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Friday, March 16, 2012

Gold World News Flash

Gold World News Flash

Posted: 15 Mar 2012 04:21 PM PDT

from The Financial Survival Network:

The rats are fleeing the burning tenement of Wall Street. First, Greg Smith from Goldman Sachs who resigned in horror over the the firm's alleged disregard of any ethical limitations upon their ability to separate their clients from their money. Then today, an anonymous insider at another large bank comes out making numerous allegations about rigging off the silver and financial markets. We have no evidence to base any conclusions as to the veracity of these allegations, but certainly we have seen numerous Wall Street clients end up in the poor house.

Surprise, surpise, just when you thought the bad guys at MF Global and their network of enablers had won, the MF's Trustee in Bankruptcy turns up another $685 million, which just a few days ago seemed all but lost. Perhaps they found it in John Corzine's filing cabinet, or maybe it was in the supply closet along with the records of all that other money they haven't been able to find. Or perhaps some of the banks who were holding these funds decided it just wasn't worth the bad PR. Either way, FSN is always skeptical of coincidences. Especially now, when the global collapse is perhaps switching into high gear, and we're going to get a sample of those weapons of mass financial destruction that Warren Buffet has been losing no sleep over.

Click Here to Listen to the Podcast


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The Daily Market Report

Posted: 15 Mar 2012 07:25 AM PDT

Rising Interest Rates May Signal Oncoming Inflation

15-Mar (USAGOLD) — Gold is on the mend, having found support ahead of the 61.8% retracement level of the rally from 1522.40 to 1790.55. The yellow metal is now back above the midpoint of that range. Perhaps investors are reconsidering the implications in the wake of yesterday's broad sell-off of safe-haven assets. In particular, the sharp drop in bonds just might be an early harbinger of inflationary things to come.

While gold is certainly a great asset to hold in times of general economic uncertainty and systemic risks, the yellow metal can really shine when inflation kicks in. And by the way, isn't inflation exactly what the Fed wants? When you control both the nation's money supply and the price of that money (interest rates), if inflation is what you want…inflation is what you will get.

As a result of the Fed's zero percent interest rate policy (ZIRP) and various other accommodations, bondholders have been realizing a real negative interest rate for some time. In an environment where investors are quick to interpret Tuesday's tepid FOMC statement as call for "risk on" — to flee the perceived safety of bonds to push out along the risk curve in a quest for yield, any yield — its worth questioning what else might be going on.

Stocks have risen of late largely based on expectations that there will be a QE3. Suddenly the most modest optimism on the part of the Fed, which has curtailed expectations of QE3, and risk assets are the place to be. In actuality, the big rally in stocks on Tuesday was likely more attributable to the Fed's stress test results and resulting stock buy-backs and dividend increases in the banking sector. However, if the premise is that the economy is improving, one would also expect an increase in price risks.

Rumors today that the President plans to tap the strategic oil reserve to check the recent rise in crude and gasoline prices is further evidence of inflation worries. Even if they're not inclined to count energy and food prices as inflation because they are "too volatile", those prices (especially energy) eventually seep into the core numbers.

But on top of the inflation threat, economic uncertainty and systemic risks still abound. The national debt isn't shrinking. We've actually seen some disturbing budget and trade deficit numbers recently. The Fed remains engaged in ongoing quantitative measures. Europe is on the verge of recession, if not already in one. Greece remains a mess, even with the hurdles to bailout-2 recently cleared.

Speculators in paper representations of gold may well be lightening their exposure, and perhaps even short-selling, on this week's sentiment shift. However. physical buyers are either holding pat or are looking to add to their holdings at these attractive prices.

The science of gold and other precious metals

Posted: 15 Mar 2012 06:56 AM PDT

Gata


Podcast interview with Detlev Schlichter

Posted: 15 Mar 2012 06:04 AM PDT

Last week I had an interesting discussion with Detlev Schlichter, an economist who has recently published his book, Paper Money Collapse. For a comprehensive introduction to Austrian economics in the context of today’s economic events I can strongly recommend it.

The podcast of the interview can be seen here:

Alasdair Macleod

macleod@financeandeconomics.org

www.financeandeconomics.org

GoldSeek.com Radio Gold Nugget Interview: President of La Ronge Gold Corp., Mr. Rasool Mohammad

Posted: 15 Mar 2012 06:02 AM PDT

Mr. Mohammad received a B.Sc. (Mining Engineering) from the NWFP University of Engineering and Technology, in Peshawar, Pakistan in 1991. He has over 15 years experience in the mining and mineral exploration industry. Mr. Mohammad has worked for companies such as BHP, Miramar Mining, Hunter Dickenson Inc., Cumberland Resources Ltd., and several other Vancouver based junior exploration companies, and has worked on mining projects in Canada, the United States, Mexico, Peru, and Brazil. He speaks English, Spanish, Portuguese, Urdu and Pashto. He also currently serves as Director, President and CEO of Comstock Metals Ltd. (TSX.V:CSL).


