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- Silver – Is the Party Over?
- Markets Flat Following ECB LTRO News, Iran Trading with “Universal Currency” Gold “Next Target for Silver” is September High
- A Tailwind For Gold? Low Rates
- Analyzing Tuesday's Noteworthy Insider Buys And Sells
- Fast Growing Gold And Silver Concern Is 50% Below Price Targets
- Discrepancy
- Another day, another Fed and bullion bank intervention
- Gold Falls Following Bernanke Comments
- Today’s Window Dressing Fall In Gold
- Gold Plunges $70 in an Hour
- Global Macro Notes: PMs Jump Up to Get Beat Down
- Bernanke Triggers Metals Sell Raid
- Gold And Silver Watch
- Satyajit Das: Pravda The Economist’s Take on Financial Innovation
- Bots and EE Simultaneously Attack
- The Largest Gold-Accumulation Plan of All Time
- 20 Economic Statistics To Wake Sheeple
- Buy the Rumor, Sell the Fact – Lather, Rinse, Repeat
- WTF just happened?
- Austin Report- Precious Metals Explode in 2012!
- It’s Official: Iran to Accept Gold for Oil
- SILVER SURGES 4.5% TO OVER $37/OZ ON “MASSIVE FUND BUYING”
- Dollar Alternative Anyone?
- Morning Outlook from the Trade Desk 02/29/12
- Silver Surges 4.5% To Over $37/oz. On Fund Buying
- Why are Gold and Equities Moving Up Together?
- Silver Price Hot Streak Continues
- Russia and China Know What GATA Discovered About Gold
- Return to gold standard would be damaging, study group says
- Iran considers taking gold as payment for oil
| Posted: 29 Feb 2012 06:52 AM PST A couple of weeks ago, we compared the Bull market of Silver to the Nasdaq Bubble… Below, you can see an updated version of the chart we posted a couple of weeks ago:
Sentiment is also getting (too?) bullish, as it has now reached 75.57% again:
Sure, sentiment can still go up. Back in April 2011, Bullish Sentiment was over 90%…
My subscribers know that my target for the EURUSD has been 1.3435 based on Fibonacci Retracement levels, and this level has now been reached. The higher highs are still confirmed by higher highs in the MACD and RSI, meaning the uptrend is still intact, as we don't have negative divergence yet.
2 days ago, I wrote in the Nightly Report about the fact that negative divergence was building in both Silver and Gold. Below you find the chart I posted that day:
In the original article, I wrote: If the pattern doesn't hold, and silver blasts through $40, it's probably on it's way to the all-time high. In that case, the next big move would be to the upside, with potential targets of $70 and potentially triple digit silver prices. Well, so far, the pattern holds. At the moment, Silver is falling 5%, adding more weight to the Nasdaq comparison, even though many people will blame me for not looking at fundamentals. I do not write this post to trash silver. I like Silver. I like Gold. But I also like my own analyses and comparisons. Do your own Due Diligence. If you like my articles, visit www.profitimes.com and feel free to subscribe to my services, which include Nightly Reports, Trading Updates for short term investors and Educational articles, as well as Fundamental analyses for long term investors.
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| Posted: 29 Feb 2012 06:50 AM PST
Markets Flat Following ECB LTRO News, Iran Trading with "Universal Currency" Gold "Next Target for Silver" is September High WHOLESALE MARKET gold bullion prices hovered around $1785 an ounce Wednesday morning London time, while stocks and commodities were also broadly flat following the European Central Bank's latest attempt to boost the liquidity held by the continent's banks. Silver bullion meantime hit $37.36 per ounce, its highest level since last September. "The next target [for silver] is $39.78, the September 2011 high," says the latest technical analysis from gold bullion dealing bank Scotia Mocatta. Wednesday's London Fix price for silver was $37.23 per ounce – a 10.8% monthly gain over the January 31 fixing. By this measure, the Dollar silver price has seen its biggest calendar month percentage gain since October. Sterling and Euro silver prices have both recorded their biggest calendar month gains since last July. Gold meantime touched $1790 per ounce for the first time since November during Wednesday's Asian trade. By Wednesday lunchtime, spot gold in Dollars was headed for a monthly gain of 2.8%. A total of 800 European banks borrowed €529.53 billion from the ECB's three year longer term refinancing operation, the ECB announced Wednesday. This compares with 523 banks who borrowed €489.19 billion at the last 3-Year LTRO in December. In addition to the increased amount of borrowing, analysts estimate that a greater proportion will be so-called new liquidity – as opposed to existing debt that has been rolled over. "The number of banks participating…signals that a lot more small banks looked for the money and it is likely they will pass it on to the economy," reckons Laurent Fransolet, London-based head of fixed income strategy at Barclays Capital. "So the impact may be bigger than with the first one." However, "there is a big difference between stopping the rot and starting a recovery," says this morning's note from Standard bank currency analysts Steve Barrow and Jeremy Stevens. "It is always possible that Eurozone politicians shy away from the tough fiscal and institutional decisions that will be required to end this crisis, if they feel that the ECB's cash is doing the job for them." The Euro fell slightly against the Dollar immediately following the LTRO, though it recovered much of the loss by lunchtime. European stock markets barely moved, although yields on 10-Year Portuguese government bonds did start rising immediately following the news, hitting their highest level in nearly three weeks at 13.6%. The amount borrowed by banks at the LTRO "was pretty much in line with expectations," says Tom Kendall, precious metals analyst at Credit Suisse. "Neither gold nor [the] Euro…have done very much on the back of it after an initial reaction, as it's [already] in the price." In London meantime, the International Swaps and Derivatives Association agreed Tuesday to adjudicate on whether or not the ongoing restructuring of privately-held Greek debt constitutes a credit event – and thus whether it should trigger payments on credit default swaps. ISDA's Determinations Committee will meet tomorrow. If it agrees a credit event has occurred, it could trigger $3.2 billion of CDS payments, the Wall Street Journal reports. Ireland's government announced Tuesday that it will hold a referendum on the so-called fiscal compact agreed last December by European Union members – with the exception of Britain and the Czech Republic. Irish prime minister Enda Kenny is expected to sign the treaty when European leaders meet later this week, before trying to persuade Irish voters to approve it. Even if Ireland votes 'No', however, the treaty could still be adopted as it only needs the approval of 12 countries. Here in the UK, seasonally adjusted M4 – the broadest measure of UK money supply – rose 1.6% in January, though the year-on-year change was a fall of 1.8%. M4 excluding intermediate 'other financial corporations' – which the bank uses to gauge the effectiveness of its quantitative easing program – saw a 1.9% s.a. monthly gain, and a 2.9% gain year-on-year. UK mortgage approvals meantime rose to their highest level since December 2009 last month. "Even so, mortgage approvals remain low compared to long-term norms." India's economy grew at an annual rate of 6.1% in the last three months of 2011 – the slowest rate since the fourth quarter of 2008 – according to official data published Wednesday. "India's economy was battered from all angles through the second half of 2011," says Glenn Levine, economist at Moody's Analytics, an arm of the ratings agency. "[It was hit by] rising interest rates, falling stock prices, a plunging Rupee and weaker global demand." India has long been the world's biggest gold consumer. In Q4, however, its gold bullion consumption was less than that of China – 173 tonnes compared to 191 tonnes, according to the latest World Gold Council data. Sanction-hit Iran meantime will accept gold bullion as well as Dollars as payment from trading partners, the country's official Islamic Republic News Agency reports. "This is a confirmation of gold's status as a store of value, a universal currency," says Michael Cuggino, president and portfolio manager at San Francisco-based asset managers Permanent Portfolio, which manages around $15 billion in assets. Earlier this month, traders reported that Iran was paying for wheat with gold. Ben Traynor 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.
