Gold World News Flash |
- Precious Metals Still a Risk Asset as Indian Demand Falls 56%
- Silver Value Investing With A Financial System Off the Rails
- Silver Industrial Demand - Steel May The Commodity to Watch
- Hathaway - Decline in Gold & the Shares Has Run its Course
- Gold Seeker Closing Report: Gold and Silver End Mixed
- 34 Shocking Facts About U.S. Debt That Should Set America On Fire With Anger
- GoldSeek Radio interviews GATA Chairman Bill Murphy
- Silver Update 1/4/12: W For The Win
- Gold Newsletter's Lundin credits GATA in Resource Clips interview
- Bull Market Tops Form In the Context of Greed and Euphoria, Not Fear and Despair
- When the Public Sector Debt Bubble Blows Up
- Gold Working Towards Familiar Territory
- Transcript Available of Jim's Latest Ellis Martin Report
- Doug Casey Addresses Getting Out of Dodge
- Gold Price Has Climbed Above $1,600 Can it Hold?
- Capital Account: James Turk on HARD MONEY
- Record Deposits at ECB? / Hungary CDS Hit Record Levels / Italy and Spanish Bonds Rise Again
- Retail Investors Pull $140 Billion From Equity Funds In 2011 Which Close The Year With 19 Consecutive Outflows
- Meet the City's No.1 Crisis-Beating Fund Manager
- Meet the City's No.1 Crisis-Beating Fund Manager
- Wild Gyrations in Commodities & Gold – what’s Next?
- Wild Gyrations in Commodities and Gold
- Swiss central banker dumped francs on eve of devaluation
- Five Forecasts for 2012
- Bill Gross Warns Of Financial Market Implosion
- One Word...Volume
- Rickards: China’s Slowdown Will Be Worse Than You Think
- Gold Daily and Silver Weekly Charts - Up Against Resistance
- Krugman: Debt Matters, But Not That Much
| Precious Metals Still a Risk Asset as Indian Demand Falls 56% Posted: 04 Jan 2012 06:15 PM PST Bullion Vault
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| Silver Value Investing With A Financial System Off the Rails Posted: 04 Jan 2012 04:37 PM PST John Bogle is well known in the investment community. At Vanguard, he completely changed the way investors think about Wall Street. He has legions of fans, fans who label themselves as "Bogleheads," reflecting their staunch acceptance of his main investment thesis: turnover kills. In a recent interview, Bogle commented on the current global financial system, noting that while the amount of money in the financial industry expands, so does active trading. Mutual funds, a savings vehicle of choice, were once turning over only 18% of their holdings each year. Today, Bogle says, funds have turnover as high as 100% - the funds move enough investments that they're virtually replacing each holding in less than one year. Trading Isn't Economic Output Bogle backs a view that other fund managers also embrace: trading is not a substitute for economic activity. Warren Buffett backs this view. As does Charlie Munger, Warren Buffett's right hand man, who says in many interview...
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| Silver Industrial Demand - Steel May The Commodity to Watch Posted: 04 Jan 2012 04:36 PM PST Forecasting the future of the economy is a difficult task; one who can do it with regularity will most certainly see massive investment profits. Most of this complexity comes from the lack of clarity in commodities prices. Commodities earn their price from demand. Most commodities are tied to a specific industry – palladium is a barometer for autos, while steel is a barometer for real estate. Some commodities are then related entirely to geography – copper is the commodity for a growing Asian economy, while oil is the commodity for all emerging markets. Localized Commodities Some commodities are localized due to the large price differences from one location to another. In general, it is the heaviest and least valuable commodities that vary the most in global price. A heavy and inexpensive good usually does not allow for shipment necessary to arbitrage differences from one locale to another. Steel is one such commodity. Already, we're seeing how steel pr...
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| Hathaway - Decline in Gold & the Shares Has Run its Course Posted: 04 Jan 2012 04:02 PM PST  KWN wanted to share some key portions of an upcoming gold report from four decade veteran, John Hathaway, the prolific manager of the Tocqueville Gold Fund. This will be one of his most important reports in years because of the content and also the current mindset which dominates the gold world. Here are just a few observations by one of the most extraordinary 5-star rated Morningstar fund managers: "2011 was a good year for gold bullion, up 11.3%, but a tough year for gold stocks which declined 18.3% based on the XAU index of gold and silver stocks. We addressed the reasons for the disparity between the performance of gold bullion and gold mining stocks at length in our web site article (The Golden Mulligan-September 2011)."
This posting includes an audio/video/photo media file: Download Now |
| Gold Seeker Closing Report: Gold and Silver End Mixed Posted: 04 Jan 2012 04:00 PM PST Gold rose $10.40 to $1613.10 in Asia before it fell back to $1593.30 in London, but it then rose to as high as $1618.30 in early afternoon New York trade and ended with a gain of 0.56%. Silver climbed to $29.712 in Asia before it fell back to $28.916 in London and then bounced back higher in New York, but it still ended with a loss of 1.62%.
