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• 6 Gold And Precious Metals Stocks For 20% Profits
• Analyzing Wednesday's Noteworthy Insider Buys And Sells In Healthcare And Tech Sectors
• Bell Rings for Bond Bubble
• How Are Perth Mint Gold And Silver Spot Rates Calculated?
• BoE Repeats ‘Desperate Shot in the Dark’ of Quantitative Easing
• This U.S. energy fact could blow your mind
• Gold to $2,500 If Euro Breaks Up – Capital Economics
• John Hathaway: People Are Right to be Scared...and Gold is a Necessity
• Japan’s interest in gold and silver is growing
• John Hathaway - People Are Right to be Scared...and gold is a Necessity
• Gold miners need gold above $1650 to keep nose above water
• Want to sell your jewelry? Duluth police want your picture
• Silver Update: “Extend and Pretend”
• Fed Action Will Decide Next Major Move For Gold
• The Gold Standard Before the Civil War
• Gold: the protector and creator of jobs
• china gold: more than meets the eye
• Measuring Wealth In Gold Ounces Instead Of Dollars
• Inflation? Deflation? Who cares... Gold will rise either way...
• Vulnerable to External Influences – The Economic State of Australia (Part I)
• Today’s Winners and Losers
• Silver Supply Inadequate To Meet Growing Demand
• 10 Things That Every American Should Know About The Federal Reserve
• Gold Steady Wed. Morning as Dollar Hits 2-Month Low, Job Market “Still Far from Normal” says Bernanke while Bank of England “Could Do £50bn” Additional QE
• Bob Chapman : keep Buying Gold & Silver
• The Silver Singularity Is Near
• Bob Chapman - Discount Gold & Silver Trading 08 Feb 2012
• 71 tons of platinum
• David Morgan: $60 Silver In 2012

6 Gold And Precious Metals Stocks For 20% Profits Posted: 09 Feb 2012 05:18 AM PST By Investment Underground: Below I will discuss six gold and other precious metals stocks that are capitalizing on price fluctuations, production capacity and strong fundamentals. I believe investors can benefit greatly from these six stocks right now. These stocks could all see a 20% rally once investors begin valuing them with an assumed gold price of $1,730 per troy ounce and a silver spot price at $34. Freeport McMoRan Copper & Gold Inc (FCX): Shares were trading around $46 at the time of this writing. This is fairly below their 52 week high of $58.75 and well above their 52 week low of $28.25. It also pays a $1 annual dividend for a 2.2% yield with a payout ratio of 31%. According to the release of its most recent 10-Q results, it is predicting 2012 production to be in line with this year's numbers. Given the increasing price of all the metals Freeport Complete Story »

Analyzing Wednesday's Noteworthy Insider Buys And Sells In Healthcare And Tech Sectors Posted: 09 Feb 2012 05:06 AM PST By Ganaxi Small Cap Movers: Insiders reported on Wednesday that they bought and sold stock in over 280 separate transactions in over 160 different companies. These transactions have to be reported within two days of the trade, so the transactions occurred sometime this week. We culled through these 280 or so insider buys and sells (based on SEC Forms 3, 4, and 5 filings), as part of our daily and weekly coverage of insider trades, and present here the most notable trades reported on Wednesday in the healthcare and technology sectors; notable based on the dollar amount sold, the number of insiders selling, and based on whether the overall buying or selling represents a strong pick-up based on historical buying and selling in the stock (for more info on how to interpret insider trades, please refer to the end of this article): Corning Inc. (GLW): GLW manufactures glass substrates for LCDs, optical fiber and cables Complete Story »

Bell Rings for Bond Bubble Posted: 09 Feb 2012 03:55 AM PST Wise investors should continue to accumulate anti-dollar investments.

How Are Perth Mint Gold And Silver Spot Rates Calculated? Posted: 09 Feb 2012 03:33 AM PST Perth Mint Blog

BoE Repeats ‘Desperate Shot in the Dark’ of Quantitative Easing Posted: 09 Feb 2012 02:55 AM PST The gold price slipped $10 per ounce to $1,730 in London trade Thursday morning, before regaining most of that dip as the European Central Bank kept its key lending rate on hold and the Bank of England extended its purchases of UK government bonds.

This U.S. energy fact could blow your mind Posted: 08 Feb 2012 11:50 PM PST From Bloomberg: The U.S. is the closest it has been in almost 20 years to achieving energy self-sufficiency, a goal the nation has been pursuing since the 1973 Arab oil embargo triggered a recession and led to lines at gasoline stations. Domestic oil output is the highest in eight years. The U.S. is producing so much natural gas that, where the government warned four years ago of a critical need to boost imports, it now may approve an export terminal. Methanex Corp. (MX), the world's biggest methanol maker, said it will dismantle a factory in Chile and reassemble it in Louisiana to take advantage of low natural gas prices. And higher mileage standards and federally mandated ethanol use, along with slow economic growth, have curbed demand. The result: The U.S. has reversed a two-decade-long decline in energy independence, increasing the proportion of demand met from domestic sources over the last six years to an estimated 81 percent through the first 10 months of 2011, according to data compiled by Bloomberg from the U.S. Department of Energy. That would be the highest level since 1992. "For 40 years, only politicians and the occasional author in Popular Mechanics magazine talked about achieving energy independence," said Adam Sieminski, who has been nominated by President Barack Obama to head the U.S. Energy Information Administration. "Now it doesn't seem such an outlandish idea." The transformation, which could see the country become the world's top energy producer by 2020, has implications for the economy and national security -- boosting household incomes, jobs and government revenue; cutting the trade deficit; enhancing manufacturers' competitiveness; and allowing greater flexibility in dealing with unrest in the Middle East. Output Rising U.S. energy self-sufficiency has been steadily rising since 2005, when it hit a low of 70 percent, the data compiled by Bloomberg show. Domestic crude oil production rose 3.6 percent last year to an average 5.7 million barrels a day, the highest since 2003, according to the Energy Department. Natural gas output climbed to 22.4 trillion cubic feet in 2010 from 20.2 trillion in 2007, when the Federal Energy Regulatory Commission warned of the need for more imports. Prices have fallen more than 80 percent since 2008. At the same time, the efficiency of the average U.S. passenger vehicle has helped limit demand. It increased to 29.6 miles per gallon in 2011 from 19.9 mpg in 1978, according to the National Highway Traffic Safety Administration. The last time the U.S. achieved energy independence was in 1952. While it still imported some petroleum, the country's exports, including of coal, more than offset its imports. Environmental Concern The expansion in oil and natural gas production isn't without a downside. Environmentalists say hydraulic fracturing, or fracking -- in which a mixture of water, sand and chemicals is shot underground to blast apart rock and free fossil fuels -- is tainting drinking water. The drop in natural gas prices is also making the use of alternative energy sources such as solar, wind and nuclear power less attractive, threatening to link the U.S.'s future even more to hydrocarbons to run the world's largest economy. Still, those concerns probably won't be enough to outweigh the benefits of greater energy independence. Stepped-up oil output and restrained consumption will lessen demand for imports, cutting the nation's trade deficit and buttressing the dollar, said Sieminski, who is currently chief energy economist at Deutsche Bank AG in Washington. Cutting Trade Deficit With the price of a barrel of oil at about $100, a drop of 4 million barrels a day in oil imports -- which he said could happen by 2020, if not before -- would shave $145 billion off the deficit. Through the first 11 months of last year, the trade gap was $513 billion, according to the Commerce Department. Crude for March delivery settled at $96.91 a barrel yesterday on the New York Mercantile Exchange. The impact on national security also could be significant as the U.S. relies less on oil from the Mideast. Persian Gulf countries accounted for 15 percent of U.S. imports of crude oil and petroleum products in 2010, down from 23 percent in 1999. "The past image of the United States as helplessly dependent on imported oil and gas from politically unstable and unfriendly regions of the world no longer holds," former Central Intelligence Agency Director John Deutch told an energy conference last month. Arab Oil Embargo That dependence was underscored in October 1973, when Arab oil producers declared an embargo in retaliation for U.S. help for Israel in the Yom Kippur war. The U.S. economy contracted at an annualized 3.5 percent rate in the first quarter of the next year. Stock prices plunged, with the Standard & Poor's 500 Index dropping more than 40 percent in the year following the embargo. Car owners were forced to line up at gasoline stations to buy fuel. President Richard Nixon announced in December that because of the energy crisis the lights on the national Christmas tree wouldn't be turned on. Today, signs of what former North Dakota Senator Byron Dorgan says could be a "new normal" in energy are proliferating. The U.S. likely became a net exporter of refined oil products last year for the first time since 1949. And it will probably become a net exporter of natural gas early in the next decade, said Howard Gruenspecht, the acting administrator of the EIA, the statistical arm of the Energy Department. Cheniere Energy Partners LP (CQP) may receive a construction and operating permit as early as this month from the Federal Energy Regulatory Commission for the first new plant capable of exporting natural gas by ship to be built since 1969 in the U.S. Houston-based Cheniere said it expects the $6 billion plant to export as much as 2.6 billion cubic feet of gas per day. Mitchell the Pioneer The shale-gas technology that's boosting U.S. natural ga

Gold to $2,500 If Euro Breaks Up – Capital Economics Posted: 08 Feb 2012 10:13 PM PST Gold tested yesterday's lows near $1,725/oz in early trading in Asia prior to ticking higher to $1,740 towards the end of the trading day with surprisingly strong inflation figures from China helping. Bullion corrected to $1,730/oz as markets in Europe opened.