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| A Tailwind For Gold? Low Rates Posted: 29 Feb 2012 06:25 AM PST By Russ Koesterich: In recent months, the Federal Reserve (Fed) and the European Central Bank (ECB) have been lowering — or maintaining low — interest rates in an effort to support growth. One unintended beneficiary of the aggressive easing by the developed world's central banks: Gold. Historically, the most important driver of gold returns has not been inflation or the dollar, but rather the level of real interest rates. In the past, environments with interest rates at or below the level of inflation have been very supportive of commodities, and particularly gold. Today's rate environment fits this bill and so should that of the near future. As the Fed and the ECB are determined to maintain their low-rate policy for the remainder of the year and probably through 2013, real rates will likely remain negative into next year. This should provide a nice tailwind for commodities in general and for gold. As such, Complete Story » |
| Analyzing Tuesday's Noteworthy Insider Buys And Sells Posted: 29 Feb 2012 06:06 AM PST By Ganaxi Small Cap Movers: We present here three noteworthy buys and four noteworthy sells from Tuesday's SEC Form 4 (insider trading) filings (ex- the healthcare and technology sectors that were covered separately in a prior article hyperlinked to above), as part of our daily and weekly coverage of insider trades. These were selected by a review of over 350 separate transactions in over 210 different companies filed by insiders on Tuesday. The filings are noteworthy based on the dollar amount sold, the number of insiders buying or 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): American Express Co. (AXP): AXP provides charge and credit payment card products, travel-related services to consumers and businesses worldwide. On Tuesday, CEO Kenneth Chenault filed SEC Form Complete Story » |
| Fast Growing Gold And Silver Concern Is 50% Below Price Targets Posted: 29 Feb 2012 05:58 AM PST By Bret Jensen: Gold is off to strong start in 2012. Given the amount of liquidity the world's central banks are pumping into the global banking system, this is likely to continue. One stock I recently came across that is rapidly increasing production that could benefit greatly by this trend is Allied Nevada Gold (ANV). Allied Nevada Gold - "Allied Nevada Gold Corp., together with its subsidiaries, engages in the evaluation, acquisition, exploration, and advancement of gold exploration and development projects in the state of Nevada. It principally operates the Hycroft Mine, an open pit heap leach gold and silver mine covering approximately 61,389 acres of mineral rights and is located to the west of Winnemucca, Nevada |
| Posted: 29 Feb 2012 05:50 AM PST Two of these charts just ain't like the othere. Two of these charts just ain't quite the same.   Actually, crude is now UP 40 cents.    Combine this with what we know from our loyal Turdite regarding JPM indiscriminately dumping 10,000 contracts of gold in two minutes this morning. Clearly this was a coordinated attack, meant to create the cascading waterfall which ensued. 1705 and 34 are still holding, however, and must be watched closely for clues as to whether or not there is more bullshit to come. TF  |
| Another day, another Fed and bullion bank intervention Posted: 29 Feb 2012 05:15 AM PST |
| Gold Falls Following Bernanke Comments Posted: 29 Feb 2012 05:02 AM PST Gold bullion prices dropped 3.2% to $1,727 per ounce in less than an hour Wednesday afternoon in London, after US Federal Reserve chairman Ben Bernanke appeared before Congress. |
| Today’s Window Dressing Fall In Gold Posted: 29 Feb 2012 03:49 AM PST by Jim Sinclair, JSMineset.com:
Please do not be bothered by today's by Jim Sinclair, JSMineset.com: My Dear Friends, Please do not be bothered by today's intervention. The following news is what creates the absolute need for QE. It is the thesis of my Formula of 2006 of no major recovery that gives the foundation to my thesis of QE to Infinity. Treasury Yield Descending Signals Slowdown The $10 trillion market for US Treasuries is signaling that the economic recovery may be poised to weaken even as consumer confidence rises toward pre-recession levels. Read More @ JSMineset.com
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| Posted: 29 Feb 2012 03:46 AM PST Silver Down 8% on U.S. QE Dampening Talk Precious metals dived Wednesday afternoon – the crash being attributed to a statement by Ben Bernanke which appeared to imply that further Quantitative Easing was unlikely to be needed in the U.S. by Lawrence Williams, MineWeb.com: LONDON – What a difference an hour makes in the price of gold. One minute it was riding high fringing on hitting $1790 and within about an hour it had fallen around 4% to below the $1720s. Panic set in in the markets as stop loss selling and end-month profit taking added to the price crash. As befits its more volatile status, silver crashed back too and at the time of writing had come back around 8% at one time. Interestingly platinum, although it fell too, did not come back to the same extent sharply closing the gap between it and the gold price and coming to within $35 of the gold price. A Statement to a U.S. Congressional Committee by U.S. Fed chairman Ben Bernanke seems to have taken the wind out of precious metals price sails with huge plunges seen across the board. Bernanke's comments were seen as implying that more Quantitative easing was unlikely – and that rising oil prices could see a build-up in inflation raising the spectre that perhaps the earlier indications that interest rates would be kept at effectively zero levels for the next couple of years might no longer prove to be the case. Read More @ MineWeb.com |
| Global Macro Notes: PMs Jump Up to Get Beat Down Posted: 29 Feb 2012 03:28 AM PST In 1992, the rap group Brand Nubian released the single "Punks Jump Up to Get Beat Down." One could imagine Ben Bernanke humming this chorus after today's whackage. The Beard spoke to congress, and commodities and precious metals took a hit. Silver in particular, which appeared ready to run, was "beat down" particularly hard. As of this writing (with markets still open), SLV has registered a very nasty outside reversal bar.
