saveyourassetsfirst3 |
- Inflation Man vs Precious Metals
- Foreign Exchange Market Often Defies Logic Longer Than You Think
- After Selling So Many Financials, Paulson & Co. May Again Underperform In 2012
- Gold, Silver, Oil & Fear Index Trends
- New South African gold production data disappoints again
- Gold price below 200-day moving average
- Gold, Silver, Oil and the Fear Index Trends
- Shifting Grounds
- Jim Grant: “Gold, the Refuge of the Idiots”
- Gold & Silver Market Morning, March 19 2012
- Should Investors Sweat Gold’s Losing Streak?
- No Luck Of The Irish For Gold
- WATCH: Silver Thursday – March 27, 1980
- Sorry guys, need some solid feedback
- Gold Mining in West Africa Promises Growth: Mark Lackey
- Elliott wave predicts $32659 gold on 16 Jan 2015
- Why Warren Buffet Hates Gold
- CFTC Pulls Public Comments : “We Are Fearful of a Cascading Wide-Scale Market Collapse”
- When the Horn Silver Mine Crashed in
- A beginners guide to investing in Gold
- Precious Metals are Decoupling from the Stock Market
- Hilarious Reasons for Why We Need the Government
- View From the Turret: The Trend Continues
- SGT: Planecast With A Patriot
- The U.S. Economy: Soul Crushing Total System Failure
- Roger Lowenstein’s Disgraceful Propagandizing via “Bernanke as Hero” Piece
- Got Gold Report – Marginal Metal Exodus
- Chinese Gold Imports Will Keep Increasing
- Fault Lines: Colombia's Gold Rush
- What's Happening @ JP Morgan Will Blow Your Mind
| Inflation Man vs Precious Metals Posted: 19 Mar 2012 06:18 AM PDT Great vidoe by the folks of Provident Metals |
| Foreign Exchange Market Often Defies Logic Longer Than You Think Posted: 19 Mar 2012 05:52 AM PDT By Lok Sang Ho: In the wake of the global financial tsunami I predicted that Japan's export machine will be affected and that it will have to import most of the stuff needed for rebuilding what had been destroyed. The data bears out my predictions. Because of the disruptions to the economy and the damage to the infrastructure incoming FDI declined, while outward FDI jumped. (Click to enlarge) All of this should depress the yen. I wrote that any strength of the yen should be temporary, and that it should weaken rather than strengthen over the medium term. At the time (March 17, 2011) the exchange rate was 79 yen to the dollar. Rather than weakening, it gradually gained strength until by late 2011, it was trading at about 75-76 yen to the dollar. While Japan might need to Complete Story » |
| After Selling So Many Financials, Paulson & Co. May Again Underperform In 2012 Posted: 19 Mar 2012 05:16 AM PDT By Zvi Bar: John Paulson, the billionaire hedge fund manager of Paulson & Co., is well known for betting against sub-prime mortgages before they collapsed, and buying banks after their collapse. In 2010, Paulson earned a record amount of money for managing a hedge fund on the back of large bets on gold and banks, and an increased client-base, but he has since been plagued by questionable decisions and market underperformance. In 2011, Paulson & Co.'s funds had some notable issues, including poor performance fueled by large investments in the financial sector and the negative news that the hedge fund was a major investor in Sino Forest, a Chinese timber and wood company that was accused of fraud. Paulson subsequently spent the second half of 2011 selling various financials, Sino Forest and even some of his gold, Paulson & Co's largest single holding. So far in 2012, it appears Paulson's underperformance may be Complete Story » |
| Gold, Silver, Oil & Fear Index Trends Posted: 19 Mar 2012 03:07 AM PDT This week may provide some trading opportunities for us if all goes well now that most traders are investors are all giddy about stocks again. Last week we saw money move out of bonds and into stocks. |
| New South African gold production data disappoints again Posted: 19 Mar 2012 03:00 AM PDT Once again investors at the commodity and precious metals markets are focusing on production in South Africa. According to Statistics South Africa (Stats SA) in January, gold production dropped 11.3% ... |
| Gold price below 200-day moving average Posted: 19 Mar 2012 02:43 AM PDT Goldmoney |
| Gold, Silver, Oil and the Fear Index Trends Posted: 19 Mar 2012 02:35 AM PDT |
| Posted: 19 Mar 2012 12:21 AM PDT Gold prices retreated towards the $1,650-$1,655 area this morning as crude oil experienced a small setback and as the dollar climbed slightly on the trade-weighted index (last quoted at 79.82). |
| Jim Grant: “Gold, the Refuge of the Idiots” Posted: 19 Mar 2012 12:05 AM PDT Yes, he did say it, but just to explain how people felt about it in 1996, as some people refer it to "the refuge of the fearful". Maybe when it will be called "the refuge of the smarts", it will be time to sell. from ETFIdeas: ~TVR |
| Gold & Silver Market Morning, March 19 2012 Posted: 18 Mar 2012 10:00 PM PDT |
| Should Investors Sweat Gold’s Losing Streak? Posted: 18 Mar 2012 09:54 PM PDT While gold and silver have struggled in March, this appears to be momentary breather from their decade long winning streak. Inflation and budget concerns still persist and more debt-based solutions will only add to the problem. |
| Posted: 18 Mar 2012 09:50 PM PDT Precious Metals Stock Review |
| WATCH: Silver Thursday – March 27, 1980 Posted: 18 Mar 2012 08:49 PM PDT from Zerohedge: Today, courtesy of Grant Williams, we have dredged up the following clip from the archives, which is a 10 minute overview of just how there is really nothing new ever in the silver market, bringing up memories of Silver Thursday, March 27, 1980, and raising questions whether last year the move in precious metals was not due to the same attempt to corner the silver and gold markets as happened 30 years prior. A far more important question perhaps is how was it that tried a redux of the Hunt brothers (and Warren Buffett of course), and when will someone take their place next? More @ Zerohedge.com |
| Sorry guys, need some solid feedback Posted: 18 Mar 2012 07:26 PM PDT Any feedback whatsoever on this hammered product will be greatly appreciated. http://www.guernseymint.com/shop/silver-bars/c-23/c-70 Thank you sincerely in advance. SH |
| Gold Mining in West Africa Promises Growth: Mark Lackey Posted: 18 Mar 2012 07:00 PM PDT Mark Lackey, chief investment strategist with Pope & Company, sees particular promise among small-cap gold equities in West Africa. Burkina Faso and Mali offer good topography and stable,... Visit the aureport.com for more information and for a free newsletter |
