Gold World News Flash |
- The Sovereign Ponzi - Tick By Tick Research Email
- Jim Rickards - US to go to War with Iran, Oil & Gold to Spike
- Gold Hits 6-Month Low, Breaches "Lehmans Uptrend"…
- Golds D-Wave Confirmed
- Gold Seeker Closing Report: Gold Falls Slightly While Silver Surges Over 3%
- BTFD! “Nothing Shines Brighter Than SILVER” – Chris Duane
- IMF bombshell: Age of America nears end
- Gold Tests September Low
- 'Financial repression' is gold price suppression
- The Last Angry Mans Problem With IMF Gold Sal...
- Sell Gold Now or will it Outperform Again in 2012?
- Harvey Organ's Daily Gold & Silver Report
- The Depth Of Despair In The Gold Community
- Jim Sinclair: The depth of despair in the gold community
- Bowing to the Absurd
- Gold Daily Chart
- Bix Weir: We've Reached the End of This Round of Silver Manipulation
- Raid On Silver And Gold Fails / Poor Italian 10 Yr Auction / Rumours Of Global QE To Infinity
- The Gold Price Closed at $1,539.90 I Would Not Sell Silver or Gold Here
- Lunch with Ron Paul
- Economic/Currency Collapse Could Bring Martial Law and Confiscation of Your High-priced Gold! Got Silver?
- It?s ALL Here! Why Gold is Declining and What the Future Holds
- Silver holding at critical $26 level
- Central Planning Update (In Theory And Practice) - You Are Here
- Jim Rogers Not Optimistic About Anything But Agriculture
- Soros Sees Gold Prices on Brink of Bear Market
- Silver Price: Attention All Crybabies, Get the Checkbook Out!
- Von Greyerz: Gold Will Trade $3,000 – $5,000 in 2012
- Mind the Leverage… It might KILL your wallet…
- Summarizing 2011 In Nine Easy Charts
| The Sovereign Ponzi - Tick By Tick Research Email Posted: 29 Dec 2011 07:07 PM PST
Dear All
In 1903, a young Italian man by the name of Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi (Charles Ponzi to you and I) arrived upon American shores aboard the SS Vancouver. With dreams of becoming one of the worlds super elite, Ponzi swiftly moved from being a dishwasher to the Branch Manager of Banco Zarossi in Montreal (which ironically turned out to be already running a "Ponzi Scheme" far before Mr Ponzi's arrival).
Fast forward eleven years, including a brief spell in Atlanta Prison, and Ponzi was ready to launch his greatest scheme of monetary fraud. In lay terms, Ponzi set out to arbitrage International Reply Coupons between Italian and US rates using investor money. However, after running into a wave of red tape, Ponzi realised that the impressive returns that were being promised could simply be paid out of fresh money as long as he could secure a consistent flow of fresh investor capital. A Ponzi Scheme if you will.
If we re-evaluate part of the penultimate sentence…"could simply be paid out of fresh money as long as he could secure a consistent flow of fresh investor capital"…we get to the point of today's email: Confidence. More specifically, confidence in Sovereigns.
"Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence."
Helen Keller
At this point, I would like to ask how a Ponzi scheme differs from the modern sovereign bond market? If the primary activity in government bond markets is the refinancing of existing debt, are we not in a Ponzi scheme of our own? By this, I mean that Modern Governance and Treasury is based upon the idea of securing a consistent flow of investor capital to meet payments of the existing principal. Is it not?
If we look back to the origin of Government Bonds, it becomes clear that they were designed as a method to fund the activity of war. An activity that, if successful, would produce future cash flows that are capable of settling the initial borrowing. From a Finance standpoint, this lending would provide a positive CAPM value for the war.
Compare this to the bulk of modern Sovereign Finance, by which I mean the process of refinancing, and it becomes clear that there is no future cash flow resulting from the activity and, as such, the whole system has become built on the idea of investor confidence; embedded with the idea that countries can inflate away the cost of borrowing over the medium to long-term.
Over the last 24 months, this practice has become increasingly comprehendible by the investors of government securities and we have already started to see the first few wounded being carried off the battlefield for treatment and we can be sure that they wont be the last. If the continued trend of higher rate refinancing starts to spread away from just profligate European nations, it won't just be the PIIGS we talk about. Think West meets East with a little island in the middle or UJU for short.
After that short introduction, I would like to introduce a number of articles that are worth reading as we enter what the Mayans believe to be the last year of the current era.
1) Brazil Overtakes the UK as the 6th Biggest Economy in the World - CEBR (Click HERE)
2) Things That Make You Go Hmm - Grant Williams (Click HERE) Grant talks about the factors that he feels will be the most pertinent in 2012
3) IceCap Asset Management - December Presentation (Click HERE)
4) New York Taxi Medallions - Bloomberg (Click HERE) Arguably the safest investment in the world and up over 1000% in the last 30 years.
5) Graph of the ECB Balance Sheet - Zerohedge (Click HERE)
Over the festive period, I was fortunate to be given a copy of Keith Gessen's Diary of a Very Bad Year, which in essence is a collection of interviews with an Anonymous Hedge Fund Manager throughout the credit crisis. Whatever I may or may not think of the content, one fundamental topic emerges out of the book. The topic of false hope (or Hopium) that exists in the market as we enter a downturn. After every wrought of the market, the HFM still shows a quite aspirational confidence that the market has reached its bottom due to good economic data or a form of government intervention. Yet the next month, the market takes a proverbial skydive once again. Sound familiar? It should. You've been warned.
"So if a higher-than-usual unemployment and slow economy is something like a chronic risk, the government can deal with that by borrowing and spending on stimulus. If the government takes all this risk onto itself, it may attenuate those chronic risks, but at the risk of you might get to the point where something goes wrong in the US and then the governments creditworthiness is in jeopardy and you have a huge mess"
Anonymous HFM – 2009 – Diary of a Very Bad Year
Best Regards George Adcock
Founder
If you would like to receive bi-weekly comment emails like this in the future, please send an email to team@tickbytick.co.uk with the words "add me" in the subject line.
All email addresses will be held with complete confidentiality and there is no profit motive in any piece of writing disseminated.
