperinflation that will imminently ensue. We recommend wheelbarrow stocks.This is textbook back against the wall. But at least the stock market takes another crutch up." and of course: "Print, print, print... God help us." Needless to say it has been downhill ever since, and even though the global economy now is in the worst situation it has ever been precisely due to this unbridled printing, it is somehow conventional wisdom that all in Europe will be well... if the ECB does what the Fed did on that Wednesday in March nearly three years ago. The sheer idiocy of the logic is dumbfounding. Yet what we wanted to demonstrate is the intraday kneejerk response in the EURUSD which we caught just as it happened: the European currency moved by 400 pips from 1.31 to almost 1.35 in minutes. Which begs the question: in order to prevent a dollar spike, much as the situation of pre-QE March dictated, is the low 1.30s level the magical threshold where if the ECB does not, then the Fed will print? We make no forecast, and merely want to show that should the Euro proceed to tumble, the Fed has more than enough weapons, well, weapon, in its arsenal to reset the global devaluation game all over again. Because a soaring dollar will be the next inevitable step in the global liquidity collapse, which can and will be delayed (if only briefly) in only possible way: the "way" which will see gold doubling yet again over the next three years (if not far shorter).
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| Indians increasingly monetize gold as collateral for loans Posted: 11 Dec 2011 02:22 PM PST Everyone Gains as Gold Loans Soar to Rs 55,000 Crore By Smriti Seth http://economictimes.indiatimes.com/news/economy/finance/everyone-gains-... More than Rs 50,000 crore worth of gold is likely to be pleged this year to procure loans in a rapidly expanding gold loan market, allowing India's favourite hoarded asset to re-enter financial markets and provide a boost to the economy. According to industry estimates, around 200 tonnes of gold have been used as collateral to raise loans by end November in 2011-12 fiscal. A back-of-the-envelope calculation shows nearly Rs 55,000 crore worth of the yellow metal has been pledged to raise loans to buy goods, real estate or fund short-term farm credit, providing some momentum to slowing economy. That stacks up well with about Rs 2.5 lakh increase in commercial bank credit in credit over April-November. "Gold loans help unlock value that is normally lying idle," said Siddhartha Sanyal, chief India economist at Barclays Capital. ... Dispatch continues below ... ADVERTISEMENT Prophecy Drills 384.9 Meters Grading 0.623 g/t PGM+Au, Company Press Release VANCOUVER, British Columbia -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) has announced the final drill results from 2011 drilling at the company's fully owned Wellgreen platinum group metals, nickel, and copper project in the Yukon Territory. Borehole WS11-192 intercepted 384.9 meters of 0.45 percent nickel equivalent starting from 9.45 meters depth. Included in this greater interval of continuous mineralization is a platinum group metals-rich zone with a combined platinum-palladium-gold grade of 1.358 grams per ton over 19.23 meters (nickel equivalent 0.74%). The final drilling results for 2011 have shown the Wellgreen Central-East and Central-West deposits to be one contiguous body, whereby there is good potential to broaden significantly the Central-West resource base, which currently contributes only about a quarter of the current 43-101 compliant resource at Wellgreen. Overall the drilling program met with good success in expanding the resource to the east and south. The long drill intercepts suggest the deposit remains very much open in those directions. For the complete drilling results and the full company statement, please visit: http://prophecyplat.com/news_2011_dec08_prophecy_platinum_wellgreen_dril... "The organised gold loan market is just developing in India and can potentially be a source of liquidity, particularly for the middle- and upper-middle-class category," he added. A recent report published by Citibank estimates that the organized gold loan market was worth Rs 50,000-Rs 53,000 crore during 2010-11 and had been growing at a compounded annual growth rate of 35 percent over the previous 5 years. Gold has traditionally been used as a store of value, making it a dead asset that has no productive use in the economy, more so as it is mostly imported. From a lenders perspective, gold is a very secure asset and the value of the loan as a percentage of the collateral is constantly falling due to rising gold prices. "Propensity of default is also very low because the borrowers are emotionally attached to their gold," said V. Sriram, CEO of ICRA Management Consulting Services. The loans work out as very attractive for the borrowers as well, as the rates charged are much lower than that that on unsecured personal loans. The average rate of interest on loans issued against gold is 12-24 percent and time taken to process an application is at most 24 hours, whereas the rates on personal loans go up to 36 percent and processing takes much longer. The rising trend of gold loans helps monetize this asset, which John Maynard Keynes once famously called a "barbarous relic." Organized gold loans "could further support consumption since gold is no longer considered an asset to buy and hold -- that is, a 'dead' asset -- and is now being used as a collateral across income groups," said Rohini Malkani and Anushka Shah. According to industry studies, since gold loans provide essential funds for investment or consumption purposes, they help generate additional aggregate demand in the economy. "Gold loans are mostly raised for personal