Gold World News Flash

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• Gold Seeker Closing Report: Gold and Silver Erase Overnight Losses and End Near Unchanged
• Stephen Leeb - This Will Spark the Next Leg Higher in Gold
• Another misplaced sneer about gold from The Wall Street Journal
• Gold Switzerland's interview with Embry covers gold market manipulation
• The Gold Price Closed Today at $1,726.80
• Silver Update: 2/16/12 Rigged Markets
• Caesar Bryan: Money Spigots Are Wide Open & Gold’s Future
• 20 Signs You Might Be A Typical American Worker
• Silver Enters Short Term Trading Range in Bullish Overall Technical Picture
• ‘Buying Opportunity' in Gold at $1,650-1,680
• Using Gold “In Extremis.” Are We There Yet?
• CRIMEX Silver: Flawed Investigations and Breaking The Law
• Harvey Organ's Daily Gold & Silver Report
• John Embry: “The Current Financial System Will Be Totally Destroyed”
• Silver Prices Soften as Greek Tragedy Continues
• Sprott's John Embry:“The Current Financial System Will Be Totally Destroyed“
• John Embry: Worldwide Debt Saturation Ensures Much Higher Gold and Silver Prices
• Caesar Bryan - Money Spigots are Wide Open & Gold’s Future
• Cash in the attc! $1 million in gold coins rains down from the rafters…
• Gold, Oil Hold Key Support Levels – Next Move Likely Higher says Yamada
• Parallel Paths to War
• Bix Weir: Banking Cabal Ready For Position Limit Rule!
• Caesar Bryan - Money Spigots are Wide Open & Gold’s Future
• Import data implies gold buying by China's central bank
• Gold Demand Hits New Records as Europeans Stockpile
• Bank Bonds Not Buying The Rally
• Is This Recovery?
• Hide your gold in the attic and central banking does the rest
• Mish: Face The Music: Road Back To Prosperity Is Through Shared Sacrifice, Not Government ...
• Sprott's John Embry:“The Current Financial System Will Be Totally Destroyed“

Gold Seeker Closing Report: Gold and Silver Erase Overnight Losses and End Near Unchanged Posted: 16 Feb 2012 04:20 PM PST Gold fell $23.50 to as low as $1705.80 by about 9AM EST, but it then rallied back higher for most of the rest of trade and ended near its late session high of $1729.91 with a loss of just 0.05%. Silver slipped over 2% to as low as $32.643 before it also stormed back higher in New York and ended near its late session high of $33.548 with a gain of 0.24%.

Stephen Leeb - This Will Spark the Next Leg Higher in Gold Posted: 16 Feb 2012 04:11 PM PST Today acclaimed money manager Stephen Leeb told King World News that gold is ready to breakout to the upside. Leeb also said he is very concerned about a potential supply in the oil market occurring, not because of Iran but because of potential problems in Saudi Arabia. Leeb is Chairman & Chief Investment Officer of Leeb Capital Management. Here is what he had to say: "Gold is ready to go.  There are any number of things that could spark the next leg in gold.  I think the world right now is extraordinarily complacent and that complacent attitude could come to an end at any point in time.  When it does, gold will begin to fly.  New highs will come very, very quickly and beyond that we will be in another leg of this bull market." This posting includes an audio/video/photo media file: Download Now

Another misplaced sneer about gold from The Wall Street Journal Posted: 16 Feb 2012 03:59 PM PST 12:25a Friday, February 17, 2012 Dear Friend of GATA and Gold: The willfully ignorant sneering about gold in the mainstream financial news media never stops. The latest example comes from The Wall Street Journal's Liam Denning, who snickers in commentary appended here that support for gold now should be coming from central bankers, the scourge of gold bugs. Denning writes that "central bank buying masks the impact of weak jewelry demand, slowing increases in investment flows, and higher supply." But in sneering that gold, "as an investment, yields nothing," Denning conveniently neglects to note that all major currencies now yield nothing as well, failing to pay a real rate of interest. Where's the sneering about them? And Denning doesn't grasp the implications of a detail he acknowledges -- that the official buying of gold is coming from central banks in "emerging markets." That is, there are two groups of central banks -- the Western central banks, which long have been, both openly and surreptitiously, part of a gold price suppression scheme, and the Eastern central banks, particularly Russia's and China's, which now strive anxiously to hedge their dollar surpluses with the monetary metal and which have admitted their awareness of the gold price suppression efforts of the Western central banks: http://www.gata.org/node/4235 http://www.gata.org/node/10380 http://www.gata.org/node/10416 "For gold bugs used to vilifying central bankers," Denning writes, "it must be discomfiting to rely on them for support." Not really. Up against the totalitarian tactics of most of the power and money in the world, gold bugs and other adherents of free markets may be glad of support wherever they can find it. That support is far less discomfiting than relying on The Wall Street Journal to tell the truth about gold -- or relying on that newspaper to report anything contrary to a Western central bank's interest. ... Dispatch continues below ... ADVERTISEMENT Be Part of a Chance to Discover Multi-Million-Ounce Gold and Silver Deposits in Canada Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada. Check out the exploration program on our Allco gold/silver project : -- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit. -- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries. -- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited. To learn more about the Allco property or Northaven's other gold and silver projects, please visit: http://www.northavenresources.com Or call Northaven CEO Allen Leschert at 604-696-3600. Here's a recent example from the Journal. On December 6 last year that newspaper published an essay by a member of the Federal Reserve Board of Governors who resigned last year, Kevin M. Warsh, and who wrote that "policy makers are finding it tempting to pursue 'financial repression' -- suppressing market prices that they don't like." Warsh added, "Efforts to manage and manipulate asset prices are not new." (See http://www.gata.org/node/10839.) Warsh's disclosure might have been stunning to any financial journalists paying attention and so might have piqued their curiosity. Which policy makers are trying to suppress which market prices, and how does Warsh know? Does he know from his experience at the Fed? Just what are they doing over there these days? Just how do they "manage and manipulate asset prices" and how long have they been doing it and exactly how? Your secretary/treasurer reached Warsh by e-mail through the Hoover Institution at Stanford University, with which, the identifier at the bottom of his essay said, he had become associated. He declined a request to elaborate. Then your secretary/treasurer brought Warsh's essay to the attention of a couple of reporters at the Journal and urged them to press the questions. While Warsh's essay appeared in their own newspaper, there is as yet no evidence that they have pursued the story behind it, nor that they are discomfited by letting it slip through their pages. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * Central Bankers Rub Gold Bugs the Right Way By Liam Denning The Wall Street Journal Friday, February 17, 2012 http://online.wsj.com/article/SB1000142405297020405980457722743246413987... Fondlers, as Warren Buffett might call them, now wander the corridors of the world's central banks. Show them some love, gold bugs. The identity of who buys gold has changed radically, as the latest report from the World Gold Council confirms. Just five years ago, jewelry accounted for two-thirds of gold demand. Last year, it represented less than half. Yet gold demand increased 13 percent overall in that time, and the price more than doubled. Beyond dental crowns and those fancy cables that electronics retailers are always pushing on you, gold's utility is limited largely, paraphrasing the Oracle of Omaha, to fondling. As an investment, it yields nothing. But if bridegrooms and rappers aren't buying, then who is? Fearful investors are one critical group. Between 2009 and 2011 demand for physical gold and exchange-traded funds jumped by 9.4 million troy ounces, more than offsetting the 6.6-million-ounce drop in jewelry consumption. Most of that surge in investment demand happened in 2009, however. Flows into ETFs, in metal terms, slumped in 2011. Increasingly, central banks, especially in emerging markets, have been the marginal buyers of gold. In 2011, an incremental 6.2 million ounces of supply came from miners and recycling. Demand for jewelry and industrial and dental applications, however, dropped by 1.8 million ounces. Investors bought just 2.4 million ounces extra -- enough to offset the drop in demand elsewhere, but nowhere near enough to absorb growing supply. Enter the central bankers, who purchased an extra 11.7 million ounces. Having bolstered gold by debasing the paper money they print, they now help by buying the metal itself. For gold bugs used to vilifying central bankers, it must be discomfiting to rely on them for support. And given how central-bank buying masks the impact of weak jewelry demand, slowing increases in investment flows, and higher supply, it probably should. * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Golden Phoenix Discusses Royalty Mining Growth Strategy on '21st Century Business' on Fox Business Network Golden Phoenix Minerals Inc. has discussed its royalty mining growth strategy on the Fox Business Network program "21st Century Business" with host Jackie Bales. Golden Phoenix's director of corporate communications, Robert Ian, told how the company narrows its focus to project generation and future royalty streams. He explained why Golden Phoenix believes it's better to own joint-venture interests in several producing mines instead of full exposure to just one project. "21st Century Business" has been airing for 15 years. Previous hosts have included Gen. Alexander Haig, Gen.l Norman Schwarzkopf, and Secretary of Defense Caspar Weinberger. Golden Phoenix appeared as paid programming on this broadcast. To view the program with Golden Phoenix, please visit Golden Phoenix's Internet site here: http://goldenphoenix.us/fox-business-network/