| Elliott wave predicts $32659 gold on 16 Jan 2015 Posted: 18 Mar 2012 06:30 PM PDT |
| Posted: 18 Mar 2012 06:07 PM PDT The sage doesn't really care about the yellow metal, whatever the price. He sees it primarily as a bet on fear. If investors are more afraid in a year than they are today, then you make money. If they aren't, then you lose money. |
| CFTC Pulls Public Comments : “We Are Fearful of a Cascading Wide-Scale Market Collapse” Posted: 18 Mar 2012 06:00 PM PDT ShtfPlan |
| When the Horn Silver Mine Crashed in Posted: 18 Mar 2012 05:45 PM PDT Utah History |
| A beginners guide to investing in Gold Posted: 18 Mar 2012 05:30 PM PDT |
| Precious Metals are Decoupling from the Stock Market Posted: 18 Mar 2012 04:01 PM PDT Normally, decoupling from the stock market is a good thing. In recent turbulent times, many have wondered if emerging markets would decouple or if gold stocks would decouple. Its surprising to see gold stocks decouple from a strong stock market. Many wondered if the sector would decouple from a weak market. Yet, the decoupling now could be positive long-term provided the decoupling continues when the stock market peaks just below the 2007-2008 highs. Below we plot the S&P 500 and the HUI Gold Bugs Index. At the bottom we show the 100-day correlation between the two markets. Note that the correlation has been trending down since the end of 2010. The broad stock market (S&P 500) appears to be headed for a test of major resistance at 1500 while the large cap gold stocks just closed at a 52-week low. Although large cap gold stocks have closed at a new low, the rest of the sector has not followed suit. The chart below shows GDXJ, the CDNX (Canadian venture exchange) and SIL (silver stocks ETF). While the HUI has closed at a new low, the other markets remain well above their December lows. The CDNX and SIL are showing a strong divergence since October. Should most of the precious metals sector hold its December lows then it will be very encouraging for the sector even with the large caps breaking to new lows. One can recall 2007-2008 when the speculative side of the sector fell to new lows well ahead of the metals and the large cap gold stocks. One should also keep the 1970s in mind. Large cap miners experienced significant gains at the start of the bull market but not at the end. Sure, the large caps performed well from 1974-1980 but it was the speculative side of the sector that captured the vast majority of the gains. Presently, the precious metals sector has underperformed badly as the stock market has continued to move higher. We know that it is highly unlikely the S&P 500 is going to make new highs. In fact, in two of the previous three secular bear markets, the market in the second half of the bear rallied to within 5% of the all-time high before falling back into a mild 4-5 year bear market. This happened in 1909 and 1976. Profit margins, the most mean reverting statistic in finance are already at record highs. Higher interest rates and higher inflation will cut into profit margins. Everyone loves stocks now and the masses can forget about gold stocks. This is a perfect contrarian opportunity for precious metals investors. The S&P 500 is nearing resistance and the precious metals sector is testing its December low. A successful retest of the low in many markets (juniors, metals, silver stocks) should be a signal that the market has confirmed its bottom. Unless you feel the bull market in precious metals is over then you should use this opportunity to be a contrarian. We may not get another buying opportunity like this for a few years. We invite you to learn more about our service. Good Luck! Jordan Roy-Byrne, CMT
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| Hilarious Reasons for Why We Need the Government Posted: 18 Mar 2012 01:55 PM PDT It doesn't matter where you go, Fellow Reckoner...it doesn't matter how far you wander or for how long you travel...you can't escape the world improver brigade. Whether we like it or not, they are here to protect us from the horror of having to make our own decisions. And there's an opening for one in every village. We'll get to that in a second. The markets are up because...because... And gold is down because...because... Well, we don't know. And we don't believe anyone who tells us they do. Vigilant Reckoners appreciate that completion of the above sentence requires of the author a profound sense of delusion, arrogance...or both. As it happens, almost none of the tools required for a deeper understanding of the events unfolding in the world are to be found in the daily news. By definition, the news simply reports on things that have already occurred. Think of it as a kind of running data stream of digits and statistics, the unfolding pages of history, clumsily recorded and with a meaningful delay. In other words, we don't know what's going on...or why. Instead, we listen. We reckon. We try to understand what's going on. What we think is going on is a gradual, long-term shift of power and influence from debtors of the world to their respective creditors. It is a settling of accounts. Largely, this is a west-to-east phenomenon. It is reversion to the mean...and one that, for the most part, moves at a pace so slow it is difficult to detect with our naked eye and average mind. It is a shift in power from the consumers of the world to the producers. And, as power tends to follow money, so too will come a rough realignment of geopolitics. It is, as Bill Bonner puts it, a Great Correction. What can we do to reverse this course? Nothing. What can we do to hold back the tides? Nothing. We can enjoy the ride, yes...we can ride the wave...but we can't change the whims of the mob or the direction in which they are headed. We can simply look around and describe what is happening. "Descriptivists" is the name Bill gives the role. Of course, not everyone is wired to leave well — or unwell — enough alone. There exists a group of people with an obsessive compulsion to "do something." Their role in the great play of history is to intervene in other people's affairs. This group never met a solution they couldn't turn into a problem...a problem in desperate need of