uses. For instance, in rural areas gold loans are used for agricultural purposes or to finance consumption. In urban areas, loans are being raised for either by entrepreneurs or for real estate purposes," said Sreejesh, assistant marketing manager at Manappuram finance, one of India's leading gold finance companies. By the end of November this fiscal, according to industry estimates, total credit issued by banks grew at around 20 percent, organised gold loans grew at near 50 percent, making it an increasingly important source of liquidity. Economists, however, believe that although gold loans help liquidate a "dead" asset, its effect on the economy is still limited because it is only a small segment of the loanable funds. "India is a consumption-based economy, and if money is stuck in gold, it can't circulate in the markets. Gold loans help overcome this but will have a limited impact on the economy because its share is very small", said Rajesh Shukla, director of the NCAER Centre for Macro Consumer Research. The total incremental credit bank credit in the current financial year so far was about Rs 2.5 lakh crore against near Rs 55,000 crore lent by finance companies against gold. But the potential is phenomenal considering the 18,000 tonnes of gold Indians hold. 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 Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf
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| Forget Copper: Steel Is The True Indicator Of The Chinese Hard Landing Posted: 11 Dec 2011 12:54 PM PST Last week we pointed out some curious observations from Fortress on commodities and the state of the Chinese market courtesy of secondary industrial metals, notably steel: "The investment landscape for industrial metals is becoming increasingly more difficult to navigate. As highlighted in last month's letter, we are continuing to see a rapid deceleration of growth in China, specifically within the cyclical industries. A recent trip to visit steel companies outside Beijing underlined the impact of extremely tight liquidity and continued restrictive policy in the Chinese housing market. Steel capacity cuts – through idling or accelerated maintenance outages – are now commonplace and the speed of these cuts has certainly surprised the market. Construction is the principal end-market blamed for this weakness; given the very large inventory overhang and the continued lack of liquidity, this is not surprising. In our equity universe, we have also seen numerous companies expressing concerns regarding China construction demand. Zoomlion, China's second largest construction machinery company, recently said, "Demand for construction machinery has shrunken drastically and growth will no doubt continue to slow next year." Within the context of declining housing starts, plummeting transaction volumes and the beginning of a meaningful move down in housing prices, these shifts in the steel market have been an interesting harbinger of more substantial problems in the Chinese economy. Our principal concern is the extension of housing weakness into the banking system through the mechanism of both failing developers as well as the opaque and informal lending. We are concerned that the recent strength in iron ore, steel and copper has been misinterpreted by the market. In our view, any suggestion that the Chinese market is undergoing a substantial restock is misplaced." Today, we get a confirmation of just this warning courtesy of Citigroup which has charted weekly Iron Ore China port inventories and of broad steel inventories. Needless to say, domestic steelmakers, who better than anyone know the state of domestic end product demand, have seen the writing on the wall, and have one message for the world: short Brazil and Australia.
h/t David
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| Currency Wars: “Strong Yen Is Destroying Japanese Industry” Posted: 11 Dec 2011 12:05 PM PST The thing to understand about inflation is that if one major country does it, all the others have to do it too. A single country can benefit by making its currency less valuable, because a falling exchange rate gives its exporters a pricing edge in global markets. But the pop in exports comes at the expense of competitors who then demand that their governments join the currency race-to-the-bottom. This happened to Switzerland in September, as global capital poured into what was seen as a financial safe haven. The Swiss franc soared, traumatized local exporters complained, and the government pegged the Swiss franc to the euro, in effect putting it on the same road to oblivion as Europe's doomed common currency. Now it's Japan's turn:
If mighty Toyota can't turn a profit with the yen at current levels, the Japanese government has no choice but to lower the value of its currency. It will accomplish this by creating hundreds of billions of dollars worth of yen and using them to buy euros and dollars, sending the dollar and euro up and yen down in relative terms. Once a process like this gets going it can't be stopped because no single central bank can step off the track without seeing its currency soar and its export industries implode. The ultimate end, of course, is the descent of the world's major currencies to the value of the paper on which they're printed. As crazy as this seems to modern sensibilities, it isn't historically unique. Just the opposite. All fiat currencies end this way, a victim of politicians' (or kings') need to satisfy powerful constituencies. Give a government a printing press, in other words, and it will use it as long as it can. Meanwhile, in each and every past case of currency destruction, the owners of gold and silver were not only spared the worst of the trauma, they were enriched.
