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Was 2011 The End of the Gold Rush?
Silver is the Next BIG Thing
US Mint Silver Eagle Sales Hit Another Record
Gold Price Firm
Edgewater Exploration 1-5-11
Decline in Gold & the Shares Has Run its Course
Trading Silver in the Dead of Night
Silver Value Investing
David Morgan on $60 Silver
LISTEN: Interview with Robert Prechter
LISTEN: Interview with Ed Steer
LISTEN: Bill Murphy talks with Chris Waltzek
Euro, Iran and Asian New Year Buying Fuels Gold
Morning Outlook from the Trade Desk - 01/05/12
Why you should expect the market's ridiculous "risk on" and "risk off" days to continue
Gold price firm; Europe woes continuing
Gold Stocks Complete First Major Bottom Since 2008
John Hathaway: The Decline in Gold & the Shares Has Run its Course
Is The Gold Bull "For Real?"
Dow Jones Options Report: Bullish Bets on Junior Gold Miners Hit All-Time High
Gold Newsletter's Lundin credits GATA in Resource Clips interview
Gold Jumps As Citi Says Gold Sell Off Over, Reiterates $2,400 Target
Criminals Determine Gold’s Future
Swiss central banker dumped francs on eve of devaluation
Gold & Silver Market Morning, January 05, 2012
The Reactionary Mind – The Truth About Conservatism: An Interview with Corey Robin Part II
Fiat Currency : Destroyer of Labor
Economic Aspects Of The Pension Problem
When the Public Sector Debt Bubble Blows Up
The Possibility of $1,000 Silver before Hyperinflation

Was 2011 The End of the Gold Rush?

Posted: 05 Jan 2012 05:55 AM PST

by Peter Schiff, EuroPac.net via GoldSeek.com:

For such a wonderful year for precious metals investors, the final calendar quarter left little to celebrate. Just as people now take for granted that their phones will also take pictures, play music, and surf the internet, many investors have come to expect gold and silver to move up in a straight line.

In fact, in a recent CNBC interview one analyst claimed that gold's recent correction proves that it is not really a safe haven. In truth, such a statement merely proves how little some analysts know about markets.

However much the fundamentals may be on your side, there are always mitigating factors that affect price movement. In the case of gold and silver, the temporary resurgence of the dollar versus other fiat currencies alternatives has been the dominant factor – but even that isn't the whole story.

¤ Yesterday in Gold and Silver

Gold sold off a bit in early Far East trading on Wednesday...and then rallied until shortly after London opened. Then gold got sold off again, with the low of the New York trading session coming right at the 8:20 a.m. Eastern time Comex open.

From that low, the gold price rallied into the London p.m. gold fix at 10:00 a.m. Eastern...and then didn't do much for the rest of the day. Gold finished at $1,612.50 spot...up $8.90 on the day. Volume, net of all roll-overs, was a reasonably brisk 125,000 contracts.

Silver pretty much followed the same price path right up until the London p.m. gold fix at 10:00 a.m. Eastern. From there it traded sideways...and then got sold off just before Comex trading ended at 1:30 p.m. Silver's early morning rally during the New York trading day was rather anemic...and never got anywhere near Tuesday's closing price.

Silver closed at $29.16 spot...down 55 cents on the day. Net volume was decent at 35,000 contracts.

The dollar, which opened around 79.65...hit its absolute low of the day just minutes after London opened...and then rallied up to 80.30 by about 10:30 a.m. Eastern time. From there the dollar gave away about 20 basis points of that gain...and it closed the New York trading session up about 45 basis points.

It's hard to say whether the gold stocks followed the gold price or the Dow yesterday. But, despite the ten dollar gain, the stocks themselves ended down a hair on the day, with the HUI closing lower by 0.15%.

Despite the fact that silver was down about two percent on Wednesday, the silver stocks themselves finished mixed on the day...and Nick Laird's Silver Sentiment Index closed basically flat...up 0.06%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 26 gold and 42 silver contracts were posted for delivery on Friday. And, for the second day in a row, Jefferies was the only short delivering...and the Bank of Nova Scotia and JPMorgan were the only long/stoppers. The link to the action is here.