Gold Switzerland's interview with Embry covers gold market manipulation Posted: 16 Feb 2012 03:19 PM PST 11:15p ET Thursday, February 16, 2012 Dear Friend of GATA and Gold: Our friend the German freelance journalist Lars Schall has just done a comprehensive interview with Sprott Asset Management's chief investment strategist, John Embry, touching heavily on gold market manipulation. It's posted at Matterhorn Asset Management's Gold Switzerland Internet site here: http://goldswitzerland.com/index.php/the-matterhorn-interview-with-john-... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Golden Phoenix Discusses Royalty Mining Growth Strategy on '21st Century Business' on Fox Business Network Golden Phoenix Minerals Inc. has discussed its royalty mining growth strategy on the Fox Business Network program "21st Century Business" with host Jackie Bales. Golden Phoenix's director of corporate communications, Robert Ian, told how the company narrows its focus to project generation and future royalty streams. He explained why Golden Phoenix believes it's better to own joint-venture interests in several producing mines instead of full exposure to just one project. "21st Century Business" has been airing for 15 years. Previous hosts have included Gen. Alexander Haig, Gen.l Norman Schwarzkopf, and Secretary of Defense Caspar Weinberger. Golden Phoenix appeared as paid programming on this broadcast. To view the program with Golden Phoenix, please visit Golden Phoenix's Internet site here: http://goldenphoenix.us/fox-business-network/ Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Be Part of a Chance to Discover Multi-Million-Ounce Gold and Silver Deposits in Canada Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada. Check out the exploration program on our Allco gold/silver project : -- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit. -- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries. -- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited. To learn more about the Allco property or Northaven's other gold and silver projects, please visit: http://www.northavenresources.com Or call Northaven CEO Allen Leschert at 604-696-3600.

The Gold Price Closed Today at $1,726.80 Posted: 16 Feb 2012 03:00 PM PST Gold Price Close Today : 1,726.80 Change : .50 or 0.0% Silver Price Close Today : 3335.00 Change : -3 cents or -0.1% Platinum Price Close Today : 1,623.50 Change : -12.10 or -0.7% Palladium Price Close Today : 696.20 Change : 12.95 or 1.9% Gold Silver Ratio Today : 51.78 Change : 0.06 or 1.00% Dow Industrial : 12,780.95 Change : -97.33 or -0.8% US Dollar Index : 79.62 Change : 0.19 or 0.2% Franklin Sanders has not published any commentary today, if he publishes later it will be available here. © 2012, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose.

Silver Update: 2/16/12 Rigged Markets Posted: 16 Feb 2012 02:44 PM PST from BrotherJohnF:

Caesar Bryan: Money Spigots Are Wide Open & Gold’s Future Posted: 16 Feb 2012 02:40 PM PST from King World News: With a big move in gold and silver, today King World News interviewed 25 year veteran Caesar Bryan, manager of the Gabelli Gold Fund. Gabelli & Company has over $31 billion under management. Caesar Bryan has managed the gold fund since its inception in 1994. Caesar had this to say about what he is focused on in the gold market: "There are a couple of key points this week. First, the Japanese authorities, in the name of the Bank of Japan, intervened to try to add liquidity to the Japanese system and to weaken the yen. Second, the Bank of England announced they are going to embark on another round of asset purchases. So, the theme of central banks printing money around the world continues." Caesar Bryan continues: Read More @ KingWorldNews.com

20 Signs You Might Be A Typical American Worker Posted: 16 Feb 2012 02:39 PM PST from The Economic Collapse Blog: Once upon a time, anyone that was relatively competent and willing to work hard could go out and easily get a job that would enable that person to financially support a family. Unfortunately, that is simply no longer true anymore. Well paying "middle income jobs" are being rapidly replaced with "low income jobs" and part-time jobs. As the economy crumbles, it is becoming increasingly difficult for the typical American worker to survive from month to month. The number of companies that provide benefits such as health insurance has fallen steadily over the past ten years, and paychecks have not been keeping up with the rising prices of food and gas. Average American families are seeing their budgets squeezed like never before, and many of them are going into huge amounts of debt in order to make up the difference. Sadly, this is a problem that has developed over an extended period of time and that is not going to be reversed overnight. Over the past four decades, the ratio of wages and salaries to GDP in America has fallen dramatically. The typical American worker is not as valued as much as he or she used to be, and if current trends continue even more of us will be working part-time jobs or "low income jobs" in the years ahead. In America today there is a great deal of focus on the unemployed, but there are also millions upon millions of Americans that are working part-time jobs because that is all that they can find. Read More @ TheEconomicCollapseBlog.com

Silver Enters Short Term Trading Range in Bullish Overall Technical Picture Posted: 16 Feb 2012 02:29 PM PST by Dr. Jeffrey Lewis, SilverSeek.com: The technical picture for spot silver has been decidedly bullish since the grey metal made what seems to be a double bottom pattern on its price chart.Basically, the price of silver has fallen to a set of notable medium term lows, first at the $26.05 level on September 26th of last year, and more recently at the $26.15 level on December 29th. The neckline of that pattern, or the intervening high point between those lows, was located at $35.66 on silver's spot chart. That price now represents the key resistance level that the market needs to overcome to see additional strong buying pressure emerge in silver. Nevertheless, silver is currently range trading just below that neckline level within a short term consolidation period, although its prevailing upward trend is still expected to reassert itself eventually. Read More @ SilverSeek.com

‘Buying Opportunity' in Gold at $1,650-1,680 Posted: 16 Feb 2012 02:26 PM PST Feb. 17 (Bloomberg) — Steve Brice, chief investment strategist at Standard Chartered Plc, talks about the outlook for emerging market stocks, gold and his investment strategy. Brice speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Using Gold “In Extremis.” Are We There Yet? Posted: 16 Feb 2012 01:00 PM PST Last week we informed you that Iran claims to hold 907 tonnes of in gold reserves. This week we're informed that Iran is using gold or oil to buy food as new financial sanctions have hurt its ability to import basic staples for its 74 million people. The difficulty paying for urgent import needs has contributed to sharp rises in the prices of basic foodstuffs, causing hardship for Iranians with just weeks to go before an election seen as a referendum on President Mahmoud Ahmadinejad's economic policies.

