Gold World News Flash |
- Euro-Gold Makes "Impulsive Move Higher", Silver Breaks $30/Oz
- John Embry - Silver to Break $100 in 12 to 24 Months
- Pimco Doubles Down On All In Bet Fed Will Monetize MBS
- Guest Post: India - Land of Energy Opportunity
- Gold Seeker Closing Report: Gold and Silver End With Modest Gains
- The Real Crisis in Capitalism
- Gold at Moving Average and Structural Resistance
- "Dangerous" Ideas
- Harvey Organ's Daily Gold & Silver Report
- Gold Bottom Targets Trend To $4,000
- FOFOA:The Studebaker Effect
- Bob Chapman with Kerry Lutz on MF Global – Investors Will Get Their Money Back – 01-12-11
- The Studebaker Effect
- Breakout Coming? An Important 24 Hours Begins Now.
- 24 Statistics To Show To Anyone Who Believes That America Has A Bright Economic Future
- Jim Sinclair - Hathaway Correct, Gold Shorts to get Squeezed
- Capital Account: Marc Chandler on the Outlook for the Dollar, Euro and Yen in 2012
- Nightly Report
- Gold Price Pierced the $1,630 Resistance and Has $1,680 Firmly in its Sights
- Nightly Report – Wednesday 11.01.2012
- Guest Post: Iran: Oh, No; Not Again
- Financials Surge Again As Post-Europe-Close Credit Outperforms
- Goldrunner Called $1,920 Gold High Exactly; Now Expects $3,000 ? $3,500 by Mid-Year
- U.S. Dollar Threats, the Paper Tiger
- Reuters: Gold hits 1-month high, breaks ranks with euro
- Gold's plunge at end of 2011 was 'an operation,' Sinclair says
- Eric Sprott: "Who is not Getting the Silver?"
- The US Dollar Paper Tiger
| Euro-Gold Makes "Impulsive Move Higher", Silver Breaks $30/Oz Posted: 11 Jan 2012 06:20 PM PST Bullion Vault
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| John Embry - Silver to Break $100 in 12 to 24 Months Posted: 11 Jan 2012 05:22 PM PST  Many traders have been shocked as gold has already risen $120 off of the recent lows. But silver, which has been quiet for some time, may finally be ready to make a move. Today King World News interviewed John Embry, Chief Investment Strategist of the $10 billion strong Sprott Asset Management to get his take on where he sees gold, silver and the mining shares headed from here. When asked about the action in gold, Embry said, "Well, I think it's putting in a reasonable performance. I'm not going to be excited by gold's performance until it breaks away from the shackles of the gold cartel and goes up, on a given day, by $50 or $100. Day to day gains are still being limited to 2%."
This posting includes an audio/video/photo media file: Download Now |
| Pimco Doubles Down On All In Bet Fed Will Monetize MBS Posted: 11 Jan 2012 04:53 PM PST When back in December we observed that Pimco's Total Return Fund (which contrary to rumors actually closed the year at $244 billion, or $4 billion more than in the beginning) had a $60 billion margin "cash" position, the proceeds of which were used to purchase a near record $103 billion in Mortgage Backed Securities we thought this is about as far as Bill Gross would go betting the ranch on QE3, and specifically that kind of QE3 that assumes at least a big portion is used to buys MBS (the same instrument that SocGen believes, along with gold, will benefit the most from an imminent QE3 announcement). It turns out we were wrong, and in December the fund doubled down on its QE3 all in bet, by "borrowing" even more cash, or a record $78 billion, using the proceeds to buy even more MBS, as well as Treasurys, which hit a combined 31% of the TRF's holdings. In other words, between MBS and USTs, Pimco holds a whopping 79% of total, mostly in very long duration exposure. In fact, this combination of long duration and pre-QE exposure has not been seen at PIMCO since late 2008, early 2009, meaning that as many banks have been suggesting, Gross is convinced that the Fed will announce if not outright QE3 this January, then at least intimate it is coming. Yet while Gross timed the advent of QE2 perfectly as well, when he bought up USTs in the summer of 2010 ahead of the August announcement of the second easing, he did mistime the latest build up in MBS in late 2010, which did not benefit from a transition of QE2 into a MBS-focused program. Needless to say, PIMCO was net short treasurys starting in March 2011, just as the security was about to become one of the best performing asset classes paradoxically ahead of the US downgrade. Yet something tells us this time Gross is correct. The only question is whether, as SocGen believes, the QE3 hint will come at the January 25 FOMC meeting or the subsequent one. And since NFP will have to be a rather big disappointment ahead of a major re-monetization episode, it just may be that the formal announcement will be delayed by a few weeks.
