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- 2012-03-14 Bloomberg Link Precious Metals Conference Gold Forecast
- Silver Is The Restless Metal
- The Virtues of the Humble Investor
- Gold And Silver Prices Have Further To Fall
- Commodity Trading: Precious Metals Lead The Way
- Bernanke Pries Gold And Platinum Apart
- Argonaut Gold added to the S&P/TSX Composite Index
- This is what I was worried about re metals,
- Matt Stoller: Robosigning Still Going on at Wells Fargo, Reports HUD Inspector General
- FSN Interview: “Ranting” Andy Nailed The Gold/Silver Raid Again
- Singapore Seeks To Be Asian Bullion Hub With Tax Free Gold and Silver
- Three dividend growers with an unusual but powerful advantage over the competition
- This could be the most important chart in the world for commodities investors
- Satyajit Das: “All Feasts Must Come to an End” – China’s Debt & Investment Fueled Growth (Part 2)
- This upcoming event could crash the euro and send gold soaring again
- Withdrawal Symptoms
- Singapore Seeks to Be Hub with Tax Free Gold & Silver
- Outlook Unclear Amid Risk Appetite Trends
- Platinum price recaptures the lead from gold
- Silver – the Restless Metal
- Gold & Silver Market Morning, March 14 2012
- Jim Grant: Warren Buffett And Coca-Cola Investors Have Been Humiliated By Gold
- Nothing's fixed, more bailouts planned, Farage tells King World News
- David Morgan Talks all about silver with Max Keiser
- South African gold production continues to plunge
- Keiser Report cites vulnerability of German, Swiss gold reserves
- Two King World News Blogs
- Gerald Celente talks with Lew Rockwell
- Silver Update: “Silver Slowdown”
- Global Macro Notes: Winds Blow Cold for Bonds and Gold
| 2012-03-14 Bloomberg Link Precious Metals Conference Gold Forecast Posted: 14 Mar 2012 11:16 AM PDT Yesterday, on March 13, 2012, the Bloomberg Precious Metals Conference took place in New York. Bloomberg asked 14 participants to estimate the End-of-2012 gold price. |
| Posted: 14 Mar 2012 06:29 AM PDT By Will Bancroft: Silver is a much smaller market than the gold market and quality research about the poor man's gold can be less easy to find. One academic who does stand out though is the late Professor Roy Jastram, whose works on gold lead him to an investigation into silver's monetary history and record. His book "Silver: the restless metal" is much cited by silver experts like David Morgan, but being out of print is now not that easy to get hold of. The Amazon book markets in the U.S. and U.K. were trading at >$140 when we looked, so we headed down to the British Library in London to get hold of a copy. Published in 1981, this book is a look at silver's recorded monetary history with a forward look at what the future might hold for the silver price. The historical depth of Complete Story » |
| The Virtues of the Humble Investor Posted: 14 Mar 2012 06:06 AM PDT Ironically, there are few if any virtues in our society which are as under-appreciated/under-respected as humility. Living in a me-first world which worships the "Alpha wolf", who aggressively takes what he wants in life; humility is mistakenly confused for weakness or timidity. Yet being humble in no way implies being meek. One can be humble while still refusing to be anyone's doormat. In fact all that is implied by humility is the opposite of arrogance. The arrogant individual is prone to being impulsive, over-confident, and careless (if not reckless). The humble person is none of these things, instead leaning towards prudence and caution. While so much of what is taking place today in the global economy is confusing (and frightening) to the ordinary person, what is utterly unequivocal is that people need to be completely focused upon prudence and caution when handling their financial affairs. We have already seen once (in the Crash of '08) what happens to the arrogant; and as many commentators (including myself) are warning people, 2008 was nothing but a warm-up for the economic chaos which lies ahead. Clearly it is the Humble Investor whom people should be placing upon a pedestal as their role-models to emulate, were it not for the fact that their humility prevents these individuals from accepting such a position in the spotlight. And it is "humble" investment strategies which investors should embrace today, as opposed to the world of high-frequency trading, exotic financial products, and endless acts of paper-fraud – epitomized by the ultra-arrogant bankers of Wall Street. Understand that with the most rigged, corrupt markets in history, with unprecedented volatility, and with entire governments literally declaring bankruptcy; now more than any time in our lives (no matter how old we are) we must be "playing defense" with our investing. It is important to note this explicitly, because of what playing defense implies. When we are in a defensive mode as investors, the primary objective of any/every investor is preservation of capital. Period. I completely understand that because of the gross economic mismanagement of our corrupt, incompetent governments that many people feel they need to focus (first) on maximizing return. That is the path to financial suicide. It was the people who were looking to "maximize return" who were especially devastated in 2008, and it those people who are certain to be wiped-out (again) in the years ahead. Fortunately, we can demonstrate with both logic and empirical evidence that not only should the Humble Investor outperform his more arrogant rivals, the Humble Investor does outperform all other investors in our markets. Recalling our definitions, as Humble Investors we should be seeking investment options which reflect prudence and caution, and with the ultimate objective of preserving our capital. For nearly 5,000 years, no asset class has come remotely close to preserving wealth (i.e. capital) as perfectly as gold and silver. One cannot get any more prudent or cautious than that. What have we in fact seen in our markets over the past decade? Precious metals has been (by far) the best-performing class of assets. Humble Investor: 1; Everyone Else: 0. However, advising people what to do to become Humble Investors is obviously only half the battle. Equally daunting to the ordinary person (especially in a world of manipulated markets) is how to become a Humble Investor – i.e. how do people accumulate holdings in gold and/or silver in a prudent and cautious manner? As a commentator, I have simply abandoned attempts at forecasting gold and silver prices. It is literally nothing but a pointless exercise in guesswork. Over the long term, as I regularly remind readers our most likely fate is extreme inflation and/or hyperinflation across most of the Western world – making "prices" nothing but nominal/arbitrary fantasy-figures. Short-term forecasting has become an even greater exercise in absurdity. With fundamentals totally out of the window, we are left with nothing but the hocus-pocus of "technical analysis" – an exercise which by definition has zero mathematical validity in manipulated markets. |