There was no reported activity in GLD yesterday...but over at the SLV ETF they reported a fairly large withdrawal of 1,890,444 troy ounces of silver. Based on the silver price activity of the last four business days, I would suspect that this withdrawal occurred because the silver was needed elsewhere.

There was another sales report from the U.S. Mint yesterday. They sold an additional 8,000 ounces of gold eagles...500 one-ounce 24K gold buffaloes...and 175,000 silver eagles. In the first two days of the new year, the mint has sold 45,500 ounces of gold eagles...2,500 one-ounce 24K gold buffaloes...and 3,372,000 silver eagles. It's still my opinion that all the bullion sold in the Tuesday sales report from the mint were actually sales from December that got pushed into January.

There was a lot of activity at the Comex-approved warehouses on Tuesday. They reported receiving 2,379,923 troy ounces of silver, but only shipped 600,231 ounces of the stuff out the door. The link to all the action is here.

Silver analyst Ted Butler had his mid-week commentary for his paying subscribers yesterday and, as usual, I have a couple of free paragraphs.

"The big commercial silver shorts had a near death experience when the price approached $50 in April. They were at the end of their rope and needed to do something in a hurry. That's why they rigged prices lower; so that they could buy and save themselves. These well-connected commercials knew, perhaps for the very first time, just how tight the silver market had become and how close we were to a profound physical shortage. The key is that the silver shortage wasn't caused by excessive speculative buying or a bubble or a mania. The extreme tightness and near shortage in silver was as a result of the gradual and cumulative impact of normal investment buying over the past five years. There is nothing to suggest that the long term and steady silver investment buying has ended."

"Because there was no bubble or mania in silver, there was no bubble to burst. The orchestrated takedowns of the price by the big commercial interests were simply so that these commercials could buy and rid themselves of silver short positions. That's done now. That means that the silver market is now in the best possible shape."

"What lies ahead for silver is exciting. While we have not witnessed a bubble in silver yet, we will some day. The silver story and the dynamics of the market are too compelling for an investment mania not to emerge at some point. If anything, speculative sentiment has been completely wrung out from silver, clearing the way for speculators and investors to enter the market with a vengeance. At some point, enough of the world's industrial silver users will panic as prices climb and attempt to build physical silver inventories. This user buying, something that never kicked in during the run to $50 will create a silver shortage, the likes of which never witnessed before. It seems that the big commercial interests have come to learn the real silver story and they appear to want no part of the short side again. The major pressure of selling has passed...and the way seems clear for higher prices. By the time the next chapter in the silver story plays out, $50 could look cheap."

I don't have quite as many stories for you today...but a lot of them are about gold and silver, so I hope you have to time to read them all.

We're still 'locked and loaded' for a big run to the upside, if that's what the Commercial traders in the Comex futures market want to see happen.

Gold Jumps As Citi Says Gold Sell Off Over, Reiterates $2,400 Target. Dow Jones Options Report: Bullish Bets on Junior Gold Miners Hit All-Time High. Criminals Determine Gold's Future.

¤ Critical Reads

Surge in ECB lending perplexes markets

The surge in emergency overnight borrowing by banks from the European Central Bank has continued, prompting market observers to speculate about what may be behind the trend.

A total of €15 billion was drawn from the ECB's "marginal lending facility" on Tuesday night, on top of €14.8 billion lent on Monday night and the €17.3 billion borrowed last Thursday, the highest since June 2009.

The level of overnight borrowing remains exceptionally high even by the standards of the past few months. Typically banks draw just millions of euro from the overnight facility.

This story was posted over at the irishtimes.com website earlier this morning...and it's Roy Stephens first offering of the day. The link is here.

View full GSD edition

A depressingly familiar story of denial from the eurozone

Mein Gott! Time to jump from the nearest bridge. The first euro summit of the new year is already in the diary – next Monday in Berlin between Merkel and Sarkozy.