Gold stocks are being tested too:
And gold itself (GLD) looks like someone dropped an anvil on it:
Maybe not. This selloff feels way overdone… cartoonish… like a way-too-big river bet that is more bluff than substance. Because the silver breakout was such a widely observed event — many small investors have been waiting for "the big one" in SLV — it makes sense for the big boys to try a wash and rinse, shaking out weak hands before the serious upside gets underway. (Not necessarily the scenario, but a real possibility.) Meanwhile, commodities in general have been extended well above their 20 and 50 day moving averages, making them susceptible to a quick and dirty correction. And longside holders of precious metals are notoriously nervous these days, given all their previous instances of disappointment. And thus some "no soup for you" commentary from the Fed is just the thing to trigger a bear raid, along with a mini-rally in the dollar ($USD) as the European Central Bank (ECB) spews liquidity into the European banking system:
On another note, if markets had truly adopted a "risk off" posture, we would expect to see treasuries breaking out today, or at least firming up a bit. But that isn't what's happening. Long bonds (TLT) are down on the day. Under normal circumstances, big outside reversal days are huge warning signs. But in this heavily government-manipulated market environment — one in which head fakes abound — it's good to be more skeptical of knee-jerk reactions. If key support points are taken out in gold, silver and precious metals holdings, then it's time to respect the risk and step aside. Otherwise, it's still "game on" given 1) the increasingly widespread view of budding global recovery, which is inflationary, and 2) the final tendency of all central banks everywhere to print, print, print as a last resort (no matter what they say otherwise)… JS (jack@mercenarytrader.com)  |
| Bernanke Triggers Metals Sell Raid Posted: 29 Feb 2012 03:15 AM PST Fed Chairman Ben S. Bernanke went before the U.S. House today for the semi-annual Humphrey-Hawkins testimony. Perhaps it wasn't what he said, but more what he didn't say that triggered quite a sell-down for precious metals starting at about 10:00 ET this morning. What traders might have been looking for was some word on additional QE, which the chairman didn't include in his prepared testimony, according to televised media reports.
As a reminder, once the 1-hour grace period has been triggered, if the price moves substantially back above the stop but then drives back lower the stop then becomes a "hard stop" for the remainder of that trading day. Should silver trade back to our chosen stop again prior to the closing bell in New York, we will automatically move to the sidelines with our silver trade. Otherwise not. |
| Posted: 29 Feb 2012 03:04 AM PST |
| Satyajit Das: Pravda The Economist’s Take on Financial Innovation Posted: 29 Feb 2012 02:59 AM PST By Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2006 and 2010) In the old Soviet Union, Pravda, the official news agency, set the standard for "truth" in reporting. Discriminating readers needed to be adroit in sifting the words to discern the facts that lay beneath. Readers of The Economist's "Special Report on Financial Innovation" (published on 23 February 2012) would do well to equip themselves with similar skills in disambiguation. Faith Based … The Economist sees financial innovation as positive; regarding it in the same sense as charity and goodwill to one's fellow creatures. The reader is told that: "Finance has a very good record of solving big problems, from enabling people to realise the value of future income through products like mortgages to protecting borrowers from the risk of interest-rate fluctuations." The definition of the "big problems" of our time is obviously subjective. The Report lacks doubt: "The evidence of this special report suggests that the market does a brilliant job of nurturing and refining instruments that people want." A closer review of the evidence suggests that the authors of the Report have followed Adlai Stevenson, the Democratic candidate for president in the 1952 and 1956 elections: "Here is the conclusion on which I base my facts." The approach is puzzling as the Report repeatedly admits the difficult of actually measuring the benefits of financial innovation: "… quantifying the benefits of innovation is almost impossible" and "To sift through the arguments on both sides is to confront a basic problem with any financial innovation: the difficulty of measuring its benefits." The Economist quotes a 2011 NBER paper by Josh Lerner and Peter Tufano which argues the impossibility of quantifying the impact of a financial innovation because finance involves many (often unintended) externalities. Instead the paper proposes a "thought experiment", imagining what the world would look like without a particular innovation. The Report undertakes this thought experiment, without the requisite imagination and with a pre-disposition to the self evident benefits of finance. In David Hare's play The Power of Yes, Adair Turner, head of the English FSA, is asked whether the fact that nobody understood what was going on was an issue. Turner responds that no, it wasn't a problem as, for people like Alan Greenspan, it was just a matter of faith. The Economist follows their mentor's modus operandi. Finance is as Finance Does…. Arguably, the function of finance is to match borrowers and savers, provide safe and secure payment mechanisms and also provide efficient tools for risk management. But the Report lacks a discernible working thesis as to what finance should do and how specific financial instruments, new and old, either do or do not further these objectives. Finance's primacy is held by The Economist as another self evident truth. Despite a self conscious mention of innovations in "microfinance products aimed at the very poor, social impact bonds, and all manner of whizzy payment technologies", the focus is on "wholesale products and techniques". This is because "they are less obviously useful than retail innovations and because they were more heavily implicated in the financial crisis". The Report outlines the case for securitisation, credit default swaps (as an example of derivatives), exchange traded funds ("ETFs") and high frequency trading ("HTF"). The thesis is that all financial innovations are prima facie good and useful. Occasionally people push them too far and things go wrong. It is Alan Greenspan's "irrational exuberance". Excesses are the work of out-of-control "rogue traders". The sub-text is that the products and system are fundamentally sound. Occasionally unavoidable accidents are always an acceptable cost of progress – collateral damage for greater good. In 2008, defending deregulated markets, Greenspan stated: "You can have huge amounts of regulation and I will guarantee nothing will go wrong, but nothing will go right either." This is the central premise of The Economist's analysis. Transference… Techniques of risk transfer – securitisation (collateralised debt obligations ("CDOs") and credit default swaps ("CDS") – are good: "… even now it is hard to find fault with the concept [of the CDO], as opposed to the practical application, of many of the most demonised products." The defence of securitisation is: "[a CDO] is really just a capital structure in miniature". In addition, "securitisation—which worked well for decades—allows banks to free up capital, enabling them to extend more credit, and helps diversification of portfolios as banks shed concentrations of risks and investors buy exposures that suit them". Europe's ill-fated and discredited adoption of CDO technology for its bailout fund (the European Financial Stability Fund) is the proof of concept, at least for The Economist. While securitisation is not without benefits, the extension of the technique, for example, into re-securitisations (CDO2) created problems – as the Report readily accepts. However, the Report does not fully understand the true role and effects of securitisation. While a CDO might be like a bank (a capital structure in miniature), it is unregulated. Securitisation for the last 15-20 years entailed shifting assets from banks to structure which reduced the amount of capital required, arbitraging regulatory capital requirements. If a bank already held a loan funded with deposits, then