Gold World News Flash |
- International Forecaster April 2012 (#2) - Gold, Silver, Economy + More
- What's the central bank endgame in gold?
- If gold isn't money, why did Vietnam just outlaw using it as such?
- “GOLD” – Top 10 Trend on Yahoo.UK for Last 4 Days
- Is A New Global Gold Standard Coming?
- Great Limited Mintage Coin, Good Price: The Silver Britannia
- We Are Nearing the End Game For Central Bank Intervention
- 150 Years Of US Fiat
- Geology of the Storm Gold Deposit
- Rick Santelli - Classic Cars, Energy Revolution & Market Action
- Article posted at GoldMoney
- Jim's Mailbox
- STOCKS HAVE REACHED THE EUPHORIA STAGE
- Is the U.S. losing faith in its own dollar? Bills proposed in more than a dozen states to make gold and silver legal currency for use
- Does the Ubiquitous Red in the Silver Herald a Trend Reversal or Higher Future Profits?
- Gold and Silver Price Manipulation - "High Frequency Shearing"
- Eating Humble Pie
- Blythe Masters Speaks Out On JPM and Market Manipulation: Take Our Word For It
- Gold Junior Stocks Available at Bargain Prices
- Silver Trend Reversal or Higher Future Profits?
- Guest Post: There Will Never Be A Failed US Treasury Auction... Until There Is
- Colony Collapse Disorder Linked To Pesticide, High-Fructose Corn Syrup
- Painful Revelations With Mark Grant As We Edge Down The Holmesian Path
- What's the central bank endgame in gold?
- The Weekly Update - NFP And DMA
- Gold Bulls, Tad Nervous Are We
- Money Morning interviews Ted Butler on silver market manipulation
- Credit derivatives market being manipulated by Morgan / U.S. govt.
- What Happens to Gold if We Enter a Recession or Depression?
- Why people should buy gold - Drew Mason and Alasdair Macleod
| International Forecaster April 2012 (#2) - Gold, Silver, Economy + More Posted: 08 Apr 2012 03:15 AM PDT We've all heard the old adage about adding insult to injury but the IMF has turned it into an art form. The new IMF Director, Christine Lagarde, came to Washington this week begging for yet more billions so the fund can continue propping up insolvent European banks and wrapping developing countries around the globe in debt chains. Lagarde is on a political junket with the aim of raising an additional $500 billion for the IMF, money that will be used for future Eurozone bailouts and other financial crises, or so they say.
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| What's the central bank endgame in gold? Posted: 08 Apr 2012 03:12 AM PDT Our friend R.V. writes: "If the naked short position in gold on behalf of the Federal Reserve through its intermediaries is so big that it can drive down the bullion markets with mere paper (and I believe that it is), then what is the likely strategic endgame that these evil people have in mind?
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| If gold isn't money, why did Vietnam just outlaw using it as such? Posted: 07 Apr 2012 04:02 PM PDT Restrictions on Bullion-Related Businesses By P. Thao and P. Trung http://www.saigon-gpdaily.com.vn/Law/2012/4/100611/ As per a decree issued by the Prime Minister's office on April 3, gold has been banned as a medium for exchange, along with seven bullion-related activities that will take effect from May 25. The decree prohibits use of gold as a medium of exchange; manufacturing gold jewellery without a licence from the central bank; trading gold without a licence; and conducting any other gold-related businesses without the approval of the prime minister and the central bank. In addition, licensed gold enterprises must satisfy requirements such as having registered capital of 100 billion Vietnamese dong; having operated in gold trading for two years; paying tax above VND500 million; and having at least a branch in three central provinces and cities. ... Dispatch continues below ... ADVERTISEMENT Prophecy Platinum (TSXV: NKL) and Ursa Major Minerals Company Press Release VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) and Ursa Major Minerals Inc. have signed a binding letter of agreement for a business combination through a proposed all-share transaction. In doing so Prophecy and Ursa have acted at arm's length and the transaction has been negotiated at arm's length. Prophecy will issue one common share in exchange for every 25 outstanding common shares of Ursa. Ursa options and warrants will be exchanged for options and warrants of Prophecy on an agreed schedule. Prophecy's offer represents a value of about $0.15 per each common share of Ursa based on Prophecy's share price of $3.70 as at March 1, representing a premium of 130 percent to Ursa's March 1 closing price of $0.065. Prophecy is to subscribe for $1 million common shares of Ursa by way of private placement financing at $0.06 per share, subject to regulatory approval. Upon placement completion, John Lee and Greg Hall, current Prophecy directors, will be appointed to Ursa's board. Prophecy thus will become a mid-tier resource company with a robust and diversified pipeline of platinum nickel projects, including: -- The fully permitted open-pit Shakespeare PGM-Ni-Cu mine close to Sudbury, Ontario, infrastructure with near-term production capabilities. -- The flagship Wellgreen (Yukon) PGM-Ni-Cu project with more than 10 million ounces of Pt-Pd-Au inferred resource. Drilling is under way and a preliminary economic assessment study is pending. -- Manitoba's Lynn Lake Ni-Cu project with more than 262 million pounds Ni and 138 million pounds Cu measured and indicated. For the complete announcement, please visit Prophecy Platinum's Internet site here: http://www.prophecyplat.com/news_2012_mar02_prophecy_platinum_ursa_major... As per the decree, licensed banks and credit institutions must have a registered capital of over VND3 trillion and branches in five provinces and cities. Moreover, gold producers must be registered under the country's law to make gold and have good working facilities. Furthermore, the State Bank of Vietnam ordered five banks including Asia Commercial Bank, Dong A Bank, Vietnam Export Import Bank, Saigon Thuong Tin Commercial Joint Stock Bank, Vietnam Technological and Commercial Joint-stock Bank, and Saigon Jewellery Co. to send detailed reports of their network for selling and buying bullion in the country, along with names and address of branches. For setting up a network in the country and for meeting the demands of domestic gold consumers, five banks and jewellery companies have been asked to expand operations in every district in the country. Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf
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| “GOLD” – Top 10 Trend on Yahoo.UK for Last 4 Days Posted: 07 Apr 2012 03:25 PM PDT
This just in from SGTreport reader 'BT' who writes: "SGT, this is the fourth day in a row in the UK that 'GOLD Price' has been a top ten trending search on Yahoo.UK" [currently #2 in the link below.] "What does it mean? Are the sheep waking up or are they planning another price slam?" Who knows BT, but regardless of what Gold and Silver prices do in the short term, the trend is that people around the world ARE waking up, and the long term trend for PHYSICAL precious metals, is up. Happy Easter friends! See the Yahoo.UK Top 10 Trends here.
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| Is A New Global Gold Standard Coming? Posted: 07 Apr 2012 02:33 PM PDT from FTM Daily:
On this week's program, Jerry Robinson and co-host Jennifer Robinson bring you their latest analysis on the continuing shift away from the U.S. dollar in global trade. Iran, China, India, and Russia are the culprits in this latest transition away from the dollar. Plus, does Iran dare to challenge the Petrodollar system? We bring you the latest on the breakdown of the Petrodollar system, including a shocking move by Iran to accept gold for oil sales. Is the world moving closer towards a new gold standard? Tom Cloud has the answer to this question, as well as the latest updates on gold, silver, and palladium in this week's Precious Metals Market Update.