Meanwhile, there's still no sign of a let up in Germany's hard-line opposition to European Central Bank bond buying. Jens Weidmann, head of the Bundesbank, has been rubbing home the point in a new year's commentary for Boesen-Zeitung today. "Financing of governments in the eurozone was forbidden not only for the reason of stability. It was also forbidden to avoid the risk of spreading or socialising the debt of the single eurozone countries", he insists.

The euro crisis rolls on with no letup in sight.

This is another Roy Stephens offering...this one from The Telegraph on Tuesday...and the link is here.

View full GSD edition

Swiss central banker dumped francs on eve of devaluation

After days of stonewalling, the Swiss National Bank gave in Wednesday to demands that it shed light on currency trades from its chief's personal account that netted fat profits as he led efforts to lower the Swiss franc's value.

The Swiss government, meanwhile, reiterated its support for bank chief Philipp Hildebrand amid growing disquiet over the possibility that the private dollar deals unfairly earned his family tens of thousands of francs or dollars.

The Swiss National Bank decided to publish a report by external auditors PricewaterhouseCoopers and release its previously secret guidelines for senior officials. The move came only hours after the Swiss political weekly Weltwoche claimed that Hildebrand had personally authorized the currency deals previously thought to have been conducted by his wife.

It's the same old, same old. This AP story was picked up by google.com. I plucked it from a GATA release last evening...and the link is here.

View full GSD edition

Jim Rickards: China's Slowdown Will Be Worse Than You Think

This 4:09 video interview with Henry Blodget at The Daily Ticker was a posting over at the finance.yahoo.com website yesterday. Anything that Jim has to say is worth listening to...at least that's my opinion. I thank reader Randall Reinwasser for sharing this video with us...and the link is here.

View full GSD edition

China's 'Demographic Tsunami' Begins

Wang Fuchuan lies in bed wearing a quilted black jacket, with two comforters pulled up to his chin to keep out the chilly November air. The heating at Beijing Songtang Caring Hospice is broken and the 90-year-old's nostrils are stuffed with toilet paper to stop them dripping.

Cockroaches scurry across the floor of his room, which has no running water or toilet. His possessions, a few articles of clothing, are in a plastic bag under his bed next to a pink wash bowl with a sliver of soap. His only entertainment is a transistor radio...and Wang counts himself lucky.

Wang is in the vanguard of a looming demographic shift for China, Bloomberg Businessweek reports in its Jan. 9 issue. The latest government census shows 178 million Chinese were over 60 in 2009. That figure could reach 437 million -- one third of the population -- by 2050, the United Nations forecasts. While the elderly were looked after in the past by their children, urbanization and the nation's one-child policy have eroded the tradition of family care.

This Bloomberg piece was filed from Hong Kong yesterday morning...and I thank West Virginia reader Elliot Simon for sending it along. The link is here.

View full GSD edition

Criminals Determine Gold's Future

"There is no point in arguing whether gold and silver price manipulation exist – even [CFTC Commissioner] Bart Chilton acknowledges that it does. But we are forced now to consider that manipulation as a "fundamental" influence on the future price of gold. The problem is that as a fundamental factor, is not quantifiable like supply and demand metrics, because its intensity is arbitrarily (at least, to public view) decided, and so all we can say for sure is that supply and demand drivers are, in the futures market, seconded to the fundamental influence of futures market manipulation. And since the futures market is exponentially greater than the spot markets, the spot price is determined by such manipulative shenanigans."

This commentary is written by James West...and posted at the midasletter.com website. I thank reader Charles Thompson for sending it along...and the link is here.

View full GSD edition

Gold Jumps As Citi Says Gold Sell Off Over, Reiterates $2,400 Target

Is The Gold Bull "For Real?"

Posted: 04 Jan 2012 09:05 PM PST

Is The Gold Bull "For Real?"

For those not following closely, gold just put in its 11th consecutive yearlyprice increase, with an approximately 14% rise on the calendar year. And that wasn't even nearly a remarkable year — the average price increase over that time span works out to about 16%!

It's true, there have been some sizeable declines over the last decade plus (such as during the global market collapse of September 2008), but as is obvious from the long-term performance, these declines haven't broken the back of "the bull" in gold. Plus, calendar-year performance is accorded special significance for various financial reasons, so gold should be granted the kudos it legitimately reserves for this virtually unheard-of feat.