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| Guest Post: India - Land of Energy Opportunity Posted: 11 Jan 2012 04:29 PM PST Submitted by Marin Katusa of Casey Research India: Land of Energy Opportunity Quick, what country is the economic engine that will power world growth? If you answered "China," you're far from alone. But there's another country that deserves as much attention and better yet, is much friendlier to investment: India, home to 1.2 billion people. To electrify all those houses, power the industries that keep all those people employed, and fuel the vehicles that more and more Indians own, India's energy needs are shooting skyward. First question to consider: what kind of energy does India need? Just about every kind, really. India encompasses significant reserves of coal, oil, and gas, but each year it has to import more and more to meet its rapidly rising demand. Domestic production increases have been hampered by land disputes, interminably slow permitting, and government-regulated pricing mechanisms that discourage development. That's got to change if India wants to keep up, and its government knows it. Domestic supplies always come with better reliability, better prices, and other benefits that we can shorten into two words: energy security. So India is reaching out to foreign oil majors, quietly setting up deals to exchange stakes in giant, underexplored oil and gas fields for the technical expertise it needs to best develop these resources. These partnerships are working into place slowly. However, they show Delhi is serious about the welcome mat it rolled out in 2000, when it passed a policy that allows foreign companies to own 100% of any oil and gas assets they may want to acquire for exploration and development. And what we really like is that explorers are welcome in a democratic and reasonably friendly country that harbors none of the risk of asset nationalization that clings to other underexplored locales, like Venezuela. Oil demand in India is set to rise some 4% annually for the next decade; natural gas requirements are expected to climb 10% per year for the next five years. Put together, India is a place that desperately needs more energy, has resources and reserves to exploit, and is working to encourage foreign investment in them. We're ready to take India up on the offer, so let's learn a little more about its circumstances and potential. Setting up Shop In the 1990s, as India's growth was beginning to snowball, Delhi realized the country needed to look abroad for expertise to shorten its learning curve and for capital to fuel it. Accordingly, the government wrote policies to attract foreign investment. The one we mentioned above is called NELP, for New Exploration Licensing Policy, designed to even out the playing field between national and private companies. India's oil and gas industry has traditionally been dominated by state-owned companies. With NELP enabling foreign companies to own oil and gas assets, Delhi next needed to develop a fiscal structure. What they chose is a PSC (production-sharing contract) system, and it's not a bad one – not as favorable as the UK North Sea, but not Iraq either. (Governments set up different ways to collect what they consider their share of income from the development of their resources. In India, companies that find oil or gas – and are not state-owned – have to negotiate production-sharing contracts, or PSCs, with the government. PSCs designate a portion of production for companies that they hope will offset their expenses. Beyond this "cost oil, " any "profit oil" is split between government and company, according to the terms of the all-important contract.) India and Oil India is the world's fourth-largest oil consumer, trailing only the United States, China, and Japan. The country has 5.6 billion barrels of proven oil reserves, but production averages just 761,800 barrels per day (bbl/d), about the same that it did 25 years ago. In contrast, the country's consumption has more than tripled in the same period. It currently consumes about 3.1 million bbl/d, and it relies on imports for 70% of that. No government in its right mind would like this trend.
India's oil sector is dominated by state-owned enterprises. The largest oil company is the state-owned Oil and Natural Gas Corporation (ONGC), followed by state-owned Oil India Limited (OIL). The NELP system has opened up opportunities for other companies, however, and India will need that foreign investment and exploration to boost domestic production. The country is working the other side of the street as well to meet its energy needs. Indian national oil companies have bought stakes in international projects in recent years, aiming to gain control over some non-domestic supplies. For example, the international arm of ONGC has oil and gas operations in 13 countries including Vietnam, Russia, Iran, Iraq, Sudan, and Brazil. Indian companies are also opening up to the notion of partnering with global firms, as we mentioned earlier. While no state-owned companies have inked major partnerships as yet, privately owned Reliance Industries Ltd signed a US$7.2 billion deal with BP (NYSE.BP, L.BP) in August. Reliance sold BP a 30% stake in 21 exploration blocks and is now using the British energy giant's expertise in deepwater drilling to revamp its plans around exploration and boosting production from its operational fields. This first major deal could well act as a model for future exploration partnerships in India. Companies know that international partners can bring valuable expertise, especially with respect to increasing output from mature fields. One aspect of India's oil sector that needs adjustment is its subsidy system. The government subsidizes prices of domestic oil products to help disadvantaged Indian consumers. But requiring its national companies to sell their products at reduced prices regularly forces them into major financial losses – more than US$23 billion in fiscal 2010-2011 alone, according to the International Energy Agency. And the subsidy situation only gets worse as the rupee depreciates. Global oil costs have eased some 8% this year, but the rupee's 9% slide against the dollar has wiped out any cost savings. The oil minister said recently that every one-rupee decline in the Indian currency against the dollar increases annual revenue loss for the three state-owned refiners by 80 billion rupees, or US$1.6 billion. No easy solution for this issue, unfortunately. Clearly, raising prices for Indian consumers would carry a heavy political price. But just as clearly, the Indian government cannot continue subsidizing oil prices at this level for long. India and Natural Gas When it comes to India and natural gas, the question is really one of keeping pace with electricity demand. The country was gas self-sufficient for years, but economic growth turned it into a net importer in 2004 despite steady increases in production. Even imports are not enough: According to the World Bank, roughly 40% of residences in India are without electricity, and blackouts are still common in main cities. Import needs have climbed by an average of 35% annually. Natural-gas demand in India is projected to grow 10% annually for the next five years as the country works to diversify away from a reliance on coal, which currently generates 70% of India's power.
