Gold World News Flash |
- Rick Santelli - 2012 Will See Funding Crisis for Many Countries
- Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 3% on the Week
- By the Numbers for the Week Ending January 6
- Gold Reverses at Channel Resistance
- Goldman Sachs Group Inc. Files 8k Form Initializing $15,000,000 in Gold-Linked Bonds
- Soros Says EU Break-Up Would Be Catastrophic: Report
- Rick Ackerman Explains Why the Dollar is Going Up – 01-05-12
- Is There A ‘Best’ Currency To Hold Right Now?
- Rick Santelli: 2012 Will See Funding Crisis for Many Countries
- Hildebrand Affair - Bad All Around
- Shine A Light!
- Ponzi Planet: The Danger Debt Poses to the Western World
- The Gold Price was Stopped by $1,625 This Week, it Will Charge at this Mark Again Taking Gold to $1,870
- Was 2011 a Dud or a Springboard for Gold?
- Nick Barisheff: $10,000 Gold is Coming! Here?s Why
- Mike Maloney on Quantitative Easing, Deflation & 2012 Outlook
- DOCTORS GOING BROKE
- Rick Ackerman Explains Why the Dollar is Going Up–01-05-12
- FEAR
- Follow the Management Names: Taylor MacDonald
- Nigel Farage - Gold to See Its Biggest Spike in 2012
- Commodity Convergence And Debt-Equity Divergence
- Why Rising Debt Will Lead to $10,000 Gold
- Silver Confirms the Bullish Outlook for Precious Metals
- Whenever you see gold trading below its 200 Day Moving Average, consider it a buy signal!
- “The whole thing is terrifying.”
- How Central Bankers Attempt to “Cure” Insolvency
- Physical Silver Surges To Record 30% Premium Over Spot, In Backwardation
- Gold Daily and Silver Weekly Charts - Rounding Errors In the Big Scheme of Things
| Rick Santelli - 2012 Will See Funding Crisis for Many Countries Posted: 06 Jan 2012 04:03 PM PST  With the dollar breaking to new recent highs, gold starting the new year strong and bonds near all-time highs, today King World News interviewed Rick Santelli, CNBC's Business News on-air Editor. When asked about maturing securities in both the US and Europe in 2012, Santelli responded, "Yes, this is a big one. The best way to make banks in any country healthier is to have outside investors say, 'Wow, this looks good. I want to buy the bonds or I want to buy the banks or I'm taking in deposits.' Remember deposits have fled out of Europe. That's why that big sucking sound, they need those swaps, they need dollars to fund some of these liabilities."
This posting includes an audio/video/photo media file: Download Now |
| Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 3% on the Week Posted: 06 Jan 2012 04:00 PM PST Gold popped up to $1630.90 by about 9:30AM EST before it fell back to $1608.70 in the next hour of trade, but it then bounced back higher into the close and ended with a loss of just 0.36%. Silver slumped to $28.598 before it also bounced back higher in late morning New York trade, but it still ended with a loss of 2.02%.
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| By the Numbers for the Week Ending January 6 Posted: 06 Jan 2012 02:44 PM PST HOUSTON -- Just below is this week's closing table followed by the CFTC disaggregated commitments of traders (DCOT) recap table for the week ending January 6, 2012.
Please also note a revised stop level for our new trade in the linked silver chart. As a reminder, the linked charts for gold, silver, mining shares indexes and important ratios are located in the subscriber pages. In addition Vultures have access anytime to all 35 of our Vulture Bargain (VB) and Vulture Bargain Candidates of Interest (VBCI) tracking charts – the small resource-related companies that we attempt to game here at Got Gold Report. Look for new commentary often as we are making frequent notations in the tracking charts during this fantastic, cascade event, negative liquidity aftermath and post tax loss selling super bargain hunting environment. Remember that the linked charts on the subscriber pages are always the first place to look for new commentary at GGR. In the future we intend to rely more on the charts to communicate, especially when it comes to our own trades. Members please also note the addition of one new Vulture Bargain Company of Interest (VBCI) as noted by email on Thursday. Gold and Silver Disaggregated COT Report (DCOT)
All of the trader's positions are calculated net of spreading contracts as of the Tuesday disaggregated COT report.
*** We will have more in the linked technical charts for Vultures by Sunday evening.***
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| Gold Reverses at Channel Resistance Posted: 06 Jan 2012 02:07 PM PST courtesy of DailyFX.com January 06, 2012 11:05 AM 240 Minute Bars Prepared by Jamie Saettele, CMT “Price has exceeded 1600 and technical evidence suggests that 1630/40 should be strong resistance. This level is defined by the 20 and 200 day averages, 12/21 high, and channel resistance.” Gold reversed to the tick at its Elliott channel and a drop to a new low is favored. Keep in mind the potential for an extended decline (3rd of 3rd wave). Levels of interest would be former resistance from 2010 at 1445 and the 2011 low at 1320. Bottom Line – short against 1675, target new lows...
