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Consequences of Collapse: Access to Critical Medicines Is Disappearing in Greece
Gold price flirting with 200-day moving average
Tocquevilles Hathaway expects terrific short squeeze in gold
The US Dollar Paper Tiger
China gold imports from Hong Kong reaches new records
2011′s Best Performing Commodity Was Milk: 2 Ways To Play
The Homeric Choice: Scylla, Charybdis And Gold
Precious Metals Market Oversold
International Forecaster January 2012
TechnicalTraders: Silver, Gold, Oil Analysis
5 Must-Own Gold Stocks For 2012
Michael Olenick: 9.8 Million Shadow Inventory Says Housing Market is a Long Way From the Bottom
EndlessMountain: Silver Chart Analysis 1.11.12
Is 2012 Silver's Year?
Finding Value In GOLD
LISTEN: James Turk talks with Tek
Suki Cooper – Barclays Sees $2,200 the Ounce for Gold in 2012
All the world's gold...
Chinas Gold Imports From Hong Kong Surge to Highest Ever? - PBOC Buying?
Morning Outlook from the Trade Desk - 01/11/12 - Long Silver
Silver coins are selling at an astonishing rate
This could be your best chance to buy gold since 2008
Four blue-chip tech stocks with huge cash hoards
LISTEN: One Hour with Jim Rickards
Tocqueville's Hathaway Expects 'Terrific Short Squeeze' In Gold
Everything you wanted to know about gold
Gold & Silver Market Morning, January 11, 2012
Farmers Sue Jon Corzine Over Their Missing Money
It’s All Been Done Before
LISTEN: Your Gold in 2012

Consequences of Collapse: Access to Critical Medicines Is Disappearing in Greece

Posted: 11 Jan 2012 06:53 AM PST

Gold price flirting with 200-day moving average

Posted: 11 Jan 2012 06:43 AM PST

Tocquevilles Hathaway expects terrific short squeeze in gold

Posted: 11 Jan 2012 06:37 AM PST

The US Dollar Paper Tiger

Posted: 11 Jan 2012 06:17 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.

To be sure, Iran's clergy qualify as a bunch of clownish fools with a tight grip on power and security forces. The shock here is that the relatively educated Tehran crowds have not disposed of their corrupt class of leaders. The clergy has been skimming from oil revenue for years, complete with hidden Swiss accounts. The same goes for the American corrupt class of leaders, with their USDollar control levers, their failures to deliver USTreasury Bonds (aka naked shorting by Wall Street firms), their hidden mechanisms behind Quantitative Easing to Infinity (QE never stopped), their insider trades to exploit financial markets (flash trades with a peek), their ETF dampers on numerous individual markets (regular inventory raids by Wall Street), their nationalization of Fannie Mae & AIG in order to put the fraud records in a warehouse (bond counterfeit, duplicate income stream usage), and their absurdly positive economic drivel data (more like chronic 10% CPI and chronic minus 3% GDP).

The big events in the last several weeks focus on the inability for US combined forces, both military and financial, to put Iran on a leash. The Tehran mongrel still roams and shares meals with neighbors. The Hat Trick Letter does not delve much into geopolitics and military weapon analysis, but the next generation Sunburn and Onyx missiles that Russia has supplied to Iran stand out as significant in their ability to neutralize great opposite forces. These two missiles are a step ahead of the Cruise, something perhaps not 5% of the US population is aware, but something that 95% of the USMilitary brass is aware. The US Fleet in the Persian Gulf might be rather easy vulnerable targets. The annual August belligerent war posturing against Iran invited my dismissals from 2004 to 2005 to 2006 to 2007 to 2008 to 2009 to 2010. But in 2011 the posturing and siren calls seemed more serious, yet still worthy of dismissal since waged battle would render massive damage to both sides. See Sunburn & Onyx again. The military maneuvering behind the scenes is not so easily tracked, which lately has extended to Syria with a Russian shadow. The entire reduced theater seems chock full of standoff factors. China might have sounded off threats of retaliation if Iran were attacked, but Russia delivers the same threats in more subtle private tones.

The USGovt has attempted to isolate Iran. To some extent they have succeeded. Price inflation inside Iran has turned acute, with numerous stories seeping through the information curtain. The pain, just like in Cuba, has been handed to the people and hardly to the leaders. One can be very certain that the mullahs continue to enjoy the good life, work little, eat well, enjoy ample time to pray, while skimming $million every week from oil revenues. However, a defiance seems more successful at the higher levels. The trend of bilateral trade deals fashioned by China has been growing, made popular by the same grand holder of over $3.2 trillion in US$-based debt securities of dubious value. Behind the trade deals are agreements to continue in crude oil purchases from oil-rich Iran.

INDIA CAUGHT IN CROSSFIRE

India shows up as a secondary victim of Iranian sanctions. The controversy between the two nations has lingered for a couple years. India received 11% of its crude imports from Iran last year. In an end-around maneuver, the nation is exploring the option of making payments for crude oil purchases through the giant Russian Gazprombank. No deal has yet been reached, but it is close to final. Russia has abstained from sanctioning Iran. Some analysts believe this payment route might work for India. Other alternative routes involve Turkey as intermediary on payments, except Turkish leaders appear to reject new proposals. The Bharat Petroleum Corp based in India had begun buying about 20,000 barrels per day of Iranian crude oil through a term contract in September. Now though, BPCL is considering whether to stop taking supplies. Other Indian companies that buy Iranian crude include Essar Oil Ltd and Indian Oil Corp. Contracts for other Indian buyers of Iranian crude oil tend to run from April to March. The refiners reportedly have yet to renew their deals with Tehran for the next financial year.

The cumulative Indian debts to Iran from refiners for purchases rose to as much as $5 billion in July, according to the Indian Central Bank. The outstanding payments threatened to jeopardize about $9.5 billion in annual trade between the nations. Officials in Iran have informed customers they would no longer receive August shipments unless the bills were paid. In a complex network, the refiners started clearing the outstanding payments in August after Halk Bank in Turkey agreed to make transfers. The middleman bank has gained a reputation in the oil market over the past 18 months for handling transactions related to trade deals with Iran. The recently passed legislation by the USGovt imposes sanctions on financial institutions dealing with Iran's central bank, thus putting Halk Bank squarely in the spotlight. India is worth watching closely as a test of the strength of sanctions. Watch for work-arounds, especially with Russia. The Turks do not have the required muscle. The Russians do. The Kremlin leaders are highly motivated to knock a wheel off the American wagon that seems to trample pedestrians all too often.