Several large natural-gas deposits have been discovered in India over the last few years, primarily offshore in the Bay of Bengal. But demand will continue to outpace production for the next several years at least. For one thing, Reliance's huge KG-D6 field – its first offshore field – is producing 20% to 40% less gas than expected, a problem that will take even its new partner BP at least three years to reverse. Then there's the subsidy issue again. Some gas finds are being left undeveloped because the regulated price of natural gas is simply too low to justify the cost of developing the field. The price more than doubled in May 2010, but US$4.20 per MMBtu is still only one-third that of the open market in Asia. The country is trying to add infrastructure to help meet its growing import needs, but it's running into hurdles here, too. A variety of economic and political issues keep delaying the Iran-Pakistan-India pipeline, under discussion since 1994. Similarly, India is the planned endpoint for the Trans-Afghan pipeline from Turkmenistan, but work is yet to begin due to concerns about route security and the adequacy of Turkmen supplies. A liquefied natural gas (LNG) terminal has made it to construction phase, adding a third to two already in operation in India. Long-term growth demand for LNG in India remains unclear, however, because… you guessed it… that gas subsidy means domestic gas is notably cheaper than imported LNG.
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| Gold Seeker Closing Report: Gold and Silver End With Modest Gains Posted: 11 Jan 2012 04:00 PM PST Gold rose almost 1% to $1647.07 in Asia before it fell back to nearly unchanged at $1633.66 near the open of trade in New York, but it then chopped its way higher for most of the rest of trade and ended with a gain of 0.59%. Silver saw an over 1% gain at $30.265 in Asia before it fell to see an over 1% loss at $29.564 in early New York trade, but it also chopped its way back higher for most of the rest of trade and ended with a gain of 0.1%.
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| Posted: 11 Jan 2012 02:30 PM PST Bill Bonner View the original article. January 11, 2012 12:19 PM The Financial Times led off its series on 'Capitalism in Crisis' with a wandering piece that attempted to outline the problem. Unfortunately, the FT writers don't seem to understand what capitalism is, let alone what is wrong with it. They say they are "rethinking capitalism." But it doesn't appear that they ever thought about it the first time. "At the heart of the problem is widening income inequality," they write. Anatomically, income equality is right on the surface…not at the heart. It is more like warts or boils…on the skin of the system for all to see. Right out in the open. The question is what causes these blemishes… More in just a minute… First, let's look briefly at what is going on in the markets. A quick preview — nothing much. The Dow rose 69 points yesterday. Gold shot up $23. Meanwhile, The Wall Street Journal tells us that consumers have begun to borrow again: Consumer b...
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| Gold at Moving Average and Structural Resistance Posted: 11 Jan 2012 02:30 PM PST courtesy of DailyFX.com January 10, 2012 04:02 PM Daily Bars Prepared by Jamie Saettele, CMT Gold has entered a zone that may be difficult for bulls to penetrate. The zone is defined by the 12/21 high and 200 day average on the low end and 11/21 low and September-November trendline at 1672/90 on the high end. 1654.40 is a pivot from 12/12 that may produce a reaction as well. Bottom Line – short against 1675, target new lows...
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| Posted: 11 Jan 2012 02:25 PM PST January 11, 2012 [LIST] [*]Emerging from the rabbit hole: Election results show the time has come for "dangerous" ideas like gold as money [*]Chinese gold imports surge 20% in one month... Silver Eagle sales on a record pace [*]Look who's buying gold stocks now... Another reason the gold price doesn't have to rise to make money from the "gold lag"... Your window of opportunity closes tonight [*]Life after municipal bankruptcy: Pensioners take a 55% hit while citizens are nickel-and-dimed for ordinary acts declared no longer legal [*]Only in Washington: Fining companies for failure to carry out a physically impossible act [/LIST] Of all the people who voted yesterday in the New Hampshire Republican primary, 23% chose Ron Paul. He even carried one of the state's 10 counties. It's an unlikely outcome for a cerebral septuagenarian — much less one with "unorthodox" ideas like Dr. Paul. "Understanding Ron Paul's ideas," one voter told NPR, "is like going down the rab...
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| Harvey Organ's Daily Gold & Silver Report Posted: 11 Jan 2012 01:18 PM PST German exports fall/Rumours of French downgrade/Huge gold imports into China/ ECB deposits of Euros at record levels again.