John Hathaway: People Are Right to be Scared...and Gold is a Necessity Posted: 08 Feb 2012 09:03 PM PST ¤ Yesterday in Gold and Silver The high in gold was about 2:30 p.m. Hong Kong time...about ninety minutes before London opened yesterday...and it was all down hill from there, but at a very leisurely pace. Once the London p.m. gold fix was in shortly after 10:00 a.m. in New York, the sell off got more serious...and by the close of Comex trading at 1:30 p.m. Eastern time, 'da boyz' had peeled another twenty plus dollars off the gold price.  From there, the price recovered a few dollars going into the close of electronic trading in the New York Access Market. The gold price closed at $1,732.00 spot...down $12.90 spot.  Net volume was decent...around 139,000 contracts. The silver price pretty much followed the gold price.  The spike at the London open...and the one that followed a bit over an hour later...proved to be the highs in silver for the day...and from that point, like gold, silver developed a slightly negative bias until the London p.m. gold fix was in.  Then in the next ninety minutes, silver got sold off 75 cents...but the subsequent recovery from the low of the day ran into a not-for-profit seller at precisely 1:00 p.m. Eastern time. From there, the silver price almost got sold down to its prior low...before recovering about two bits going into the New York close at 5:15 p.m. Eastern time. Silver closed back below the $34 spot market at $33.94...down 21 cents on the day.  Net volume, was a very chunky 42,000 contracts. The dollar index did precisely nothing, spending all of Wednesday between 78.5 and 78.7. The London p.m. gold fix was the obvious high in the precious metal stocks yesterday...and the HUI was actually up over a percent at that point.  Then it all fell apart once the 'fix' was in...and after the Comex close at 1:30 p.m. Eastern, the gold stocks flat-lined into the close.  The HUI finished down 0.73% on the day. The silver stocks finished the day mostly down as well...but not by much...and Nick Laird's Silver Sentiment Index closed lower by only 0.63%. (Click on image to enlarge) The CME Daily Delivery Report was a real yawner yesterday...as only 10 gold contracts were posted for delivery on Friday. There were no reported changes in either GLD or SLV. There was another smallish sales report from the U.S. Mint.  They reported selling another 2,000 ounces of gold eagles....500 one-ounce 24K gold buffaloes...and 40,000 silver eagles.  I'll update the month-to-date figures when they're a little more exciting. The Comex-approved depositories reported receiving 300,197 troy ounces of silver on Tuesday...and all of it went into Brink's, Inc.  There were no withdrawals. Silver analyst Ted Butler had a few things to say about the current state of affairs in the three and a half year long investigation into the silver price manipulation on the Comex. "Unlike the current silver investigation, the previous [two] investigations were concluded by the Commission in months, not years. Timing aside, all three silver investigations share a commonality apart from stemming from the same basic core allegation of manipulative short selling. That commonality is the Commission's refusal to conduct a fair and balanced investigation. I confess to being the instigator behind all three silver investigations (with you being the enabler). Not once, in any of these investigations has the agency ever contacted me or anyone I know who is familiar with the allegations. I even complained to the CFTC's Inspector General about the one-sidedness of the process. How can you conduct a balanced investigation on manipulative short selling when you only question one side, the shorts?" "The real problem with the findings of the CFTC of no manipulation in their previous investigations is two-fold. First, it provides a shield and comfort to the perpetrators of the manipulation in that they can continue to hide behind the agency's findings in the furtherance of an active crime in progress. The longer the CFTC takes to act or report on its current investigation, the comfort to the manipulators is maintained, at a cost to nearly everyone else. Second, the prior findings put the agency in a tricky spot. Because the Commission had previously found nothing amiss in the silver market on two separate occasions, if the agency uncovers any wrongdoing in silver in the current investigation it will, effectively, contradict its former findings. Obviously, it will be loath to do so." "The fact that the Commission will contradict its former findings should it now find something wrong in silver may explain the unprecedented delay on the part of the Enforcement Division to act. But the reluctance to reverse the former findings is a weak excuse for the Commission to fail in its most basic mission, namely, preventing fraud, abuse and manipulation. Most importantly, the silver manipulation is a crime in progress...and the Commission's delay in terminating it, has allowed for untold continuing damage to thousands of market participants at the hands of the manipulators. Not once, but twice in 2011 did the silver market plunge by 35% in a matter of days on deliberate price moves lower. It's impossible for a world commodity to suddenly plunge 35% in days without some radical change in real supply and demand in a free market. Aside from proving that the silver market is still manipulated, these price plunges would not have occurred had the Commission acted expeditiously in concluding its current silver investigation." I have edited the number of stories down to what I feel is a manageable number, so I hope you have time for them all. Email Print You can see that over those 1,000 trading days, the rallies that begin in the Far East run into a not-for-profit seller about five minutes before trading begins in London. Gold miners need gold above $1650 to keep nose above water. Japan's interest in gold and silver is growing. Want to sell your jewelry? Duluth police want your picture. ¤ Critical Reads Subscribe U.S. Faces Downgrade If No Plan: Chambers The U.S., lacking a plan to contain $1 trillion deficits, faces the prospect of another rating cut in six to 24 months depending on the outcome of November elections, according to John Chambers of Standard & Poor's. America has had an AA+ rating with a negative outlook since Aug. 5 when the New York-based unit of McGraw-Hill Cos. stripped the nation of its AAA ranking for the first time, citing the government's failure to agree on a path to reduce deficits. The U.S. has a one-in-three chance of another downgrade, Chamber said today during an S&P sponsored Webcast. "What the U.S. needs is not so much a short-term fiscal tightening, but it has to have a credible medium-term fiscal plan," said Chambers, managing director of sovereign ratings. "That is going to have to say something about entitlements, and that is probably going to have to say something about revenues." Washington state reader S.A. sent me this Bloomberg story yesterday...and the link is here. View full GSD edition Ban on Insider Trading Faces G.O.P. Revisions Lobbyists were in a tizzy on Tuesday over provisions of a Senate-passed ethics bill that tighten regulation of lobbying and require secretive "political intelligence" firms to register in the same way as lobbyists. Representative Tim Walz, Democrat of Minnesota, said the bill, to ban insider trading by members of Congress, was being rewritten behind closed doors by House Republican leaders. "How ironic," Mr. Walz said. "Insiders now appear to be writing a bill meant to ban insider trading." The bill is intended to restore trust in Congress, but Mr. Walz said the revisions could "make the cynicism that's rampant in America even greater." I think I hear the sound of one hand clapping.  This story was posted in The New York Times on Tuesday...and I thank Phil Barlett for sending it along.  The link is here. View full GSD edition Wall Street Groups Seek to Delay CFTC Limits on Speculation Two Wall Street groups asked a federal judge to delay a U.S. Commodity Futures Trading Commission rule that limits speculation, saying the regulation is already imposing "significant, irreversible costs." The International Swaps and Derivatives Association Inc. and the Securities Industry and Financial Markets Association filed a request yesterday with U.S. District Judge Robert Wilkins in Washington, urging him to put the rule on hold while he considers their legal challenge. "Compliance efforts will include restructuring of corporate relationships and divestment -- irreversible changes in ownership," Eugene Scalia, a lawyer for the groups, said in the filing. "These costs are being incurred now and will continue to rise absent a preliminary injunction, and they will be impossible to recoup if the rule is invalidated -- as it likely will be." I feel for them, but I can't quite reach them.  This Bloomberg story was posted over at the businessweek.com website yesterday...and it certainly worth running through.  I thank Florida reader Gabe Ferrer for bringing it to my attention.  The link is here. View full GSD edition Brokers suspended in LIBOR manipulation inquiry More than a dozen traders and brokers in London and Asia have been fired, suspended, or put on leave by their employers as a multinational probe into alleged manipulation of crucial global lending rates accelerates. Regulators have been investigating US and European banks that help set interbank lending rates in London and Tokyo since late 2010, in an intensive profile inquiry that spans three continents and involves at least nine separate enforcement agencies. In the last few months, officials have also expanded their enquiries to both hedge funds that place big bets on movements in those rates, and the interdealer brokers that serve as go-betweens with the banks, according to people familiar with the probe. Once these regulators are through there, they can head on over to the CFTC and get to the bottom of the precious metals price management scheme.  It doesn't sound like it would take them three and half years to discover the obvious.  This Financial Times story was posted in the clear in this GATA release...and the link is here. View full GSD edition For Greece a tear, for Brussels a blush Very quickly: some of you will have seen that Greece's tax revenue from VAT collapsed by 18.7pc in January from a year earlier. Nobody can seriously blame tax evasion for this. It has happened because 60,000 small firms and family businesses have gone bankrupt since the summer. The VAT rate for food and drink rose from 13pc to 23pc in September to comply with EU-IMF Troika demands. The revenue effect has been overwhelmed by the contraction of the economy. Overall tax receipts fell 7pc year-on-year. This is a damning indictment of the EU-imposed strategy. Greece is chasing its tail. The budget deficit is stuck near 8pc to 9pc of GDP because the economic base is shrinking so fast...so it makes little difference whether or not Lucas Papademos secures tri-party agreement today – or soon – for a debt deal. The Greek parliament still has to vote and there is a sauve qui peut mood among MPs who don't want to be stoned to death (metaphorically) by the polloi – hoi or otherwise. This very short Ambrose Evans-Pritchard offering from yesterday's edition of The Telegraph is worth the read...and it's Roy Stephens first offering of the day.  The link is here. View full GSD edition Greece agrees on bailout terms After three days of high drama, political posturing and brinkmanship, Greece's coalition government reached a tentative agreement on the draconian terms required to unlock €130bn (£109bn) in aid for the crisis-hit country on Wednesday night, although the marathon negotiations were set to continue into the small hours. One senior aide said that by the time the Greek finance minister, Evangelos Venizelos, boarded a plane at 7am to attend Thursday's eurogroup meeting in Brussels, he would have the "finalised text of the agreement in his hands". Panic hovered over the talks, widely seen as a last chance for Greece to keep bankruptcy at bay. Athens faces debt repayments amounting to €14.5bn in barely six weeks' time – money it simply does not have. Taking the discussions down to the wire had exasperated Europ