This posting includes an audio/video/photo media file: Download Now |
| Great Limited Mintage Coin, Good Price: The Silver Britannia Posted: 07 Apr 2012 02:32 PM PDT by SGT Thanks to reader Bob A for bringing this one to our attention. Apmex is running a special on 2010 Silver Brittania coins until Sunday, April 8th at 10am CST. I own many Britannia's from various years and they are among the most beautifully minted, government issued coins in the world. What makes the Brittania's particularly special is that in a world with more than 6 billion people and only a billion ounces of silver, these coins are profoundly rare.
For the record, they're going for between $42 – $55 on ebay. Check 'em out now for $38.28 each, here.
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| We Are Nearing the End Game For Central Bank Intervention Posted: 07 Apr 2012 11:02 AM PDT
The media and 99% of analysts believe the Fed is and can continue to act aggressively to prop up the markets, the fact is that the Fed has been reining in its monetary stimulus over the last nine months, largely relying on verbal intervention from Fed Presidents to push stocks higher.
We at Phoenix Capital Research have known this for some time. But the general public and financial media are only just starting to realize that the Fed, in some ways, is at the end of its rope in terms of monetary intervention. This has become increasingly clear in the Fed FOMC statements.
Consider the latest FOMC statement released earlier this week…
Fed Signals No Need for More Easing Unless Growth Falters
The Federal Reserve is holding off on increasing monetary accommodation unless the U.S. economic expansion falters or prices rise at a rate slower than its 2 percent target.
“A couple of members indicated that the initiation of additional stimulus could become necessary if the economy lost momentum or if inflation seemed likely to remain below” 2 percent, according to minutes of their March 13 meeting released today in Washington. That contrasts with the assessment at the FOMC’s January meeting in which some Fed officials saw current conditions warranting additional action “before long.”
Ignore the verbal obfuscation here. The Fed knows that inflation is higher than 2%. It also knows that US growth is faltering. The above announcement is the Fed essentially admitting its hands are tied regarding more easing due to:
Again, we are in a process of slow awakening to the fact that the Fed has not solved the problems that caused 2008. Instead, the Fed has exacerbated these problems (excess leverage) and created new problems in the process (inflation).
Fortunately for the Fed, the European Central Bank has picked up the intervention slack since the Fed began pulling back in mid-2011. Indeed, between July 2011 and today, the ECB has expanded its balance sheet by an incredible $1+ trillion: more than the Fed’s QE 2 and QE lite combined (and in just a nine month period).
The two largest interventions were the ECB’s LTRO 1 and LTRO 2, which saw the ECB handing out $645 billion and $712 billion to 523 and 800 banks respectively.
As a result of this, the ECB’s balance sheet exploded to nearly $4 trillion in size, larger than the GDPs of Germany, France, or the UK.
This rapid and extreme expansion of the ECB’s balance sheet (again it was greater than QE lite and QE2 combined… in nine months) indicates the severity of the banking crisis in Europe. You don’t rush this much money out the door this fast unless you’re facing something very, very bad.
This rapid expansion has also resulted in the ECB obtaining a similar political toxicity to that of the US Federal Reserve. Indeed, those European banks that participated in the LTRO schemes have found their Credit Default Swaps exploding relative to their non-LTRO participating counterparts.
The reason for this is obvious: any bank that participated in either LTRO implicitly announced that it was in dire need of capital. As a result of this the markets have stigmatized those banks that participated in the schemes, thereby:
In simple terms, the Fed’s hands are tied and the ECB is out of ammo. The End Game for Central Bank intervention is approaching. And it won’t be pretty… First Europe. Then Japan. Then the US.
So if you’re not already taking steps to prepare for the coming collapse, you need to do so now. I recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.
This report is 100% FREE. You can pick up a copy today at: http://www.gainspainscapital.com
Good Investing!
Graham Summers
PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.
And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com
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| Posted: 07 Apr 2012 09:48 AM PDT 5 days ago saw the 150th year anniversary of an event so historic that a very select few even noticed: the birth of US fiat. Bloomberg was one of the few who commemorated the birth of modern US currency: "On April 2, 1862, the first greenback left the U.S. Treasury, marking the start of a new era in the American monetary system.... The greenbacks were originally intended to be a temporary emergency-financing measure. Almost bankrupt, the Treasury needed money to pay suppliers and troops. The plan was to print a limited supply of United States notes to meet the crisis and then have people convert the currency into Treasury bonds. But United States notes grew in popularity and continued to circulate." The rest, as they say is history. In the intervening 150 years, the greenback saw major transformations: from being issued by the Treasury and backed by gold, it is now printed, mostly in electronic form, by an entity that in its own words, is "set up similarly to private corporations, but operated in the public interest." Of course, when said public interest is not the primary driver of operation, the entity, also known as the Federal Reserve is accountable to precisely nobody. Oh, and the fiat money, which is now just a balance sheet liability of a private corporation, and thus just a plug to the Fed's deficit monetization efforts, is no longer backed by anything besides the "full faith and credit" of a country that is forced to fund more than half of its spending through debt issuance than tax revenues.
More on the history of American fiat from Bloomberg:
So instead of real money, America has an impostor "which came to look almost identical to the United States note" with the full complicity of everyone in charge, just so that when needed, any and all untenable debt burdens can be inflated away. And while the latter is a topic of a whole different discussion, we present another chart which, unlike the 150th anniversary of fiat, should be something discussed far more broadly... Because in a fiat world superpower status is always relative.
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| Geology of the Storm Gold Deposit Posted: 07 Apr 2012 09:34 AM PDT nbmg
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| Rick Santelli - Classic Cars, Energy Revolution & Market Action Posted: 07 Apr 2012 08:07 AM PDT  With fears escalating in key global markets, today King World News interviewed Rick Santelli, CNBC's Business News on-air Editor. Investors may not be aware that Santelli began his career in 1979 as a trader at the Chicago Mercantile Exchange in markets that included gold, lumber, CD's, T-bills, foreign currencies, etc.. But Rick is also a huge fan of classic cars. Santellii also likes to work on cars and KWN was fascinated to learn about what he is up to this Monday: "Well, it is a big deal, Eric, because one of my hobbies, above and beyond being a market junkie, is that I like working on cars. I like to restore cars, I'll paint them, work on the engines, interiors and most of the cars I enjoy are from the 1960s."