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| The U.S. Dollar Could Rise, After the Euro Summit Posted: 11 Dec 2011 11:51 AM PST Trust must be rebuilt. The euro crisis has not reached its climax yet. The U.S. dollar could rise and stocks fall. Read More...
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| Rumor Of Swedbank Failure Results In Second Latvian Bank Run In One Month Posted: 11 Dec 2011 11:12 AM PST
Video of people lining up at ATM and branches: Google translated from E24.no
There are conflicts view about the severity of the actual run:
Regardless of just how severe the event ends up being, isolated incidents like these occuring increasingly more frequently will do nothing to reinforce the public's confidence that the financial system is actually stable. And all it will take is one such rumor and/or one bank run in a major "developed nation" for things to begin unwinding.Unfortunately, with the global financial regime only focused on the symptoms and never the underlying causes of the problem, more such pictures of empty ATMs in the near future are virtually assured.
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| Posted: 11 Dec 2011 10:32 AM PST from ZeroHedge:
Now that the rehypothecation bogeyman has been let loose, and the question of just how many paper (and apparently physical) assets have been double, triple, and n-counted (where n can be a number up to "infinity") by the infinitely daisy-chained modern global financial system in which one's liability is someone else's asset….apparently up to infinity times, the next logical step was for the firms named in the original Reuters article to step up and begin denials they had anything to do with anything. Sure enough, below is the first (of many) such response, by Interactive Brokers, claiming it has been greatly misunderstood and unlike MF Global, it has done nothing wrong at all. Of note is that IB was simply one of many brokers mentioned in the Reuters piece, where we read that "Engaging in hyper-hypothecation have been Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion)."
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| Posted: 11 Dec 2011 10:29 AM PST from TFMetalsReport.com:
As we prepare for what will certainly be another wild and volatile week, I thought I would propose to you the thought experiment I have been considering all weekend. First, let's summarize what we know:
Read More @ TFMetalsReport.com
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| Alasdair Macleod: “By End of 2012 Silver May Triple And Gold Should Be Priced Around $3800″ Posted: 11 Dec 2011 10:15 AM PST from Tekoa Da Silva's Bull Market Thinking:
A few days ago I had the opportunity to speak with Alasdair Macleod, a proponent of sound money and Senior Fellow at the GoldMoney Foundation. The interview was a fascinating discussion on the concept of money itself, different schools of economic thought, plus what may lie ahead for gold, silver, and the West. A chief topic during the interview was Keynesian Economics and it's deadly impact on society. Alasdair indicates that, "Keynesianism is a self-serving mechanism," in which, "only governments, their cronies, and banks benefit. Outside of Ron Paul, you don't have anyone with the foresight or the guts to take the Austrian view. If members of congress or parliament do find out about Austrian economics–they have to keep quiet about it because of the politics of the system itself." Read More (and Listen to the Interview) @ BullMarketThinking.com
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| Gold Continues to Show Lack of Enthusiasm From Speculators Posted: 11 Dec 2011 09:44 AM PST Volume low, Gold price going nowhere except slightly lower, not bullish for the road forward but things could change overnight. GOLD : LONG TERM The long term chart shown here a couple of weeks ago remains in force. The action remains within that up trending channel and that very long term momentum indicator remains below its support trend line but still in its positive zone.
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| Stock World Weekly - The Anti-Crisis Bazooka & Other Bedtime Stories Posted: 11 Dec 2011 07:59 AM PST
Excerpt from Stock World Weekly - The Anti-Crisis Bazooka & Other Bedtime Stories.