Buying a Hairway to Steven with Gold

Posted: 15 Mar 2012 05:59 AM PDT

"Now the only question remaining is...as Ted Butler said on the phone yesterday...are JPMorgan et al done to the downside?" ...


LGMR: Gold "Vulnerable" as Treasury Bond Sell-Off Worsens, Indian Demand Revives

Posted: 15 Mar 2012 05:58 AM PDT

London Gold Market Report from Adrian Ash BullionVault Thurs 15 March, 08:45 EST The WHOLESALE-MARKET gold price twice rose within a few cents of $1650 per ounce in London Thursday morning, adding 0.9% from yesterday's fresh 8-week low as industrial commodities ticked lower again. The price of silver bullion rallied 2.3% to $32.40 per ounce, but remained over 5% down for the week so far, being "very much influenced" by the gold price according to one Swiss precious-metals dealer. Japanese and Hong Kong equities rose, but European stock markets were flat while US equity futures pointed higher. The price of US Treasury fell for the seventh consecutive session, pushing the 10-year bond's yield up to 2.29% – just shy of Wednesday's 5-month high – and extending the longest period of price falls since 2006 on Bloomberg's data. "The [bond] market is on the back foot," reckons head strategist Charles Diebel at Lloyds Banking Group in London. "The catalyst seemed to be the Fed ac...


CNG Interstate Conversions from Gasoline to NatGas for Cars

Posted: 15 Mar 2012 05:50 AM PDT

CNBC's Rick Santelli interviews Craig Wright, president of CNG Interstate, a company that does conversions for cars and trucks to allow them to run on NatGas (CNG or compressed natural gas).

One can tell we are in an election year by what surfaces at the end of this interview – an apparent release from the Strategic Petroleum Reserve by the U.S. and the U.K.   

 

To learn more about CNG Interstate, start here:  http://www.cnginterstate.com/

Source: CNBC

http://video.cnbc.com/gallery/?video=3000078769

In The News Today

Posted: 15 Mar 2012 05:37 AM PDT

Go confidently in the direction of your dreams. Live the life you have imagined. –Henry David Thoreau

My Dear Friends:

I have done an interview with Eric King of King World Radio. Our subject is what will be resolved here and now in the gold market and why.

I anticipate the interview to

Continue reading In The News Today

Jim's Mailbox

Posted: 15 Mar 2012 05:33 AM PDT

Emotional Clamour, Extreme Concentration, And Feel For Markets CIGA Eric

Liquidity is lifting all boats. Relative buoyancy in this case rather than being defined by fluid pressure and gravity are defined by human behavior and capital flows. At times the equity market is a clear winner, while others the gold miners are quietly out

Continue reading Jim's Mailbox

Tim Geithner Covers for Corruption on Pennsylvania Avenue

Posted: 15 Mar 2012 05:14 AM PDT

Last Friday, Treasury Secretary Timothy Geithner charged in a Wall Street Journal op-ed that those who oppose the Obama Administration's regulatory regime for the financial services industry "seem to be suffering from amnesia about how close America came to complete financial collapse under the outdated regulatory system we had before Wall Street reform." Au contraire, Secretary Geithner, it is you who choose to ignore and misrepresent the lessons of the financial crisis by perpetuating the myth that the source of the crisis was a lack of regulation.

First, your essay glosses over the central role the federal government played in creating the crisis. In particular, the government through Fannie Mae and Freddie Mac directed $5.2 trillion (that is trillion with a "t") of capital to increase the supply of mortgages. In addition, it passed a law that required banks to make billions of dollars in loans to individuals that were unlikely to pay off the loans, in the end with 0% down.

In 1998, Fannie Mae announced it would purchase mortgages with only 3% down. And, in 2001, it offered a program that required no down payment at all. Between 2001 and 2004, subprime mortgages grew from $160 billion to $540 billion. And between 2005 and 2007, Fannie Mae's acquisition of mortgages with less than 10% down almost tripled. These loans are now known as "subprime" and "alt A" loans. At the time they were made, Fannie Mae and Freddie Mac encouraged their issuance by lowering their standards and buying them up from the now vilified mortgage brokers, S&Ls, banks and Wall Street investment banks.

This activity was not due to a lack of regulation or oversight as you claim. Both companies are under the direct supervision of a federal regulator and Congress. At the time these loans were being purchased by these two Government Sponsored Enterprises, their actions were defended by many in Congress who, led by Senator Chris Dodd and Congressman Barney Frank, saw such reckless lending as a successful government initiative.