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| Goldman Sachs Group Inc. Files 8k Form Initializing $15,000,000 in Gold-Linked Bonds Posted: 06 Jan 2012 12:31 PM PST from Tekoa Da Silva's Bull Market Thinking:
Tipped off 40 minutes ago by our friend and guest of the Bull Market Thinking radio program, Reggie Middleton, it was discovered this morning that Goldman Sachs has just filed an 8k form with Sullivan & Cromwell LLP, initializing what looks to be a gold-linked issuance of interest bearing notes (more commonly called bonds). The raw filing as published by Yahoo is the following: 6-Jan-2012 Form 8-K for GOLDMAN SACHS GROUP INC Item 9.01 Financial Statements and Exhibits. Exhibits are filed herewith in connection with the issuance of the following debt securities by the Company on January 5, 2012, pursuant to the Company's automatic shelf registration statement on Form S-3 (File No. 333-176914) (the "Registration Statement"): Read More @ BullMarketThinking.com
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| Soros Says EU Break-Up Would Be Catastrophic: Report Posted: 06 Jan 2012 12:10 PM PST from Reuters.com:
"Today, the euro is potentially endangering the political cohesion of the European Union," the Business Line newspaper cited Soros as saying in the south Indian city of Hyderabad. "If the common currency were to break down, it will lead to the break up of the European Union itself. And this will be catastrophic not only for Europe but also for the global financial system." The euro zone crisis is "more serious and more threatening than the crash of 2008," the Economic Times reported, quoting Soros.
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| Rick Ackerman Explains Why the Dollar is Going Up – 01-05-12 Posted: 06 Jan 2012 12:05 PM PST from The Financial Survival Network:
These are exciting times in which we are living, and there is an end to the major eruptions that we are witnessing. Rick's hidden pivot system can help keep you ahead of the trend and ready for the next Black Swan. Click Here to Listen to the Interview
This posting includes an audio/video/photo media file: Download Now |
| Is There A ‘Best’ Currency To Hold Right Now? Posted: 06 Jan 2012 11:53 AM PST by Simon Black, Sovereign Man: We recently received a great question from a reader, Chuck, who asked, "Simon, I'm going to HK in 10 days to open a bank account, and I know there are options to do this in several foreign currencies. What foreign currency would you recommend to hold over the longer term?" I could never make a personal recommendation as I'm not a financial advisor, nor do I know the details of your situation. But let's review the options. First off, Hong Kong is an excellent place to bank. One of the best in the world, in my opinion… and I say that as someone who keeps a lot of money in Hong Kong. Why? Because the banks are strong, stable, innovative, and well-capitalized. I have far fewer concerns about a bank going under in Hong Kong than I do in the US or Europe. And in Hong Kong, with just a few clicks, I can move money into gold or any number of currencies.
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| Rick Santelli: 2012 Will See Funding Crisis for Many Countries Posted: 06 Jan 2012 11:43 AM PST from King World News:
Rick Santelli continues: Read More @ KingWorldNews.com
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| Hildebrand Affair - Bad All Around Posted: 06 Jan 2012 11:39 AM PST Following up on Bruce Krasting's Kashya Hildebrand Speaks – Sinks Hubby?
