Gold World News Flash |
- Arensberg Video - Bargain Hunter’s Paradise – For Junior Exploration Companies
- Harvey Organ: Get Physical Gold & Silver!
- Currency Wars: Rickards On Gold, QE, and the Economy
- Waiting for the Opening Whistle (or Not)
- Mother Jones: “It Takes Dark Money to Make Dark Money”
- By the Numbers for the Week Ending April 20
- Central banks rig gold market to ensure orderly rise, Rickards says
- Graham Summers: Spain?s Fiscal Problems Will Result in Collapse of European Union! Here?s Why
- Gold and Silver Disaggregated COT Report (DCOT) for April 20
- Higher Gold Price Coming Soon a Break Above $1,682 Will Prove it Time to Stop Waiting and Start Buying
- Friday Afternoon Link Dump
- James Rickards Interview on Why Central Banks are Obsessed with Gold & Why QE3 is Imminent
- Guest Post: How To Speculate Your Way To Success
- The fact that Endeavour has the confidence to choose when to sell its metals production should be one indication that gold and silver prices are not done climbing higher.
- Over Their Dead Bodies
- NASDAPPL Crumbles Amid Sideways Volatile Week
- How to Speculate Your Way to Success: Doug Casey
- Something Rotten in the State of America
- Surging central bank gold demand adds new dimension to bull market
- Après Moi, le Déluge
- Gold Seeker Weekly Wrap-Up: Gold and Silver End Mixed on the Week
- Gold Daily and Silver Weekly Charts - Winding Into the Apex, Slowly
- The Other Side Of The Gold And Silver Coin
- COT Gold, Silver and US Dollar Index Report - April 20, 2012
- Nixon, Gold and Oil
- Paul Brodsky On The State of Play: Statists At Play
- Exeter Resource Corporation: Big Gold Discovery in Northern Chile
- COMEX Reduces Silver Margins Yet Again
- Many Signs Point to Gold's Higher Prices
- Atlas Shrugs, Orwell Yawns
| Arensberg Video - Bargain Hunter’s Paradise – For Junior Exploration Companies Posted: 20 Apr 2012 05:33 PM PDT HOUSTON -- Judging by the plethora of articles and comments out this week from the giants of the resource industry; people like Eric Sprott, James Turk, Frank Holmes, Don Coxe and John Hathaway to mention but a few of many more, there is spontaneous unanimity among the industry elders that gold stocks have been sold off to an extreme low level relative to the underlying metal. We agree. Our own contribution to that idea (in chart form) is just below this post, tagged onto the disaggregated COT report recap at this link. The general consensus of the gold market masters is that the major mining share indexes are now more attractive relative to gold than they were during the depths of the 2008 panic and probably ever. (Our chart of the XAU in gold terms linked above pretty much confirms the "ever" part of that sentence.) But it's not just the Big Miners that have been so mistreated by the markets. As much as they have been pummeled, the smaller, less liquid and more speculative junior miners and explorers make the Big Miners look like they are doing great. That is; "The Little Guys," as we call them, have been massacred in a 14-month period of successive waves of negative liquidity. (Money flow away from the sector like a falling tide, lowering all boats.) The entire sub-sector is in the midst of the capital exodus bleed-out. The flow of wealth out of the space has reached the point of near-absurdity in a $1,600 gold/$31 silver environment. Below is a brief video hosted by our own Tracy Weslosky on the subject of what we see as a rare opportunity developing today in the junior mining space – so much so that we have even sold a small portion of our own physical gold in order to be in position to take advantage of issues we track that get irrationally driven down to preposterously low levels. We Vultures do so secure in the knowledge and belief that no matter how distressingly wicked liquidity vacuums can get, they are always a temporary event, soon followed by the opposite condition of positive liquidity (more buyers than sellers, like a rising tide lifting all boats). At least that has always been the case and we see no reason to think or expect otherwise today.
The video below is for those who can actually "walk the walk" of a Vulture Speculator (not very many can). It is for those who get energized and excited by baby-out-with-the-bathwater, low-volume, high-percentage plunges in a sure-enough full-blown buyer's strike (overwhelmingly more sellers than buyers at any price) -- like right now for many of the promising junior exploration companies. It is for those who enjoy buying the fear, panic and disgust of others and can handle extreme volatility afterward -- long enough for the liquidity tide to return, however long it takes. In short (no pun), it is for fully fledged and aspiring Vulture Speculators.
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| Harvey Organ: Get Physical Gold & Silver! Posted: 20 Apr 2012 05:17 PM PDT from ChrisMartensondotcom : Harvey Organ has been analyzing the bullion markets closely for decades. The quality and accuracy of his work is respected enough to earn him an invitation to testify before the CFTC on position limits for precious metals back in 2010. And he minces no words: gold and silver prices are suppressed. With extreme prejudice. In this detailed interview, Harvey explains to Chris the mechanics how of he sees this manipulation occurring, why he predicts this fraudulent pricing scheme will collapse soon, and why it's critical to be holding physical (vs paper) bullion when it does.
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| Currency Wars: Rickards On Gold, QE, and the Economy Posted: 20 Apr 2012 04:39 PM PDT |
| Waiting for the Opening Whistle (or Not) Posted: 20 Apr 2012 03:44 PM PDT Preamble:
There is a rich compost heap here at ZH from which we can take our share to turn and prepare for our respective gardens. I've thrown down the gauntlet here and there, made a few observations. It is strengthening my resolve to post my poorly referenced crap because it may be fresh for some. Some are beginning to understand what my point is so they can take it for what it's worth, others are welcome to post whatever shit they have on their own minds. I think I've explained my willingness to be forthcoming when I haven't properly identified my sources or the basis for my arguments. And I will be all over the place, once again just picking up on a bit of news here and there and trying to distill it.
Body: Some of the supplementary budgetary plans are leaking out and the calculations by the fumbling morons at the CPB have been handed to the negotiators. Why no one questioned the epithet I used for the CPB in my last post is beyond me. I'm sure I could come up with a short list of criticisms rather quickly. I personally think it would be appropriate to knock some wind out of that holy see here in the Netherlands. I digress. The VVV (an association of insurers) has already criticised what might be part of the deal to save this hapless construct of a government we have at the moment. They say forcing people to pay off their mortgages in 30 years would completely destroy the housing market. There's still a large contingency of people here who think the housing market can revive from here in short order, probably because they own mortgages or need their commissions. And that group is supported by a massive and comforting lobbying effort from all sides. The point is that the housing market sucks up upwards of 10 billion euros (conservative estimate I believe) of tax money - and growing quickly - despite the low volumes of new mortgages. I say let Southern Europe see exactly what we're up against here by adding some reality to the mix. I think non-owners, or people who are a little less concerned about changes to mortgage policy, should form a more vocal opposition to a Cabinet who sees its prime responsibility as keeping that market afloat. It is sad to read elsewhere yesterday that 65 000 home owners are already identified as unable to make instalments on time, and the number is growing. The silver lining here? Don't forget that whatever subsidies you take out here can be reinjected elsewhere. Like trying to create the basis for an economy that results in potential homebuyers. But most of the youth, unless they find jobs at KPMG or Goldman (which is planning to open up an office here) are screwed because things have gone so far out of whack for so long. Yes banks, my suggestions add considerably to your worries and I will go out on a limb and say that doesn't concern me so much. The coalition governing of one of our provinces, Limburg, has collapsed because of a dispute surrounding the visit of President Gul (sorry I don't know how to do the umlaut in this word processor) of Turkey to celebrate 400 years of trade relations, or diplomatic relations, between the countries. I don't think the collapse of this government is going to mean much in the end but who knows. It is just a kind of karmic reaction to the politics going on in this country. The things I'd like to pick up on here and regurgitate from what I've read, for what it's worth, is that some kind of parliamentary mission to Turkey planned for next January is not going ahead. At least at this point. The Queen will still visit in May or June to continue to celebrate the anniversay, but other missions have been cancelled. For the time being. The reason is Turkey's Davatoglu, the great thinker and statesman, does not want Wilders in Turkey because he is a racist and fascist. So our Parliament, in a show of solidarity and as part of its tradition on these things, has kindly declined the invitation. For the time being. As we all know, there's a lot of posturing going on everywhere and that's part of politics. That posturing happens to win and occasionally lose votes. And distracts from other large issues. Gul, while here, added a more nuanced take of circumstances than Davatoglu: he said something to the effect that parties such as the PVV are natural in a multicultural society. Or something like that. If it interests you there should be articles in English to read elsewhere. Wouter Bos is starting a column in the Volkskrant. As I've said, the guy has received criticism for handling the crisis at its height as our Minister of Finance at the time. I will see if that column has any momentum from my point of view. So far he is teasing us with some bait that I'm not sure actually interests me. Thanks for reading and you know the routine.
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| Mother Jones: “It Takes Dark Money to Make Dark Money” Posted: 20 Apr 2012 02:17 PM PDT by Theresa Riley, BillMoyers.com:
But what about those on the other side? Who's hiding behind the curtain fighting to keep the status quo? For part of the answer, don't miss Andy Kroll's excellent article on Mother Jones today that tracks some of the spending of Crossroads GPS, one of two conservative groups tied to Karl Rove. In 2011, GPS raised $76.8 million dollars. In addition to bankrolling negative ads attacking Obama or Democrats in local races, GPS has made multi-million-dollar payouts to likeminded groups such as Grover Norquist's Americans for Tax Reform, the National Right to Life Committee and the less well-known Center for Individual Freedom. (More on them in a minute.)
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| By the Numbers for the Week Ending April 20 Posted: 20 Apr 2012 02:11 PM PDT This week's closing table.
That is all for now, but there is more to come.