| Gold And Silver Prices Have Further To Fall Posted: 14 Mar 2012 05:18 AM PDT By Ananthan Thangavel: Yesterday's action across markets was very interesting, as markets opened higher on the back of decent economic data in the U.S. and Europe. However, precious metals were one of the most interesting trades all day, and we believe there is significantly more action left to occur. Fundamentals Our longer-time readers will know that as recently as summer 2011, we were staunch precious metals bulls. In fact, we have been bullish gold (GLD) since 2008. However, the parabolic run-up of August and September caused us to reverse our position, and in so doing, we caught quite a bit of the downward move in gold during September's large sell-off by shorting both gold and silver (SLV) futures. What is scary for gold is that fundamentals for precious metals have become markedly worse, not better, since then. The following chart shows the balance sheets of the four largest central banks in the world. Complete Story » |
| Commodity Trading: Precious Metals Lead The Way Posted: 14 Mar 2012 05:13 AM PDT By Jarred Cummans: As 2012 wears on, investors seem less and less sure how the year will end. Some feel that the early bull market we experienced is here to stay and that strong U.S. data only supports that claim. But others feel that such rapid appreciations in stock markets mean that we are about due for a pullback, potentially ending the year on a sour note. No matter which way you feel about the economy, there are always strategies to make a trading profit, and for the time being it looks like precious metals are it. These four metals have been steadily outperforming their commodity peers in recent trading sessions and are presenting a strong play. In the trailing five days alone, platinum has jumped 5%, palladium 4.4%, silver 1.4%, and gold 0.9%. But this may be a trend that extends further than just one week, as the four metals have had Complete Story » |
| Bernanke Pries Gold And Platinum Apart Posted: 14 Mar 2012 05:00 AM PDT By Emerging Money: The weak dollar policies of the Federal Reserve under Chairman Ben Bernanke have vitiated the traditional correlation between ETFS Physical Platinum Shares (PPLT), and SPDR Gold Shares (GLD). While a ghost of the traditional relationship remains, excessive liquidity has forced gold and platinum apart. Since August 2010, the falling U.S. dollar has led to excessive speculation in commodities. Gold, silver, oil, platinum and other commodities rose based not on fundamental economic demand, but on speculative buying. Those purchasing were Complete Story » |
| Argonaut Gold added to the S&P/TSX Composite Index Posted: 14 Mar 2012 03:50 AM PDT Toronto, Ontario – (March 14, 2012) Argonaut Gold Inc. (TSX: AR) is pleased to announce that Standard & Poor's Index Operations will be adding Argonaut Gold to the S&P/TSX Composite Index effective as at the open on Monday, March 19, 2012. One year ago in March of 2011, Argonaut Gold was added to the S&P Global Gold Index and the Global Mining Index. Argonaut has maintained inclusion in these two indices. At the end of 2011, Argonaut Gold had a fully diluted market cap of $824 million (2010 ended at $383 million) and an average trading volume of 556,000 shares a day (2010 ended at 150,000 shares a day). Mr. Peter Dougherty, President and CEO of Argonaut Gold, stated "The Company takes great pride in being able to announce we have been included in the S&P/TSX Composite Index. The accomplishments our team has achieved in just two years are very gratifying, and it's all because of the dedicated employees we have throughout every level of our organization". Mr. Dougherty added: "Over that time period we have seen a continual increase in both our market capitalization and share liquidity. The company is focused on delivering on our objectives as we strive to continue Creating Value Beyond Gold". About Argonaut Gold Creating Value Beyond Gold Cautionary Note Regarding Forward-looking Statements This news release contains forward-looking statements that involve risks and uncertainties that could cause results to differ materially from management's current expectations. Actual results may differ materially due to a number of factors. Except as required by law, Argonaut Gold Inc. assumes no obligation to update the forward-looking information contained in this news release. Fully diluted market cap is based on statistics from stockwatch.com for volume and yahoo finance for stock price as of the final closing price for 2010 and 2011 respectively. For more information, contact:
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| This is what I was worried about re metals, Posted: 14 Mar 2012 03:33 AM PDT How I talked there was no seasonal, etc. That it is election year and full pump is one, Putting lipstick on a pig for the election, things could get real ugly this summer, dollar breaking resistance at 80, and heading north, SM's flying to the up, Scorp |
| Matt Stoller: Robosigning Still Going on at Wells Fargo, Reports HUD Inspector General Posted: 14 Mar 2012 02:50 AM PDT Matt Stoller is a fellow at the Roosevelt Institute. You can follow him on twitter at http://www.twitter.com/matthewstoller. I've been going over the mortgage settlement documents over the past few days – a lot has been released, with many implications. There is plenty to criticize. Subprime Shakeout has a great summary, and David Dayen has done a wonderful job going through the nitty gritty. Abigail Field has a spectacular review of the problems with the servicing standards. I'll make a few criticisms of my own below. But I think the most interesting parts of the document release were the HUD Inspector General reports on the five banks and the DOJ complaint. What these prove is what we've always known – the law enforcement community knew exactly what these banks were doing. DOJ simply chose not to prosecute. There was intent to defraud, fraud, and frankly, according to HUD. In fact, it's not clear that the past tense is the correct tense to use. The Wells Fargo report is particularly interesting on that last point. Take it away, HUD OIG (italics are mine).