CRIMEX Silver: Flawed Investigations and Breaking The Law Posted: 16 Feb 2012 12:46 PM PST This is just to good not to pass along: "This travesty of justice must end immediately."  -Bix Weir OPEN LETTER TO THE CFTC February 16, 2012 Commodities Futures Trading Commission 3 Lafayette Center 1155 21st St. NW Washington, DC 50581 Re: Flawed Investigations and Breaking The Law Dear Commissioners: For over 2 decades a large group of silver investors have been yelling and screaming at the CFTC to stop the rampant downward manipulation of the COMEX silver market. On May 14, 2004 the CFTC released the results of their 1st investigation by Michael Gorham, Director of Market Oversight, saying they have not found any evidence of silver market manipulation. http://www.cpmgroup.com/free_library1/COUNTER-AR GUMENTS_TO_SILVER_CONSPIRACY_THEORIES/CFTC_Silver_Letter_May_2004.pdf Dr. Gorham, who once worked at the Federal Reserve Bank, resigned only 3 weeks after releasing this report: http://www.cftc.gov/opa/press04/opa4935-04.htm As a truly REMARKABLE twist of fate, or not, Mr. Gorham now serves on the Probable Cause and Business Conduct Committees of the CME who were supposed to be overseeing MF Global before it imploded: http://www.marketswiki.com/mwiki/Michael_Gorham Then in May 2008 the CFTC released another report on the same topic again stating again that the silver market was not being manipulated. This time the CFTC decided NOT to put anyone's name on the report: http://www.cftc.gov/ucm/groups/public/@n ewsroom/documents/file/silverfuturesmarketreport0508.pdf This report piggy backed off the 2004 report in reinforcing the main argument why there was no manipulation in the silver market... "Staff in 2004 also examined the relationship between NYMEX silver futures prices and cash market silver prices to determine whether NYMEX prices appeared to be unusually or significantly out of line with cash prices." "NYMEX silver futures prices tend to track closely the price of physical silver...This analysis shows that there is not a downward bias in the NYMEX futures price vis-a-vis the LBMA price, which, as noted, is widely regarded as the benchmark value in the marketplace." In BOTH reports the CFTC cites the "cash prices" as the prices for silver on the London Bullion Market(LBMA). It is absolutely important that the NYMEX (COMEX) prices stay in line with the "cash prices" of silver otherwise it would prove that the futures and options trading was SETTING the price for physical silver which is illegal. The PROBLEM with the CFTC's analysis is that they are comparing the NYMEX prices to a massively flawed proxy for the price of physical silver. I'd like to direct your attention to the CFTC hearing on the silver market manipulation issue. Jeffery Christian of the CPM Group points out clearly that the LBMA really has NOTHING TO DO WITH THE "PHYSICAL MARKET" IN SILVER. http://www.bullionbullscanada.com/index.php?option=com_communit y&view=videos&task=video&userid=330&videoid=43&Itemid=114 As a matter of fact Mr. Christian points out that the physical silver related to LBMA contracts amounts to only 1/100th of the silver market. This is supported (and even vastly understated) by the MASSIVE volumes traded daily and annually on the London Bullion Market in excess of 50B ounces per year (NET!) when annual global mine production is only 550M oz. The TOTAL VOLUME of yearly trades on a gross level is likely 5x this number or 250B oz. The argument used twice by the CFTC that silver cannot be manipulated because this price matches the "physical price" as determined at the LBMA is patently absurd. Now we come to the 3rd investigation into the manipulation of silver that began over 3 years ago that still has no resolution. We have supplied a whistle blower (Andrew McGuire), new regulatory authorities (Dodd-Frank Law), an admission by a CFTC Commissioner that manipulation has transpired (Bart Chilton) and a silver price that relentlessly continues to rise without any significant decrease in the concentrated short position held by a small handful of single bank. WHAT MORE DO YOU NEED? On January 17, 2010 the CFTC was required BY LAW to implement position limits in the COMEX silver market. This date was not a suggestion by Congress but a hard fact of law. On January 18, 2010 the CFTC was in full violation of this law. I submit that the current CFTC Commissioners, Summers and O'Malia, who have blocked the implementation of position limits at every turn should be removed from their post immediately. The actions of the CFTC have baffled the "free market" and leaves market participants standing dumbfounded with a very simple question... Under what legal authority does the CFTC have the ability to disobey the laws of the US Congress? Our patience with the CFTC has long gone. We have endured 2 botched silver investigations, one NEVER ENDING silver investigation that should have been a slam dunk and now the blatant violation of Federal Law all the while silver market participants are being ROBBED DAILY BY CRIMINALS ON THE COMEX after making the very sound decision to invest in silver. If you are unaware of the facts behind silver please review the following article: Melt The Witch http://www.roadtoroota.com/public/136.cfm This travesty of justice must end immediately. Do your job or stand down and let someone more capable take over. Bix Weirwww.RoadtoRoota.com VIA EMAIL TO: ggensler@cftc.gov; bchilton@cftc.gov; mwetjen@cftc.gov; somalia@cftc.gov; jsommers@cftc.gov; jriley@cftc.gov; dberkovitz@cftc.gov; hhardman@cftc.gov; rshilts@cftc.gov; vmcgonagle@cftc.gov; pcela@cftc.gov; ssherrod@cftc.gov

Harvey Organ's Daily Gold & Silver Report Posted: 16 Feb 2012 12:28 PM PST MF Global Customers will not receive their money/Greek decision by Monday/ SLV shorts cover 17% of their shortfall/ Moody's downgrades...

John Embry: “The Current Financial System Will Be Totally Destroyed” Posted: 16 Feb 2012 12:26 PM PST by Lars Schall, GoldSwitzerland.com An industry expert in precious metals, his experience as a portfolio management specialist spans more than 45 years: John Embry, the chief investment strategist at Sprott Asset Management. He began his investment career as a Stock Selection Analyst and Portfolio Manager at Great West Life. Mr. Embry then became a Vice President of Pension Investments for the entire firm. After 23 years with the firm, he became a Partner at United Bond and Share, the investment counseling firm acquired by Royal Bank in 1987. Afterwards he was named Vice-President, Equities and Portfolio Manager at RBC Global Investment Management, a $33 billion organization where he oversaw $5 billion in assets, including the Royal Canadian Equity Fund and the Royal Precious Metals Fund. In March 2003 Mr. Embry joined Sprott Asset Management with focus on the Sprott Gold and Precious Minerals Fund and the Sprott Strategic Offshore Gold Fund Ltd. He plays an instrumental role in the corporate and investment policy of the firm. Mr. Embry, the perhaps best report I have ever read on the gold market was "Not Free, Not Fair: The Long-Term Manipulation of the Gold Price," written by Andrew Hepburn and you. (1) I would like to talk with you at the beginning about the findings of that report. First of all, why do you think it is relevant whether the gold price is free or not? John Embry: Thank you for the very generous compliment. It is essential that the gold market be free. It functions as the so called "canary in the coal mine" and its price should be allowed to reflect excesses in a pure fiat monetary system. The continued suppression of the gold price was a key factor in the many financial bubbles which have essentially wrecked the monetary system as we know it. Read More @ GoldSwitzerland.com

Silver Prices Soften as Greek Tragedy Continues Posted: 16 Feb 2012 11:38 AM PST Prices for precious metals met resistance as Greece continues to be the main focal point in the ongoing European financial crisis. Despite agreeing to strict austerity measures, including cutting 15,000 public sector jobs and cutting the minimum wage by 22 percent, the coalition leaders would not agree to make substantial cuts in supplementary pensions. March 20th Deadline for Debt Repayment Unless Greece receives the €130 billion bailout package, the country faces missing a €15.5 billion debt repayment that comes due on March 20th. Greece has been solvent for the past two years on the first EU/IMF/ECB bailout of €110 billion. The two years of austerity measures have been extremely trying for Greece, with unemployment rising to 19 percent. Civil unrest has also sparked controversy as the overwhelming majority of Greeks are opposed to the troika’s austerity measures. Greece Exit From the Euro In an interview with a Dutch newspaper, Neelie Kro...

Sprott's John Embry:“The Current Financial System Will Be Totally Destroyed“ Posted: 16 Feb 2012 11:34 AM PST The next system will require gold backing to have any legitimacy. This has happened many times in history."

John Embry: Worldwide Debt Saturation Ensures Much Higher Gold and Silver Prices Posted: 16 Feb 2012 11:33 AM PST The staggering debt situation throughout the industrialized world…will be terminal for the financial system we have known since the end of World War 2 [and, as such,*have a major]*impact…on the value of paper money and by extension, gold and silver. [Let me explain.] Words: 2328*So said John Embry ([url]www.sprott.com[/url])this past weekend in a speech to the California Investment Conference which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) below for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. Emb...

Caesar Bryan - Money Spigots are Wide Open & Gold’s Future Posted: 16 Feb 2012 11:30 AM PST Money is being created at will and of course it's very hard to create gold, as we are finding out

Cash in the attc! $1 million in gold coins rains down from the rafters… Posted: 16 Feb 2012 11:06 AM PST Daily Telegraph (Feb 16) — By Graham Smith A team of builders renovating a vineyard facility in France were stunned when U.S. gold coins worth $1million rained down on them from the rafters. The treasure trove of 497 coins was hidden in the attic of an old building in the rural village of Les Riceys in the country's famed Champagne region. The pieces, which have a face value of $20 each, were minted between 1851 and 1928 and are the equivalent of 17 kilograms of gold. [Source]: JK Comment: Its interesting to think about this story in the context of the time in which these coins were stashed away. In 1933, FDR confiscated gold. Many citizens smuggled gold coins out of the United States to relatives in Europe to avoid this confiscation. Fearing similar draconian measures in their own country, these coins were hidden with such care it took 80 years for them to resurface. Impressive to witness the great lengths some go to to protect their gold.