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| Central banks rig gold market to ensure orderly rise, Rickards says Posted: 20 Apr 2012 01:26 PM PDT 9:20p ET Friday, April 20, 2012 Dear Friend of GATA and Gold: Market analyst and hedge fund manager James G. Rickards this week told Dan Ameduri of Future Money Trends that the U.S. government wants the gold price to rise gradually in an orderly way to devalue the dollar and works with other central banks through the Bank for International Settlements to rig the gold market. The interview can be heard at Future Money Trends here: http://futuremoneytrends.com/index.php/category-table/171-james-rickards... 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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| Graham Summers: Spain?s Fiscal Problems Will Result in Collapse of European Union! Here?s Why Posted: 20 Apr 2012 12:40 PM PDT On the surface, Spain’s debt woes have many things in common with those of Greece – bad age demographics and a*toxic bank system -*but you’ll note that, as we tackle each of these, Spain is in fact in far worse fiscal shape than Greece. [Let's take a look.] Words: 700 So says Graham Summers ([url]http://gainspainscapital.com/[/url]) in edited excerpts from his original article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited below for length and clarity – see Editor's Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement. Summers goes on to say, in part: Demographics Spain’s*demographics alone are setting Spain up for a sovereign debt Crisis. [Take a look:] [LIST] [*]Currently there is*1 person of non-working age (65 or older) for every*4 people of working age (15-64) in Spain. [*]This is expected to worsen to*1 person of non-working age for every 3*p...
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| Gold and Silver Disaggregated COT Report (DCOT) for April 20 Posted: 20 Apr 2012 12:26 PM PDT HOUSTON -- This week's Commodity Futures Trading Commission (CFTC) disaggregated commitments of traders (DCOT) report was released at 15:30 ET Friday. Our recap of the changes in weekly positioning by the disaggregated trader classes, as compiled by the CFTC, is just below. Following that is a chart which suggests that it might be time to sell some gold - to buy gold stocks! In the DCOT table below a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting "longer" and red figures are traders getting less long or shorter. All of the trader's positions are calculated net of spreading contracts as of the Tuesday disaggregated COT report.
Vultures, (Got Gold Report Subscribers) please note that updates to our linked technical charts, including our comments about the COT reports and the week's technical changes, should be completed by the usual time on Sunday evening (around 18:00 ET). As a reminder, the linked charts for gold, silver, mining shares indexes and important ratios are located in the subscriber pages. In addition Vultures have access anytime to all 30-something Vulture Bargain (VB) and Vulture Bargain Candidates of Interest (VBCI) tracking charts – the small resource-related companies that we attempt to game here at Got Gold Report. Continue to look for new commentary directly in the charts often. Below is a chart from an upcoming report to subscribers as kind of a sneak peak.
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| Posted: 20 Apr 2012 11:31 AM PDT Gold Price Close Today : 1,642.10 Gold Price Close 13-Apr : 1,659.10 Change : -17.00 or -1.0% Silver Price Close Today : 3164.4 Silver Price Close 13-Apr : 3138 Change : 26.40 or 0.8% Gold Silver Ratio Today : 51.893 Gold Silver Ratio 13-Apr : 52.871 Change : -0.98 or -1.9% Silver Gold Ratio : 0.01927 Silver Gold Ratio 13-Apr : 0.01891 Change : 0.00036 or 1.9% Dow in Gold Dollars : $ 164.02 Dow in Gold Dollars 13-Apr : $ 160.10 Change : $ 3.92 or 2.4% Dow in Gold Ounces : 7.935 Dow in Gold Ounces 13-Apr : 7.745 Change : 0.19 or 2.4% Dow in Silver Ounces : 411.75 Dow in Silver Ounces 13-Apr : 409.48 Change : 2.26 or 0.6% Dow Industrial : 13,029.26 Dow Industrial 13-Apr : 12,849.59 Change : 179.67 or 1.4% S&P 500 : 1,378.53 S&P 500 13-Apr : 1,370.26 Change : 8.27 or 0.6% US Dollar Index : 79.144 US Dollar Index 13-Apr : 79.888 Change : -0.744 or -0.9% Platinum Price Close Today : 1,577.40 Platinum Price Close 13-Apr : 1,581.60 Change : -4.20 or -0.3% Palladium Price Close Today : 675.00 Palladium Price Close 13-Apr : 643.20 Change : 31.80 or 4.9% The GOLD PRICE ranged today a meager $7.74, practically dead and not twitching. Rose $1.50 to $1,642.10, but fell $17 (1%) for the week. Aha! What's that I see on a one year chart? Could that be a bullish falling wedge that began in March and neareth its completion? Why, yes, indeed it could be, and is. It also argues that gold will not again visit $1,600. The sad time of this long GOLD PRICE correction since the high last August draweth to a close. It may yet be weeks away, but higher gold is coming soon. A break through $1,682 will prove it, a break below $1,600 gainsays it, but only for the nonce. SILVER PRICE contended against gold today, dropping 12.7c (Would you even pick up a sum that big, a dime and three pennies?) to close at 3164.4c. Range was passing narrow at 34c (high 3190, low 3156.1). Clearly, everybody has run for cover until the Resplendent have returned to their dens. The SILVER PRICE, too, has formed a falling wedge since the March high, a formation that usually resolves in a rally. Silver needs to clear 3200c, then 3250c to prove a rally. Could drop as low as 3000c without violating the falling wedge. Must hold 3100c or visit that 3000c. Time is growing full, time to stop waiting and start buying silver and gold. My, O, my, I look at markets today and think with Voltaire's Candide, "This is the best of all possible worlds." Until it isn't. I suspect that markets have hushed their mouths, covered their heads, and hunkered down because the Resplendent Ones of the Very Important IMF are meeting in Washington this weekend, and one never knows what the Resplendent might do to upset everyone's applecarts. Thus markets moved little this week: gold down a twinch, silver up the same, stocks better a bit, and the dollar index make a new low today while the Euro perked up. One (a suspicious one) suspects that news might have leaked about the Resplendent's plans because the dollar hit a new low today while the euro gained 0.64% to $1.3220, gapping up for a new high. On the other hand, another suspicious one might deduce the Resplendent manipulated the dollar lower and the euro higher to sell something or other at the VI IMF meeting. One with truly important concerns, like a sock drawer that needs re-arranging, would not care either way, since both the Resplendent and all their fiat currencies are sliding down the Way of the Dodo even as we speak. Technically today's dollar index slide took the scrofulous US currency down to a new low for the move AND below its 20 day moving average, leaving the dollar looking event scabbier than usual. The yen closed up 0.13% (nothing) to 122.66c (Y81.53/US$1), improving nothing, changing nothing. I reckon someone in the Nice Government Men's cave decided that the Dow shouldn't finish a week below 13,000, so the Dow rose today 65.16 points to 13,029.26. S&P500 rose 8.22 to 1,376.92 Delude not yourself, neither hug to your breast the phantom of groundless hope. Dow is tracing out a head and shoulders reversal pattern and is now putting finishing touches on the right and final shoulder. Shouldn't rise again above 13,150, and when it crosses that neckline at 12,700, 'twill nose dive 600 points before you can say, "Bernancubus, call the NGM!" Y'all enjoy your weekend! Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com 888-218-9226 10:00am-5:00pm CST, Monday-Friday © 2012, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. 
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| Posted: 20 Apr 2012 11:01 AM PDT from TF Metals Report:
The Turd humbly submits a short reading list for the weekend. First of all, we should discuss the latest CoT. I was all excited to see the numbers and, instead, it's mostly a non-event with no clear signals either way. Gold, as discussed here repeatedly, has seen its total OI fall under 400,000 which is down about 20% from the OI highs of late February. This past reporting week alone, total OI fell over 1% but the internals are kind of strange. Spec longs and Cartel longs both cut about 2,300 contracts while The Cartel short position increased by about 2,700. Interestingly, long and short small specs both fell by nearly 2,000. What the heck is going on here? Beat's the living daylights out of me! Here's the weirdest part: Large spec shorts declined by 7,648 or roughly 22%. It's only one indicator but, on balance, this report does not indicate that gold is ready to explode higher. Maybe sometime soon but likely not yet. Read More @ TF Metals Report.com
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| James Rickards Interview on Why Central Banks are Obsessed with Gold & Why QE3 is Imminent Posted: 20 Apr 2012 10:36 AM PDT |
| Guest Post: How To Speculate Your Way To Success Posted: 20 Apr 2012 10:34 AM PDT Submitted by Doug Casey of Casey Research, Source: JT Long of The Gold Report (4/20/12) So far, 2012 has been a banner year for the stock market, which recently closed the books on its best first quarter in 14 years. But Casey Research Chairman Doug Casey insists that time is running out on the ticking time bombs. Next week when Casey Research's spring summit gets underway, Casey will open the first general session addressing the question of whether the inevitable is now imminent. In another exclusive interview with The Gold Report, Casey tells us that he foresees extreme volatility "as the titanic forces of inflation and deflation fight with each other" and a forced shift to speculation to either protect or build wealth. The Gold Report: You told us about two ticking time bombs last September, Doug—the trillions of dollars owned outside the U.S. that could be dumped if the holders lose confidence, and the trillions of dollars in the U.S. created to paper over the 2008 liquidity crisis. It's been six months since then. Have we averted the disaster or are we closer than ever? Doug Casey: Things are worse now. The way I see it, what's going to happen is inevitable; it's just a question of when. We're rapidly approaching that moment. I suspect it will start in Europe, because so many European governments are bankrupt; Greece isn't an exception, it's the norm. So we have bankrupt governments trying to bail out the European banks, which are bankrupt because they've loaned money to the bankrupt governments. It's actually rather funny, in a perverse way. If it were just the banks and the governments, I wouldn't care; they're just getting what they deserve. The problem is that many prudent middle class people are going to be wiped out. These folks have tried to produce more than they consume for their whole lives and save the difference. But their savings are almost all in government currencies, and those currencies are held in banks. However, the banks are unable to give back all the euros that these people have entrusted to them. It's a very serious thing. So European governments are trying to solve this by creating more euros. Eventually the euro is going to reach its intrinsic value—which is nothing. It's the same in the U.S. The banks are bankrupt, the government's bankrupt and creating more dollars so the banks don't go bust and depositors don't lose their money. I'm of the opinion that if it doesn't blow up this year, the situation is certainly going to blow up next year. We're very close to the edge of the precipice. TGR: Is the problem the debt, or all of the currency that has been pumped in? DC: It's both. We have to really consider what debt is. It's the opposite of savings because savings means that you've produced more than you've consumed and put the difference aside. That's how you build capital. That's how you grow in wealth. On the other side of the balance sheet is debt, which means you've consumed more than you've produced. You've mortgaged the future or you're living out of past capital that somebody else produced. The existence of debt is a very bad thing. In a classical banking system, loans are made only against 100% security and only on a short-term basis. And only from savings accounts that earn interest, not from money in checking accounts or demand deposits, where the depositor (at least theoretically) pays the banker for safe storage