Japan’s interest in gold and silver is growing Posted: 08 Feb 2012 09:03 PM PST Japan's interest in gold and silver is growing Trading data shows that Japan's interest in gold and silver has climbed year on year. "Concerns about the Japanese economy and continuing debasement of the yen may be leading Japanese diversification into gold," said Mark O'Byrne, executive director at GoldCore, noting that Japan had been "notably absent" in the gold market in recent years. The "scale of domestic savings in Japan remains enormous," he said. "This would be a new and potentially extremely important source of demand in the gold market, which could help contribute to much higher gold prices." read more

John Hathaway - People Are Right to be Scared...and gold is a Necessity Posted: 08 Feb 2012 09:03 PM PST John Hathaway - People Are Right to be Scared...and gold is a Necessity Eric King send me this John Hathaway blog yesterday...and I consider it a must read.  It's posted over at the King World News website...and the link is here.

Gold miners need gold above $1650 to keep nose above water Posted: 08 Feb 2012 09:03 PM PST Gold miners need gold above $1650 to keep nose above water Speaking to Mineweb from the sidelines of the 2012 African Mining Indaba conference, AngloGold Ashanti CEO, Mark Cutifani, said, at a price of $1,650 per ounce, gold miners are "only just returning the weighted average cost of capital for the industry". This is the number that gold miners need to work from on a real basis he says, but added, "The average cost to produce an ounce of gold, all up, everything loaded in, is about $1,200 to $1,250. read more

Want to sell your jewelry? Duluth police want your picture Posted: 08 Feb 2012 09:03 PM PST Want to sell your jewelry? Duluth police want your picture Duluth police say they want to treat jewelers and antique dealers like pawn shops when it comes to their dealing in precious metals. A draft city ordinance calls for any Duluth business that purchases precious metal items from the public to be licensed and equipped to provide daily electronic reports of its transactions to a statewide system. Any business purchasing an item that's more than 1 percent gold, silver or platinum by weight would need to provide notice of the transaction and furnish a picture of the item or items purchased — as well as a color photo of the seller. But the proposed ordinance has received a chilly reception from several in the local business community, including Dave Blustin, owner of Garon Bros. Jewelry, who called it "onerous." read more

Silver Update: “Extend and Pretend” Posted: 08 Feb 2012 08:38 PM PST from BrotherJohnF: BJF predicts Ag may be about to experience a rollover and reviews why the ponzi continues 2.8.12  Silver Update. Got Physical ? ~TVR

Fed Action Will Decide Next Major Move For Gold Posted: 08 Feb 2012 05:45 PM PST

The Gold Standard Before the Civil War Posted: 08 Feb 2012 05:30 PM PST Mises

Gold: the protector and creator of jobs Posted: 08 Feb 2012 05:00 PM PST

china gold: more than meets the eye Posted: 08 Feb 2012 04:48 PM PST

Measuring Wealth In Gold Ounces Instead Of Dollars Posted: 08 Feb 2012 04:10 PM PST The debt-based monetary system creates an illusion of wealth. It allows for claims on real goods to significantly exceed the actual amount of real goods. You then have a number of people believing they have wealth.