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| Jim Rickards - US to go to War with Iran, Oil & Gold to Spike Posted: 29 Dec 2011 05:39 PM PST  With investors concerned about the recent plunge in gold and silver and questions about what is going to happen with Iran and the Straits of Hormuz, today King World News interviewed KWN resident expert Jim Rickards. Rickards, has gained international recognition for his deadly accurate predictions regarding moves by central planners. Rickards let KWN know that the US is headed to war with Iran: "Yeah, it's very serious, Eric, actually grave. The big thing to get right in this case is that Iran will not be allowed to have a nuclear weapon, period. That's just not going to happen. Now we know they (Iran & its allies) are pushing towards it and so there is going to be a train wreck."
This posting includes an audio/video/photo media file: Download Now |
| Gold Hits 6-Month Low, Breaches "Lehmans Uptrend"… Posted: 29 Dec 2011 05:19 PM PST Bullion Vault
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| Posted: 29 Dec 2011 05:17 PM PST Gold Scents
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| Gold Seeker Closing Report: Gold Falls Slightly While Silver Surges Over 3% Posted: 29 Dec 2011 04:30 PM PST Gold fell over 2% to as low as $1522.60 by about 7AM EST, but it then rallied back higher throughout most of trade in New York and ended with a loss of just 0.55%. Silver slipped all the way to $26.15 before it also rallied back higher in New York and ended with a gain of 3.07%.
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| BTFD! “Nothing Shines Brighter Than SILVER” – Chris Duane Posted: 29 Dec 2011 04:11 PM PST This is a special end of the year silver update with the 'Silver Shield' Chris Duane from Dont-Tread-On.Me. Chris says it's time to buy physical silver with both hands – that's what he's doing.
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| IMF bombshell: Age of America nears end Posted: 29 Dec 2011 03:51 PM PST  For the first time, the international organization has set a date for the moment when the "Age of America" will end and the U.S. economy will be overtaken by that of China. And it's a lot closer than you may think. According to the latest IMF official forecasts, China's economy will surpass that of America in real terms in 2016 — just five years from now. Put that in your calendar. It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world's hegemonic power. More China news: U.S., China to hold economic talks in early May, Shanghai hit by tightening, China 2011 trade surplus may shrink to 2% of GDP. Read more...... 
This posting includes an audio/video/photo media file: Download Now |
| Posted: 29 Dec 2011 02:55 PM PST courtesy of DailyFX.com December 29, 2011 03:14 PM Daily Bars Prepared by Jamie Saettele, CMT My last comments were that “expectations remain for a test of the September low at 1532 with price finding a top in the 1620/40 zone. Gold reached 1642 this morning (12/21) before reversing and risk on shorts can be moved to that level.” 1642 was never exceeded and gold has tested the September low. The spike under the September low probably cleared the market of weak longs so beware of a pop into 1600 before sellers return. Other TA Articles...
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| 'Financial repression' is gold price suppression Posted: 29 Dec 2011 02:23 PM PST 10:35p ET Thursday, December 29, 2011 Dear Friend of GATA and Gold: Referring to Financial Times editor Gillian Tett's December 22 column, "Ties Between Sovereigns and Banks Set to Deepen," to which the GATA Dispatch called your attention the other night with the headline "Citing 'Financial Repression,' FT's Gillian Tett Sounds Like Jim Rickards and Rob Kirby" (http://www.gata.org/node/10828), a friend asks: "Is the message here that governments have determined that the only way to stay in power is: "-- To fund their excess through the banking system, at the expense of the private sector; "-- And to go along with the gold price suppression scheme so that the only alternative to that system is not attractive either? "If the Chinese, Indians, Japanese, and others buy into this power-preservation scheme, then it appears -- as you have long said -- there really is no true market left, and we're all screwed, no? This is not particularly what I want to believe, but if that's where we are, then I guess I need to deal with it." ... 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. Your secretary/treasurer replied: "Yes, that's how I construe the comments about 'financial repression' made by Rickards, Kirby, Tett, and others. It's a matter of government's making it impossible for investors to make money except in undertakings specifically approved and designed by the government itself, undertakings that get narrower and narrower as government intervention in markets grows more pervasive. "Economic circumstances and markets will keep trying to find ways to assert themselves, and the different interests of some countries may cause them to act against the 'financial repression' other countries try to impose, what Rickards describes in his new book, "Currency Wars" (http://www.amazon.com/Currency-Wars-Making-Global-Portfolio/dp/159184449...), so there's no assurance about how things will end up, just assurance of less democracy and more totalitarianism. That's what GATA has been fighting all along." "Financial repression" was perhaps first foreseen by the British economist Peter Warburton in his 2001 essay "The Debasement of World Currency: It Is Inflation, But Not as We Know It" (http://www.gata.org/node/8303). Warburton wrote: "What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities, or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets." [Emphasis added.] That is, "financial repression." As the idea reached her this month, Tett wrote incisively: "To understand this, it is worth taking a look at a fascinating recent working paper by Carmen Reinhart and M. Belen Sbrancia, published by the Bank for International Settlements but drawing on earlier work for the International Monetary Fund. ... "... What Reinhart and Sbrancia argue is that if you want to understand how the West cut its debts during the last great bout of deleveraging -- namely, after the Second World War -- then do not just focus on austerity or growth. Instead, the crucial issue is that during that period, the state engineered a situation where the yields on government bonds were kept slightly below the prevailing rate of inflation for many years. This gap was not vast. But since asset managers and banks continued to buy those bonds at unfavorable prices, this implicit, subtle subsidy from investors helped the government to cut its debt pile over several years. Indeed, Reinhart and Sbrancia calculate that such 'repression' accounted for half of the post-Second World War fiscal adjustment in the U.S. and U.K., due to the magic of compounding. "Now these days it is hard to imagine any Western government overtly calling for a second wave of such 'repression.' After all, as Kevin Warsh, a former Fed governor, recently pointed out, the drawback of financial repression is that it curbs private-sector investment and credit growth. And in any case it is a moot point whether such repression could even be implemented today, given the globalized nature of markets. "Nevertheless, the political incentives to flirt with this concept are clear. After all, the beauty of a stealth subsidy is precisely that: It is too subtle for most voters to understand. It is also arguably a more equitable form of burden sharing, and thus less politically divisive, than, say, state spending cuts. "Moreover, governments do not necessarily need to be 'repressive' to achieve the 'repression' trick. As the economist Alan Taylor observes, if investors are so terrified that they cannot see alternative