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| 34 Shocking Facts About U.S. Debt That Should Set America On Fire With Anger Posted: 04 Jan 2012 03:30 PM PST from The Economic Collapse Blog:
Read More @ TheEconomicCollapseBlog.com
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| GoldSeek Radio interviews GATA Chairman Bill Murphy Posted: 04 Jan 2012 03:26 PM PST 11:24p ET Wednesday, January 4, 2012 Dear Friend of GATA and Gold: GoldSeek Radio's Chris Waltzek today interviewed GATA Chairman Bill Murphy for 10 minutes about gold's prospects against the Western central bank gold price suppression scheme. You can listen to the interview here: http://radio.goldseek.com/nuggets/murphy01.04.12.mp3 CHRIS POWELL, Secretary/Treasurer 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... 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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| Silver Update 1/4/12: W For The Win Posted: 04 Jan 2012 02:36 PM PST |
| Gold Newsletter's Lundin credits GATA in Resource Clips interview Posted: 04 Jan 2012 01:40 PM PST 9:35p ET Wednesday, January 4, 2012 Dear Friend of GATA and Gold: Gold Newsletter editor and New Orleans Investment Conference sponsor Brien Lundin has given a comprehensive interview to Kevin Michael Grace of Resource Clips, analyzing the metal's prospects, identifying some of his top mining company recommendations, and giving credit to GATA's work. Lundin says of GATA: "I give a lot of credence to their claims. GATA was founded on that very research that Frank Veneroso did in the 1990s that we published; that's where it all started. I don't have a lot of confidence in the efficiency of government, and yet governments have done major covert and overt manipulations of the gold price over the decades as well as every other investment market. There's really no reason to think that they wouldn't be doing the same with the gold price; there's a lot of evidence that they have. I don't like to blame every short-term or daily movement in the gold price on some unseen hand; I think that's taking it a bit too far. Gold is a central barometer of whether governments are doing a good job of managing their economies and currencies. Governments have every motive to manipulate the price, and they have the power to do so as well." The interview with Lundin is headlined "Lundin on Gold" and it's posted at Resource Clips here: http://resourceclips.com/2012/01/04/lundin-on-gold/ CHRIS POWELL, Secretary/Treasurer 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. 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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| Bull Market Tops Form In the Context of Greed and Euphoria, Not Fear and Despair Posted: 04 Jan 2012 12:52 PM PST Massive breakout above a thirty year consolidation and everyone is scared to death? Maybe if the chart was flipped upside down. S&P Gold (Formerly Precious Metals Mining)* Turned Upside Down Secular bull market, exhibiting massive breakout above multi-year resistance, end within the context of greed and euphoria, Continue reading Bull Market Tops Form In the Context of Greed and Euphoria, Not Fear and Despair
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| When the Public Sector Debt Bubble Blows Up Posted: 04 Jan 2012 12:24 PM PST Bill Bonner View the original article. January 04, 2012 01:15 PM What's ahead for 2012? We gave you a hunch yesterday. The price of gold will probably go nowhere this year. We have a feeling that 2012 is not going to be a great year for money you get from the ground. Oddly, it will probably be a better year for the money you get from trees. How is that possible? We all know paper money is going to be worthless. Yes…dear reader…but not necessarily in 2012. It's just part of the curious way Mr. Market does business…and a feature of his nasty habit of ruining as many investors as possible. Look, it's pretty simple. The private sector debt bubble blew up in 2008. The public sector debt bubble will blow up too. Maybe in 2012. Most likely not for a while longer. But when US debt begins to blow up, the feds will come in with everything they've got trying to stop it. And all they've got is a printing press. Ben Bernanke: …the US government has a technology,...
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| Gold Working Towards Familiar Territory Posted: 04 Jan 2012 12:24 PM PST courtesy of DailyFX.com January 04, 2012 02:26 PM 240 Minute Bars Prepared by Jamie Saettele, CMT My last comments were that “the spike under the September low probably cleared the market of weak longs so beware of a pop into 1600 before sellers return.” Price has reached 1600 but a closer examination of the technical evidence suggests that stronger resistance may not come in until 1630/40. This level is defined by the 20 and 200 day averages, 12/21 high, and channel resistance. Supports for Thursday are 1594 and 1583. Other TA Articles...
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| Transcript Available of Jim's Latest Ellis Martin Report Posted: 04 Jan 2012 12:19 PM PST Dear Friends, The most recent interview with Ellis Martin of ellismartinreport.com is titled "Some Gold Stocks Are Bouncing Back." In this interview we further discuss my outlook for 2012. Click here to read the transcript of the interview. Jim Sinclair
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| Doug Casey Addresses Getting Out of Dodge Posted: 04 Jan 2012 11:08 AM PST Submitted by Doug Casey of Casey Research Doug Casey Addresses Getting Out of Dodge L: Doug, a lot of readers have been asking for guidance on how to know when it's time to exit center stage and hunker down in some safe place. Few people want to hide from the world in a cabin in the woods while life goes on in the mainstream, but nobody wants to get caught once the gates clang shut on the police state the US is becoming. How do you know when it's time to go? Doug: Well, the first thing to keep in mind is that it's better to be a year too early than a minute too late. David Galland recently read They Thought They Were Free: The Germans, 1933-45, by Milton Mayer. He quoted a passage in his column of last Friday. It goes a long way in explaining why Americans appear to be such whipped dogs today. They're no different from the Germans of recent memory. For those who missed it, let me quote it: "You see," my colleague went on, "one doesn't see exactly where or how to move. Believe me, this is true. Each act, each occasion, is worse than the last, but only a little worse. You wait for the next and the next. You wait for one great shocking occasion, thinking that others, when such a shock comes, will join with you in resisting somehow. You don't want to act, or even talk, alone; you don't want to 'go out of your way to make trouble.' … In the university community, in your own community, you speak privately to your colleagues, some of whom certainly feel as you do; but what do they say? They say, 'It's not so bad' or 'You're seeing things' or 'You're an alarmist.' "These are the beginnings, yes; but how do you know for sure when you don't know the end, and how do you know, or even surmise, the end? On the one hand, your enemies, the law, the regime, the Party, intimidate you. On the other, your colleagues pooh-pooh you as pessimistic or even neurotic… the one great shocking occasion, when tens or hundreds or thousands will join with you, never comes. That's the difficulty. If the last and worst act of the whole regime had come immediately after the first and smallest, thousands, yes, millions would have been sufficiently