Inflation? Deflation? Who cares... Gold will rise either way... Posted: 08 Feb 2012 03:37 PM PST from ZeroHedge Gold Increased In Value In Both Extreme Inflationary And Deflationary Scenarios - Credit Suisse & LBS Research Gold Increased In Value In Both Extreme Inflationary And Deflationary Scenarios (1900-2011) - Credit Suisse & LBS Research Gold's London AM fix this morning was USD 1,743.00, EUR 1,315.17, and GBP 1,095.95 per ounce. Yesterday's AM fix was USD 1,720.00, EUR 1,308.98, and GBP 1,087.56 per ounce. Cross Currency Table – Bloomberg Gold has again seen the pattern of recent days, months and years of strength in Asia followed by weakness in Europe. Gold's 1.5% gain yesterday came as Ben Bernanke spoke regarding the slow US economy and need for continued loose monetary policy. Gold broke through a resistance level of $1,750/oz in Asian trading as investors continue to hope for a Greek debt interim solution after the series of recent missed deadlines and gold appears to be consolidating above $1,740/oz. Tuesday's decision was postponed again, as Greek's grapple to accept austerity and reform measures in exchange for a 130 billion euro loan from the EU and IMF. Gold Spot $/oz – 3 Days (Bloomberg) A conclusion to the deal may see a short term dip in gold bullion prices, hurting the safe haven appeal for gold momentarily. Greece is the one country getting headlines in the Eurozone today; however the other PIIGS will have their own restructuring to deal with soon. Mohamed El-Erian, CEO and co-chief investment officer of bond fund giant PIMCO, said investors should be underweight equities while favoring "selected commodities" such as gold and oil, given the fragile global economy and geopolitical risks. Over the long term gold will reward investors who own gold as part of a diversified portfolio. Trying to time purchases and market movements is not recommended – especially for inexperienced investors. New research from Credit Suisse and London Business School entitled 'The Credit Suisse Global Investment Returns Yearbook 2012' continues to be analysed by market participants. The 2012 Yearbook investigates data from 1900 to 2011 and looks at how best to protect against inflation and deflation, and how currency exposure should be steered. The chief findings are that bonds do well in deflation and benefit from currency hedging, and equities are not a perfect inflation hedge, but benefit from international diversification. Gold Price ($/troy ounce) The report shows that gold offers a timely inflation hedge and long term holders of gold should expect a positive correlation to inflation – gold is one of only two assets since 1900 to have positive sensitivity to inflation (of 0.26). Only inflation-linked bonds had more - 1.00, as expected. By contrast, when inflation rises 10%, bond returns have fallen an average 7.4%; Treasuries fell 6.2%, and equities lost 5.2%. Property fell by between 3.3% and 2%. Importantly, gold managed to increase its value across both extreme inflationary and deflationary scenarios. The academics from LBS analysed 2,128 individual years in 19 major countries (1900-2011), finding gold rose 12.2% in the most deflationary years - when average deflation was 26%. Also of note is the fact that gold also rose marginally in the most inflationary of those years, when CPI was jumping on average by 18%. The only negative in the report regarding gold was the fact that gold's returns from 1900 to 2011 were poor - with real returns of only 1.3% a year, compared to shares' 5.4% (MSCI World USD) and bonds' 1.7%. However, it is important to note that of course equities outperformed gold. It would be astonishing if they had not as gold was money & fixed at $20 per ounce until 1933 and $35 per ounce until 1971. Therefore, it is not a fair or noteworthy comparison. More importantly, in recent history and in the modern era since 1971, when the Gold Standard ended and gold became freely traded, gold has outperformed the benchmark S&P 500. One of the authors of the report, Paul Walsh said the lesson for investors was that while equities are still better long term investments – equities lost 12% of their real value in years when average annual inflation was highest (at 18%). "Gold has given returns that are not very high, but when you have had inflation, gold has been a good asset to have" he said. While the report noted that gold has been volatile – it is important to note that gold is only marginally more volatile than global equity benchmark indices (less volatile than emerging market indices and far less volatile than individual shares) and this volatility is only since the end of the Gold Standard in 1971 when gold became not just money but a tradable asset. Credit Suisse Research On Gold Interpreted Very Differently There appears to be significant discrepancy in how the research is being analysed and interpreted by different journalists. The Wall Street Journal ( 'Investing for Inflation (and Deflation)' ) wrote how the report was broadly positive on gold showing that: "since 1900, gold gave an average 1.1% real annual return for U.K. investors. On average, gold performed positively during periods of inflation and modest deflation and performed well in severe deflations. Not bad. But it came with a substantial cost. One, it doesn't yield anything, all those gains came in price performance. Two, it came at the expense of considerable market volatility. Overall, bonds and bills did worst with inflation and best with deflation. Equities weren't much of an inflation hedge, though housing and gold largely kept pace with inflation. The only surefire inflation hedge is index-lined bonds. Though with these, there's the risk of government default. In terms of outright performance, equities delivered by far the biggest real annualized returns, 5.4% against 1.7% for bonds and about 1% for bills and housing. But this return came only because investors were willing to accept substantial risks. The standard deviation for equities was nearly 18%. They may not have been much of an inflation hedge and they demand strong stomachs from investors, but equities were the best way to invest over the very long run. Whether they continue to be over the next century is another question entirely." While Reuters ("Gold not a reliable inflation hedge-study" ) interpreted the report's findings regarding investing in gold in a more negative manner: "Gold prices have been too volatile to play a reliable role as a hedge against inflation, a study of financial assets over the past 112 years showed on Tuesday. While inflation does not reduce gold's real value, it has no yield or income flow and the precious metal has given a far lower long-term return than equities. In the period since 1900, gold gave a real return of 1.1 percent in sterling terms and its value fluctuated widely, the study published by Credit Suisse and London Business School's Elroy Dimson, Paul Marsh and Mike Staunton." Bloomberg reported: " While gold can be viewed as a hedge against inflation, the metal has given a "far lower" long-term return than equities, according to a study by the London Business School and Credit Suisse Group AG. "For that reason it is unlikely that institutions seeking a worthwhile long-term real return will invest heavily in gold," authors of the report e-mailed today said. "The purchasing power of gold has fluctuated over a wide range." The Financial Times ("Investors are turning to equities" ) reported: "Gold offers better defences against both inflation and deflation than shares. But its price is very volatile, and for years at a time it failed to live up to its promise, falling as inflation soared. The truth is that investors worried about inflation have no good options." At Goldcore, we are privileged to also have access to excellent research on gold from Trinity College Finance Professor, Dr Constantin Gurdgiev, who wrote an academic paper with Dr Brian Lucey, also of Trinity College Dublin, showing gold is a proven hedging instrument and safe haven. Dr Constantin Gurdgiev opinion regarding this research on gold follows: "While gold price volatility and correlations reversals with other assets do occur and can be detrimental to short- and at times even medium-term hedging, data shows that in the long run, gold is the instrument providing the best risk cover for investors concerned with preservation of wealth. This is not to say that other assets, held in a diversified portfolio are inferior to gold in terms of either returns, risk-adjusted returns, or in terms of providing hedging opportunities over medium and short-term investment horizons. However, no other asset class provides as many hedging opportunities as well as safe haven outlets vis-a-vis other asset classes and inflation, as gold. While gold does not deliver a dividend yield, unlike equities, gold does not suffer from survivorship bias. It is also important to note that many equities do not provide regular dividends, either. Observed returns on equities are often estimated under the assumption that an average investable portfolio originally allocated is identical to that held on average at the time of closing portfolio simulations. Instead, many equities fail with a downside value of zero. Gold, throughout the centuries, remains there - unchallenged by risks of delisting, bankruptcy and even, with modern storage options, repudiation and expropriation. In addition, physically held gold is not a claim on a residual value of the underlying undertaking, as equities are, but a fully owned asset with no risk of subordination of the claim. Thus, investors in equity are subject to risks of dilution and ultimately, of total principal loss. These risks are not associated with gold ownership. No matter how one slices the data, a diversified portfolio of equities, gold, fixed income and other asset classes, coupled with strict passive rules for loss management and profit booking in the case of investors pursuing mixed strategies, is the best alternative available to ordinary investors in the current markets. Until some dramatic financial instrumentation invents an asset that holds real value in the face of many incremental and catastrophic risks, while supplying high degree of liquidity, portability and safety of ownership, gold will remain a core component of a well-diversified portfolio." Dr Constantin Gurdgiev is Adjunct Professor of Finance with Trinity College, Dublin, and non-executive member of the Investment Committee of Goldcore, Ltd."