I'm sorry, but WHAT THE $&*@!?!? I'm so glad Eric Holder has cut a deal with Al Capone while Capone is still on a shooting spree. And note, this isn't just robosigning, this is potentially overcharging homeowners with junk fees and just generally not verifying accurate data on who owes what to whom. There really is no lesson here except "crime pays". And keep in mind, that's Wells Fargo, the "good bank", the one owned partially by St. Warren Buffett, the one whose executives assured the public as well as a room full of Congressional staffers in 2010 that they did not use robosigners. It turns out that not only did they use robosigners, but senior executives knew about it and set policies designed to make sure that documents were signed without verification. And when the HUD OIG tried to interview the 14 affidavit signers disclosed by Wells, Wells allowed the IG to interview only 5 of them. Eventually, the bank allowed interviews with all of them, provided that bank attorneys were in the room, as well as private attorneys for each robosigner, who were also paid for by Wells. It also turns out that the IG interviewed 33 more robosigners used by Wells that the bank had tried to hide but ultimately had to admit employing. And then there's what the HUD OIG had to say about Bank of America when it demanded documents. "Bank of America", said the report, "only provided excerpts of subpoenaed personnel documents." Get that? Bank of America would not comply with subpoenas. It goes on and on like this (as Ben Hallman notes). These HUD OIG documents are breathtaking – the claim is that the banks actively impeded these investigations, through delay, obfuscation, lying, and incompetence. It's rare to see a government official actually come out and talk about how an investigation was impeded. Kudos to the HUD OIG for the clarify of language. We should all be pretty disturbed, though, at what this settlement means now that the details are out. Abigail Field has a remarkable analysis of the servicing standards put forward in the agreement, an analysis appropriately titled "The Mortgage Settlement Lets Banks Systematically Overcharge You And Wrongly Take Your Home ". Fields points out that the standards basically set caps for the number of illegal fees and illegal foreclosures banks can engage in before getting into trouble. Banks are actually allowed, in the standards in this settlement, to foreclose on people who are current on their mortgage. Let me repeat that – according to Fields, banks are actually allowed, in this settlement, to foreclose on people who are current on their mortgage. Don't Steal Too Much, is the essential message. Though I might modify it to, Don't Steal Too Much, Pretty Please, based on the obvious criminality and contempt for law enforcement implied by the HUD investigative reports. Beyond these reports (and the complaint by DOJ showing that Holder and the other attorneys general knew and understood what the banks were doing), the mortgage settlement is incoherent. The settlement will be challenged in court by investors. And the formula for settlement credits is bizarre and full of easter eggs for the banks. For instance, banks will now get credit for houses they were going to bulldoze anyway, essentially being allowed to unload low-value properties with clouded title on a dollar-for-dollar basis, which are actually worth pennies on the dollar (or perhaps value negative in areas where there are fines for not keeping up properties). Banks will also get credit for not going after deficiency judgments, which means they get credit when they choose not to sue foreclosed families who have no money. They aren't suing for deficiency judgments anyway, by and large, because suing people who have nothing is, surprise, not profitable! But they'll get billions in credit for this regardless. So what is the rationale for this settlement, from the perspective of the administration? There are many different parts of the law enforcement and housing community, and they don't all agree. Some groups, like the OCC, are simply in thrall to the importance banks and the implied social order of banker supremacy. But others, like I suspect Shaun Donovan, believe in the Lays Potato Chip Theory of principal write-downs. This theory goes, the actual settlement details are not important, as long as they force the banks to start writing down a few mortgage. Once the banks realize that writing down mortgages is profitable, because they are more likely to be repaid, they won't be able to stop. They will have set up the infrastructure to do mass write-downs, and such infrastructure tends to be used. Nom nom nom. I don't, obviously, buy that, as I think the accounting fraud and executive compensation incentive structures get in the way of mass write-downs (as does mortgage banker DNA). But a blanket corruption argument is too simplistic and prone to imprecise hyperbole. I prefer the argument that a new legal system is being designed wherein property rights are increasingly based solely on political connections. With that lens in mind, this settlement fits into the overall policy arc of the Bush and then the Obama administration (you could trace this back to Carter, but I'm specifically focusing on the foreclosure crisis). From the nationalization of Fannie and Freddie to TARP to the Fed bailouts to Dodd-Frank to this settlement, the policy continuity of extreme creditor bias is ever-present. In plain language, the policy is foreclose first, ask questions later. And yes, this probably comes from the top, from President Barack Obama himself, and his reminder that it's an important policy priority to ensure that whatever is done, we mustn't accidentally help irresponsible homeowners and investors. If the 2012 election feels hollow, this might be why. Such a massive Constitutional redesign of our American order should be debated, and a Presidential race is the right forum in which to do so. But since that's not happening, social conflict a few years down the road is probably the more likely path. It is a hopeful sign that the Federal Reserve in DC and the New York Fed are beginning to recognize that foreclosures are problematic in the context of implementing monetary policy, since housing finance is an important channel for economic regulation. But how we get from there to reestablishing some form of liberal legal framework that protects property rights and enforces the law on a reasonably equitable footing isn't obvious.