in aggregate by selling the loan to the same depositors does not increase the supply of credit. The increase in credit is a function of the several things: (1) shifting risk into the shadow banking system; (2) alchemy (tranching) to create highly rated securities (AAA or AA) which acts as collateral to allow further re-leveraging; and (3) the ability to re-hypothecate the collateral over and over again, such as in re-securitisation. The process increased leverage (crudely the capital against risk in reduced), model risk, liquidity risk, complexity and linkages via counterparty risk. It also moves risk from somewhere where it is highly visible to where it is less visible. In cutting and dicing risk, it encourages mis-pricing. It also creates difficulties in resolving problems – a delinquent loan is difficult to restructure when it no longer exists in its original form and different slices of the cash flows are held by different investors. The case for securitisation also misses that banks sell off risk and then re-acquire it either directly through linkages with the shadow banking system or indirectly by financing investors secured against the securitised bonds created. Instead of actually assisting diversification, the entire process concentrates risk while simultaneously lowering the amount of capital and liquidity reserves held against the loans. Recent research and enquiries have presented considerable evidence that CDOs were a direct contributing factor for the toxic phase of the asset bubble in US housing, commercial real estate and private equity market. But if The Economist is aware of these problems, then they are not covered in any detail. The only problem with CDOs apparently was that "they were stuffed full of subprime loans but treated by banks, ratings agencies and investors as though they were gold-plated". Given that sub-prime mortgages were only a part of the much larger CDO market, the wider fall in value of securitised debt and the losses must have been a collective hallucination. Giving Credit… After the expected Oxbridge cross Channel sneer at "choking Europeans", the Report concludes that CDS contracts are "sound". Sovereign CDS contracts perform "a useful signalling function". The only problem apparently is that banks sometimes sell protection on their own governments increasing their exposures to the sovereign. Given large banks dependence on the sovereign for their own existence, the absurdity of a bank insuring the nation's risk collateralised by government debt is ignored. CDS, if it is used as a pure hedge, can be useful. Over time, the market, led by dealers keen to make credit a tradeable commodity, has evolved differently. The major drivers of the market are the ability to short credit and take leveraged positions on bonds. In addition, the fact that CDS contracts are not limited by the availability of underlying bonds or credit assets (at the peak the CDS market was around 4/5 times the available underlying assets) has encouraged the growth of the market. Standardisation of the contract to facilitate trading has created significant "basis risks" for hedgers. The recent restructuring of Greek debt, designed to specifically, avoid triggering CDS contracts, highlights the problems. A number of episodes over the last 4 years have highlighted documentary issues – trigger events and loss payouts – which cast serious doubts as to the utility of the contract. Curiously, The Economist cites that fact that "conservative" India has recently given permission for CDS contracts to commence trading as proof of the utility of the product. The Report neglects to mention that approval was highly conditional, being designed to ensure that the only contracts traded were pure hedges of underlying positions. In the film Casablanca, Rick (Humphrey Bogart) tells Captain Renault (Claude Rains) that he came to the city "for the waters" because of his health. Informed that they are in the desert, Rick ironically rejoinders that he was "misinformed". The Economist as well as investors and banks, including those who purchased Greek sovereign CDS to protect themselves against the risk of default, may have been similarly misinformed. ETF…. Exchange Traded Funds ("ETF") are a hoary old chestnut, a listed and tradeable version of an index fund; hardly a revolutionary "innovation". As the Supplement notes the absolute size of the ETF market is also relatively modest compared with estimated global assets under the control of fund managers. Vanguard founder John Bogle might take justifiable issue with the statement that ETFs "allow retail investors access to diversified portfolios of assets that had previously been the sole preserve of institutional investors". Mr. Bogle founded the Vanguard 500 Index Fund as the first index mutual fund available to the general public in 1975, more than a decade before ETFs. Argument and analysis is replaced by over energetic prose – "finance's infectious creativity"; "vibrancy looks like a victory for the investor over the fund manager"; "It is in the nature of finance that experimentation never stops." ETFs are "good", reducing transaction costs and increasing efficiency. The Report notes criticism of ETFs – counterparty risk to delaers where funds use derivatives to replicate exposure to the underlying assets. Closer reading of the IMF report on ETFs suggest deeper concerns that do not merit mention – the market impact of simultaneous trend following trading by ETFs and "innovations", such as leveraged and other versions. There is no discussion of a key underlying issue – the idea of diversification. The Economist argues that "the dotcom bust had underscored the importance of diversification". Diversification to reduce risk is not without problems. As equity indexes are weighted typically by market capitalisation, as an individual share price rises it becomes a larger part of the index and therefore the ETF. During manic market phases, such as the dot com and now the AGF (Apple Google Facebook) boom, ETF investors may inadvertently find them heavily exposed to such stocks. In asset classes such as debt, the idea of indexation is more problematic. As the indexes are weighted by the amount of bonds on issue, as an issuer borrows more it becomes a larger part of the ETF, irrespective of its ability to make repayments. As Worldcom and more recently European sovereign debt shows, the results are not pretty. While successfully managing the portfolios of an insurance company and the King's College endowment, Keynes insisted that diversification was flawed: "To suppose that safety…consists in having a small gamble in a large number of different [stocks] where I have no information…as compared with a substantial stake in a company where one's information is adequate, strikes me as a travesty of investment". Mark Twain's Pudd'nhead Wilson would have agreed: "Put all your eggs in one basket, and watch that basket." HFT…. The Economist sides with the high frequency trading ("HFT") practitioners who are "frustrated by what they perceive as an unfair onslaught". The Report resorts to tried and tested rhetoric – HFT is difficult to define; there is not enough data. But these factors present no barrier to the conclusion reached that "high-frequency traders provide liquidity and 'knit' together our increasingly fragmented marketplace, resulting in tighter spreads that benefit all investors" (citing testimony delivered to the Securities and Exchange Commission in 2010 by George Sauter of Vanguard, a big fund manager). Liquidity and lower transaction costs only benefits an investor when they trade. High liquidity and tight bid-offer spreads are only available, as all practitioners know, when it is not needed, becoming the first casualties of market downturns and volatility. Market-making needs adequate compensation for the risk assumed. Forcing return below sustainable levels encourages dealers to boost revenue from proprietary trading (often using the information gained from client activity) and trading structured products, creating different risks. The Report ignores the real problems of HFT – the problems of potential market manipulation, insider trading, front running client flows and increased market volatility often at critical times. The Economist cannot imagine a world without HFT which is "an "outcrop" of the market structure". High trading volumes are regarded as normal and desirable. In