Vulnerable to External Influences – The Economic State of Australia (Part I) Posted: 08 Feb 2012 02:58 PM PST [Satyajit Das, Contributing Writer, Money Morning] Australia has been one of the world's best performing economies. But its success in avoiding the worst of the global economic problems may not continue. Australia's future is inextricably linked to China and the commodity "super boom". Australian economic prospects remain vulnerable to international developments outside its control. Escaping Acronyms… The popular narrative is that Australia escaped the GFC (global financial crisis – Australians are acronymic) through their own planning. The country was certainly in a better position to cope with the problems. The Federal government did not have much debt. However, some State governments have significant borrowing. Governments also systematically shifted some of their debt into public private partnerships ("PPP"). Because of the strategic nature of this infrastructure, these projects de facto enjoy the indirect support of governments. Private household debt is also high. At the start of the crisis, Australian interest rates were relatively high, providing greater flexibility. But Australia did not escape the crisis unscathed. One major bank lost nearly a billion Australian dollars. Investors, including a number of charities and local councils, suffered significant losses from investments in various financial products. A number of highly leveraged infrastructure and commercial real-estate investors failed. Local banks escaped the problems of their overseas counterparts. The near death experiences in the recession of the early 1990s encouraged them to stay home eschewing overseas adventures and complex financial structures. That said, another year or so, they would not have been so lucky. The local banking regulator, APRA (Australian Prudential Regulation Authority), and politicians take credit for the banks being relatively unaffected. This is curious given that banking regulations are largely uniform around the world. One can only assume that Australia has superior regulators and politicians to the rest of the world – an example of "Australian exceptionalism". In reality, Australia's swift recovery was driven by large cuts in interest rates, government guarantees for banks, government stimulus and a commodity boom. The central bank reduced interest rates (from 7.25% per annum to 3.00% per annum). The fall of 4.25% per annum translates into a fall in monthly mortgage repayments of nearly 30 % or around $7,000 per year on a 20-year mortgage of $250,000. A government guarantee on bank deposits and borrowing ensured that financial institutions were insulated from many of the problems. Government spending minimised the effects on the real economy. Cleverly directed cash transfers to lower income households rapidly stimulated the economy. As part of the ESP (Economic Stimulus Package), government spending on education, housing and infrastructure was also increased. Some of the spending was not well directed. Environmental initiatives, subsidies for home insulation to reduce energy consumption, have proved less than successful. The main driver of the recovery has been a commodity boom. This is not a new phenomenon in Australian history. It can be traced back to the famous gold rush of the 19th century when many travelled to Australia in search of their fortunes. Boom… Former Prime Minister of Australia Paul Keating recently remarked that Australians were luckier than most races having been given an entire continent. He might have added that it was also remarkably rich in mineral wealth. Australia has benefited from a substantial increase in demand for and prices for its mineral products. The country is enjoying its best terms of trade (measured as Price of Exports divided by Price of Imports, showing the quantity of imports that can be purchased theoretically from the sale of a fixed amount of exports) in 140 years. Australia's terms of trade have improved by 42%, just since 2004. The commodity boom is driven by a sharp increase in demand, supply constraints because of under-investment in mineral production and associated infrastructure and some unexpected effects of the GFC. In the 1990s, as a result of persistently low prices, mining companies did not invest sufficiently in expanding production capacity or infrastructure, such as transport, refining or processing capacity. The increase in demand from purchasers, particularly emerging economies, quickly created bottlenecks and shortages. This led to sharply higher prices as well as improved volumes for many commodities. The GFC also boosted investment in commodities. As traditional investments fared poorly (stocks, interest rates and property prices all fell), investors switched to hard assets, like commodities. The underlying logic was that these were real assets with genuine underlying uses rather than the fictions created through financial engineering. Low interest rates also assisted demand and prices as it cost less than before to buy and hold commodities, which paid no return. As central banks commenced printing money in an effort to restart growth, investment in commodities increased further as investors sought a hedge against the risk of inflation. Former Board member of the Reserve Bank of Australia, Professor Warwick McKibbin suggested that perhaps as much as 40% of the improvement in Australia's terms of trade surge was being driven by US and European monetary expansion. One of China's priorities is to preserve the value of its foreign exchange reserves, currently around US$3.2 trillion. The bulk of these funds are invested in US dollar, Euro and Yen denominated securities. To reduce the risk of losses as these securities lose value due to the actions of governments to devalue the currency against the Renminbi, China has purchased and stockpiled large amounts of strategic commodities. Boomier… The economists, who failed to forecast the rise in commodity prices or the GFC, now speak of a "super" boom lasting decades. The boom is more fragile than currently understood. As growth in China and other emerging countries decelerates, demand for commodities is likely to slow. High prices have encouraged investment in expanding existing mines, building new mines and additional infrastructure as well as exploration. As new capacity and supply comes on stream, there will be pressure on prices. Australian mining entrepreneurs and politicians point to a massive pipeline of projects, which will underpin Australian prosperity. The Australian Mines and Metals Association estimate that there is A$427 billion of resources in train, including A$146 billion in Liquid Natural Gas alone. A$236 billion of projects are current under way with a further A$191 billion awaiting approval. There is also A$770 billion of infrastructure spending required to renew and develop Australia's economic and social infrastructure. This will compete with commodity projects for funding. Chairman of Infrastructure Australia Rod Eddington has warned that financing will not be available for many projects. Infrastructure Australia has identified a smaller list of priority project totalling A$86 billion. Commodity projects depend on demand for the product and also on the ability to finance it. Deterioration in money market conditions and also problems in the banking system mean that the availability of funding is becoming more restricted and expensive. If previous commodity booms are a guide, then many of these projects may not eventuate. Sinophilia… Around 23 % of Australian exports now go to China. The real quantum is higher as some Australian exports to Asia are then re-exported to China. China currently faces significant challenges. Its two major trading partners – Europe and America – face serious problems which will lead to a slow down in our own exports. Recent statistics, such as the volatile Purchasing Managers Index that measures manufacturing activity, suggest a sharp slowdown. In turn, this will affect suppliers such as Australia by way of lower demand and also lower prices for commodities. Unlike 2008, China's capacity to respond to any slowdown is reduced. Then, China increased lending through our policy banks to boost demand. In 2009 and 2010, loan growth of around 30-40% of GDP drove growth. Unfortunately, unproductive investment will result in bad debts for the banks. The need to support the banks and cover their bad debts will restrict China's ability to support the economy. Around US$ 800 billion or 25% of China's US$3.2 trillion in foreign exchange reserves is invested in "risk free" European government bonds. Continued losses in these investments and on investments in US government bonds also further restrict our flexibility. China's economic growth may be slower than widely anticipated. European Tsunamis… Australians believe that physical distance from Europe and proximity to China and Asia affords protection from European debt problems. Despite record terms of trade and high export volumes, Australia continues to run a current account deficit with the rest of the world of around 2-3% of GDP, around US$30-40 billion per year. This must be financed overseas. Sovereign debt problems and the resultant problems in the banking system will affect international money markets for some time to come. Australian borrowers will face reduced availability of funding and increased borrowing cost. Before the crisis, Australian bank deposits totalled 50-60% of loans made. The difference was funded in wholesale markets, generally from institutional investors. In 2007, deposits made up around 20% of bank borrowing down from 34% a decade earlier. Domestic wholesale borrowing and foreign wholesale borrowing were 53% and 27% of bank balance sheets.  Following the GFC, increases in the cost of overseas funding and regulatory pressure, Australian banks significantly reduced their loan to deposit ratios, with deposits now around 70% of loans. They also reduced their dependence on international borrowings. Nevertheless, Australian banks face significantly international re-financing pressures, needing around A$80 billion in 2012. Around A$35 billion are AAA rated government guaranteed bonds, which will need to be financed without government support, unless the policy changes. In addition, the banks have a further A$28 billion worth of bonds that mature in the domestic markets. In the period before the GFC, Australian banks relied on securitisation to raise cheap funding from overseas. When these markets closed, Australian banks used debt guaranteed by the Federal Government to raise funds. With the guarantee now not available, Australian banks are increasingly using covered bonds to raise funds. Covered bonds are secured over specified assets such as a pool of mortgages, giving investors priority over depositors. Regulators have limited the quantum of covered bonds permitted to a maximum of 8% of assets, limiting the ability of banks to use this form of financing. To date, covered bonds have not proved a cheap source of finance for banks, as originally envisaged. Inaugural international issues by ANZ and Westpac have cost around 1.50% over inter-bank rates. In early 2012, the Commonwealth Bank issued at around 1.75% over interbank rates in the domestic markets. Given that the covered bonds enjoyed the highest rating of AAA, the funding cost for Australian banks for unsecured borrowings would be around 2.00-2.50% over inter-bank rates, a sharp increase over the last 6 months. This higher cost will be passed on to customers at some stage. In testimony to a parliamentary committee, John Laker, the head of APRA, acknowledged the funding challenge. He hoped that improvements in market conditions would allow the Australian banks to access the overseas funding required. Money Too Tight To Mention … Facing reduced availability and higher cost of funding, Australian banks may reduce loan volumes and increase rates to customers. The problems of international banks, especially European banks, previously active in financing local businesses, will compound the problem. These banks are required to increase capital to cover losses, including those on their sovereign bond investment. As they can't or do not want to issue equity at deeply discounted prices and the limited investor appetite for such issues, the banks may sell assets or reduce lending to raise the required capital. Estimates suggest that these banks could have to sell (up to) $2.5-3.0 trillion in assets, resulting in a sharp contraction in availability of credit. Before the GFC, European banks provided around 35% of loans to Australian corporations. This has fallen to around 16% in 2011 and is likely to decline further as a result of losses on sovereign bond holdings, pressures on bank capital and increases in US$ funding costs. European banks are actively looking to sell all or a portion of their Australian loan portfolios to alleviate the pressures. They are also cutting back on new lending to Australia clients, focusing on their home markets in Europe. The reduced participation reflects losses on sovereign bond holdings, pressures on bank capital and increases in US$ funding costs. European banks are actively looking to sell all or a portion of their Australian loan portfolios to alleviate the pressures. They are also cutting back on new lending to Australia clients, focusing on their home markets in Europe. Given that Australian companies will need to re-finance around A$80 billion of maturing loans in 2012, these pressures are not welcome. The problems of European banks, active in commodity financing, may reduce the supply of credit to the sector by about 25-30%, which would impact Australia's resources businesses. The contraction of credit will also affect Australia indirectly. The withdrawal of European banks from Asia and other emerging markets is affecting the ability of companies to finance trade and investment projects. This affects Australian exports. In 2007, European banks and US banks accounted for 30% and 10% of loan in Asia-Pacific. This has fallen by around half to 15-16% for European banks and 5-6% for US banks. The level of participation is likely to shrink further as a result of the problems of these banks. Troubled French banks account for about 11% of maturing loans in Asia Pacific. It is unlikely that these banks will maintain their level of commitment. Asia-Pacific banks have taken up the slack but are not sizeable enough to fill the gap completely. Australian companies' overseas earnings also face significant pressure due to economic weakness in Europe and its effect on the other markets. A proportion of Australian retirement savings are invested overseas. These will also be affected by the problems in Europe and internationally. The European crisis has affected Australian public finances. Falls in income and capital gains have reduced tax revenue. The government is cutting expenditure and tightening taxes to offset the reduction in revenue. Falls in income on retirement savings, reduced business investment and general loss of confidence is likely to adversely affect the domestic economy. Australia may not escape the possible European tsunami. © 2012 Satyajit Das All Rights Reserved. Satyajit Das is author of Extreme Money: The Masters of the Universe and the Cult of Risk (2011). He is a keynote speaker at After America: the Port Phillip Publishing Investment Symposium, March 14th-16th at Sydney's Intercontinental Hotel. Ed Note: Tomorrow, Satyajit Das examines the Australian housing market and the perfect storm that could engulf Australia. Similar Posts: Buckle Up Banking Crisis Anatomy Globalisation Driving the Nation State to Bankruptcy Corporate Debt is Just One Aspect of the National Debt Problem Banks or BHP?