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| FSN Interview: “Ranting” Andy Nailed The Gold/Silver Raid Again Posted: 14 Mar 2012 02:46 AM PDT Andy Hoffman |
| Singapore Seeks To Be Asian Bullion Hub With Tax Free Gold and Silver Posted: 14 Mar 2012 02:43 AM PDT gold.ie |
| Three dividend growers with an unusual but powerful advantage over the competition Posted: 14 Mar 2012 01:03 AM PDT From The Dividend Monk: This is the sixth and last in a series of articles highlighting dividend growth companies that have large and durable economic advantages, or "moats," that protect their business operations and allow years or decades of strong profitability. When looking for long-term investments, one typically wants to find a business that is performing well... not simply because management is on top of their game right now, but rather because the business itself has fundamental and difficult-to-replicate advantages over its competitors. The previous article described four businesses with natural monopolies. This sixth and final description of a moat is the "Network Effect." It comes last in the series, since it is the most elusive among dividend growth companies, and tends to be far more common in... Read full article... More on dividend stocks: Ten high-yield stocks growing dividends every year The three big reasons you should build your own dividend-stock portfolio Unique new service could allow you to receive your stock dividends in physical gold |
| This could be the most important chart in the world for commodities investors Posted: 14 Mar 2012 01:00 AM PDT From All Star Charts: The CRB index represents a basket of commodities ranging from coffee and cotton to silver and natural gas. This is an important one guys. For over 50 years, this index has served as the most widely-recognized measure of the global commodity markets. "The Thomson Reuters/Jefferies CRB Index," as it is more formally known, is comprised of 19 commodities. The ups and downs in the prices of these commodities tells us a lot about global demand and can help us make decisions in our every day trading of U.S. equities. The intermarket relationships have been mentioned here in the past, but today, we are going to focus on just the price of this particular index. ...The first chart we're looking at is a longer-term view of the CRB index. It's easy to see here how devastating the... Read full article... More on commodities: One big reason to expect another short-term decline in gold Casey Research: How to profit from the shale gas revolution today Not just gold: Federal Reserve president is also holding a big position in this commodity |
| Posted: 14 Mar 2012 01:00 AM PDT 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) China's recovery from the initial effects of the GFC was no miracle. Like the rest of the world, it was the result of "Botox economics". Using the advantages of a centrally controlled, command economy, Beijing boosted output through government spending and directed bank lending to maintain growth. Unfortunately, China now faces significant problems. The weakness of its two major trading partners (US and Europe) means export demand is likely to remain subdued. Domestically, the side effects of debt driven investment are now emerging. China's ability to sustain high growth levels is questionable. Specifically, its capacity for further stimulus is uncertain. In 2009, Premier Wen Jiabao admitted that the "stabilisation and recovery of the Chinese economy are not yet steady, solid and balanced". Lack of Stimulation … The conventional view is China will be able to continue to stimulate demand using its large foreign exchange reserves, large domestic savings and low levels of debt. Attempts by the Chinese to liquidate reserve assets would result in sharp falls in the value of the securities and a rise in the Renminbi against the relevant currencies with large losses. The reserves also force China to buy more US dollar, Euro and yen securities to defend the value of the existing portfolio, increasing both the size of the problem and risks. In reality, China will ultimately have to write-off these reserves, recognising its losses. This equates to a real loss of wealth as China has issued Renminbi or government bonds against the value of these investments. China also has far greater levels of debt than commonly acknowledged, although the bulk is held domestically. The Central government has a low level of debt – around $1 trillion (17% of GDP). In addition, State owned and supported entities have debt totalling $2.6 trillion (42%): local governments about $1.2 trillion (19%), policy banks $800 billion (13%); Ministry of Railways $280 billion (5%) and government backed asset managements companies set up to hold non-performing bank loans $300 billion (5%). The total debt, around $3.6 trillion, is 59% of GDP. China also has limited flexibility in managing its currency. The Renminbi has risen 30% since Beijing adopted a policy of managed appreciation and revalued its dollar peg in July 2005. As growth and exports slow (the trade surplus has fallen to 2% and foreign exchange reserves are falling), China needs to let the Renminbi fall to cushion the adjustment. In an US election year, the risk of trade protectionism and the prospect of being referred to the World Trade Organisation for currency manipulation limit China's policy flexibility. No Consuming Passions … The failure to redress the balance between consumption and investment lies at the heart of China's economic dilemma. Consumption totals around 35-40% of China's GDP, a decrease from over 50% in 1980. Even by the thrifty standards of Asia, Chinese consumption is low, with Japan, India, Taiwan and Thailand at 55-60% and South Korea and Malaysia around 45-50%. American consumption is around 65-70% of GDP. In contrast, Chinese fixed investment is around 46% of GDP, an increase over the last decade of 12% from 34%. At a comparable stage of economic development, fixed investment in Japan and South Korea was around 10-20% of GDP lower than China. There are numerous theses about China's low rate of consumption. China's consumption has been growing at around 8% per annum over the last decade but growth in consumer spending has been slower than that of the overall economy. Between 2000 and 2010, gross fixed investment grew at an average annual rate of over 13%, while private consumption grew at around 8%. One factor has been an underdeveloped social welfare state. Chinese workers lost their state-provided health care and education when the SOEs were reformed almost a decade ago. Chinese save to cover the expected costs of education, retirement and health care. Despite the fact that government expenditure on health, education and social security has doubled, it remains around 6% of GDP compared to an OECD average of 25%. The government is increasing pension coverage and extending basic health care but new spending remains modest. Another factor is the falling share of national household income (wages and investment income). In contrast, corporate earning has risen, faster than wages. This reflects a combination of low interest rates which has encouraged capital