At the same time, the easy money policies of the Federal Open Market Committee, of which you were a voting member, were feeding an asset bubble in residential real estate, providing what proved to be an irresistible lure not only for speculators, but also for American families trying desperately to buy a house before inflation robbed them of their chance for home ownership.

Yes, mortgage brokers and banks encouraged reckless borrowing, though many who borrowed, with a little honest reflection, could have known that they would be unable to meet the financial obligation of paying the mortgage that they were using to buy a house that they could not afford. Nor does any of this excuse the poor judgment of those on Wall Street who levered their firms' balance sheets so that even a 4% loss on their investments would leave them either bankrupt or in need of a bailout.

But, the culpability of those in the private sector should not be used to cover up or excuse the irresponsible behavior of those in the federal government. The self-regulatory check normally provided by markets on activities that are likely to lose money — lenders backing away — was simply blocked by the government's intervention in the capital markets. As you must know, six top executives of Fannie Mae and Freddie Mac have been charged by the Securities and Exchange Commission with securities fraud for hiding the size of the purchases of low quality mortgages from the market.

In addition, the normal check on excessive leverage provided by unwilling lenders was overwhelmed by the perception, now validated, that Fannie Mae and Freddie Mac debt were backed by the full faith and credit of the federal government. This created a willing buyer backed by the federal government with unlimited access to credit markets and a trillion dollar budget. No wonder S&Ls and Wall Street found ways to satisfy the demand. Blaming a lack of regulation for the subsequent losses is political spin meant to cover up the greed and corruption on Pennsylvania Avenue that led to the crisis.

Second, your claim that increased regulatory oversight would have prevented the crisis requires a credulous belief in the wisdom and courage of those in power. Regulators with all of the necessary powers have failed in their most basic task of preventing fraud including Bernie Maddoff's Ponzi scheme, and now the still unexplained disappearance of $1.6 billion of customer money at MF Global. Yet, you ask us to believe tens of thousands of pages of new regulations will somehow empower you and other elite public servants to prevent another financial crisis?

As we know now, you and the other members of the Federal Open Market Committee in 2006 did not grasp the implications of the then faltering housing market for the general economy or the health of the banking system. As a consequence, you and your colleagues did not use the powers you had to head off the financial crisis when there was still plenty of time to act. As former Prime Minister Tony Blair writes in his memoir, A Journey of My Political Life, an important contributor to the financial crisis was a failure "of understanding. We didn't spot it…it wasn't that we were powerless to prevent it even if we had seen it coming; it wasn't a failure of regulation in the sense that we lacked the power to intervene. Had regulators said to the leaders that a huge crisis was about to break, we wouldn't have said: There's nothing we can do about it until we get more regulation through. We would have acted. But they didn't say that."

Third, the new regulatory regime for the financial industry created by the Dodd-Frank bill — ironically named after two of the perpetrators of the financial crisis — omits any reform of Fannie Mae and Freddie Mac. Yet, unlike the commercial and investment banks who have repaid the government bailout money, these two state sponsored financial giants have cost taxpayers more than $140 billion and are seeking billions more in bailout funds. At the same time, HUD is moving forward on issuing new rules that would support racial quotas for bank mortgages, which no doubt will again force banks to make loans to individuals who cannot afford them.

In light of this evidence and your own experience, your promise that a new, expansive regulatory regime reduces the risk of financial crisis is not credible. The regulatory maze created by Dodd-Frank not only robs the private sector of real resources that otherwise would be committed to allocating capital to credit worthy borrowers, it also undermines market skepticism essential to preventing systemic risk. In addition, it puts even more power in the hands of a few individuals who, like you, are fallible, rather than dispersing power among market participants.

You conclude your essay by writing: "We cannot afford to forget the lessons of the crisis and the damage it caused to millions of Americans. Amnesia is what causes financial crises."

With all due respect Mr. Secretary, federal government policies, not amnesia, were at the heart of the financial crisis. The arrogance of power revealed by your selective memory and political spin, and the expansive regulatory regime you support are now the primary source of systemic risk to the US financial system and the economic security of the American people.

Regards,

Charles Kadlec,
for The Daily Reckoning

Tim Geithner Covers for Corruption on Pennsylvania Avenue originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.


Jefferies to Buy MF Global Precious-Metals Assets

Posted: 15 Mar 2012 05:13 AM PDT

Investment bank Jefferies Group Inc.'s commodities arm has agreed to buy the gold, silver and other precious-metals assets from the trustee liquidating MF Global Holdings Ltd.'s brokerage business.

James Giddens, the trustee overseeing the liquidation of MF Global's brokerage's commodities business, said in a court filing Monday that an offer from Jefferies Bache Financial Services Inc. is the "best available opportunity" to sell the remaining physical property under his control.

Jefferies is buying the warehouse certificates—not the actual gold and silver bars—of MF Global's former commodities customers.