Today’s Winners and Losers Posted: 08 Feb 2012 01:23 PM PST GDX  fell by -0.61 % while GDXJ fell by -1.68%  and SIL fell by -0.64% Here are today's best  performing Silver and Gold stocks:

Silver Supply Inadequate To Meet Growing Demand Posted: 08 Feb 2012 12:48 PM PST In the media much has been made of the investment demand for silver and whether or not it will maintain its blistering pace. So far, it has. Even if one were to make the argument that demand will remain flat, in commodities a bull market still can still thrive. This takes place when supply declines faster than demand—disrupting the fragile balance and igniting what we believe are the beginnings of a massive bull market. In 2012, for January alone the U.S. mint sold 6,107,000 oz. of silver, after remaining stable throughout 1999-2007, averaging 9,400,000 oz. annually. In 2008, sales more than doubled, reaching 19,700,000 oz., rising to 34,700,000 oz. in 2010. For 2011 a fresh peak was set: 39,868,500 oz. This is more silver than the United States produces as a nation, for the sole use of being fabricated into 1-ounce coins. read more

10 Things That Every American Should Know About The Federal Reserve Posted: 08 Feb 2012 12:45 PM PST What would happen if the Federal Reserve was shut down permanently?  That is a question that CNBC asked recently, but unfortunately most Americans don't really think about the Fed much. Most Americans are content with believing that the Federal Reserve is just another stuffy government agency that sets our interest rates and that is watching out for the best interests of the American people.  But that is not the case at all.  The truth is that the Federal Reserve is a private banking cartel that has been designed to systematically destroy the value of our currency, drain the wealth of the American public and enslave the federal government to perpetually expanding debt.  During this election year, the economy is the number one issue that voters are concerned about.  But instead of endlessly blaming both political parties, the truth is that most of the blame should be placed at the feet of the Federal Reserve.  The Federal Reserve has more power over the performance of the U.S. economy than anyone else does.  The Federal Reserve controls the money supply, the Federal Reserve sets the interest rates and the Federal Reserve hands out bailouts to the big banks that absolutely dwarf anything that Congress ever did.  If the American people are ever going to learn what is really going on with our economy, then it is absolutely imperative that they get educated about the Federal Reserve. The following are 10 things that every American should know about the Federal Reserve.... #1 The Federal Reserve System Is A Privately Owned Banking Cartel The Federal Reserve is not a government agency. The truth is that it is a privately owned central bank.  It is owned by the banks that are members of the Federal Reserve system.  We do not know how much of the system each bank owns, because that has never been disclosed to the American people. The Federal Reserve openly admits that it is privately owned.  When it was defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve stated unequivocally in court that it was "not an agency" of the federal government and therefore not subject to the Freedom of Information Act. In fact, if you want to find out that the Federal Reserve system is owned by the member banks, all you have to do is go to the Federal Reserve website.... The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year. Foreign governments and foreign banks do own significant ownership interests in the member banks that own the Federal Reserve system.  So it would be accurate to say that the Federal Reserve is partially foreign-owned. But until the exact ownership shares of the Federal Reserve are revealed, we will never know to what extent the Fed is foreign-owned. #2 The Federal Reserve System Is A Perpetual Debt Machine As long as the Federal Reserve System exists, U.S. government debt will continue to go up and up and up. This runs contrary to the conventional wisdom that Democrats and Republicans would have us believe, but unfortunately it is true. The way our system works, whenever more money is created more debt is created as well. For example, whenever the U.S. government wants to spend more money than it takes in (which happens constantly), it has to go ask the Federal Reserve for it.  The federal government gives U.S. Treasury bonds to the Federal Reserve, and the Federal Reserve gives the U.S. government "Federal Reserve Notes" in return.  Usually this is just done electronically. So where does the Federal Reserve get the Federal Reserve Notes? It just creates them out of thin air. Wouldn't you like to be able to create money out of thin air? Instead of issuing money directly, the U.S. government lets the Federal Reserve create it out of thin air and then the U.S. government borrows it. Talk about stupid. When this new debt is created, the amount of interest that the U.S. government will eventually pay on that debt is not also created. So where will that money come from? Well, eventually the U.S. government will have to go back to the Federal Reserve to get even more money to finance the ever expanding debt that it has gotten itself trapped into. It is a debt spiral that is designed to go on perpetually. You see, the reality is that the money supply is designed to constantly expand under the Federal Reserve system.  That is why we have all become accustomed to thinking of inflation as "normal". So what does the Federal Reserve do with the U.S. Treasury bonds that it gets from the U.S. government? Well, it sells them off to others.  There are lots of people out there that have made a ton of money by holding U.S. government debt. In fiscal 2011, the U.S. government paid out 454 billion dollars just in interest on the national debt. That is 454 billion dollars that was taken out of our pockets and put into the pockets of wealthy individuals and foreign governments around the globe. The truth is that our current debt-based monetary system was designed by greedy bankers that wanted to make enormous profits by using the Federal Reserve as a tool to create money out of thin air and lend it to the U.S. government at interest. And that plan is working quite well. Most Americans today don't understand how any of this works, but many prominent Americans in the past did understand it. For example, Thomas Edison was once quoted in the New York Times as saying the following.... That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt. Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 — that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we simply add 120 to 150 per cent, to the stated cost. But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good. We should have listened to men like Edison and Ford. But we didn't. And so we pay the price. On July 1, 1914 (a few months after the Fed was created) the U.S. national debt was 2.9 billion dollars. Today, it is more than more than 5000 times larger. Yes, the perpetual debt machine is working quite well, and most Americans do not even realize what is happening. #3 The Federal Reserve Has Destroyed More Than 96% Of The Value Of The U.S. Dollar Did you know that the U.S. dollar has lost 96.2 percent of its value since 1900?  Of course almost all of that decline has happened since the Federal Reserve was created in 1913. Because the money supply is designed to expand constantly, it is guaranteed that all of our dollars will constantly lose value. Inflation is a "hidden tax" that continually robs us all of our wealth.  The Federal Reserve always says that it is "committed" to controlling inflation, but that never seems to work out so well. And current Federal Reserve Chairman Ben Bernanke says that it is actually a good thing to have a little bit of inflation.  He plans to try to keep the inflation rate at about 2 percent in the coming years. So what is so bad about 2 percent?  That doesn't sound so bad, does it? Well, just consider the following excerpt from a recent Forbes article.... The Federal Reserve Open Market Committee (FOMC) has made it official:  After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years.  The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level. #4 The Federal Reserve Can Bail Out Whoever It Wants To With No Accountability The American people got so upset about the bailouts that Congress gave to the Wall Street banks and to the big automakers, but did you know that the biggest bailouts of all were given out by the Federal Reserve? Thanks to a very limited audit of the Federal Reserve that Congress approved a while back, we learned that the Fed made trillions of dollars in secret bailout loans to the big Wall Street banks during the last financial crisis.  They even secretly loaned out hundreds of billions of dollars to foreign banks. According to the results of the limited Fed audit mentioned above, a total of $16.1 trillion in secret loans were made by the Federal Reserve between December 1, 2007 and July 21, 2010. The following is a list of loan recipients that was taken directly from page 131 of the audit report.... Citigroup - $2.513 trillion Morgan Stanley - $2.041 trillion Merrill Lynch - $1.949 trillion Bank of America - $1.344 trillion Barclays PLC - $868 billion Bear Sterns - $853 billion Goldman Sachs - $814 billion Royal Bank of Scotland - $541 billion JP Morgan Chase - $391 billion Deutsche Bank - $354 billion UBS - $287 billion Credit Suisse - $262 billion Lehman Brothers - $183 billion Bank of Scotland - $181 billion BNP Paribas - $175 billion Wells Fargo - $159 billion Dexia - $159 billion Wachovia - $142 billion Dresdner Bank - $135 billion Societe Generale - $124 billion "All Other Borrowers" - $2.639 trillion So why haven't we heard more about this? This is scandalous. In addition, it turns out that the Fed paid enormous sums of money to the big Wall Street banks to help "administer" these nearly interest-free loans.... Not only did the Federal Reserve give 16.1 trillion dollars in nearly interest-free loans to the "too big to fail" banks, the Fed also paid them over 600 million dollars to help run the emergency lending program.  According to the GAO, the Federal Reserve shelled out an astounding $659.4 million in "fees" to the very financial institutions which caused the financial crisis in the first place. Does reading that make you angry? It should. #5 The Federal Reserve Is Paying Banks Not To Lend Money Did you know that the Federal Reserve is actually paying banks not to make loans? It is true. Section 128 of the Emergency Economic Stabilization Act of 2008 allows the Federal Reserve to pay interest on "excess reserves" that U.S. banks park at the Fed. So the banks can just send their cash to the Fed and watch the money come rolling in risk-free. So are many banks taking advantage of this? You tell me.  Just check out the chart below.  The amount of "excess reserves" parked at the Fed has gone from nearly nothing to about 1.5 trillion dollars since 2008.... But shouldn't the banks be lending the money to us so that we can start businesses and buy homes? You would think that is how it is supposed to work. Unfortunately, the Federal Reserve is not working for us. The Federal Reserve is working for the big banks. Sadly, most Americans have no idea what is going on. Another example of this is the government debt carry trade. Here is how it works.  The Federal Reserve lends gigantic piles of nearly interest-free cash to the big Wall Street banks, and in turn those banks use the money to buy up huge amounts of government debt.  Since the return on government debt is higher, the banks are able to make large profits very easily and with very little risk. This scam was also explained in a recent article in the Guardian.... Consider this: we pretend that banks are private businesses that should be allowed to run their own affairs. But they are the biggest scroungers of public money of our time. Banks are lent vast sums of money by central banks at near-zero interest. They lend that money to us or back to the government at higher rates and rake in the difference by the billion. They don't even have to make clever investments to make huge profits. That is a pretty good little scam they have got going, wouldn't you say? #6 The Federal Reserve Creates Artificial Economic Bubbles That Are Extremely Damaging By allowing a centralized authority such as the Federal Reserve to dictate interest rates, it creates an environment where financial bubbles can be created very easily. Over the past several decades, we have seen bubble after bubble.  Most of these have been the result of the Federal Reserve keeping interest rates artificially low.  If the free market had been setting interest rates all this time, things would have never gotten so far out of hand. For example, the housing crash would have never been so horrific if the Federal Reserve had not created such ideal conditions for a housing bubble in the first place.  But we allow the Fed to continue to make the same mistakes. Right now, the Federal Reserve continues to set interest rates much, much lower than they should be.  This is causing a tremendous misallocation of economic resources, and there will be massive consequences for that down the line. #7 The Federal Reserve System Is Dominated By The Big Wall Street Banks Even since it was created, the Federal Reserve system has been dominated by the big Wall Street banks. The following is from a previous article that I did about the Fed.... The New York representative is the only permanent member of the Federal Open Market Committee, while other regional banks rotate in 2 and 3 year intervals.  The former head of the New York Fed, Timothy Geithner, is now U.S. Treasury Secretary.  The truth is that the Federal Reserve Bank of New York has always been the most important of the regional Fed banks by far, and in turn the Federal Reserve Bank of New York has always been dominated by Wall Street and the major New York banks. #8 It Is Not An Accident That We Saw The Personal Income Tax And The Federal Reserve System Both Come Into Existence In 1913 On February 3rd, 1913 the 16th Amendment to the U.S. Constitution was ratified.  Later that year, the United States Revenue Act of 1913 imposed a personal income tax on the American people and we have had one ever since. Without a personal income tax, it is hard to have a central bank.  It takes a lot of money to finance all of the government debt that a central banking system creates. It is no accident that the 16th Amendment was ratified in 1913 and the Federal Reserve system was also created in 1913. They have a symbiotic relationship and they are designed to work together. We could fill Congress with people that are committed to ending this oppressive system, but so far we have chosen not to do that. So our children and our grandchildren will face a lifetime of debt slavery because of us. I am sure they will be thankful for that. #9 The Current Federal Reserve Chairman, Ben Bernanke, Has A Nightmarish Track Record Of Incompetence The mainstream media portrays Federal Reserve Chairman Ben Bernanke as a brilliant economist, but is that really the case? Let's go to the videotape. The following is an extended excerpt from an article that I published previously.... ---------- In 2005, Bernanke said that we shouldn't worry because housing prices had never declined on a nationwide basis before and he said that he believed that the U.S. would continue to experience close to "full employment".... "We've never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don't think it's gonna drive the economy too far from its full employment path, though." In 2005, Bernanke also said that he believed that derivatives were perfectly safe and posed no danger to financial markets.... "With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly." In 2006, Bernanke said that housing prices would probably keep rising.... "Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise." In 2007, Bernanke insisted that there was not a problem with subprime mortgages.... "At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency." In 2008, Bernanke said that a recession was not coming.... "The Federal Reserve is not currently forecasting a recession." A few months before Fannie Mae and Freddie Mac collapsed, Bernanke insisted that they were totally secure.... "The GSEs are adequately capitalized. They are in no danger of failing." For many more examples that demonstrate the absolutely nightmarish track record of Federal Reserve Chairman Ben Bernanke, please see the following articles.... *"Say What? 30 Ben Bernanke Quotes That Are So Stupid That You Won't Know Whether To Laugh Or Cry" *"Is Ben Bernanke A Liar, A Lunatic Or Is He Just Completely And Totally Incompetent?" But after being wrong over and over and over, Barack Obama still nominated Ben Bernanke for another term as Chairman of the Fed. ---------- #10 The Federal Reserve Has Become Way Too Powerful The Federal Reserve is the most undemocratic institution in America. The Federal Reserve has become so powerful that it is now known as "the fourth branch of government", but there are less checks and balances on the Fed than there are on the other three branches.