investment choices, they may end up buying government bonds by default -- even at unattractive prices. [Emphasis added.] Indeed, that is arguably what is already occurring today in the Treasuries market or the world of Japanese government bonds. And, perhaps, in the eurozone too. After all, when eurozone banks were given E442 billion of European Central Bank money two years ago, they used half of this to buy government bonds -- without compulsion at all. "Whatever you want to call it, then, the state and private-sector finance are becoming more entwined by the day. It is a profound irony of 21st-century 'market' capitalism. And in 2012 it will only deepen." Thus Tett, like Warburton long before her, expressed perfectly the rationale for the gold price suppression scheme even as she explained why there would be little point in questioning central bankers about their implementation of "public" policy. ("Now these days it is hard to imagine any Western government overtly calling for a second wave of such 'repression.'") In mainstream financial journalism it is simply taken for granted that the purposes and objectives of central banking are not to be learned from central banks themselves but rather from academics, market analysts, soothsayers, or whoever else might answer the telephone when a central banker won't. As a practical matter, this assumption of mainstream financial journalism is probably correct. But the world might begin to change, however slowly, if journalists tried putting the questions to central bankers in public settings anyway and reported their evasions or refusals to answer. Eventually investors and even the public might come to understand that great power, the power to control the prices of all capital, labor, goods, and services in the world -- that is, the power to control the price of everything, absolute power -- was being exercised in secret so that the world more easily might be expropriated, that democracy had been crushed, and that, as a mere high school graduate remarked a few years ago, "There are no markets anymore, only interventions." (http://www.gata.org/node/6242.) CHRIS POWELL, Secretary/Treasurer 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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| The Last Angry Mans Problem With IMF Gold Sal... Posted: 29 Dec 2011 01:16 PM PST SafeHaven
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| Sell Gold Now or will it Outperform Again in 2012? Posted: 29 Dec 2011 01:00 PM PST In 2011 investors saw gold perform outstandingly in the quiet season in July, August. $2,000 looked a certainty before the end of the year, but then unusual forces pummelled the gold price and all other global financial markets. Shades of the credit crunch hit the markets under the title of the Eurozone debt crisis. This had been going on for the last two years, but it entered a very dangerous stage in the final quarter of 2011.
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| Harvey Organ's Daily Gold & Silver Report Posted: 29 Dec 2011 12:49 PM PST Raid on silver and gold fails/Poor Italian 10 yr auction/rumours of global QE to infinity.
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| The Depth Of Despair In The Gold Community Posted: 29 Dec 2011 12:47 PM PST Jim Sinclair's Mineset My Dear Friends, Today was the first day that we got some good action in the gold price. It will be very interesting to see if sellers appear as they have been during Asian hours. Just because the manipulators use the illiquid Asian hours to paint gold do not assume it reveals the nationality of the selling. The gold market as we all know on a day to day basis is totally rigged. In fact, find a market anywhere that is not bullied by some young buck who considers himself the Master of the Universe. Gold is coming up on a tight group of four very major support areas that will hold the price from which the next advance is to take place. We have reached a point in terms of the depth of despair in the gold community that was never reached in the 1968 to 1980 reactions. That is all this is. Just another reaction in a Gold price headed for Alf's $4500. I imagine when gold reacts off $2100 the stampede to the bath tub with their razor bl...
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| Jim Sinclair: The depth of despair in the gold community Posted: 29 Dec 2011 12:34 PM PST By Jim Sinclair http://www.jsmineset.com/2011/12/29/the-depth-of-despair-in-the-gold-com... Today was the first day when we got some good action in the gold price. It will be very interesting to see if sellers appear as they have during Asian hours. Just because the manipulators use the illiquid Asian hours to paint gold, do not assume that it reveals the nationality of the selling. The gold market, as we all know, on a day-to-day basis is totally rigged. In fact, find a market anywhere that is not bullied by some young buck who considers himself the Master of the Universe. Gold is coming up on a tight group of four very major support areas that will hold the price from which the next advance is to take place. We have reached a point in terms of the depth of despair in the gold community that was never reached in the 1968-1980 reactions. That is all this is. Just another reaction in a gold price headed for Alf Field's target of $4,500. I imagine that when gold reacts off $2,100, the stampede to the bathtub with razor blades will be on again. Gold has in no way topped. The gold reaction per day in terms of percentage was nothing whatsoever. We have in no way reached the level called "thrilling with bullish bliss" common to a top. Every dollar we have won has been paid for in blood. All the short-of-gold wunderkin Masters of the Universe will have to be destroyed before gold is fully priced. The community, if you can still call it that, is in a psychotic episode that is soon to end. 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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| Posted: 29 Dec 2011 12:34 PM PST December 29, 2011 [LIST] [*]“Out of money” or “a little difficulty”? A preadolescent teen magazine encapsulates the U.S. fiscal situation better than Bloomberg... [*]Treasuries rally in the midst of gold’s “panic liquidation”: Pento, Hathaway, Amoss on an improbable flight to safety, and the euro-driven endgame in 2012 [*]Gun sales set another record: Guenthner on the investable angle [*]Chris Mayer on one of his major criteria as he surveys the world for opportunity next year [*]Reader backs up Byron King... what’s up with all the hyphens... strangling new businesses in the crib... and more! [/LIST] It’s come to this: Mad magazine has a better read on the economy than legions of journalists, analysts and pontificators... Pretty prescient, considering that tomorrow the White House will formally ask Congress to raise the debt ceiling another $1.2 trillion. No big deal, as conventional wisdom would have ...
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| Posted: 29 Dec 2011 12:21 PM PST [url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] Gold, as with Silver, managed to bounce right where it needed to in order to prevent a deeper drop. It uncovered buying down near the $1,535 - $1,530 level, an area where we learned after the fact, that Central Banks had been buying back in September. Bulls are digging in here so one can only hope that their conviction remains firm enough to take the price out of the danger zone and back above the $1,600 level. Such an event would trigger some sizeable shortcovering among the weaker-handed bears. Failure to hold today's low sends the market almost immediately down towards $1505 - $1,500. Last see what we get in trading tomorrow to end the day, week, month and year. Currently we are seeing buying coming into the Asian session. No doubt some of this is shorts ringing the cash register to go out on a winning note for the week. ...