their own unique and indispensable solution. These people, to whom we alluded in the first paragraph, above, might best be described as "prescriptivists." We came across one such fellow, while thumbing through a copy of Melbourne's The Age newspaper. On the rare occasion you do find an opinion in the news, it's usually best left unread. Unless you're in the mood for a good laugh. Well, Chris Middendorp might just be our new favourite comedic writer. The title of his piece? (Are you ready?) "A caring state is no nanny, it is doing its job." Your editor nearly spat his Burger Rings into the next aisle when he read that one. "A caring state." Ha! The favourable personification of a non-human entity. The slavish, drooling adoration of one's own keeper. This had to be one of the most poorly disguised cases of political Stockholm Syndrome we'd ever come across. But there's more. Here's a choice quote from a little later in the piece: "Our government exists specifically to represent the best interests of citizens." Seriously. Did you read that, Fellow Reckoner? Bill Hicks had a line for this too: "Go back to sleep, citizen. Your government has everything under control." Of course, Bill Hicks actually was funny...as in, funny to laugh with, not at. But let's not get ahead of ourselves. The author has more for us. Here he is again, struggling to explain something so simple it needs no explaining at all: "Bodies that aggressively advocate free market economics are most vocal in their criticism of what they consider to be government meddling." Well...Yes! Free market advocates would be opposed to unfree, para-market intrusions, wouldn't they? We would think it might even go without saying...for the same reason we don't bother to accuse assault and battery victims of (aggressively?) defending themselves against "what they consider to be punches and kicks." What fuels this hatred for freedom of choice, we wondered. Further along we get to Mr. Middendorp's primary vexation: Individual responsibility "The central point is that human behaviour is often problematic," he writes, winding up for the punchline. "We cannot rely on individuals to behave responsibly." So who will tell us what to do, Mr. Middendorp? Who will tell us how to behave? You? Any thoughtful person would at least have the decency to feel embarrassed if called on to defend such a condescending, patronising position. Conveniently, and without a thought to his credit, Middendorp disqualifies himself from this group altogether. When it comes to statist meddlers, decent people deserve less. Regards, Joel Bowman for The Daily Reckoning Australia The "After America" Archives... Debt-onomics and the Coming Debt-ocalypse The End of Empires Are Investment Ideas Useful? A Chinese Mini Communist Revolution The Final Countdown |
| View From the Turret: The Trend Continues Posted: 18 Mar 2012 12:49 PM PDT
The US consumer appears to be alive and well, as evidenced by Apple once again selling out of its newest version of the iPad, and the company's stock now up 45% for the year. Homebuilder stocks are hitting prices not seen since 2008, and luxury retailers from Lululemon Athletica (LULU) to Harley Davidson (HOG) are well into multi-year bull trends. At times like this, it's easy to throw caution to the wind and simply "buy stuff"… After all, when the trend is bullish you have to be on board right? Today's bullish trend is certainly a powerful tailwind, and as traders we always respect the price action. But rather than buying blindly, we need to be particularly picky when it comes to what long exposure we will add to our trading book. Buying extended names that are hitting new highs, introduces too much risk into the equation. It's just too difficult to determine where proper risk points should be placed. With a stock like HOG, we could easily see a 10% pullback without damaging the technical picture – and if you use a tighter risk point, you could get stopped out while the overall trend is still very much in play. As we head into a new week of trading, we're focused on isolating bullish patterns that are NOT extended on the weekly charts – giving us a chance to buy into sectors that are in the early stages of bullish trends – and have reasonable risk points and plenty of runway for future gains. At the same time, there are a few isolated bearish sectors we are interested in. These are areas that face specific geopolitical or regulatory risks, and have already demonstrated bearish characteristics (despite the broad market moving higher). Having a relatively balanced approach to our book (while still keeping more capital at work in bullish trends) helps to smooth out the P&L curve, and gives us some insurance should the broad picture begin to deteriorate. Below are a few of the areas we are focusing on this week…
Looking for a Professional Trading Platform? Check out the DMA platform from TradeStation Prime Services. It's the platform we use for our Mercenary Trader executions. Click here for more information. Drilling For Black Gold (And Gas…) As crude prices continue to hover well over $100 per barrel, the incentive to drill becomes more and more appealing. Last week, the Mercenary Live Feed added a handful of E&P (Exploration & Production) stocks to our roster as continuation patterns gave us attractive entry points with acceptable risk envelopes. TransOcean Ltd (RIG) is one that bolted sharply higher shortly after our entry, gapping to a new 2012 high on Friday after issuing an update on its drilling fleet. According to a recent report by Global Hunter Securities – as published in Barron's Online, RIG enjoys a competitive advantage as pricing increases – due to having a larger percentage of its fleet available for higher-priced new contracts From the report:
This week, we will be able to adjust our risk point on this new position to breakeven – cutting out the risk t initial capital, while still giving us plenty of room for additional profits. Cimarex Energy (XEC) looks like it could have a similar run, after trading sharply higher in February, and then spending a few weeks consolidating its gains. With solid prospects for 2012, and 27% expected EPS growth in 2013, institutional buy programs should continue to push this E&P stock higher – and the "thrust and drift" pattern creates a great opportunity for a trend position with limited risk.