SCO REVISITED

During the 2002 to 2005 period, the Shanghai Cooperative Organization aroused a considerable amount of publicity. It was originally a cultural exchange group between Russia and China, led by the surviving republics of the Soviet Union. Its agenda grew to include security matters. Then later still, commercial trade and commodity supply entered the picture, as the resource rich nations lacking in economic development banded together. The added twist was the inclusion as guest SCO members such nations as renegade Venezuela, Iran, and others. The SCO defiance began to escalate right about when the organization faded from view. It never faded away, only from view, as it coalesced into a powerful movement behind the scenes. SCO became a hidden movement to build fortifications in opposition to the USDollar. Its main thrust has been gold accumulation in the shadows.

The key to comprehension on SCO matters is to realize that all countries in the Shanghai Coop are working vigorously to bypass the USDollar, and all are increasing their gold reserves. They work in much more secrecy, probably at the direction of Kremlin and Beijing leaders. They have learned that avoiding direct confrontation and sanctions is the path to take. The proposal to end usage of the USDollar in bilateral Russian-Iran tade came from Moscow, not Tehran. One can be absolutely certain that Kremlin leaders are as stiff spined as they are motivated to challenge the USGovt and Wall Street leadership. They remember all too well the Yeltsin years and the Western oil company role. The proposal to switch to the Russian Ruble and the Iranian Rial was raised by Russian President Dmitry Medvedev with his Iranian counterpart, Mahmoud Ahmadinejad, at a meeting in Kazakhstan. It was staged without herald as an continuance of the Shanghai Cooperation Organization. Iran has replaced the USDollar in its oil trade with India, China, and Japan. At the cusp of developments is a potential deal that could bring an important linkage between crude oil and commodity trade settlement outside the USDollar, with provision for funding the European bank rescue fund, the European Financial Stability Facility. The concept was raised by the intrepid indefatigable Tyler Durden (bloodied but resilient) of the Zero Hedge crew. The bypass of the USDollar in trade is likely soon to be engrained in the financial system. The American trumpets continue to promote the notion that all global trade is done in US$ terms, when the reality is far different, and the trend is in the opposite direction, as in global revolt.

Actually, the ZH crew merely took the ball and ran with it, as they do so adroitly and consistently. In my opinion, the Zero Hedge web journal is by far the most valuable and broad single source of relevant information in the global financial crisis, bar none. The German newspaper Bild am Sonntag had said Klaus Regling (CEO of the European Financial Stability Facility) is pushing to increase guarantees to up to 30% for investors external to the EuroZone, the amount confirmed by a fund official. Although the guarantees were non-existent a year ago, EFSF officials have stressed that state guarantees had always been planned to range from 20% to 30% range, and furthermore, such offering should not be interpreted as a deepening of the endless debt crisis. Such denials serve as clear direct confirmation of a deepening crisis. Clearly, the guarantees provide incentive to attract foreign funds. The nations with big foreign reserves like China have turned their noses up at Europeans in recent rounds. The Beijing leaders want more on the table. Think industrial collateral. Think access to central bank gold. Think official bypass of the USDollar in trade settlement. Think consolidated resistance to unilateral pronouncements. Think indirect action to isolate the USGovt and its corrupt financial fortress.

IRAN & RUSSIA REPLACE THE USDOLLAR

Iran and Russia have replaced the USDollar with their own native currencies, thus solidifying trade ties. Tehran's Ambassador to Moscow Seyed Reza Sajjadi claimed that the proposal for replacing USDollar with Ruble and Rial was raised by Russian President Dmitry Medvedev in in Astana Kazakhstan during a sidelines meeting of the Shanghai Cooperation Organization (SCO) meeting. He added that many Iranian entities are using Ruble currency for their trade deals. The Kremlin leaders stand against unilateral sanctions on Iran conducted outside the UN Security Council, their position in diplomatic circles, which WashingtonDC avoids. The USGovt has a long track record of making unilateral decisions, and attempting to impose sanctions on third party nations, all done without the blessing of global bodies. The Russians have clearly announced that they will not accept broad sanctions. The central bank in Iran is working feverishly to to circumvent and overcome plans to isolate it and cut off income. The sanctions directed by the USGovt cut off from the US financial system foreign firms that do business with the central bank in Tehran. Many even in the West believe that the move would prove futile. Most Iranian oil sales are processed by the central bank. The means to avoid the sanctions is to conduct trade settlement outside the USDollar, where the USFed would not act as processor. The peripheral impact is felt with intermediary entities such as Turkey's Halk Bank, which will likely choose to step aside and not risk being stepped on by American jack boots bearing London brand.

During the last two years, Iran has been replacing the USDollar with other currencies in its trade with the outside world. Iran has replaced the USDollar in its oil trade with India, China, and Japan. Late in November, the Reserve Bank of India (RBI) granted the necessary permission to the Central Bank of Iran to open Rupee accounts with two major Indian banks, seen as a solution final to the payment problems. While payments for Indian oil imports would initially be in Rupees, they would be converted into a separate currency, which was yet to be decided by the Apex bank. Conclude that USGovt sanctions provide the fertilizer for a seedbed in non-US$ trade settlement. The American strongarm tactics are meeting with stern resistance, as the backlash gathers momentum and intensity. Iran could become a broken plank in the US hegemony. History is not likely to repeat. The Iraq challenges with Euro-based oil sales led to the invasion and annexation. Iran has too many partners in Russia, China, Japan, and India. Without any dispute, Baghdad was defenseless. With almost ten years to fortify its partnerships, Tehran is not defenseless. The next few months will demonstrate it.

JAPAN & CHINA BYPASS USDOLLAR

In a gesture loaded with defiance, Japan and China have embarked on a trade deal that directly bypasses the USDollar in settlement. One more platform of the USDollar global fortress has been shown to be dismantled. Its hegemony is ending, although slowly. The mercantilist relationship held firm between China and the United States has shifted into reverse during the trade war in its third year, a trade war fully anticipated and forecasted back in 2005 and 2006 and 2007 in the Hat Trick Letter. With the new pact, Japan and China have made the arrangement public. They will promote direct trade in Yen and Yuan currency without USDdollar usage, in order to encourage the development of a market for the exchange, and to cut costs for companies. The real surprise was the announced plan for Japan to buy Chinese bonds in the current 2012 year. Confirmation came from a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing in late December. Considering the huge trade volume between the two biggest economies in Asia, the pact is significant. Look for continued Yuan appreciation, and all the problems it will cause to their export industry.