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| Gold Bottom Targets Trend To $4,000 Posted: 11 Jan 2012 01:16 PM PST from Gold-Eagle.com: 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. I want to discuss what gold has done, where it's at now, and then end with where it's going from here and postulate why it's going to do what it will do. Right now you need to understand that gold is beginning the twelfth year of major bull market; perhaps the most unprecedented bull market in our lifetime. Here's a quick snapshot of what that bull market has looked like since the 1999 bottom and the 2001 retest of that bottom:
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| Posted: 11 Jan 2012 01:10 PM PST The evidence is already in — physical gold is "the load," set and levered for revaluation,
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| Bob Chapman with Kerry Lutz on MF Global – Investors Will Get Their Money Back – 01-12-11 Posted: 11 Jan 2012 01:05 PM PST from The Financial Survival Network:
Click Here to Listen to the Interview
This posting includes an audio/video/photo media file: Download Now |
| Posted: 11 Jan 2012 01:01 PM PST from FOFOA:
This is tricky ground for me because I'm not a gold activist. The purpose of this blog is stated at the top. It is a tribute to Another and FOA. I'm not here to convert the unwilling. I'm not here to project my thoughts and draw in the masses. But at the same time, I do want to share what I've learned with loved ones. And from the email I receive, so do a lot of other people. That said, you can't just approach the unwilling with stories of decade-old anonymous internet personalities. Read More @ FOFOA.Blogspot.com
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| Breakout Coming? An Important 24 Hours Begins Now. Posted: 11 Jan 2012 12:57 PM PST from TFMetalsReport.com:
Let's just go straight to the charts. First is gold. I start with gold because, if the breakout occurs, I think that gold will be the driver and that silver will come along for the ride. First of all, here's an 8-hour Feb gold. You can clearly see the significance of the 1645-1650 area. Above there, and it looks like a bottom is in. In fact, it's a double bottom aligned with the panic lows of September. Below 1645 however and you are still rangebound and, of course, the possibility always exists for another test of the lows of the range. Read More @ TFMetalsReport.com
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| 24 Statistics To Show To Anyone Who Believes That America Has A Bright Economic Future Posted: 11 Jan 2012 12:54 PM PST from The Economic Collapse Blog:
Read More @ TheEconomicCollapseBlog.com
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| Jim Sinclair - Hathaway Correct, Gold Shorts to get Squeezed Posted: 11 Jan 2012 12:41 PM PST I've never seen a more negative impact on holders of an asset than what occurred in this last takedown in gold.
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| Capital Account: Marc Chandler on the Outlook for the Dollar, Euro and Yen in 2012 Posted: 11 Jan 2012 12:36 PM PST which currencies will prevail in 2012 -- the dollar, the yet, the swiss franc, the euro?
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| Posted: 11 Jan 2012 11:04 AM PST I'm going to unlock this "Nightly Report" for everybody, because I wanted to clarify some things for people who are calling me crazy for saying that the silver "Bubble" might have burst. Read More...
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| Gold Price Pierced the $1,630 Resistance and Has $1,680 Firmly in its Sights Posted: 11 Jan 2012 10:19 AM PST Gold Price Close Today : 1642.00 Change : 8.20 or 0.5% Silver Price Close Today : 2993.50 Change : 7.50 cents or 0.3% Gold Silver Ratio Today : 54.852 Change : 0.137 or 0.3% Silver Gold Ratio Today : 0.01823 Change : -0.000046 or -0.2% Platinum Price Close Today : 1491.90 Change : 73.90 or 5.2% Palladium Price Close Today : 644.30 Change : -22.95 or -3.4% S&P 500 : 1,292.48 Change : 0.40 or 0.0% Dow In GOLD$ : $ 156.73 Change : $ (0.77) or -0.5% Dow in GOLD oz : 7.582 Change : -0.037 or -0.5% Dow in SILVER oz : 415.88 Change : -1.03 or -0.2% Dow Industrial : 12,449.45 Change : 0.40 or 0.0% US Dollar Index : 81.31 Change : 0.503 or 0.6% The GOLD PRICE pierced that ($1,630) resistance level and ratcheted to the next resistance level, $1,640. Closed today $8.20 higher at $1,639.20, but high came at $1,646.97. Gapped up on the open and never traded lower than $1,633.49, higher than yesterday's close. Strong, solid gain. GOLD has $1,675-$1,680 firmly in its sights and is marching that way with resolute dedication. The SILVER PRICE met opposition today that muffled its enthusiasm. It gained only 7.5c to 2985.8c and with at a 3027c high failed to penetrate that resistance. Should do so tomorrow, as today it built an even-sided triangle, which tells us SOMEthing will happen tomorrow. Must-hold level remains 2960c. Look for silver at 3100c soon, maybe tomorrow. Get out of its way! Buying U.S. 90% SILVER coin rather than Silver Eagles over the last few years has saved investors from $3.25 to $2.25 PER OUNCE. You can buy more than 10% MORE silver by dodging the Eagles and purchasing 90% instead. And don't let anybody fool you about recapturing the premium when you sell at market peak. I've been there, and you won't. At the peak nobody asks, nobody asks, "What KIND of silver do you have?" They only ask, "How MUCH silver do you have?" Always buying the least expensive (but still liquid) form of silver or gold greatly increases your investment's leverage, because it increases the ounces you own. TODAY silver and gold kept up their advance, the US dollar resumed its role as Big Bully Of Filthy Fiat, and stocks seem to be hovering at their arc's top preparatory to an earthward plunge. Some stock indices rose, some fell today, reflecting fear and indecision. Dow fell 13.02 to 12,449.45, S&P500 gained a flea-bite 0.4 to $1,292.48. Charts have look and feel of a dying advance. US dollar index bellied up to the table and chug-a-lugged another 50.3 basis points (0.65%) to end at 81.308. This takes the buck back to where this bar-fight started over the weekend with a new high at 81.50. Tomorrow the dollar will finish this fight by breaking beer bottles over its opponents heads, pitching them out of the bar, and closing the doors higher. Dollar rally continues. Euro and yen both closed lower. Yucky yen closed 130.12c/Y100 (-.04%) and scrofulous euro closed at 1.2709, down 0.52%. For the moment, the dollar has 'em licked, but it's every bit as sorry as they are. Well, that's not quite right, but it's still plenty sorry. 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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| Nightly Report – Wednesday 11.01.2012 Posted: 11 Jan 2012 09:11 AM PST I'm going to unlock this "Nightly Report" for everybody, because I wanted to clarify some things for people who are calling me crazy for saying that the silver "Bubble" might have burst. I am not a BULL nor a BEAR in ANY asset class, but I would rather say that I'm a REALIST. I hope this helps to clarify. **************************************************************************************************** We now have a BUY signal on the RSI for Gold. Price has also broken above a key resistance level, and has made a higher high.