Gold Steady Wed. Morning as Dollar Hits 2-Month Low, Job Market “Still Far from Normal” says Bernanke while Bank of England “Could Do £50bn” Additional QE Posted: 08 Feb 2012 11:04 AM PST Wednesday 8 February 2012, 08:30 EST WHOLESALE MARKET prices for gold bullion held steady just below $1750 per ounce Wednesday morning in London – a 2.2% gain on yesterday's low – after rallying Tuesday following comments from US Federal Reserve chairman Ben Bernanke. Silver bullion eased slightly this morning after hitting $34.55 per ounce – its highest level since November 16. "Gold faces significant resistance at $1766, but above that look for $1778-1798," says one gold bullion dealer here in London. The S&P 500 hit its highest level in over six months Tuesday at 1349.24 – 25% up on last October's low. Gold bullion meantime is up 9.6% over the same period. "I'm very bullish on the [stock] market," says Laurence D. Fink, chief executive at world's largest money manager BlackRock. "I don't have a view that the world is going to fall apart, so you need to take on more risk. You need to overcome all this noise and there are great values in equities." Despite official figures showing that the unemployment rate fell to 8.3% last month – down from 8.5% in December – the US still has "a long way to go before the labor market can be said to be operating normally," Federal Reserve chairman Ben Bernanke told the Senate Budget Committee Tuesday. "Bernanke did not give any indication that the Friday job market report is changing the fundamental way [Fed policymakers] are viewing the economy," says Dean Maki, chief US economist at Barclays Capital. "It is going to take a number of favorable reports before their view on monetary policy shifts." The US Dollar Index, which measures the US Dollar against a basket of other major currencies, hit a 2-month low Wednesday morning. Elsewhere in Washington, talks on extending payroll tax cuts and unemployment benefits stalled in the Senate Tuesday. Around 160 million people will see their taxes rise if the cuts, which expire March 1, are not extended. Three million meantime could lose unemployment benefits from the same date if they too expire. There was still no agreement Wednesday lunchtime among Greek leaders regarding austerity reforms required as part of Greece's €130 billion second bailout. A meeting of senior Greek politicians was postponed for the second day running Tuesday, with some reports citing missing paperwork as the cause of the delay. Leaders have agreed in principle to spending cuts equivalent to 1.5% of GDP, Greek prime minister Lucas Papdemos has said, but a formal reform deal remains elusive. "[Even] if Greece were to agree on everything right away," says Societe Generale commodity strategist Jeremy Friesen, "I don't think it would solve everything because they will still have to implement the measures…there are plenty of land mines left." "No to medieval labor conditions!" chanted protesters outside the Greek parliament during Tuesday's 24 hour strike. "It is in our interest for Greece to remain [in the single currency]," Dutch prime minister Mark Rutte said Tuesday. "But if that does no work out, then [the other Euro members] are stronger now than a year-and-a-half ago." Rutte's comments echo those of his compatriot Neelie Kroes, a European Commissioner, who told a Dutch newspaper this week that it is "simply not true" that the "entire edifice" of the single currency would collapse were Greece to leave. German chancellor Angela Merkel however warned yesterday that a Greek exit would have "unforeseeable consequences". "I will have no part in forcing Greece out of the Euro," she told some young people in a Berlin museum. The European Central Bank meantime has agreed to exchange its Greek bonds, bought on the secondary market as part of the ongoing Securities Market Program, at below face value, according to a Wall Street Journal report. The plan would reportedly involve the ECB swapping its Greek debt for bonds issued by the Eurozone's current bailout fund, the European Financial Stability Facility. The EFSF, whose debt was downgraded by Standard & Poor's last month from AAA to AA+, would then redeem the bonds with Greece at less than par value – though the ECB, which itself paid less than par for the bonds, says it does not intend to take a loss. The ECB Governing Council is due to deliver its latest policy decision tomorrow. Here in London, the Bank of England, which also announces its latest monetary policy decisions tomorrow, is widely expected to press ahead with further quantitative easing despite recent positive economic data. "On a risk/reward basis, I still think the Bank will do more QE," says Alan Clarke, UK economist at Scotiabank. "The market's disappointment at the BoE not delivering would be too unwelcome. But if we continue to get reasonable growth numbers, then February's QE may be the last." The Bank of England's Monetary Policy Committee voted to increase the size of its QE program from £200 billion to £275 billion last October. "We believe the debate on the MPC will now be between [additional QE of] £25 billion and £50 billion this month, with our official call being for £50 billion," reckons George Buckley, chief UK economist at Deutsche Bank, who also feels "this may be the last round of asset buying" should economic data continue to be strong. The world's second-largest gold bullion consumer China is set to see a 13% rise in the official annual minimum wage as part of a government jobs plan published Wednesday. The plan is part of China's 12th Five Year Plan, which runs from 2010 to 2015. Ben Traynor BullionVault Gold value calculator   |   Buy gold online at live prices Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. (c) BullionVault 2011 Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Bob Chapman : keep Buying Gold & Silver Posted: 08 Feb 2012 10:35 AM PST Bob Chapman - Kerry Lutz 08 Feb 2012 : keep buying gold and silver says Bob... [[ This is a content summary only. Visit my blog http://www.bobchapman.blogspot.com for the full Story ]] This posting includes an audio/video/photo media file: Download Now