Hildebrand Affair - Bad All Around
By Ilene Recall: Philipp Hildebrand, chief of the Swiss National Bank, denied wrongdoing on Thursday and claimed he had no intention of resigning over the trades. According to Mr. Hildebrand, his former currency trader wife wasn't aware of the Swiss central bank's plans. (SNB chief denies wrongdoing over dollar deals) As Frank Jordans reported,
Hildebrand insisted he did nothing wrong, but understands why his actions could be "misinterpreted." Apparently, the correct interpretation is that Hildebrand's wife knew nothing, and there should be no presumption otherwise. The real take home message is a repeat - laws and rules of ethics only apply to some people. Like who? The Sarasin bank's IT support employee for one. In discovering the trades, he violated Hildebrand's right to secretly conduct currency trades from his private account broke the laws of Switzerland. The people he gave the information to may have also broken the law. Hildebrand didn't let the travesty go unnoticed, and he "lashed out" at those who leaked details of his and/or his wife's trades. The employee who stole the information has been fired, and Hildebrand is consulting his attorneys about pursuing additional legal action. According to the NY Times:
Exposure to criminal charges should have a chilling effect on anyone who has any thoughts of revealing insider trades from private bank accounts in the future. No worries, because according to the WSJ, "In his first public remarks since the affair broke in late December, Mr. Hildebrand disclosed proposals to increase transparency in financial transactions by top SNB officials." Good idea. The conflict between laws protecting privacy and laws against insider trading could be largely eliminated by real transparency. More details from the WSJ (Swiss Banker Says He Won't Resign, Official Denies Advance Knowledge of Wife's Dollar Trade):
While the SNB acts independently of government, its president is elected by the government's Cabinet members. The seven-member Cabinet can remove Mr. Hildebrand if requested to by the central bank's supervisory council. In "Swiss right presses central bank chief to resign," Frank Jordans reported,
These events bring up many questions regarding not only the actions of Mr. Hildebrand and insider trading laws, but also regarding an individual's right to privacy and the public's interest in not discouraging bank employees from revealing private information when it involves potentially illegal activity. Bruce kindly answered my questions on the latter in red. 1) How far should a right of (bank account) privacy extend to protect public figures from exposure of questionable transactions? ZERO. More generally, how should the right of privacy be balanced against the public's right to know of illegal and/or unethical activity? I think there should be full disclosure of financial transactions for elected officials and non elected ones in important positions. 2) What are the details of Sarasin bank's employee finding the trades? He was an IT guy. Not a senior person. Did he break the law, break only bank regulations, or did he discover the trades through his normal activities? Totally, totally broke the laws of Switzerland. He turned himself into the police. Would there be a criminal probe into the employee's conduct if he went straight to the police? Yes. He broke the laws of Switzerland (by getting the information in the first place). 3) What is the basis of the criminal probe directed at "those who encouraged the unnamed employee" to give them confidential documents? This is the question of the hour. Which way was it? (a) An IT guys sees something. He understands what it is and makes a copy of it. Later (through an intermediary), he contacts Blocher who, in turn, takes it to Calmy Rey. (b) Blocher hires an intermediary and instructs him to get records of Hildebrand's accounts. So an IT guy regularly reviews the account looking for dirt. Bingo! one day he finds it. I think it was (a); the crime would be (b).
[Picture credit: William Banzai]
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| Posted: 06 Jan 2012 11:38 AM PST There has been so much talk about gold and so little understanding of the reality behind the move in the price of the yellow metal over the last 90 plus days that I think it's necessary to separate the wheat from the chaff. Read More...
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| Ponzi Planet: The Danger Debt Poses to the Western World Posted: 06 Jan 2012 11:30 AM PST "Nothing has changed in the 'locked and loaded' situation since yesterday...and it's just a matter of waiting until gold and silver are allowed to rally a decent amount." [COLOR=#7f4028] Yesterday in Gold and Silver As I mentioned in 'The Wrap' in this column yesterday, the gold price rallied in the Hong Kong afternoon on Thursday...and then got sold off the moment that London began to trade at 8:00 a.m. GMT. This sell-off intensified once the Comex opened at 8:20 a.m. Eastern time...and the low tick of the day came at precisely 9:30 a.m....an hour and ten minutes later....