We also have a BUY signal on Silver, as the RSI broke above the red resistance line and above 50.
As expected, the higher high in the Gold:Silver ratio was not confirmed by the RSI and MACD, resulting in Negative Divergence, meaning the ratio should soon start to drop. This means Silver should soon outperform Gold. Given the BUY signal on both Gold and Silver, I expect both to rally over the next couple of weeks.
What Gold and Silver will do, greatly depends on the movement of the US Dollar.
Sentiment in the US Dollar is also sky-high, adding more weight to my SHORT TERM negative view on the USD and the positive SHORT TERM view on Precious Metals.
The Euro is the heavy weight in the USD index, so the recent dollar strength can be mainly attributed to the Euro Weakness.
However, sentiment in the GBP and the Swiss Franc are also very negative now, meaning the dollar could be in the process of setting a top against ALL currencies now.
Back in August we warned of the "Swiss Franc Bubble", which was based on Technical indicators as well as sentiment charts:
That was the EXACT top, as the Swiss Central bank intervened shortly after, and we profited nicely of this opportunity by shorting the Swiss Franc at that time. $XSF (the Swiss Franc Index) is now back at 104 (coming from 140′ish)… Last but not least, the Bullish % index of Gold Miners is still very depressed. This indicator shows the percentage of mining stocks in the $HUI index that are yielding a BUY signal on their point and figure charts.
Conclusion: IF the Dollar is about to set a short term TOP, this will probably lead to a nice rally of both Gold and Silver, and most likely also in Mining Stocks. For more articles, trading Updates, Nightly Reports and much more, please visit www.profitimes.com and feel free to sign up for our services!
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| Guest Post: Iran: Oh, No; Not Again Posted: 11 Jan 2012 09:06 AM PST Submitted by ChrisMartenson.com Iran: Oh, No; Not Again In each of the years 2008, 2009, and 2010, significant worries emerged that Western nations might attack Iran. Here again in 2012, similar concerns are once again at the surface. Why revisit this topic again? Simply because if actions against Iran trigger a shutdown of the Strait of Hormuz, through which 40% of the world's daily sea-borne oil passes, oil prices will spike, the world's teetering economy will slump, and the arrival of the next financial emergency will be hastened. Even if the strait remains open but Iran is blocked from being an oil exporter for a period of time, it bears mentioning that Iran is the third largest exporter of oil in the world after Saudi Arabia and Russia. Once again, I am deeply confused as to the timing of the perception of an Iranian threat, right now at this critical moment of economic weakness. The very last thing the world economies need is a vastly increased price for oil, which is precisely what a war with Iran will deliver. Let me back up. The US has already committed acts of war against Iran, though no formal declaration of war has yet been made. At least if Iran had violated US airspace with stealth drones and then signed into law the equivalent of the recent US bill that will freeze any and all financial institutions that deal with Iran out of US financial markets, we could be quite confident that these would be perceived as acts of war against the US by Iran. And rightly so. U.S. imposes sanctions on banks dealing with IranDec 31, 2011 (Reuters) - President Barack Obama signed into law on Saturday a defense funding bill that imposes sanctions on financial institutions dealing with Iran's central bank, while allowing for exemptions to avoid upsetting energy markets. The sanctions target both private and government-controlled banks - including central banks - and would take hold after a two- to six-month warning period, depending on the transactions, a senior Obama administration official said. Sanctioned institutions would be frozen out of U.S. financial markets. (Source) The impact of this law was quite pronounced and immediate, with the Iranian rial falling sharply against the dollar in the first few days after the bill was signed into law.