This posting includes an audio/video/photo media file: Download Now |
| Posted: 07 Apr 2012 07:58 AM PDT The following article has been posted at GoldMoney, here. Savings, investment, and the Keynesian preference – a follow-up2012-APR-07
 The reality is different. If you are considering lending money to someone, you will want to be sure that the money will be used to generate a return, otherwise both the interest and the principal will not be covered. The borrower knows this as well, and he will make his case to the lender accordingly. The point is that money leant to a businessman has to be put to productive use. Conversely, money leant to governments is rarely put to productive use, and when it is, production is less efficient than the private sector equivalent anyway, because bureaucracy and political motivations replace entrepreneurial imperatives. Nationalised industries are therefore less able to pay interest on their borrowings, and require a government guarantee, actual or implied to secure funds at attractive rates. But when the state merely borrows to cover a budget deficit, it is actually destroying capital, because the capital is being spent, and not invested. That is the situation facing most mature economies. And since this capital is being destroyed, the interest and the principal can only be funded from further destructive borrowing. It is truly amazing that governments and their advisers are completely blind to this simple fact. Sooner or later governments run out of their citizens’ money, leaving nothing but impoverishment for all. Reducing interest rates is the first deliberate step on this road, advocated by Keynes no less in his General Theory. He put forward an idea whereby the state acts to saturate the economy with capital equipment “to get rid of many of the objectionable features of capitalism” (by which he means capitalists themselves: seeObservations on the Nature of Capital – Pages 220-221). The destruction of savings, and therefore the impoverishment of savers, if not a deliberate policy, has caused no heart-ache in Keynesian circles. And now that countries like Greece need every cent they can get, the destruction of domestic savings and savers is in its final stages. Deficit nations are unable to promise the return of savers’ money; instead, they tell us to expect economic recovery and improving government finances. Like Greece, they are all destroying savings at an increasing pace, making any lasting economic recovery impossible through the lack of necessary capital. Furthermore, the pace of money creation will have to accelerate, not only to fund continuing deficits, but also to pay the compounding interest cost of debt already incurred. Tags: euro crisis, government bonds, Greece, interest rates, Keynesianism Author: Alasdair Macleod Alasdair Macleod 
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| Posted: 07 Apr 2012 07:22 AM PDT Employment gains slow, jobless rate drops CIGA Eric The dollar's sharp bounce and drubbing in precious metals and mining shares precipitated from the interpretation that an improving economy had significantly reduced the probability of quantitative easing (QE3) going forward. After today's disappointing employment data, it's likely that this assumption will be challenged by the Continue reading Jim's Mailbox
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| STOCKS HAVE REACHED THE EUPHORIA STAGE Posted: 07 Apr 2012 07:14 AM PDT The last bull ended when the leading stock, GOOG, entered a parabolic "bubble" phase. That was the signal that the bull had reached the euphoria stage. When the GOOG bubble popped it signaled the end of the bull market.  Two stocks, AAPL and PCLN, have been the leaders of this bull market. Both have entered the euphoric "bubble" stage. When the Apple and Priceline parabolas break it will almost certainly signal the end of this bull market.  Apple is now stretched 49% above the 200 day moving average. Anything between 50 and 60% above the mean is extreme dangerous territory. As I pointed out in my last article the dollar is beginning its second daily cycle up in what could very well be a cyclical bull market. This should correspond with the stock market topping and the next leg down in the secular bear market. My best guess is that we will see a sharp sell off over the next 2 to 3 weeks, followed by a sharp rebound (QE3?) that may, or may not, move stocks to marginal new highs, similar to the 2007 top.   The poor employment report on Friday is the first warning shot across the bow that the economy is slowing in preparation for moving down into the next recession/depression. Bernanke is in the same position he was in 2007. Printing more money won't stop the collapse. It will only continue to spike the price of energy and exacerbate the decline.       
This posting includes an audio/video/photo media file: Download Now |
| Posted: 07 Apr 2012 06:57 AM PDT by Mark Duell, Daily Mail:
Politicians in Colorado concerned about the nation's financial stability are the latest to push a bill to legalise gold and silver coins as usable currency. But from a consumer angle the conservative bill would not lead to people carrying gold nuggets in their purses and would have little practical effect. The GOP proposal reflects anxieties about the domestic consequences of the European debt crisis and chronic deficit spending in Washington D.C. 'There are lots of concerns about the U.S. monetary system,' said the bill's sponsor, Republican Senator Kent Lambert of Colorado Springs. 'There's no way to maintain the value of anything if countries start a race to the bottom by inflating their currency to get out of debt.'
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| Does the Ubiquitous Red in the Silver Herald a Trend Reversal or Higher Future Profits? Posted: 07 Apr 2012 06:51 AM PDT by Przemyslaw Radomski, SilverSeek.com
All that red is still a post-breakout consolidation often seen before a rally takes off, only this time, the consolidation is significant (2 months long) enough to make even the staunchest precious metals bull feel nagging doubts. We want to remind you of an investment rule of thumb– the bigger the consolidation, the bigger the following rally. It's like a coil, the more you press on it and harder it will spring back, the more you pull back the bow the further the arrow will fly.
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| Gold and Silver Price Manipulation - "High Frequency Shearing" Posted: 07 Apr 2012 06:05 AM PDT In this video with RT Capital Account’s Lauren Lyster, Mike Maloney talks about a mission critical topic for gold and silver investors—manipulation. Governments and central banks around the world manage the action of markets to maintain an illusion of prosperity, but Mike calls gold and silver the “canaries in the coal mine.”
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| Posted: 07 Apr 2012 05:58 AM PDT
I thought the big neckline in Gold stocks would hold. My subscribers and I bought the neckline assuming it would. Instead, the neckline failed and we got out immediately with a loss. This is an ominous development for the precious metal (PM) stocks in particular and a warning for the whole PM sector in my opinion. This neckline is no secret and should be respected for what it is trying to tell us. Here's a 5 year chart of the GDX thru this week's close to show you what I mean:  It was a reasonable trade to go long at the neckline in my opinion given lousy PM sector sentiment, oversold momentum readings, low "Gold stocks to Gold" ratio and low "Gold stocks to common stocks" ratio readings. However, once that neckline broke, it was shown to be the wrong trade and out we go, waiting for a better opportunity. That opportunity may come from much lower levels. Gold stocks are "seeing" trouble up ahead. I suspect Gold stocks are leading global equities into the next cyclical common equity bear market. BUT IT CAN'T HAPPEN, BECAUSE IT'S AN ELECTION YEAR AND "THEY" WON'T LET MARKETS FALL UNTIL AFTER THE ELECTION. How'd that work out for you in 2008? If you are looking for advice in navigating and trading through what I believe to be impending market turmoil, consider trying my low cost subscription service - a one month trial is only $15. If not, my longer term advice is free: buy physical Gold, store it outside the banking system, and don't sell it until the Dow to Gold ratio dips below 2 (and we may well go below 1 this cycle).  ![[Most Recent Charts from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_4.gif) 
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| Blythe Masters Speaks Out On JPM and Market Manipulation: Take Our Word For It Posted: 07 Apr 2012 05:54 AM PDT from Jesse's Café Américain:
I think a detailed description of all of JPM's hedging positions in the futures and derivatives market, and the related customers and bullion holdings, should be supplied to Gary Gensler's CFTC as government regulator so they can look them over. That is what the CFTC has been asked by the people who pay them, the investing public, to do. And he and his staff should examine the evidence for any conflicts of interest and anomalies in them, for example, hedging related to SLV. They should also carefully examine trading patterns that JPM engaged in over a one year period with special attention to daily drops in price of over 3 percent. And then Mr. Gensler can present his report to Congress, and the details to select members of the Finance Committee including Ron Paul, and swear under oath that these are legitimate hedging positions and that there is no manipulation in silver market. And then I might believe it. Read More @ JessesCrossroadsCafe.Blogspot.ca
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| Gold Junior Stocks Available at Bargain Prices Posted: 07 Apr 2012 05:44 AM PDT What do the gold market and the weather have in common? You can forecast both, but predict neither, according to Brien Lundin, chief executive of Jefferson Financial and publisher of Gold Newsletter. Lundin, who also organizes the New Orleans Investment Conference, isn't focusing on if there will be rain or sun in the market, he told The Gold Report in this exclusive interview. He's slowly accumulating juniors on the cheap that have big news in the forecast.