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| Posted: 06 Jan 2012 11:15 AM PST Gold Price Close Today : 1,616.10 Gold Price Close 30-Dec : 1,565.80 Change : 50.30 or 3.2% Silver Price Close Today : 2865.30 Silver Price Close 30-Dec : 2787.50 Change : 77.80 or 2.8% Gold Silver Ratio Today : 56.402 Gold Silver Ratio 30-Dec : 56.172 Change : 0.23 or 0.4% Silver Gold Ratio : 0.01773 Silver Gold Ratio 30-Dec : 0.01780 Change : -0.00007 or -0.4% Dow in Gold Dollars : $ 158.10 Dow in Gold Dollars 30-Dec : $ 161.30 Change : $ (3.20) or -2.0% Dow in Gold Ounces : 7.648 Dow in Gold Ounces 30-Dec : 7.803 Change : -0.15 or -2.0% Dow in Silver Ounces : 431.37 Dow in Silver Ounces 30-Dec : 438.30 Change : -6.93 or -1.6% Dow Industrial : 12,359.92 Dow Industrial 30-Dec : 12,217.56 Change : 142.36 or 1.2% S&P 500 : 1,277.81 S&P 500 30-Dec : 1,257.60 Change : 20.21 or 1.6% US Dollar Index : 81.264 US Dollar Index 30-Dec : 80.205 Change : 1.059 or 1.3% Platinum Price Close Today : 1,401.00 Platinum Price Close 30-Dec : 1,393.30 Change : 7.70 or 0.6% Palladium Price Close Today : 613.20 Palladium Price Close 30-Dec : 649.50 Change : -36.30 or -5.6% The GOLD PRICE had a strong week and so did the SILVER PRICE, but silver kept not pace. Today gold lost $3.30 (-.2%) to close Comex at 1,616.10 while silver lost 61.2c (-2.1%) to close at 2865.30 Yet, behold the week! GOLD rose 3.2% and SILVER rose 2.8%. Highs for gold today came at $1,631 and for silver at 2945.2c. Lows were 2862c and 1608.75. This week $1,625 stopped gold. It will back off, then charge at that same mark again. This rally should take gold to $1,870 at least before it seriously corrects. Bottom for the GOLD PRICE has probably been seen, for the SILVER PRICE I'm not as sure. Bottoms for both will be behind us by 1 March 2012. There's a tendency -- not always followed -- for silver and gold to bottom within a few days of each other, which also means the GOLD/SILVER RATIO tops around their bottoms. HOWEVER, sometimes that peak might lag 30 - 60 days as gold stays flat and silver keeps eroding. Ratio will likely repeat that staggered performance, and 'twill be a fall in silver that takes the ratio down sooner than a big rise in gold. This bottom picking for silver is becoming a risky and unprofitable business. Watch it closely, buy more as it falls. May not see any price below 2622. This week 2960c stopped silver, but it has held on three days refusing to drop back below 2850c. Break of that 2850c would take silver down a couple of bucks, break of 2960c would take it up two, maybe three bucks. GOLD PRICE and the SILVER PRICE remain in a primary uptrend (bull market). This correction offers y'all a chance to load your boats again, cheap. Scoreboard don't lie. Silver and gold had a good week despite the US dollar index's 1.3% gain. Stocks added big time this week, then practiced subtracting, and Friday ended lower than Monday. Palladium got hit on the head with a sledge hammer. Gold/Silver ratio is edging up toward our 57.5 target. Somebody has floated the rumor out there that "Bernanke is going to devalue the dollar 40%." This reminds me of the man who stands on the front porch with a shotgun, fiercely daring anyone to steal his property while out the back door the thieves are loading his furniture and appliances into a moving van. Since 2001 the US dollar has dropped from 121 to 81, or 33%. While y'all are worrying about the Bernancubus devaluing by 40% SUDDENLY, he and the Greenspan have already devalued it SLOWLY by 33%. Rumors and internet hysteria -- they merely misdirect your attention from what's important. Wonder what department in the US government is responsible for floating rumors? Disinformation, the Soviets used to call it. INCOMPREHENSIBLE -- that's what my friend Catherine Fitts warned me today is coming in 2012. What you hear grows more incomprehensible as more and more commentators fail to comprehend what is happening. Economy ain't recovering, cavalry ain't coming but more inflation is. And it mattereth not which of the flyweight nitwit smoothtalkers is elected. STOCKS today dropped a little, giving up more of this week's gains. Dow closed 12,359.92 55.78 (0.45%) lower than yesterday's close and 37.46 lower than Monday's. S&P500 today closed at 1,277.81, down 3.25 (0.25%). Stocks may rally before the end of the month as high as 12,600, maybe 200 points higher on a spike, but that will limit it. Rest of the year will fill stock investors with weeping, wailing, teeth-gnashing, and hair-pulling. US DOLLAR INDEX gained 32.8 basis points today (0-.42%) to 81.264. Dollar has gained 111 basis points in two days, a sign that this week's upside breakout was genuine and has some legs. Should overcome 81.50 early next week and march toward 83.50. Nice Government Men must be puking in their wastebaskets. Not to mention the European NGM. Euro fell 0.58% today to 1.2713, riding the roller coaster toward 1.2000. Eventually this will cause the US NGM to puke in their wastebaskets, as this competitive currency devaluation (Shades of the Great Depression!) makes US exports dearer. Japanese NGM showed this week they wouldn't abide a rising currency. Closed today 129.93c/Y100 (Y76.96/$1), up 0.19% but contained for the nonce. Today is Epiphany or the Feast of the Three Kings celebrating the visit of the three magi to the baby Jesus. SPECIAL OFFER U.S. $5 and $10 modern commemoratives. These are US $5 and $10 gold commemoratives minted to the ancient standard over the past 20 years. The US gold $5 commemorative contains 0.2418 oz gold and costs US$404.75 while the