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| Bix Weir: We've Reached the End of This Round of Silver Manipulation Posted: 29 Dec 2011 11:44 AM PST from Silver Doctors: Bix Weir has stated today that he believes we have reached the end of this round of silver manipulation, with silver matching the low for 2011 this morning near $26. While it's possible we have seen the lows for this correction (silver will need to close above $28 before we can even consider calling $26 THE bottom), think again if you believe we have reached the end of silver manipulation. The bullion banks are merely positioned for a sharp rally to the upside, profiting from their HFT naked shorting induced illiquid holiday week smash. From Bix: Just a quick note. I've been getting emails from people around the world who are angry that they are not able to secure physical silver at these low manipulated prices. There are both problems with supply and exorbitant premiums in the retail sales market. We have been waiting for the separation between paper and physical silver and it seems we are there. Read More @ SilverDoctors.Blogspot.com
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| Raid On Silver And Gold Fails / Poor Italian 10 Yr Auction / Rumours Of Global QE To Infinity Posted: 29 Dec 2011 11:35 AM PST by Harvey Organ: Good evening Ladies and Gentlemen: I hope that all of you were not blinded by the antics of the banks as they threw a tantrum this week as they are trying desperately for you to sell to them all of physical metals that you wish to depart with. The paper shorting accomplished nothing as you will see below. The bankers have nobody to play with so they are playing with themselves selling all the way down and up as well. You will see the OI either remained the same or rose. The price of gold finished the comex session at $1539.90 down $23.00 dollars. The price of silver fared better finishing the session at $27.27 up 8 cents on the day. I have written to Bart Chilton and he is going to obtain for me the Dec 23.2011 data which somehow was released at 10 am the 27th of December. If any of you saw this release, please let me know and email to me the inventory movements so I can complete my data entries. Read More @ HarveyOrgan.Blogspot.com
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| The Gold Price Closed at $1,539.90 I Would Not Sell Silver or Gold Here Posted: 29 Dec 2011 11:24 AM PST Gold Price Close Today : 1539.90 Change : (23.10) or -1.5% Silver Price Close Today : 2727.40 Change : 8.20 cents or 0.3% Gold Silver Ratio Today : 56.460 Change : -1.020 or -1.8% Silver Gold Ratio Today : 0.01771 Change : 0.000314 or 1.8% Platinum Price Close Today : 1367.70 Change : -16.30 or -1.2% Palladium Price Close Today : 631.75 Change : -0.70 or -0.1% S&P 500 : 1,263.02 Change : -15.79 or -1.2% Dow In GOLD$ : $164.94 Change : $ 0.60 or 0.4% Dow in GOLD oz : 7.979 Change : 0.029 or 0.4% Dow in SILVER oz : 450.50 Change : -6.50 or -1.4% Dow Industrial : 12,287.04 Change : -139.94 or -1.1% US Dollar Index : 80.36 Change : -0.136 or -0.2% Is silver non-confirming the GOLD PRICE fall, or is gold non-confirming the SILVER PRICE rise? Clue comes from the GOLD/SILVER RATIO, which fell today and closed Comex at 56.460. It reached my 57.25:1 target overnight, but markets never saw that price today. It should yet appear. Premium on US 90% silver coin keeps on rising, pointing to higher silver prices. Silver defended 2600c level with a low at 2614c. High came at 2785c. As long as the GOLD PRICE keeps on closing above $1,530 and silver above 2600c, they're good. Longer they hold on above those points, less chance they will dip below them. Often markets are influence by year-end selling that has nothing to do with outlook or economics, only with some goofy government mandate that skews the economy. We may be seeing some of that, and certainly in stocks all those mutual fund managers and financial advisors want to see stocks fill the year just a bit, just any bit at all, higher than unchanged or negative. We'll see what happens when sobriety returns on 2 January 2012. I would NOT sell SILVER or GOLD here. Let's see if silver will drop once again before we go hog-wild buying, though. Talking to a friend of mine from West Texas a few days ago, he said he had seen the weather there go from 80 degrees in the morning to 20 degrees that night. So they have a saying, if you don't like the weather, just hang around. It'll change soon enough. I feel the same way about silver and gold today, but when they change directions twice in one day, they like to wear out my thermometer. I am learning how to react to news events. I look across everything for the most meaningless item, and THAT will be what the media pundits pick out as the day's pivotal event. Today's bait for the causality-challenged came in the form of a report claiming the labor market is "healing." Now even with the Labor Dept's jimmying, jobless claims rose to 381,000 from 366,000 last week, yet fewer filed for unemployment in the past month than any in the past three years. What are y'all waiting for? Break out the champagne! Well, I say, One Hobo doth Not a Jungle Make. And if all you've got to brag about is that this month showed the smallest job losses of any out of the last 36, well, friend, you ought to put your hand over your mouth and retreat in silent shame. Yet hath the stock market not received it thus. The Dow rose 135.63 (1.12%) to 12,287.04 while the S&P500 roses 13.38 (1.07%) to 1,263.02. In the Moneychanger's tiny mind, the unemployment report would have generated no jubilation, but once again you see the perilous failure of following both stocks AND rationality. In my mind the Dow rising again to 12,300 resistance offers a splendid opportunity for another double-top failure. Should the Dow falter at 12,300, watch 12,150, because that will be the first trip-wire of a much larger fall. US DOLLAR INDEX is down 13.6 basis points (0.17%) to 80.361. Mattereth not, so long as it remains above morale-maintaining 80, and technical support at 79.50. Trend in force remains in force until violated, and this trend is up. Euro hardly worth talking about. Close at 1.2962, up 0.16%, but what a little mouse-burp deal. Who cares? Yen rose 0.42% to 128.82c/Y100 (Y77.63/$1), edging away from its lower channel line, at least enough so that you could slip a thin piece of paper between it and the line. Nothing happening there. I felt like a bimetallic thermostat in West Texas today, not knowing whether to heat or cool. Gold fell a meaty 1.5%, down $23.10 to $1,539.90 on Comex (low came at -- Eeek! -- $1,522!) but silver ROSE 8.2C to 2727.4c, then rose another 50c in the aftermarket! Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2011, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. 