Dow Jones Options Report: Bullish Bets on Junior Gold Miners Hit All-Time High

Posted: 04 Jan 2012 09:05 PM PST

Dow Jones Options Report: Bullish Bets on Junior Gold Miners Hit All-Time High

Here's a story that was on the Dow News Wire yesterday...and there's no link to it. I have cut and paste an excerpt from it...and it's an absolute must read.

Wesley Legrand, who sent me this article, had this to say about it..."The "smart money may be getting set. By buying calls and selling puts, I assume these traders are getting set with big bets without pushing the underlying security higher by buying units of the ETF directly."

NEW YORK [Dow Jones]--A week of bullish activity in the Market Vectors Junior Gold Miners exchange-traded fund [GDXJ] drove up the number of ETF call options to an all-time high as traders wagered the ETF can rebound in 2012.

Gold Newsletter's Lundin credits GATA in Resource Clips interview

Posted: 04 Jan 2012 09:05 PM PST

Gold Newsletter's Lundin credits GATA in Resource Clips interview

Gold Newsletter editor and New Orleans Investment Conference sponsor Brien Lundin has given a comprehensive interview to Kevin Michael Grace of Resource Clips, analyzing the metal's prospects, identifying some of his top mining company recommendations, and giving credit to GATA's work.

The rest of Chris Powell's introduction to this interview is contained in this GATA release. It's worth the read if you have the time...and the link is here.

Gold Jumps As Citi Says Gold Sell Off Over, Reiterates $2,400 Target

Posted: 04 Jan 2012 09:05 PM PST

Gold Jumps As Citi Says Gold Sell Off Over, Reiterates $2,400 Target

According to a note just released by Citi analyst Tom Fitzpatrick, the gold correction "has run its course...and a rally is now back on the cards." Granted it is not all smooth sailing - "Gold may drop to $1,550 before turning", but when the turn comes, Fitzpatrick sees it as going all the way up to $2,400.

Australian reader Wesley Legrand sent me this zerohedge.com piece from yesterday...and the link is here.

Criminals Determine Gold’s Future

Posted: 04 Jan 2012 09:05 PM PST

Criminals Determine Gold's Future

Swiss central banker dumped francs on eve of devaluation

Posted: 04 Jan 2012 09:05 PM PST

Swiss central banker dumped francs on eve of devaluation

Gold & Silver Market Morning, January 05, 2012

Posted: 04 Jan 2012 09:00 PM PST

The Reactionary Mind – The Truth About Conservatism: An Interview with Corey Robin Part II

Posted: 04 Jan 2012 05:59 PM PST

Corey Robin teaches political science at Brooklyn College and the CUNY Graduate Center. His latest book, The Reactionary Mind, is available from Amazon.com.

Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.

PP: Okay, let's move on. One of the chapters in the book deals with Ayn Rand. I'm going to quote from it directly as I don't think there is a better way to sum it up.

"Saint Petersburg in revolt gave us Vladamir Nabokov, Isaiah Berlin, and Ayn Rand. The first was a novelist, the second philosopher. The third was neither but thought she was both."

I really don't think I've seen a better quote summing up the phenomenon that is Ayn Rand. This is not political jousting either – in the book you're generally quite respectful of conservative theorists. But Ayn Rand is unusual in that… well… she really was a hack. There is no way she was on par with the other theorists discussed in the book. Her work was just cartoonish, amateurish; almost a self-parody. She had no real philosophical influences and this shone through in the innumerable cracks in what she referred to as her 'philosophy'. So, how on earth do you account for her popularity today? Is her mediocrity part of what makes her so appealing?

CR: This is one of the questions I really struggled with in writing about Rand, and I don't think I ever fully resolved it. Because you're right about her mediocrity, and I'm certain that's part of her appeal, but what makes that strange is that she is a writer who claims to speak for excellence. And that's what's so odd to me: I don't know that I can think of a single less talented writer who has ever pressed the claims of superiority – that there are superior beings out there, that she is one of them, that her readers are among them too – with such unwarranted self-confidence. It's that marriage of total arrogance and total confidence that I find so mystifying.