of his funds. These are very important distinctions, but they've been completely lost. The entire banking system today is totally corrupt. It's worse than that. Central banking has taken what was an occasional local problem, a bank failing from fraud or mismanagement, and elevated it to a national level by allowing fractional banking reserves and by creating currency for bailouts. Debt—at least consumer debt—is a bad thing; it's typically a sign that you're living above your means. But inflation of the currency is even worse in its consequences, because it can overturn the whole basis of society and destroy the middle class. TGR: What happens when these time bombs go off? DC: There are two possibilities. One is that the central banks and the governments stop creating enough currency units to bail out their banks. That could lead to a catastrophic deflation and banks going bankrupt wholesale. When consumer and business loans can't be repaid, the bank goes bust. The money created by those banks out of nothing, through fractional reserve banking, literally disappears. The dollars die and go to money heaven; the deposits that people put in there can't be redeemed. The other possibility is an eventual hyperinflation. Here the central bank steps in and gives the banks new currency units to pay off depositors. It's just a question of which one happens. Or we can have both in sequence. If there's a catastrophic deflation, the government will get scared, and feel the need to "do something." And it will need money, because tax revenues will collapse at exactly the time its expenditures are skyrocketing—so it prints up more, which brings on a hyperinflation. We could also see deflation in some areas of the economy and inflation in others. For example, the price of beans and rice may fall, relatively speaking, during a boom because everybody's eating steak and caviar. Then during a subsequent depression, people need more calories for fewer dollars, so prices for caviar and steak drop but beans and rice become more expensive because everybody is eating more of them. Inflation creates all kinds of distortions in the economy and misallocations of capital. When there's a real demand for filet mignon, there's a lot of investment in the filet mignon industry and not enough in the beans and rice industry because nobody is eating them. And vice-versa. And it happens all over the economy, in every area. TGR: But inflation rates don't seem to reflect the vast amounts of currency that central banks have injected into the U.S., European and other economies. The U.S. inflation rate was 2.93% in January and 2.87% in February. We haven't seen signs yet either of a hyperinflation or a serious deflation that we were warned would come with quantitative easing (QE). Does that mean QE is working after all? DC: No. It's not just the immediate and direct consequences of what they do—everybody loves it when trillions of dollars are created. It feels good to have lots more purchasing media. The problem arises with the indirect and delayed consequences. All these dollars and euros—and Chinese yuan and Japanese yen—that have been created have basically gone into the banks, but the banks are not lending them out. The banks are afraid to lend and a lot of people don't want to borrow because they're afraid of taking on more debt. So the dollars that have been created, mostly invested in government paper, sit on the banks' balance sheets. They are not circulating in the economy at the moment. That's why prices aren't skyrocketing right now. That's point number two, though. Point number one is that I wouldn't trust those inflation figures in the first place. The governments of Western Europe and the U.S. fudge inflation figures as certainly as the Argentine government fudges them, just less overtly and outrageously. They do that because they want to keep the perception of inflation down; they don't want people panicking, which is a pity, because the public should urgently do something to protect their capital. They also don't want to see Social Security payments and other payments that are tied to the consumer price index go up. They don't have the tax revenues to pay for them and will have to print even more money, which just exacerbates the problem. Official inflation numbers are unreliable; only somebody very naïve—like a TV anchorperson—could possibly believe them. If you think of inflation as an increase in the money supply above the increase in real wealth—which is actually what the word means—the inflation rate is actually quite high at the moment. Real wealth is being created at lower rates than it historically has been, while the money supply is increasing tremendously. It's just a question of when that inflation rate manifests itself on a retail level. You've got to think like a real economist, not a political hack like Joseph Stiglitz or Paul Krugman. You have to see not just the immediate and direct consequences of something, but the indirect and delayed ones. TGR: Given that this is an election year in the U.S., won't the government do everything possible to maintain a stable market and stop inflation? DC: Sure, the government wants things stable. I have no doubt it is trying to keep the stock market up. It wants the stock market to stay high because pension funds and insurance companies and the public at large are invested in the stock market. It wants interest rates low, although artificially low interest rates are an economic disaster in that they encourage people to borrow more and save less. It would prefer to see precious metals, and all other commodities, at low levels. The argument is made that the governments of the world, especially the U.S. government, are manipulating the prices of gold and silver to keep them down, because when they increase, it's like financial alarm bells going off. But they can't control the prices of the precious metals. In the real world, cause has effect. When you create trillions of currency units, eventually the price of those currency units relative to other things will go down. That's called inflation. Whether he's lying or he really believes it, Fed Chairman Ben Bernanke said he can control the levels of inflation. When it gets too high, he thinks he can rein it in somehow. The current world monetary system is going to come undone. That's my prediction, and I'm betting on it massively, personally. TGR: You've talked about the possibility of abandoning paper currency altogether and going to a digital system. DC: The most important thing is to get the government out of money. There should be a high wall between the state and religion and an equally high wall between the state and the economy. I don't even like to talk about what governments "should" do as far as money is concerned because the governments shouldn't be involved in money—period. Money is a medium of exchange and a store of value. It shouldn't be a political football, nor should it be used as an indirect form of taxation, which is what inflation is. It should be a pure, 100% market phenomenon. Central banks should, therefore, be abolished. Paper currency should cease to exist—except as a receipt for money held on deposit. Historically, that's how it originated. You could use any kind of commodity as money, but gold has proven since the dawn of civilization to be uniquely well suited for use as money. It's a market, which is to say a voluntary, phenomenon. Whether you represent that gold with bank notes printed by individual banks or by digital currency—which I'm sure the world is going to—makes no difference. But having the state in charge of currency is idiotic. TGR: You've written about China moving away from the dollar. Do you see that happening gradually or all of a sudden? And would it be in favor of its own currency or more investment in gold? What impact would that have on gold prices? DC: First of all, I think the nation-state as a form of organization is on its way out, and that a 100 years from now people will look back at countries like China and the U.S. the way we look back at medieval kingdoms today. In the meantime, the dollar is important because it's the numéraire for trade all over the world. At the same time, fewer and fewer people trust it, and they increasingly realize that it's the unbacked liability of a bankrupt government. Eventually, it's going to be replaced by something else. India and Iran are trading between each other using gold and oil. Why use a piece of paper issued by a hostile and unreliable third party? The Russians and the Chinese can see how crazy it is to trade between each other using dollars, which all have to clear in New York. But people are still accustomed to using currencies issued by nation-states, and the U.S. dollar is everywhere and is therefore convenient. But it's a hot potato. People no longer trust it. I suspect the Chinese yuan will replace the dollar gradually—assuming the Chinese don't destroy the yuan as well. They're also creating trillions of the things to keep the economic bubble in China from imploding. Before the Chinese yuan can replace the dollar, people must have confidence in it. The best way they can gain confidence in it is if the volume of yuan is limited and redeemable by the issuer in something real, something tangible. That's going to be gold. So I expect China will continue buying large amounts of gold to back its currency. China is already the world's largest gold producer. Considering that only about 6–7 billion ounces of gold have ever been mined in all the world's history, China alone could drive the price of gold much higher. TGR: At your Recovery Reality Check summit in Florida April 27–29, you'll be talking about how business cycles have been turned on their heads. Is this the time for investors to sit tight, making only small adjustments to portfolios, or must they take more drastic action to protect their wealth or, better yet, profit from volatility? DC: I think volatility is going to go way up in the future as the titanic forces of inflation and deflation fight with each other. This is a very poor time to make big bets in almost any conventional market because it's impossible to tell how things will finally settle, where the next major war will be and so forth. Stock markets around the world are not cheap now and bond markets are fantastically overpriced. Currencies are no more than floating abstractions. Commodities have been in a long bull market, so they're no longer a low-risk bet. Real estate—the most obvious thing for bankrupt governments to tax—is dangerous. In the developed world—especially in the U.S.—it floats on a sea of debt, which has driven it to artificially high levels. It's coming down as we speak, but it's nowhere near a bottom. So there are very few places where people can still attempt to preserve capital. Everybody is going to be almost forced to be a speculator to try to stay in the same place. Speculating means capitalizing on politically caused distortions in the marketplace. That's the proper definition of the word. TGR: What can people speculate on? DC: Unfortunately, they have to second-guess where the money will go. I've always liked resource stocks, especially resource exploration stocks. It's a tiny market. If a fire gets lit under gold and silver, and I think it will, companies in this nanosector could explode 10, 20 or 50 times upward in price. It's happened many times in the past. Right now, these stocks are relatively cheap, so I like that as a speculative vehicle. TGR: Rick Rule has cautioned against generalizing about the entire junior mining sector as a whole, because so many of these companies don't find anything. How do you decide which resource investments are worth looking into? Are there criteria? Is there some kind of a litmus test that you use? DC: Rick is absolutely correct about that. Although the sector is capable of going upwards 10 or 20 times as a whole, most of the stocks in it are total garbage. The only gold, uranium, silver or whatever appears on their stock certificates, not in the ground they control. There are thousands of these little stocks, and yes, we have criteria we use to evaluate them. We use a tried-and-true due diligence process we call The Eight Ps of Resource Stock Evaluation to separate the wheat from the chaff among speculative investment opportunities. TGR: Would you share that with us? DC: Sure. This is a guide to help investors ask the right questions about every individual company they're considering. This list comprehends the essential, but you could write a book about each of these eight points.