Some shock waves are coming to the FOREX markets, where the USDollar is still seen as king in official circles. The year 2012 will prove to be highly disruptive to such a perception. The primary motive behind the bilateral trade deal is to reduce currency risks and trading costs. Currently, about 60% of trade transactions between the two nations are currently settled in USDollars, a practice to be reduced. China is largest trade partner to Japan, bigger than the United States, thanks to colossal direct foreign investment by American and European firms for a full decade. China already purchases Japanese debt securities. In turn, Japan holds $1.3 trillion of FX reserves, the world's second largest war chest. They wish to purchase Chinese debt securities. Nothing will stop this movement. The list of imminent investors in Chinese debt is growing, from Austria to Thailand to Nigeria. The ultra-low USTreasury Bond yields, corrupted by Interest Rate Swap applications, fails to reward investors for risk. The USGovt deficits are chronically over $1.5 trillion annually. The growth in cumulative debt assures continued 0% bond yields and artificially low borrowing costs, a new constant for foreign investors to turn more toward China. The United States is fast losing its dominance, which when abused is called hegemony. The hegemony has been ripe and fierce since 2005. The volume of Chinese Govt Bonds denominated in Yuan has tripled up to 2011, with volume of $18 billion. Funds are moving away from the West, where sovereign debt has turned toxic and government deficits have grown like vast weeds and austerity plans are more like designer suicide pills.

USDOLLAR RISES TOWARD THE CEMETERY

Back in the spring months of 2009, the Jackass penned a public article called "Dollar Death Dance" that was well received. When the system was going through an implosion phase, albeit temporary, the demand for USDollars rose sharply. What followed for the last three years has been a gradual inexorable powerful pathogenesis toward monetary system collapse, the focus having shifted from the US to Europe. The US$ demand came from banks required to cover their US$-based debts. Recall the USFed was the first to promote an ultra-low official interest rate several years ago. So its loans were huge to Europe, England, and elsewhere. Also, the ruinous derivative trade suffered a shock wave. The settlement of derivatives, such as a bond insurance contract, tend to be exclusively in USDollar terms. The second chapter to this trend is well along. Call it the second song to the Dollar Death Dance. The woes in Europe are translating into more US$ demand, as funds flee the fires of European sovereign bonds turned toxic, as funds flee the big European banks that must meet reserves requirements, as funds in money markets return to US shores, as funds cover the derivatives.

By the way, the derivative market must qualify as the most corrupt in human history, totally unregulated, the liferaft tossed to a sinking bank system, the source of huge income, against a backdrop of obstructions on payouts for both financial firm failure and the sovereign bond defaults. A restructure does not a failure make. All the regulators and bank officials did was to declare a bond loss as a non-event in the default world. They called it redefinitions, recalibrations, total nonsense and corruption to the core. The bank leaders continue to make claims that counter-party positions offset and canceled each other, when the reality is more like they assure mutual destruction and simultaneous death. When the first Italian bank goes bust, a French bank, a German bank, and a London bank will all turn to dust immediately. One day later, a New York bank will follow to the glue factory.

The USDollar is due for some extreme shocks. Some might not think so, given the Euro depression in sentiment and the rattling of big European banks. Word has come that in late February and late March, some important adjustment events are due to kick in, enough to knock over the tables in the temple. Conjecture is wide open and ripe for imagination. For the USDollar to continue its catbird post in global trade is inconceivable. The elite controllers will do their best to keep the USDollar in its dominant post. But the rest of the world, especially on its Eastern locales, is working in the other direction. As a sage contact told me last week, "There is a clear swing in power to the East, not to return Westward in our lifetime." The primary victim of that pendulum swing, a powerful Paradigm Shift, is the USDollar. The consequent beneficiary will be Gold, and its squire Silver. A complete list of forecasts will not be given here, since too dangerous and ugly. The world financial system will not survive in its current form. A collapse is due probably by late 2012, or early 2013 after the US presidential elections, another controlled event subject to outsourcing.

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Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com. For personal questions about subscriptions, contact him at JimWillieCB@aol.com

THE USDOLLAR PAPER TIGER

by Jim Willie CB January 10, 2012

home: Golden Jackass website
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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.

China gold imports from Hong Kong reaches new records

Posted: 11 Jan 2012 06:17 AM PST

2011′s Best Performing Commodity Was Milk: 2 Ways To Play

Posted: 11 Jan 2012 05:21 AM PST

By CommodityHQ:

Commodity investing has been a difficult space to navigate over the past year. Though this asset class is known for its volatility, the last year has been plagued with unprecedented market instability, making commodity trading an incredibly frustrating venture. It is estimated that as many as 90% to 95% of investors lose money in the commodity space and last year's returns likely only inflated that figure. That being said, there are still incredibly lucrative opportunities that exist. Gold, for example, finished up approximately 10% on the year though it was up much higher when its prices were sitting around $1,900/oz. Other notable wins included brent oil and live cattle while cotton and natural gas were among the worst performers. But what may be the most surprising to investors, is which commodity outperformed them all; milk [see also How To Lose Money Investing In Commodities].

Got Milk?

Yes, you read that

Complete Story »

The Homeric Choice: Scylla, Charybdis And Gold

Posted: 11 Jan 2012 05:14 AM PST

By Peter Grant:

Gold ended the first week of the new year up more than 3% from its 2011 closing price. The yellow metal is off to a robust start this week, once again trading in close proximity of the 200-day moving average (1635.86). A definitive close above this level is still awaited to bolster bullish sentiment. The high from 2-weeks ago at 1641.65 is an important level to watch as well.

Renewed euro weakness has been a central theme recently, and despite the corresponding dollar strength, gold has displayed impressive resilience. A decent German bund auction last week failed to allay worries about upcoming periphery debt sales. A point that may have been driven home when the French saw their borrowing costs rise amid persistent rumors of an impending downgrade. Spain and Italy will attempt to sell bonds this week and global investors will be eying demand closely. They'll also be watching

Complete Story »

Precious Metals Market Oversold

Posted: 11 Jan 2012 04:49 AM PST

Precious Metals Market Most Oversold Since 2008

by Chris Puplava, FinancialSense.com:

In September of last year we saw gold jump two standard deviations above our gold intermediate-term risk indicator's average, a feat only seen on three prior occasions (2006, 2008, 2009). Since then, gold has significantly worked off its overbought condition and fallen by over 20% to its recent low on December 29th. Now, the recent decline has been sufficient enough in both time and magnitude to drop our gold indicator to a very oversold reading of more than 1 standard deviation below its historical average. The last time gold was this oversold was back in 2008 and represents the second most oversold reading since gold's secular bull market began, and likely represents a major buying opportunity as the long term fundamentals (negative real interest rates, global currency debasement) remain.