intensive heavy industries. This means that China's high growth rate has not created a commensurate level of new jobs or boosted incomes. Investment driven growth also favours SOEs and large projects. These firms generally reinvest their profits and pay modest if any dividends. Lending policies, exchange rate policy and control of input costs such as land and energy favour infrastructure and manufacturing rather than services, limiting employment and income growth. Higher savings and lower consumption has been encouraged by an inefficient banking system, low interest rates, limited access to individual credit and limited investment products. Chinese saving rates have increased to around 24% of income from a low of 12-15% around 20 years ago. Companies have also increased surpluses, contributing the bulk of domestic savings. The transfer to banks and companies from low interest rates is significant. In general in developed economies, nominal interest rates approximate nominal growth in GDP. This would ensure that savers earn a fair share of growth. Over the past decade, nominal lending rates in China have been about 6%, well below nominal GDP growth rates of 14%. Assuming that Chinese interest rates have averaged 4-6% below the required rate, this equates to a net transfer from savers of around 5% of GDP each year. This transfer keeps China's cost of capital low facilitating its investment strategy as well as helping cover the non-performing loans made by banks. At the same time, China was investing around 10-12% of its GDP each year in low-yielding foreign assets, through its current account surplus and currency reserves. This equates to about one third of its total consumption. All these factors have reduced consumption. Iceberg Ahead…. China faces significant economic challenges and related social and political pressures. Externally, China's major trading partners – Europe and US – find themselves trapped in a period of low growth and high unemployment as they deleverage. China will be forced to reduce its excessive reliance on exports as trading partners no longer tolerate rising trade deficits. China's foreign exchange reserves will lose value as the credit quality of investments deteriorates and the value of the foreign currencies declines, as part of a deliberate policy of adjustment. Domestically, China's ability to use debt fuelled investment to fuel its continued growth may have reached a limit. High inflation, in part driven by rising commodity prices as a result of a weaker US dollar, has required increasing rates to reign in domestic demand at a time when external demand is weak. Inflation and social unrest is driving wage increases to buy social stability but decreasing China's competitiveness. The policy options are increasingly limited. Rebalancing household consumption and investment as a share of GDP is seen as an important element in any solution. Chinese President Wen argued that "we should focus on restructuring the economy, and make greater effort to enhance the role of domestic demand, especially final consumption, in spurring growth". But the level of consumption growth needed to rebalance China is large because of its low existing consumption base. If China grows at 8% per annum, consumption needs to grow by around 11% (3% above growth) to increase the share of consumption from 35% to 36% of GDP in a year. Assuming a growth rate of 8% and consumption increases of 11%, it would take around 5 years to increase consumption to 40% of GDP. To increase consumption to 50% over 20 years, it would take consumption to grow at least 9%, 2% above an average projected growth rate of 7%. If growth slows, then the difficulty of the task increases. Increasing consumption at the required rate requires an increase in household income, reduced savings or a combination. It needs a rapid increase in wage levels and employment levels. It will require reform of the welfare system, especially health, education and pensions. It requires changes in the banking system, especially the process of allocating credit and higher interest rate levels, which would boost incomes and also increase the cost of costs to businesses. It requires changes in regulations that favour manufacturing, including reduction in subsidies for certain industrial inputs. It requires land reform and changes in the mobility of the labour force. The required reforms have barely commenced. Fragile Compact … China' fragile social compact is based on a trade-off: economic improvements at the expense of political and individual freedoms. The CCP's future and power is dependent on successfully managing this compact. But difficulties are increasingly apparent. Higher wages increase the cost structure decreasing competiveness when the scope for devaluing the Renminbi is constrained. Encouraging consumption at the expense of savings reduces the supply of cheap deposits to policy banks, reducing the CCP's ability to control credit and investment. The flow of deposits is also needed to cover the sharp expected increase in non-performing loans. China needs to provide employment for approximately 750 million workers, including 200 million internal migrant workers. Reduced export demand means that China must rely on internally driven growth to provide employment. Higher interest rates reward savers but increase the cost of capital to SOEs. Reducing the ability to direct credit also reduces the ability to engineer growth through the SOE sector. Given the bias of SOEs toward heavy and construction industries, lending driven fixed-investment finance remains the favored means of creating employment. The CCP's existing system of political privilege and influence relies on the large captive domestic saving pool that can be directed into specific projects. Liberalisation threatens this arrangement. Changes that improve income levels, education standards and social security may drive demand for greater political freedom and transparency threatening the Party's hegemony. In Snail House … Social inequality in modern China has become an increasing problem. A viral 2010 email captured the anger about China's growing differences in living standards. To purchase a 1,076-square-foot (100-square-metre) apartment in central Beijing costing 3 million Renminbi ($450,000), a peasant farmer would have had to work since the Tang dynasty that ended in A.D. 907. A Chinese blue-collar worker on the average monthly salary of 1,500 Renminbi ($225) would have had to work since the opium wars of the mid-nineteenth century. Prostitutes would have to entertain 10,000 customers; a thief would need 2,500 robberies. Another email described the fate of ordinary Chinese with sardonic humour: "Can't afford to be born because a Caesarean costs 50,000 Renminbi [$7,500]; can't afford to study because schools cost at least 30,000 Renminbi [$4,500]; can't afford to live anywhere because each square meter is at least 20,000 Renminbi [$3,000]; … can't afford to die because cremation costs at least 30,000 Renminbi [$4,500]." Inability to maintain economic growth now threatens to expose these deep seated fault lines within Chinese society. © 2012 Satyajit Das All Rights Reserved.