shocked… But of course this isn't the way it happens. In between come all the hundreds of little steps, some of them imperceptible, each of them preparing you not to be shocked by the next. Step C is not so much worse than Step B, and, if you did not make a stand at Step B, why should you at Step C?" The fact is that the US has been on a slippery slope for decades, and it's about to go over a cliff. However, our standard of living, while declining, is still very high, both relatively and absolutely. But an American can enjoy a much higher standard of living abroad. On the other hand, if I were some poor guy in a poverty-wracked country with few opportunities, I'd want to go where the action is, where the money is, now. Today, that means trying to get into the United States. The US is headed the wrong direction, but it's still a land of opportunity and a whole lot better than some flea-bitten village in Niger. L: By the time things get worse than some Third-World dictatorship in the US, such a person could have remitted a whole lot of cash back home. Doug: And you'd have a whole lot of experiences that would give you a competitive edge back where you came from, or in the next place you go to. The one-eyed man is king in the valley of the blind. People have to lose that backward, peasant mentality that ties them to the land of their birth. Sad to say, although the average American has somewhat more knowledge of the world – mainly due to television – his psychology is just as constrained as that of some serf from central Asia or some primitive village in Africa. It's all a matter of psychology. But if you're not poor, you want to go someplace that is safe, nice – whatever that means to you – and with a lower cost of living. As most readers know, for me that's Cafayate, Argentina, but one size does not fit all. It needs to be a place you actually enjoy spending some time, with people whose company you enjoy. L: Fair enough. But our readers want to know if your guru-sense is tingling yet, or how close you think we are to it being too late to leave – or at least too late to leave with any meaningful assets. Doug: I'm a trend observer. This is one of the advantages of studying history, because it shows you that things like this rarely happen overnight. They are usually the result of trends that build over years and years, sometimes over generations. In the case of the US, I think the trend has been downhill, in many ways, for many years. Pick a time. You could make an argument, from a moral point of view, that things started heading downhill at the time of the Spanish-American War. That was when a previously peaceful and open country first started conquering overseas lands and staking colonies. America was still in the ascent towards its peak economically, but the seeds of its own demise were already sewn, and a libertarian watching the scene might have concluded that it was time to get out of Dodge – L: [Laughs] That would have been a bit early… Doug: [Chuckles] Yes, that would have been way too soon. As Adam Smith observed, there's a lot of ruin in a country. L: On the other paw, it would have gotten you out before the War between the States, a disaster well worth avoiding. Doug: No, the Spanish-American War was in 1898. L: Oops! Sorry, I was thinking of what Americans call the Mexican-American War, but which Mexicans call the "American Invasion" – Doug: [Laughs] L: I'm not joking. That's what they called it in the history books I was given in Mexican schools when I lived there in the '70s. It has long seemed to me that that was an ominous turn for the worse for the US and a clear example of conquering a weaker neighbor purely for pillage – not just Texas, but everything from there all the way to California. Doug: That's right. Davey Crockett and the boys, we love them, but in many ways they were the equivalent of today's Mexicans who want to recolonize the southwest and turn it back into part of Mexico, in what they call the Reconquista. L: Indeed, but this is ancient history to most US taxpayers today – I'm reminded that it's not correct in many cases to call them Americans. Doug: Yes, just as it was a misnomer to call the people who lived in the Roman Empire after Diocletian Romans – because Roman citizens were once free men. After about 300 AD most of them were bound to the land or their occupations as serfs. But the slide for Rome started at least 120 years earlier, after the death of Marcus Aurelius. Politically, the decline started with the accession of Julius Caesar 240 years before that. So, when did the slide – politically, economically, and socially – really start for the US? When were there no more trends going up? L: FDR? The New Deal was really a moral, economic, and political turning point. Doug: You could make that argument, but the US still grew economically, despite the roadblocks FDR threw in its path. US military power and global prestige continued growing from that point, although, paradoxically, the accelerating growth of the US military was directly responsible for the decline of the US economically and in terms of personal freedom. One reason for the ascendancy of the US after World War II was that we were the only major country in the world not physically devastated by the war. L: Ah. Right. Doug: So it seems to me that the peak of American civilization was in the 1960s. As for evidence, well, I like to put my finger on the 1959 Cadillac. Those twin bullet taillights, the opulence of it… In terms of then-current technology, things couldn't get much better. L: "Opulence. I has it." Doug: [Laughs – a real belly laugh] That's my favorite TV commercial! Anyway, that was the peak, in my mind. Though things continued getting better for a while, the US started to live out of capital. L: Had to pay for guns and butter. Doug: That's right. The Johnson administration's so-called Great Society created vast new federal bureaucracies that promised Americans free food, shelter, medical care, education, and what-have-you. Americans became true wards of the state. But the real, final nail in the coffin for America was in 1971 – L: Nixon taking the US off the gold standard. Doug: Nixon taking the US off the gold standard – open devaluation of the dollar, combined with wage and price controls for some months. And that was not long after the so-called Bank Secrecy Act, which abolished bank secrecy, and required the reporting of all foreign financial accounts. Nixon was, in many ways, even more of a disaster than Johnson. Republicans are usually worse than Democrats when it comes to freedom, partly because they like to couch their depredations in the rhetoric of defending the free market. While everyone understands that Democrats are socialists just under the surface, Republicans actually give capitalism a bad name. Baby Bush is a perfect, recent example. L: But don't you worry your pretty little head about devaluation – it's just a "bugaboo" – and as long as you're not one of those unpatriotic people wanting to buy imports or vacation abroad, your dollar will be worth just as much tomorrow as it is today. The scary thing is that the Belarusian dictator Lukashenko said almost the same thing when the Belarusian ruble lost two thirds of its forex value earlier this year, asking his countrymen why they need to go on vacation in Germany or buy German cars… Doug: You see why I like to study history? It doesn't repeat, but it sure does rhyme… L: With a vengeance. Doug: So, anyway, since 1971, some things have improved largely due to technological advances, but the America That Was has been fading into