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| Silver Trend Reversal or Higher Future Profits? Posted: 07 Apr 2012 05:01 AM PDT Yellow and silver are our favorite colors, but red is what we are seeing on the boards this week after the U.S. central bank dashed hopes for more monetary stimulus and a weakened euro weighed on sentiment. Silver and gold were caught in a broad market sell-off which spread across commodities and equities. Bullion lost more than 3 percent over two days after the U.S. Federal Reserve released minutes from its last policy meeting which showed policy makers were less inclined to launch more monetary stimulus. This was strange since the Fed did not explicitly take QE3 off the table. In fact, according to the minutes, if the recovery stumbles, or if inflation is too low, the Fed is already prepared to launch QE3. Press accounts report that the sentiment dimmed precious metals' appeal as an inflation hedge.
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| Guest Post: There Will Never Be A Failed US Treasury Auction... Until There Is Posted: 07 Apr 2012 04:52 AM PDT From Brian Rogers There Will Never Be A Failed US Treasury Auction... Until There Is
"The antidote to hubris, to overweening pride, is irony, that capacity to discover and systematize ideas. Or, as Emerson insisted, the development of consciousness, consciousness, consciousness." -Ralph Ellison "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one." -Charles Mackay
Asymmetric Trades One thing I've learned from my 14 years of working on Wall Street is that no matter how much you think you know, no matter how certain you are of something or how well you know how to "play the game," reality inevitably comes along and shows you just how ignorant you were, are and probably always will be. It can be a very humbling business no matter who you are. And if you're in it long enough and doing anything of any relevance whatsoever, you too will one day eat a big heaping helping of humble pie. Just look at some of the modern investing "legends" or "masters of the universe" littering the side of the road with sub-index returns and below high-water mark funds. But one thing to look for that can and often does lead to outsized returns is when everyone in the market is "certain" of something. This is when risk/return profiles can get really interesting because the payoff starts to get asymmetric. Kyle Bass talks about this kind of payoff in the trades he looks for. Regardless if you agree or disagree with the thing that everyone is "certain" of, if you can spot an argument like this where nearly everyone has piled on to one side of the boat, you should do some homework because this is usually precisely the thing that can cause assets and even entire markets to make big moves. A good example of this is the recent collapse of the US housing market and the associated collapse of mortgage-related securities. "We've never had a decline in house prices on a nationwide basis." As a former mortgage and CDO salesman at a TBTF (forgive me Father, for I have sinned), I had a front row seat to watch not only what was happening in the industry but also the overwhelmingly prevalent attitude that investors had about the asset class at the time. The Bernank summed things up nicely in July, 2005 when he said, "We've never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don't think it's gonna drive the economy too far from its full employment path, though." Now I love to give our monetary fiat ponzi central planner in chief as much grief as the next critical thinking monkey, but his statement above absolutely reflected the prevailing attitude of almost every major market participant at the time. Yours truly included. To be fair, not everyone shared this view. I sat a few dozen feet away from Greg Lippmann in late 2005 and still kick myself for not grabbing one of the t-shirts he had printed up sitting in a box near his desk that said simply, "I'm short your house." But aside from Greg and a few other out-of-consensus thinkers, nearly everyone and their brother agreed with the Bernank. Strongly agreed. And here was your asymmetric opportunity. Everybody believing thast something simply cannot happen or will continue to happen in a particular way. Has never happened, will not happen, will not change. Next question. Of course, if it does happen, things will got to hell in a handbasket, but don't you worry your pretty little head about that, it will not happen. Everyone says so. This allowed nearly the entire financial world to be as calm as Hindu cows while watching underwriting standards for mortgages collapse to an almost meaningless level. Before the party ended, most of the major mortgage underwriters got comfortable with >100% LTV second liens by thinking of them as "bridge loans" meaning house prices were rising so surely and regularly, they believed the second lien would be paid off by the increase in the underlying property value when the owner flipped the place for a nice profit. Uhh, yea. Authors note: for those curious, the answer is no, I did not predict the collapse of housing despite my place at the table. Like most others around me, I had been drinking giant gulps of Kool-Aid. I have since gone on a massive Kool-Aid 12-step program. In fact, realizing how economically and politically naïve I was has been one of the critical turning points in my life. Recognizing, acknowledging and dealing with my own cognitive dissonance has been nothing short of a journey towards personal enlightment. I wonder if the Bernank could ever admit to something like this? I highly doubt it, even though we'd all be better off if he did. Personally, I think the Bernank's marquee spot in the Havenstein Museum of Failed Central Bankers is all but guaranteed at this point. But I digress... Regardless of your view on housing or knowledege of mortgage securities, if you had recognized that everyone was sitting on one side of the boat, you would have found the trade of the 00s. Which brings me to the US Treasury market. US Treasury Market Exceptionalism Paul McCulley and Zoltan Pozsar presented a paper at the Banque of France on March 26 where they address "critical questions which are not currently being addressed by policymakers." The FT reported on this a few days ago (link here). Having worked with Paul McCulley for a few years in the early 00s, I can say without reservation that he is one of the smartest, nicest, funniest, most genuine people I have ever met. Not just in the markets, but in life in general. Despite the fact that I rarely agree with his economic views, Paul is, quite simply said, a great guy and true gentleman. However, nice guy accolades aside, McCulley expresses a view in his paper that completely sums up the key assumption on which the entire global financial fiat ponzi system hinges. Namely, the casual assumption that there will never be a failed US Treasury auction or even reason to fear rising US rates. McCulley and Pozsar express the following view when attempting to dismiss hand-wringing over rising US Treasury rates or a failed US Treasury auction: "Crowding out, overheating and rising interest rates are also not likely to be a problem as there is no competition for funds from the private sector. For evidence, look no further than the impact of government borrowing on long-term interest rates in the U.S. during the Great Depression, or more recently, Japan. A buyers' strike is also unlikely, especially in the case of the U.S. This is because countries with mercantilist policies tied to the U.S. dollar are de facto piggybacking on the U.S.'s internal demand, and simply have no option but to continue to accumulate U.S. Treasuries to moderate the real appreciation of their exchange rates so as to hold their shares of U.S. demand." I'm not going to go into a big discussion here about Modern Monetary Theory, the Great Depression or Japan. For starters, that's not the theme of this article but more to the point, I have no clue what's going to happen next regarding interest rates in the US or any other country. Despite what information may or may not be gleaned from previous events, we are absolutely in unchartered territory from an economic and geo-political perspective. In other words, no one really knows what's going to happen next. And that's exactly the point. Neither I nor any other person on the face of the planet knows exactly what's going to happen to interest rates in the next 2 seconds, let alone 2 months or 2 years. So much is happening and changing at such a rapid pace, thinking that anything will "never" or "always" happen strikes me as pure, unadulterated hubris. The madness of crowds. And yet, everything in modern finance hinges on the assumption that US rates will remain low and buyers plentiful enough to dilute and mask the Fed's own forced buying. Essentially, the entire market is betting that the Fed will always and forever be able to manipulate Treasury rates and ensure successful Treasury auctions. Jim Quinn talked about this in one of his latest posts, "You Ain't Seen Nothing Yet - Part 3" (link here). TPTB are absolutely all-in on this concept. It underlines the "confidence" the Bernank always talks about. It ensures the current political-economy (credit to Martin Armstrong for that phrase) lives another day and our current crop of bought-and-paid-for politicians can keep feeding at the government trough. Sound a bit asymmetric? You bet it does. Will Atlas Shrug? Think about that. Do you think the US will always and forever be able to pay for our