That represents a more than 70% decline in just a month. Assuming that Iran trades its oil in dollars, this will not necessarily cripple its economy, but the specter of hyperinflation looms large whenever a currency falls by that much. With hyperinflation comes economic, social, and political instability, and these are, of course, precisely the aims of the US in imposing the sanctions. And of course, everything that Iran imports will become hideously expensive -- quite rapidly. The US is deliberately poking and prodding Iran right now. Given the glacial pace of nuclear development, we must ask ourselves, why now? The StoryAs with most things today, there is a story created for public consumption that justifies waging war against Iran. The main narrative goes something like this: Iran is trying to develop nuclear weapons, and this is intolerable, so it must be stopped. In November 2011, the International Atomic Energy Agency (IAEA) issued a report, long denied under the prior director's tenure (Mohamed ElBaradei), finally declaring that Iran was unequivocally trying to build a nuclear weapon:
I've not yet read the report, but I am concerned about the gap between the headlines I've seen that say Iran is building a nuclear bomb and carrying out "activities relevant to the development of a nuclear device." For example, much has been recently made of the fact that Iran has enriched some uranium to the 20% grade, but there is a huge leap between that and the 90%+ grade needed for a nuclear device. Iran had told the world it needed the 20% grade for a medical reactor, and then created a fuel rod for that reactor. To say that enriching to the 20% grade is the same thing as trying to build a bomb is not accurate and possibly deceptive. As a signatory to the Non-Proliferation of Nuclear Weapons (NPT) treaty, Iran has every legal right to enrich uranium for peaceful purposes, such as making nuclear fuel rods for a research reactor, and Iran is claiming that all their current work is towards this end. Maybe it is; maybe not. But even if a nuclear bomb is being pursued, there's nothing in the NPT that provides for military action to pre-emptively prevent any nation-state from carrying out such development work. In fact, if a preemptive strike is carried out, it will be done without the benefit of any international laws or treaties that could justify the action. Also left out of the narrative is any explanation of why it was okay for Pakistan to develop nuclear weapons or why North Korea is permitted to hold them. The simple answer is because they don't have any oil. A quick view of the US military presence surrounding Iran, coupled with the Iraqi experience of being attacked for supposed weapons of mass destruction that did not exist (nor were used by Iraq to threaten the US), reveals why Iran may be so motivated to develop a nuclear weapon:
If Iraq had a nuclear weapon in 2002, it is quite doubtful the US would have invaded -- a lesson that has not gone unnoticed. While I am not a supporter of the current repressive theocratic regime in Iran, I strongly believe that it is up to the people of any nation to decide for themselves what sort of system they will choose to live under. The Arab Spring, as messy as it was, is vastly preferable to the blunt instrument of an externally driven war. The CuriosityThe most curious thing about this story is the apparent lack of awareness among US officials about how the oil markets work. I know they know better, but the context-free repetitions in articles such as this next one almost literally drive me crazy:
The idea that the world can just stop buying Iranian oil, as though it were the same thing as boycotting McDonald's and buying Burger King instead, is just ridiculous. The world oil markets are far too tight for that. How is it that China is supposed to cut its Iranian oil imports, exactly? Oil is a fungible product. If China cuts its oil imports from Iran, it will simply have to buy the missing amount of oil from someplace else. The 2.6 million barrels a day that Iran exports cannot simply be instantly replaced at this time from other spare capacity elsewhere in the world. It doesn't exist at the moment. Where will it come from? Perhaps Geithner is offering something behind the scenes, like providing China with extra petroleum from the US strategic reserve while events unfold (unlikely). But barring that, it is a remarkably naïve request as it stands and is curious on its own. The Powder KegWith the Persian Gulf being so small, and so many tense parties crammed into that tiny arena, the chance of some sort of mischief arising is quite high. One twitchy trigger finger -- such as the one that caused the USS Vincennes, thinking it was under attack by a jet fighter in 1988 during the Iran-Iraq war, to shoot down an Iranian passenger airliner -- and the hounds of war may be let loose. And it's not just the US. Practically everybody who's anybody has naval assets positioned for whatever may happen next:
With all those boats chugging around in those little bathtubs, and with various other forces that would definitely like to see a shooting war develop (a false flag attack is an option here), the risk is quite high of some form of incident that would trigger hostilities. Of course, there are those in the war rooms of the various OECD countries who think they have a plan for the conduct of that war, but no plan ever survives first contact with the enemy. The one thing we can count on is the war being messier, longer, and more expensive by at least a factor of two than whatever is currently occupying the minds of the war planners. Iran's ResponsesOf course, Iran has been none too happy over the years at being surrounded, poked, prodded, and now finally sanctioned for having done nothing more than cloak its nuclear program in the exact same sort of secrecy that has surrounded literally every other nation's nuclear programs, including Israel and Pakistan, Iran's notable nuclear neighbors. And now, with the aid of enhanced missile technology obtained from China and Russia, Iran has a credible threat to make:
The admission here by the US military is that Iran has the ability to block the Strait of Hormuz "for a period of time," which they do, is an extraordinary admission (even if it really is stating the obvious) by the US brass. Anti-ship missile technology has come a long way, and an offensive missile is much cheaper than either a large ship or defensive measures. The Falklands war in the early 1980s taught me that the navy is an outmoded concept if the opponent is armed with semi-decent anti-ship missiles, and such devices have improved remarkably since then. During the most recent Iranian war exercises, the US military test-fired (more of a demonstration, really) their Qader anti-ship cruise missile, which has a range of 200 km and can be fired from a small truck. To visualize the difficulty of defending against such a technology, just imagine how many hiding places for a small truck might exist within this 200 km radius green circle :
In order to neutralize the entire missile, full air superiority would have to be established and every mobile launcher found and destroyed. Further, Iran has a number of submarines capable of firing a new breed of torpedo that can achieve speeds in excess of 200 knots. As far as I know, these are extraordinarily difficult to defend against, let alone evade. Of course, China is paying close attention to the developments:
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| Financials Surge Again As Post-Europe-Close Credit Outperforms Posted: 11 Jan 2012 09:04 AM PST Today saw NYSE trading volumes at their 3rd highest of the year and ES (the e-mini S&P 500 futures contract) saw its second highest volume of the year (though both still well below recent averages) as stocks managed marginal gains, outperformed handily by high yield credit. For the sixth day of the last seven ES closed only a smidge from where it opened but average trade size was dramatically higher (its highest since 8/31) which historically has suggested a short-term top (and certainly seems odd heading into tomorrow's European bond auctions). In a similar manner to yesterday, HY17 (the high yield credit index) surged (absolute and relative to ES and HYG) from the European close to US day session close (index RV to Europe and Index arbitrage seems much more of an effect than rerisking. The major Financials were among the best performers today once again (as XLF managed +1.13%) with BofA now up an impressive (if not ridiculous) 24% YTD (and Citi +19%). Perhaps of note is the fact that the major financial CDS rally stalled today with MS, GS, and JPM all leaking a little wider into the close. Treasuries continued their ain't-no-decoupling rally as the 10Y auction went well (beige Book mixed/weak) leaving longer-dated TSY yields near day (and year to date) lows and ES near day highs (sell EUR, buy anything USD-denominated?). The dollar is practically unchanged on the week now as EUR 1.27 (and GBP more so) weakness dragged it up (even as AUD rallied - helping stocks). Copper outperformed among the economically sensitive commodities as Gold gained modestly (slight beat of Silver) and Oil slid back to $101 and remains down on the week as Silver holds over 4% gains.
On Monday we saw stocks and credit in very good sync through the European session outperform and then decouple (green box 1) during the afternoon US session). Tuesday and Wednesday have seen a similarly well-synced equity-credit relationship through the European close but post-Europe very different. As far as boxes 2 and 3, we suspect that the HY (high yield credit) index is being held during European hours by relative-value trades against European indices and once that is closed, index arbitrage is playing a heavy hand (as the index was trading significantly cheap/wide to its underlying portfolio's fair-value. The compression between HYG (high-yield bond ETF) and HY remains a driver of the divergence between the two high-yield indices (but has largely been closed now) as HYG's NAV premium has also dropped. While headlines will look at this performance as indicative of risk-on, it feels very scrambly to us and furthermore has plenty of technicals (flow) impacting it also - HYG seems more 'real' for now (no matter how much it is over-bidding for junk-that-dealers-don't-want).
Whether it is rotation/rebalancing of implicitly underweight positions in index-tracking funds, a short-squeeze, arbs against CDS markets, or good-old fashioned momo-cashing, the major financials (most notably BofA and Citi - though MS and GS have also impressed) have torn out of the gate this year. Noone really knows which or all of the above though the mortgage refi rumors and now chatter over 'what do they know' about Greek PSIs is being discussed. The only thing we can add to this incredible move is that CDS (which have rallied with stocks the last week or two), stalled this afternoon.
Volume was up today as was average trade size - dramatically so. The second biggest average trade size in ES in five months suggests a topping process (or at least has done many times before) and timing seems 'appropriate' heading into tomorrow's auctions. VIX opened up and stayed up - not budging much as stocks rallied in the afternoon - sustaining the divergence between index and underlying demand for protection that we discussed last week.
As an aside, from the 12/30/11 close, Gold is up 4.95%, the S&P 500 is up 2.77%, and the Long Bond is -0.65%.
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| Goldrunner Called $1,920 Gold High Exactly; Now Expects $3,000 ? $3,500 by Mid-Year Posted: 11 Jan 2012 08:40 AM PST [/CENTER] Who in the world is currently reading this article along with you? Click [COLOR=#0000ff]here[/COLOR][/CENTER] [/CENTER] The Gold Bull in US Dollars (USD)*is a parabolic cycle that is created by the fall in value of the USD. The "US Dollar Index" (USDI)*has little relationship to the "Value of the USD" once the other paper currencies in the basket are being devalued aggressively. Thus, the*USD is no safe haven except for very short periods of time late in major Gold Bulls. The global competitive currency devaluation (GCCD) process started in earnest in 2010 – much like it did in the late 70's cycle. Once the GCCDs start in earnest, the USDI becomes little more than*a "fake pricing oscillator", mostly moving sideways and inversely to the Euro, the largest component of paper currency in the US Dollar Basket. The USDI is trading much like it did at the same point in the late 70's once it became a simple oscillator, and the analogous rise in the late 70's suggests tha...