the past. It was a decisive turning point. You can see that in the accelerated proliferation of undeclared wars we've had since then. I don't just mean the penny-ante invasions of Granada and Panama – the US has always lorded it over Caribbean and Central American banana republics; those are just sport wars. But Iraq and Afghanistan are alien cultures on the other side of the world – apart from never posing any threat to the US. Now it looks like Iran and Pakistan are on the dance card, and they're big game. The War Against Islam has started in earnest, and it's going to end badly for the US. I explained all this at great length in the white paper, Learn to Make Terror Your Friend, that I wrote for The Casey Report last month. Domestically, saying that the US is turning into a police state when you started this conversation was quite accurate. You can see more and more videos spreading over the Internet, not just of police brutality, but demonstrating the militarization and federalization of police, who are being inculcated with both disdain for and paranoia about ordinary citizens. In the old days, if you were stopped for speeding, the peace officer was polite – you could get out of your car, meet the cop on neutral ground, and chat with him. You didn't have a serious problem unless you were obviously drunk or combative. Now, you don't dare make a move. You better keep your hands in plain sight on the steering wheel and be ready for a Breathalyzer test without probable cause. The law enforcement officer will stand behind you with his hand on his gun. And you're the one who'd better be polite. L: There has been a polar reversal. The cops used to address citizens as "sir" or "ma'am." Now, the correct response in a traffic stop is: "Yes, sir! I would love to inspect the bottom of your boot, sir!" Doug: [Laughs] That's right. My friend Marc Victor gives out magnetized business cards. People ask, "Why?" He answers that it's so clients can put them on the bottom of their cars or refrigerators, so they can see it when the cops throw them to the ground. L: Marc's a good man. There's a handy video on Marc's website, offering advice on what to do if you're pulled over by the police in a traffic stop. Doug: A good public service announcement. At any rate, I think there's no question that the US has turned the corner on every basis: politically, socially, morally, and now, economically… L: Okay, but, Doug, you said that in 1979 too. The question is, how do we know when the door is going to close? Doug: [Laughs.] Well, sometimes I feel a little like the boy who cried wolf. But Roman writers like Tacitus and Sallust saw where Rome was going before it got completely out of control. Should they have said nothing, for fear of being too early? Here in the US, it should have gone over the edge back in the 1980s, but we got lucky. There was still a lot of forward momentum, which can last for decades when you're speaking of civilizations. There was the computer productivity boom. The Soviet Union collapsed, China liberalized, and Communism was discredited everywhere except on US college campuses. The end of the Cold War opened up vast areas of the world to the global market. And most surprising of all, Volker tightened up the money supply and interest rates went high, causing people to save money and stop borrowing to consume. L: That's not happening this time. Doug: No. We got lucky back then. Since the '90s we've had a long and totally phony, debt-driven boom that's now come to an end. I feel very confident that there's no way out this time. There are huge distortions and misallocations of capital that have been cranked into the system for two decades. And not just in the US this time, but in Europe, China, Japan, and elsewhere. The US is very clearly on the decline. The fact that in spite of bankrupting military expenditures to no gain for the American people, those in power are talking overtly and aggressively about attacking more countries – Iran and Pakistan in particular – is extremely grave. The fact that they attacked Libya – which, incidentally, is going to turn into a total disaster, a civil war that will last for years – shows it's not stopping. Sure, Obama brought troops home from Iraq – another disaster that's going to remain a disaster for years to come – but at the same time he put a company of combat troops in Uganda, of all places and Marines in Australia, to provoke the Chinese. Back home, I've read reports that people are being stopped for carrying gold coins out of the US, in Houston in particular. Now we have authorization of the military to detain US citizens, on US soil, with no trail, and indefinitely, on the verge of becoming law. And Predator Drones have been used to hunt down farmers on their own ranches. I could go on and on. This is not like spotting early signs of decay in America's expansionist wars of the 19th century or things getting worse with FDR. Most people can't see it with all the noise and confusion, but we've reached the edge of the precipice. L: Don't worry about exactly where the edge is, just assume it's there and take appropriate action? Doug: Yes. It really is there. It's a clear and present danger. But most Americans are as oblivious as most Germans were in the '30s. In fact, most of them support what's going on, just as most Germans supported their government in the '30s and '40s. L: So… don't worry about figuring out exactly when the gates will shut. Assume they are shutting now? Doug: That's right. One should be actively and vigorously looking to expatriate assets, cash, and even one's self. A prudent person will always be diversified politically and internationally. L: What about people who have jobs they can't continue doing from abroad and who need the income? Doug: They should still prepare, as best they can, to be ready to go on a vacation when things get hot – a vacation from which they might not return for a long time. All that needs happen, with the hysteria that's building in the US, is for a major terrorist incident – real or imagined – to occur. Homeland Security will lock the country down. I hate to admit it, but I'm almost starting to credit the stories about those FEMA camps. Look, I know it sounds extreme, and the comparison to pre-WWII Germany has been made many times, but it bears repeating. Germany was the most literate, civilized, and even mellow, in some ways, country in Europe. It was much admired all around the world – a nation of shopkeepers, small farmers, and scholars. But the whole character of the place started changing in 1933, and it just got worse and worse. By the end of 1939, if you weren't out, you were done. L: [Pauses] Well, not a cheerful thought. Actions to take? Doug: Things we've said before: Set up foreign bank accounts in places you like to travel, while you can. Set up vault arrangements for physical precious metals outside the US. Buy foreign real estate that you'd like to own, because it can't be forcibly repatriated. Offshore asset protection trusts are a good idea too. Become an International Man. Let me emphasize that US taxpayers should stay within all US laws, because the consequences of breaking them are unbelievably draconian. Generally, one simply must internationalize one's assets. The biggest danger investors face, by far, is not market risk – huge as that will be – but political risk. The only way to insulate yourself from such risk is to diversify yourself politically and geographically. L: Right then… words to the wise. Thanks for your insight. Doug: You're welcome. Most won't, but I just hope readers listen.