over-bloated military-industrial complex and our wars of choice? Do you think the federal housing agencies will always and forever be able to subsidize the real estate industry with money losing, non-economic mortgage loans? Do you think the government will always and forever be able to pay on the promises they've made regarding Social Security, Medicare and Medicade? Do you think the government will always and forever be able to extend debt-enslaving, subsidized student loans to anyone with a pulse? Do you think the fiat ponzi central planners at the Fed will always and forever be able to manipulate the Treasury curve to whatever levels the Oracles of Delphi decide? If you answer yes to the above, ask yourself this: how would all of these things be affected if the average interest rate paid by the US was to rise to 5%? At today's debt level of $15.6 trillion, the interest expense would be approximately $780 billion or about 35% of total government revenues. Welcome to the United States of Greece. Next stop, bankruptcy. Housing will collapse as mortgage rates approach 8%. Every aspect of federal, state and local government spending will have to be slashed. Police, fire, schools, medical services, mail delivery, trash delivery, road maintenance and every other kind of social service will be cut dramatically as capital is diverted to pay interest on our debt. And these sudden rate rises can happen brutally fast in our uber-connected global ponzi. Just ask Italy. 4% rates and it was bunga bunga time. Rates jump to 7% a few months later and suddenly the Vampire Squid has to send in one of their own to "save" the day. You get the idea. I think it's no exaggeration at all to say that keeping US rates low, ZIRP low, for the foreseeable future (ie, forever) is key to maintaining the semblance of stability in the current global fiat ponzi. Nearly every major financial player on the planet is counting on this being an a priori piece of knowledge. And there's your trade. Everyone is betting on this one idea - that the Fed will never lose control of interest rates and the US Treasury will never have a failed auction. The same way nearly every major financial player on the planet was willing to bet that US real estate could never fall for an extended period of time. And we all know how that trade worked out. Timing, please? Of course, the big question for most Zero Hege readers is not if this will happen, but when. Who knows? Not me. Not Paul McCulley. Not the Bernank. Not Timmy G. Not any financial pundit or TBTF economist. No one knows. These abnormal, asymmetric situations have a tendency to go on longer than anyone suspects. I recall hearing in 2009 that legendary hedge fund investor Julian Robertson was making a big bet on a Treasury steepener trade (essentially a bet that longer-term interest rates will rise more than short-term rates). I completely agreed with him. And at least in the short run, we have both been more or less wrong. Again, this business can be humbling. But eventually, just like the guys who bet against housing in 2005, 2006 and 2007, eventually I think Mr. Robertson will be proven right. Big time right. And TPTB, the Bernank, TBTF, market consensus and everyone long 30-year Treasuries, wrong. Completely wrong. There will never be a failed US Treasury auction. Until there is.
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| Colony Collapse Disorder Linked To Pesticide, High-Fructose Corn Syrup Posted: 07 Apr 2012 04:40 AM PDT Use of Common Pesticide Linked to Bee Colony Collapse
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| Painful Revelations With Mark Grant As We Edge Down The Holmesian Path Posted: 07 Apr 2012 04:37 AM PDT From Mark Grant, author of Out of the box and Onto Wall Street Edging Down The Holmesian Path; Painful Revelations
The way the news is often presented and then digested can be mis-leading. Some event is announced and then there is the commentary on that event and it is burned into your mind as a singular and separate occurrence. This is not the correct way to envision the world. What is critically important is to consider each event as appended and tied to all other notable events so that put together; they may be considered as a whole. This is the correct methodology for astute comprehension and then for making informed decisions. I point out this rather banal fact this morning because many do not do it well so I bring it to your attention. This all can be exemplified by what occurred last Friday. We got the jobs report which came in somewhere between bad and really bad and a surprise to virtually everyone because the deterioration in employment was forecast by no one. You can blame the weather and goblins in the Labor Department but the slowdown in the creation of jobs was noticeable. Then there was a second announcement having to do with credit creation that was far less than prognosticated by anyone. Here we have two clear signals of a slowing economy which then gets appended to the Fed shutting off new monetization which will surely bite in the months ahead as the 7 trillion supplied by the Fed, the ECB and other of the world's central banks is drying up. As a totality then; one can envision the upcoming landscape. Treasuries will move based upon the degree of the slowdown and the severity of the recession and its consequences in Europe. Equities have and will continue to go down and perhaps severally down as the obvious implications are calculated and acted upon. Risk assets, credit assets will widen to Treasuries as forward earnings decline in valuation and as Risk overtakes Greed as the markets' driving force. With the Fed shutting off monetary easing and the ECB still keeping their pipeline open the Euro will decline against the Dollar in a marked fashion. A currency has no Real Value except the cost of the paper and, whether green or blue, the value is never Real but just Relative and Intrinsic so that the currency with their central bank still printing always declines against the ones that have stopped. Of all of these announcements the Fed's is the most important one because we have been living off of Quantitative Easing for the last four years and the stoppage will have magnified effects on all manner of economic announcements in the months ahead and they will all have negative consequences so that profits should be taken and moves should be made into assets that step up or float with Inflation or even have a fixed coupon now and float later because those that remain with nothing but bullets will lose their profits and those in equities will follow the same path. You do not have to even consider Europe to reach this conclusion and when Europe is thrown into the mix then the odds for deterioration increase dramatically. Europe
You can visualize a chart and note the increase in the borrowing of the Italian and Spanish banks at the ECB but then you must apply the methodology of Holmesian thinking to arrive at the appropriate conclusions. For Italy it is up 776% from a year ago at $354 billion which is an all-time high. For Spain it is up to $200 billion and also a record. For these two countries it is now 14% of all ECB lending and a clear indication of the deterioration in their economies as exemplified by these kinds of increases. Do not stop here however but keep going! Since the Italian and Spanish banks are pledging collateral for their loans to the ECB and that collateral is no longer on their balance sheets while the loans are included on the liability side of their ledgers we are going to see some very impaired financials for the banks of these two countries in the upcoming months and then downgrades from the ratings agencies as investors flee the landscape in both equities and debt. Then as Spain cannot finance Spain nor can Italy finance Italy any longer you will see the sovereign credits back-up sharply in yield as the LTRO funds run dry which is already occurring. Paying off debt with new debt and printing money to do this has consequences and further increases will not just create zombie banks but banks that are identified as bankrupt and unable to pay their debts so that counterparty risk and flights of capital will force their capitulation in the end. It is quite possible now that there will be a run on the Italian and Spanish banks at some point as Fear caused by these balance sheets infects the market. Now let us take another step down the Holmesian path. As the economies in Italy and Spain deteriorate who will be seriously affected: Germany. Two of their largest buyers of their goods and services will radically cut back on their purchases and the German economy, for the first time in this cycle, will suffer as buyers are no longer able to afford various services. The circle always completes and the consequences will not be pleasant; this circle, in fact, will resemble a noose that is pulled tighter and tighter with each passing quarter and the pay master for the European Union will shrink as their economy, currently at the $3.2 trillion mark, sinks back towards $2.5 trillion during the next year. There will be screams of anguish aplenty and you might begin now to make the necessary adjustments to this coming reality. Then as Italy and Spain soon line up at the till you will see the Real Hurt being on which is why Europe is begging the IMF, the G-20, China and Japan for funds because they now have the burning smell in their nostrils of damaged flesh that has been singed and is about to be cooked and served up fresh in the begging bowls of those urchins turned out into the street.