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| Posted: 29 Dec 2011 11:00 AM PST Ron Paul published Gold, Peace, and Prosperity in 1981. What makes his pamphlet especially attractive today is the speed with which it can be consumed. A reader could get through his robust prose during an hour lunch break.
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| Posted: 29 Dec 2011 10:40 AM PST So says Cognitive Dissonance ([url]www.zerohedge.com/blogs/cognitive-dissonance[/url]) in edited excerpts from his original article*. [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]The article goes on to say, in part: This essay is directed towards those solidly middle class people who are converting their 'wealth' into Gold and Silver, even going so far as to cash out their qualified retirement accounts (IRA's, 401(k)'s and qua...
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| It?s ALL Here! Why Gold is Declining and What the Future Holds Posted: 29 Dec 2011 10:40 AM PST MunKNEE.com Editor-in-Chief Lorimer Wilson Holding a Gold BarSo much has been written over the past 4 months about why the price of gold has be misbehaving that I think you will appreciate having links to all the best articles, as posted on munKNEE.com, that explain the situation from a variety of perspectives. In addition to a greater understanding of what is happening to the price of gold and why I am sure you would like to have some insights into just where the price of gold (and silver, by extension) is going in the weeks, months and years to come. To that end*I have again*posted links to the most enlightening articles on the subject for your review. Frankly, virtually nothing more can be written on the current and future pricing of gold than you will find in this summary article so read on and take action according to the conclusions you come to as a result of being fully informed. Words: 1975 Compiled and posted by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making M...
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| Silver holding at critical $26 level Posted: 29 Dec 2011 10:12 AM PST [url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] Silver has been the on the receiving end of the risk aversion trades and as noted in a previous post has been badly lagging gold in terms of performance. It ended last year (2010) at $28.01. As of this writing, it is currently trading near $27.74, down, but just barely on the year. Compare that to Gold which is currently trading near $1547, and remains up for the year at about 8% or so. This being said, Silver had held on the charts exactly at the former spike low near the $26 level which it made after plunging from near $45 in late September of this year. This is a key level which needs to hold to prevent deeper losses which could threaten to take the metal down closer to $21 - $20 before it would bottom. Today's performance by the bulls, in bringing the metal sharply off its session low, is an outstanding effort. However, to get out of the woods and move past the danger stage, they now ne...
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| Central Planning Update (In Theory And Practice) - You Are Here Posted: 29 Dec 2011 09:55 AM PST Submitted by Jeffrey Snider of Atlantic Capital Management Volatility Is The Price Of Real Progress As we all ponder what may come at us in 2012, the ongoing volatility in almost every corner of every marketplace is certainly concerning, as it should be. This record volatility has enormous implications for any investor, but especially those in leveraged ETF's. Volatility is the anathema to these vehicles, as has been well discussed, but that does not diminish their targeted usefulness. As a portfolio manager I use leveraged inverse ETF's as hedges against the dramatic downside. They have a very narrow window and only perform when the market more or less moves in a straight-line down – just as it did in early October 2008, May 2010 or July/August 2011. Other than those sustained sell-offs, they are a drag on portfolio performance, a cost of doing business in this risk-on, risk-off "marketplace". I willingly pay that cost because I have no concrete idea when another fit of sustained selling will actually take place, but I have more than an inkling that it will. Instead, this massive and growing volatility, even though it is costing me some short-term performance, is a good sign that there is actually progress being made. What we are witnessing is a titanic battle between the world as it really is and the one central banks need you to believe it might be (if only you would set aside your own perceptions and self-interest). The fact that volatility has risen is a clear indication that the central bank-inspired anesthesia is no longer as effective as it was in 2009, or even in the QE 2.0 inspired insanity of 2010. Reality, and the free market, is being imposed – and that means there is a place for even narrowly-useful hedging vehicles. The current market battle is nothing more than the extreme measures of the rational expectations theory and a form of the fallacy of composition, combined with the political aspirations of a century-old theoretical notion of how the economic system should be ordered. Mainstream economic "science" has developed in a relatively straight line since the Great Depression, starting with the idea that the economy must be governed in emergencies. Executive Order 6102 and the subsequent devaluation of the dollar solidified the place for the entire field of economic management, marking perhaps the last time it would be challenged by mainstream thought. Without the guiding hand of the educated economist, capitalist, free market economies are believed to be wrought with the danger of total collapse, unable to escape from their own emotional whimsies. At the most primal level of modern economics is a deathly fear of deflation, a fear that is best summed up by Fisher's paradox. In 1933, Irving Fisher published a paper in the Federal Reserve's Econometrica circular that amounted to a point-by-point logical deduction of the string of events that led to the unusual collapse of the economic and banking systems. The scale and pace of the disaster confounded "experts" of the era (it seems experts have trouble with inflections in every era), so his deduction offered a highly plausible, well-reasoned and "logical" explanation. For Fisher, the combination of over-indebtedness and deflation was the toxic mix from which the calamity grew. But within that mix lay a paradox that formed a trap by which no self-made recovery was possible:
The lessons of this paradox are interwoven into the fabric of modern/conventional economics, that whenever deflation might be present a recovery has to be forced since it cannot start on its own. But it is extremely curious that only one half of the equation was chosen as an outcast: deflation. Over-indebtedness has, obviously, been warmly embraced in the decades since Fisher's proposition. The development of the mainstream of economics has led to the belief that intentional inflation can always defeat deflation, and therefore debt can assume a role, even a primary role, within the schematic of economic stewardship. Fisher's paradox survives in many forms, but among the most important was a logical derivation, namely the idea that economic participants can do what they believe is best for themselves, but in doing so harm themselves through systemic processes. This is known as a fallacy of composition; that what is good for individuals is not necessarily best for the whole. It overturned the traditional economic notion of an economy at its most basic level, from the time of Adam Smith describing individual self-fulfillment. Sure, this idea had been around for awhile before Fisher's paper, but the Great Depression "proved" that the