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| This upcoming event could crash the euro and send gold soaring again Posted: 14 Mar 2012 12:55 AM PDT From Gonzalo Lira: [Warning: This post contains explicit language.] On May 6, France is holding its second round of presidential elections, where the Socialist Francois Hollande is fully expected to win. I'm pretty sure two things will happen immediately following the election: The first is, Carla Bruni will leave Nicolas Sarkozy (because everyone knows that a professional courtesan never stays when the going gets tough for her patron). The second thing that will happen following the election of Hollande is that the euro will begin to fall -- amid persistent, insistent calls by the new French president for Europe to spend its way out of the hole it's in. In other words, France is about to elect their version of Paul Krugman to the presidency. Up until now, Europe has been going the way of Austeristan: Forcing the weaker eurozone nations (Greece, Portugal, Ireland, Spain, Italy) to severely cut their budgets and reign in their deficit spending, so as to... Read full article... More on the euro: How Germany could start a run on gold Nouriel Roubini: This euro country will be the next to default The first casualty of Greek credit-default swaps has already appeared |
| Posted: 14 Mar 2012 12:43 AM PDT The midweek sessions in precious metals started off at sharply lower price levels in the wake of the sentiment that took gold post the Fed announcement that given current economic conditions it has opted to do nothing more than monitor the situation. |
| Singapore Seeks to Be Hub with Tax Free Gold & Silver Posted: 14 Mar 2012 12:01 AM PDT Despite continuing caution regarding gold in western markets, lackluster buying and indeed some selling – there is still strong buying from Asia store of wealth buyers. |
| Outlook Unclear Amid Risk Appetite Trends Posted: 13 Mar 2012 11:37 PM PDT Commodity prices produced mixed results in the aftermath of yesterday's FOMC policy announcement.The outcome weighed heavily on gold and silver while the behavior of crude oil and copper was more nuanced. |
| Platinum price recaptures the lead from gold Posted: 13 Mar 2012 10:45 PM PDT Cautious words from the Federal Reserve encouraged another sell-off in gold and silver yesterday, with the gold price falling below an important buying support level at $1,680. The silver price has ... |
| Posted: 13 Mar 2012 10:15 PM PDT Silver is a much smaller market than the gold market and quality research about the poor man's gold can be less easy to find. One academic who does stand out though is the late Professor Roy Jastram, whose works on gold lead him to an investigation into silver's monetary history... |
| Gold & Silver Market Morning, March 14 2012 Posted: 13 Mar 2012 10:00 PM PDT |
| Jim Grant: Warren Buffett And Coca-Cola Investors Have Been Humiliated By Gold Posted: 13 Mar 2012 09:18 PM PDT ¤ Yesterday in Gold and SilverGold's high tick of the day came minutes after 1:00 p.m. Hong Kong time during their Tuesday trading day. The price went into a slow decline from there...and by 8:30 a.m. in New York, the gold price was down about six bucks from Monday's close. Then, in the space of ten minutes, someone sliced ten bucks off the gold price. But by 11:45 a.m. Eastern time, gold had struggled back to break through the $1,700 mark. That was as high as the price got in New York...$1,702.70 spot...and from there it went into a very slow decline right up until 2:15 p.m. in the thinly-traded electronic market. From that point, gold got sold off about fifteen dollars in the space of fifteen minutes or so. But the real damage came shortly before 3:30 p.m. when the bid disappeared entirely...and by 3:45 or so, the gold price got hit for another twenty-one bucks. That was the low of the day...$1,660.90 spot...and from there, gold recovered about fourteen dollars going into the 5:15 p.m. New York close. Gold finished Tuesday at $1,675.10 spot...down $25.70 on the day. With a price drop that size, there was massive speculative long liquidation once again...and net volume was pretty chunky at 180,000 contracts.
The silver price pretty much followed the same pattern as the gold price, which should not come as any big surprise. Like gold, silver rallied in the New York morning to move above Monday's close...but that situation wasn't allowed to stand either, and silver ran into the same not-for-profit selling sequence that gold did. But once the low tick [$32.90 spot] was in shortly after 3:30 p.m. in New York yesterday afternoon, the price came roaring back. Silver closed at $33.37 spot...down only 20 cents on the day. Silver's net volume was more than decent as well...around 48,000 contracts.
Of course both gold and silver wanted to take off to the upside in late-morning trading in New York...but there was clearly a seller lying in wait when both metals broke into positive price territory. And, just in case you didn't notice it...I didn't either...platinum closed above the gold price yesterday for the first time since last year. I thank Washington state reader S.A. for pointing this out to me yesterday. The dollar index rally, which began about 10:00 p.m. on Monday night, continued until precisely 9:00 a.m. Eastern time yesterday morning, which was the moment that the dollar index broke through the 80.30 mark. At that point, the index was up about 60 basis points...and at its high of the day. Then, it spent just about three hours giving up about 35 basis points of that gain before rallying a bit into the close. The dollar index close up a bit over 40 basis points. The dollar index pretty much mirrored the gold price action up until 2:15 p.m. in the thinly-traded electronic market. Then the not-for-profit sellers showed up...and that, as they say, was that.
The gold stocks spent most of the day just barely above unchanged, which is surprising considering that gold was down a percent earlier in the trading day. However, the stocks certainly succumbed to selling pressure the moment that gold got hit at 2:15 p.m. Eastern time. But even then, there were buyers for every dip...and the HUI closed down only 0.52%.
Why the gold stocks didn't sell off harder is a mystery. After more than ten years of watching this sort of thing, I'm of two minds when I see counter-intuitive share price behavior on a big price decline: a] the bullish part of me says that someone is buying cheap shares because a huge rally in the gold price is just around the corner; b] the GATA/John Embry side of me sees 'da boyz' buying everything that's obviously falling of the table so they can build up their reserves to keep the HUI in check on days when it want to blow skyward. But, as I've said many times in the past, maybe I'm looking for black bears in dark rooms that aren't there. And despite the trashing that silver took, the silver stocks were a mixed bag as well yesterday...and Nick Laird's Silver Sentiment Index closed up an impressive 1.04%.
(Click on image to enlarge) It was another quiet CME Daily Delivery Report, as only 12 gold and 20 silver contracts were posted for delivery on Thursday. There was a minor decline in GLD's stockpile yesterday...13,109 troy ounces in total...which was probably a fee payment. There was no reported change in SLV. The U.S. Mint did not have a sales report. There was something not right about yesterday's report from the Comex-approved warehouses. They reported exactly the same withdrawal amount from the identical depository [Scotia Mocatta] on both Friday and Monday...with the total silver inventory remaining the same. There was an obvious error made...and hopefully they'll have this straightened out in today's report for Tuesday. A couple of things from reader Scott Pluschau before I get into my list of stories today. The first deals with the 30-year Treasury note...and it's two charts in one. The first is a daily chart from yesterday...and the second is a nine month chart. Scott's covering sentence was short and to the point..."Long bond is potentially in a world of trouble." Even I have to admit that it's a pretty ugly looking chart.