US gold $10 commem contains just twice as much gold, 0.4838 oz, and costs US$809.50. Premium over gold content value for these is a tiny 3.5%. I will sell lots of Five (5) each $5 gold commems ($404.75 each) for $2,023.75 + $25 shipping = $2,048.75 per lot. A $10 gold counts as two $5 golds, so you can order one $10 and three $5s and that equals five $5s. I reserve the right to mix the orders as suits me, but have mostly $5s, so you'll most likely get those. Limit ten (10) lots per customer. Special Conditions: First come, first served, and no re-orders at these prices. I will write orders based on the time I receive your e-mail. We will not take orders for less than the minimums shown above. All sales on a strict "no-nag" basis. We will ship as soon as your check clears, but we allow Two weeks (14 days) for your check to clear. Calls looking for your order two days after we receive your check will be politely and patiently rebuffed. If you want faster shipping, please send a wire. Spot gold basis for all prices above is $1,616.10 ORDERING INSTRUCTIONS: 1. You may order by e-mail only to Your email must include your complete name, address, and phone number. We cannot ship to you without your address. Sorry, we cannot ship outside the United States or to Tennessee. Repeat, you must include your complete name, address, and phone number. Our clairvoyant quit without warning last week and we can no longer read your mind. 2. Orders are on a first-come, first-served basis until supply is exhausted. 3. "First come, first-served" means that we will enter the orders in the order that we receive them by e-mail. 4. If your order is filled, we will e-mail you a confirmation. If you do not receive a confirmation, your order was not filled. 5. You will need to send payment by personal check or bank wire (either one is fine) within 48 hours. It just needs to be in the mail, not in our hands, in 48 hours. 6. We allow fourteen (14) days for personal checks to clear before we ship. If your hurry is greater than that, you can send a bank wire. Once we ship, the post office takes four to fourteen days to get the registered mail package to you. All in all, you'll see your order in about one month if you send a check. Y'all enjoy your weekend! - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2012, 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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| Was 2011 a Dud or a Springboard for Gold? Posted: 06 Jan 2012 11:07 AM PST 2011 was remarkable in many ways for the precious metals markets. Gold soared to new highs in early September, hitting at an intraday record of $1,920/ounce on the fifth. Silver screamed to within a hair of $50 on April 28. Read More...
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| Nick Barisheff: $10,000 Gold is Coming! Here?s Why Posted: 06 Jan 2012 11:05 AM PST This is not a typical bull market. Gold is not rising in value, but instead, currencies are losing purchasing power against gold and, therefore, gold can rise as high as currencies can fall. Since currencies are falling because of increasing debt, gold can rise as high as government debt can grow. Based on official estimates, America's debt is projected to reach $23 trillion in 2015 and, if its correlation with the price of gold remains the same, the indicated gold price would be $2,600 per ounce. However, if history is any example, it's a safe bet that government expenditure estimates will be greatly exceeded, and [this] rising debt will cause the price of gold to rise to $10,000…over the next five years. (Let me explain further.] Words: 1767.*****So said Nick Barisheff ([URL]http://www.bmgbullion.com/[/URL]) in edited excerpts from a speech* he presented at the Empire Club's 18th Annual Investment Outlook on Thursday, January 5, 2012. I was his guest at the luncheon as editor o...
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| Mike Maloney on Quantitative Easing, Deflation & 2012 Outlook Posted: 06 Jan 2012 11:02 AM PST Mike Discusses, Gold, Silver, U.S.paper dollar supply, Dollar devaluation, Dow/Gold Ratio & More
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| Posted: 06 Jan 2012 11:01 AM PST I know TBP has several doctor-regulars, and this gets some attention here, but it's much worse than people realize. I mentioned recently the State of Illinois announced a 1 year freeze on making payments to doctors and hospitals for gold-plated union state employees. Medicaid only pays twice a year now, when they get their Federal [...]
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| Rick Ackerman Explains Why the Dollar is Going Up–01-05-12 Posted: 06 Jan 2012 10:12 AM PST We interviewed Rick Ackerman yesterday, and he hit us with his prediction that the dollar was headed up. However, he was emphatic this was not an indication of the dollar's fundamental health but rather a sign of the Euro's impending slide. The buck is "The best looking horse in the glue factory." Unfortunately, while misery may enjoy company, it doesn't make anyone any happier. These are exciting times in which we are living, and there is an end to the major eruptions that we are witnessing. Rick's hidden pivot system can help keep you ahead of the trend and ready for the next Black Swan. Please send your questions to kl@KerryLutz.com or call us at 347-460-LUTZ.