fallacy was real and potentially cataclysmic. Originally it was confined to the narrow interpretation of depression economics, and so the evolution of unquestioned economic management started from there. The economics profession truly believes that there exists economic states where individual self-maximization no longer benefits the larger societal association of economic actions, so it "logically" follows that some process (or entity) has to step in and enforce conditions contrary to individual notions of self-maximization. In other words, there are times when people must be forced to do what they perceive is against their own best interest. In the context of depression avoidance this seems to be rather innocuous, but in the displacement of political thinking since the 1930's, it was a slippery slope. What Fisher's paradox essentially required was a benevolent authority to administer and visit a kind of beneficial tyranny upon the economic population. In the constant forward roll of history, though, the slippery slope of needed benevolence has been applied to a larger and larger cohort of economic circumstances – emergencies breed human desire for such authoritarianism. It is important to remember that the Federal Reserve was a secondary institution for much of the post-Depression period. After the monetary debacles of the Great Depression, especially the unnecessary reserve requirement hike in 1936 that initiated the depression-within-a-depression in 1937, the Fed was relegated to being simply a monetary check-writer. The Treasury Dept. was the economic powerhouse, especially during a time in which the dollar was the primary tool of economic management. The Fed was consigned to managing the money supply around treasury debt auctions to ensure the federal government's uninterrupted ability to borrow (in some ways things never change). When that borrowing exploded in 1965, the money supply went with it and the seeds of the Great Inflation were embedded. Paul Volcker changed this with his "heroism" in defense of the dollar, a dramatic departure from the previous era of Treasury Dept. domination. Conventional wisdom posits that it was Volcker's Fed that vanquished the inflation dragon, in doing so he "created" another pillar of the fallacy of composition (high interest rates were not good for individuals, but seemed to be good for the larger system). The chastened Fed of 1965 that allowed inflation to begin building was dropped for the activist Fed of 1980 that could apparently do no wrong (the monetary history of the 1970's was completely and conveniently ignored). The Fed's reputation soared with the perceived economic success of the 1980's, handing Alan Greenspan an amount of power unparalleled in human history. But how much economic success in the 1980's was earned? Again, conventional wisdom sees the Great Inflation ending in 1982, giving way to the Golden Age of Economic kingship – the Great Moderation. What I see is simply a transformation of inflation from consumer prices to asset prices. Instead of overwrought money creation circulating within the real economy in the form of wages and higher consumer prices, new credit production capabilities allowed a secondary circulation of credit money into assets, indirectly feeding into the real economy – first as interest income, second as debt – as the notorious "wealth effect". The economy in this age would transform from one based on earned income to one based on paper movements of created money, with the irony of the "wealth effect" being its tendency to incrementally create economic activity without actually creating productive wealth. The global economy was increasingly reliant solely on money creation, a transformation that cannot be understated and a prime cause for re-evaluating the whole of the Great Moderation. We see this quite clearly in the consumerism of the period. In 1975, household spending was still largely a function of wage income. If we adjust Disposable Personal Income by subtracting asset income (interest and dividends), we see a modest deficit in spending sources of about 3.5%. Households spent more than they brought in from wages, benefits, government transfers (net of taxes) and rental income. Consumer/household spending needed asset income to make up that small funding shortfall (and to go beyond to generate a positive savings rate). By the midpoint of the Great "Moderation" in 1990, the spending deficit was a chasm, 19.3%. Without the $898 billion (nominal dollars) in asset income there was no way that consumer spending would have grown so far so fast. That interest/asset income was a leftover effect of the Great Inflation when monetary creation found its way into growing stockpiles of "safe" financial assets for the household sector. By 1990, US households had accumulated $5.1 trillion in deposits and credit market assets (largely US treasury bonds) against only $3.6 trillion in debt (including mortgages). But that was a huge "problem" for the growing acumen of an activist Federal Reserve. As the 1980's progressed, interest rates were declining with consumer inflation (and providing a helping hand to asset prices running wild with credit now focused in that direction). The mainstream of economics took this as a sign of success, but it was really just a marked decrease in monetary efficiency since new money was now circulating heavily in asset prices (the junk bond bubble and the new, great bull market in equities). Concurrently, economic management had evolved in the 1980's with the innovation of the "rational expectations" theory. It was hailed as a huge advancement in monetary thinking coming out of the Great Inflation. In many ways it was an adjunct to the fallacy of composition. The rational expectations theory holds that the economic children of modern society can be fooled into undertaking activity that might be against their own best interest if some benevolent authority simply makes it look like everything will be better in the not-too-distant future. If the Fed screws with the price and cost of money (for debt accumulation), manipulates the price of gold (for inflation expectations), or "nudges" stock or real estate prices in the "right" direction (the notorious wealth effect), the population will act today on those conjured expectations of good times tomorrow. By the end of the 1980's, the S&L crisis (a stark warning that economic management might not have been all that it was advertised to be, a warning that has largely been ignored) threatened to plunge the world back into depression. The Fed and Alan Greenspan feared the consequences of a banking crisis and any attendant deflation. The Fed funds rate was pushed from around 8.25% in April 1990 to a ridiculous 3.25% by July 1992 – staying at that low level well into 1994. Alan Greenspan was trying to save the entire banking system from the S&L crisis by reducing the cost of funds so dramatically (hoping to see an increase in bank profits, leading to higher retained earnings and therefore equity capital upon which to pyramid more debt). The pressure on household spending because of the collapse in interest rates necessitated a marginal change in spending, but not back toward earned income. Instead we got the wealth effect and the myth of Greenspan's genius. Despite a persistently weak recovery (just ask George HW Bush) from a relatively mild recession, the Fed's management of the economy into a "soft landing" was hailed as a new form of a New World Order. The business cycle could be smoothed (or even eliminated) by the marginal attraction to debt and the wealth effect. If expectations were properly managed, the public would suppress their base emotional instincts and dance to the tune set by the monetary kingship. It was hubris of the highest order, of course. By the time the tech bubble finally burst (another warning of the dangers of an artificial economy) the Fed doubled down to save itself and its primacy. The results have been disastrous as the marginal economy progressed further and further away from the fundamental foundation of wages and earned income. The savings rate fell to zero by 2005. Worse than that, US households added $10 TRILLION (+269%) in debt between 1990 and 2007, with $7 TRILLION coming after 2002 alone. The household funding deficit reached a high of 24%! Even worse than that, households had shifted preferences out of "safe" credit market assets or bank deposits and into much riskier price assets simply because the systemic cost of risk was intentionally held artificially low. The economic foundation of the Great Moderation was an illusion, nothing more than asset prices and debt; wealth effect and rational expectations. None of this describes a free market, capitalist economy. Central banks and economists love to talk about economic potential, spending so much time trying to calculate it with their complex modeling capabilities and elegant mathematical equations. But the hard truth of economic overlordship is rather simple. The Federal Reserve, in cooperation with global central banks, Wall Street and the interbank wholesale money marketplace, simply substituted credit for earned income. And the reason is also very simple, because debt accumulation is far more easily manipulated. As long as households remained attached to earned income and "safe" savings assets, economic management was nearly impossible. The rational expectations theory needs a system more attuned by asset prices and malleable debt levels. And so marginal consumer spending shifted away from the solid foundation of jobs and wages right into the hands of the fallacy of composition and the rational expectations theory. It is more than a little ironic that the Fed so willingly embraced indebtedness in light of their history with Fisher's paradox. But mathematical advances in modeling along with a growing commitment to steady inflation allowed the Fed to really believe it could stave off deflation. So they made a deal with the debt devil to obtain the keys to the marginal economic castle and its grand artificial economy, and in the process dangerously surrendered to the over-indebted part of the Fisher's paradox equation. Thus the housing bubble to mediate the tech bubble since the tech bubble had some potentially deflationary consequences. Even today, everything the Fed has done since 2007 can be seen in these terms: the fallacy of composition, rational expectations and the preservation of the benevolent stewardship of the economic, academic masters. Somewhere in all this transition from Fisher's paradox to Greenspan's genius to debt-slavery, the system ceased to function as a free-market, capitalist system. The free market values the bottom-up dispersal and divergence of billions and billions of free opinions, freely associating together as unfettered price discovery. A central bank devoted to the fallacy of composition and rational expectations is a top-down system committed to manipulating price discovery to achieve ends that seem to be, and very often are, contrary to the perceptions of the vast majority of doltish economic participants. The monetarist system is forced upon the population, no matter how much they resist. Indeed, the idea of an economic fallacy of composition is itself a logical fallacy. I have no quarrel with the idea of a fallacy of composition or any logical fallacy for that matter, but logic holds no special place in social interactions. There are no logical deductions from economics no matter how much math is applied. It is, and will remain, a subjective interpretation of events. Even the vaunted Fed and its accumulation of Ivy League PhD's performs no leaps of logic. Like anyone else with an opinion, whatever fallacy of composition it thinks it sees is still just subjective interpretation. And that is the real danger. Cloaked in the apparent objectivity of math, the economic elite have gained unlimited economic power. When you stop and think about it, you can create a fallacy of composition pretty much anywhere (and write and enforce rules based on it) – from the steep tax on savers with five-plus years of zero interest rates to mandating everyone has to purchase health insurance even if they don't have the need for it. The volatility of today is nothing more than a fight between the active perceptions of participants trying to maximize self-interest within the classical, traditional concept of a free economy, and the opposing forces of overlordship of the landed economic elite, trying to get the uninitiated to simply follow orders. The elite really believes that if everyone would gladly pile on even more debt and spend with reckless abandon, the Great Moderation would once again be within reach. Consumers should only stop thinking for and of themselves since common sense is dangerous to the controlled economic system. To get more debt "flowing" requires active price manipulation to make the world seem like it will be better in the near future so that people will start acting like it. Economic potential to the Fed is the level of economic activity of 2006. To them, this is a cyclical recovery from a cyclical interruption in their normal smoothing of the business cycle. Sure it veered way off into panic, but that was just more confirmation that human emotion needs to be managed. But if we view the economy from the historical perspective, the lack of a cyclical recovery is not at all surprising. The Fed spent decades building up so much monetary inefficiency, so many artificial monetary channels for indirectly "stimulating" economic activity, that it will simply take an enormous amount of new money to get it all moving in the "right" direction again (Ben Bernanke and Paul Krugman at least have that part right). The fact that resistance is growing, that investors are not drinking the economic Kool-Aid as much as 2009 or late 2010 is a sign of growing discord. The efforts in the realm of rational expectations are simply not working. That is the ultimate danger because the entire central bank gameplan is based on only that. Without willing adherents (useful idiots?) to the central authority of economic management, everything falls back to the true potential – earned income and boring cash flow of un-manipulated dollars or euros. With such a massive chasm between marginal economic activity and earned income sources of spending, it is not likely to be a shallow or short transition (this explains most of the inability of the economy to create jobs – so many jobs in the central planning era were based on money creation and financial "innovation"). That is both the opportunity and danger of a system reaching its logical end. Put another way, there is a growing realization that while free markets are messy and somewhat unstable, central planning is not really a cure for those symptoms. In fact, it has created more harm ($13 trillion in debt is only US households) than good, more illusion than solid results. Volatility means that the free market is at least attempting to impose itself at the expense of central planning's soft financial repression and control. By no means is such a beneficial outcome assured; rather the other half of all this volatility (the risk-on days) is the status quo desperately trying to hang on through any and all means (even those less than legal, like bailing out Europe through cheapened dollar swaps). So the cost of using leveraged ETF's as insurance against the failure of soft central planning necessarily rises, but that just may mean their ultimate usefulness is closer to being realized. Unless you know exactly when this transition might reach its conclusion, it is, in my opinion, a cost worth bearing.