TGR: How hard is it to find a company that passes muster on all eight counts? DC: It's very hard. It's hard enough to look at the basic statistics of thousands of companies. Then you look at the people behind them. Generally, we try to find the people first. We stay away from those who have no history of success and have established that they have questionable characters. We look for people with long histories of success or appear to be about to embark on a lifetime of success. The most important piece is people. That's what we really look for most of all. TGR: Based on all the calamities that could occur, how will you adjust your investing philosophy? DC: Let me put it this way. We're going into something that I call The Greater Depression, much worse and much different than what happened in the 1930s. I think my friend Richard Russell said it best: "In a depression, everybody loses. The winner is the guy who loses the least." It's very tough to keep capital together today, much less make it grow in the years to come. But I think it's possible. The thing to remember is that most of the world's real wealth will remain in existence regardless of what happens. The key is to position yourself so that more of it falls into your hands as opposed to falling out of your hands. That's what we're trying to do, to increase our relative share of the wealth in the world. We're not looking at boom times. What's coming will be the opposite of what we experienced during the artificial inflationary boom of the 1990s, where everything was going up—stocks, real estate and so forth. This is a time when, in real terms, most things will lose value. Most people will experience a real decline in their standard of living. TGR: As we've discussed, at its root, paper currency is a substitute for something of value. Energy, similar to gold, has intrinsic value. It's always in demand. In the past, you've expressed optimism about uranium, natural gas and oil. As the dollar becomes suspect, do you foresee sources of energy becoming more valuable? DC: Absolutely. I'm very bullish on oil. The world runs on fossil fuels today because they're ideal sources of highly concentrated energy. Unfortunately, all of the easily available, cheap fossil fuels have basically been found. The low-hanging fruit is gone. This is what the peak oil theory is about. Plenty of oil remains, but it's going to be more expensive to get it. To find oil now requires going to exotic places without infrastructure and with big political problems. It requires going much deeper into the ground, exploring under the ocean, using new technologies, and so forth. Gas is secondary to oil when it comes to concentrated sources of energy. Of course, with the development of new technologies, primarily horizontal drilling and new fracking techniques, a huge amount of natural gas has become available all over the world. But it takes tremendous capital to retrieve it, and it also faces political problems. But in summary, I'm bullish on energy of all types. There is plenty of fuel out there. It's just a question of the price level, so it becomes economic to retrieve it. TGR: So how do you invest in finding the rest of what's out there? DC: You look for companies that are exploring for it. One of the important things that makes me very bullish on oil is that most of the oil in the world today—something like 80%—is not owned and produced by BP Plc (BP:NYSE; BP:LSE), Exxon Mobil Corp. (XOM:NYSE), Royal Dutch Shell Plc (RDS.A:NYSE; RDS.B:NYSE) and companies like that. It's mostly owned and produced by national oil companies such as those in Mexico, Iran, Saudi Arabia and Venezuela. These state oil companies are universally corrupt and inefficient. The profits from the oil are generally used as piggybanks by those governments, not to build capital and find more oil. Furthermore, where governments allow private exploration, such as Iraq, they take about 80–90% of the potential profits from oil, which of course discourages exploration and exploitation of the resource. The problems are almost entirely political, but they're big problems. TGR: Speaking of the politics of energy, are you still bullish on uranium in light of the politics of what's gone on since the Fukushima meltdown? DC: Yes. I've said it before and continue to say it. There's no question that nuclear power is by far the safest, cleanest and cheapest type of mass power generation available. Fukushima survived one of the most severe earthquakes in recorded history with no problem; it's just a pity they didn't adequately plan for a 45-foot tidal wave on top of it. In addition, those plants basically were 50-year-old technology. If it weren't for political obstructions, we'd be using vastly improved technology. But it's not just uranium. Thorium is actually a much better fuel from many points of view and probably would have been used as a fuel instead of uranium except that the governments of the world found uranium useful for nuclear weapons as well as nuclear power. Nuclear power is definitely the answer, but as you point out, it's a question of political problems. Across the resource industry, in fact, it's all politics. When you find a gigantic resource of some type, you can count on lawsuits, not-in-my-backyard opposition and political theft. Those are among the reasons that I don't see the resource industry as a place to make investments. It's only a place where you can speculate. TGR: So what should long-term investors do to protect themselves? DC: Because the big problems in the world today all are political, the critical thing is to diversify politically and internationally. You can't have all your assets under the control of one government or in one country. Then, of course, you have to find the right place to put the money within that framework. TGR: How do you do that? DC: I can write a book on that. TGR: Or stage a summit? You have quite a faculty lined up. DC: It is an impressive group. Actually, this summit has dual overarching purposes. As we've discussed, the massive amounts of money the world's governments have unleashed in their economies have lit a small fire of recovery. We're going to talk a lot about whether the world is truly on a path to recovery or whether investors wouldn't be wise to develop and implement Plan B now, given that the extreme levels of debt that were such a major factor in creating the current crisis have not been reduced. To me, that strongly suggests that this so-called recovery is unsustainable and calls for moving into Plan B. Part of Plan B involves identifying optimal investment strategies for the markets ahead. TGR: What sorts of takeaways are in store for people who attend? DC: Let's have David Galland, who's been instrumental in preparing for this summit, respond to that. (A senior market strategist, Galland is managing director of Casey Research LLC, managing editor of The Casey Report, International Speculator, Casey Investment Alert author of Casey's Daily Dispatch.) David Galland: We expect the takeaways will be good answers to many burning questions. As Doug has suggested, the government says the recovery is real and your broker will tell you it is, yet the underlying data suggests that it may be a paper tiger. So, what's the hard truth? Should you be moving aggressively into rebounding equities? Or is the recovery a mirage that will dissipate in a second crushing leg down for the economy and traditional investment markets? What are the road signs you need to pay close attention to? How can you position your portfolio to do well in either scenario and, most importantly, to hedge against the worst case? Should you worry about inflation or deflation? Neither? Or both? Will the gold and silver you've been holding turn to lead and pull your portfolio down? Or is loading up on corrections still the right thing to do?
TGR: These summits are always sold-out affairs. Is this one full already? DG: Just a few spots remain as we speak. Even if you can't make it to the Casey Research Recovery Reality Check Summit April 27-29, you can still listen to every piece of actionable investment advice attendees will hear with the Summit Audio Collection. This expansive audio set will feature every recorded Summit presentation, including those from David Stockman, director of the Office of Management and Budget under President Reagan. . .Harry Dent, author of The Great Crash Ahead. . .Casey Research Chairman Doug Casey. . .and 28 other financial luminaries. Pre-order before the Summit starts and get the entire collection for $100 off. Want to read more exclusive Gold R |
| Posted: 20 Apr 2012 10:31 AM PDT Gold and Silver Miners Put Real Money Where Their Mouth Is
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| Posted: 20 Apr 2012 09:22 AM PDT Bill Bonner View the original article. April 20, 2012 01:12 PM The more things don't change…the more they remain the same. You can quote us on that. On the surface, very little changed in the 2 months we were away. The Dow was about 13,000 in mid-Feb. It's still about 13,000. The yield on the 10 year US note was about 2%. No change there either. The euro was about $1.30. It's $1.30 today. Gold is a little lower. Big deal. But down deeper….did anything more substantial change…evolve…develop? Apparently not. Back in the winter, the Europeans were pretending to fix Greece. Now they're pretending to fix Spain. But wait…here's something that might be changing…now nobody believes the fixes will stay fixed. "Europe's Rescue Plan Falters," says the front page of The Wall Street Journal. Yesterday, widely reported was the fact that Spanish banks held more delinquent loans than at any time since 1995. The world seemed to be waking up too to the real...
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| NASDAPPL Crumbles Amid Sideways Volatile Week Posted: 20 Apr 2012 08:54 AM PDT Take your pick of how to describe this week's action. The Dow was green, S&P 500 unch (ES closed right at its 50DMA), and NASDAQ down for its biggest 2-week loss since the rally began. Heavy volume and incessant selling pressure pushed AAPL to its biggest 10-day loss in over 8 months as it closed at 5-week lows just shy of filling the gap from 3/13 and very close to testing its 50DMA for the first time in 4 months. Credit and equity markets generally did a round-trip today closing near their lows after opening the day-session near their highs off the ubiquitous overnight ramp. HY is practically unchanged on the week as IG saw up-in-quality rotation and outperformed while the S&P ended in between the two as they all traded in a broad range for the second week in a row - even though volatility remains intraday. Treasuries slid to their lowest yields of the day into the close today (though off the week's best and unch today) once again somewhat range-bound but with a notable falling-yield momentum down a few bps on the week with the long-end outperforming and 10Y closing under 1.96%. Copper and Oil rallied solidly today but aside from a little volatility Gold and Silver trod water ending the week with Gold -1% and Silver +0.55% as WTI ended back over $104. The EUR kept rallying all week (more repatriation flows?) dragging the USD lower as JPY underperformed on the week (flat today as the rest of the majors tracked USD weakness) and GBP outperformed. Broadly, the Treasury strength balanced the Oil and FX market risk-on-sentiment but risk-assets proxied higher into the US day-session open only to give it all back and drag stocks back down. It feels like there is still hope for some re-liquification but the weakness in AAPL and the financials suggest at best rotation and at worst steady risk-off while earnings beats (of drastically lowered expectations) keeps the dream alive. AAPL struggled - that is all...
The NASDAQ lost some of its shine this week while the DOW benefited from the MSFT rotation...
Credit and Equity markets chugged violently up and down all week to end practically unchanged - in the same range as last week - with IG modestly outperforming. Notably IG cash markets underperformed CDS this week (as financials lagged) but HYG bond spreads and CDS were generally flat and in line with one another's moves (as industrials and consumer cyclicals underperformed today).
Treasuries limped lower in yield with a late-day rally back near the week's low yields...
Commodities were not as range-bound as the rest of the asset classes - though Silver and Gold went dead in the last 24 hours or so. WTI managed to close above $104 again and Copper outperformed on the week...
FX markets drifted lower in USD all week (but that didn't help Gold) as EUR repatriation flows continue. JPY was flat (underperformed) today as the rest synced with the USD flow...
CONTEXT rallied early in the day on FX flows and Oil strength but Treasury yields dropping and flattening and credit stability rolled broad-risk-assets over and dragged equities back down into the close...
Charts: Bloomberg
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| How to Speculate Your Way to Success: Doug Casey Posted: 20 Apr 2012 08:43 AM PDT The Gold Report: You told us about two ticking time bombs last September—the trillions of dollars owned outside the U.S. that could be dumped if the holders lose confidence and the trillions of dollars in the U.S. created to paper over the 2008 liquidity crisis. It's been six months since then. Have we averted the disaster or are we closer than ever? Doug Casey: Things are worse now. The way I see it, what's going to happen is inevitable; it's just a question of when. We're rapidly approaching that moment. I suspect it will start in Europe, because so many European governments are bankrupt; Greece isn't an exception, it's the norm. So we have bankrupt governments trying to bail out the European banks, which are bankrupt because they've loaned money to the bankrupt governments. It's actually rather funny, in a perverse way. . . If it were just the banks and the governments, I wouldn't care; they're just getting what they deserve. The problem is that many prudent middle class people ar...
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| Something Rotten in the State of America Posted: 20 Apr 2012 08:30 AM PDT Dave Gonigam – April 20, 2012
"The institutions that used to be the best in the world are no longer," he said during a recent summit at Stanford University.