 Shippers Rebound From Deep Base If you pull up a 10-year weekly chart of almost any dry-bulk shipper, you'll see a picture of true carnage. The group was devastated by a sharp decline in day rates – and even the shippers who had secured long-term contracts had to deal with bankruptcies or distressed re-negotiations of terms. The majority of losses occurred in late 2008, but the shippers had another sharp downdraft late last year as European demand fears led to another round of panicked selling. That final round of liquidation set the stage for what very well could turn out to be a long-term bullish trend for shippers. The last weak holders have now been shaken out – and sentiment has plenty of room for a bullish shift. Diana Shipping (DSX) looks particularly interesting after bottoming in October. Incidentally, the low in October 2011 briefly took out the previous low from November 2008. Taking out this long-term low should have been effective in knocking out investors with ANY reservations about owning this stock – which now gives DSX a chance to rebound with only the strong hands holding long-term positions. The stock rallied sharply in February and then pulled back to test its breakout point. A push higher late last week confirms the stocks strength – and also sets up a series of higher lows and higher highs (exactly the pattern that a bullish trend follower wants to see).
Education & Airlines Under Pressure The two areas offering the best bearish setups at this point are for-profit education stocks, and US airline companies.It's easy to see why the airlines are struggling. Higher oil prices mean rising fuel costs. Most of the airlines have hedging programs in place to help smooth out prices for the short-term. But as oil prices linger above $100 per barrel, and economists adjust their long-term models, airlines are beginning to enter hedges at much higher prices – locking in fuel costs that crimp future margins. Depending on the strength of the US consumer, the airlines may be able to ratchet up prices to help offset these rising costs. But considering the ultra-competitive state of the industry, raising prices too early can simply result in fewer seats filled and lost revenue. After rebounding with the broad market for the last 6-9 months, airlines are now turning tail and setting up bearish patterns. A swift rebound last Thursday was met by intense selling Friday. The headfake sets up a great short entry as "trapped" short-term buyers from Thursday are now likely to throw in the towel as the airlines hit new lows.
With earnings season still a few weeks away, and the Fed meeting in the rear-view mirror, there shouldn't be too many catalysts to disrupt the current trend. Don't let your "intuition" talk you out of what the charts are clearly signaling. We are in a bull market for the time being, and our best indicator for when this changes will be the price action itself. It makes sense to balance exposure, to manage risk, to develop scenarios for when the season changes – but until that point, it's important to take advantage of the broad tail wind. Trade 'em well this week!
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| Posted: 18 Mar 2012 11:51 AM PDT
from SGT: Part One Part Two Much more @ SGTReport.com |
| The U.S. Economy: Soul Crushing Total System Failure Posted: 18 Mar 2012 11:18 AM PDT 
As the U.S. economy experiences total system failure, it will be imperative for all of us not to wait around waiting for someone to rescue us. And I am not just talking about the government. Today, millions upon millions of Americans are waiting around hoping that someone out there will hire them. Well, the truth is that our politicians have made it so complicated and so expensive to hire someone that many small businesses try to avoid hiring as much as possible. Businesses generally only want to hire people if they can make a profit by doing so. When our politicians keep piling on the taxes and the regulations and the paperwork, that creates a tremendous incentive not to hire workers. Michael Fleischer, the President of Bogen Communications, once wrote an op-ed in the Wall Street Journal entitled "Why I'm Not Hiring". The following is how Paul Hollrah of Family Security Matters summarized the nightmarish taxes that are imposed on his company when Fleischer hires a new worker....
Are you starting to understand why so many businesses are hesitant to hire new workers? The big corporations can handle all of the paperwork and regulations that come with hiring a new worker fairly well, but for small businesses hiring a new worker can be a massive undertaking. That new worker is going to have to almost be a miracle worker in order to justify all of the hassle and expense. But the federal government just keeps piling more burdens on to the backs of employers. That is one reason why there is such an uproar over Obamacare. It is going to make hiring workers even less attractive. These days, most small businesses are trying to get by with as few workers as possible, and many big businesses are trying to ship as many jobs as they can overseas. Sadly, even if you do find a good job it can disappear at any moment. The following is from a comment that a reader named Jeff recently left on one of my articles....