(Click on image to enlarge) Scott's second comment involved his blog yesterday in which he spoke about "Dr. Copper". His covering e-mail read as follows..."Keep an eye on copper. Take a look at the chart in this article of copper coiling... this may lift silver on a breakout." The link to Scott's blog is here...and the chart is certainly worth a look. I have the usual number of stories today...and the final edit is up to you. Both gold's 50 and 200-day moving averages were taken out with real authority yesterday...and gold closed below its 200-day moving average as well. South African gold production continues to plunge. Keiser Report cites vulnerability of German, Swiss gold reserves. China defends tough stance on rare earths. ¤ Critical ReadsSubscribeCFTC Sues Clearing House, Fines GoldmanThe U.S. Commodity Futures Trading Commission has sued two companies for allegedly failing to properly handle customer funds. Goldman Sachs' will pay $7 million to settle allegations it failed to diligently supervise accounts that it carried from about May 2007 to December 2009, the Commodity Futures Trading Commission said on Tuesday. In a separate lawsuit against New York-based futures clearing company MBF Clearing, the CFTC alleged that the company failed to properly segregate customer funds. If you read the story, I think that MBF Clearing is getting shafted. This CNBC story was sent to me by West Virginia reader Elliot Simon...and the link is here.  This Is The Fed's Worst-Case Doom Scenario For The US EconomyThe Fed just announced that the latest round of bank stress tests will come out Thursday at 4:30 PM Eastern time. [Note: The Fed was forced to release this data yesterday, following a disclosure by JPMorgan. - Ed] As a reminder, this is the doom scenario banks will be stress tested against: The supervisory stress scenario for CCAR 2012, which was designed in November 2011, depicts a severe recession in the United States, including a peak unemployment rate of 13 percent, a 50 percent drop in equity prices, and a 21 percent decline in housing prices. The supervisory stress scenario is not the Federal Reserve's forecast for the economy, but was designed to represent an outcome that, while unlikely, may occur if the U.S economy were to experience a deep recession at the same time that economic activity in other major economies contracted significantly. Sooner or later this will all come to pass. This story was posted on the businessinsider.com website yesterday...and I thank reader Brad Robertson for sending it along. The link is here.  JPMorgan's $28 Billion Leads Bank Trading Losses in TestsJPMorgan Chase & Co., which produced the most trading revenue among Wall Street firms last year, had the highest trading and counterparty losses of the biggest U.S. banks under the Federal Reserve's stress scenario. JPMorgan had an estimated $27.7 billion in projected losses from mark-to-market changes, credit valuation adjustments and counterparty default losses, according to the Fed results released yesterday. Goldman Sachs Group Inc. had an estimated $27.1 billion of such losses in the testing. The Fed's global financial market shock tested losses from declines in positions held, counterparty defaults and charges related to the deterioration of creditworthiness of trading partners through the end of 2013. Bank of America Corp. had a projected $21.1 billion of trading and counterparty losses, Citigroup Inc. had $20.9 billion, Morgan Stanley had $12.8 billion and Wells Fargo & Co. had $6.9 billion. This rather short Bloomberg story, filed late yesterday afternoon from New York, was sent to me by Washington state reader S.A...and is definitely worth the read. The link is here.  CFTC Vacates CME Clearing Europe Limited Registration as a Derivatives Clearing OrganizationAccording to financial analyst Louis Boulanger out of Auckland, New Zealand..."Something very nasty may be about to happen in the derivatives complex..." "Why would this latest announcement be important? Because it is the latest in a series since last week's Greek government default on its sovereign debt and, while the mainstream financial media would have you believe this was a 'non-event' or 'orderly default' with minimal consequences, the truth of the matter is that we will not know how 'orderly' the default will be until the announced auction of the bonds to be swapped takes place next week at the date set by the ISDA. But, irrespective of the outcome next week, please note that last Friday WAS, in fact, the first sovereign debt default from a developed nation since World War II. That alone, makes it a very significant event." "Since the default, there seems to be a raging wildfire behind the scenes as maybe the entire Credit Default Swap (CDS) market is stressed due to the Greek default. The losses may come fast and furious once the auction is held on March 19th, based on ISDA's Big Bang Protocol." Yesterday I ran the story that the CME's chairman was leaving at the end of 2012. One wonders if this turn of events, plus others, is behind it. We'll see. Here's the press release from the CFTC's website...and I thank reader 'David in California' for bringing this must read story to our attention. The link is here.  Fears of Competitive Disadvantage: Euro Zone Split over Financial Transaction TaxIt's being greeted as a breakthrough -- but it remains open whether it really is. When the 27 European Union finance ministers meet in Brussels on Tuesday, they plan to discuss the introduction of a financial transaction tax in Europe. It's the first time that the issue has been on the agenda at such a meeting, and supporters of the tax argue that is a sign that the tax is making progress in its long journey through the EU's institutions. Indeed, a certain amount of progress can be seen in the ongoing battle over a tax on financial transactions -- at least on paper. French President Nicolas Sarkozy and German Chancellor Angela Merkel, the EU's two most powerful leaders, have made the issue a priority. And in September 2011, the European Commission presented a draft directive which foresees a financial transaction tax on all stock, bond and derivative transactions within the EU. The tax could come into force in 2014 -- provided all 27 EU members agree to it. Therein lies the rub. There is little chance of such an agreement. Officially, supporters of the tax are still hoping for the "comprehensive solution," as the Commission's proposal is dubbed by the German government. But an agreement is already regarded as a pipedream. A whole row of naysayers, led by Britain and Sweden, are opposed to the tax unless it is introduced globally. They consider it to be detrimental to growth and fear that they will become less competitive on the international playing field if they introduce a tax. The unanimity principle applies to tax matters within the EU, so even a single veto would be sufficient to derail the plan. This story was posted on the German website spiegel.de yesterday...and is Roy Stephens first offering of the day. The link is Nothing's fixed, more bailouts planned, Farage tells King World News Posted: 13 Mar 2012 09:18 PM PDT European Parliament member Nigel Farage told King World News yesterday that the European financial elite is posing as if everything in the financial system has been fixed even as they are planning more bailouts. And Farage acknowledges that Germany and Switzerland are trying to figure out how to get their gold back from the United States. I borrowed the headline and the introduction from a GATA release...and the link to the KWN blog is here. |