Read More @ FinancialSense.com

International Forecaster January 2012

Posted: 11 Jan 2012 04:43 AM PST

by Bob Chapman, The International Forecaster via GoldSeek.com:

The hand of the US elitists shows more each day in the decisions being made in Europe. Mario Draghi, ex-Goldman Sachs, Trilateralist and Bilderberg, is putting everything in place just the way the US elitists want. We are about to see full scale quantitative easing. One trillion in loans times fractional lending of 3 to 9 to whatever will give Europe the funds it needs indefinitely. Europe is going to be a rerun of what we have seen in the UK and US. In behalf of German voters who are 65% against such funding, Chancellor Merkel has refused to allow issuance of Eurobonds or an expansion of the EFSF. Draghi at the head of the ECB is now putting pressure on Mrs. Merkel to drop back to a more defensive position. The intrigue is at its height. If Frau Merkel gives into Draghi she and her party will not score well in the next election and may even lose political control. That could cause Germany to consider leaving the euro, which would destroy the euro zone. There are major dangers here and all the players are well aware of it. Agreement will take time and if it is not reached everything could short circuit, other than the fact that the Fed has put the funds in place. The other objective of getting Germany to whole-heartedly accept the bailout and stimulation is another matter. Confusion reigns even among the participants. The US, UK, France and their front men, Draghi, Monti and Papademos are all moving forward. The price will be very high from an inflationary standpoint, but to the elitists that isn't even a consideration. They could care less. That is why you want to have your assets invested in gold and silver related assets. We could be headed toward another Weimer episode.

Read More @ GoldSeek.com

TechnicalTraders: Silver, Gold, Oil Analysis

Posted: 11 Jan 2012 04:38 AM PST

from TheTechnicalTraders:

~TVR

5 Must-Own Gold Stocks For 2012

Posted: 11 Jan 2012 04:37 AM PST

By Investment Underground:

By Michael Williams

Given the traditional inverse relationship between gold and Wall Street, investing in gold stock seems to be a paradox. Because many investors use it to protect against inflation, the gold price frequently rises when stock prices fall. In spite of this, gold stock values move separately from the price of the yellow precious metal, giving investors the opportunity to capitalize on both rises and falls in the market.

With the economic problems of the past five years, many people have invested a larger percentage of their portfolio in gold. For those who don't plan on gold the metal or understand how to purchase futures, gold stock is a great alternative. Some of the top companies to watch in 2012 are Goldcorp Inc (GG), Yamana Gold Inc (AUY), Newmont Mining Corp (NEM), Barrick Gold Corp (ABX), and Randgold Resources Ltd. (GOLD) Each of these mining and exploration companies

Complete Story »

Michael Olenick: 9.8 Million Shadow Inventory Says Housing Market is a Long Way From the Bottom

Posted: 11 Jan 2012 04:35 AM PST

By Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha). You can follow him on Twitter at @michael_olenick

"Shadow inventory," the number of homes that are either in foreclosure or are likely to end up in foreclosure, creates substantial but hidden pressure on housing prices and potential losses to banks and investors. This is a critical figure for policymakers and financial services industry executives, since if the number is manageable, that means waiting for the market to digest the overhang might not be such a terrible option. But if shadow inventory is large, housing prices have a good bit further to go before they hit bottom, which has dire consequences for communities, homeowners, and the broader economy.

Yet estimates of shadow inventory, and even the definition of what constitutes shadow inventory property, vary widely. For example, the Wall Street Journal published a Nov. 11, 2011 article, "How Many Homes Are In Trouble?" where values varied from 1.6 million (CoreLogic), to "about 3 million" (Barclays Capital), to 4 million (LPS Applied Analytic), to 4.3 million (Capital Economics), to LPS Applied Analytics, to between 8.2 million and 10.3 million (Laurie Goodman, Amherst Securities).

Why do these numbers vary so much? Even though CoreLogic is generally considered to have one of the best databases of loans, its estimates of loan performance and odds of default are based on credit scores, which is a badly lagging indicator. Laurie Goodman is seen by many as having the most carefully though out model, even though industry insiders are keen to attack her bearsish-looking forecast.

I have a large database of my own, and am familiar with housing and mortgage information sources. I've come up with my own tally of shadow inventory and have also tried to analyze — OK — take a stab at – what I call "shadow liability," meaning the amount of money taxpayers, investors, banks, will be lose if those homes are liquidated. Assumptions using those terms are also in the attached spreadsheet. My analysis comes up with a total close to that of Goodman's range, 9.8 million using a narrower definition than Goodman's of what constitutes shadow inventory.

Put more simply, things are actually worse than any of the prevailing estimates indicates, although Goodman is very close to the mark. Current loss experience suggests that this figure is staggering, easily in the $1 trillion range.

Why aren't those losses more visible yet? Well, evidence suggests that servicers are stalling the foreclosure process, not taking title to and selling these houses. For the lenders, such delay likely allows them avoid the write-offs of both the negative equity as well as the worthless second liens. More generally, it keeps the trillion dollar losses hidden. Lenders aren't acknowledging their stall tactics, however. When people notice how slowly foreclosures are progressing from initial steps to resale, lenders point at their foreclosure fraud related dysfunction. Lenders conveniently don't mention that such dysfunction was self-induced, instead blaming borrowers and courts.

My Methodology

My data comes from several sources. Default information is from the October, 2011 LPS Mortgage Monitor. Housing information, including the number of houses with mortgages, comes from the US 2010 US Census and the 2009 Statistical Abstract. Median home prices — the likely value of the loans that are either in foreclosure or will be soon, is from the FHFA; specifically the Q2, 2006 state-by-state median home prices, when many of the bubble loans were written. Note: these prices are used to approximate the principal value of the loans, not what the properties are currently worth.

Because not all this data overlaps entirely some extrapolation was necessary; when required to extrapolate I tried to do so conservatively. An example is how I arrived at the number of mortgages in the US, a step on the way to calculating the number of mortgages in default.

The first step was figuring out how many housing units with residential mortgages America has. According to the 2010 census, America is home to 131.7 million housing units. Of these, 76.4 million are owner-occupied, 37.5 million are rental units, and the remaining 17.2 million are vacant, and the remaining 600K are houseboats or other exotic housing. Of the 37.5 million rentals, some are in apartment buildings that would be financed with commercial mortgages, not residential ones. Commercial loans are structured differently than residential loans, and are easier to renegotiate, so they I've excluded from this analysis.

To be conservative—to exclude more loans as commercial than actually are, rather than risk leaving commercial loans in the analysis—I've assumed that any building with 5 or more housing units is in a building that either has a commercial loan or no mortgage at all.