Can you imagine that? Can you imagine your boss walking in one day and declaring that the business has just been sold to foreigners and that you are about to lose your job? In America today, it can be absolutely soul crushing to lose a job. It isn't as if you are going to run out and get another fantastic job in a week or two. When you are unemployed, people look at your differently. It gets to the point where you don't even want to interact with other people because you know that your unemployment is probably going to be the number one topic of conversation. When you are out of work for six months or more, it is easy to feel like a failure - especially when so many other people are looking at you as if you are a failure too. But in most cases, individual Americans are not to blame for not being able to find work. Rather it is the entire system that is failing all of us. The U.S. economy is bleeding good jobs and the middle class in America has become a bizarre game of musical chairs. When the music stops each round you might lose your spot. You just never know. Looking for work in the United States in this economic environment can be a demoralizing endeavor. For example, a recent Esquire article described what one unemployed man named Scott Annechino found when he attended a job fair in San Francisco....
If you want to check out the rest of the sad unemployment stories in that article, you can find them right here. But even if you do have a job, that doesn't mean that everything is just fine. Average American families are finding that the prices of the basic things that they need are rising much faster than their paychecks are. According to one recent study, more than half of all Americans feel as though they are really struggling to afford just the basics at this point....
Just buying food and gas is a major financial ordeal for many families these days. On average, a gallon of gasoline in the United States now costs $3.83. Many Americans burn up a huge chunk of their paychecks just going back and forth to work in their cars. So what is the solution? Well, according to the Obama administration the answer is even more government dependence. The federal government is now actually running ads encouraging even more people to go on food stamps.... Can you believe that? Apparently having 46.5 million Americans on food stamps is not enough. The federal government is spending our tax money on advertisements that try to convince even more Americans that they need to be on food stamps. What the American people really need are good jobs, but those keep getting shipped out of the country. Meanwhile, people are becoming increasingly desperate. For example one Colorado man was recently caught stealing parts from toilets in public restrooms....
They are calling him "the crapper scrapper". Other Americans are not willing to stoop to crime and instead suffer quietly and anonymously. A reader named Katie recently left the following heartbreaking comment on one of my articles....
Please say a prayer for Katie and the millions of other Americans just like her. It can be absolutely soul crushing to lose everything that you ever worked for and not see any light at the end of the tunnel. Unfortunately, the U.S. economy is not going to be improving in the long run. What we are experiencing right now is about as good as it is going to get. The truth is that it is pretty much downhill from here. It is fairly simple to figure out what is happening to us as a nation. You can't keep buying far more than you sell. You can't keep spending far more than you bring in. You can't keep running up debt in larger and larger amounts indefinitely. The U.S. economy is running on borrowed money and on borrowed time. At some point, both are going to run out. Are you ready for that?
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| Roger Lowenstein’s Disgraceful Propagandizing via “Bernanke as Hero” Piece Posted: 18 Mar 2012 10:55 AM PDT As Winston Churchill pointed out, history is written by the victors. The big end of finance, having won decisively in the global financial crisis, is in the process of rewriting history to suit its liking. The cover story in the current Atlantic by Roger Lowenstein on Ben Bernanke, titled simply, "The Hero," is a classic example of this type of revisionist history. I don't know what has happened to Lowenstein. His book on the collapse of hedge fund Long Term Capital Management, When Genius Failed, is a terrific piece of reporting. People I know who were on the inside of the LTCM rescue negotiations give his account high marks. But he has increasingly fallen into the role of scrivener for powerful interests, when his previous standards of writing and his knowledge of the finance beat says he must, on some level, know what he is doing. The Fed couldn't have gotten better PR if it had paid for it. Lowenstein's account has just enough muted criticism of Bernanke (he was slow to see the severity of the crisis, his critics on the left may have a point in saying he hasn't been aggressive enough in trying to reflate the economy) to mask its hagiography. And this sort of spin-meistering is effective. Not only did people at the Atlantic economy conference, which coincided with the release of the piece, take up the "Bernanke did a great job in the crisis" mantra (they seemed to appreciate a piece that reinforced inside-the-Beltway conventional wisdom) but the cover, with a beatific picture of Bernanke and "THE HERO" blazed across his chest, will be seen by lots of people walking by newsstands and have an impact well beyond those who read the piece. As further proof of its faux-objectivity, the title inside the magazine is "The Villain," to highlight the way (as Lowenstein positions the piece) Bernanke is being unfairly pilloried. I'll turn to the major arguments shortly, but one of the things that was particularly annoying was the way it repeatedly gilded a rotting cabbage. These are devices that most readers would miss, by virtue of not reading carefully enough to recognize their construction, or not knowing the terrain well enough to discern how Lowenstein skews his account. Here are a few of numerous examples:
Now let's get to the thrust of the argument, that Bernanke did a great job in the crisis and its aftermath, and that critics, save maybe Paul Krugman, are ignorant populists (Krugman is presumably an educated populist). This thesis conveniently sidesteps the fact that Bernanke is at best a doctor who unnecessarily amputated both legs of the economy and is now being applauded for attaching badly fitting prosthetics to the stumps. And there are numerous experts who have criticized the Bernanke Fed, ranging from Steven Roach, Chris Whalen, former central banker Willem Buiter, as well as former Fed staffers and financial markets professionals of the non-goldbug variety. Another central banker, Andrew Haldane of the Bank of England, has done some rough estimates of the cost of the crisis to the global economy, and the low end of his range is one times global GDP. That is such a large number that if you were to try to make the biggest banks to pay for it over 20 years, the first year charge would exceed their market value. Haldane has pointed out in other articles that big bank shareholders and executives who have equity linked pay are in the position of option-holders: they have capped downside (the authorities will ride in to the rescue) and unlimited upside. And the more volatile the performance of the underlying instrument (bank stocks) the more an option is worth. Bankers not only have powerful incentives to take risks, even worse, they are in a position to generate systemic risk, and that's the best course of action for them. Yet last week, after another round of stress test theater, the Fed gave all but a few banks permission to pay out dividends and buy back stock rather than bolster their equity bases, even as the mortgage settlement is based on the premise that the banks are still too fragile to pay for the damage they've done. Lowenstein argues, in keeping with other Bernanke defenders, that the crisis was Greenspan's doing rather than Bernanke's. It isn't that cut and dried. Bernanke, as a notable monetary scholar, gave intellectual legitimacy to Greenspan's unprecedentedly long period of low interest rates in the dot-bomb era that many argue stoked the credit bubble. Bernanke's famous 2002 speech on deflation, which Lowenstein refers to, was a defense of Greenspan's overreaction to the stock market bust. The unwinding of that bubble, unlike our current one, did not represent a threat to the financial system, since the speculation was not fueled by borrowing. Bernanke was vocal proponent of the "no bubble to see here" view when he took the helm of the Fed, and argued the runup in household debt was benign, since consumer balance sheets were in good shape. But that of course was based on unsustainable home prices. There is much that Lowenstein ignores in his piece, and that's because it is necessary to paint such a flattering picture of Bernanke. First is the Fed's record during the crisis. Lowenstein depicts it as a success, when you can conclude that only by dint of applying a very liberal grade scale. The only missteps he mentions are the "75 is the new 25," the central bank's panicked rate cuts when it realized the crisis was more severe than it thought, and the AIG bailout. But that only scratches the surface. I'm not certain that Bear Stearns should have died. The Fed was originally going to give it a 28 day loan which some believed would allow Bear to find more capital or persuade the markets it was being unfairly stigmatized. And the Fed also created an unprecedented facility to lend to primary dealers. Had Bear gotten the loan it was originally promised, it would also have gotten access to the new program, which might have enabled it to survive. No explanation has ever been given of why the Fed changed its mind and reneged on its a 28 day loan promise, extending instead an overnight loan to carry it through to a weekend subsidized sale to JP Morgan. But if you assume the Fed was right, Lehman was simply a bigger version of Bear, and Merrill and UBS were also known to be at risk. And most observers assumed the reason Bear was bailed out what its credit default swaps exposures, which had the potential to turn a Bear failure into a bigger mess. Yet, as we recounted at some length at time, Bernanke, Paulson and Geithner went into Mission Accomplished mode after the Bear rescue. Instead of seeing the Bear implosion as a wake up call, and mounting a full bore effort to diagnose the health of the major players, or get a grip on CDS exposures, the Fed and SEC notched up supervision only a smidge. The Fed sent a grand total of two people to Lehman, for instance. By contrast, the FDIC had to send 160 bank examiners to get a handle on a single (admittedly large) loan portfolio when Citi was on the ropes in the early 1990s. And Lehman was a self-inflicted wound. Bernanke, Paulson, and Geithner had only one plan, and that was a private sector rescue. They didn't even look at what the alternative might entail; they hadn't even talked to Harvey Miller, the dean of the bankruptcy bar who had been retained by Lehman. They were utterly flat footed when the negotiations failed. Miller has stressed that the lack of any prep (including the use of a thin form bankruptcy filing) made outcomes much worse than they needed to be. In an interview, Bernanke cut short Lowenstein on AIG, and there's good reason why. Its original bailout was the only one I approved of; it did adhere to the Bagehot rule by applying a high rate of interest and securing the loan with all of AIG's assets. But one also has to note that the very fact that the Fed figured out a way to make massive emergency loans to AIG undermines its "we had no legal