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| Gold Price Has Climbed Above $1,600 Can it Hold? Posted: 04 Jan 2012 10:50 AM PST Gold Price Close Today : 1611.90 Change : 12.20 or 0.8% Silver Price Close Today : 2906.30 Change : 47.0 cents or -1.6% Gold Silver Ratio Today : 55.462 Change : 1.296 or 2.4% Silver Gold Ratio Today : 0.01803 Change : -0.000431 or -2.3% Platinum Price Close Today : 1418.00 Change : -17.00 or -1.2% Palladium Price Close Today : 651.15 Change : -16.10 or -2.4% S&P 500 : 1,277.30 Change : 0.24 or 0.0% Dow In GOLD$ : $159.26 Change : $ (0.93) or -0.6% Dow in GOLD oz : 7.704 Change : -0.045 or -0.6% Dow in SILVER oz : 427.29 Change : 7.51 or 1.8% Dow Industrial : 12,418.42 Change : 21.04 or 0.2% US Dollar Index : 80.09 Change : -0.476 or -0.6% Today the GOLD PRICE moved ahead on its way to a meeting with $1,625 resistance. Rose $12.20 to $1,611.90 on Comex. Silver, perversely, fell 47c to 2906.3c. Now that the GOLD PRICE has climbed above $1,600, it must hold on there or crash badly. It has pointed its hood ornament at $1,675/$1,680, lateral resistance and the 150 day moving average (now 1,672.42). Whether GOLD has already bottomed or must be sent back to suffer more indignities makes little difference. It will have turned back up before this first quarter is over. Silver and gold will end 2012 much higher. Overhead the SILVER PRICE is knocking at 2970c. Chart has congested, digesting yesterday's rise. Tomorrow Silver will break one way or the other, most like upward. Low today came at 2894, so silver must defend that 2900c area. GOLD/SILVER RATIO may have fooled me. May not reach 57.5:1, but over the years I have learned to wait for my target, so I will wait. Most important aspect of investing seems the one principle almost nobody knows, including investment "professionals" and financial planners. It's simple: ALWAYS ALIGN YOUR INVESTMENTS WITH THE PRIMARY TREND. That's the trend that runs for 15-20 years, up or down. If it's up, you buy it and hold it. If it's down, you sell it and stay out or short it. NEVER buy a bull market position and trade in and out, trying to catch the highs and lows. You ain't that good. Hardly anybody is, and you'll only lose your position and your money trying. Bear market (primary down trend) began in stocks and the US dollar in 2000, and it's still running. Bull market in silver and gold began in 2001, and it's still running. Best investment strategy is to climb aboard the primary trend and ride it till it ends. Not fancy, no long fake-eyelashes, not flashy, it just makes money. Whenever a sharp bull market correction makes you question yourself, remember: bull market quandaries eventually resolve to the upside. Go look at the silver chart, 2008 - now, if you need an example. But of course, I don't wear them fancy, pointy shoes like them financial planner and experts, and I don't have any fancy degrees either. I'm just a natural born fool from Tennessee --- who was advising people to get out of stocks back in 2001. But what do I know? Dollar index made a rounding bottom (or upside-down head and shoulders) over the last three trading days. Unless it drops below 80, that pattern will hold and send the dollar higher, to 81.1 at least. Close below 80 negates that outlook. Euro gapped down today, utterly gainsaying yesterday's pin prick across the downtrend line. Closed down 0.87% at 1.2940. Looking for 1.2000. Yen sidestepped today, flat, but holding on to the break above the trend line. Ended at 130.37c/Y100 (Y76.70/$1). Itching to move higher. Tired out by yesterday's gains, stocks took a rest today. Dow rose 0.17% (21.04 points) to 12,418.42. S&P500 rose 0.2% (0.24%) to 1,277.30. I don't get it. Economy's future remains burdened by massive bad debts and malinvestment from the last boom cycle -- shucks, from the booms since 1913. Apparently at midnight a.m., 1 January 2012, some Great Wheel turned that will fix everything. At least, that's how the stock market is acting, but I reckon somebody forgot to tell me about the Great Wheel's turning. Add to that what seems to be the Federal Reserve's resolve to keep on inflating, which is the only cure they know and the one cure that won't help. Oh, and the Bernancubus and Co. have announced that they're going to be more transparent and announce what course they expect interest rates to follow, which gives them a chance at making even more mistakes in uncharted waters. Whoops -- they made that decision to be more open at last month's meeting, but kept it a secret until today. The Three Stooges weren't this ridiculous. Curly, Larry, and Moe are in charge of national monetary policy! Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2012, 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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| Capital Account: James Turk on HARD MONEY Posted: 04 Jan 2012 10:46 AM PST from CapitalAccount: The fireworks have fizzled out over 2011. So what's in store for financial markets in 2012? We've already said good bye to the old normal, now maybe even the new normal, so are we living today in the paranormal? That's the forecast of bond titan Bill Gross of PIMCO. The toll of too much paper and too little trust. But how does that materialize? Bill Gross talks about the creation of two permanent fat tails, one on the left full of credit deflation, delevering and bankruptcies, and one on the right full of inflation and money printing. Where do we fall, and can the world navigate between the two in this new paranormal and can gold help hedge our journey? We will talk to James Turk, founder of GoldMoney and author of "The Collapse of the Dollar and how to Profit from it," who agrees with Bill Gross, and thinks that gold is a good hedge to navigate through these turbulent times. And on the issue of gold, we have seen a lot of volatility in the precious metals market as of late. What does James Turk think of this? Well, corrections are normal in bull markets, and this is a bull market, so don't be scared when you see these price drops. They are just opportunities to accumulate more. From ECB LTRO to Federal Reserve quantitative easing, James Turk thinks the real risk is continued debasement of currencies globally, and gold is your best bet at preserving your wealth going forward. And James Turk is not the only one who seems to think so. Alan Greenspan certainly agreed back in 1966 when wrote Gold and Economic Freedom, saying that a gold standard is the only way to protect a person's wealth from confiscation through inflation. And in lighter news, out of this world, paranormal type of news, will we see US president Barack Obama's foreign policy go intergalactic in a quest for gold stolen by aliens? We'll tell you how the white house responded to claims that the chief executive has been teleporting to mars.
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| Record Deposits at ECB? / Hungary CDS Hit Record Levels / Italy and Spanish Bonds Rise Again Posted: 04 Jan 2012 10:24 AM PST by Harvey Organ: Good evening Ladies and Gentlemen: Gold closed today at $1612.00 for a gain of $12.30. Silver fell by 46 cents to $29.07 falling in sympathy with the drop of bourses in Europe. The Dow recovered late in the day. Today we witnessed the Euro deposits at the central banks climb to record levels as the banks shun the carry trade of LTRO. Actually it is a carry trade in reverse as the banks have to pay 1% for the privilege of lending the euros back every night. The banks are using this money for cover many cracks in their armour as well as a funding vehicle to get their tier one assets above 9%. They receive only .25% credit on overnight money redeposited back to the central bank. Let us head over to the comex and assess trading, inventory movements, delivery notices and amount of physical metal standing. Read More @ HarveyOrgan.Blogspot.com
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| Posted: 04 Jan 2012 09:55 AM PST The Santa rally into the year end was taken good advantage of by retail America. As ICI reports, in the week ending December 28, investors pulled another $3.988 billion out of domestic equity mutual funds (and $1.2 billion out of foreign equtiy funds). This represents the 19th consecutive outflow since a tiny inflow in mid-August, which if excluded would mean 36 consecutive weeks of outflows beginning in late April, or roughly the time when the market peaked. Altogether a whopping $140 billion has been redeemed from domestic equity-focused mutual funds, which compares to "only" $98 billion in 2010. Unfortunately for the permabulls, the rangebound market since then indicates that absent retail investors returning to the broken casino that is the equity market, the probability of another break out of previous high is slim to nil. In fact as the chart below confirms judging by how long the area chart has been negative (or in outflow territory), the only thing Joe Sixpack wants is to get his money out of the rigged ponzi scheme pronto. And the longer the market trades like an irrational, pustular (for all the 19 year old HFT Ph.D's out there) and outright rabid teenager, the more investors will just say no and park their cash in either taxable bond funds (another $1.2 billion inflow in the past week), in their mattress or in gold. And unlike the Fed, equity funds can not print their own money: given enough redemptions and the liquidation selling will be inevitable. It also means that following $140 billion in redemptions with the market ending unchanged, the leverage used by mutual funds, whose cash is already at record lows, must be at record levels. And we all know how "record leverage" situations end...