Excerpt from the Week Ahead Section The turmoil in the eurozone makes it easy to overlook positive signs in the U.S. economy, such as this week's drop in Initial Claims for unemployment insurance, or Friday's report showing consumer confidence climbing for the fourth month in a row. Financial blogger Scott Grannis argued, "No one can say for sure that the U.S. can avoid contagion, but so far the U.S. economy appears to be decoupling from Europe, as Europe slumps but conditions here continue to improve." Others disagree. Charles Biderman of TrimTabs "dismisses the simple-minded decoupling perspective." As Zero Hedge reported, Biderman believes, "U.S. growth will be in the doldrums as European de-leveraging drags global growth down with it. It's not all doom-and-gloom though...this collapse won't happen tomorrow, given balance sheet strength, although selling into rallies is the clear picture he is painting." Not everything is rosy. Monday's Non-Manufacturing ISM report for November came in at 52.0%, down nearly a point from October, indicating slowing growth. The employment subindex contracted too, dropping to 48.9% from 53.3% in October. And China is facing serious problems. Slack demand in U.S. and European markets is weighing on China's export-driven economy. Easing inflation and slowing growth in both imports and exports was pressuring Beijing to loosen its credit policy. However, on Friday, the Politburo issued a statement confirming its commitment to keeping a "prudent" monetary policy while adopting a "pro-active" fiscal policy. This means that rather than relying on massive stimulus, Chinese authorities are likely to rely on tax cuts and other administrative measures to help encourage consumer spending. (China's exports weaken amid European troubles, import also slow) Friday's new deal from the European Union to create deeper financial integration between member nations, to save the struggling eurozone, sparked many responses. An exuberant ECB President Mario Draghi declared, "It's a very good outcome for the euro area, very good. It's going to be the bases for much more disciplined economic policy for euro-area members...certainly it is going to be helpful in the present situation." German Chancellor Angela Merkel called it a "breakthrough to the stability union." At the other end of the spectrum, British Prime Minister David Cameron emphatically rejected the proposal. "What was on offer is not in Britain's interest so I didn't agree to it. We're not in the euro, and I'm glad we're not in the euro. We're never going to join the euro and we're never going to give up this kind of sovereignty that these countries are having to give up." (U.K. to eurozone nations: We're out, good luck) Commenting on the turbulence in the eurozone, Research Professor of Economics at the University of Missouri, Michael Hudson wrote, "The kind of warfare now engulfing Europe is thus more than just economic in scope. It threatens to become a historic dividing line between the past half-century's epoch of hope and technological potential to a new era of polarization as a financial oligarchy replaces democratic governments and reduces populations to debt peonage. "For so bold an asset and power grab to succeed, it needs a crisis to suspend the normal political and democratic legislative processes that would oppose it. Political panic and anarchy create a vacuum into which grabbers can move quickly, using the rhetoric of financial deception and a junk economics to rationalize self-serving solutions by a false view of economic history – and in the case of today's ECB, German history in particular. "Governments do not need to borrow from commercial bankers or other lenders. Ever since the Bank of England was founded in 1694, central banks have printed money to finance public spending. Bankers also create credit freely – when they make a loan and credit the customer's account, in exchange for a promissory note bearing interest. Today, these banks can borrow reserves from the government's central bank at a low annual interest rate (0.25% in the United States) and lend it out at a higher rate. So banks are glad to see the government's central bank create credit to lend to them. But when it comes to governments creating money to finance their budget deficits for spending in the rest of the economy, banks would prefer to have this market and its interest return for themselves. "European commercial banks are especially adamant that the European Central Bank should not finance government budget deficits. But private credit creation is not necessarily less inflationary than governments monetizing their deficits (simply by printing the money needed)... "It is mainly government that spends credit on the 'real' economy, to the extent that public budget deficits employ labor or are spent on goods and services. Governments avoid paying interest by having their central banks printing money on their own computer keyboards rather than borrowing from banks that do the same thing on their own keyboards... "If the euro breaks up, it is because of the obligation of governments to pay bankers in money that must be borrowed rather than created through their own central bank. Unlike the United States and Britain which can create central bank credit on their own computer keyboards to keep their economy from shrinking or becoming insolvent, the German constitution and the Lisbon Treaty prevent the central bank from doing this. "The effect is to oblige governments to borrow from commercial banks at interest. This gives bankers the ability to create a crisis – threatening to drive economies out of the Eurozone if they do not submit to 'conditionalities' being imposed in what quickly is becoming a new class war of finance against labor... "Today's economic crisis is a matter of policy choice, not necessity. As President Obama's chief of staff Rahm Emanuel quipped: 'A crisis is too good an opportunity to let go to waste.' In such cases the most logical explanation is that some special interest must be benefiting. Depressions increase unemployment, helping to break the power of unionized as well as non-union labor. The United States is seeing a state and local budget squeeze (as bankruptcies begin to be announced), with the first cutbacks coming in the sphere of pension defaults. High finance is being paid – by not paying the working population for savings and promises made as part of labor contracts and employee retirement plans. Big fish are eating little fish." (Europe's Transition From Social Democracy to Oligarchy) Heading into next week, Phil wrote in Income Portfolio – Year End (Almost) Review: "Next month will be busy, with plenty of adjustments to make. A Santa Claus rally would be nice but we're not counting on it. Less than half of our VIRTUAL $1M buying power is in use. We're not looking to add many new trades until we take others off the table. No matter what the market does, we're going to want hedges over the holidays, but then we'll see how things shake out in January."