According to the National Multi-Housing Council, using 2011 Census data, has determined that nationally, 42% of renters live in buildings with 5 or more units. Applying that percentage to the 37.5 million rental units, and subtracting that from total renters, I end up with 21.8 million rental housing units that could have residential mortgages.

In total, then, I have 76.4 million owner-occupied homes, 21.8 million residential rental units, 17.2 million vacant homes (which includes, among other things, vacation homes and abandoned ones) and 16.3 million other, mainly units in commercial properties. All in all I end up with just over 115 million homes that could have a residential mortgage on them. But how many of them? Well, the Census reports that in 2010, 68% of owner-occupied units had at least one mortgage. I used this same 68% for investment (residential rental) properties and vacant (primarily vacation and abandoned single family homes) properties.

I believe this 68% figure is appropriate for two reasons. First, a person who has a mortgage on their own home is unlike to buy a vacation house or an investment property with cash. Indeed, even a homeowner living free and clear in their own home might need a mortgage to buy second property. So assuming the mortgage rate for investment and vacation homes is the same as owner occupied surely understates the number of mortgages. Second, the mortgage rate on abandoned homes surely is nearly 100%; why abandon a home if it's not in foreclosure?

Using that math, I came up with 78.6 million mortgaged properties. This figure is substantially higher than many other estimates, including Goodman's Amherst study, though the likely reason is that the census data the analysis relies upon is relatively new. Goodman's study uses 53.7 million mortgaged homes, though the census reports 52.2 million owner-occupied loans alone, in additional to rental properties, mobile homes, and vacant properties. Given that the census cost $13 billion to produce — an amount no private organization could afford — and 2010 results were not available at this level of granularity until relatively recently, I would not be surprised to see upward revisions to other base housing unit figures in the future.

To estimate shadow inventory, I used the delinquency data from LPS Analytics. They add up loans that are delinquent, loans that are in foreclosure, then come up with a state-by-state percentage of "non-current" — loans that are, or are likely, to end up in foreclosure. There is some ambiguity in LPS' figures; specifically the definition of "delinquent," and whether they are counting homes or loans.

To illustrate a potential problem with these assumptions, let's take a theoretical example of 100 houses. Let's assume 68% have mortgages, a figure from the census, so 68 houses have mortgages. Then let's assume these homes are in FL and 22.9%, or 23 houses, are either in foreclosure or likely to end up there soon. I'm assuming this means that 45 houses are current, 23 houses in trouble, and 32 houses paid-off, though I concede that it could mean 12 houses with two mortgages are in trouble, 32 are paid off, and 56 are fine.

This methodology differs from Goodman's, which relies upon predicting both likely defaults and re-defaults for non-sustainable modifications, as well as a small number of homes likely to strategically default as liquidations begin and home value plummets. Conversely, my model assumes all 90-day delinquent loans will result in foreclosure and liquidation — and I've yet to see enough good-faith modifications to assume otherwise — whereas Amherst's believes the figure is likely to be 80-90%. However, I do not allow for strategic defaults, which more than offsets my skeptical assessment of the mortgage mods now begin offered (my assumption is that when people default suddenly, it is really an anticipatory default: the borrower could see he was going to hit the wall, but defaulted before he was completely broke. Given the job market costs of having a foreclosure or bankruptcy on your credit record, I don't regard that as a bad assumption). Goodman has three buckets of current loans that she anticipates will produce defaults: badly underwater loans (loan to value ratios of over 120%), moderately underwater loans (LTVs of 100% to 120%) and loans with equity borrowers will default upon anyway (LTVs less than 100%). She estimated those three groups would produce eventual foreclosures of 2.8 to 3.7 million of her total. Thus my somewhat smaller tally is actually more dire, because it consists of borrowers who are having trouble making payments now, as opposed to borrowers who are anticipated to default at some undetermined point in the future.

That being said, except for the lower housing unit loan base Goodman's analysis seems rock-solid, though it would mushroom if used with my higher base housing unit figures and more pessimistic view of servicer's ability to mitigate defaults. Together they would paint a devastating picture of the future, so I won't try to reconcile them .. at least not yet.

Using the assumptions above, and applying the LPS data state-by-state, there are 9,800,000 houses in shadow inventory.

If these loans were taken out for the median value of a state-by-state home price, using data from the FHFA, for Q2, 2006, there is $2.3 trillion of home values at near the market peak. The mortgage balances are going to be lower than that, but given how widespread equity extraction came to be (and it is probably that the most levered homes are hitting the wall), it is not unreasonable to assume LTV ratios relative to peak values of 80%. Loss severities on prime mortgages are running at roughly 50% and are 70% on subprime (note that with more borrowers fighting foreclosures, and given that loss severities on a contested foreclosure can come in at 200% or even higher, so using these assumption is certain to understate actual results). $2.3 trillion x 80% x 50% = $900 billion.

These losses will be distributed across the GSEs (meaning taxpayers), banks that have second liens (with the biggest losers being Bank of America, Citibank, JP Morgan, and Wells Fargo), investors in private label (non GSE) mortgage securities, and other US and foreign banks. Balanced against this liability is some amount figure for the underlying asset, the house. Given that servicer advances, foreclosure costs and servicer fees come close to and even exceed the value of the property, comparatively little of this $2.3 trillion will be recovered in property liquidations.

It is unclear where the money from these write-offs will come from, or whether they losses have been adequately budgeted. Obvious sources are Fannie Mae, Freddie Mac, European and US banks, none of which have reported anywhere near this level of reserves. We know that the Federal Reserve has been buying up MBS and related instruments in bulk; maybe the central bank plans to print more money to cover the losses and enable the foreclosures. Printing this much money, for this purpose, in this political environment, in secret, seems unlikely.

In support of the conclusion that banks cannot afford to recognize this shadow liability is the sharp decrease of foreclosure filings in 2011 and the seeming unwillingness of banks to move foreclosures through the system. They file foreclosures, then let them linger, not taking homes even when every possible borrower defense is exhausted. Some of this slowdown may be due to more scrutiny of foreclosure documentation, particularly in judicial foreclosure states, but there is clearly more at work. In the most obvious example, servicers are reluctance of banks to take title to the homes after obtaining a judgment; even after the judgment is a year old and cannot be challenged.

For example, filing volume in Palm Beach County, FL, started to increase towards the end of 2010 but judgments remained flat and certificates of title — where a bank actually takes title to a house, recognizing the underlying financial loss and evicting the family — actually slowed down despite an enormous backlog of judgments. This contrasts to the banks incessant complaints of a broken court system, because a judgment more than one year old in FL cannot be challenged for fraud. This leads to the conclusion that it is the banks — who are unwilling or unable to absorb the losses — rather than the courts or homeowners that are actually slowing down liquidations.