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| Meet the City's No.1 Crisis-Beating Fund Manager Posted: 04 Jan 2012 09:22 AM PST |
| Meet the City's No.1 Crisis-Beating Fund Manager Posted: 04 Jan 2012 09:22 AM PST |
| Wild Gyrations in Commodities & Gold – what’s Next? Posted: 04 Jan 2012 09:10 AM PST If traders in the commodities markets were to check into a Psyche ward, the files would no doubt read "Bi-Polar" or Schizophrenic." This is so, because commodity traders have a habit of fixating on a set of data one day, and then quickly forgetting about the data the very next day, and re-focusing on something else. Market sentiment often turns on a dime, and without notice. This shifting of sentiment in commodity futures is nothing new, of course. That's why for decades, dabbling in commodities was considered too risky for most investors, since sentiment, by definition, is unpredictable and impossible to measure.
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| Wild Gyrations in Commodities and Gold Posted: 04 Jan 2012 09:07 AM PST If traders in the commodities markets were to check into a Psyche ward, the files would no doubt read "Bi-Polar" or Schizophrenic." This is so, because commodity traders have a habit of fixating on a set of data one day ... Read More...
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| Swiss central banker dumped francs on eve of devaluation Posted: 04 Jan 2012 08:53 AM PST Swiss National Bank Caves Over Chief's Dollar Deals By The Associated Press http://www.google.com/hostednews/ap/article/ALeqM5jq0lw-tfNgrfg1ICuikmx9... GENEVA -- After days of stonewalling, the Swiss National Bank gave in Wednesday to demands that it shed light on currency trades from its chief's personal account that netted fat profits as he led efforts to lower the Swiss franc's value. The Swiss government, meanwhile, reiterated its support for bank chief Philipp Hildebrand amid growing disquiet over the possibility that the private dollar deals unfairly earned his family tens of thousands of francs or dollars. The Swiss National Bank decided to publish a report by external auditors PricewaterhouseCoopers and release its previously secret guidelines for senior officials. The move came only hours after the Swiss political weekly Weltwoche claimed that Hildebrand had personally authorized the currency deals previously thought to have been conducted by his wife. "The report by PWC shows that recent reports in certain media about the transactions of the Hildebrand family are partly incorrect and contain no information that wasn't already known to the controlling authorities," the central bank said in a statement. ... Dispatch continues below ... 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 Like most central banks, the SNB forbids senior officials from engaging in personal trading where they might profit from insider knowledge about an upcoming monetary policy decision. A key question is whether the trades were done by the bank chief or his wife Kashya, a former currency trader, and whether Hildebrand knew of them. The Zurich-based Weltwoche weekly said it had obtained bank statements showing that Hildebrand himself bought large amounts of U.S. dollars before selling them for profit. "We have all the bank statements showing the relevant transactions, plus a verbal assurance from a bank employee confirming that it was Hildebrand personally, not his wife, who ordered the transactions," Weltwoche's Deputy Editor-in-Chief Philipp Gut told The Associated Press in a telephone interview. Gut declined to identify the bank employee, but said he was a client adviser at Bank Sarasin. The Basel-based private bank said it has fired an IT support employee who leaked confidential information about "currency transactions by the family" of Hildebrand. The audit report released by the bank Wednesday cites emails indicating it was Kashya who used 400,000 francs to purchase 504,000 U.S. dollars on Aug. 15 -- informing her husband only a day after the transaction occurred. The audit report doesn't say whether she was aware of the SNB's currency plans, nor whether it was Hildebrand or his wife who, less than two months later, sold $516,000 for 475,000 Swiss francs. The trade seemed to earn the Hildebrands almost 75,000 Swiss francs ($83,000) because between the purchase and the sale of U.S. currency, the Swiss National Bank had increased franc liquidity and set the minimum exchange rate of the euro at 1.20 Swiss francs. The two actions helped to sharply raise the value of major currencies like the dollar against the franc. Auditors concluded that the cheap purchase of U.S. dollars two days before the SNB's liquidity decision Aug. 17 was "delicate," but since Hildebrand had declared the transaction a day earlier, he hadn't breached any rules. On the sale of U.S. dollars, the auditors concluded it was part of a property deal that began in March. They decided that because Hildebrand had held almost $1.2 million from the deal for over six months, he also didn't breach SNB rules with the Oct. 4 dollar sale and in fact lost money in the exchange. The Swiss government, meanwhile, issued a statement Wednesday saying it had discussed the affair with Hildebrand at a Cabinet meeting Dec. 23. "The Federal Council sees no reasons to question the outcome of the audit. It has pronounced its support for Mr. Hildebrand," the government said. Media commentators and lawmakers had urged greater transparency from the SNB and from Hildebrand, 48, whose unblemished image is considered crucial to the credibility of Switzerland's small but powerful central bank. Hildebrand has scheduled a news conference for Thursday. Weltwoche, which published the latest allegations against Hildebrand, is close to the nationalist Swiss People's Party and its prominent billionaire backer, former Justice Minister Christoph Blocher. Bank Sarasin said in a statement late Tuesday the fired IT support specialist passed details of the Hildebrands' account to a People's Party lawyer, who then arranged a meeting with Blocher. Blocher, who has repeatedly criticized Hildebrand's management of the central bank, said through his spokesman he had no plans to comment on the case. 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: 04 Jan 2012 08:38 AM PST January 4, 2012 [LIST] [*]The 5’s outrageous 2012 forecasts: How to profit from the Fed’s and Treasury’s perpetual bailouts... [*]How to know when the market’s turned... why gold stocks are set to shine (finally!)... [*]A cautionary tale: geopolitical tensions and rising oil prices... and more! [*]The real story behind Tom Cruise and that building in M:I ... [*]J’accuse: “Addison Wiggin continues to print lies” ... real progress with the New Trade of the Decade... and your final chance at our most-elite level of service. [/LIST] Uncle Sam entered the new year with a national debt of $15.22 trillion. Worldwide, the governments of the largest economies have to “roll over” $7.6 trillion in the next calendar year. “Where’s the money come from?” asks our publisher Joe Schriefer. “Printing presses... and forced retirement account investing of some sort?” “It’s gonna be ...