This posting includes an audio/video/photo media file: Download Now |
| Posted: 06 Jan 2012 09:43 AM PST Synopsis: The government is ramping up use of fear to justify massive new bureaucracies and regulations that trample civil liberties. In the face of this sad reality, you have but two options to protect what's rightfully yours. Dear Reader, In today's missive, I am going to delve into the topic of fear. For reasons I am hoping to lay out, this matter of fear is critical to all of us in ways most profound. But where to start? This is, after all, no small topic.
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| Follow the Management Names: Taylor MacDonald Posted: 06 Jan 2012 09:17 AM PST The Gold Report: Taylor, many investors are confused by today's unpredictable market. Are you as confused as most market observers? Taylor MacDonald: We have come to expect the unpredictability. Since 2008 volatility has become the new norm. You have to learn how to protect yourself in these hazardous times. TGR: How has 2011 tested your bag of investment tricks? TM: We focus on the long term, taking large positions in smaller companies. We look for unique assets, strong management teams and structure. In the past couple of years, we have learned to stick to our knitting, to what we do best. TGR: And what would you say you do best? TM: Our strength is identifying undervalued opportunities in the precious metals, energy, commodities and technology sectors. We like to find what I call concept companies early on. If necessary, we will provide whatever help we can to management teams as the investment theses unfold. For example, Ridgeline Energy Services Inc. (RLE:TSX.V) went from...
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| Nigel Farage - Gold to See Its Biggest Spike in 2012 Posted: 06 Jan 2012 09:07 AM PST there is a fundamental imbalance between the members of the eurozone and the whole thing is going to go bust anyway.
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| Commodity Convergence And Debt-Equity Divergence Posted: 06 Jan 2012 08:39 AM PST Equities traded at their lowest volume of the week (-19% from yesterday alone) as S&P futures volumes remain 35% below medium-term averages. The NFP print this morning provided ammunition for some vol early on but as we drifted into the European close, risk assets in general were pushing lower. Unlike the last few days the circa-Europe-close dip-and-rip only occurred in the equity market today as the USD stayed near its highs and TSYs near their low yields of the day (and high yield credit near its wides of the day) as stocks took off back into the green and meandered either side of VWAP for the afternoon. It seems odd that the afternoon's divergence between TSYs and stocks was not accompanied by Gold or USD weakness (QE hopes) and in fact as we got into the last few minutes, stocks started to push back lower on much larger average trade size but was trapped between VWAP and unchanged on the day. Gold outperformed on the week (+3.4%) just inching out Silver and Oil as they appeared to converge on a 3x beta of the USD 'appreciation' of around 1.2% this week. Treasuries rallied 4-6bps and the curve flattened overall as we saw duration reduction in corporate bonds (with highest quality names (Aaa-Aa3) being net sold). DXY stayed above 81 as the EURUSD scrambled back above 1.27 (down an impressive 1.85% on the week). AUD was the only major to gain relative to the USD on the week (and very marginally). Finally, we saw VIX dropping and stabilize and implied correlation diverged and rose this afternoon which combined with the divergence in risk assets suggests some stocks are short-term overdone at best.
The USD (DXY) remained at its highs (green inverted) and Treasuries (red near their low yields of the day) as stocks (blue) pushed up post Europe and clung to VWAP and practically unchanged.
Overall ES (the S&P 500 e-mini futures contract) outperformed/diverged from broad risk assets as correlations (above) broke down to very low levels in the afternoon.
High yield credit (red) and HYG (the high yield bond ETF in green) underperformed with a late day dive in the latter actually pulling overall stock-vol-rate-credit risk into better correspondence (as seen below in the SPY Arb framework) on a strangely quiet day. Once again it looks like HYG was used to try to spark a risk-on rally (the outperformance of 'Model' below) but this failed as major volume and selling pressure hit HYG into the close.
Gold and Silver drifted lower this afternoon after modest rallies early on as Oil pulled higher to a somewhat coincidental convergence of these three economic/QE sensitive commodities for the week. Copper came and went with the USD revaluation on the week ending just down YTD.
The dollar strength was impressive this week and should be very worrisome for corporate earnings in our humble opinion if it is maintained (especially with Oil not dropping on USD strength). The shape of moves this week suggests where the EUR selling pressure is coming from - Europe - as we suspect global investors try and creep through those narrow doors as they reduce exposure to the haircut-facing nations across the pond.
Evidently that real money exiting Europe seems to be coming from both financials and sovereign bonds as we saw Belgium, Austria, and Spain all see very significant decompression this week, let alone France.
Finally we note that implied correlation (a measure of the relative demand for macro risk protection versus micro name protection) elevated all afternoon as VIX (3rd month futures) drifted lower and stabilized. We have shown this divergence a number of times and it has often presaged short-term weakness in stocks.