Some people think that that is in a way her appeal: she gives not very talented people a sense that they are part of an Olympian guard. I'm not really persuaded of that. I think her appeal lies elsewhere: she has a vision of transcendence, of self-overcoming, which is central to conservatism, but it's a vision that is ultimately flat and cartoonish.

It's the purest form of kitsch: it preys upon an idea of high culture, of cultural greatness, but it doesn't make the demands of that culture, except in a cheesy and romantic way. It allows people to imagine themselves living these exalted lives, without having to actually live those lives. It's pure movie magic.

PP: Yes, I agree that the explanation that she lends greatness to mediocrity is not sufficient – all celebrity culture does that to an extent. It's something beyond that; something that taps deep into a massive vein of narcissism at the heart of our age, a narcissism that resides particularly in a certain type of reader. Although Rand is a particularly vulgar proponent of this, I think I see something similar in many of the conservative ideas discussed in the book. They all revolve, in some way or another, around the figure of the 'great man'. Do you think this is the case? And does this not contradict the vision of a humble, reasonable return to simpler values as put forward by, say, a figure like Pat Buchanen?

In fact, in answering those questions perhaps you could say something about the paleoconservative movement. I noted that it was absent from the book.

CR: You've hit on what I think is a really central tenet of conservatism: the great man. And yes it sits somewhat uneasily with the populism and the simple/humble man that sometimes gets presented in conservatism (though it's interesting; I never really associated that with Buchanan.) But as for the great man, there is a notion in conservatism that there are men – and it's almost always men – who are simply more excellent than the general run of humanity. They're more talented, more visionary, more skilled, more something. And while that in itself is not that remarkable a notion, what makes it significant in conservatism is how central that notion is to their vision of the good society. The good society is one that is unequal – in their idea, inequality and progress go hand in hand (the slaveholders are particularly interesting on this question, as is Nietzsche, though he of course eschewed any notion of progress; he saw inequality and excellence going hand in hand) – and where the best men rule.

Now how this gets reconciled with the populism/humility of the right is tricky, but I think it goes something like this: The excellent man is extraordinary. He doesn't require credentials or training; his excellence is like a gift from God. Often, the most extraordinary person will arise from fairly obscure or humble background. So in de Maistre (and a fair number of other French conservatives) there is a real obsession with Joan of Arc — yes, not a man, obviously, but her peasant origins make her rise seem that much more miraculous.

I know this will sound like a stretch, but I often have thought that the ejaculations on the right over Sarah Palin were quite similar to this. Here's someone with very limited education, very limited experience, no international knowledge to speak of, not much awareness of the burning political issues of our time, and yet there she is, a serious contender – at least she was up until recently – for the nomination of the Republican Party (not to mention the fact that she was a vice-presidential candidate in 2008).

On the face of it, it's absolutely crazy. But I suspect that for the conservative, her very inexperience and total lack of credentials, made her seem that much more desirable and destined for greatness.

Anne Norton is a political scientist at the University of Pennsylvania. A few years ago she wrote a brilliant book on the Straussians, and one chapter in particular really stood out for me. It was about Allan Bloom, who was a Straussian and wrote a very influential book in the 1980s called The Closing of the American Mind. Anyway, as Norton points out, Bloom was obsessed with romance novels, the Cinderella story. And in those stories, there's often this idea of an obscure princess lurking somewhere in the weeds. All she needs is a patron to find her and pluck her out of obscurity.

That idea –that there is extraordinary greatness lurking out there, perhaps in your home, no matter how impoverished you are, and that all that's required for you to assume your destined position is a miracle of election – I think fits in with the romantic notion of greatness and excellence that you see in someone like Rand and conservatism more generally.

As for the paleocons, I did talk about them in a bit in my chapter on Edward Luttwack, but you're right, I never gave them that much attention, in part because they've been fairly insignificant politically for the last several decades. They're interesting intellectually – very interesting in fact – but their ideas just haven't had that much traction.