Gold, Oil Hold Key Support Levels – Next Move Likely Higher says Yamada Posted: 16 Feb 2012 10:56 AM PST Breakout (February 16) JK Comment: My favorite part is the casual statement that, "Remember this (gold) is a currency, everybody's printing money, even the Japanese now are going to start buying bonds." Given that proponents for gold are often marginalized with references like "gold bugs" and "conspiracy theorists", its refreshing to see such matter-of-fact analysis on gold. Gold is a currency. That simple fact, when taken into the context of how developed countries around the world are managing their paper currencies, is all the argument one needs to justify diversification into gold. Another interesting point from Yamada worth noting, "…and the interesting thing is, in many cases now, did you that India now is going to pay for Iranian oil in gold to bypass the embargo in dollars" As events like this repeat into a trend, the dollar's role as the world reserve currency is increasingly threatened.

Parallel Paths to War Posted: 16 Feb 2012 10:55 AM PST February 16, 2012 [LIST] [*]"Slant drilling" 1990... "Complex oil smuggling network" 2012... Parallel paths on the road to war in the Gulf [*]Breaking news on the nutraceutical front and your chance to take advantage [*]Sunny economic numbers, but Dan Amoss finds a cloud that points to more margin squeeze [*]China's new golden distinction, and an update on the gold holdings of top U.S hedgies [*]Readers write: Revenue-hungry governments abetted by private firms, the CNG solution and a broken dollar hypothesis? [/LIST] If history doesn't repeat, but rather rhymes, as Mark Twain said... then we recognize some doggerel this morning in the latest news from the Persian Gulf. "Iran has been systematically plundering large amounts of oil from southern Iraq for years," according to a UPI story that cites a report from Stratfor, the U.S.-based private intelligence outfit. Through a "complex oil smuggling network," the Islamic Republic is able to pull in $20 million p...

Bix Weir: Banking Cabal Ready For Position Limit Rule! Posted: 16 Feb 2012 10:20 AM PST glancing at the latest Bank Participation Report from the CFTC. As of February 7, 2012 there are now 4 US Banks that hold the silver short hot potato!

Caesar Bryan - Money Spigots are Wide Open & Gold’s Future Posted: 16 Feb 2012 09:58 AM PST With a big move in gold and silver, today King World News interviewed 25 year veteran Caesar Bryan, manager of the Gabelli Gold Fund. Gabelli & Company has over $31 billion under management. Caesar Bryan has managed the gold fund since its inception in 1994. Caesar had this to say about what he is focused on in the gold market: "There are a couple of key points this week.  First, the Japanese authorities, in the name of the Bank of Japan, intervened to try to add liquidity to the Japanese system and to weaken the yen.  Second, the Bank of England announced they are going to embark on another round of asset purchases.  So, the theme of central banks printing money around the world continues." This posting includes an audio/video/photo media file: Download Now

Import data implies gold buying by China's central bank Posted: 16 Feb 2012 09:46 AM PST China Central Bank in Gold-Buying Push By Jack Farchy Financial Times, London Thursday, February 16, 2012 http://www.ft.com/intl/cms/s/0/d735e8cc-58c5-11e1-b118-00144feabdc0.html The World Gold Council believes China's central bank made significant gold purchases in the final months of 2011, contributing to a surge in the country's imports. Marcus Grubb, managing director for investment at the WGC, a lobby group for the gold mining industry, told the Financial Times that buying by the People's Bank of China could explain a large discrepancy between Chinese imports and the WGC's estimates of consumer demand in the country. "There is absolutely a discrepancy in the import figures," said Marcus Grubb. "The obvious inference is that the central bank is buying." ... Dispatch continues below ... ADVERTISEMENT Free Month Subscription to Market Force Analysis for GATA Supporters Market Force Analysis is a unique, patent-pending approach to commodity market analysis. An algorithm has been developed to extract supply and demand weightings from futures market data. The difference between supply and demand is the market imbalance that is called "market force," so named because it is what drives price. It brings clarity to past market action and predicts market trends. Because it is derived from accurate futures market data it is not subject to the errors inherent in macro-level estimates of supply and demand. Learn more here: https://marketforceanalysis.com/About_MFA.html Market Force Analysis focuses on short-term (15 days) and medium-term price predictions to help both short-term traders and long-term investors understand market moves and benefit from the generated prediction of prices. To read subscriber comments that show how much the service is appreciated, visit: https://marketforceanalysis.com/Testimonials.html The MFA service has been pioneered by market analyst and Gold Anti-Trust Action board member and researcher Adrian Douglas. The Market Force Analysis premium service provides: -- A bi-weekly report. -- Access to the MFA hot list of junior mining stocks derived from analysis of more than 800 mining stocks. The MFA hot list consistently outperforms well-known mining share indices like the HUI, GDX, and GDXJ. -- E-mail alerts about actionable trades. -- E-mail updates with important information. To obtain your 1-month free trial subscription to the Market Force Analysis letter, e-mail info@marketforceanalysis.com and put "MFA Free Trial" in the subject field. His comments mark the first public statement from a senior gold industry executive pointing to purchases by the Chinese central bank, a trend that many others have highlighted privately. The PBOC did not respond to questions on Thursday. China's imports from Hong Kong, which account for the majority of its overseas buying, soared to 227 tonnes in the last three months of 2011, according to data published by Hong Kong. Mine production in the country, the largest gold producer, stood at about 100 tonnes in the quarter, implying total supply of at least 330 tonnes. That compares to demand of 191 tonnes for gold jewellery, bars, and coins -- which account for the vast majority of Chinese demand -- reported by the WGC on Thursday. Most industry executives believe China has been quietly accumulating gold produced in its domestic market for years, but it rarely publishes details of its holdings. In 2009, Beijing revealed it had almost doubled its gold reserves since 2003, making it the fifth-largest holder of bullion with 1,054 tonnes. Philip Klapwijk, head of metals analytics at Thomson Reuters GFMS, the consultancy that produced the data underlying the WGC report, agreed that the so-called "official sector" of the central bank and other sovereign institutions may have bought gold in the final quarter of the year. "It could be that the apparent surplus in the domestic market due to the scale of imports reflects official sector purchases," he said. However, he added that some of the apparent surplus could be accounted for by stockbuilding by Chinese banks ahead of the lunar new year holiday. Mr Grubb added that the Hong Kong trade data could yet be subject to revisions, or that other players, such as Chinese sovereign wealth funds, or other financial institutions, could have accumulated stocks of gold during the quarter. But he added: "In the medium term we do know the Chinese central bank and other Asian central banks with large foreign exchange reserves have been increasing their holdings of gold. This is consistent with that." Central banks bought about 440 tonnes of gold last year on a net basis, the WGC said, the highest level of buying since 1964. Large buyers included Mexico, Russia, and South Korea. China's State Administration of Foreign Reserves, which manages China's $3.2 trillion in foreign reserves under the Central Bank, has said publicly that it views gold and other commodities as having limited relevance for its investments because of price fluctuations, storage costs, and limited transaction volumes. However, advisers to the central bank have been urging China to diversify its holding of foreign reserves, which is held mostly in US Treasuries and other governments' bonds. Demand from Chinese consumers is also rising rapidly, as they pour newfound wealth into gold. The WGC on Thursday predicted that China would this year overtake India as the world's top gold consumer for the first time. * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

Gold Demand Hits New Records as Europeans Stockpile Posted: 16 Feb 2012 09:44 AM PST In Europe, Germany and Switzerland were the main drivers of the growth as the euro zone debt crisis escalated and investors looked for safe havens