…The sale therefore represents an "attractive opportunity" in a market environment in which other means of liquidating the certificates are unlikely or would be subject to a "far greater liquidation haircut," Mr. Giddens said in court papers.

[source]

PG View: The trustee's comments about the liquidity of these warehouse certificates sends a very clear message: Buy physical and take delivery.

An industry insider familiar with the deal tells me this is purely a play by Jefferies to acquire the former commodities clients of MF Global. Jefferies apparently has the connections with HSBC (the custodian of the actual metal) and is far more likely to be able to get the metal or sell the certificates than some lawyer handling the bankruptcy. What they want is these former MF clients to start trading with them.


Ayn Rand's Don Watkins on Finding a Way Out of the Entitlement Tarpit--03-15-2015

Posted: 15 Mar 2012 04:34 AM PDT

Don Watkins and I discuss the unsustainable state of America's Entitlement Society. It is clear that the system is going to collapse; we are certainly at the height of corruption when half the population is allowed to live at the expense of the other half. The geometric growth in entitlement programs and expenditures is also mathematically unsustainable. Therefore, people need to be educated about entitlements, which actually make society more poor and ensure a lower standard of living for everyone. 

The alternative to enlightening and raising the population's consciousness will be far worse than ending entitlements programs. While there is certainly a core of individuals who physically or mentally cannot participate in society, the extra wealth created by the elimination of the parasitic class would more than make up for the loss of entitlements. Before the advent of leviathan government, who's sole purpose was to take care of an ever increasing portion of the populace thereby insuring it's own perpetuation, it used to work this way in America.

Please fill out the subscription box at KerryLutz.com to instantly receive your free Financial Survival Toolkit & weekly gold and silver newsletter.


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Pierre Lassonde - Why Gold Could Spike 20% in a Day or Two

Posted: 15 Mar 2012 04:19 AM PDT

With so much worry surrounding the gold and silver markets, today King World News interviewed legendary Pierre Lassonde, to get his thoughts on what to look for going forward. Pierre is arguably the greatest company builder in the history of the mining sector. He is past President of Newmont Mining and past Chairman of the World Gold Council and current Chairman of Franco Nevada. When asked about the plunge in gold, Lassonde responded, "There's no cliff here.  There's no need to panic whatsoever.  First of all, let's take a look at where we came from.  We came from $250 ten years ago, to $1,600 to $1,700 today.  That is a remarkable feat for the gold price."


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Real Estate 4 Ran$om: Role of Speculation in Financial Collapse - The Recurrency of Fraud

Posted: 15 Mar 2012 04:12 AM PDT

Fed Meeting Spillover Aids US Dollar Strength

Posted: 15 Mar 2012 03:36 AM PDT

Good day and welcome to another Thursday. We saw another summer-like day here in the Midwest that lends itself to throwing the winter coat toward the back of the closet and forgetting about it until next winter. While it's still way too early to take such drastic action, investors have seemingly thrown the debt problems and other fundamental concerns about the U.S. economy to the back of the closet, hidden under that shirt you got as a birthday gift years ago that was never returned.

Saying goodbye to my winter attire isn't the wisest decision, but it's definitely tempting. It appears the markets were looking for any type of excuse to jump on the U.S. bandwagon and see how far it would take them. We didn't see any remnants of the choppy trading pattern from Tuesday, so it was an all-out rout by the dollar from the time we fired up the currency screens in the morning until we left for the evening. Did we have any reports that would have sent the dollar into orbit yesterday? No, not really. The party that began yesterday after the Fed meeting was still going full force and was still celebrating their upbeat outlook.

I'm always up for a good party, but when you see that guy who overindulged on punch running around with a lampshade on his head, you know it won't be long before things start to wind down. When that guy comes out of the woodwork is anyone's guess, but it's usually just a matter of time. I think the same can be said with this dollar strength. The markets have such a short-term memory these days that going from one extreme to the other isn't outside the norm, and investors have no problem bailing midstream. It's just something to keep in the back or your mind while dealing with this market volatility.

We saw only a handful of economic reports yesterday, which included weekly mortgage applications, the import price index and the fourth-quarter current account balance. The mortgage app figures are considered secondary and very volatile, but nonetheless, they did fall 2.4%. I don't know if you've paid much attention to the bond yields, but they have really shot up recently, so that doesn't spell good news for those looking to refinance or buy a home. Bond yields have been all over the place as well, with the 10-year sitting on a four-month high, but it wouldn't surprise me to see them turn on a dime. I'm sure the Fed isn't exactly thrilled to see them jump over 27% since the end of January.