PP: Well, I always thought the Sarah Palin phenomenon was a sexual thing. She tapped into that whole MILF thing that was launched, in particular, by the Desperate Housewives television show. Husbands wanted her, housewives wanted to be her – and pornographers made films about her. It was this (rather unusual) domestic sexuality that then gave her supposed power. It was this that turned her into the 'great woman' – the seemingly unknowing housewife who, despite her humble appearances, actually knows 'something' that she's not letting on. *Queue Sarah Palin wink*.

That might be the single crudest political analysis ever undertaken, but I think there's more than a grain of truth there. Seriously, look at the winking video linked above; that stuff was focus grouped and orchestrated!

Anyway, leaving poor Palin aside, let's move onto that other thing that gets the conservative juices flowing to no end: war. Broadly speaking, what is it that fascinates conservatives about war so much?

CR: I think there are two ways to think about the relationship between conservatism and war. The first is to look at conservatism's moral psychology – that is, not the psyche of the conservative, but how the conservative views human nature. And here I take my cues from Burke's A Philosophical Enquiry Concerning the Origins of Our Ideas of the Sublime and the Beautiful. There, Burke lays out of a vision of human nature in which the self is always on the verge of collapse and implosion. Burke's basic idea is that we have a set of impulses and responses – ultimately to objects and experiences of pleasure and beauty – that, while immediately gratifying, have the tendency to soften us, leaving us either indifferent or ultimately in a less vital or strong state than we were before. There's a kind of corrosiveness to the human character: too much ease and comfort, too much pleasure and enjoyment, and we decline. Decadence, in other words, haunts the human condition.

The antidote to that tendency is the experience of sublimity, which Burke associates with death and terror. The sublime is a terrible experience – frightening, shocking, even terrifying – but unlike pleasure and beauty, it's a strong and vitalizing experience. It leaves us in a stronger state than we were before: more alert, more alive, more wakeful and watchful of all that surrounds us. It's a shock to the system that wakes us up from our torpor and readies us for a very powerful mode of engagement with the world.

Now Burke doesn't talk about war in this treatise, but I think you can see a lot of his ideas in many conservative writings about warfare, whether the war is international or civil. In my book, I look at the writing on war by Joseph de Maistre, Tocqueville, Teddy Roosevelt, Carl Schmitt, and many of the neoconservatives. (You could probably add Christopher Hitchens to that list, though I don't really talk about him in the book much.) There you really see the development of this idea about warfare, how it revitalizes the self.

The other way to think about this problem involves an idea I discussed earlier: the conservative's consistent concern about the decadence of the ruling classes, the need to find ruling classes that are not weak, too comfortable in their privileges, and the like. And again, you find conservatives welcoming warfare as a kind of testing ground for a new ruling class, a way of establishing who is the superior man, not on the basis of inheritance or tradition, but on the basis of character, wit, physical strength, and more.

These are the two steady streams I find in the conservative tradition regarding warfare. I don't say this in the book, but there's definitely a left tradition regarding warfare, but it bears little resemblance to this discussion. So the point is not that conservatives have a monopoly on discussions of war and violence – they don't – but that they have a distinctive way of talking about it.

PP: That's very interesting. But surely the nature of warfare has changed. Whereas a conservative in Burke's day might have had to saddle-up and lead the charge, today this hardly seems the case. War has become cold, calculated and precise – I guess the figure of Robert McNamara, the great technician of war, comes to mind. Do you think that modern day conservatives have come to terms with this or have they simply ignored it?

CR: Actually, believe it or not, what you're talking about is prefigured in Burke's own theory. Because Burke says that for terror and the sublime to be rejuvenating and reawakening in the way I've described, the object of terror has to be at some remove from the self. If it gets too close, it loses those rejuvenating capacities, and becomes simply violent and awful.