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| U.S. Dollar Threats, the Paper Tiger Posted: 11 Jan 2012 08:33 AM PST Events in the last decade displayed a vigorous effort to defend the USDollar. The rogue nation of Iraq sold crude oil in Euros for three years, until they were liberated. Its tyrant was a scourge to be sure. Weapons of financial mass destruction seem to have replaced the traditional type, the new variety being derivatives, mortgage bonds, and even sovereign bonds from weak nations. Newer weapons from the United States feature extended hands from clearing house fronts that snatch and grab segregated private accounts, and backdoor raids of exchange traded fund precious metal. Let's not overlook the more frontal assault weapons deployed like unseating Qaddafi and capturing his gold held in foreign accounts, along with all that cash. Liberation has its benefits. The confrontation with Iran would be comical if not so dangerous. The claims have been silly in my view for years, in the perception of Iran as a serious threat to the West. They have been subjected to cut communication lines on the Persian Gulf seabed. They have been subjected to Stuxnet viruses to obstruct their nuclear refinement process, via the Siemens rear door. They have been subjected to an influx of heroin from the north, where the USMilitary manages the Afghan situation and locale.
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| Reuters: Gold hits 1-month high, breaks ranks with euro Posted: 11 Jan 2012 08:31 AM PST Gold rose to a one-month high on Wednesday, breaking ranks with the euro & equities, evidence of strong physical demand from China fueled fund
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| Gold's plunge at end of 2011 was 'an operation,' Sinclair says Posted: 11 Jan 2012 08:27 AM PST 4:25p ET Wednesday, January 11, 2012 Dear Friend of GATA and Gold: Mining entrepreneur and gold advocate Jim Sinclair today tells King World News that gold's plunge at the end of 2011 was "an operation" and that he agrees with the Tocqueville Gold Fund's John Hathaway that a short squeeze is imminent. An excerpt from the interview is posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/1/11_Ji... 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 Golden Phoenix Receives Inferred Gold Resource Estimate Company Press Release Golden Phoenix Minerals Inc. (OTC: GPXM) reports that on behalf of Golden Phoenix Panama S.A., the joint venture entity that owns and operates the Santa Rosa gold mine in Panama, it has received from SRK Consulting (U.S.) an initial resource estimate for Mina Santa Rosa. The Santa Rosa project is a volcanic-hosted epithermal gold-silver deposit previously operated as an open pit-heap leach operation. Production ceased in 1999 in part because of low gold prices. SRK Consulting reports an in-situ inferred resource at the former Santa Rosa and ADLM pits totaling 23.1 million metric tonnes at 0.90 grams/tonne gold, for a contained 669,000 ounces of gold at a 0.30 g/t gold cutoff. The resource also contains an average grade of 2.87 g/t silver for a contained 2.1 million ounces of silver. John Bolanos, Golden Phoenix's vice president of exploration, remarks: "In addition to SRK's inferred resource estimate of 669,000 contained ounces of For the company's full statement, including a table detailing the resources at Santa Rose, please visit: http://goldenphoenix.us/press-release/golden-phoenix-receives-initial-ni...
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| Eric Sprott: "Who is not Getting the Silver?" Posted: 11 Jan 2012 08:22 AM PST Eric Sprott speaks at the Casey Research/Sprott Summit When Money Dies.
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| Posted: 11 Jan 2012 08:17 AM PST by Jim Willie CB January 10, 2012 home: Golden Jackass website subscribe: Hat Trick Letter Jim Willie CB, editor of the "HAT TRICK LETTER" Use the above link to subscribe to the paid research reports, which include coverage of critically important factors at work during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy. Events in the last decade displayed a vigorous effort to defend the USDollar. The rogue nation of Iraq sold crude oil in Euros for three ye...
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Bob Chapman, The International Forecaster, is back with Kerry Lutz on the Financial Survival Network to talk about precious metals and MF Global Investors.
One of my resolutions for 2012 is to spend some time finding new ways to introduce gold-resistant paperbugs to the powerful arguments for buying and holding physical gold right now. But I never want anyone to invest in anything based merely on a recommendation. I want them to understand the reasons for the purchase themselves. Peace of mind can only come from within, and that's what understanding can provide.
As we've gone through this week, I've tried to lead you to this point. We examined open interest and secondary technical indicators. Everything points toward a bottom and a breakout. Now the question is: Will price follow? We will soon know. The next 24-48 hours will tell the tale.
Beware of bubbles of false hope. Right now there is a lot of talk about how the U.S. economy is improving, but it is all a lie. The mainstream media can be very seductive. When you sit down to watch television your brain tends to go into a very relaxed mode. In such a state, it becomes easy to slip thoughts and ideas past your defenses. Sometimes when I am watching television I realize what the media is trying to do and yet I can still feel it happening to me. In this day and age, it is absolutely critical that we all think for ourselves. When you look at the long-term trends and the long-term numbers, a much different picture of the U.S economy emerges than the one that is painted for us on television. Over the long-term, the number of good jobs in America has been steadily going down. Over the long-term, the number of Americans living in poverty and living on food stamps has been steadily going up. Over the past couple of decades, tens of thousands of businesses, millions of jobs and trillions of dollars of our national wealth have gone out of the country. Our debt is nearly 15 times larger than it was 30 years ago, and U.S. consumer debt has soared by 1700% over the past 40 years. Year after year the rate of inflation goes up faster than our incomes do, and this is absolutely devastating the middle class. Anyone who believes that we can keep doing the same things that we have been doing and yet America will still have a bright economic future is delusional. Until the long-term trends which are taking the U.S. economy straight into the toilet are reversed, any talk of a bright economic future is absolute nonsense.
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