the zero sum game of trading, the presence of super fast computers copulating with other super fast machines provides uncertain benefits in financial intermediation. Average investment periods for shares have shortened from around 7 years to 7 months since 1940. HFT now accounts for over 60% of equity trading, with an average holding period of around 11 seconds. High levels of trading may create excessive "noise" preventing prices from reflecting true value, ultimately leading to a loss of confidence in certain markets discouraging investment. HFT may damage the process of long term capital accumulation and allocation. Collateral Damage … The Report believes that collateral is problematic "the whirring of financiers' minds … spells trouble" but confusingly sees it is as also breeding innovation. The discussion may remind the reader of an observation of Groucho Marx: "A child of five would understand this. Send someone to fetch a child of five". The use of collateral contributed significantly to the financial crisis. Secured lending, collateralised by securities, including high quality bonds especially created through securitisation, contributed to the increase in debt. It allowed a shift of focus from repayment ability based on income and cash flow to the value of the asset securing the borrowing. As debt fuelled a virtuous cycle of price appreciation it allowed the level of debt to increase rapidly. The process relies on a steady and unending rise of debt and prices – a Ponzi scheme, in effect. It also relies on the ability to trade and the liquidity of markets. Unfortunately, the virtuous cycle turns vicious when the supply of debt ceases and prices fall. The system creates exposure to short term price fluctuations as the amount of collateral required varies. It effectively amplifies the broader financial problems of funding short and lending long. Collateral also facilitates access to derivative markets for less credit worthy counterparties. The problems of Bear Stearns' hedge funds, AIG and Lehman all can be traced, in different degrees, to the system of collateral. Unfortunately, those unlikely to be able to meet demands for payment are unlikely to be able to meet collateral calls – a fact which financial institutions and their regulators failed to understand. At a broader level, collateral underlies the entire shadow banking system, which proved so problematic during the crisis. Left Unsaid… Mistakes of commission are compounded with errors of omissions. The Report notes that risk transfer may encourage excessive risk taking and lending. It identifies that the illusion of stability may cause instability, an idea first put forward by economist Hyman Minsky (who does not gain a mention). The systemic side effects of financial innovation are barely recognised. Financial innovation played a crucial role in allowing the increase in debt levels and leverage. It created complex linkages between financial participants increasing systemic risk and informational failures. The appropriate size of some markets, such as for over-the-counter derivative, is not considered. The Economist points to interest-rate swaps "which are used to bet on and hedge against future changes in interest rates, as an example of a huge, well-functioning and useful innovation of the modern financial era". Interest rate derivatives (including interest rate swaps) are about 70% of total derivative outstanding on $600 trillion, which equates to over $400 trillion roughly 6 or 7 times global GDP and a significant multiple of all financial assets in existence. Daily currency turnover is between 30 and 50 times trade flows. Derivative volumes are inconsistent with pure risk transfer. The necessity for or utility of such high trading volumes does not figure in the discussion. A quaint economic concept – cost benefit analysis -. weighs the benefits of any actions against the costs. Unable to identify the benefits accurately by their own admission, the Report decides to ignore costs arguing: "Even bad ideas are not a problem when they first arise. If only a few people get burned by a duff product, the wider world need not care". Given the high cost of failure of financial innovations as evidenced by the significant and ongoing costs of global financial crisis, the case for financial innovation, at least of many of the products cited, may fail on cost-benefit grounds. Defenders of financial innovation have a high burden of proof to overcome. Super Smarts… The Economist fails to understand the real motivations of financial innovation. They believe that: "Products … mutate constantly, in part because patenting is not common". Citing Franklin Allen of the Wharton School at the University of Pennsylvania and Glenn Yago of the Milken Institute, wholesale financial innovation, they argue, is the creation of new capital structures that align the interests of lots of different parties. In practice, the major alignment of interests relates to getting a deal done to enable the bankers to receive substantial bonuses based on mark-to-market values of the product. The profit frequently does not fully recognise the long term consequences or risks to either the client or the financial institution. Confusing bankers with saintly figures in line for beatification, the Report approvingly cites Goldman Sach's Martin Chavez who explains that innovation is in response to the "clients call"… We can't tell them 'no thanks'." This, undoubtedly, is "doing God's work", which the head of the firm once stated was its primary mission. It is difficult to reconcile this position with statements by another Goldman Sachs' employee Fabrice Tourre, who sold the Abacus deals to unwitting "widows and orphans". Among tender emails to his girlfriend Serres, the self-styled "Fabulous Fab" observed in January 2007: "More and more leverage in the system. The whole building is about to collapse anytime now?.?.?.? Only potential survivor, the fabulous Fab[rice Tourre] standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!" Tourre stated that Abacus was "pure intellectual masturbation", "a 'thing' which has no Stéphane Mattatia, Société Générale's global head of equity flow engineering and advisory, told The Economist of a hedge based on the Euro falling and gold rising for a client worried about French CDSs. Of course, SG managed to lose Euro 5.9 billion through its inability to hedge its own risk on positions taken by rogue trader Jerome Kerviel. If the client was concerned about positions in French CDS, wouldn't it have been just easier to close out its existing position rather than enter into a complex, potentially expensive and illiquid instrument? There is no acknowledgement that much of what is called financial innovation is economic rent extraction, exploiting lack of transparency as well as information and knowledge asymmetries. There is no discussion of the destructive bonus culture which encourages certain behaviours in financial institutions. Thomas Philippon and Ariel Reshef have estimated that around 30-50% of the extra pay bankers received compared to similar professionals is attributable to economic rents. In a January 2009 speech, Lord Adair Turner, chairman of UK's Financial Services Authority, observed that: "Much of the structuring and trading activity involved in the complex version of securitized credit was not required to deliver credit intermediation efficiently, but achieved an economic rent extraction made possible by the opacity of margins and the asymmetry of information and knowledge between…users of financial services and producers…financial innovation which delivers no fundamental economic benefit, can for a time flourish and earn for the individuals and institutions which innovated very large returns." The unpalatable reality that few, self interested industry participants and their cheerleaders are prepared to admit is that much of what passes for financial innovation is specifically designed to conceal risk, obfuscate investors and reduce transparency. The process is entirely deliberate. Efficiency and transparency is not consistent with the high profit margins on Wall Street and the City. Financial products need to be opaque and priced inefficiently to produce excessive profits. The Report does not canvas this issue. Fixing It …. The Report makes prescriptions for strengthening financial innovation – protection of investors, more capital, improved operational procedures and stronger regulators. The solutions are familiar dictums which have been tried before with limited success. As former New York Federal Reserve President Gerald Corrigan told policy-makers and financiers on 16 May, 2007: "Anyone who thinks they understand this stuff is living in lala land." The problem of protecting investors arises because of the difficult in "judging the sophis |