Let's walk through these figures. In Palm Beach County, the number of Certificates of Title issued for Q1-4, 2011, was 1,594, 1,886, 1,413, and 1,299 respectively; the number of judgments was 289, 480, 281, and 367 respectively. Let's compare that to 2010, when there were 3,105, 9,704, 7,259, 1,033 judgments in Q1-4 respectively and 1,534, 2,207, 3,065, and 2,738 titles transferred.

Many of these cases are uncontested; yet it is not uncommon in foreclosure court to see bank lawyers arguing vehemently for delays with nobody on the other side.

Let's review more figures: in Palm Beach County there are 10,794 more final judgments of foreclosure that are at least a year old than there are certificates of title issued. Again, there is nothing anybody can do to challenge a judgment after one year. Servicers appear to be milking ongoing costs and fees from investors. Cross-referencing that to a softer data point I'm reminded of a worker, in my home state of FL, sent by a company I hired to perform a home repair. He's a young man who said he purchased a condo, lost a prior job that paid better, and stopped paying for his condo for which, he noted, similar models were selling for at a 80% discount to what he owed. He filed no defense to his foreclosure whatsoever — he was positively clueless about the judicial system and did not hire a lawyer — but he ran to his truck to show me a Notice of Voluntary Dismissal of his foreclosure, asking what it meant. It's clear that while some homeowners do their best to avoid the auction block, even those who do nothing all have a statistically good chance of staying put.

There is other anecdotal evidence suggesting banks do not want these houses or, more accurately, do not want the write-offs that actually taking the houses would force:

• Foreclosure defense lawyers have clients who have not paid their mortgage in years, but face neither a foreclosure nor even a negative mark on their credit report. I recently received a call from a man who said he had not paid his $1.6 million mortgage in two years but his servicer has not foreclosed, and he faces no derogatory information on his credit report; he was frustrated because he is retired and just wants to move to a cottage. This phenomenon, which apparently isn't rare, might explain why shadow inventory reports that rely on credit reports to extrapolate shadow inventory are often dramatically lower than these calculations.

• Every year the Republican dominated Florida legislature introduces legislation to speed along foreclosures, and every year the legislation fails. I personally believe this legislation to be both immoral and arguably illegal. However, it is impossible to believe this bank beholden governmental body is willing to repeatedly bite the hand that feeds them .. unless their master makes it quietly clear that they do not actually wish to accelerate liquidations but cannot publicly admit as much.

• It is common for foreclosure mill lawyers to argue for delays in selling a home when nobody is representing a borrower. Judges, who want to clear their dockets, will rail at bank lawyers about the age of the case even while bank lawyers argue for yet another delay, while the other table — where the borrower, the defendant, is supposed to sit — is empty.

• Bank-instituted delay tactics are not limited to Florida. Not long ago I spent the day with Sean O'Toole, CEO of foreclosureradar.com. Sean knows the foreclosure world and his data is, literally, the best in the Western states he covers. He noted the same effect in CA; lender-initiated delay after delay after delay selling a home. In CA, after three delays both parties must approve a further delay but Sean said banks routinely file stipulated delays when, in fact, borrowers just want to literally move on.

• There is the well-known tendency of servicers to "lose" paperwork, where borrowers beg for mortgage modifications, short-sales, or deeds-in-lieu. These delay tactics — rather than just answering "no" to a request — make sense in this context because leaving a house in foreclosure limbo, forever, is the only solution that delays the inevitable balance sheet busting write-offs.

• Lastly is the unwillingness of banks to agree to principal reductions, or even modifications with principal balloon payments, which would yield more long-term money than a foreclosure. Servicers appear to want these homes in the higher-yielding default status, even if they are reluctant to actually push the homes to liquidation, to take title on behalf of investors.

We've written relentlessly about servicer abuses, but we've almost always contextualized these abuses through their effect on borrowers. Staring through data, especially data at this scale, complexity, and with strong economic ramifications, is like looking through a dirty window. But as we wipe away layer after layer of schmutz the picture is becoming clearer. Yes, servicers continue to prey upon ordinary Americans. But evidence suggests that they're also preying on investors. Individual American families do not deserve to suffer these behaviors, that increase the losses while delaying the uncertainty, and neither do pension funds, European villages, municipalities, or other unsuspecting entities who actually funded these loans.

Few people are going to complain when they're not paying their mortgage that there is no mark on their credit-report nor a foreclosure; a few of the more perplexed ones — or those that want to bring a bad mortgage to resolution — may speak out, but most remain silent.

Similarly, many investors, and surely the banks themselves, know about these figures. But as both sides spin their wheels, the problem continues to spiral out of control.

Finally, there is government behavior that makes no sense, especially from the Obama Administration. We have repeatedly seen federal intervention when it is inappropriate and unwelcome, and we've seen no intervention when it is warranted. For example, the Administration has actively intervened in the multistate Attorney General settlement talks even though this is, by definition, a state issue. However, they have done nothing to prosecute overt and clearly proven interstate crimes surrounding document forgery.

There is a strong argument that campaign donations are at work, but given the lopsided donations from the financial services industry to Republicans one would think Obama would send a message by taking firm control over the FHFA, the FDIC, the SEC, the OCC, the Treasury, the Justice Department, and strong-arming the Federal Reserve into offering substantive help to borrowers and investors. Yet, at every level, the President has failed ordinary Americans. Even the most egregious behavior results in dead silence .. we don't even get a yawn. Every program has been an unmitigated disaster, especially HAMP. When Administration figures do intervene their influence is overtly skewed in favor of the banks.

Surely Obama and his advisers realize these problems. It seems inevitable that we will soon face either widespread bank failures and a staggering loss in home values (although arguably an increase in middle-class liquidity), or another much larger bailout; a fraud bailout. Either option is likely to sink President Obama's popularity rating in much the same way it is likely to sink individual home values. Despite this, the president continues to play Kick the Can, presumably hoping these problems won't be widely recognized prior to the election in November, while the banks continue to kick everybody else.

Market manipulation used to be illegal, especially in cases where there was asymmetrical information or unequal bargaining power. Pundits use the term "heads we win, tails you lose," but that actually understates the problem because it implies that there still exists individual parties and counter-parties. Our more modern arrangement looks more like an aristocracy, where there isn't a genuine market at all but rather a pseudo-market operating like a private ancient tax collector, demanding the increasingly poor peasants feed the monarchs and his cronies rather than feeding their own children.