Bank Bonds Not Buying The Rally Posted: 16 Feb 2012 09:43 AM PST Financial credits remain the big underperformer hinting at much less risk appetite than USD-based stocks would indicate for now but broad risk assets staged an impressive bounce recovery on better than average volumes today as early weakness in Europe was shrugged off with better-than-expected macro data in the US (claims and Philly Fed headlines) and then later in the morning the story in the ECB Greek debt swap deal. We discussed both the macro data and the debt swap deal realities but the coincident timing of the ECB story right into the European close (when we have tended to see trends reverse in EUR and risk anyway) helped lift all risky asset boats as USD lost ground. The long-weekend and OPEX tomorrow likely helped exaggerate the trend back today but we note HYG underperformed out of the gate and while credit and stocks did rally together, the afternoon in the US saw stocks limp higher on lagging volumes (and lower trade size) as credit leaked lower. Treasuries sold off reasonably well as risk buyers came back (around 8bps off their low yields of the day pre-ECO) but rallied midly into the close (as credit derisked). Commodities all surged nicely from the macro break point this morning with Copper best on the day but WTI still best on the week. Silver is synced with USD strength still (-0.25% on the week) as Gold is modestly in the money at 1728 (+0.4% on the week) against +0.47% gains for the USD still. FX markets abruptly reversed yesterday's USD gains with most majors getting back to yesterday's highs. GBP outperformed today (at highs of the week) and JPY underperformed (lows of the week). VIX shifts into OPEX are always squirly and today was no different but we did see VIX futures rise into the close.     The biggest divergence (and rather surprising on such an apparently risk-on mode day) was US financials. While stocks managed to recover from earlier losses as the broad market levitated on weaker and weaker volumes as the day wore on, credit spreads for the major financials remained wide - worryingly wide. There are some reasons for this divergence being bandied around by sell-side shops - varying from 'normal profit-taking' to 'its a skew thing - bonds haven't confirmed the CDS move'. We remember back to last Q1/Q2 when every bond manager and his mum were filled to the gills with senior financial paper (juicy yield, TBTF etc) and the same kind of arguments were mentioned then when CDS started to leak wider. We all know how that ended.   We suspect that this decompression (or worsening) in CDS spreads for the major US financials (and remember we have been creaming about the weakness in European banks for two weeks now) is due to the ease of use of CDS specifically as a hedge tool (i.e. easier to buy protection than sell your bonds into an illiquid market and trigger more selling), there is likely a systemic risk effect from the lack of a firewall surrounding Europe still that is rising due to the pending hard default that is so obviously going to occur in Greece, and dealer inventories are at multi-year lows (blame Dodd-Frank or Volcker) meaning little ability to provide borrow (less likely) or soak up risk without offsetting through CDS       We also wonder if the Maiden Lane II sales last week (and a week or two back) have soaked up some balance sheet (or more likely brought out some liquidity-seeking systemic hedgers as the deal likely went off below market given that GS kept it on their books). A quick look at CMBX prices shows that they have stopped benefiting from the post-Thanksgiving Day printfest and most have been falling for a month or so. AAA has been rallying for no other reason (in our simple minds) than the market is becoming increaisngly bereft of AAA collateral (but that's another story).     Either way - we know there is basis risk (as we note below) in the two indices but the divergence is dramatic and is also shouting loud and clear in Europe too as the big six major US financials see credit spreads at 3-4 weeks wides while stocks are holding up overall. While XLF is increasingly divergent from the TBTFs, we would not expect it to be able to hold up if they all crack. In arbitrage land there is a trade here, in retail ETF land - its tricky, one could perhaps leverage the LQD (investment grade bond ETF) exposure to financials as a proxy for the credit leg. By way of example, one might want to hedge the interest rate risk from LQD (so it becomes a more pure credit risk play) and trade that against XLF (the financials ETF) though obviously these are apples-to-elderberries comparisons. Back of the envelope math suggests Buying 2130x LQD, Selling 2100x IEF, and Selling 45x XLF in hope for a reversion but the basis in this trade is large given the flows in all of them and the different underlyings.   The green vertical line shows approximately when the macro data hit this morning and turned a slow leak lower into a rip-snorting rally monkey day. We assume when claims are revised higher next week then this will all be remembered and discounted back out - no confirmation bias here at all. As the USD sold off (green line inverted) then Treasuries (orange) sold off and stocks and gold took off with the midday momentum nudge from the ECB (orange vertical line) providing the impetus to take DXY lower and risk higher to help with pin risk on AAPL among others we are sure.   HYG (green) dropped notably out of the gate and trades at a discount to NAV once again - as we warned might happen once retail realizes that high-yield credits have a high-yield for a reason and carry can be ripped away from you very quickly by capital shifts. This sell-off in HYG (rather notably) was after the early ECO data but by the time the ECB rumor hit we were already off to the races. Stocks (blue) kept going and going while credit (red lines) slid wider in the afternoon - losing its will to ramp higher and still dramatically underperforming on a medium-term basis.   FX markets have indeed been a wild (if not massively volatile) ride this week with EURUSD reversing all of its losses from yesterday to close just shy of its European closing levels from yesterday around 1.3130. JPY continues to push lower (-1.7% on the week) which along with AUD and EUR strength lit a fire under broad risk assets as CONTEXT surged on the day (providing the risk-on support). The Treasury shift was a bigger magnitude driver though of risk-on appetite based on CONTEXT as rates increased and the curve steepened and twisted. Lastly, we thought a fun experiment in total anchoring bias on this week's equity and FX price moves was necessary - if nothing else to prove we can use Excel again. For a 10pip rise in the EURUSD rate, we see a 7.1pt rise in the Dow. Conversely, when there is a 10pip drop in the EURUSD exchange rate, the Dow only lost 5.8pts this week (based on high-frequency data since Monday's open). All things being equal we would expect these offsets to be equal (we did this one log returns and absolute changes) - in this case we do not as equity upside from a EURUSD uptick is 22% higher than the downside in the Dow from a downtick in EURUSD. It seems indeed that our USD-based stock market is much more prone to upside moves than downside (at least this week) when USD weakness appears. Gold almost reclaimed $1730 today but WTI remains the winner on the week (with Dr.Copper's ebullience clear today).   The small rise in vol into the close, lack of follow through in credit, modest Treasury rally, and stability in FX and commodities suggests that not all was gung-ho today (which makes sense if you spend any time actually trying to understand what is going on in the ECB and Greece). While macro US data is indeed better than expected there are skeleton after skeleton in those cupboards and every time I hear some talking head mention "money on the sidelines" a little piece of me dies. We wonder if the last couple of days of Dow swings and vol spikes and recoveries will remind anyone of the mid-summer day swings last year? Charts: Bloomberg