| Bots and EE Simultaneously Attack Posted: 29 Feb 2012 02:50 AM PST First of all, I greatly apologize for the site being down yet again. I enrolled yesterday in the site "Alexa" with surveys the site and measures the traffic. Perhaps the overload of traffic that is crashing the site is due to an initial Alexa survey? Maybe. Of course, when the crash of the site coincides perfectly with a crash in gold and silver, it sure makes me wonder. The reason given for the smash of gold and silver is the testimony of The Bernank. Hmmmm. Of course, stocks aren't down very much. Hmmmm. Look, Santa has warned us repeatedly that there is extreme volatility coming. Today's action is certainly a part of that trend. If you can't stomach the volatility, I suggest you completely avoid trading and only use the big dips like today for adding to your stack. That said, I guess we now know what the EE has been planning to do with all of their leased silver. Lost in the madness of yesterday was a drop in the 1-month rate to -0.48%. Since we've been discussing this possible "raid" indicator here for weeks, today's drop should really come as no surprise. Let's see now if $34-34.50 can hold. I suspect that it might not. $33 will be a possible floor as that is a significant level and it would represent a roughly 10% drop from the highs of yetserday. Even $31 is not out of the question, though. Gold is getting punished, too, but should find a solid floor between 1680 and 1705. Please be patient and try to keep your wits about you. Silver is going much, much higher from here. Later this week, we will discuss some extraordinary, new fundamentals that will drive prices. I know it's tough but try to hang in there and enjoy the ride. TF    |
| The Largest Gold-Accumulation Plan of All Time Posted: 29 Feb 2012 02:27 AM PST For more than 30 years China has been selling more goods than it has imported, that's allowed the nation to stockpile trillions of dollars. |
| 20 Economic Statistics To Wake Sheeple Posted: 29 Feb 2012 02:11 AM PST 20 Economic Statistics To Use To Wake Sheeple Up From Their Entertainment-Induced Comas from The Economic Collapse Blog:
Read More @ TheEconomicCollapseBlog.com |
| Buy the Rumor, Sell the Fact – Lather, Rinse, Repeat Posted: 29 Feb 2012 02:01 AM PST Albeit gold did open about $2.50 higher in New York, yesterday's enthusiasm levels were nowhere near detectable. We were confronted with abnormal concurrent headlines that observed gold trading at a five-month high and the DJIA closing above 13K for the first time. |
| Posted: 29 Feb 2012 01:55 AM PST Gold down 50 buks, silver down $1.50 in 5 minutes.  |
| Austin Report- Precious Metals Explode in 2012! Posted: 29 Feb 2012 01:47 AM PST The train is leaving the station... |
| It’s Official: Iran to Accept Gold for Oil Posted: 29 Feb 2012 01:44 AM PST Iacono Research |
| SILVER SURGES 4.5% TO OVER $37/OZ ON “MASSIVE FUND BUYING” Posted: 29 Feb 2012 01:37 AM PST |
| Posted: 29 Feb 2012 12:03 AM PST from Greg Hunter's USAWatchdog.com:
Countries around the world have been actively seeking ways to not do business in dollars for the past few years. The U.S. dollar is the so-called world C, but the big question is for how long? China and Japan are beginning to shun the dollar in trade between the two countries. Mind you, this is the 2nd biggest economy in the world doing business without dollars with the 3rd biggest economy in the world. Russia and China, also, have an agreement to not use the dollar, and even India recently announced it would trade gold for oil with Iran.Additionally, the International Monetary Fund (IMF) has been calling for an alternative to the buck. The big push is not because the U.S. dollar is held in the highest regard but because it is losing its luster on the world stage. After all, the debt debacle facing America is worse than what the Greeks are facing according to a new report from U.S. Senator Jeff Sessions. (Click here to see for yourself.) Senator Sessions says every man, woman and child in the country is saddled with $44,000 in debt. The difference is the U.S. can print money, Greece cannot, and that is the problem for the rest of the world. Every dollar that is created devalues the other dollars in existence. America spends 43 cents more than it takes in every year. There is a current $15 trillion national debt and future commitments that some economists say exceeds $200 trillion. Last August, Congress raised the debt ceiling $2.1 trillion to $16.4 trillion. That money is likely to run out before the November 2012 election, and then, Congress will need to raise it again or the U.S. will face default. My money is on yet another debt ceiling increase. Is there any wonder why the world wants to move away from the dollar? The more you have of something, the less it is worth. Read More @ USAWatchdog.com |
| Morning Outlook from the Trade Desk 02/29/12 Posted: 28 Feb 2012 11:55 PM PST On a 6 am flight, thought I would squeeze this in before cab arrived. Target of $37.20 was hit yesterday and even thow durable goods orders were the worst in three years, the metals complex held up well. Still see the $1,800 print in play. Silver needs to be watched closely, but a break out for gold above the $1,800 level should take silver to key resistance in the $39.30 level. A break here and we will be in the $40's. volumes should pick up as clients become more convicted. Retail missed the last $10 run in silver and $100 run in gold. They are nervous about getting whipsawed. They'll be back, but as usual well late to the party. |
| Silver Surges 4.5% To Over $37/oz. On Fund Buying Posted: 28 Feb 2012 11:35 PM PST Spot silver has gained another 0.5% today to $37.05 an ounce, after surging 4.5% yesterday once it rose above resistance at $35.50/oz. Silver reached a five-month high of $37.21 but remains more than 30% below its nominal high in of April last year of $48.44. |
| Why are Gold and Equities Moving Up Together? Posted: 28 Feb 2012 11:13 PM PST Since late October 2011 gold and the equity markets have become closely correlated. This raises two rather more important question than it at first appears. Firstly why – and secondly what does this mean for gold's safe-haven status? |
| Silver Price Hot Streak Continues Posted: 28 Feb 2012 11:08 PM PST from GoldMoney.com:
As has been the dominant market trend of late, equities rode higher together with precious metal prices, the Dow closing above the psychologically important 13,000-level at 13,005.12. This is the Dow's highest closing price since May 19 2008. Commodities as a whole also gained, though crude oil prices declined for the second day in a row. As is typical on a "risk on" day, the dollar fell against the euro and other major currencies, with the Dollar Index down 0.38% to close at 78.27. However, yields on longer-maturity US Treasuries continued to fall – contrary to what one would expect in an environment where inflation concerns are growing. Looks like we'll have to wait a little while longer for the "Bond apocalypse" that Peter Schiff and others have been warning about. Read More @ GoldMoney.com |
| Russia and China Know What GATA Discovered About Gold Posted: 28 Feb 2012 09:12 PM PST ¤ Yesterday in Gold and SilverGold's low price print on Tuesday came at precisely 9:00 a.m. in Hong Kong. From there the gold price began to work its way slowly higher...and by noon in New York it was banging on the $1,790 spot price level. That proved to be the price ceiling for the day...and at 1:30 p.m. Eastern time, the close of Comex trading in New York, someone came in and sold gold down about ten bucks or so...but the gold price closed well off that low by the close of the New York Access Market at 5:15 p.m. Eastern time. Gold closed at $1,783.90 spot...up $15.80 on the day. The spike high of the day was $1,792.40 spot. Net volume was a heavy 146,000 contracts, so it's my guess that this rally is not going unopposed...and the bullion banks are going short against all comers. The Kitco price chart tends to confirm that.