Finally, we had the fourth-quarter current account deficit grow to $124.1 billion, which marked the biggest shortfall in three years. The balance for 2011 widened to $473.4 billion, or 3.1% of GDP, and came in much higher than the estimated $115 billion figure. If we do see the type of increased expansion that investors have been hanging their hats on over the past few days, then I would expect to see this number continue to rise.

We have a full day in the data department today, as there are a couple of regional manufacturing reports, wholesale inflation and the TIC (Treasury international capital) flows from January. I don't think the market will pay much attention to those, but the only wild card that I can see would be the weekly jobs numbers. If we see a better-than-expected result, investors may feel vindicated on their rosier outlook and continue to party on with the dollar. I haven't seen much that would indicate a sharp rise, but if the report disappoints, we could see things settle down a bit.

Speaking of jobs, Chuck sent this tidbit while he was sitting in the airport yesterday morning:

"I saw this in today's post. Talk about the book-cookers coming clean! The BLS originally said that St Louis had created 2,500 jobs in 2011. And the civic leaders were gushing, slapping each other on the back for the 'job well done.'

"Well, a funny thing happened on the way to the forum. The BLS now has revised the numbers to show that St. Louis actually lost 3,900 jobs instead! OK, I've heard of revisions, but by this wide of a percentage margin? Oh, and this was reported on the back pages of the paper, hidden away in a corner hoping that no one would see it!

"But I did!"

Thanks again for the info, Chuck. Seeing a report like that is so frustrating. Investors use this type of information to make important decisions not only in real time, but also in regard to the future, so it's no wonder we see market volatility on the rise.

Anyway, let's move on the currency market before my blood pressure begins to rise. While the dollar rose against every single major currency, except for the Indian rupee (INR), a good portion of them took a sizable fall. The worst of the worst, which included both the Norwegian krone (NOK) and South African rand (ZAR), got caught with a stiff right jab as they were sitting on 2%-plus losses for most of the day. The general optimism surrounding the U.S. economy set the wheels in motion, but economic reports released in each country sent them over the edge and battling for last place throughout the day.

Beginning with South Africa, retail sales growth rose at the slowest pace in six months, as it fell to 3.9% in January, from the previous reading of 8.7%. The rise in January inflation to a two-year high was blamed for a majority of the slowdown as rising food, fuel and utility prices kept a lid on consumer spending. This goes along with what I was talking about yesterday regarding fuel prices in the U.S. potentially impacting future retail sales figures if consumers are forced to pay more at the pump.

The domestic retail industry has played a major role in the economy over the past year, so its much-larger-than expected fall led some investors to believe a rate cut might be needed at some point. Interest rates have remained near record lows since November 2010, when they were cut to the current 5.5%, but any rate cuts would send investors packing, as the interest rate differential has been the primary motivation to own rand. The $40 drop in gold prices didn't help either, but there was also speculation the South African central bank has been in the market buying dollars at an increased rate.

The Norwegian krone fell to a five-week low against the dollar, and fell by the most in six months against the euro, as Norges Bank, their central bank, unexpectedly cut interest rates by 0.25%, to 1.5%. The krone was already in the hole to start the day as economists were just expecting to see a downward revision to their rate forecast, but the decision to actually move took many by surprise. The currency fell nearly 1.5% in a couple of hours and ended the day with over a 2% loss. Coupled with the 0.5% cut in December and continued government concern over a strong currency, the market took this cut to heart.

Policymakers are in a tough spot. The higher krone has been spurred by the economy's relatively solid fundamentals. If it wasn't an escape from the eurozone to a neighboring AAA-rated country, it was economic resilience underpinned by the oil industry attracting investors from all over the world. We have recently seen improvement in both manufacturing and consumer confidence reports, so it's not like a poorly performing economy justified the cut. In fact, the already low internal interest rate environment has given rise to the housing and domestic credit markets, so this move will just feed the fire.

The Norwegian government has long been critical of its disproportionate currency appreciation compared with the euro, as most of their trade is with the eurozone. The stronger krone has kept inflation in the background, so the central bank would rather give manufacturers some breathing room by cutting rates and lessening the appeal to investors seeking yield than worry about the impact of easy money. It's a delicate balancing act, as the krone was trading at a nine-year high versus the euro, but I have confidence policymakers have the ability to remain on the tightrope without falling.

It wasn't a pretty picture on the currency screens as I was on my way home last night. The only currency that went against the grain, interestingly enough, was the Indian rupee. From what I could find, it looked as though investors were pleased with the lower-than-expected report of manufacturing inflation. This report fueled speculation the central bank would have some scope to cut interest rates in order to help bolster economic growth. Also, real returns for foreign investors were being eaten up by the higher inflation, so thoughts of higher capital inflows were on the table. The reasons for rate cuts were, obviously, different, but the market reaction to the cut in Norway certainly wasn't positive.