Is This Recovery? Posted: 16 Feb 2012 09:39 AM PST This article originally appeared on The Daily Capitalist. There is a lot of good news to buoy the markets and give cheer to the public. We hear that new jobless claims are down another 15,000 to 358,000, the ninth week of declines out of the last ten, finally breaking below the 400,000 mark. A reduction in unemployment is a very positive sign and is politically significant. Also Gallup released its latest economic confidence poll and it is up to -20, the highest in 12 months, a very solid gain from the -54 score in August and September.  We heard as well that Greece may qualify for another round of funding to stay default (we are very skeptical of that). And, the S&P is very close to its 52-week high. There is more. The official CPI was up 2.4% last year, a very modest and tolerable amount according to the Fed. Markit reports that the combined U.S. ISM manufacturing and non-manufacturing indices were up from 56.4 in December to 58.9 in January, hitting its highest level since March of last year. New orders in both surveys were up significantly. These data were backed up by reports of durable goods orders and factory orders. Data from many of the regional Feds confirm this. Personal income increased 4.7% in 2011 versus an increase of 3.7% in 2010. Real disposable personal income (DPI) increased 0.9% compared with an increase of 1.8% in 2010. Real personal consumption expenditures (PCE) increased 2.2%, compared with an increase of 2.0% in 2010. State tax revenues increased 6.1% YoY according to the latest report. What could possibly go wrong? Are we in a recovery or not? This article will deal with this issue. I will briefly recap how we got here and the problems we need to overcome before we can call it a recovery. I will look at the reasons behind our current positive data. And then I will compare the current data to see where we are.  What is holding back recovery? Economic recovery is quite simple when you think about it: bad investments and their supporting debt need to be liquidated. These bad deals are called "malinvestment" and our recent housing boom left huge piles of them for us to clean up. Think of it as the detritus of bad economic policies that led to bad business decisions. Massive amounts of capital (consisting of real and fiat "paper" capital) were lost during the resulting bust and there is nothing anyone can do about it. Keeping bad deals alive only serves to trap valuable capital into unproductive assets and delays recovery. New capital must be created through real "organic" production to get the economy going again. The biggest piles of detritus to clean up before the U.S. economy can recover are: The asset and capital structure of our local and regional banks, mostly as related to real estate loans; The debt of small business owners, especially in relation to commercial real estate holdings; The debt of households in relation to home mortgages, student loans, and consumption-related debt. All of the above have been important contributors to the stagnation of our economy. And all of the above, except student loans, have to do with real estate. There certainly are other major issues this country needs to deal with that will also affect economic recovery. Those issues are political in nature and will depend in large part on the outcome of the 2012 elections. They are our budget deficit and huge national debt, tax policies, social welfare entitlement programs, and regulations which negatively impact capital formation and business expansion. These issues are not within the scope of this article but we have discussed them frequently here at The Daily Capitalist. There is one further policy matter that is political in nature and that will impact the economy, and that is Fed policy which I will discuss. Will consumer spending drive the economy?  Most economists and analysts point to the lack of consumer demand as being the economy's greatest hurdle, but that is a symptom of a serious underlying problem rather than the cause. The cause is what Austrian theory economists call a lack of "real savings" (real capital). That lack occurs because, as noted above, the boom-bust business cycle, which we are still in the midst of, destroyed huge amounts of real capital/savings. (Household wealth declined by $10 trillion, for example.) We need real capital in order to have new production; without it, the economy stagnates. To get production going manufacturers need to buy capital goods and commodities in order to make things. If they haven't been produced and you have a fistful of fiat dollars, then there is nothing to buy and nothing to produce. If we could print real savings we would already be in recovery which tells us that fiat money, the stuff that the Fed creates out of thin air, is not real wealth. Real savings can only come from the production of things that consumers, or the manufacturers of consumer goods, want. Profits saved from such production or from saved wages of workers employed to make such goods, is real capital/savings. The bottom line is that if we had enough real capital/savings, we would have already recovered. The fact that we haven't recovered means that we don't have enough real capital/savings. Flogging the consumer to spend will only impoverish the consumer and destroy more capital. Consumers need to save, not spend. Will manufacturing drive the economy? Manufacturing is an important part of our economy, but not as important as it was. The production of goods represents only 24% of the economy (services are 47%). There is no question that recently manufacturing has been improving. It is being driven mainly by manufacturing exports and auto sales. What is causing this? There are two parallel functions occurring that are giving rise to the current good economic news. One is the natural forces that cause an economy to recover. The other is the Fed's policies to devalue the dollar and keep interest rates artificially low. When I refer to "natural forces" causing a recovery, I am talking about market forces such as the liquidation of debt related to malinvestments, the devaluation of those malinvestments, and the formation of new real capital/savings. It is occurring naturally, often despite government policies, and is clearing the way for new production. But I believe it has been a very slow process and has not been sufficient to cause most of the positive economic news. I will discuss this in some detail in another article coming soon. Much of the recent good economic news comes as a result of the Fed's cheap dollar policy. It does two things to stimulate manufacturing: First, fiat money devalues a currency. This is obvious to us as we look at a constant positive inflation rate and the decline of the dollar in relation to most other currencies. That devaluation makes U.S. goods appear to be relatively cheaper on foreign markets and stimulates demand for them.  Thus a cheap dollar policy stimulates exports.  Second, the Fed's zero interest rate policy (ZIRP) which has driven down interest rates, stimulates demand for certain big ticket goods such as autos.  Exports  Exports represent about 14% of GDP and of that manufacturing exports is about 5% of GDP: a substantial factor. So when the dollar declines it stimulates exports and this is going a long way to revive manufacturing in the U.S.  The following chart shows the decline of the dollar (blue), the level of exports (red). I have inserted the two incidents of quantitative easing as shown in the salmon and light green bars. It is easy to see the mirror image inverse relationship of rising exports and a declining dollar.    The recent strengthening of the dollar, a result of the eurozone crisis driving the dollar up, and declining world economies do not point to continued strong export growth. This is already starting to show up in the numbers as this chart shows more clearly (gray bars): The below chart of leading indicators, just out from the OECD, shows that the world is not cooperating with exporters—these are their major markets:   Autos Auto production is about 2.5% of GDP, a substantial part of manufacturing. Recent sales improvement is being driven by cheap credit (ZIRP). This chart shows new car sales (blue), expanding nonrevolving credit (red), and auto loan interest rates (black): The first thing you should notice is the high level of sales pre-Crash and its rapid decline in 2008 (blue). Note the spike in 2009 which was the ill-conceived Cash for Clunkers program. Nonrevolving credit is used mainly for financing autos and this chart shows the post-Crash rise of such credit growing in lock-step with auto sales. It also shows a significant spike in sales beginning in 2010 as auto loan interest rates decline (black) to historic lows. While recent sales growth is also a function of pent-up demand as consumers replace worn out vehicles, in an economy where consumer debt is still very high and where consumer income has been flat, most of these auto sales are being spurred on by low ZIRP-driven financing costs, not just organic demand. Industrial production The other thing is that industrial production is not growing strongly as the headlines would have you believe. If it was strong, it would be a good indicator of positive growth and the presence of real capital/saving driving growth. While factory orders and industrial production have improved, they have been essentially flat-to-declining for the past 12 months:   Improvements in manufacturing and industrial output are largely being driven by Fed policy, QE and ZIRP. I don't believe it will last because it appears that monetary growth and the rate of change of such growth, are declining as the effects of QE wear off.  The role of money supply If much of our positive economic data, especially manufacturing, employment, and price inflation is tied to monetary policy, then that begs the questions of where is money supply (MS) now, where is it heading, and what will the Fed do? The Fed has been trying to stimulate the economy by making credit available to banks, by keeping interest rates (Fed Funds) at near zero (ZIRP), and by direct injections of money into the economy (QE, quantitative easing). Those policies as anticipated by the Fed have largely failed. In a truly recovering economy, credit would be expanding because businesses would be borrowing in order to expand and hire. Interest rates would be so attractive to borrowers, they couldn't resist expanding through borrowing. The problem is that it hasn't worked. What is happening instead is that economic gains are coming largely from quantitative easing, a once-in-a-lifetime policy of last resort. While Chairman Bernanke denies it, creating money out of thin air (QE) has the same effect as printing new currency and throwing it out of the Chairman's proverbial helicopter. Look at how QE has expanded the Fed's balance sheet from securities purchased on the open market, which  is how the Fed creates new money: As you can see, its balance sheet exploded during the Crash (QE1) and has continued to grow (QE2). The Fed has injected about $2 trillion into the economy since 2008.  One can't deny that such injections have impacted the economy. It has rewarded the financial markets (S&P500: 3/6/09=666; 2/14/12=1,350), it has rewarded the multinationals and exporters, and it has caused a positive CPI despite massive deflationary forces. MS itself has been on a rocky track, but it has expanded in response to QE. Bank credit expansion (loans) is the easiest way to cause MS to grow. While the Fed has made massive amounts of credit available to banks, without loan demand lenders are satisfied to keep it locked up at the Fed (excess reserves). Without landing activity, in order to make MS grow, the Fed has found it must inject new money directly into the economy via QE .  To measure MS, I use the Austrian concepts of money supply, what is called "Austrian" or "True" money supply. Specifically I use what I consider to be the most accurate "Austrian" data which is from Michael Pollaro's The Contrarian Take (with his kind permission), which looks like this: As you can see the percentage YoY change of TMS2 (bright blue line), the data which I think is most accurate, is actually declining. What does this mean? Let me try to explain this with a more detailed, and unfortunately, a more complicated chart. This is the same chart as above with an addition of the QE events (vertical salmon and blue bars), the addition of GDP data (black line), and the addition of the NBER's dates for the Great Recession as a vertical gray bar. The scale on the inside of the chart on the left shows quarterly changes in GDP from 2006 to Q4 2011, and it is shown on the black line. I have exaggerated GDP by showing percentage changes of GDP on a quarterly basis to make it fit to Pollaro's chart and to make my point clearer. Another chart below shows GDP alone.  What I believe this chart shows is that, after a delay, quantitative easing has caused much of the "recovery" by increasing MS which in turn has increased GDP . In terms of measuring money supply, I use the bright blue line (TMS2) which shows annualized changes. If you are a believer in M2, Pollaro shows that as well (dark blue line). QE1, starting in November 2007 and ending in March 2008, brought a huge infusion of new money into the economy, about $1.3 trillion in only 3 months. The Fed, as you recall, went on a massive buying campaign which including a lot of "bad" assets (GSE debt, etc.). GDP is a lagging indicator, but as you can see it was well on its way down by Q1 2007 as real estate values collapsed and Lehman went under. By Q4 2009 GDP started to pick up which was a 6-month lag from the end of QE1.  As the effects of QE1 wore off, as one would expect it to do in the face of massive deflationary forces, GDP began to stall out and unemployment continued to climb. By October, 2009 unemployment reached 10%, and people were talking about a jobless recovery. GDP peaked in Q4 2009 and started declining again in Q1 2010. The Fed took action starting in November 2009 through June, 2010, and QE2 brought another $600 billion of new fiat money into the economy over a four month period. GDP bottomed out in Q1 2011 and since then it has been expanding but at a snail's pace. On a YoY basis GDP is stagnating, but not declining. Again, there was about a 6-month lag between the end of QE2 and GDP turnaround. Here is a chart that makes it easier to see real GDP: To those out there who see this as an exercise in curve fitting, faulty logic (post hoc ergo propter hoc), or Monetarist theory, these data are consistent with Austrian Business Cycle Theory (ABCT) and one would expect to see these results after flooding the economy with fiat money. I believe that the gains, such as they are, are not "real" in the sense that they are not based on real savings, but on fiat money which always redirects capital into projects that eventually will become malinvestments. When money is injected in the QE fashion, it takes longer for the money to get into the farther reaches of the economy. When you think about it, the cash initially goes to the Fed's Prime Dealers and they use it to make investments, which indirectly leads to productive activities, but takes time to expand beyond, say, New York City. Bank credit expansion through loans is a more direct transmission into productive activities rather than investment activities (businesses borrow to expand business, consumers borrow to buy homes and cars). The thing about GDP is that it is not necessarily a very good measure of economic activity in the sense that it measures what we spend. If you inject more fiat money into the economy it means there will be more spending and a higher GDP. More spending doesn't always mean that those activities will be productive and lasting. That is especially the case with QE. But, for whatever it's worth, the world pays attention to GDP and so will we; it's just very tricky footing for forecasters. It appears that TMS2 MS growth is declining. One look at the above chart will confirm this. This has to do with a lot of factors, but mainly it is occurring because QE2 is wearing off. This is occurring despite the fact that we are finally seeing modest increases in bank lending activity: The above chart shows total loan activity (blue line) and the components that are business loans (red line) and consumer loans (green line). Ignore the straight line increase in Q2 2010; that is a recalculation based on a change of the government's methodology. While it shows recent modest improvement, loans have not grown since April, 2010. The