I'm often told that people don't care about deadbeats who haven't paid their mortgages. But people fail to realize that this affects everybody. Ordinary Americans see the effects of this manipulation every day; it affects them profoundly, even if they don't understand it. All but the most irresponsible aristocrats throughout history realized there were boundaries. Their motivations may have differed — some cared about the well-being of the peasantry while others feared the guillotine — but for millennia all but the stupidest acknowledged and avoided pushing the populace too far. If we're going to live under an American Nuevo-Feudal system, the least we deserve are overlords at least as smart as the despots they're trying to imitate.

EndlessMountain: Silver Chart Analysis 1.11.12

Posted: 11 Jan 2012 04:33 AM PST

EM's silver chart analysuis for 1.11.11.

~TVR

Is 2012 Silver's Year?

Posted: 11 Jan 2012 04:32 AM PST

By CommodityHQ:

By Jared Cummans

Silver has been one of the most talked about commodities over the past few years thanks to its massive price swings. After a dismal 2008, silver prices soared for the next two years including an approximate 80% appreciation in 2010 alone. Then came 2011, which brought silver back down to earth despite impressive spikes intra-year. With losses piling up to more than 10% in the previous year, investors were quick to sell out of the flailing precious metal. It's poor performance, however, came as a major surprise especially considering that gold was up by about the same margin that silver surrendered. But now that 2012 is underway, silver may be poised for another break-out year [see also 25 Ways To Invest In Silver].

The upside potential for silver seems to be about as bright as the metal itself; last year saw the commodity spike all the way

Complete Story »

Finding Value In GOLD

Posted: 11 Jan 2012 04:31 AM PST

By George Liu:

Gold has seen recent uncertainty eat away at its price primarily due to the strengthening of the dollar, which recently appreciated more than 15 percent in a time span of 2-3 month; this in turn lowered the purchasing power of major buyers such as China and India. However, as noted by Jon Nadler, senior analyst at Kitco.com, the strong dollar isn't expected to persist due to specific steps taken by countries such as China and Brazil to add liquidity to the global monetary system. Heavy selling by speculative traders in the futures markets, profit-taking by firms and weak investment demand in the fourth quarter also took a toll on gold prices, but a continued European sovereign debt crisis and the positioning of gold as a risk-aversion asset leaves many investors positive on gold's 2012 prospects. In fact, there has been an increase in Chinese and Indian buying during the first

Complete Story »

LISTEN: James Turk talks with Tek

Posted: 11 Jan 2012 04:29 AM PST

James Turk: "There's Physical Gold and Paper Gold–The Closer You Are to Physical the Higher the Price"
from Tekoa Da Silva's Bull Market Thinking:

Yesterday I had the chance to share an outstanding conversation and interview with James Turk, founder and chairman of GoldMoney.com.

Part one

Part Two

James is one of the leading voices of the global gold community, and his background and network information is second to none. The topics we discussed in the interview ranged from where GoldMoney.com sources it's bullion, to the Middle Eastern & Asian perceptions of gold, the coming "PAGE" gold exchange, plus James' expectations for gold, silver, and mining shares in 2012.

Starting out the discussion, I asked James to comment on the ongoing misunderstandings of the "lack of supply" in the metals markets. James said, "If you're really looking for large amounts of metal, it's very difficult and it's not something that can be filled overnight [the order]…it's something that's going to take weeks perhaps to fill depending on the size of the order."

¤ Yesterday in Gold and Silver

Gold rose about five bucks in rather uneven trading during the Far East session on Tuesday, but headed sharply higher very shortly after the London open. This rally lasted until twenty minutes after trading began on the Comex in New York...and the party was brought to a quick end.

Gold closed at $1,632.20 spot...up $21.20 on the day...but definitely well of its high, which was $1,641.70 spot. Volume, net of all roll-overs, was around 129,000 contracts.

The silver price didn't do a thing through the Far East trading day and...like gold...began to rally shortly after the London market opened. The silver party ended at the same exact time as the gold party was brought to an end, about twenty minutes after New York trading began. Silver's high price tick was $30.45...and then got sold off about two percent from that high price.

Silver closed the electronic trading session in New York at $29.94...up 89 cents on the day. Volume was pretty decent as well...37,500 contracts net.

The dollar index traded within about a 15 basis point range of 80.9 yesterday...and closed virtually unchanged from Monday. It was obviously never a factor in yesterday's price moves in the precious metals complex.

The gold stocks gapped up...and stayed up...although they slid a bit as the day wore on and the gold price eroded. The HUI finished up 1.54% on the day...a full percentage point off its early high tick.

The silver stock did just OK but, like the gold stocks, would have done better if the silver price peak had come while the equity markets were open. Nick Laird's Silver Sentiment Index closed up 2.64%.

(Click on image to enlarge)

The CME's Daily Delivery Report was a real yawner yesterday, which should come as no real surprise, as most futures contract holders in January that stood for delivery have received their metal already. There were only 14 gold and 1 silver contracts posted for delivery on Thursday...and the action isn't worth linking.

For the fourth day in a row there were no reported changes in either GLD or SLV.

There was another sales report from the U.S. Mint yesterday. They sold 3,500 ounces of gold eagles...4,000 one-ounce 24K gold buffaloes...and 300,000 silver eagles. Month-to-date the mint has sold 82,500 ounces of gold eagles...7,500 one-ounce 24K gold buffaloes...and 4,257,000 silver eagles. Not a bad start for the year.

Monday was another action-packed day over at the Comex-approved depositories. They took in 1,777,720 troy ounces of silver...and shipped the magnificent sum of 1,984 ounces out the door. The link to that action is here.

Technical analyst Scott Pluschau sent me another one of his blogs yesterday. This one is about silver and he titled it "Silver Futures Inverted H&S Pattern Brewing". It's worth read if you're a T.A. person...and the link is here.

Here's the "Total PMs Pool" chart courtesy of Nick Laird over at sharelynx.com. He notes that..."as you can see, despite the price fluctuations and the sell-offs, the total PMs pool continues to rise."

(Click on image to enlarge)

I don't have a lot of stories for you today, so I hope that you have the time for the ones I do have.

If these small commercial traders decide to hold off selling as silver and gold prices rise, then a short squeeze in both metals could materialize in a flash.

Rob McEwan Audio Interview: King World News. Everything you wanted to know about gold. The Escalation: Iran and the West Rediscover Oil as a Weapon.

¤ Critical Reads

Break-Up of CME on the Table: Gasparino

Here's a 5:10 Fox Business News interview with Charlie Gasparino. He has it on good authority that the CME is going to be broken up. I was happy to hear that...and Ted Butler, who has always considered them to be a criminal organization, was dancing on his computer desk when I spoke to him about it yesterday morning. It's a must listen...and I thank reader Kip Lee for sending it along. The link is here.