What I take from this insight of his is there is an element of anti-climax in almost all conservative visions of warfare. I talk about this explicitly in my chapter 'Easy to Be Hard', but basically the argument goes like this: while conservatives can wax rhapsodic over warfare in the abstract – e.g., when it remains a possibility rather than a reality, when they don't have to fight it, etc. – as soon as it confronts them in its immediacy, it loses all that romance. In the last half-century, as warfare becomes more and more bureaucratized, that romance really disappears, as you point out. One of the most interesting instances of this, in fact, is the war on terror, particularly the use of torture. When conservatives talk about torture, they ascribe to it all these hallowed attributes: transgressive, boundary-pushing, proving one's mettle, going to 'the dark side', in Cheney's famous words. But as Jane Mayer shows in her book of that title – The Dark Side – torture is not the realm of romantic warriors or transgressive types; it's actually something that's run by the lawyers. They're the ones who devise, in excruciating detail, all the do's and don't's of the torture session: a slap on the face, a threat to the head, etc. In fact, Mayer cites George Tenet, former head of the CIA: describing the capture, interrogation, and torture of Al Qaeda logistics chief Abu Zubayda, Tenet says, "Despite what Hollywood might have you believe, in situations like this, you don't call in the tough guys; you call in the lawyers." Mayer compares torture sessions to a game of "Mother, May I?" the torturer asks the lawyer/bureaucrat, Can do I x, Can I do x+1, and so on. Nothing romantic or transgressive about it; it's as rule-bound and bureaucratic as things can get.

So the upshot is: the romance can't live up to the reality. Certainly not in this age of bureaucratic warfare – the Pentagon is not exactly a non-bureaucratic institution – and probably not ever. And, what's more, that anti-climax is built into the theory, at least as it was adumbrated by Burke.

PP: Although it seems a rather silly question I think it still worth asking: where do you see conservativism going? What strains are the most potent in the movement? Is the libertarian tradition on the rise – as we see from Ron Paul's recent popularity – or is neoconservatism still the order of the day – as we see from the discourse surrounding Iran's nuclear program?

CR: I don't think the question is whether any one tradition is on the rise or fall; the mere fact that we are increasingly talking about these different factions as if they were separate entities suggests the overall fraying of the movement itself. When a movement is at its apex, it's able to finesse these internal divisions. The contrast with the enemy – the left, in the case of the right – is so great that internal divisions will seem small. The fact that these internal factions are now starting to look at each other as the great enemy suggests what I've long suspected (at least since Bush declared the war on terror): that the administration of George W. Bush was the high point of the development of modern conservatism, and that everything since then will be downhill. That doesn't mean there won't be victories along the way – in the same the election of a fairly left-wing Congress in 1974 was a victory for the Democrats and progressivism. Yet, as we all know, the trajectory of the left from 1968 to 1980 was essentially a downward one, from the apex of the liberal regime under Lyndon Johnson to the utter repudiation of that regime with Ronald Reagan. Likewise, George W. Bush was the summit; what comes next – and it could take a long long time – is essentially one long trip downhill.

There's a reason for this dynamic both general and specific. The general reason is that any political movement or coalition, when it achieves the utmost of power, will start exercising that power in a way that frays that coalition. In the case of LBJ, he used his massive reelection in 1964 to extend the promise of the New Deal to blacks, and in the process, destroyed the New Deal coalition, which had been uneasily dependent on the votes of racist white Southerners and racist white Northerners. In the case of George W. Bush, he used the warrants of 9/11 to pursue major wars of empire, satisfying his neocon supporters, and cutting taxes, satisfying the Grover Norquists of his party. That combination is not sustainable, as we're now seeing with the debt crisis. And it will ultimately prove the undoing of the GOP. But again it could take a long time for that to happen.

The more specific reason is peculiar to the right: the right, as I've argued, is a praxis of opposition to the emancipatory claims of the left. To a very large degree, the right has defeated the left. On economic questions, on civil rights, and on feminism as well. And where it hasn't defeated the left, it's forced a stop to its forward motion. But that success poses a problem for the right: what is there for it to do? One of the reasons why I think you see such loony rhetoric from today's right – where they call a neoliberal manager of the American imperium like Barack Obama a Kenyan Muslim socialist and so forth – is that it is trying to re-fight the battles that brought it to victory in 1980. And while it can get some traction from that re-run, it can't get much. So again, I think the long-term indicators are negative.