authority" defense of the Lehman debacle. (The other excuse has been that Lehman didn't have enough good collateral, but time has proven that to be true with AIG, plus Bloomberg-forced disclosures revealed that some of the other emergence lending, such as that to Morgan Stanley, also had dubious backing). But the authorities not only lent AIG more money, they kept improving the terms, and allowed its intransigent new CEO Robert Benmosche to defy the original plan, which was to dismember AIG, which would have been a very effective way pour discourager les autres. That in turn resulted from the Fed's failure to require the board to resign as one of the conditions of the rescue. And this is all before we get to the Fed's two-facedness about contracts. It insists contracts have to be observed strictly when they favor bankers, such as the credit default swaps contracts AIG had written, or pay agreements with bank executives and major producers that would have been worthless ex taxpayer support and Fed intervention. But it has no problem with banks running roughshod over agreements with homeowners and investors. As recounted here and elsewhere, the mortgage settlement incorporates, among other things, that wrongful foreclosures at a rate of up to 1% (which equates to 33,000 homes since 2008) is acceptable servicing and the Fed and other regulators will give it a free pass. Similarly, the Fed has joined in a effort to reverse the long-established creditor hierarchy, allowing banks to modify first liens owned by investors (and count this use of other peoples' money towards the settlement of their own misdeeds) without wiping out second mortgages they own, as would be required contractually. The second major theme of the piece is that Bernanke is a fine economist and ideally suited to steer the central bank now. To the extent that Bernanke is held in high regard, it says more about the state of orthodox economics than it does about his expertise. Anna Schwartz, who with Milton Friedman authored the influential Monetary History of the United States, upbraided Bernanke for his handling of the crisis, stressing that he failed to recognize that it was a solvency crisis, not a liquidity crisis (needless to say, that issue is absent in Lowenstein's account). Bernanke is also a firm believer in the discredited "loanable funds" view, that if you make put money on sale by making interest rates low and credit readily available, businesses will take advantage of it and borrow and invest. But that's just silly. The cost of money is a secondary consideration in investing. The primary one is: will there be enough buyers for your output and will they pay what you need to charge to make the project work? And we can see that in the result of the Fed's operations. As Richard Koo points out in his latest research report, the Fed has increased bank reserves by over 320% since Lehman, yet the money supply has increased only 25%. The worst is that the Lowenstein article is long enough and consistently wrong-headed enough that there is much more I could add to this shredding, but in the interest of not taxing reader patience, I'll stop here. I'm afraid we are due for a steady diet of this sort of thing. And even though we can't stop it, we can let the people putting out this sort of disinformation and our colleagues know that we aren't fooled.
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| Got Gold Report – Marginal Metal Exodus Posted: 18 Mar 2012 09:22 AM PDT
HOUSTON (Got Gold Report) – On the one hand we note India doubling the gold tax from 2% to 4%, leaving silver as-is; wealth flooding out of bonds and precious metals to chase an already extended U.S. stock market; tightening sanctions on Iran, cutting off her access to the SWIFT banking system; local gold and silver dealers heavy with inventory, gold and silver premiums low and some discounts showing (a contrary bullish signal). On the other hand we cannot forget enormous LTRO liquidity, Bank of England QE, Bank of Japan QE, Fed to ECB dollars for euros swaps liquidity, massive, unprecedented balance sheet expansion and forced liquidity into the system by the Federal Reserve ... with a Fed "Twist" (Operation Twist by the Fed) if we want to cite a "kicker." Oh, and let us keep in reserve that central banks are net buyers of gold now for some (very obvious) reason. With economic news of the day here in the U.S. improving, and all that titanic pump priming by the heavy debtor western world's central banks ... um, in an election year for many countries, can we be all that surprised to see levitating U.S. equity markets and at least the illusion that "things are getting better?" (Cue the democratic party theme song, please, "Happy Days are Here Again.")
the creation of too much money and credit, with the symptoms of inflation, price and wage 'inflation' always ... ALWAYS ... lagging its monetary roots; when we consider that never before in the history of mankind has so much borrowed money been protected by central bankers and governments creating oceans of new fiat currency out of the thinnest of thin air and mountains of new debt to service the old ... can the more visible kind of inflation and the world's focus upon that insidious demon be far behind? Witness the world apparently 'buying' Fed Chairman Ben S. Bernanke's line that the Fed only wants to create "a little inflation," not a terrifying amount of it. (Like saying the Fed only wants a little theft not full scale, very noticeable robbery.) More importantly, the world seems to be accepting hook, line and sinker the Fed's contention that it can rein in high price and wage inflation via Fed policy; via bond market manipulation (and don't laugh) "if necessary." So, is it surprising to see wealth leaving precious metals at the margin right now? Is it surprising that people are selling some of their gold and silver to put that money to work in the rising equity markets right now?