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| Jim Rogers Not Optimistic About Anything But Agriculture Posted: 29 Dec 2011 09:36 AM PST World markets may be riddled with uncertainty, but billionaire investor Jim Rogers anticipates gains in one sector for years to come. "If I were buying anything I'd be buying agricultural commodities," he says. "Going forward we're going to have huge shortages of everything – including farmers – I think ag will be a great place for the next 10-20 years," he says. But don't take that to mean that agri stocks are a buy – that's not what he means. "Yale did a study recently showing that investors made 300% more by putting money in commodities themselves rather than commodity stocks – that is unless you're a great stock picker." In other words, he'd play his thesis with commodities futures or ETFs that track them. And his thesis is based on massive research, part of which involves the performance of commodities in the 1970′s. "At the time economies did nothing and yet commodities went through the roof," he explains. Jim Rogers co-founded the Quantum Fund with George Soros in 1973. Although a native of Alabama, Rogers famously moved to Singapore due to his on-going belief that Asia is on the cusp of great prosperity. "He's an investor who eats his own cooking," says Fast Money trader Stephen Weiss. In other words, he doesn't just talk the talk, Rogers walks the walk. And largely Rogers is short because he is not optimistic about what's going to happen in the world over the next two or three years. "I'm short emerging markets, short American technology, short European stocks – I don't see much reason to own equities," he says. In a nutshell, Rogers expects global economic problems to get much worse. But whether that happens or not he still thinks a long position in commodities makes sense. That's the one area of the market where he sees potential. Here's why. If his thesis doesn't hold and the economies of the world improve, "I'll make money in commodities because (increased demand will generate) shortages," he says. "But if the world doesn't get better, then governments print money and the way to protect against that is to own real assets." In other words, he thinks commodities are a win/win. And in case you're wondering about his thoughts on gold, Rogers says, "it would not surprise me to see gold go to $1200 – but if it goes that low I'd buy a lot more – gold has been up 11 years in a row it deserves a substantial correction." Source: MoneyControl
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| Soros Sees Gold Prices on Brink of Bear Market Posted: 29 Dec 2011 09:32 AM PST Gold is poised to complete its 11th consecutive annual gain, the longest winning streak in at least nine decades, on the brink of a bear market. George Soros, the billionaire who two years ago called it the "ultimate asset bubble," cut 99 percent of his holdings in the first quarter, Securities and Exchange Commission data show. Hedge fund managers John Paulson, Paul Touradji and Eric Mindich also sold bullion this year. While speculators in New York futures are the least bullish in 31 months, the median estimate in a Bloomberg survey of 44 traders and analysts is for prices to rally as much as 40 percent to $2,140 an ounce in 2012. The divergence of views is widening after prices declined 19 percent from a record close of $1,900.23 on Sept. 5, or 1 percentage point away from a bear market. As some investors retreated to cash amid a $10 trillion slump in global equity values since May, others bought more metal, taking holdings in exchange-traded products to an all-time high two weeks ago. Bullion's 7.6 percent gain in 2011 means it's on track to beat stocks, bonds and the dollar for a second straight year. "It's done its job this year of protecting investors," said Michael Cuggino, 48, who helps manage about $15 billion of assets, including $3 billion in gold, at Permanent Portfolio Funds in San Francisco and correctly predicted in February that prices would keep rising. "Gold has been all over the place. If you bought gold at $1,800 then you aren't too happy. Some people will get out of gold, but the longer-term investors will remain."
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| Silver Price: Attention All Crybabies, Get the Checkbook Out! Posted: 29 Dec 2011 09:28 AM PST The tears stream from the faces of the silver bugs. Boo-hoo! Where's my $100 silver? Toughen up! Better yet, go buy a 10-year Treasury, then. I hear Greek 1-year paper is even better, paying out 150 percent. What a deal! Look! The Fed wants you OUT of precious metals. Understand? But before you hit that sell button, there are some pretty smart fellas who've done a lot of legwork and research on the subject of silver and see $100 as chump change when the dust settles from these manipulating bankers. Keep the faith. Physical buyers will break the cartel, and not by Max Keiser's gang of JP Morgan haters getting together to clean out the COMEX, though Keiser's laudable efforts will aid the cause of protecting investors from the Fed's insanity. No sir. It will be China who will drive the silver price higher for all silver bugs. So relax, be patient and enjoy.
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| Von Greyerz: Gold Will Trade $3,000 – $5,000 in 2012 Posted: 29 Dec 2011 09:23 AM PST With the gold price tumbling, along with silver, today King World News interviewed the man who told clients in 2002, when gold was $300, to put up to 50% of their assets into physical gold. Read (or listen to) the full interview here.
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| Mind the Leverage… It might KILL your wallet… Posted: 29 Dec 2011 09:03 AM PST In this article I will show you why it's wise to be careful with leveraged products, such as Proshares Ultra ETF's and Direxion 3x ETF etc… as they migh KILL your portfolio!
Proshares states on its website: Each Short or Ultra ProShares ETF seeks a return that is either 3x, 2x, -1x, -2x or -3x of the return of an index or other benchmark (target) for a single day, as measured from one NAV calculation to the next. Due to the compounding of daily returns, ProShares' returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period. These effects may be more pronounced in funds with larger or inverse multiples and in funds with volatile benchmarks. Investors should monitor their ProShares holdings consistent with their strategies, as frequently as daily. While I like those products for a short term trade, I will never hold them for a long time. Let me explain why… Imagine you have an asset class with a price today of $100. To keep it simple, let's also assume that the 2x Long ETF also trades at $100 today.
However, imagine we get a situation that works against us. We own a 2x Short ETF, and the market keeps rising.
The two tables above show us that we might get a favorable situation with leveraged ETF's when volatility is very low. But what happens when volatility is very high, as it has been recently? Even though the asset class ended up just where it began (at $100), our 2x Short ETF has lost 7.94%!
The same would be true if we have a 2x Long ETF: Even though the asset class ended up just where it began (at $100), we would have lost money with the Leveraged Long ETF…
To give you an example, let's have a look at the Silver price, the 2x Leveraged Long Silver ETF (Ticker: AGQ) and the 2x Leveraged Short Silver ETF (Ticker: ZSL). The candlestick chart is the Silver price, the Green line is AGQ and the purple line is ZSL. As we can see, silver lost 12.25% this year. One would expect to have gained 2 x 12.25%=25.50% with ZSL this year, right? One would expect to have lost 2 x 12.25% = -25.50% with AGQ this year, right?
Oh, and by the way, it also happens with the -1x ETF's, even though they DON'T leverage the price… Let's have a look at the SP500 vs Proshares Short SP500 (Ticker: SH) since 01.01.2011.
That's why you have to mind the leverage products! Buy them to do a short trade, don't buy them to Buy & Hold, unless you would expect price to keep going in one direction, and then still… Don't forget to visit www.profitimes.com for more articles!
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| Summarizing 2011 In Nine Easy Charts Posted: 29 Dec 2011 08:45 AM PST
If one had to summarize 2011 in one sentence, it probably would be: "a year in which the market ended unchanged, in which the world got within seconds of global coordinated bankruptcy, and in which central planning finally took over everything." Simple. On the other hand, conveying a comparably concise message full of hope and despair at the same time, using charts would actually be slightly more problematic. But not for the Economist, which has managed to do just that, however not in one but nine discrete charts. Here is what they did. From the Economist:
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