View full GSD edition

Corzine Sued by Montana Farmers Over MF Global Futures Account Money

The lawsuit filed today by three farmers and a cattle- raising operation in Montana seeks to represent a nationwide group of commodities futures customers whose money went missing amid the $41 billion bankruptcy of MF Global, parent of the futures brokerage that is being liquidated. A trustee is looking for $1.2 billion or more in money missing from commodity customers' accounts.

Corzine, the former governor of New Jersey, and other executives at MF Global made "knowingly false statements" to induce the plaintiffs to enter into contracts with the brokerage, according to the complaint filed in federal court in Missoula, Montana.

The executives failed to disclose to customers that their money was used to finance MF Global's bad bets on European sovereign debt, the farmers said in the complaint.

This Bloomberg piece was forwarded to me by Casey Research's Aaron Bedrick yesterday...and the link is here.

View full GSD edition

Awaiting a Greek Payout: Hedge Fund the Winners if Greek Bailout Arrives

Could Greece's next rescue payout go straight into the pockets of London hedge funds?

That, more or less, is the bet that a growing number of investors are making now as they load up on Greek government securities that mature in March. That is when Athens hopes to receive a potentially make-or-break bailout payment — a lifeline of as much as 30 billion euros ($38 billion) from the European Union and the International Monetary Fund.

Greece's new prime minister, Lucas D. Papademos, has warned that without that infusion, his country might well default on its debts, a move that might force Greece to leave the euro currency union.

Reader Phil Barlett sent me this story from yesterday's edition of The New York Times...and the link is here.

View full GSD edition

Economic crisis means the Mafia is now 'Italy's number one bank': report

Organized crime has tightened its grip on the Italian economy during the economic crisis, making the Mafia the country's biggest "bank" and squeezing the life out of thousands of small firms, according to a report on Tuesday.

Extortionate lending by criminal groups had become a "national emergency," said the report by anti-crime group SOS Impresa.

Organized crime now generated annual turnover of about €140-billion ($178.89 billion) and profits of more than €100-billion, it added.

I hate to say it, but there's not much difference between the Cosa Nostra and all the power and money in the world on Wall Street. They're one in the same to me. The only major difference is that the crooks on Wall Street have the government protecting their criminal enterprises. Casey Research's own Erik Nelson passed this National Post story around yesterday...and the link is here.

View full GSD edition

The Escalation: Iran and the West Rediscover Oil as Weapon

Four decades after the 1973 oil shock, Iran and the West are once again embracing oil as a weapon. Tehran is threatening to block the Strait of Hormuz, while the industrialized countries are considering a boycott of Iranian oil. But both sides will suffer if such tactics are used.

Surprisingly enough, supertankers don't burn very well. Although the crude oil they transport is highly flammable, there is not enough oxygen in their tanks to create an explosive mixture.

On average, 14 of these giant tankers pass through the Strait of Hormuz, located between Iran and Oman, every day. If Iranian President Mahmoud Ahmadinejad actually ordered his forces to fire missiles at one of these tankers, quite a bit of firepower would be needed to set off a Hollywood-style inferno.

But the verbal attacks from Tehran are more than sufficient to set the global markets ablaze.

This story was posted over at the German website spiegel.de yesterday...and I thank Roy Stephens for sending it along. The link is here.

View full GSD edition

The war dance is in full swing: Asia Times

If the most recent wave of escalations in the Middle East is a bluff, it is a very convincing one. Russian analysts speculate that a military intervention against either Syria or Iran (or both) could start by the end of the month; the latter is still hard to imagine, but the time frame seems to correspond to the nature of the developments and the rate at which they are being announced.

Barring a full-scale war in the Middle East in the next few weeks, we could think of what is happening on both sides as a modern version of a war dance, a dress rehearsal for a showdown and a spectacle for domestic consumption, for the enemy and for the international community alike.

There is a widespread perception that the crises with both Iran and Syria are nearing a climax. There is a massive Western naval presence off the coasts of both countries, and the opposing sides are conducting war games at a dizzying rate. In fact, it looks suspiciously as if the games are an excuse for them to keep their militaries on near-constant high alert (a dangerous situation, not least because an isolated incident or a miscalculation could lead to a full-scale clash). The diplomatic war is near a peak level as well.

This story was posted in the Asia Times early yesterday morning...and I thank Roy Stephens once again for sharing it with us. The link is here.

View full GSD edition

Hyperinflation Comes To Iran

An EA source reports that a relative in Tehran ordered a washing machine for 400,000 Toman (about $240) this week. When he went to the shop the next day, he was told that --- amidst the currency crisis and rising import costs --- the price was now 800,000 Toman (about $480). Another EA source says that the price of an item of software for a laptop computer has tripled from 50,000 Toman to 150,000 Toman within days.

[This is a]100% replica of the US-planned Japanese escalation that led to the Pearl Harbor attack, and gave America the green light to enter the war.

For those of you who have never read Robert Stinnett's book Day of Deceit: The Truth about FDR and Pearl Harbor...now would be a good time to do so.

Everything you wanted to know about gold

Posted: 10 Jan 2012 09:03 PM PST

Everything you wanted to know about gold

This graphics-intensive story showed up as a posting over at the wealthwire.com website yesterday. I can't vouch for the accuracy of the figures, but it appears that the author has done his homework.

Reader Tolling Jennings was the first person through the door with this story yesterday...and it's a must read. Use the 'click to enlarge' feature to bring the commentary up to full-screen size once the website has loaded. The link is here.

Gold & Silver Market Morning, January 11, 2012

Posted: 10 Jan 2012 09:00 PM PST

Farmers Sue Jon Corzine Over Their Missing Money

Posted: 10 Jan 2012 08:58 PM PST

by John Hayward, humanevents.com:

ABC News reports the latest legal development for former Democrat senator, former Democrat governor, Obama Administration economic guru, and top Obama money man Jon Corzine:

Montana farmers have filed a class action suit against former New Jersey governor Jon Corzine, charging that the failed financial firm run by Corzine stole millions from their accounts to pay off its spiraling debts, and that Corzine's "single-minded obsession" with making MF Global a big player on Wall Street led to the firm's collapse.

MF Global's clients included 38,000 wheat farmers, cattle ranchers and others who "hedged" their crop prices by placing millions in MF Global accounts. Those accounts were supposed to be "segregated and secure," according to the federal suit, meaning MF Global could not draw on those funds.