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| Bill Gross Warns Of Financial Market Implosion Posted: 04 Jan 2012 08:35 AM PST According to Bill Gross, the world has too much debt, too little trust, and is vulnerable towards total collapse. He writes: How many ways can you say "it's different this time?" There's "abnormal," "subnormal," "paranormal" and of course "new normal." Mohamed El-Erian's awakening phrase of several years past has virtually been adopted into the lexicon these days, but now it has an almost antiquated vapor to it that reflected calmer seas in 2011 as opposed to the possibility of a perfect storm in 2012. The New Normal as PIMCO and other economists would describe it was a world of muted western growth, high unemployment and relatively orderly delevering. Now we appear to be morphing into a world with much fatter tails, bordering on bimodal. It's as if the Earth now has two moons instead of one and both are growing in size like a cancerous tumor that may threaten the financial tides, oceans and economic life as we have known it for the past half century. Welcome to 2012. The Old/New Normal But before ringing in the New Year with a rather grim foreboding, let me at least describe what financial markets came to know as the "old normal." It actually began with early 20th century fractional reserve banking, but came into its adulthood in 1971 when the U.S. and the world departed from gold to a debt-based credit foundation. Some called it a dollar standard but it was really a credit standard based on dollars and unlike gold with its scarcity and hard money character, the new credit-based standard had no anchor – dollar or otherwise. All developed economies from 1971 and beyond learned to use credit and the expansion of debt to drive growth and prosperity. Almost all developed and some emerging economies became hooked on credit as a substitution for investment in tangible real things – plant, equipment and an educated labor force. They made paper, not things, so much of it it seems, that they debased it. Interest rates were lowered and assets securitized to the point where they could go no further and in the aftermath of Lehman 2008 markets substituted sovereign for private credit until it appears that that trend can go no further either. Now we are left with zero-bound yields and creditors that trust no one and very few countries. The financial markets are slowly imploding – delevering – because there's too much paper and too little trust. Goodbye "Old Normal," standby to redefine "New Normal," and welcome to 2012's "paranormal." 2012 Paranormal This process of delevering has consistently been a part of PIMCO's secular thesis but "implosion" and "bimodal fat tailed" outcomes are New Age and very "2012ish." Perhaps the first observation to be made is that most developed economies have not, in fact, delevered since 2008. Certain portions of them – yes: U.S. and Euroland households; southern peripheral Euroland countries. But credit as a whole remains resilient or at least static because of a multitude of quantitative easings (QEs) in the U.S., U.K., and Japan. Now it seems a gigantic tidal wave of QE is being generated in Euroland, thinly disguised as an LTRO (three-year long term refinancing operation) which in effect can and will be used by banks to support sovereign bond issuance. Amazingly, Italian banks are now issuing state guaranteed paper to obtain funds from the European Central Bank (ECB) and then reinvesting the proceeds into Italian bonds, which is QE by any definition and near Ponzi by another. So what does it all mean? Basically that the future could be characterized by horrible, zero-rate growth on one hand, or implosion on the other hand. This new duality – credit and zero-bound interest rate risk – is what characterizes our financial markets of 2012. It offers the fat-left-tailed possibility of unforeseen – delevering – or the fat-right-tailed possibility of central bank inflationary expansion. I expect the January Fed meeting to mirror in some ways what we have first witnessed from the ECB. It won't take the form of three-year financing by a central bank – but will give assurances via language that the cost of money will remain constant at 25 basis points for three years or more – until inflation or unemployment reach specific targeted levels. QE by another name I suggest. If and when that doesn't work then a specific QE3 may be announced – probably by mid-year – and the race to reflate will shift into high gear. But the outcome of left-tailed delevering or right-tailed inflation is not certain. Both tails are fat. Read More: Pimco
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| Posted: 04 Jan 2012 08:26 AM PST The S&P 500 closed practically unchanged today - recovering from decent selloff to a late-Europe-session low - amid volume that was over 30% lower than at the same time last year. Investment grade credit, the high-yield bond ETF HYG, and broad risk assets in general kept pace with ES (the e-mini S&P 500 futures contract) but high yield credit (tracked by the HY17 credit derivative index) outperformed considerably - moving to its best levels since late October. This disconnect appeared as much driven by technicals from HY-XOver (Long US credit vs Short EU credit) and HYG vs HY17 (a high premium-to-NAV bond ETF vs relatively cheap high yield spread index) trades as it was a pure risk-on trade. Elsewhere, the USD retraced only marginally the earlier gains of the day (with EUR hanging under 1.2950 by the close) as Treasury yields jumped 5-7bps more (30Y +14bps on the week now) as we can't help but notice the correlation between TSY weakness and EUR strength for a few hours this afternoon (repatriation to pay up for tomorrow's French auction?). Commodities were very mixed with Copper sliding notably (decoupling from its new friend Gold which rose and stabilized this afternoon over $1610) as Oil pushed higher all day (over $103) on Iran news and Silver leaked back this afternoon (under $29.5).
US equity volumes remain very low - not bouncing back at all like last year's! We also note that ES (e-mini S&P 500 futures volume) is 35% below its medium-term average. There were two periods of activity (where notably larger than average trade size occurred), the first was heading into the European close as we bounced off last week's highs, and the other occurred into the close as it appeared larger traders were covering longs.
Much like yesterday, ES, investment grade credit, and HYG all tracked each other rather well but the major disconnect was HY17 (the high yield credit spread credit derivative index). Breaking above $94 takes HY17 back to late October 2011 levels - near its best levels since inception in September. As we noted above there are some technical (flow) reasons for this related to popular trades that are perhaps having a more significant impact on HY17 price movement - these are the 'US high yield will outperform European high yield bonds as Europe's supply concerns are massively crowded out by sovereign issuance and deleveraging' which means being Long HY and Short XOver (Europe's high yield credit index). This trade was perhaps laid out today as the close of Europe saw HY17 take off.