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| What's the central bank endgame in gold? Posted: 07 Apr 2012 03:42 AM PDT 11:55a ET Saturday, April 7, 2012 Dear Friend of GATA and Gold: Our friend R.V. writes: "If the naked short position in gold on behalf of the Federal Reserve through its intermediaries is so big that it can drive down the bullion markets with mere paper (and I believe that it is), then what is the likely strategic endgame that these evil people have in mind? "They obviously know that they are fighting a losing battle against market forces, as Russia, India, and China have no intention of reducing their acquisition of real metal while unloading U.S. treasuries and dollar reserves (though they do that on the sly to avoid crashing the markets). So these guys must have an endgame strategy. But what is it? "-- The U.S. government suddenly 'requires' contract settlement in infinite amounts of digital fiat currency? "-- The Fed allows the intermediaries to 'default' without penalty? ADVERTISEMENT Golden Phoenix Discusses Royalty Mining Growth Strategy Golden Phoenix Minerals Inc. has discussed its royalty mining growth strategy on the Fox Business Network program "21st Century Business" with host Jackie Bales. Golden Phoenix's director of corporate communications, Robert Ian, told how the company narrows its focus to project generation and future royalty streams. He explained why Golden Phoenix believes it's better to own joint-venture interests in several producing mines instead of full exposure to just one project. "21st Century Business" has been airing for 15 years. Previous hosts have included Gen. Alexander Haig, Gen.l Norman Schwarzkopf, and Secretary of Defense Caspar Weinberger. Golden Phoenix appeared as paid programming on this broadcast. To view the program with Golden Phoenix, please visit Golden Phoenix's Internet site here: http://www.goldenphoenix.us/company-videos.html "-- The intermediaries are forced into collapse (in stages) by the markets but are planned to be resurrected via Fed-forced mergers and contract defaults? "This is the underlying question about which I am not seeing any commentary. "So I think it is somewhat counterproductive for GATA's experts to discuss the obvious as they try to encourage the good guys about the inevitable collapse of the scheme while not also taking their analysis to the next logical step and unravel the plans the bad guys have for that eventuality." A reply R.V.: This question does come up occasionally and a few options are plain from the U.S. Treasury Department's candid admission to GATA in 2005 that the U.S. government claims the power to seize control of all markets and all financial assets in any emergency the government itself declares: Among the options: 1) Prohibition of gold ownership and confiscation of privately owned gold by the U.S. government. Geopolitical analyst Jim Rickards speculates that, in a crunch, the United States might confiscate even the gold it vaults in trust for its allies. (What are friends for?) Shorts won't have to deliver what has been made illegal. 2) Cash settlement in place of delivery through a declaration of "force majeure" by commodity futures exchanges. I believe that all the major futures exchanges provide for such declarations when product unexpectedly becomes unavailable. In such circumstances shorts don't have to deliver product, just cash, which, of course, the U.S. government can print to infinity and distribute to its agents in the markets -- which, of course, is not to say that the cash will hold its real value. But its nominal value will be sufficient for the discharge of obligations. 3) A declaration by central banks of a much higher gold price, a price at which they will be buyers of gold. At a gold price high enough relative to other assets, nearly everyone will sell to government. This would be another form of cash settlement, a voluntary one. As these options, while rather totalitarian, are always available to them, I don't think the Western central banks worry much about their short position in gold. I think their primary concerns are about maintaining the value of their currencies, government bonds, and general equity markets while gradually inflating their unpayable debts away and keeping the mere rabble of their citizenry from figuring out what's really going on, which would be the end of Western central banking. This is a huge challenge and its implication is that there may be some advantage to investors in moving assets outside the reach of aspiring totalitarians. As was written in GATA's preface to the Treasury's statement cited above: "GATA is not an investment adviser, but if we were, we might suggest that you accumulate all the gold and silver you can and then find a safe planet to keep it on. And when you do, please let us know what it is." CHRIS POWELL, Secretary/Treasurer Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Be Part of a Chance to Discover Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada. Check out the exploration program on our Allco gold/silver project : -- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit. -- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries. -- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited. To learn more about the Allco property or Northaven's other gold and silver projects, please visit: http://www.northavenresources.com Or call Northaven CEO Allen Leschert at 604-696-3600.
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| The Weekly Update - NFP And DMA Posted: 07 Apr 2012 03:41 AM PDT From Peter Tchir of TF Market Advisors The Weekly Update - NFP And DMA In a very thin market, the S&P futures came very close to hitting their 50 DMA on Friday. The S&P futures went from a high of 1,418 on Monday, to trade as low as 1,372 on Friday. A 46 point swing is healthy correction at the very least, if not an ominous warning sign of more problems to come. There were 3 key drivers to the negative price action in stocks this week. All 3 of them will continue to dominant issues next week. Spain and Italy
Spanish 10 year bonds hit a low yield of 4.83% in early February. They sold off from that level until the anticipation and execution of LTRO2 drove them back to 4.85% on March the 1st. They struggled from that point on, in spite of equities in general, and even more of the credit market doing well. It was a canary that was largely ignored, until the week of March 20th. Then people started noticing the problems in Spain. Budget deficits that continue to miss targets, staggering unemployment rates, and problems at the regional levels (in Spain, the regions are responsible for healthcare, not the central government – one reason why debt to GDP at the national level looks okay, but also why the problems at the regional level are very serious). The "firewall" talks helped calm the situation, but the incongruence of Spain having to issue debt, to be part of a "firewall" to issue more debt, to go and buy Spanish debt, finally hit the market, and the selling pressure resumed. The 10 year bond has the least support from the LTRO program. Even the most aggressive Spanish banks will be reluctant to take on 10 year debt, when their funding gift only lasts 3 years, plus they would be obligated to post variation margin on assets pledged against LTRO borrowing. While the problem remained isolated to the longer maturities, you could think of some "easy" remedies, like longer LTRO. With clear signs that even LTRO can't hide the problem forever, the ECB may have to come up with even more creative solutions, and that will take time, especially as they try and transition more responsibilities (loser trades) to the EFSF, and many question how counterproductive ECB holdings were during the Greek restructuring. Italy has moved out as well. Not quite as much as Spain, and as much in sympathy as any specific new concerns. Portuguese bonds also finally had a significant down week. Somehow, investors had bought into the Greek restructuring/default as being unique, but now there is once again a growing realization, that some austerity, mixed with some programs to promote growth, only really work if the debt burden has been reduced in the first place. Non Farm Payroll A number that would have excited the market in January seemed to spook the market on Friday. It was only futures, and a shortened session at that, but the reaction was swift and painful, with futures indicating a potential 1% loss on the open Monday if nothing changes between now and then. I'm a little surprised how strongly the market reacted (and took off some shorts), as I expect we will see at least one solid attempt by the QE is back on the table crowd to push markets higher. We have believed that great weather and some extreme "seasonality" over the past few years made the January and February numbers seem much better than they really were. We had some hope, that the spike in jobs would "jump start" the economy and encourage more hiring, but felt the adjustments had overstated what growth there was, and that much of that growth had been because the weather had allowed a lot of projects to start early, and encouraged shoppers to be out and about more than in prior winters. I had been concerned that continued great weather in March would mean it would take longer to see this give back. It is once again concerning that we started to see the give back in a month where the weather certainly was a helpful factor. We need jobs to get housing going. Housing is the key, and more jobs were supposed to lead to a rebound in housing. We never saw a real rebound in housing in spite of the jobs numbers, and now I think we know why. The job numbers were distorted, not the housing numbers. The hopes that housing would catch up to jobs seems to have been hit badly now. The reality is that jobs are falling back to levels consistent with the housing data. The entire renewed and strengthened economic recovery story has to be questioned, and not just because of one number. Most of the numbers had led us to question the premise that economic growth in the US was on a stronger footing, and it was only the job numbers that made us question that. With jobs returning to mediocre, the view that the economy is still very fragile, has to be the main assumption. QE3 or QED Are we going to get another round of QE or are they done for now? That is a key question.