Both gold and silver took another hit as speculation for QE3 hopped in the back seat after the Fed meeting. Gold fell another 1.5%, to $1,645, and silver was trying to hold onto the $32 handle when all was said and done. Even though both metals have seen a reduction in buying, silver is still up 15% so far this year and gold has seen a rise of about 5%. If the Fed doesn't end up taking additional measures, the damage has already been done as far as the previous influx of capital into the market in the form of QE1 and QE2.

The same rationale was being applied to the market perceptions of most currencies in that if the Fed doesn't pump more dollars into circulation, then a systemic reason for a weak dollar has been removed. I think most rational investors can look past this as being a motivation for buying the dollar. The fundamentals that have applied constant pressure on the dollar over the past several years are still present, if not worse, so looking long term paints a different picture than what has been portrayed this week.

As I came in this morning, the dollar buying frenzy has finally subsided, as the only currency in negative territory is the pound sterling (GBP). The currency is sitting on only a fractional loss at the moment, but Fitch Ratings was at it again by changing Britain's outlook to negative from stable and threatening its AAA status. They went on to say the decision reflects the very limited fiscal space to absorb further economic shocks in light of such elevated debt levels and a potentially weaker than currently forecast economic recovery.

Then, Goldman Sachs shares plummeted 3.4% on Wednesday, cutting its market value by $2.15 billion, after The New York Times published an article by a Goldman executive criticizing the firm's treatment of its clients and a "decline in the firm's moral fiber." London-based executive Greg Smith said he was resigning after 12 years with the firm.

To recap… It was another day in the sun for the US dollar as a spillover effect from Tuesday's Fed meeting was in full force. The question then becomes how long with this last. There wasn't much data yesterday, of which the current account deficit widened, but we'll see our fair share today. The South African rand and Norwegian krone both fell by over 2%, but all of the currencies ended the day in negative territory except for the rupee. Diminished thoughts of QE3 spurred a selloff in metals as well.

Mike Meyer
for The Daily Reckoning

Fed Meeting Spillover Aids US Dollar Strength originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.


Gold futures gain after sharp losses

Posted: 15 Mar 2012 03:25 AM PDT

15-Mar (MarketWatch) — Gold futures edged higher on Thursday, as recent sharp losses attracted bargain hunters and the dollar was weaker.

Gold for April delivery added $5.20, or 0.3%, to $1,647.90 an ounce on the Comex division of the New York Mercantile Exchange.

Gold sank 3% on Wednesday as reduced hopes of monetary stimulus dulled demand for the metal.

[source]

Use This Sell-off To Prepare For The Next Big Fundamental Move Higher

Posted: 15 Mar 2012 03:15 AM PDT

A good hockey player plays where the puck is.  A great hockey player plays where the puck is going to be.   - Wayne Gretsky
The reason this sell off in gold and silver doesn't particularly concern me is we have seen this pattern now for more than a decade.  Hedge funds buy paper gold and silver, pushing the prices higher on momentum and the bullion banks or commercials are on the sell side, building up a sizable short position.

That quote is from Dan Norcini's interview on King World News Blog  LINK.  Dan has been trading the futures market for twice as long as I have and, while I may not always agree with his analysis, I have to pay attention to what he's willing to share with the public and he knows the mechanics of the commodities markets as well as anyone out there.  I may not always be right when I think he's wrong, but I know that his latest commentary is 100% correct.

I have traded and observed every single manipulated Comex paper gold/silver open interest liquidation sell-off since this bull market began over 10 years ago.   This open interest liquidation sell off started last year at the end of April.  At this point in the cycle the percentage size of the correction is not as severe as a couple of the past liquidation cycles.  We are getting near the end.  The open interest peaked last April at over 160,000 silver contracts.  The o/i bottomed in December around 90,000.   The o/i bounce quickly to around 118k.  A lot of this was momentum money and this is the open interest long position that JP Morgan makes an illegal living off of.  This latest hit is JP Morgan's manipulated hit on the market working off the latest round of "hot" money jumping in the market to try and get the ride in silver from $31 to $34.  Those traders are losing money on their long positions and - based on my reading of yesterday's o/i - have started to short the silver market.  This is when JP Morgan will cover and the market will move higher again.  Likely much higher.

How can the CFTC and SEC regulators allow JP Morgan to do this repeatedly over 10 years?  You don't believe it?  Well then I guess you don't believe MF Global was product of corruption and Government enablement and disbelievers are therefore okay with the MF Global tragedy.  But the fact of the matter is that the Government entities that were supposed to regulate and prevent - and prosecute in the event of broken laws - MF Global from happening are the same Government enforcement agencies that regulate the Comex.  Ultimately the market will prevail, as it has for 5.000 years.  

In the meantime, I know these illegally manipulated sell-offs can be gut-wrenching, but you either have to start scale-in buying after the initial big market stop-loss driven drops occur or just look the other way for awhile and hold on tight.