At least that's what I'm telling myself…

Fiat Currency : Destroyer of Labor

Posted: 04 Jan 2012 04:00 PM PST

Gold University

Economic Aspects Of The Pension Problem

Posted: 04 Jan 2012 04:00 PM PST

Gold University

When the Public Sector Debt Bubble Blows Up

Posted: 04 Jan 2012 03:32 PM PST

What's ahead for 2012?

We gave you a hunch yesterday. The price of gold will probably go nowhere this year.

We have a feeling that 2012 is not going to be a great year for money you get from the ground. Oddly, it will probably be a better year for the money you get from trees.

How is that possible? We all know paper money is going to be worthless. Yes...dear reader...but not necessarily in 2012. It's just part of the curious way Mr. Market does business...and a feature of his nasty habit of ruining as many investors as possible.

Look, it's pretty simple. The private sector debt bubble blew up in 2008. The public sector debt bubble will blow up too. Maybe in 2012. Most likely not for a while longer. But when US debt begins to blow up, the feds will come in with everything they've got trying to stop it.

And all they've got is a printing press. Ben Bernanke:

...the US government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many US dollars as it wishes at essentially no cost. By increasing the number of US dollars in circulation, or even by credibly threatening to do so, the US government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation...

Positive inflation is the feds' answer to a debt blow-up. They have no other answer... When bond buyers refuse to roll over US debt at reasonable rates, the Fed will use its printing press. The resulting "positive" inflation will blow up the world's monetary system as well as government debt. Gold will be the about the only money left.

So, we should just buy gold...and avoid US dollar-denominated debt, right?

Hold on. Mr. Market doesn't make it that easy. Our guess is that he's going to lure trillions more dollars into the US debt market...and then blow the whole thing sky high.

Just look what happened last year. Bloomberg tells us that stocks worldwide lost 12% of their value. But bonds actually went up...about 6%. And there's a good chance that the same thing could happen in 2012. Stocks down. Bonds up.

Stocks won't be cheap until they are about half today's prices. So they have a long way to go.

When stocks go down, investors will go into the US bond market looking for shelter. This will drive down yields and drive up prices. And bonds - judging from Japan's example - can keep edging upward for a long time. Especially now that everyone thinks US debt is 100% safe.

And the worse things get, the more people want the safety of US Treasury debt. That was the lesson of 2011.

Like people buying houses in 2005...investors will buy bonds and think they are geniuses - for a while.

The feds are already running into the limits of their ability to borrow. Here's the Bloomberg story:

Governments of the world's leading economies have more than $7.6 trillion of debt maturing this year, with most facing a rise in borrowing costs.

Led by Japan's $3 trillion and the US's $2.8 trillion, the amount coming due for the Group of Seven nations and Brazil, Russia, India and China is up from $7.4 trillion at this time last year, according to data compiled by Bloomberg. Ten-year bond yields will be higher by year-end for at least seven of the countries, forecasts show.

Investors may demand higher compensation to lend to countries that struggle to finance increasing debt burdens as the global economy slows, surveys show. The International Monetary Fund cut its forecast for growth this year to 4 percent from a prior estimate of 4.5 percent as Europe's debt crisis spreads, the US struggles to reduce a budget deficit exceeding $1 trillion and China's property market cools.

The amount needing to be refinanced rises to more than $8 trillion when interest payments are included. Coming after a year in which Standard & Poor's cut the US's rating to AA+ from AAA and put 15 European nations on notice for possible downgrades, the competition to find buyers is heating up.

Borrowing costs for G-7 nations will rise as much as 39 percent from 2011, based on forecasts of 10-year government bond yields by economists and strategists surveyed by Bloomberg in separate surveys. China's 10-year yields may remain little changed, while India's are projected to fall to 8.02 percent from 8.36 percent. The survey doesn't include estimates for Russia and Brazil.

The world's economic knees are beginning to buckle. Higher borrowing costs reduce the fiscal support governments can give to their economies. "Austerity" becomes less of a choice and more of a necessity. Europe is already in recession. America is probably not far behind.

The feds may have to turn to the printing press sooner than we thought.

Regards,

Bill Bonner

for The Daily Reckoning Australia

Save Your ASSets First

Thursday, January 5, 2012