The other trade that has become more obvious as increasing numbers of funds trade HYG - that is the compression trade as HYG has outperformed dramatically (and trades at a considerable premium to NAV). Nonetheless - for months we have been pointing to the considerable underperformance of high yield credit as an indication that the equity market is over-enthusiastic. We worry that today's surge was a little too scrambling and given its focus in credit derivative land (and total disconnect from other realities) we suspect it is not the all-clear that some will think it is.
Copper is now underperforming the USD and is lower for the year as Oil and Silver resync coincidentally at around a 4.75% rise for the year. Gold was stable for much of the post European day at around $1610-15 - up around 2.9% on the week.
Broad risk-driver assets stayed well correlated today, as the lower chart shows, and in general ES and CONTEXT (the broad risk asset proxy) stayed in sync for much of the day - despite some overnight derisking efforts (mainly due to TSY 2s10s30s decompression). Charts: Bloomberg and Capital Context
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| Rickards: China’s Slowdown Will Be Worse Than You Think Posted: 04 Jan 2012 08:21 AM PST China's Premier Wen Jiabao has just warned that China's economy is now facing challenges, including higher-than-desired inflation and an economic slowdown. Our guest James Rickards, the author of Currency Wars: The Making Of The Next Global Crisis, says this slowdown will be significantly worse than most people think. He believes it will trigger a policy response from the United States that will likely lead to a third round of "quantitative easing" by the Fed. Rickards thinks China's economy could slow to a 3.5% growth rate. This doesn't sound bad, but it would be a disaster relative to the 10% growth rate of the last few decades, and it is much more of slowdown than most analysts are looking for. In response, Rickards says, the Chinese government would likely devalue China's currency relative to the dollar, to help stimulate exports. This would counter Washington's ongoing attempts to do the same thing. Rickards believes that the U.S. would respond with another round of quantitative easing designed to produce inflation, likely through a technique called "nominal GDP targeting." (Nominal GDP targeting would allow the Fed to explicitly focus on a target GDP growth rate that includes inflation, as opposed to trying to fight inflation by focusing on real GDP growth. Inflation would help the U.S. reduce the real burden of its massive debt load, and it might also make U.S. exports more competitive.) A sharp China slowdown could also hammer Europe, which is already reeling from a banking and sovereign debt crisis. Source: The Daily Ticker
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| Gold Daily and Silver Weekly Charts - Up Against Resistance Posted: 04 Jan 2012 08:18 AM PST |
| Krugman: Debt Matters, But Not That Much Posted: 04 Jan 2012 08:16 AM PST In 2011, as in 2010, America was in a technical recovery but continued to suffer from disastrously high unemployment. And through most of 2011, as in 2010, almost all the conversation in Washington was about something else: the allegedly urgent issue of reducing the budget deficit. This misplaced focus said a lot about our political culture, in particular about how disconnected Congress is from the suffering of ordinary Americans. But it also revealed something else: When people in D.C. talk about deficits and debt, by and large they have no idea what they're talking about – and the people who talk the most understand the least. Perhaps most obviously, the economic experts on whom much of Congress relies have been repeatedly wrong about the short-run effects of budget deficits. People who get their economic analysis from the likes of the Heritage Foundation have been waiting ever since President Obama took office for budget deficits to send interest rates soaring. Any day now! And while they've been waiting, those rates have dropped to historical lows. You might think that this would make politicians question their choice of experts – that is, you might think that if you didn't know anything about our postmodern, fact-free politics. But Washington isn't just confused about the short run; it's also confused about the long run. For while debt can be a problem, the way our politicians think about debt is all wrong, and exaggerates the problem's size. Deficit-worriers portray a future in which we're impoverished by the need to pay back money we've been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments. This is, however, a really bad analogy in at least two ways. First, families have to pay back their debt. Governments don't – all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation. Second – and this is the point almost nobody seems to get – an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves. This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of GDP, than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn't make postwar America poorer. In particular, the debt didn't prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation's history. But isn't this time different? Not as much as you think. It's true that foreigners now hold large claims on the U.S., including a fair amount of government debt. But every dollar's worth of foreign claims on America is matched by 89 cents' worth of U.S. claims on foreigners. And because foreigners tend to put their U.S. investments into safe, low-yield assets, America actually earns more from its assets abroad than it pays to foreign investors. If your image is of a nation that's deep in hock to the Chinese, you've been misinformed. Now, the fact that federal debt isn't like a mortgage on America's future doesn't mean that the debt is harmless. Taxes must be levied to pay the interest, and you don't have to be a right-wing ideologue to concede that taxes impose some cost on the economy, if nothing else by causing a diversion of resources away from productive activities into tax avoidance. But these costs are a lot less dramatic than the analogy with an over-indebted family might suggest. And that's why nations with responsible governments – that is, governments that are willing to impose modestly higher taxes when the situation warrants it – have historically been able to live with much higher levels of debt than today's conventional wisdom would lead you to believe. Britain, in particular, has had debt exceeding 100 percent of GDP for 81 of the past 170 years. When Keynes was writing about the need to spend your way out of a depression, Britain was deeper in debt than any advanced nation today, with the exception of Japan. So yes, debt matters. But right now, other things matter more. We need more, not less, government spending to get us out of our unemployment trap. And the wrongheaded, ill-informed obsession with debt is standing in the way. Source: Chron
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We have all been lied to. For decades, the leaders of both major political parties have promised us that they can fix our current system and that they can get our national debt under control. As the 2012 election approaches, they are making all kinds of wild promises once again. Well you know what? It is all a giant sham. The United States has gotten into so much debt that there will be no coming back from this. The current system is irretrievably broken. 30 years ago the U.S. debt was a horrific crisis that was completely and totally out of control. If we would have dealt with it back then maybe we could have done something about it. But now it is 15 times larger, and we are adding more than a trillion dollars to the debt every single year. The facts that you are about to read below should set America on fire with anger. Please share them with as many people as you can. What we are doing to our children and our grandchildren is absolutely nightmarish. Words like "abuse", "financial rape", "theft" and "crime" do not even begin to describe what we are doing to future generations. We were the wealthiest nation on earth, but it wasn't good enough just to squander all of our own money. We had to squander the money of our children and our grandchildren as well. America has been so selfish and so self-centered that it is hard to argue that we don't deserve what is about to happen to this country. We have stolen the future of America, and yet we strut around as if we are the smartest generation that ever walked the face of the earth.
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