For now, it is enough to note that macro protection is much more bid than talking heads discussions of VIX falling would have you believe and the divergences between stocks and risk assets in general add to the concern on getting too excited at this week's performance - especially in financials (remember the CDS arb technicals and short squeeze potential).
Charts: Bloomberg and Capital Context
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| Why Rising Debt Will Lead to $10,000 Gold Posted: 06 Jan 2012 08:37 AM PST Good afternoon, it's a pleasure to speak about gold at this Outlook for 2012. Today, I'd like to focus on one important idea: the direct relationship between the rising price of gold and the rising levels of government debt ... Read More...
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| Silver Confirms the Bullish Outlook for Precious Metals Posted: 06 Jan 2012 08:37 AM PST Overall, the situation appears to be quite bullish since long-term indicators carry more weight than short-term signals.
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| Whenever you see gold trading below its 200 Day Moving Average, consider it a buy signal! Posted: 06 Jan 2012 08:33 AM PST During the 12 year history of this bull market in gold, only about 5% of the time did we see gold trading below its 200DMA, and each time it turned out to be a prime buying opportunity. (Charts courtesy Stockcharts.com unless indicated). Featured is the daily gold chart. The last time gold traded below its 200DMA was during the autumn of 2008. As soon as the price climbed back above the 200DMA, it rose from $900 to $1,900. The fundamentals for gold are bullish enough for a repeat performance. Just make sure you are buying gold and not a ‘paper or digital substitute’ for gold. This chart courtesy Jagadeesh Gokhal, shows the fundamentals for gold quite clearly. Since tax revenues are inadequate to cover these liabilities, the central banks do what they’ve always done – they’ll print! “In the distance, I see a frightful storm brewing in the form of un-tethered government debt. I choose the words –“frightful ...
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| “The whole thing is terrifying.” Posted: 06 Jan 2012 08:31 AM PST Nigel Farage – Gold to See Its Biggest Spike in 2012
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| How Central Bankers Attempt to “Cure” Insolvency Posted: 06 Jan 2012 08:30 AM PST Like trying to patch a nuclear reactor with scotch tape and chewing gum, the central banks of the world's leading economies are trying to Spackle over cracks in the global monetary system with a variety of desperate tactics and measures. Unfortunately, hiding the cracks does nothing to strengthen the underlying infrastructure. To the contrary, hiding the cracks dupes individuals into believing all is well, even as the monetary system is crumbling around them. Many European governments, for example, are spending much more money than they can possibly confiscate through taxation. These guys are broke… plain and simple. But so is the United States, based on any intellectually honest assessment of the facts. According to the US Treasury's own data, the US ended 2011 with total debt of $15.2 trillion, which means the US debt-to-GDP is now more than 100%! Move over Greece! Make way for Uncle Sam. Bankrupt governments usually default…at least they used to. In the modern era of faith-based currencies and Ivy League educated central bankers, bailouts and shell games are the cogs and wheels that drive the global monetary machinery. But this machinery does not actually power anything…other than a massive fraud. It merely sputters along, chugging out massive plumes of toxic theories and misguided manipulations. And whenever a central bank cannot provide direct, overt assistance to a specific insolvent investment bank or government, not to worry, a central bank can still provide indirect, covert assistance. The recently announced "backdoor bailout" of European financial institutions illustrates the point. The European Central Bank (ECB) cannot directly bail out the insolvent governments of Greece, Italy, Spain, Portugal, et al. Meanwhile, the US Federal Reserve cannot directly rescue Europe's insolvent banks. Enter the indirect bailouts… Here's how they work: The Fed extends unlimited lines of credit to the ECB under so-called swap agreements. The ECB, in turn, provides dirt-cheap capital to Europe's struggling banks. Then, the banks — understanding an unspoken quid pro quo — use the dirt-cheap financing to buy the high-yielding bonds of Greece, Italy, Spain, et cetera. So if you follow the money, the Fed is lending money to Greece… and all along the way, the insolvent European banks are making money they don't deserve to make, while taxpayers lose money they don't deserve to lose… and also stand first in line to lose even more money as these various coddled banks and governments eventually default anyway. Does this characterization of the Fed's activities sound like an exaggeration? Consider this fact, courtesy of The Wall Street Journal: As recently as a few weeks ago, the amount of dollar swaps — i.e., loans — with the ECB was only $2.4 billion. "For the week ending December 14, however, the amount jumped to $54 billion," the Journal reports. "For the week ending December 21, the total went up by [another] $8 billion… No matter the legalistic interpretation, the Fed is, working through the