More than others, Ferguson understands what made the West so prosperous for so long — namely, the rule of law. And the rule of law is unraveling in an age when banks foreclose on properties whose owners paid cash… when judges arbitrarily hose the bondholders of GM and Chrysler… or when the government limits your ability to travel overseas if you're in arrears to the IRS.
The standards are cut and dried: Are property rights protected? Are officials easily bribed? Are the courts independent? Is organized crime a problem? The United States ranked No. 1 as recently as 2008. By last year, it had slipped to No. 5. And the overall rankings don't tell the whole story: 
Professor Ferguson, assessing the WEF report, finds Hong Kong tops the United States in all of the top 15 categories related to the rule of law. And mainland China has better rule of law in two of those categories. In fact, the United States made the top 20 in only one category. "What this tells you," says Ferguson, "is something is rotten in the state of America."
The good doctor, in the current issue of his Gloom, Boom & Doom Report, recounts a recent dinner he attended featuring people he describes as "super-wealthy money shufflers." He did not come away feeling sanguine about their willingness to support the sort of policies that would restore America's place on that list of the world's nations. "Such measures," he writes, "would include supporting tight monetary policies and far less government regulation, which would contain the rapid escalation of cost-of-living expenses (notably, for food, energy, insurance and educational prices). "Obviously, these policies would be stock market unfriendly because they would increase interest rates." So what's the endgame? And how should you prepare? "What if collapse," posits Ferguson, "does not arrive over a number of centuries but comes suddenly, like a thief in the night?" "Great powers and empires are complex systems, which means their construction more resembles a termite hill than an Egyptian pyramid . . . including the tendency to move from stability to instability quite suddenly." This year's Agora Financial Investment Symposium will bring together both Marc Faber — back after a two-year hiatus — and, for the first time, Niall Ferguson. Ferguson will answer some of your most-pressing questions: Can China keep up its growth? What might the world look like with China at the top of the economic heap? And what does that mean for the investments you hold now? Dr. Faber will tell you which asset classes will perform best if the "super-wealthy money shufflers" insist on retaining their privileges. (Here's a hint he recently dropped: "Social deterioration over the last 20 or so years is unlikely to have escaped the attention of wealthy Americans. The shift into relatively safe assets is, therefore, likely to continue.") We'll have other new faces, not as familiar, but who offer insights into opportunities as diverse as farmland and Southeast Asia. We'll have "regulars" like Doug Casey, Rick Rule and Agora Inc. founder Bill Bonner. The trailblazing and always-colorful oil geologist Marcio Mello is back for a return engagement. And your "usual suspects" of Agora Financial editors — King, Mayer, Cox and company — will be on hand, too. We'd love to see you for our annual gathering in Vancouver — our 13th, to be exact. Online registration is available now. And if you sign up before Monday, April 30, you secure the lowest available fee.
Yesterday's market action delivered another substantial gain to readers of Options Hotline. Steve Sarnoff's recommendation on a stumbling telecom firm traded at a level good for a 40% gain in one month. And that's on top of the 156% gain on a surging pharmaceutical maker. Options Hotline comes with the boldest and most-unique guarantee in the business… and through this weekend only, you can access this service at half off the regular fee. The deal comes off the table at 5 p.m. on Sunday.
As we mentioned on Wednesday, the firm was the subject of a hit piece in The Wall Street Journal intimating that Egan-Jones is understaffed, and the people it does have on hand might not be fully qualified. We noted this coincided with the firm's downgrade of U.S. Treasuries two weeks ago… to two notches below AAA. Here's what's new: Yesterday, the firm revealed it got a notice from the SEC. Supposedly, Egan-Jones made "material misstatements" when it applied for SEC permission to rate sovereign debt, municipal debt and asset-backed securities. "In what would be an unprecedented move," the Journal reports, "the SEC could seek to punish the firm by stripping it of its ability to issue officially recognized ratings on securities tied to government debt and asset-backed deals." "Here, we have an allegation of a specific error, made in good faith by Egan-Jones, over the course of doing business," says Fusion IQ chief and Big Picture blogger Barry Ritholtz. "At the same time, we have a broad set of systemic errors made by the two much-larger competitors, Moody's and Standard & Poor's. These two firms, by design, gave AAA ratings to piles of junk paper. They did so because that was what they were paid to do by the underwriters." "These were not good faith errors. They were instead a reflection of a wholly corrupted industry, designed to mislead investors and legitimize junk paper. Somehow, these two whales of corruption get a pass. I don't get it…" [Ed. note: Symposium attendees have become accustomed to Mr. Ritholtz's candid — and frequently hilarious — comments. And he'll be back with us again this year. If we can persuade him to take part in this year's Whiskey Bar, we sense the potential for a knock-down, drag-out fight over the U.S. housing market with Chris Mayer. Or maybe not — the unpredictability is itself one of the attractions. One more time, here's where to register.]
The NDAA was signed last New Year's Eve when nobody was paying attention, authorizing the indefinite detention of U.S. citizens on the say-so of the president. On Wednesday, the Virginia legislature passed a bill forbidding state agencies from cooperating with federal attempts to enforce the indefinite detention provision of the NDAA. The governor has promised to sign the bill after the legislature agreed to a couple of minor changes. Several state legislatures have passed toothless resolutions condemning the NDAA. Virginia's done something else altogether. "In the 1850s, northern states felt that habeas corpus was so important that they passed laws rejecting the federal Fugitive Slave Act," says Michael Boldin of the Tenth Amendment Center, offering historical perspective. "The bill passed in Massachusetts was so effective, not one single runaway slave was returned south from that state. Today, Virginia joins in this great American tradition."
"Here, you can find official art merchandise from North Korea," says the Web page. "Show your support to our country!" You find the usual assortment of T-shirts and coffee mugs. Heck, for $29.99, you can even get an iPhone case depicting the people's glorious victory over capitalist running dogs:  Clearly, the irony is lost on the regime, that it's hawking accessories for an item most of its citizens are forbidden to own…
"Can you clarify how you know this to be true, and is this legal?" The 5: You're talking about Bank of America. Last fall, BofA won approval from the Federal Reserve to move billions in derivatives off the books of its Merrill Lynch subsidiary and onto the books of BofA's commercial arm. Merrill cannot borrow from the Fed's discount window. Nor is Merrill backed by FDIC deposit insurance. BofA's commercial unit has both of these advantages. Curiously, this shift does not appear to have occurred as of year-end 2011 — the most-recent figures available from the Office of the Comptroller of the Currency. Indeed, the derivatives book on BofA's commercial side fell during the fourth quarter, from $55.1 trillion (yes, with a "t") to $50.1 trillion. We'll stay on top of it…
"It is not only our pump prices — now over $8.53 per gallon — our government costs more, too. All this and letting the pound slide so far that it is becoming almost as useless as the dollar in terms of a global currency. "I truly believe that running a country is far too important to be left to politicians.
The 5: Ah, you touch on question that's crossed this editor's mind often: At what point is Godwin's law — the notion that if you invoke the Nazis, you automatically lose an argument — effectively repealed? We refer you to a passage from Milton Mayer's book They Thought They Were Free: "To live in the process," a university professor told Mayer, "is absolutely not to notice it — please try to believe me — unless one has a much greater degree of political awareness, acuity, than most of us ever had occasion to develop. "Each step was so small, so inconsequential, so well explained or, on occasion, 'regretted.'… Believe me, this is true. Each act, each occasion is worse than the last, but only a little worse. You wait for the next and the next. You wait for one shocking occasion, thinking that others, when such a shock comes, will join you in resisting somehow… "Suddenly, it all comes down, all at once. You see what you are, what you have done or, more accurately, what you haven't done (for that was all that was required of most of us: that we did nothing)." If you feel compelled to take a stand… and you know in your bones that political action is a futile means to do so… we urge you to read the special message from Laissez Faire Books Executive Editor Jeffrey Tucker in today's Overtime Briefing, below. Have a good weekend, Dave Gonigam P.S. We knew the streak couldn't last forever. With the British pound trading strong at $1.612 this morning, it looks as if Abe Cofnas' "mock trade" this week won't work out. Still, it's hard to argue with the track record to date — seven winners out of eight plays. Nor can we deny the allure of always knowing the outcome in four days or less. Look for a new opportunity on Monday… P.P.S. Final reminder: Discounted access to Options Hotline — one of the longest-running services of its kind — expires at 5 p.m. on Sunday. Here's where to act.  As you might be aware, Agora Financial purchased Laissez Faire Books in 2011. This institution, launched 40 years ago in New York, carries a legacy we've labored long and hard to sustain and revive. But events since our acquisition have compelled us to make a significant and dramatic shift… which LFB's executive editor, Jeffrey Tucker, describes below in this statement released to customers yesterday… FOR IMMEDIATE RELEASE Dear Laissez Faire Today reader, Today, I'd like to introduce you to a major change we've decided to make to Laissez Faire Books' 40-year history of doing business — a change that I believe will directly impact your knowledge of economics, the way you protect your liberty against the police state and even how you look at your personal freedom (or lack thereof). I'll explain this change — and its benefits — in a moment. But first, a quick apology… Normally, we reserve the pages of Laissez Faire Today to explore economic theory policy, to tip you off on threats to your personal liberties or to share protection strategies. This missive doesn't directly focus on any one of those things. Instead, I'd like to focus on the intersection of all these things and how they all add up to affect your life. I'd like to take you from the "analysis" we normally offer in these pages to a whole new world of "actionable ideas" that you can put into place today to make you smarter, happier and wealthier. For the first time, we've found a way to deliver you the knowledge base of all the classic economic ideas and combine that knowledge with legal things you can do to work around laws that affect your personal liberties. For example… although you may not know this, the government passed a law in 1993 that's surely cost you thousands of dollars in new clothes. The law removed a vital ingredient from detergent that kept clothes clean and white. They claimed the ingredient created algae growth in streams and ponds. Their claim has never been proven. Even to this day, nearly 20 years later. But I've found a natural element that works around this boneheaded regulation legally. Add a cup of this to your next wash and it will whoosh away stains and dirt, leaving clothes clean and smelling fresh. Best of all, you can buy this from the paint department at your local Home Depot or Lowe's. It'll cost you less than a dime per wash, yet it could save you thousands of dollars in clothes over the years. You may not think government regulation on laundry detergent is a huge problem. But it's these small laws that, added up, really put the boot on our throats. Over the course of my 20-year career, I've found roughly a dozen of these small workarounds. Each of them can help you take back control of your own life, despite the efforts of Uncle Sam and the legions of regulators who believe they're in a position to tell you how to live your life. I've written up all these loopholes in a new report called Hack Your Showerhead: Plus, Nine Other Ways to Get Big Government