Hide your gold in the attic and central banking does the rest Posted: 16 Feb 2012 09:36 AM PST $1 Million in Gold Coins Rains Down from the Rafters By Graham Smith Daily Mail, London Thursday, February 16, 2012 http://www.dailymail.co.uk/news/article-2102056/Cash-attic--1million-gol... A team of builders renovating a vineyard facility in France were stunned when U.S. gold coins worth $1 million rained down on them from the rafters. The treasure trove of 497 coins was hidden in the attic of an old building in the rural village of Les Riceys in the country's famed Champagne region. The pieces, which have a face value of $20 each, were minted between 1851 and 1928 and are the equivalent of 17 kilograms of gold. ... Dispatch continues below ... ADVERTISEMENT Golden Phoenix Discusses Royalty Mining Growth Strategy on '21st Century Business' on Fox Business Network Golden Phoenix Minerals Inc. has discussed its royalty mining growth strategy on the Fox Business Network program "21st Century Business" with host Jackie Bales. Golden Phoenix's director of corporate communications, Robert Ian, told how the company narrows its focus to project generation and future royalty streams. He explained why Golden Phoenix believes it's better to own joint-venture interests in several producing mines instead of full exposure to just one project. "21st Century Business" has been airing for 15 years. Previous hosts have included Gen. Alexander Haig, Gen.l Norman Schwarzkopf, and Secretary of Defense Caspar Weinberger. Golden Phoenix appeared as paid programming on this broadcast. To view the program with Golden Phoenix, please visit Golden Phoenix's Internet site here: http://goldenphoenix.us/fox-business-network/ They are today worth about $980,000 (L622,000). The building, a former grape-drying facility, is owned by Champagne producer Francois Lange. Mr Lange, the head of the Alexandre Bonnet Champagne firm, said: "One of the workers was attacking the building's ceiling with a crowbar when gold coins started to rain down on him, followed by sacks of gold." Half the coins will go to the workers and the other half to Mr Lange. How the U.S. currency came to be in a French attic remains unknown. However, the building was once owned by a wine producer who traded with Britain and the United States in the 1930s. It is located in Les Riceys, a village known for its rose Champagne. So pleased is Mr Lange with the find that he may now produce a special vintage in its honour. * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Be Part of a Chance to Discover Multi-Million-Ounce Gold and Silver Deposits in Canada Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada. Check out the exploration program on our Allco gold/silver project : -- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit. -- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries. -- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited. To learn more about the Allco property or Northaven's other gold and silver projects, please visit: http://www.northavenresources.com Or call Northaven CEO Allen Leschert at 604-696-3600.

Mish: Face The Music: Road Back To Prosperity Is Through Shared Sacrifice, Not Government ... Posted: 16 Feb 2012 09:36 AM PST Hunt correctly identifies fractional reserve lending as the culprit behind the massive rise in debt. The solution is 100% gold-baked money...