that pronounced the U.S. housing market sound (no bubble) in 2007 and utterly failed to see or prepare for the 2008 excessive debt/leverage financial crisis ahead of time. Forgive us if we, and many like us, are not comforted by the Federal Reserve's utmost confidence they will be able to keep price and wage inflation in check once it is allowed to take hold. Call us fairly skeptical of it in fact. Bond Break That thundering cracking sound you hear is the U.S. bond market breaking lower out of a wide topping formation. It's either the real deal major reversal of the 25-year-plus bond bull market or a warning shot of it. With all the liquidity sloshing around in the world's financial engine a bond market reversal is but one sign that the effects of monetary inflation are starting to show. Rising interest rates could just mean that things are getting back to 'normal,' right? Wealth moving out of bonds and into stocks is a good sign, isn't it? Isn't this just exactly what the Fed wanted, rising asset, commodity and equity prices to rekindle confidence? Well, yes, and we said we thought this would occur, but does anyone reading this really believe that the Fed only wants or will only get "a little inflation?" Really? No Major ETF Exodus, a 'Tell' Maybe that's why in this current metals sell-down there have been little in the way of metal inventory reductions in the world's precious metal ETFs. Wealth is exiting the metals, that's true, but so far, not like it "means it." We can state categorically that if there was a major exodus of capital from precious metals – if the world suddenly regained more confidence in fiat currencies and less confidence in gold – we would be seeing negative liquidity in spades. We would be seeing large and consistent reductions in the amount of metal being held by the world's big metals ETFs. Does this next chart look like an exodus of wealth from the largest gold ETF is currently underway? SPDR Gold Shares metal holdings, at 1,293.27 tonnes of gold remain within two percent of the all time record of about 1,320 tonnes set in June, 2010. That's hardly evidence of a large exodus of capital from gold metal; to the contrary. Local Dealers Heavy Inventory - Bullish People are also selling some of their accumulated gold and silver to dealers at present. Local dealers report heavy inventories of most small gold and silver products and some are actively looking for capital. (We sometimes provide liquidity for a few local dealers, holding gold and silver collateral. When their inventories are bulging and premiums are low that condition is very often a contrary bullish signal short term.) When dealers are discounting metal to each other it is a sign that The Street is doing more selling than buying. When small, thinly capitalized dealers are actively looking for capital it means they have tapped their bank or brother-in-law credit lines to take on more inventory because The Street has been selling a bit more aggressively. They are willing to increase debt because the game becomes more profitable when they can buy from the public at larger discounts. The Little Guys Forgotten – for Now Nowhere is the exodus of capital from the metals and metals related stocks felt more strongly in than in the smaller, less liquid and more speculative issues – the ones we happen to enjoy gaming here at Got Gold Report. We call them "The Little Guys" and that is what we will take a brief look at in a moment. A quick glance at the HUI shows that it is quite literally at implied support in a typically bullish Falling Wedge pattern. At Support also means there is little room for "error" now and a breakdown of the wedge could easily show just ahead. Vulture members look for much, much more in our linked technical charts located on the subscriber pages.
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| Chinese Gold Imports Will Keep Increasing Posted: 18 Mar 2012 08:48 AM PDT by James Turk, GoldMoney.com:
China has had little impact on world gold markets. The reason being that Chinese domestic gold production, which over the past several years has grown to make China the largest gold miner in the world, was sufficient to satisfy domestic demand. Consequently, in contrast to other markets in which China has become an important source of demand, it has had little impact on the demand for gold. Just over a year ago, however, the balance between Chinese gold production and demand began to change. Chinese mining companies were unable to produce enough metal to satisfy the growing domestic demand, with the result that China began importing gold. Read More @ GoldMoney.com |
| Fault Lines: Colombia's Gold Rush Posted: 18 Mar 2012 08:37 AM PDT Gold fever is sweeping across South America. Nowhere is it more lethal than in Colombia, where the gold rush has become a new axle in Colombia's civil war. Turf wars are erupting between paramilitaries, and leftist rebel groups fighting to take control of mining regions. It's fueling an old ideological conflict and has displacing hundreds of people.
Helicopter raids by the Colombian Army on small community mining collectives have become commonplace, and the Colombian government is accused of targeting poor workers to protect big business interests, and operating with impunity from human rights violations. Thousands have fled their homes where land is violently contested, and others live in fear they'll be removed from their land, arrested, or killed. The multinationals are flooding in too. With gold now worth around $1,500 an ounce, everyone is getting in on the act, including North American mining companies. Colombia's pro-business mentality has seen arbitrary concessions by the state sold to multinational companies, often on indigenous land. Fault Lines traveled to Colombia to speak to the people caught in the middle. The rural workers and artisan miners who've mined for generations, and some whose ancestors were enslaved during the first gold rush centuries ago. Others are former coca farmers, put out of work by the US-led Plan Colombia. |
| What's Happening @ JP Morgan Will Blow Your Mind Posted: 18 Mar 2012 07:57 AM PDT The Crazy Things That One Whistleblower Says Are Happening At JP Morgan Will Blow Your Mind
Rampant silver manipulation? Rampant gold manipulation? Rampant LIBOR manipulation? Hiding MF Global client assets? These are all happening at JP Morgan according to an open letter reportedly written by an anonymous employee of the firm. The whistleblower also warns of a "cascading credit event being triggered" by derivatives related to Greek government debt. Unlike Greg Smith at Goldman Sachs, this whistleblower has chosen to remain anonymous for now. According to the letter, the whistleblower is still an employee of JP Morgan and has not resigned. But that does make it much more difficult to confirm what he is saying. With Greg Smith, we know exactly who he is and what he was doing at Goldman. As far as this anonymous whistleblower is concerned, all we have is this letter. So we must take it with a grain of salt. However, the information in this letter does agree with what whistleblowerssuch as Andrew Maguire have said in the past about silver manipulation by JP Morgan. And this letter does mention Greg Smith's resignation from Goldman, so we know that it must have been written in the past few days. Hopefully this letter will cause authorities to take a much closer look at the crazy things that are going on over at JP Morgan and the other big Wall Street banks. |
After a brief diversion early this month, the bullish trend has re-asserted itself with the major indices once again hitting new 3-year highs and speculative growth stocks catching a bid.
Since China began to embrace economic progress in the 1990s and let the compelling forces of capitalism take hold to raise living standards in that country, its impact on world markets has been profound. Chinese capital has become a major influence in the global economy, and demand from China has had a huge impact on commodity prices. But an exception to the Chinese influence has been gold.
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