| David Morgan Talks all about silver with Max Keiser Posted: 13 Mar 2012 09:18 PM PDT  This 12:36 interview was done in the second half of the above-mentioned 'Keiser Report'. It, too, is a must watch in my opinion...and it's also posted over at the youtube.com website...and the link is here. |
| South African gold production continues to plunge Posted: 13 Mar 2012 09:18 PM PDT  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% |
| Keiser Report cites vulnerability of German, Swiss gold reserves Posted: 13 Mar 2012 09:18 PM PDT  On the latest edition of "The Keiser Report" on the Russia Today network, Max Keiser and Stacy Herbert discuss the growing concern in Germany and Switzerland about the vulnerability of their gold reserves in United States custody. GATA's work is cited. I borrowed the intro and headline from another GATA release yesterday...and the video is posted over at youtube.com...and the applicable part runs for the first 8:50 minutes. It's a must watch...and the link is here. |
| Posted: 13 Mar 2012 09:18 PM PDT  The first is from Rick Rule...and it's headlined "$150 to $170 Oil, Gold, Fraud & Dangerous Times". The second is from Richard Russell. The title reads "More QE After 40 Year Monster Bubble". |
| Gerald Celente talks with Lew Rockwell Posted: 13 Mar 2012 08:58 PM PDT Gerald Celente talks to Lew Rockwell about the moral and economic responsibility of every individual in these times. ~TVR This posting includes an audio/video/photo media file: Download Now |
| Silver Update: “Silver Slowdown” Posted: 13 Mar 2012 08:52 PM PDT from BrotherJohnF: BJF examines the charts and why the suppression scheme will end in the 3.13.12 Silver Got Physical ? ~TVR |
| Global Macro Notes: Winds Blow Cold for Bonds and Gold Posted: 13 Mar 2012 06:29 PM PDT On February 14th — one month ago — we pondered "Long Bonds and Yen: Big Shorts for 2012?" Japan's currency (which we shorted circa Feb 14) has been in freefall the past four weeks, from 77 to 83 yen to the dollar. (As the yen declines in value, USDJPY rises.) And now, this week, we may be seeing the long bond breakdown:
Treasury bonds, as you know, have long been the "safe haven" of last resort for frightened capital in a low inflation, low opportunity environment. While the finances of the U.S. government are terrible, treasurys have been a "least bad" option in a world of high unemployment, stagnating economies, and elevated risk. What's more, those who remain bullish on bonds (like Gary Shilling) foresee "more of the same" in terms of economic malaise, high unemployment, and general doldrums — not to mention slow motion crisis in Europe. But 30-year yields around 3% have always been a temporary proposition. With any sign of genuine economic recovery, the risk to bondholders is a flight-to-safety reversal — a return to risk that sees investor capital pouring out of treasuries and back into stocks.
Tuesday's widespread equity breakout, which came on the back of the best retail sales since September, a JP Morgan dividend hike, and a complacent Fed, have now taken the markets to pre-crisis levels. The major indices are at their highest levels since June 2008. The Nasdaq, stretching back even further, has surpassed 3,000 for the first time since the year 2000. Legendary investor George Soros has noted that a self-reinforcing market perception needs to pass a series of tests… and with each successful test, the perception gets stronger. Having overcome last week's brief correction, conditions are now in place for a "melt-up" in which investors show more fear of being "out" than "in." Perceptions of an accelerating U.S. recovery are extremely negative for bonds, for the following reasons:
The current backdrop is also an ugly one for gold. The yellow metal is performing poorly for at least a few reasons:
Another way to look at it is like this: Consumer retail and consumer tech have been the king of all asset classes. In spite of all the concerns over rising unemployment, a stagnating U.S. economy, and tens of millions of "left behinds," the contingent of U.S. spenders with money have been out there spending. This has led to dominant performance from specialty retailers, restaurant chains, department stores, and other domestic-based themes catering to the 30% of Americans who still have ample discretionary income. This group has had the virtue of being isolated from European crisis, global slowdown threats, creeping oil prices, and other general concerns. In a sense, the purchasing power of the moneyed U.S. consumer has been "macro proof" — and an incredibly mild winter has only cemented this sense of invincibility. Against such a backdrop — and with the weaker environs of the U.S. economy holding back wages, and thus holding back inflation — who needs to worry about gold? Weak Europe, Decelerating China, Overbought Oil It's still a trader's environment, though, because as we noted last week — in China, Brazil and Spain flip the script — global slowdown fears outside the U.S. are becoming a problem:
And here is more trouble:
So, weighted against a new positive sentiment breakout for U.S. equities and the U.S. domestic economy, we continue to see a real threat of global slowdown and economic drag from the malaise in Europe. This dynamic is creating a tailwind for the U.S. dollar and putting pressure on European currencies — along with the Australian dollar (AUDUSD), which has become something of a proxy for China's natural resource appetite and growth prospects. A final interesting note on oil — how much of oil's appreciation is purely speculative?
A backdrop of global slowdown + firming dollar would not generally be considered oil bullish. Then add into the mix "OPEC pumps record volumes despite demand worry" (Reuters), and one has reason to wonder. This may help explain why energy stocks have performed relatively poorly as of late. And a near term fall in the price of oil — perhaps on realization that crude has been bid up more on speculation than logic — could be construed as further bullish for the "low inflation recovery" perception driving U.S. markets. JS  |
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