The Silver Singularity Is Near Posted: 08 Feb 2012 10:33 AM PST http://community.nasdaq.com/News/201...storyid=117209 : Price, as they say, is determined on the margins. This is especially true for inelastic goods. If 100 Tickle Me Elmo dolls exist in Walmart on Christmas eve, and 100 people absolutely need to have them, you don't have a problem. The price will be some reasonable markup on the cost of production. However, if one more person walks in fearing the wrath of his child if there's no Elmo under the tree, Walmart ( WMT ) can quickly turn into a war zone. In Walmart, this supply shortage might be settled by shoving and hair pulling. In a civilized market, this supply, demand inequity is settled with price. In the case of Elmo in 1996, some dolls were reportedly sold in aftermarkets for $1500. This is an important concept to keep in mind when evaluating the silver market. Silver is interesting because it is actually two different markets. On one hand, silver is a physical commodity that is used in industry or warehoused as physical savings. This market is rather inelastic on the supply and demand side as I will discuss in a bit. On the other hand is the silver derivatives market, paper contracts for silver, that set the spot price on the margins. The paper market is elastic and depends more on investor psychology than underlying fundamentals. First the physical market. Each year, new silver is dug out of the ground and added to supply. A higher silver price causes an increase in silver production, but that increase is constrained due to the time it takes to bring new production on line and the fact that 70% of silver production comes as a relatively small byproduct of mining other metals. Government sales and recycling added about 25% to the physical supply in 2010, but those factors are only loosely correlated with price. On the demand side, industrial applications make up nearly half of the demand. For many of these applications, such as electronics, coatings, anti-microbial uses, etc., the amount of silver in the final product is a tiny fraction of the product cost, thus a rise in the silver price does not affect its usage. For demand components such as jewelry, coins, and physical bar investment, a rising price can actually add to the desirability of these goods. As such, the supply and demand of physical silver is very insensitive to price as I explain further in my article, "The Top 10 Reasons Silver Will Soar". Now for the paper market. Like all commodity futures markets, the silver futures market has its roots in providing a legitimate market function. A silver miner, for instance, may sell futures to lock in prices and pay for capital equipment. On the other side of the trade, an electronics manufacturer may buy futures to lock in their costs for silver they intend to use in the future. And like other commodities, the silver futures market provides speculators a convenient way to bet on the future price of silver without having to ship the stuff around. This speculation through commodities derivatives is not always a bad thing as it can add liquidity to markets and can help with price discovery. But in the case of silver, the derivatives market has gotten way out of hand to the point of distorting true price discovery. Some market watchers believe there has been manipulation by banks with huge short positions, such as J.P. Morgan. Some, like Eric Sprott, suggest that the CME Group's odd behavior, such as raising margins two days after the silver price had just dropped by 22%, is holding down the price to help the commercial shorts. Regardless of whether you believe these "conspiracy" theories, in the long run, it does not matter. The important thing to realize is that the silver derivatives market, like all derivatives markets, is based on leverage, confidence and promises. The main way the futures market keeps down the spot price of silver is by greatly adding to the supply of silver for investment. Take the example of the COMEX which currently has 102,516 open interest contracts (512 million ounces) promised for future delivery. This compares to roughly 117 million ounces of physical silver available for investment in 2010 (Mine supplies 736 + recycling 215 + gov't. sales 45 - fabrication 879 = 117Moz.) Shorts have promised to deliver over four times the amount of physical silver available per year. In other words, demand for silver investment at today's price is much higher than physical supply. This works fine as long as futures investors don't take physical delivery. Shorts can simply settle the contract for the cash value and everybody's happy. If a small amount of investors stand for delivery, the shorts can transfer silver from their accounts at the COMEX or buy silver on the open market. However, as more investors stand for physical delivery, things can get dicey. Kyle Bass of Hayman Capital was clearly concerned about this leverage risk in the COMEX when he said the following: "My opinion is very simple as a fiduciary... to the extent that you own gold and you are going to own it a long time --it's not a trade. It costs us about 90 basis points a year to roll it through financial futures contracts," he said. "And then we went and looked at the COMEX. The COMEX at the time they had about $80 billion in open interest between futures and futures options. In the warehouse they had $2.7 billion of deliverables. So $80 billion in open interest -- $2.7 billion in deliverables. We're gonna own it a long time. You're on the board, as a fiduciary, what do you do? That's an easy one. You go get it. So you go take a billion of $2.7 billion and you let them worry about the rest." "When I talked to the head of deliveries at COMEX NYMEX, I was like, 'What if 4% of the people want deliveries?' He said, 'Oh Kyle, that never happens. We rarely ever get a 1% delivery.' And I asked, 'Well what if it does happen?' And he said,'Price will solve everything' And I said, 'Thanks, give me the gold.'" Mr. Bass was discussing the gold futures market, but the same dynamics apply to the silver market. With silver at $33 one big fish like Bass (pun intended) could take down 30 million ounces with his billion dollars, which is 80% the entire amount of registered silver at the COMEX. Thanks, give me the silver! To date, there hasn't been a failure to deliver on a futures contract at the COMEX. But that's not to say it can't happen. Already there are cracks appearing in the silver derivatives dam. The silver derivatives market requires some amount of physical silver to back it up. As the physical silver available in the market decreases, the paper market becomes more and more leveraged. Many trends are converging to remove physical silver from the market. Here are a few industrial trends: For the past decades, governments have been selling their silver stockpiles into the markets, thus adding to supply. These stockpiles are basically depleted and governments are likely to become net buyers of silver. Photographic demand, which has been decreasing for the past decade is becoming a less significant part of demand and will soon cease to be a driver of silver demand trends. Also, as most photographic silver is recycled, photographic use approaching zero means less recycling supply moving forward. Similarly, A steady decline in silverware demand is also reaching its lower bounds and at some point will cease to be a negative driver of silver demand trends. According to the Silver Institute, during silver's bull market from 2001 to 2010, mine supply increased by an average of 2.2% per year, from 606 to 736 million ounces. However, demand from industrial uses (from which the majority of silver cannot be recycled at anywhere near today's price) increased 3.7% per year from 350 to 487 million ounces. The trends discussed above are enough to show that we will reach a point at some time in the future where fabrication demand exceeds supply. But it is the investment trends discussed below that I believe will bring us to a supply/demand crunch much sooner than (almost) anyone expects. Silver coin sales are skyrocketing. Read more: http://community.nasdaq.com/News/201...#ixzz1lq9oBC7M

Bob Chapman - Discount Gold & Silver Trading 08 Feb 2012 Posted: 08 Feb 2012 10:20 AM PST Bob Chapman - The Financial Survival 08 Feb 2012 : The Us government is again... [[ This is a content summary only. Visit my blog http://www.bobchapman.blogspot.com for the full Story ]] This posting includes an audio/video/photo media file: Download Now

71 tons of platinum Posted: 08 Feb 2012 07:55 AM PST Modern-day treasure hunters say they've found a sunken ship off the coast of Cape Cod, Mass., holding one of the biggest fortunes ever discovered in the ocean depths. http://www.foxnews.com/us/2012/02/08...#ixzz1lpVvBCBl

David Morgan: $60 Silver In 2012 Posted: 08 Feb 2012 07:41 AM PST Next major leg up in precious metals could mean $60 silver in 2012. from SilverGuru: ~TVR

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