Silver basically did nothing all through Far East and early London trading. But the moment that the London silver fix was in...shortly after 12 o'clock noon in London...away the silver price went. The high price tick [$37.34 spot] came shortly after 1:00 p.m. in New York...and then got sold off about two bits before flat-lining into the close of electronic trading at 5:15 p.m. Eastern. Silver closed at $36.93 spot...up $1.47 on the day. Net volume was a very chunky 46,000 contracts. If there was any short covering going on, that fact was kept well hidden.
The dollar index opened around 78.60...and was in decline right from the open in New York on Monday night. The standout feature was the big 30+ basis point price spike that occurred in the 3-hour time period between 8:30 and 11:30 a.m. Eastern. This anomaly, and the rest of the day's price 'action', made absolutely no difference to what was going on in the precious metals. The index closed down about 35 basis points on the day.
The gold stocks pretty much followed the gold price...and the 1:30 p.m. sell-off at the Comex close is the most obvious feature on the chart below. But the moment that the sell-off was done, which was shortly before 2:00 p.m...the shares rallied smartly...and the HUI came very close to finishing on its high of the day, closing up 2.21%.
For the most part, the silver shares really sailed...and it's about time. Nick Laird's Silver Sentiment Index closed up a chunky 4.15%.
(Click on image to enlarge) The CME Daily Delivery Report for Tuesday [for Wednesday delivery] didn't show a thing, which is no surprise, considering the fact that the balance of February's deliveries were all posted in Monday's report...and were in my column yesterday. First Day Notice numbers showed that 335 gold and 513 silver contracts were posted for delivery on Thursday, March 1st. In gold it was all JPMorgan as the big short/issuer with 334 contracts posted for delivery. The big long/stopper was the Bank of Nova Scotia with 294 contracts. In silver, the biggest short/issuer was the Bank of Nova Scotia with 425 contracts. JPMorgan was a distant second at 67 contracts. JPMorgan was the big long/stopper...as they are set to receive 371 silver contracts on Thursday. Of those 371 contracts...367 contracts were for JPMorgan's in-house trading account. The Issuers and Stoppers Report is well worth looking at...and the link is here. There were no reported changes in either GLD or SLV. There may have been no changes in inventory levels in either ETF...but there were more big declines in the short positions of both SLV and GLD. Silver analyst Ted Butler put out a special report on it yesterday...and in order to save myself some time, I'm just going to steal two paragraphs of what he had to say... "First, and with the risk of setting up for disappointment down the road, the latest short interest data on SLV was very good news indeed; much better than I had anticipated. Following the historic 9.4 million share decline in the SLV short position as of Jan 31, the new short report indicates a further 4.6 million share reduction as of Feb 15, to a bit over 12.5 million shares. Over the last four weeks, the short position in SLV has dropped by more than 50%, to the lowest level in more than a year. Importantly, I don't recall a previous time when the short position of SLV declined as prices were rising. Not only is the reduction in the short position notable by size, it is unprecedented under increasing prices." "From the high-water mark of nearly 37 million shares held short last spring, the short position in SLV is now down a stunning 66%. Even more impressive is that the reduction in terms of the short position relative to total shares outstanding is down from over 12% at the peak to under 4% currently. Last year at the peak, more than 12% of all the SLV shares legitimately purchased had no silver metal backing; the new report indicates the number of shares without proper silver backing is down to 3.9%. That is still too high but, man oh man, we are moving in the right direction." The GLD ETF also had a huge reduction in their short position during the last couple of weeks. GLD's short position declined from 1.73 million ounces sold short, to 1.11 million ounces sold short...a reduction of 35.8%. This is a big decline...and one can only hopes that this trend continues in gold as well. The U.S. Mint had a small sales report. They sold 500 ounce of gold eagles...500 one-ounce 24K gold buffaloes...and 40,000 silver eagles. It will be interesting to see if they have an update for the last day of February. Over at the Comex-approved depositories on Monday, they reported receiving 1,169,352 troy ounces of silver...and shipped out only 3,079 ounces. The link to that action is here. I have cut the stories down to a more reasonable number today, so I hope you have the time for them all. Yes, I'm happy with the current state of affairs, but ever mindful of the fact that this rally is being managed every step of the way. Gold to Take Out $1,800 as Tangibles Soar: Richard Russell. Bull Market Dynamics Explosive for Gold and Silver: Robert Fitzwilson. Fear Driving Demand, Moving Gold and Silver Higher: Rick Rule ¤ Critical ReadsSubscribeCME Subpoenaed By Federal Grand Jury, CFTC in Probes of MF Global CollapseCME Group Inc., the world's largest futures exchange, said it received a subpoena from a federal grand jury investigating the October collapse of MF Global Holdings Ltd. CME Group, which had auditing authority over the failed futures broker, has been asked to produce information and witnesses in connection with the investigation by a grand jury in the Northern District of Illinois, the Chicago-based company said in a regulatory filing today. The company also received a subpoena from the U.S. Commodity Futures Trading Commission and a document request from the Securities Investor Protection Corp. trustee handling MF Global's liquidation, it said. The CFTC is reviewing CME Group's audit of MF Global before the broker's Oct. 31 bankruptcy, when as much as $1.6 billion in client funds went missing, a person familiar with the matter said last month. The CFTC, Securities and Exchange Commission, Justice Department and bankruptcy trustees overseeing MF Global's liquidation are investigating the possible misuse of client funds. Ted Butler was tickled pink by this turn of events. The Wall Street Journal story about this that Washington state reader S.A. sent me was subscriber protected, so I borrowed the Bloomberg story from Ted's note to his clients yesterday. It's well worth skimming...and the link is here.  