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| Chavez flies Venezuela gold home to avoid EU turmoil Posted: 11 Dec 2011 07:30 AM PST Billions of dollars worth of gold is being flown around the globe in a massive drive to bring home Venezuela's riches from the West. 
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| The Land of Anti-Gold Propaganda Posted: 11 Dec 2011 06:55 AM PST When it comes to "realms of fantasy", the title to this commentary doesn't flow nearly as smoothly from the lips as "The Land of Oz". However, the two fantasy realms share so much in common that I felt somewhat compelled to use this allegory. To begin with, in both realms we regularly witness the most fantastic events; events not even slightly constrained by the laws of science (or economics) or simple common sense. Illustrating this concept beautifully is another piece of gibberish churned out by the anti-gold propaganda mill. "Gold posts weekly loss as EU jitters boost dollar", reads the title; immediately identifying this piece as more nonsensical propaganda. As I have noted in many previous commentaries, all of our governments have declared us to be living in a world of "competitive devaluation": where our governments "compete" to see who can destroy the value of their banker-paper the fastest. In such a world it is absolute nonsense to talk of any currency being "boosted" – easily illustrated with a simple analogy. Two people jump off a 100-storey building at the same time. On the way down, one person climbs on top of the shoulders of the other. Obviously the dominant fact of this hypothetical example is not that one person has "boosted" himself, but merely that he will go "splat" on the pavement a millisecond later. This is a constant illusion from the propaganda machine, because it is their chief means of deception in delaying hyperinflation – i.e. the final collapse of the paper currencies and the reassertion of "good money" (gold and/or silver). Being in the final death-throes of the collapse of yet another paper-currency Ponzi scheme, competitive devaluation is the perfect bankster smoke-screen. Getting all governments to devalue their currencies simultaneously is the most effective means to hide the total destruction of our currencies from the near-comatose sheep. Returning to the analogy of two people jumping off a tall building, to each other neither appears to be moving – or at the very least it drastically reduces their perception of the speed at which both are falling. It is only those who are standing on the ground who are capable of perceiving how fast the two jumpers are plummeting. However, in an era of competitive devaluation, then by definition there is no one "standing on the ground"; we are all falling – together. The other aspect of total nonsense in the article I cited (still only looking at the title) is the total absurdity of connecting a drop in the price of gold to "EU jitters". Here the propagandists have to lie primarily by omission. Gone are the days when the propaganda machine attempts to brush-off gold as "a barbarous relic". That line became a major liability on the day that central bankers (the primary source of that propaganda) flip-flopped from being sellers of gold to buyers of gold. Had the propagandists continued to trot-out that old, tired line; first of all it would have meant explicitly exposing this flip-flop, and second it would have attracted all sorts of unwanted scrutiny with respect to the original lie itself. Instead, confronted with an overwhelming dose of reality, the propagandists have grudgingly been forced to again refer to gold as "a safe haven" (and in fact the safe haven) in their own propaganda. Thus the propagandists have been reduced to lying-by-omission. | ||||
| Gold producers rush to boost dividends Posted: 11 Dec 2011 06:46 AM PST By Bernard Simon and William MacNamara http://www.ft.com/intl/cms/s/0/df02331c-23a0-11e1-af98-00144feabdc0.html Gold miners are rushing to boost their dividends in the hope of wooing investors from gold-linked exchange-traded funds and other vehicles. In the latest move, Iamgold, a mid-sized producer with mines in west Africa, Canada, and Suriname, announced a 25 per cent increase in its payout on Friday. Iamgold's annual dividend is now 25 cents a share, more than four times last year's 6 cents payout. Earlier this month, Goldcorp, another Toronto-based producer, lifted its dividend by 32 per cent, the third increase in little more than a year. Barrick Gold, the world's biggest producer by volume, pushed up its payout by a quarter. Steve Letwin, Iamgold's chief executive, said that "in the past there was this belief that people buy gold equities for growth only. The management view was: 'We are much better off holding on to the cash and investing it for growth than giving it to the shareholders.' I'm a believer that you can do both, and I think others are seeing that as well." ... Dispatch continues below ... 