Sprott's John Embry:“The Current Financial System Will Be Totally Destroyed“ Posted: 16 Feb 2012 09:22 AM PST Sprott strategist John Embry has never been a fan of the existing financial system. Today, he makes that once again quite clear in this interview with Egon von Grayerz' Matterhorn Asset Management in which he says: "I think that the current financial system, as we know it, will be totally destroyed, probably sooner rather than later. The next system will require gold backing to have any legitimacy. This has happened many times in history." Needless to say, he proceeds to explain why a monetary system based on gold, one in which one, gasp, lives according to one's means, is better. Logically, he also explains why the status quo, whose insolvent welfare world has nearly a third of a quadrillion in the form of unfunded future liabilities, will never let this happen. Much more inside. From Matterhorn Asset Management "The Current Financial System Will Be Totally Destroyed" John Embry, the chief investment strategist at Sprott Asset Management, talks in this exclusive interview about the motives and the means of certain interests to prevent a free gold market; tells the reason why the gold price will remain high; shows the opportunities in silver; and explains: "Gold is about the furthest thing from a bubble that I can think of." By Lars Schall An industry expert in precious metals, his experience as a portfolio management specialist spans more than 45 years: John Embry, the chief investment strategist at Sprott Asset Management. He began his investment career as a Stock Selection Analyst and Portfolio Manager at Great West Life. Mr. Embry then became a Vice President of Pension Investments for the entire firm. After 23 years with the firm, he became a Partner at United Bond and Share, the investment counseling firm acquired by Royal Bank in 1987. Afterwards he was named Vice-President, Equities and Portfolio Manager at RBC Global Investment Management, a $33 billion organization where he oversaw $5 billion in assets, including the Royal Canadian Equity Fund and the Royal Precious Metals Fund. In March 2003 Mr. Embry joined  Sprott Asset Management with focus on the Sprott Gold and Precious Minerals Fund and the Sprott Strategic Offshore Gold Fund Ltd. He plays an instrumental role in the corporate and investment policy of the firm. Mr. Embry, the perhaps best report I have ever read on the gold market was "Not Free, Not Fair: The Long-Term Manipulation of the Gold Price," written by Andrew Hepburn and you. (1) I would like to talk with you at the beginning about the findings of that report. First of all, why do you think it is relevant whether the gold price is free or not? John Embry: Thank you for the very generous compliment. It is essential that the gold market be free. It functions as the so called "canary in the coal mine" and its price should be allowed to reflect excesses in a pure fiat monetary system. The continued suppression of the gold price was a key factor in the many financial bubbles which have essentially wrecked the monetary system as we know it. What has the evidence been that the gold market isn't a free market? John Embry: Our report which was written 7 ½ years ago revealed all sorts of chicanery in the gold market and we only used evidence which could be corroborated. Considerable additional evidence has piled up subsequently but two smoking guns are the repetitive counter intuitive price action and evidence of widespread clandestine leasing of western central bank gold. Who are the ones that don't like a free gold market and which objectives do they have in mind by preventing a free gold market? John Embry: The western governments, their central banks and the allied bullion banks are the culprits. They view gold as a mortal enemy of the fiat currency system. Gold has been real money for centuries and every paper money system in history has ultimately collapsed. This drives them to continuously denigrate and manipulate gold. Through which tools is the gold price "managed"? John Embry: The worst damage occurs in the so-called paper gold market where derivatives, naked shorting, vicious margin hikes, etc. are employed to fleece the long side who don't have as deep pockets. In addition, the western central banks have supplied the physical gold necessary to effect the plan through their leasing. Recently, I was told by a former chairman of the Federal Reserve, Paul A. Volcker, that to his best knowledge "the U.S. has not intervened in the gold market for more than 40 years." (2) Do you think Mr. Volcker has the truth on his side? John Embry: Mr. Volcker admitted that the U.S. had made a mistake by not intervening at one point in the gold market some 40 years, so to think that nothing has happened subsequently is extremely naïve. Technically he might be correct in the sense that swaps could have been employed and the intervention using U.S. gold could have been conducted by another party. Recently retired Fed Governor Kevin Warsh acknowledged U.S. gold swaps in correspondence with GATA just last year. (3) Furthermore, Mr. Volcker seemed to suggest that central banks have some interest in the price of gold because of its effect on the currency markets. (4) What kind of relationship does exist between gold and the currency markets which are much bigger than the gold market? John Embry: Very simple. Gold is a currency. Arguably it is the ultimate currency and the central bankers are acutely aware of this fact. Gold's role as currency is once again coming to the  fore and the central bankers hate that fact. Are gold swap arrangements between central banks a) important for the "management" of the gold price, and b) do they represent a means of intervention in the gold market? John Embry: They are most certainly important because it allows central bankers to technically tell the truth because it is always another central bank that is utilizing the swapped gold to intervene in the market.  It is a subterfuge. Do you think the Western central banks have as much gold as they claim they have? John Embry: I strongly suspect that they have materially less than they try to represent. The IMF permits a one line entry on their balance sheets which aggregates physical gold with gold receivables. That's ridiculous and it is done to deceive analysts. For example, if the Americans had the 8,161 tonnes that they say they have, they would be delighted to submit to an outside audit and shut their detractors up. However, they stonewall all requests. With its "QE to infinity" program: would you say the Fed has exposed itself in a way as a hardcore goldbug entity? John Embry: I believe they are fully aware of the extent to which they are debasing their money. We, the public, have to be the hardcore gold bugs to protect our wealth from their depredations. It seems as if more and more gold is moving towards certain central banks and not away from them.  Is this a solid assurance that the gold price will remain high? John Embry: I believe so. The eastern central banks (China, Russia, et al) have accumulated a lot of dollars and realize they are at risk. Ergo, they buy gold. At the same time, I think the western central banks have run their inventories down to levels beyond which they won't go. Thus, I think central banks collective gold buying will have a salutary impact on the price going forward. In the event of another market meltdown, which seems rather likely, do you expect a sell-off in gold? John Embry: There could be a minor sell-off just because there are so many algorhythyms influencing the market.  It would be short lived because big money in the world now knows they need gold for protection. Gold is in a bull market for ten years now. So an increasing number of people say it is in a bubble. Why would you say, in Gershwin's words, "it ain't necessarily so"? John Embry: Gold's price is directly related to the constant debasement of the currencies in which it is denominated. The creation of new paper money is dwarfing the amount of gold available. Gold is about the furthest thing from a bubble that I can think of. What do you think in particular about Warren Buffett's constant "Gold is in a bubble, I go for stocks" talk? Does he serve here as an influential opinion maker in a specific role because he gets a lot of public attention? In other words: is he a fool or does he only act like a fool? (5) John Embry: Warren Buffet sold out a long time ago. It's too bad because he was a great stock picker once. Now he owns insurance companies, Wells Fargo and was a buyer of Goldman Sachs and G.E. in the global financial crisis. He is a member of the American establishment and has a lot to lose. He should have listened to his father Howard Buffett who was a U.S. Congressman and a true "hard money" advocate. In your view, gold will gain in importance as a monetary asset in the years ahead, likely regaining an official role in the world's financial system. Why do you think so? John Embry: I think that the current financial system, as we know it, will be totally destroyed, probably sooner rather than later. The next system will require gold backing to have any legitimacy. This has happened many times in history. The mining stocks both in gold and silver seem to me extremely undervalued. Do you agree? John Embry: They are indeed, and they are being heavily manipulated by the same entities active in suppressing the gold price. In addition, many nefarious hedge funds now are active on the short side. The U.S. financial scene has become a  total cesspool. Are there key levels in the XAU and HUI that one should pay attention to as starting points of a mining stock rally? John Embry: I tend to pay more attention to the HUI because it is the pure gold index.  When the HUI takes out the 555 level with gusto, I think we are away to the races. However, this level is being aggressively defended by the bad guys. A higher gold price (through $2000 per oz.) will rectify this issue. Why are you at Sprott Asset MGMT so very bullish related to silver? John Embry: We think the supply-demand equation is ultimately better than even that of gold. New industrial and medical uses are exploding and because silver is "poor man's gold," investment demand for silver will go crazy when gold gets priced out of the average citizen's capacity to buy. Given the small size of the market and very limited inventory, the price should go ballistic. For your physical silver ETF you want to re-acquire physical silver in a big way. Do you think you could be pioneers (for other fund managers) in direct engagement with mines through direct and forward transactions, instead of going to the Comex? You certainly don't want to "whoop" the silver price by your own buying, correct? John Embry: I think that is a potential avenue particularly when the supply-demand equation gets progressively tighter in the future. Is the silver market also subject of surreptitious interventions? John Embry: Without question. In many ways it may be worse because it is a smaller market and J.P. Morgan Chase's activities have been egregious. The fact that the CFTC has been investigating this for nearly four years without resolution is one of the great jokes of all time. What is your information: to which extent the US silver ETFs are short and how many stocks of those have been used for covering future short contracts? John Embry: I believe that they are but I can't provide any information on the extent. When the very same organizations that have manipulated the market for years act as custodians for the ETF's, it would be wise to be wary. One highly interesting issue for me personally is the point in time when the Middle East countries will no longer sell their oil and natural gas for paper money. When do you think  they will be paid for it with precious metals? John Embry: I suspect this whole phenomenon could occur very quickly. When confidence in paper money is lost and I think we are rapidly approaching that moment, something like that would undoubtedly come to pass. How do you think about the conflict around Iran viewed from a perspective of the petrodollar? John Embry: The whole Iranian issue is very disturbing and I think the U.S 's motives might have more to do with the petrodollar than Iran's nuclear ambitions. One final question. IF the financial system goes under, one can expect massive supply shortfalls and disruptions in goods and services, particularly in the energy sector. Would you recommend to our readers to take precautions for such a scenario instead of hoping for the best outcome of the global financial crisis? John Embry: Unfortunately yes. I am a great believer in cognitive dissonance. Most individuals don't want to face the truth, particularly if it is very unpleasant. Those that do not suffer from this condition should take precautions because the world situation is presently very dangerous. Thank you very much for taking your time, Mr. Embry! SOURCES: (1) John Embry / Andrew Hepburn: "Not Free, Not Fair: The Long-Term Manipulation of the Gold Price", published by Sprott Asset Management in August 2004 under: http://www.sprott.com/Docs/SpecialReports/08_2004_NotFreeNotFair.pdf. (2) See Rob Kirby: "Manifest Destiny Derailed: Treason from Within", published at Goldseek on January 31, 2012 under: http://news.goldseek.com/GoldSeek/1328037291.php. (3) Compare http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf. The relevant passage of Mr. Warsh's letter to GATA said: "In connection with your appeal, I have confirmed that the information withheld under Exemption 4? — that's Exemption 4 of the Freedom of Information Act — "consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you." (4) See Rob Kirby: "Manifest Destiny Derailed: Treason from Within," Footnote 2. (5) Compare for example in this context what Marshall Auerback has said in an interview about the supression of the silver price: "It's in contrast to the gold suppression, which is a central-bank orchestrated scheme. You've got a situation now where it seems to be being done amongst the banking community, but I have no doubt that it has being done with official encouragement, explicit or implicit. To give you an example, 10 years ago Warren Buffet bought a silver position, and he liquidated it a few months later. The story I heard from one of his dealers was that he basically told them, "Boys, it's not politically correct to speculate in silver." Now who told him that I don't actually know; I suspect it came from government sources. More interesting to me is that he had had a significant position, and it was liquidated with a great degree of ease with a loss at time when it wasn't easy to do. This suggests that there was an external agency involved. I have no doubt that there is some degree of government involvement as well, but the primary agents are the investment banks, the commercial banks here." See: http://resourceclips.com/2011/04/05/marshall-auerback-on-silver/.

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