ECB, bailing out European banks and, indirectly, spendthrift European governments. It is difficult to count the number of things wrong with this arrangement." Thus far, the Fed's indirect bailout of Europe is relatively small, at a mere $62 billion. But we should expect that number to grow…a lot. And as that number grows, the Federal Reserve will be providing yet one more reason to buy gold, silver and other hard assets. No modern central banker can seem to resist the urge to "cure" insolvency with more credit — credit that comes not from a store of accumulated capital, but from the mouth of a printing press. Gold is a buy, perhaps now more than ever. "2011's close for gold marks the 11th year for higher year-end gold closing," observes Richard Russell. "To my knowledge, this is the longest bull market of any kind in history in which each year's close was above the previous year. This fabulous bull market will not end with a whisper and a fizzle. I continue to believe that the upside gold crescendo of this bull market lies ahead. We are watching market history. Below are the last day of the year quotes for gold: 2000 — $273.60 "I note the frustration and anger of the anti-gold crowd," Russell continues. "To miss twelve years of rising prices is enough to make any investor furious with himself. I would guess that 99 percent of Americans have never participated in the gold bull market. Thus, sour grapes is the sentiment of the gold-haters…" But there's no sense being "a hater" or to continue sucking sour grapes. If the gold bull market is merely resting, rather than dying, there will be plenty of opportunity to become a gold-lover. "Jeff Clark, editor of the S&A Short Report, sees the best opportunity to trade gold stocks of the past three years," the S&A Digest reports. "After the end-of-the-year rout in the sector, one of Jeff's favorite indicators dropped to its lowest level since October 2008 — one of the most pessimistic times in history for gold stocks. But after the indicator flashed 'buy' (as it is doing today), the average gold stock doubled over the next 10 weeks. "Take a look at this chart of the gold sector bullish percent index, which shows the past two times Jeff's indicator flashed buy (in June and October of last year)… Gold stocks rallied 20% over the following month in both instances."
Longer term, the precious metals seem even more compelling. "Gold stocks will have a great year," predicts Chris Mayer, editor of Mayer's Special Situations. "The market hated gold stocks in 2011, especially the juniors. The MarketVectors Junior Gold Miners ETF (GDXJ) is made up of small mining stocks. It fell 38% in 2011. This, despite gold itself finishing the year modestly up. "Brigus Gold (BRD), for example, is dirt-cheap," Chris continues. "In 2012, it is still targeting 100,000 ounces of production from its Black Fox mine. In the meantime, during 2011, Brigus boosted the total resource at Black Fox by 50% with high-grade ore extensions. So, the stock is now very cheap on reserves and trades for about 4x prospective cash flow at 100,000 ounces… So even if it gets a peer multiple of 8x, the stock could double. And that's if gold goes nowhere! "The market is offering low multiples on gold stocks right now," Chris winds up. "Price-to-cash-flow multiples, for instance, linger near generational lows. Gold doesn't have to go up for these stocks to make a lot of money. However, I think gold will make another run at $2,000 an ounce in 2012 — and exceed it. All the factors that drove gold to new highs in 2011 are still in place. The world's monetary system is still a mess. And its leading brand, the US dollar, is not well. Combine a rising gold price with low multiples and you have a kind of financial rocket fuel." Eric Fry How Central Bankers Attempt to "Cure" Insolvency originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.
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| Physical Silver Surges To Record 30% Premium Over Spot, In Backwardation Posted: 06 Jan 2012 08:28 AM PST One of the main reasons why we have been not so focused on paper representations of real currencies, gold & silver) is that ever since the MF Global debacle
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| Gold Daily and Silver Weekly Charts - Rounding Errors In the Big Scheme of Things Posted: 06 Jan 2012 08:20 AM PST |
We interviewed Rick Ackerman yesterday, and he hit us with his prediction that the dollar was headed up. However, he was emphatic this was not an indication of the dollar's fundamental health but rather a sign of the Euro's impending slide. The buck is "The best looking horse in the glue factory." Unfortunately, while misery may enjoy company, it doesn't make anyone any happier.
With the dollar breaking to new recent highs, gold starting the new year strong and bonds near all-time highs, today King World News interviewed Rick Santelli, CNBC's Business News on-air Editor. When asked about maturing securities in both the US and Europe in 2012, Santelli responded, "Yes, this is a big one. The best way to make banks in any country healthier is to have outside investors say, 'Wow, this looks good. I want to buy the bonds or I want to buy the banks or I'm taking in deposits.' Remember deposits have fled out of Europe. That's why that big sucking sound, they need those swaps, they need dollars to fund some of these liabilities."
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