Goldman gets SEC notice over mortgage securitiesGoldman Sachs Group Inc. said it received a Wells notice from the Securities and Exchange Commission related to disclosures in its sales materials for $1.3 billion of subprime mortgage-backed bonds. Goldman said in its annual securities filing late Tuesday that it received the notice on Feb. 24. Wells Fargo & Co. disclosed earlier Tuesday it had also received a Wells notice related to disclosures in its mortgage-backed securities offering materials. A Wells notice is the SEC's warning that civil charges may be coming, giving time to the recipient provide documents and state a case for why charges should not be filed. Regulators are examining the disclosures several Wall Street banks made in mortgage-backed securities offerings to see whether they mislead investors about the underlying pool of assets. This story was filed over at the marketwatch.com website yesterday evening...and I thank Florida reader Donna Badach for sending it along. The link is here.  Gordon Gekko's Insider Trading Public Service Announcement Is OutThe Gordon Gekko PSA against insider trading, as masterminded by the FBI, has been released. The clip features a scene from the original Wall Street movie and then Michael Douglas, who portrayed Gekko, warning the public that insider trading as a very real issue despite the fact that Gekko is fictional. He then encourages viewers to learn more about securities fraud and to report insider trading through a tip line. The PSA was developed by the guys behind the FBI's "Perfect Hedge" operation, so there's hope that this may yield some results. It's a 1-minute must watch...and I thank Casey Research's own Alex Daley for sharing it with us. The link is here.  Former Fed Chief Urges Support for Volcker RuleFormer Federal Reserve Chairman Paul Volcker on Wednesday urged critics of a proposed U.S. rule limiting speculative trading by banks to get behind the measure, saying that opposition to it is not in their interest. His defense of the so-called Volcker Rule at a financial conference in the Emirati capital Abu Dhabi was the latest in an ongoing fight between Wall Street and Washington over tighter restrictions for banks operating in the United States. The measure is designed to limit the ability of commercial banks backed by government deposit insurance to trade for their own profit. It was drawn up by regulators as part of a broad-based financial overhaul in 2010 and named after the former Fed chief. This AP story was filed from Abu Dhabi today...and was posted on The New York Times website at 3:36 a.m. this morning. I thank reader Phil Barlett for getting it to me in time to make this morning's column. It's well worth reading...and the link is here.  European Investment Bank Said to Share ECB Exemption From Greek Write-downsThe European Investment Bank, the development lender for the 27-member bloc, is getting a similar exemption from Greek debt write-downs to the euro area's central bank, said two regional officials familiar with the matter. The European Central Bank negotiated a deal to avoid the 53.5 percent loss on principal that's costing private investors as much as 106 billion euros ($143 billion). The EIB, which unlike its Frankfurt-based counterpart represents the entire European Union, also owns Greece's debt and is sidestepping the so-called haircut in the same way, said the officials, who declined to be identified because the plan isn't public. "This continues the trend of burden-shifting," said Gabriel Sterne, an economist at London-based brokerage Exotix Ltd. "This is bad crisis resolution and it's going to affect things for years to come." This Bloomberg story was filed on their website late yesterday afternoon...and I thank Washington state reader S.A. for sending this along. The link is here.  The World from Berlin: Second Bailout for Greece 'Will Not Be the Last'The German parliament may have passed the second rescue package for Greece, but Chancellor Merkel had to contend with dissenting backbenchers and a loose-lipped cabinet minister w |
| Return to gold standard would be damaging, study group says Posted: 28 Feb 2012 09:12 PM PST  A return to the gold standard would be impractical and could even be damaging to the financial system, even though it can serve as a hedge against declining values of fiat currencies and plays a role as a reserve asset, a think-tank said on Tuesday. The price of gold, which last year hit a record high above $1,920 an ounce and on Tuesday traded near $1,780, has been rising for the last 11 years, driven by widespread appetite for the metal including from central banks, whose purchases are at their highest for at least two decades. Gold has gotten a boost since the financial crisis from Western central banks' attempts to reinvigourate domestic growth with near-zero interest rates and trillions of dollars in government bond purchases. |
| Iran considers taking gold as payment for oil Posted: 28 Feb 2012 09:12 PM PST  Iran is to consider accepting gold as payment for oil and other commodities in what is seen as a fresh attempt to skirt international sanctions on the country's nuclear programme and ease their impact on Iranian businesses and consumers. "In addition to the U.S dollar and currencies of the trading countries, Iran could take gold in its commercial transactions with other countries," Mahmoud Bahmani, Iran's central bank governor, told domestic Iranian news agencies. In recent months, Western powers, notably the U.S. and the European Union, have tightened financial sanctions on the Islamic regime in an attempt to force Iran to scale back or halt its efforts to enrich uranium. |
My Dear Friends,
So is that it? Are precious metals simply "done," beat down by the beard, not to lift their heads again?
The Dow has closed above 13,000 for the first time since 2008, and the mainstream media is declaring that a strong economic recovery is underway. Barack Obama is telling anyone who will listen that his economic policies are a huge success, and U.S. consumers are piling up astounding amounts of new debt. Unfortunately, this euphoria about the economy will be short-lived. None of the long-term problems that are destroying the U.S. economy have been solved. In fact, there are dozens of statistics that can be quoted that prove that the U.S. economy is in far worse shape than it was when the recession supposedly ended. If dramatic changes are not made very rapidly, our nation is going to smash directly into an economic brick wall. Sadly, most Americans are so addicted to entertainment that they have no idea what is about to happen. Most of them are "sheeple" that are content to trust that the "experts" know exactly how to fix our problems as they continue to enjoy their entertainment-induced comas. After all, it is much easier to turn on "American Idol" or "Dancing With The Stars" than it is to think about debt ratios and monetary policy. But that doesn't mean that we should not try to wake the sheeple up. It just means that it will not be easy.
The silver price streaked higher yesterday, with Comex silver for delivery in March gaining 4.6% to settle at $37.14 per troy ounce – the highest settlement price since September. Gains in the gold price were more modest, with gold for April delivery up 0.8% to $1,788.40, but nevertheless, this is above resistance at $1,780, and offers gold a good shot at running up to and perhaps besting the $1,800 mark. As 
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