On another note, here's a chart that should scare the crap out everyone who has faith in the U.S. dollar:


The price of the 30-yr Treasury bond looks like it could go into a freefall.  Yesterday's 30-yr Treasury auction was very ugly.  The primary dealers had to swallow 56% of the all the bonds issued.  With current Fed QE policy still in place - i.e. operation twist - we can assume that in some slick accounting maneuver, the Fed is ultimately the back-stop on the bonds taken down by the PD's.  I spot-checked the last 10 long bond auctions and there was only 1 in which the PD's took down more than 56%.  In most them, the PD's were taking down less than 50%.   Why is this significant?  Because China, Russian, and now Japan are starting to reduce their participation in U.S. Government bond auctions.  In fact, Russia has outright reduced its holding by over 50% in the last year.  Japan announced the other day that, in a move to diversify their dollar reserves - they bought $11 billion in yuan-denominated Chinese Government bonds. 

This is not a one-time event.  This is becoming a systemic trend with large holders of U.S. dollar reserves. This is a very ominous sign for the massive U.S. Government budget deficit spending program.  Either the Fed has to figure out a way to induce our large foreign financiers back into Treasuries/dollars or the Fed is going to have to print even more money to make sure the Government gets its spending heroin without sending bond yields into outer space.

On that note, since mid-December the yield on the 30-yr bond has gone from 2.80% to over 3.40%.  This is a 22% increase, signifying a 22% increase in the cost to the Taxpayers of funding spending deficits with 30-yr. bonds. This is a very bad trend.  Even worse, the flagship mortgage finance index, the 10-yr Treasury, has shot up from 1.85% to 2.30% - a 23% increase in the cost of 10-yr paper.  At some point this higher rate will funnel through to the mortgage market.  It's probably why mortgage refi applications took a nose-dive over the past couple weeks.  It will place further stress on an already fragile housing market. 

What the hell happened to the intended interest rate of Bernanke's "Operation Twist?"  like ALL Government intervention programs it is starting to fail badly, perhaps tragically...



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Trustee Sells the MF Global Customers' Gold and Silver to Jefferies and Company

Posted: 15 Mar 2012 02:54 AM PDT

According to Barry Stuppler Platinum has a Golden Future--03-15-2012

Posted: 15 Mar 2012 02:47 AM PDT

Barry Stuppler, veteran precious metals investor and dealer said back in October that Platinum was a screaming buy. For good reason. Platinum's price had dipped below the price of gold, for only the fourth time in the post WWII era. Of course the Platinum market is extremely small compared to others, but it is an extremely important industrial metal that also has some investment attributes. Sure enough, Platinum closed out the year at around $1400 and in no time at all has surpassed gold. Platinum has been the best performing metal so far this year. Today, Thursday, 3/15/2012 it's at $1674 per ounce.  

There's a number of factors adding to Platinum's rise. Labor unrest in South Africa (the largest producer), increased auto sales, jewelry demand in Japan, and the Canadian Mint's reintroduction of Platinum Maple Leafs. If these factors continue in force, we could see record increases in Platinum prices and for that reason Barry believes it has a golden future. 

Please fill out the subscription box at KerryLutz.com to instantly receive your free Financial Survival Toolkit & weekly gold and silver newsletter.


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James Turk, Ed Steer discuss metals market manipulation

Posted: 15 Mar 2012 02:39 AM PDT

10:33a ET Thursday, March 15, 2012

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk today tells King World News that the recent smashing of gold and silver contradict other economic indicators and thus give evidence of government intervention. Both an excerpt of the interview and its full audio are posted at King World News here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/3/15_Tu...

And video of the presentation made at the Casey Research pavilion at the Vancouver Resource Investment Conference in January by GATA board member Ed Steer, editor of Ed Steer's Gold and Silver Daily letter, published by Casey Research, has been posted at YouTube. Steer discusses the manipulative short interest in the precious metals on futures exchanges. It's posted here:

http://www.youtube.com/watch?v=_bII1rUDH88

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters

From a Company Press Release
November 22, 2011

VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.

"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."

Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.

For the company's complete press release, please visit:

http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf


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Prophecy Platinum (TSXV: NKL) and Ursa Major Minerals
Sign Combination Agreement

Company Press Release
Friday, March 2, 2012

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) and Ursa Major Minerals Inc. have signed a binding letter of agreement for a business combination through a proposed all-share transaction. In doing so Prophecy and Ursa have acted at arm's length and the transaction has been negotiated at arm's length.

Prophecy will issue one common share in exchange for every 25 outstanding common shares of Ursa. Ursa options and warrants will be exchanged for options and warrants of Prophecy on an agreed schedule.