out of Your Home. As executive editor of Laissez Faire Books, I'll gladly send you a copy of this report, free of charge. In return, all I ask you do is agree to be part of an exciting new change in our business… I'd like to invite you to become a charter member in the brand-new Laissez Faire Club — the first comprehensive, digital-age society of big ideas. As a member, you'll have everything you need to cultivate learning and living a free life. And best of all, everything included with the club comes to you for free with your membership, potentially saving you hundreds of dollars in expenses. Your membership starts with the report I've just told you about, Hack Your Showerhead: Plus, Nine Other Ways to Get Big Government out of Your Home. This report shows the best ways that you can fight back against other ways the regulators are trying to wreck your way of life. The way to receive the report is to become a club member. You'll also receive our new Economics in One Library box set of books, mailed directly to your doorstep. This carefully selected set includes the great work by Henry Hazlitt, Economics in One Lesson; plus Garet Garrett's A Bubble That Broke the World (the true story of the Great Depression); and F.A. Hayek's A Tiger by the Tail. Each includes fantastic introductory material to explain what it is all about. In addition, this set will include a new edition of Frédéric Bastiat's classic essay The Law, with an introduction by Agora Inc.'s founder, Bill Bonner. Having reread this monograph recently, I'm amazed at just how timely it truly is. I can see why it has inspired so many over the course of a century and a half. In some ways, this one essay is all you need to understand the social, economic and political orders. It opens eyes as nothing else. Together, these four books help you understand the world in a whole new way, providing greater clarity on politics, economics and personal life management. Never again will you be confused about terms like Keynesian spending, quantitative easing or credit default swaps. This Economics in One Library set will be for sale in the Laissez Faire Bookstore for more than $30. But as a charter member to the Laissez Faire Club, you'll have it delivered to your doorstep at no charge. In addition, your charter membership to the Laissez Faire Club:
Those are a lot of benefits, I know. So let's cover some of those things in more depth… FREE E-BOOKS: When you become a charter member to the Laissez Faire Club today, you'll enjoy one new book per week. But it doesn't come in a packet. It is delivered through the website and arrives for your e-reader. It could be an early release of a new book by one of today's most-remarkable writers. It could a great classic. Regardless, each one will be what is called an "essential read." Each one is custom-built with new introductory material and other tools. This weekly delivery will cause the digital bookshelf to fill up fast. That is just fine. A digital reader can carry whole libraries in a thin package. Members will have access to an archive that will add books as fast as we can make them. And if you don't have an e-reader, don't worry. You'll be able to download each of these books directly to your computer, should you choose to read that way. We'll sell these e-books through the Laissez Faire Bookstore for anywhere between $5–20 each. But as a member, these will all come your way at no charge. But a bigger benefit than just being free is the fact that these books will provide you with an education unrivaled by any Ivy League university. FREE VIDEO SUMMARY NOTES: I'm often told that my own video reviews of books are wonderfully informative because I boil down hundreds of pages into small bites and explain the themes and ideas in the context of the current political and economic culture. As a Laissez Faire Club member, you'll be able to download and enjoy as many of these video analyses for free, for as long as you'd like. I will involve others in these video reviews as time goes on. I'll interview authors, ask experts in various fields to weigh in and broaden the discussion to include older works. LIVE ONLINE SEMINARS: Imagine if you could have studied under F.A. Hayek or Ludwig von Mises in the 1930s. Their modern equivalent will be made available to club members in real-time. Here's how… Technology today allows for live online seminars in which people can gather to hear lectures. This has been possible for only a few years, and in my view, this is an underused technology today. It has great potential to allow you to meet up in real-time with some of the best thinkers and experts. But the vision of the club goes far beyond distributing literature… Have you been reading about the government's attacks on the Internet and how this is has alarmed advocates of free speech? Well, the chilling effect has already arrived, and public spaces are becoming ever less useful and informative. That brings me to what I believe could be the most-exciting part of this club… PRIVATE COMMUNITIES TO SHARE IDEAS: The Laissez Faire Club provides exactly what is needed right now: a free city within the digital world. This private city stays off the search engines, protects your privacy, keeps your browsing habits and discussions out of reach from prying eyes and allows you to form real friendships with safety and confidence. A members-only forum provides an opportunity to read along with others and discuss the books, chapter by chapter, giving your reactions and considering them alongside other members. This is a wonderful way to stay constantly in touch with people who share your values and contribute to your learning and knowledge. It will become your essential community, the basis of professional networks and great friendships. Forums can form charming internal cultures and be thoroughly humane and friendly for everyone — provided they are set up properly. The big problem with most public forums, however: They are too public. Public forums invite drive-by commentators, trolls, lurkers, jerks, flame wars and worse. A very common complaint concerns profanity. Administrators work hard to keep the culture clean, and as a moderator of many forums for years, I can tell stories you wouldn't believe. It is a full-time job that is never done. But you know what solves it all? A wall, privatization, the formation of a "club," the creation of a "gated community." This is what lets a vibrant and healthy community develop, one based on civility, intelligence, mutual respect and genuine excitement about ideas. This is part of what the Laissez Faire Club offers. Having built many Web properties from 1995 onward, I can assure you that there's never been a better time to join this effort. And when you claim your charter membership today, you'll be in fine company. The initial "brain trust" we've assembled to lead this effort includes…
I'm thoroughly convinced this club will change your life — putting you in place to take control of your health, happiness and finances — as nothing else ever has. It's the unity of actionable ideas, technology and private enterprise, all in one package. I know of no other "club" like this in the world. That's why I couldn't be more excited to invite you to become a charter member. Give membership a try… Take advantage of the ideas in your free report, Hack Your Showerhead: Plus, Nine Other Ways to Get Big Government out o |
| Surging central bank gold demand adds new dimension to bull market Posted: 20 Apr 2012 08:28 AM PDT The longer-term trends in gold's supply-demand fundamentals point to a potentially explosive market situation in the years ahead. In short, the supply trend is static to shrinking while global demand trends, particularly from investors and central banks, appear to be in a period of rapid expansion. What's more the political, financial and economic dynamics driving these trends are not likely to undergo any significant reversal anytime soon for reasons explored below. Up until now, gold's secular bull market has been driven by a combination of private and institutional investor demand. Though those two components in the demand picture remain well-defined, it is the arrival of deep-pocket central banks in emerging countries like China, Russia, Saudi Arabia, India, Mexico, Brazil, as well as players yet to be named, that have added a whole new dimension to gold's secular bull market. Investor demand tends to ebb and flow based on changing views about the econ...
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| Posted: 20 Apr 2012 08:18 AM PDT Synopsis: An irresistible force is ultimately responsible for all the government meddling that's destroying the world's economies. Dear Reader, If history has taught one certain lesson, it is that the less fettered an economy, the better humankind is able to do what it does best: run from trouble and run toward opportunity. In this way mistakes are quickly resolved and progress assured. Conversely, the deeper the muck of regulation, mandates, taxes, subsidies and other bureaucratic meddling, the slower we humans are in following our natural instincts until the point that progress is slowed or even stopped. It is said that history doesn't repeat itself, but it often rhymes. In the current circumstances, it appears that enough time has passed that current generations have completely forgotten the critical connection between the ability of humans to freely pursue their aspirations and economic progress. You can see this ignorance in the popular demand for even more, not less, meddling in the affairs of humankind. Should this trend continue – and for reasons I will touch on momentarily, I firmly believe it will – then the aspirations of the productive minority will soon be dampened by ever higher taxes and other attempts to "level the playing field" and the global economy, already in tatters, will fall off the edge. There is no more timely nor acute example of this growing trend than what is currently going on in France. I refer, of course, to the first round of the presidential election process, scheduled for this weekend. In France, if no candidate attracts no better than 50% of the vote, then the two leading candidates go to a decisive runoff vote, this time around to be held on May 6. The current president, Nicolas Sarkozy, a conservative in name only, was running at a fairly steady gait toward re-election (thanks to the head start awarded all incumbents), when leading socialist candidate Francois Hollande came out with a proposal to tax anyone with an annual income of over one million euros at a rate of 75%. He also promised to add a tax on all financial transactions and increase taxes on France's biggest companies to 35% – securing bragging rights as levying the world's third-highest corporate taxes, the US being #1. This all on top of a 25% VAT, one of the world's highest. By some calculations, the result of Hollande's new taxes is that effectively 100% of all incomes over one million euros will now be stripped away by the state. For good measure, Hollande also promised to reverse the recent modest increase in retirement age from 60 to 62 pushed through by Sarkozy. While I am sure it is mere coincidence, I found it noteworthy that Mssr. Hollande's campaign slogan is "Change – Now!" Remarkably, at least for those with some small understanding of economics, as a result of leaning into the microphone with these proposals Hollande has galloped ahead of all other potential contenders and is now projected to finish nose by nose with Sarkozy this weekend. After which the also-rans will be removed from the race, freeing their supporters to share their affections elsewhere. Given that the leading contender for third place with an estimated 14% of the vote is one Jean-Luc Mélenchon – charitably categorized as "far left", a label that can be applied to most of the other candidates – it is projected that the "conservative" Mssr. Sarkozy will go down in double-digit flames come May 6. Bringing to mind the prophetic utterance of Louis XV: "Après moi, le deluge." The deluge in Louis' case manifested as the murderous affair commonly known as the French Revolution. In the case of Mssr. Hollande taking up residence in the Palais de l'Élysée, the deluge is likely to manifest in the form of rising interest rates as investors look to protect against an acceleration in the country's debt to GDP ratio, already projected to hit almost 90% this year, exacerbated by a flight of capital, investors, entrepreneurs and large businesses. As is the nature of such things, because of the aforementioned predilection of humans to run from trouble, we likely won't have to wait for Mssr. Hollande to be formally enshrined in the gilded halls for the trouble to start – it will begin within days and maybe even minutes of the handicappers concluding that his ascendency is a sure thing. Given that France is the third-largest economy in the already-troubled Eurozone, one can expect the deluge to spread, with potentially devastating consequences. That the guillotines may soon be rolled out across Europe can be better understood by taking into account that the Eurozone sovereign deadbeats are on the hook for roughly nine trillion euros in debt, some significant percentage of which has to be rolled over to ready buyers over the next couple of years. Adding weight to the problem is that, according to the latest figures out of the IMF, Europe's banks may have to sell off up to 3.8 trillion euros in assets, many of them questionable, between now and the end of next year. At least, if they want to remain solvent. Across the pond, the United States also has aggressive funding needs, given that the "change" we experienced ourselves in the last presidential election has left the government gasping for about $1.4 trillion in additional funding each year. Then there is Japan, officially the world's largest debtor in terms of debt to GDP, where the easy availability of local funding has dried up, requiring that nation to go to the international markets for funding as well. The phrase "an awful lot of hogs at the trough" comes to mind. But, as I am prone to do, I drift. My point is not just that these governments are broke and are about to get a lot more broke as interest rates rise on their many debts and financings, but rather that the global trend toward a resurgence in public demand for socialism in response to a worsening crisis is a certainty. How could it be otherwise when for decades now the schooling of children has been delegated to functionaries of the state? For evidence, look no further than the screen swipe here. It is a quote from an essay by a college student in the United States on role the government should play:
The writer of those words was a member of a Valencia University economics class. The professor, Jack Chandliss, asked the class to write an essay on what the American dream means to them, and what they want the federal government to do to help them achieve that dream. Out of 180 students participating, only about 10% wanted the government to leave them alone and not tax them too much, but a whopping 80% wanted the government to provide pretty much the whole dream thing wrapped in a tidy bow – including free college tuition and health care, jobs, even the down payment on their future homes, money for retirement and hard cash, taken in the form of taxes from rich people. While I run up the stairs for another shot of caffeine, take a moment to watch a worthwhile interview with the professor by clicking here now (with thanks to Dennis Miller for sending it along). See you in a moment… *** **** **** Okay, I'm back. Pretty eye-opening, eh? The point here is not complex, but it is important. With the apparatus of state education over many years serving to bamboozle the populace into the hardened belief that government has a positive role to play in virtually all aspects of modern life, it should come to no surprise to anyone that, when push comes to shove, people are now trained to look to government to solve the problems – even when it was the government that created the problems in the first place. Thus, confronted with the intractable mess they have made, these governments have to keep alive the mythology they have created about their omnipotence. Which is easier said than done, because with things now swirling fairly quickly around the drain, the mob is beginning to lose faith – and even patience. Which puts these governments in a very tight spot, because the only way they can actually fix things is by doing exactly the opposite of what people have come to expect from their governments, which is always to do more. Put simply, the only hope now is that these governments begin to reduce their roles in their respective economies, and dramatically so. Concurrently, they have to encourage people in their aspirations to greater wealth, by lowering their taxes and unwinding the tangle of regulations they have created over the last half-century. But if the governments actually tried to take these actions, the brainwashed masses would be positively befuddled then outraged, as it goes against everything they have been taught. Why, it would be like the Pope shuffling his way to the balcony of St. Peter's Basilica and informing the doting faithful that there isn't a god and never has been. Riots would follow. So it is that we find ourselves at a particularly interesting juncture in the historical record. On the one hand you have a majority of the world's population who have been carefully schooled into believing that the institution of government holds the solution to all problems and is the source of succor to all who need it. (Even that subset of the populace who has lost confidence in their current government invariably believes as doctrine that the next and better government can change things for the better and lead the way to the shining castle on the hill.) In this mix are the politicians and their functionaries, 99.99% of whom believe that, if for no other reason than their re-election prospects, they have to do something to meet the demands of the public. Of course, under normal circumstances the "something" usually consists of making grand-sounding speeches and otherwise blowing smoke. Today that's just not going to cut it, for the simple reason that the crisis is real, it is spinning out of control, and it's not going to go away unless and until the markets are allowed to breathe again. Which brings us full circle to the simple truth that the brainwashed public won't stand idly by while the politicians lower taxes and regulations on the profit makers or cut back state pensions and guarantees or otherwise reduce any of the many services the state has taken on itself to provide. "Between a rock and a hard place" is an inadequate phrase to describe the situation. Meanwhile, the mob has started to gather, their dark mutterings heard by the politicos who quickly don the red caps themselves, the better to be viewed as one with the people and join in expressing outrage against the capitalists who have been selected as fall guys in this unfolding drama. When confronted by reporters about the fact that his 75% tax on high-income owners would raise nowhere enough revenue to offset France's towering debt and social obligations, Mssr. Hollande was heard to respond: "It's not a question of return. It's a question of morality." When coercion and theft are considered moral, anything is possible, and none of it good. While I certainly can't say how this is all going to end, I'm pretty sure it's not going to end well.
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| Gold Seeker Weekly Wrap-Up: Gold and Silver End Mixed on the Week Posted: 20 Apr 2012 08:18 AM PDT Gold traded mostly slightly higher and ended with a gain of 0.07%. Silver saw slight gains in Asia and London, but it then fell back off in New York and ended with a loss of 0.13%.
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| Gold Daily and Silver Weekly Charts - Winding Into the Apex, Slowly Posted: 20 Apr 2012 08:18 AM PDT |
| The Other Side Of The Gold And Silver Coin Posted: 20 Apr 2012 07:50 AM PDT We have long-discussed the currency debasement, fiat-fiasco thesis for owning hard assets and only last night noted the discussion between Biderman and Sprott on the practicalities of this plan. What we found interesting was this week we have seen a number of quite bearish articles on the precious metals - most notably Bloomberg's chart-of-the-day has had two notes citing inventory build for Silver's imminent demise and lagging futures open interest as a sign of investor's losing conviction in gold. Given that we are fair-and-balanced we thought it worth sharing these technical insights and perhaps reflecting on what Eric Sprott noted (and Dylan Grice has previously highlighted) as the only thing that could break his 'hard asset' thesis - that the political and banker elite "come to their financial senses".
4/18/12. Bloomberg. Silver-Inventory Surge Means Decline In Prices (no link - reporter here)
4/20. Jesse's Cafe Americain. Comex Silver Inventory Watch - Heading Into May-July Delivery Period
4/11/12. Bloomberg. Gold Holdings Signal Slump
And lastly - as a reminder - Dylan Grice Explains When To Sell Gold.
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| COT Gold, Silver and US Dollar Index Report - April 20, 2012 Posted: 20 Apr 2012 07:33 AM PDT COT Gold, Silver and US Dollar Index Report - April 20, 2012
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| Posted: 20 Apr 2012 07:04 AM PDT In July 1944, delegates from 44 nations met at Bretton Woods, New Hampshire - the United Nations Monetary and Financial Conference - and agreed to "peg" their currencies to the U.S. dollar, the only currency strong enough to meet ... Read More...
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| Paul Brodsky On The State of Play: Statists At Play Posted: 20 Apr 2012 07:00 AM PDT On April 16, Argentine president Cristina Fernandez de Kirchner announced that her Argentine government would expropriate and re-nationalize YPF, an energy company operating mostly in Argentina founded by its government in the 1920s and de-nationalized in the 1990s. Repsol, a Spanish company that owns (owned) 57% of YPF called the act "illegal and unjustified" and vowed to sue. Repsol's president implied he had higher bids for its share of YPF, notably from China (Sinopac), and further asserted that prior to the announcement the Argentine government had deliberately depressed the stock price ahead of expropriation. Spain and its allies in the EU immediately renounced YPF's re-nationalization and threatened retaliation. Too late: the deal is done and Argentina's political calculus seems to pass economic scrutiny in a commercial age dictated by political economics. By the time this matter is likely resolved in an international tribunal YPF's existing energy reserves should be mostly depleted.
Fernandez de Kirchner's timing was brilliant, reminiscent of Robert Rubin currency interventions when he was running the US Treasury who would strike when FX positions were vulnerable. To re-nationalize the Spanish-controlled energy company when Spain's economy and funding are teetering means the Spanish government and businesses domiciled there lack the clout to make demands of Euro confederates. FdeK's declaration that the action is a "recovery of sovereignty and control" should further remind observers and investors that those in power ultimately rely on maintaining and obtaining access to natural resources.
In times past such expropriation would surely be an act of war. Recall Argentine scrap metal merchants raising an Argentine flag over the Falkland Islands in 1982 was enough to prompt Margaret Thatcher to launch the Royal Navy. (Five British firms are currently looking for oil around the Falklands.) The Spanish armada is unlikely to set sail this time. This particular act of state piracy performed by an independent sovereign nation is notable in that its victims are not members of another society but shareholders neither sovereign serves directly. The Spanish government is busy trying to appease foreign creditors and Repsol's energy production served shareholders first, not necessarily Spanish energy demands.
The Bigger Implication
The political calculus among leaders of sovereign governments reduces to short-term domestic political benefits vs. threats of economic or military retaliation. When it comes to natural resources the points of tension are not sovereign governments vs. private domestic interests but sovereign government vs. sovereign government. It would seem China joined global trade in 1978 because its mandarins realized domestic production could not satisfy the Chinese people's insatiable appetite for basic resources. Perhaps Russian Glasnost and Perestroika sprung in the latter half of the eighties so that Russia could profit by feeding emerging markets like China its bountiful natural resources? And it would seem reasonable that the formation of US free trade agreements and the EU, (in spite of political partisans who would otherwise killed such measures because they threatened domestic employment), were forced by Western mandarins looking to aggregate global natural resources and control its channel of distribution? And the really difficult question: could the unprovoked invasions of Iraq and Libya (and Iran?) have something to do with increasing control over global energy?
The paper bets representing global production and resources that we call "capital markets" is in jeopardy of becoming a sideshow. Baseless paper money, fractional banking, revenue shuffling, financial returns, ever-increasing debts, unwarranted confidence building, nominal output growth and politicians posing as policy makers cannot sustain the most basic needs of societies. The G7 remains strong economically not only because we have established infrastructures and markets, we are law-abiding and because Apple is innovative. We remain powerful because ultimately our militaries ensure access to resources. Thankfully, our soldiers remain willing to take fiat with unknown future purchasing power in exchange for their labor and the shareholders of defense contractors remain willing to have their investments denominated in such paper. (Of course, the same was true of shareholders in Repsol YPF.)