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. Gold mining equities have lagged behind the surge in the bullion price. Barrick shares are one-fifth higher than in December 2009, while the gold price has soared more than 50 per cent, closing on Friday at $1,712 an ounce. Peter Munk, Barrick's chairman, said in September: "ETFs are wonderful things. But they have taken demand away from gold equities. "Being the biggest has worked against us," he added. "The bigger you are, the more likely you are to have a strike or to maybe run into environmental problems at any of your mines around the world. So it's thought of as safer for the gold investor to buy an ETF." Miners are also exposed to volatile costs. With mine expansion and construction activity picking up, Mr. Letwin said that "costs are a clear and present danger. Everyone has his hand out." Chris Beer, a precious-metals fund manager at Royal Bank of Canada, said that some gold miners had sought to boost shareholder value through acquisitions in recent years. But, he added, "they're just bigger, with more shares -- not necessarily better in share-price performance." Gold miners' current dividend yields, averaging little more than 1 per cent, are less than half those of oil shares and a third below base metals stocks. Gold miners also traditionally pay out a far lower proportion of their cash flow. Denver-based Newmont Mining, among others, pledged this year to link its dividend payout to the bullion price. Even so, Barry Cooper, analyst at CIBC World Markets, told clients in a recent report that "the fascination with gold dividends is a function of the economic times the world is facing. As with most fads, this too will pass." In Mr. Cooper's view, "Gold companies should continue their struggle to provide growth over cash distribution if left with a choice." According to a recent RBC Capital Markets poll of institutional investors, 63 per cent said raising dividends would be the best way to narrow the divergence between the gold price and equities. Almost a fifth of respondents said nothing should be done, citing a structural change in the relationship between gold and equities, and 12 per cent suggested share buybacks. 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 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
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| Gold Model Forecasts $4380 Gold Price Posted: 11 Dec 2011 06:08 AM PST You've probably heard it many times: "Gold is a good hedge against inflation". But IS it? That's the question we will try to answer in this article. Let's have a look at a chart:
The chart above shows us the gold price (left hand scale, red line) since 1968, when the Gold Pool broke down. At that time, the gold price was no longer fixed, and was able to rise (substantially). I thus figured there had to be other forces at play that influence the price movement of Gold, and yes, I think there are…
Special thanks goes to Jake from EconompicData, who also wrote about this topic, and who has helped me a lot with solving formulas. So mr. Elfenbein wrote that gold isn't tied to inflation. It's tied to low real rates which are often the by-product of inflation (high nominal rates can still lead to low real rates if inflation is also high). That's an interesting observation, as Ben Bernanke promised to keep rates at record low levels throughout 2013 in order to stimulate the economy. I wanted to see it myself, and I was thinking if I could improve the "model". I think I managed to do so, as my model "gold price" has a higher correlation with the gold price. With a lot of formulas in excel, I calculated the real short term rates, level of inflation, and "calculated" a model price for gold, based on the models of Jake and Eddy.
For those who prefer to look at logarithmic charts:
Now, what does this all mean? Does the model have the potential to "forecast" the gold price? Maybe. It depends on the nominal short term rates, and the level of inflation. The first one is pretty easy to "guesstimate", as Bernanke promised to keep rates near zero for the next 2 years. The average annual (officially reported) rate of inflation over the last 43 years, has been 4.44%.
To put things in perspective, please have a look at the logarithmic chart if you think the chart above looks "bubbly".