Two of the biggest recent moves were a direct result of the markets determining that QE was coming, or that QE wasn't coming. What really changed is the perception that Ben would be able to jam in some QE in spite of signs of economic growth. Ben has been trying to find ways to get "people" to focus on the negatives and the concerns so that he can justify another round of QE. The minutes indicate that the rest of the board is less willing to go along with that game. Ben can talk about Okun's law all he wants, but the other members may have had enough and will be more patient about growing the Fed's balance sheet or expanding into riskier assets (longer duration and/or mortgages). That shift may take time for the market to digest, and near term I think it is negative for rates, but also negative for stocks. In the end, it should reduce volatility in the stock market, as the market gets better at assessing the probability of QE since it will be more directly tied to economic data (it should no longer be at the whim of one man now). What else to watch for? So those are the stories that drove last week. They weren't new stories, and in many cases people were focused on them, they just happened to be the biggest drivers. They will continue to be important factors in this week's trading. China remains a big question. They are "landing" but it is far from clear if it is going to be a soft or hard one. Data should be less confusing over the coming weeks as the impacts of the holiday dissipate. China seems to be taking on an ever increasing role in the world's policies. They look set to step up their involvement and commitment to the IMF, but they also seem to be taking steps to influence our policy – they have questioned QE publicly – and also seem interested in ensuring that the U.S. dollar isn't the sole reserve currency in the future. I continue to believe that the problems there are bigger than we realize, but that the official data is unlikely to admit to the true extent of those problems. A lack of clear direction from China is the base case for now, but I would look more for negative surprises, rather than positive ones from their domestic economy. The additional IMF support might be good, but I think we have rallied about 3,000 points on the S&P over the past year on Chinese support for the IMF, so don't think there is a whole lot more to get out of it in stocks. The situation in the Middle East seemed to have disappeared from the headlines this week. That could be a sign that the tensions have eased and there is less risk of a problem coming from there, or just that we had enough other things to keep our attention focused that we didn't bother looking there much. I'm leaning towards the latter. Progress in the mid-East would be positive, but I think we see another round of escalation, and the rise in oil prices that go along with it, before it truly calms down. The energy markets seem as confusing as ever. Natural gas is a disaster. Car gas is a disaster in the other direction. Government sponsored solar companies were a disaster. On one hand we could see the nation take comfort from secure, abundant, domestic supplies of energy and build on that. At the same time, with a few screw-ups here and there by the politicians, and some defaults by junior, highly leveraged nat gas producers and we could see another wave of delays and problems that hurt all of America. Fixed Income Allocation We only had a minor shift in our Fixed Income Allocation target. We took off 5% of the allocation to HY, and although we looked at adding that back on Thursday, HYG didn't hit our price target. With Friday's action we will be looking for opportunities to add back that 5%. We also were in and out of treasuries. We had briefly put on a 10% allocation which we put back to 0%. So far it looks like we were too early in taking that off, but our theme of treasuries being more at risk to a swift drop in price (increase in yields) remains intact. High yield has sold off since we cut the allocation, and with our deep concerns about the debt problems in Europe, this asset class needs to be watched carefully. Here is the allocation that we sent out last week and a more detailed analysis of what we liked and didn't like.
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| Gold Bulls, Tad Nervous Are We Posted: 07 Apr 2012 03:18 AM PDT There is only one thing a blogger can do to get more hate emails more so than upset the Apple Inc fan crowd, and that publish a bearish report on gold. Well this time its justified, the long and strong bullish 1x1 Gann angle could break ... Read More...
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| Money Morning interviews Ted Butler on silver market manipulation Posted: 07 Apr 2012 03:13 AM PDT 11:10a ET Saturday, April 7, 2012 Dear Friend of GATA and Gold (and Silver): The Money Morning investment letter yesterday published a comprehensive interview with silver market analyst Ted Butler about the mechanisms of manipulation in the silver market. It's headlined "The Who, How, and Why Behind Silver Price Manipulation" and it's posted at Money Morning here: http://moneymorning.com/2012/04/06/the-who-how-and-why-behind-silver-pri... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Be Part of a Chance to Discover Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada. Check out the exploration program on our Allco gold/silver project : -- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit. -- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries. -- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited. To learn more about the Allco property or Northaven's other gold and silver projects, please visit: http://www.northavenresources.com Or call Northaven CEO Allen Leschert at 604-696-3600. Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Golden Phoenix Discusses Royalty Mining Growth Strategy Golden Phoenix Minerals Inc. has discussed its royalty mining growth strategy on the Fox Business Network program "21st Century Business" with host Jackie Bales. Golden Phoenix's director of corporate communications, Robert Ian, told how the company narrows its focus to project generation and future royalty streams. He explained why Golden Phoenix believes it's better to own joint-venture interests in several producing mines instead of full exposure to just one project. "21st Century Business" has been airing for 15 years. Previous hosts have included Gen. Alexander Haig, Gen.l Norman Schwarzkopf, and Secretary of Defense Caspar Weinberger. Golden Phoenix appeared as paid programming on this broadcast. To view the program with Golden Phoenix, please visit Golden Phoenix's Internet site here: http://www.goldenphoenix.us/company-videos.html
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| Credit derivatives market being manipulated by Morgan / U.S. govt. Posted: 07 Apr 2012 03:05 AM PDT JPMorgan Trader's Positions Said to Distort Credit Indexes By Stephanie Ruhle, Bradley Keoun, and Mary Childs http://www.bloomberg.com/news/2012-04-05/jpmorgan-trader-iksil-s-heft-is... A JPMorgan Chase & Co. trader of derivatives linked to the financial health of corporations has amassed positions so large that he's driving price moves in the $10 trillion market, traders outside the firm said. The trader is London-based Bruno Iksil, according to five counterparts at hedge funds and rival banks who requested anonymity because they're not authorized to discuss the transactions. He specializes in credit-derivative indexes, a market that during the past decade has overtaken corporate bonds to become the biggest forum for investors betting on the likelihood of company defaults. Investors complain that Iksil's trades may be distorting prices, affecting bondholders who use the instruments to hedge hundreds of billions of dollars of fixed-income holdings. Analysts and economists also use the indexes to help gauge perceptions of risk in credit markets. Though Iksil reveals little to other traders about his own positions, they say they've taken the opposite side of transactions and that his orders are the biggest they've encountered. Two hedge-fund traders said they have seen unusually large price swings when they were told by dealers that Iksil was in the market. At least some traders refer to Iksil as "the London whale," according to one person in the business. Joe Evangelisti, a spokesman for New York-based JPMorgan, declined to comment on Iksil's specific transactions. Iksil didn't respond to phone messages and e-mails seeking comment. ... Dispatch continues below ... ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf The credit indexes are linked to the default risk on a group of at least 100 companies. The newest and most-active index of investment-grade credit rose the most in almost four months yesterday and climbed again today. The Markit CDX North America Investment Grade Index of credit-default swaps Series 18 rose 3.3 basis points to 100.2 basis points as of 10:18 a.m. in New York, after jumping 4.4 basis points yesterday, according to Markit Group Ltd. The price of the index is quoted in yield spreads, which rise along with the perceived likelihood of increased corporate defaults. A credit-default swap is a financial instrument that investors use to hedge against losses on corporate debt or to speculate on a company's creditworthiness. Iksil may have "broken" some credit indexes -- Wall Street lingo for creating a disparity between the price of the index and the average price of credit-default swaps on the individual companies, the people said. The persistence of the price differential has frustrated some hedge funds that had bet the gap would close, the people said. Some traders have added positions in a bet that Iksil eventually will liquidate some holdings, moving prices in their favor, the people said. Iksil, unlike JPMorgan traders who buy and sell securities on behalf of customers, works in the chief investment office. The unit is affiliated with the bank's treasury, helping to control market risks and investing excess funds, according to the lender's annual report. "The chief investment office is responsible for managing and hedging the firm's foreign-exchange, interest-rate, and other structural risks," Evangelisti said. It's "focused on managing the long-term structural assets and liabilities of the firm and is not focused on short-term profits." Iksil probably traded under close supervision at JPMorgan, said Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia. "The issue is how much capital they're putting at risk," said Miller, a former examiner for the Federal Reserve Bank of Philadelphia. A U.S. curb on proprietary trading at banks, meant to reduce the odds they'll make risky investments with their own capital, is supposed to take effect in July. Regulators are still determining how the so-called Volcker rule will make exceptions for instances where firms are hedging to curtail risk in their lending and trading businesses. Wall Street banks including JPMorgan, Goldman Sachs Group Inc., and Morgan Stanley have submitted comment letters and met with regulators to discuss their complaints about the rule. "Several agencies claiming jurisdiction over the Volcker rule have proposed regulations of mind-numbing complexity," JPMorgan Chief Executive Officer Jamie Dimon said in his annual letter to shareholders released this week. "Even senior regulators now recognize that the current proposed rules are unworkable and will be impossible to implement." JPMorgan had $4.14 billion of combined revenue last year from the chief investment office, treasury and private-equity investments, according to the annual report. The treasury and chief investment office held a combined $355.6 billion of investment securities as of December 2011, up 14 percent from a year earlier, according to a year-end earnings statement. Chief Investment Officer Ina Drew, who runs the unit, was among JPMorgan's highest-paid executives in 2011, earning $14 million, a 6.8 percent pay cut from 2010, the bank said in a regulatory filing this week. Drew referred a request for comment to Evangelisti. Iksil has earned about $100 million a year for the chief investment office in recent years, the Wall Street Journal said in an article following Bloomberg News' initial report, citing people familiar with the matter. Iksil joined JPMorgan in 2005, according to his career-history record with the U.K. Financial Services Authority. He worked at the French investment bank Natixis (KN) from 1999 to 2003, according to data compiled by Bloomberg. The French-born trader commutes to London each week from Paris and works from home most Fridays, the Journal article said, citing a person who worked with him. The trader may have built a $100 billion position in contracts on Series 9 of the Markit CDX North America Investment Grade Index, according to the people, who said they based their estimates on the trades and price movements they witnessed as well as their understanding of the size and structure of the markets. The positions, by the bank's calculations, amount to tens of billions of dollars and were built with the knowledge of Iksil's superiors, a person familiar with the firm's view said. Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy Platinum (TSXV: NKL) and Ursa Major Minerals Company Press Release VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) and Ursa Major Minerals Inc. have signed a binding letter of agreement for a business combination through a proposed all-share transaction. In doing so Prophecy and Ursa have acted at arm's length and the transaction has been negotiated at arm's length. Prophecy will issue one common share in exchange for every 25 outstanding common shares of Ursa. Ursa options and warrants will be exchanged for options and warrants of Prophecy on an agreed schedule. Prophecy's offer represents a value of about $0.15 per each common share of Ursa based on Prophecy's share price of $3.70 as at March 1, representing a premium of 130 percent to Ursa's March 1 closing price of $0.065. Prophecy is to subscribe for $1 million common shares of Ursa by way of private placement financing at $0.06 per share, subject to regulatory approval. Upon placement completion, John Lee and Greg Hall, current Prophecy directors, will be appointed to Ursa's board. Prophecy thus will become a mid-tier resource company with a robust and -- The fully permitted open-pit Shakespeare PGM-Ni-Cu mine close to Sudbury, Ontario, infrastructure with near-term production capabilities. -- The flagship Wellgreen (Yukon) PGM-Ni-Cu project with more than 10 million ounces of Pt-Pd-Au inferred resource. Drilling is under way and a preliminary economic assessment study is pending. -- Manitoba's Lynn Lake Ni-Cu project with more than 262 million pounds Ni and 138 million pounds Cu measured and indicated. For the complete announcement, please visit Prophecy Platinum's Internet site here: http://www.prophecyplat.com/news_2012_mar02_prophecy_platinum_ursa_major...
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| What Happens to Gold if We Enter a Recession or Depression? Posted: 07 Apr 2012 01:03 AM PDT By Jeff Clark, Casey Research Mayan prophecies aside, many of the senior Casey Research staff believe that economic, monetary, and fiscal pressures could come to a head this year. The massive buildup of global debt, continued reckless deficit spending, and the lack of sound political leadership to reverse either trend point to a potentially ugly [...]
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| Why people should buy gold - Drew Mason and Alasdair Macleod Posted: 07 Apr 2012 12:30 AM PDT In this podcast, Drew Mason, principal at St. Joseph Partners and contributor to Forbes, and Alasdair Macleod of the GoldMoney Foundation discuss the role of physical gold and silver in a ...
This posting includes an audio/video/photo media file: Download Now |
Unlike the American Silver Eagle which the U.S. Mint issues until demand is met each year, which equates to tens of millions of coins, the British Royal Mint caps the total mintage for the Silver Britannia at just 100,000 coins. So when they're gone, they're gone. Apparently you can get as many as you'd like right now at Apmex for around $38 per coin.
U.S. politicians are rapidly losing faith in the dollar, with more than a dozen states proposing legislation to legalise gold and silver as a currency.
Yellow and silver are our favorite colors, but red is what we are seeing on the boards this week after the U.S. central bank dashed hopes for more monetary stimulus and a weakened euro weighed on sentiment. Silver and gold were caught in a broad market sell-off which spread across commodities and equities. Bullion lost more than 3 percent over two days after the U.S. Federal Reserve released minutes from its last policy meeting which showed policy makers were less inclined to launch more monetary stimulus. This was strange since the Fed did not explicitly take QE3 off the table. In fact, according to the minutes, if the recovery stumbles, or if inflation is too low, the Fed is already prepared to launch QE3. Press accounts report that the sentiment dimmed precious metals' appeal as an inflation hedge.
A number of people have asked me what I think about Blythe Masters' interview on CNBC in which she categorically denies that JPM is involved in anything but legitimate hedging of customer positions in the silver market.
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