Price Management
The governments of G7 economies have been able to control global resource pricing because they have been able to control the perception of global currencies in which resources are priced. Few in the private sector have seemed to mind government control over pricing because resources in developed economies have remained affordable. Policy management over the general price level (GPL) has been generally considered to be successful and in the public good. GPL management starts with the manner in which we arrive at prices. Central bank-issued paper currencies and electronic credits used to exchange global value among goods, services, labor and assets is, for lack of a better way to phrase it, generally agreed upon. This has been possible because the spigot through which the exchange of value and wealth flow and may be quantified is fairly narrow, coordinated among global treasury ministries and central banks. Legal tender laws and compulsory government tax obligations in specific currencies further ensure that only acceptable currencies are used as media of exchange in the private sector.
From time to time, official currency boards of major exporting nations intervene or threaten to intervene into foreign exchange markets so they may devalue their currency vis-à-vis another, with the economic impact of helping their nations' exporting businesses. They do this by notionally selling their currencies and buying the other, driving the exchange rate to a level that makes it cheaper for importers to buy their nations goods and services. Currency boards that abuse this privilege or do not play ball at all are labeled "currency manipulators". (A "currency manipulator" is ironically a currency board that does not manipulate its currency in line with the currency manipulations of the broader group.) Nevertheless, laborers and businesses have not minded official currency management because it has tended to be pro-cyclical -- supported by the best overall interests of domestic commercial trade, employment and consumer affordability.
As President Fernandez de Kirchner just demonstrated, currency is not property and intervening to confiscate privately-held property does not require "acceptable currency". Intellectual property may also be easily copied without exchanging "acceptable currencies", same for factories, goods and manufacturing processes. At the end of the day, if China and India need food, energy and materials, and if Russia, South America and Africa have too much to consume domestically, then nothing is prohibiting them from agreeing to barter or to use a currency that developed countries might deem "unacceptable". Very few economies have all the natural resources needed to support their populations. Access to abundant resources can only be accomplished by exchanging them for other resources or for credible markers/money/stores of purchasing power. Do the $3 trillion-plus in US dollar reserves that China holds qualify as a credible marker for future purchasing power when everyone knows dollars and all other currencies priced relative to them are being diluted? Tick, tock.
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| Exeter Resource Corporation: Big Gold Discovery in Northern Chile Posted: 20 Apr 2012 07:00 AM PDT Exeter Resource Corporation [NYSE,XRC; TSX,XRA] is led by an accomplished management team, has about $68 million in cash and a tight share structure so despite volatility in the market their downside risk appears minimal, while their upside is enormous. When Exeter's team of mine finders went hunting for an elephant sized gold deposit in the northern Chile's emerging Maricunga porphyry belt they bagged a woolly mammoth at Caspiche.
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| COMEX Reduces Silver Margins Yet Again Posted: 20 Apr 2012 06:58 AM PDT After raising margin requirements for silver futures contracts eight times last year, the CME Group has decided to lower margins yet again, after having last lowered them on February 13th. Last year's margin requirement hikes increased the cost of holding silver futures positions by 80 percent and was one of the key factors contributing to silver's sharp decline last May. On April 16th, margin requirements for COMEX 5,000 ounce silver futures contracts were reduced from $21,600 to $18,900, while maintenance margin was lowered from $16,000 to $14,000. Members of the exchange and traders denominated as hedgers margins were reduced from $16,000 to $14,000. The CME Group Position on Margins The CME Group last lowered margins on silver futures on February 13th, with initial margin for speculators reduced from $24,975 to $21,600 and maintenance margins from $18,500 to $16,000. Hedgers and members margin was reduced from $18,500 to $16,000. Despite the official position...
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| Many Signs Point to Gold's Higher Prices Posted: 20 Apr 2012 06:46 AM PDT The Reserve Bank of India on Tuesday surprised investors with a bigger-than-expected half-percentage-point cut to its key lending rate, sending it to 8%, saying the state of India's economy is "a matter of growing concern." Read More...
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| Posted: 20 Apr 2012 06:22 AM PDT The Obama Justice Department is the worst in the history of this country. It's an absolute joke. It makes the old Soviet Politburo look like a system based on rule of law. Eric Holder is one of the most corrupt Federal officials that I have witnessed in my lifetime, starting with the pardon letter that he drafted, to pardon infamous tax evader Marc Rich, for Clinton to sign as Clinton was walking out of the Oval Office for the final time. - Dave in DenverThe Orwellian cloud of Government deceit that is hanging over our system is now thicker than the 420 cloud that will hang over most cities where people are having big 420 celebrations, like the one in Denver at Civic Park. Civic Park sits between the Colorado State Capitol and the Denver City and County Courthouse. It was reported today that the SEC has decided to pursue enforcement actions against the Egan Jones credit rating agency for making "material misstatements" on its 2008 application to begin rating asset-backed and sovereign (e.g. U.S. Government bonds) LINK Egan Jones is the least well known of the major credit rating agencies (Moody's, S&P, Fitch, Egan Jones). But anyone who has been around the credit markets for a long time knows that Egan Jones is the most honest and forthright. To be sure, Egan Jones is not influenced by the undo monetary and political persuasion that is successfully exerted on, and happily received by, Moodys and S&P. Literally two weeks ago, Egan Jones downgraded the credit rating of the U.S. Government from AA+ to AA: LINK Of course, anyone who understands the factors that go into assessing any entity's credit rating knows that the U.S. Government, in reality, has a C credit rating for being on the verge of default. If it weren't for the U.S. Government's unfettered ability to print money, it would have already defaulted. So a AA credit rating by any standard of measurement should be welcomed with a red carpet by the Obama Administration. And really, the move in gold from $250 to $1650, despite the considerable headwinds presented by Central Bank manipulation, is telling us that the U.S. is in de facto default. Be all of that as it may, the SEC has decided to go after Egan Jones for these "misstatements" from 2008. Why all of a sudden did the SEC decide that Egan Jones committed violations four years after the fact? Having been through SEC/FINRA regulatory application processes several times over the past 25 years, I can say with certainty that, at most, the Egan Jones "misstatements" were most likely nothing more than clerical errors or general oversight. I'm sure 90% of all regulatory applications have these issues. It was certainly, to be sure, nothing to do with Egan Jones' ability and competency to analyze and assess credit ratings. What really blows my mind is that the SEC looks the other way when Jon Corzine, MF Global, JP Morgan, Goldman Sachs, Bank of America et al, ad nauseum commit grave and obvious crimes of theft and fraud. Why isn't the SEC scouring over these firms' regulatory applications in order to come up with meaningless filing violations? Anyone who truly believes that this action by the SEC is merely coincidental to Egan's ratings downgrade of Treasury bonds two weeks ago has been spending too much time at too many 420 celebrations. It's getting worse by the day, as the Government enables the big wealthy entities who fund elections and Presidencies to get away with murder and capriciously enforces rules and laws against those who are not always in a position to properly defend themselves. Hopefully Sean Egan owns his own politician or Government official who is in a position to deflect this nonsense, although I doubt he does because this would not have happened in the first place if he did. And Obama was supposed to change all of this. Everyone remember his mantra of "Hope" and "Change?" Has there been any real, material change created by Obama? I was at lunch yesterday with two attorneys who are staunch, dogmatic Democrats. I mentioned to them that Obama had not delivered on one single campaign promise he issued during his campaign. I also reminded them that I attended his campaign rally as a supporter in October 2008, so I heard these promises firsthand. My lunch friends were not there. (I subsequently withdrew my support for Obama as soon as he nominated Geithner for Treasury Secretary - it's been all downhill since then...). I explained to them that Obama had not delivered on ONE single promise that I heard, firsthand, in person that day. Not one. Even the health care care bill, which is one giant clusterfuck and does not even come close to delivering on the health care agenda set by Obama during his campaign, can not be used as an example of something Obama has achieved (one of them threw that at me). The Golden Truth is that not only has Obama failed as a leader and has turned out to be just another straw man, farce of a human being, but he's continued down the path set by his predecessors of ignoring and shredding the Constitution and completely eliminating habeus corpas and Rule of Law. Our system as we've known it for 236 years just can not survive without habeus corpas and Rule of Law. Obama will be written about by historians who are motivated to present the facts and the truth as the President who ushered in totalitarianism and Rule of Privilege.  Happy 420 day, if that's your thing. Please try to enjoy what you can, while you can, as much as you can. I plan on enjoying playing in a big tennis tournament this weekend, starting this afternoon. 
This posting includes an audio/video/photo media file: Download Now |
In recent weeks, Bill's been 
"We are in the midst of a grave deterioration in the quality of Western institutions," declares the historian Niall Ferguson.
The "decline of the West" meme is, dare we say, quickly becoming old hat. But Ferguson brings new insights to the table.
Even the power elite recognizes something is amiss. Each year, the World Economic Forum — the outfit that holds an annual shindig in Davos, Switzerland — issues an annual ranking of the world's countries and how competitive they are.
In several critical subcategories, the United States is now a middling player…
"People of privilege," says Marc Faber, "tend to prefer to risk their own destruction than surrender their advantages."
After slipping below 13,000 yesterday, the Dow has pushed back above that level today. As of this writing, all the major indexes are up.
Precious metals are once again going nowhere fast today. Gold is at $1,641, while the bid on silver is $31.65.
The war against the boutique rating agency Egan-Jones is being cranked up a few levels.
After yesterday's frankly depressing laundry list of assaults on liberty, we owe you some good news: Virginia is standing up to the depredations of the National Defense Authorization Act.
At the risk of sounding premature, North Korea might be tiptoeing away from Marxism. For the "Democratic Republic" now has its own CafePress shop.
"Some time ago," a reader writes, "you mentioned that investment firms were moving poor-performing investments from the investment arm of the firm to the banking side of the firm, to have them shielded or protected by FDIC insurance."
"You say that you have 107 days from the start of the year before 'Tax Freedom Day,'" writes a British reader. "Pity, then, us in the U.K. with 151 days!
"When the CFTC," writes a reader conflating a couple of recent themes in The 5, "gets all these new people that Obama wants to control and those greedy oil speculators, will they have access to the training and ammo from Homeland Security and raid the commodity brokers with SWAT teams?"
"With all these changes to our liberties," writes a reader after yesterday's episode, "is there any parallel to when Hitler came to power? The Germans voted him in, but it took certain consolidations of power for him to become total dictator."
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