From the beginning of this bull market, it would "only" be a 17.5-fold increase, compared to the 25-fold increase from 1968 to 1980. A similar 25-fold increase would lead to a gold price of about $6,250. We now have another reason to believe legendary gold experts Jim Sinclair, Alf Fields and plenty of other analysts who are fully confident of a parabolic rise in the price of gold with targets of $4,500 and above.
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| Silver Investors Will Make A Lot Of Money Posted: 11 Dec 2011 05:53 AM PST I MF Global'd (i.e. embezzled) this video from http://www.zerohedge.com/ this morning. For those who have not watched it yet, it is a great explanation of why there will be a massive move higher in silver at some point in the near future (don't ask me for a timeframe). We know the market for large deliveries of physical silver is getting very tight per the Sprott Asset comments that they have to wait several months for delivery when they buy a large amount of silver. It certainly calls into the question the reliability of the "reported" silver inventories on the Comex. Currently the U.S. Mint is producing enough silver to meet investor demand. But all of the silver used in silver eagles has to come from U.S.-based mines. The annual demand for silver eagles is getting close to exceeding the annual output of U.S. silver. Once this happens, I expect all hell to break out in the price of silver. Silver mining stocks will move up many multiples in price in just a few days. Here's the video (about 4 mins.): 
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| Is A Physical Silver Shortage Spike Imminent? Posted: 11 Dec 2011 05:34 AM PST
That imbalances in the supply and demand of precious metals, particularly silver, could lead to a shortage of physical product in the future should not come as a surprise to many - it is a topic covered extensively here in the past. Nonetheless, as a useful reminder of the big picture in the silver market, Future Money Trends has released another update video, reminding viewers that if traded purely on fundamentals, there is a high likelihood of increases in the price of silver, and other precious metals. As the authors put it, " There simply isn't enough physical silver to deal with the demand of a fiat currency crisis. As the paper silver market pushes prices down, all hell will break loose in the physical market." While that conclusion may or may not be applicable just yet, when coupled with recent revelations of potential double counting of precious metals at the warehouse level (see HSBC-MF Global story), the situation will certainly get only more exacerbated. Furthermore, should silver miners take Eric Sprott's advice to heart and decide to convert some or all of their product into physical, the market will suddenly recall that in addition to liquidity, prices are also determined by something called fundamentals. And fundamentals, especially in combination with a market risk spike, confirm a price jump may be imminent.
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| Posted: 11 Dec 2011 04:48 AM PST
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| Dramatic new video cites paper market's silver price suppression Posted: 11 Dec 2011 03:25 AM PST 11:22a ET Sunday, December 11, 2011 Dear Friend of GATA and Gold: Our friends at Future Money Trends (http://www.futuremoneytrends.com/), who have produced videos featuring GATA personalities James Turk and Adrian Douglas, have just made a dramatic 4 1/2-minute video about how the silver paper market's price suppression is running up against increasing demand and uses for real metal and diminishing supply. The video argues that another pounding down of the silver price in the paper market could explode demand. The video is headlined "If Silver Goes Down, All Hell Will Break Loose in the Physical Market: Silver Investment Update" and it's posted at YouTube here: http://www.youtube.com/watch?v=xCCuLMgyUgY CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf 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 Prophecy Drills 384.9 Meters Grading 0.623 g/t PGM+Au, Company Press Release VANCOUVER, British Columbia -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) has announced the final drill results from 2011 drilling at the company's fully owned Wellgreen platinum group metals, nickel, and copper project in the Yukon Territory. Borehole WS11-192 intercepted 384.9 meters of 0.45 percent nickel equivalent starting from 9.45 meters depth. Included in this greater interval of continuous mineralization is a platinum group metals-rich zone with a combined platinum-palladium-gold grade of 1.358 grams per ton over 19.23 meters (nickel equivalent 0.74%). The final drilling results for 2011 have shown the Wellgreen Central-East and Central-West deposits to be one contiguous body, whereby there is good potential to broaden significantly the Central-West resource base, which currently contributes only about a quarter of the current 43-101 compliant resource at Wellgreen. Overall the drilling program met with good success in expanding the resource to the east and south. The long drill intercepts suggest the deposit remains very much open in those directions. For the complete drilling results and the full company statement, please visit: http://prophecyplat.com/news_2011_dec08_prophecy_platinum_wellgreen_dril...
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