Prophecy's offer represents a value of about $0.15 per each common share of Ursa based on Prophecy's share price of $3.70 as at March 1, representing a premium of 130 percent to Ursa's March 1 closing price of $0.065.

Prophecy is to subscribe for $1 million common shares of Ursa by way of private placement financing at $0.06 per share, subject to regulatory approval. Upon placement completion, John Lee and Greg Hall, current Prophecy directors, will be appointed to Ursa's board.

Prophecy thus will become a mid-tier resource company with a robust and
diversified pipeline of platinum nickel projects, including:

-- The fully permitted open-pit Shakespeare PGM-Ni-Cu mine close to Sudbury, Ontario, infrastructure with near-term production capabilities.

-- The flagship Wellgreen (Yukon) PGM-Ni-Cu project with more than 10 million ounces of Pt-Pd-Au inferred resource. Drilling is under way and a preliminary economic assessment study is pending.

-- Manitoba's Lynn Lake Ni-Cu project with more than 262 million pounds Ni and 138 million pounds Cu measured and indicated.

For the complete announcement, please visit Prophecy Platinum's Internet site here:

http://www.prophecyplat.com/news_2012_mar02_prophecy_platinum_ursa_major...

Barron’s Gold Mining Index To Double Over The Next Couple Of Years?

Posted: 15 Mar 2012 02:18 AM PDT

The behaviour of gold stocks during this gold bull market is really not that different to the gold bull market of the 70s. It was not until almost the end of the bull market (in 1979) that the gold stocks really started to take-off. Those who think gold stocks will not rise during this bull market will be disappointed, and need to consider the evidence presented here.


The relationship between gold and interest rates

Posted: 15 Mar 2012 02:07 AM PDT

This week's downside breakout in the T-Bond futures market and the associated rise in the T-Bond yield has prompted us to re-visit the relationship between gold and interest rates. In the process of doing so we'll address the question: are rising interest rates bullish or bearish for gold?


Buy Gold Because A Currency Crisis is Coming

Posted: 15 Mar 2012 02:04 AM PDT

12-Mar (TheStreet) — Michael Green, co-author of In Gold We Trust?, explains why a currency crisis is unavoidable and investors need to protect themselves with gold.

Grandich Client Timmins Gold

Posted: 15 Mar 2012 01:51 AM PDT

The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! March 15, 2012 05:35 AM Timmins Gold continues to demonstrate its desire to be a true emerging gold producer. I would suggest it needs to build a new technical base as most gold producers are being pressured by the current bear raid in the paper gold market [url]http://www.grandich.com/[/url] grandich.com...


South African gold production continues to plunge

Posted: 15 Mar 2012 01:45 AM PDT

13-Mar (MINEWEB) — South Africa, only a couple of decades ago the world's largest producer of gold by a huge margin, but recently overtaken by China, Australia and the U.S., and in danger of being overtaken by Russia, has seen the decline continuing according to Statistics SA.

The state statistical body's report on South Africa's mine production in January this year sees an overall decline year on year for all metals and minerals of 2.5%, but in the gold sector the decline was a massive 11.3%, more than even that in December when gold output fell by 8.2%.

[source]

PG View: South African gold production hasn't been this low in 90-years.

Real Estate 4 Ran$om: Role of Speculation in the Financial Collapse - Patience and Finance

Posted: 15 Mar 2012 01:19 AM PDT

This is an Australian produced film, but the principles carry. I would not focus on land to the exclusion of financial assets like stocks, and other vehicles for producing income and capital gains, that allow speculators to game the system.


Gold & Silver Market Morning

Posted: 15 Mar 2012 01:08 AM PDT

New York gave us the low at $1,642.80 before Asia stated the bounce taking it up to $1,648, while the euro continued to struggle at €1: $1.3046, while the dollar strengthened against most currencies. The morning Fix in London was set at $1,646.75 and in the euro at €1,262.26, while the euro stood at €1: 3046. Ahead of New York's opening it stood at $1,647 and in the euro €1,262.65 while the euro was at €1: $1.3045.


Gold "Vulnerable" as Treasury Bond Sell-Off Worsens, Indian Demand Revives

Posted: 15 Mar 2012 01:02 AM PDT

The WHOLESALE-MARKET gold price twice rose within a few cents of $1650 per ounce in London Thursday morning, adding 0.9% from yesterday's fresh 8-week low as industrial commodities ticked lower again.


Barron’s Gold Mining Index To Double Over The Next Couple Of Years?

Posted: 15 Mar 2012 12:57 AM PDT

The behaviour of gold stocks during this gold bull market is really not that different to the gold bull market of the 70s. It was not until almost the end of the bull market (in 1979) that the gold stocks really started to take-off. Those who think gold stocks will not rise during this bull market will be disappointed, and need to consider the evidence presented here.


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