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Wednesday, April 18, 2012

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Apple: The World's Largest Penny Stock

Posted: 18 Apr 2012 04:53 AM PDT

Apple stock now moves like a penny stock. The problem is, with a market cap of nearly-half US GDP, and every American tied to AAPL in some way or another, a collapse of Apple stock could be a castrophe for more than just Apple -shareholders-.

from daytradeshow:

~TVR

Jim Willie: Physical Buying Pressures in the Gold Market

Posted: 18 Apr 2012 04:51 AM PDT

Jim Willie: "'SWIFT Kick' Bringing New Physical Buying Pressures To The Gold Market"

from tekoadasilva:

Part One

Part Two

~TVR

Time To Confront Central Bank Liars

Posted: 18 Apr 2012 03:39 AM PDT

I've had enough. Day after day of 100% manure from these propagandists. It's time to shout out that "the Emperors are wearing no clothes."

For three years we have had to listen to B.S. Bernanke (yes, his initials really are "B.S.") drone on and on about the mythical "U.S. economic recovery." I recently pointed out with an abundance of long-term charts and elementary reasoning that it wasn't even theoretically possible for the crippled U.S. economy to be growing.

However, don't take my word for it. Instead, let's look at the actions of B.S. Bernanke. Until Japan's failed experiment with taking interest rates to zero – and leaving them there – no nation in modern history had ever engaged in such recklessly insane monetary policy.

There is a very good reason why this had never happened before in economic history. Zero percent interest rates (as I have noted previously) are nothing less than the economic equivalent of a defibrillator. It is a last-ditch, desperation measure designed to attempt to shock some life back into a dying body.

Ultra-low interest rates (interest rates much lower than inflation) were never intended as a permanent prescription for any economy. They rape "savers". And with rapidly greying populations, we are becoming societies of savers. Leaving interest rates at near-zero is simply serial rape.

What happens when you rape savers again and again and again? They stop saving. They begin spending their paper as fast as they get it – the inevitable consequence of near-zero interest rates.

The math is simple. When you have "negative interest rates" (savings rates much lower than inflation), every day that people hang onto their money it loses value. So people spend that money today, rather than waiting until tomorrow to spend it  - when it will be worth less (worthless?). And when all the consumers start spending all their money as fast as they get it (and then borrow more at those near-zero interest rates), asset bubbles start cropping up all over the economy – starting with the real estate market.

This is what must happen with any/every economy with near-zero interest rates…with one exception. When does the human body no longer respond to a defibrillator? When it is already dead. When does an economy not "respond" to near-zero interest rates (i.e. explode into asset-bubbles)? When an economy is already dead.

All that Japan has accomplished with nearly two decades of near-zero interest rates is to prove beyond a shadow of a doubt (in hindsight) that its economy has been dead for all these years. Similarly, all that B.S. Bernanke has proven with his 3+ years of near-zero interest rates is that the U.S. economy is already dead.

We don't need two decades of near-zero interest rates to prove the U.S. is an economic corpse. Defibrillating an economy with near-zero interest rates for 3+ years (and getting no response) is proof of death just like defibrillating a body incessantly for three years would prove it's a corpse.

For the deluded apologists who claim there hasn't been enough time for the U.S. to pump-up all of its asset bubbles yet again, there is an inevitable precursor for interest-rate induced asset bubbles: ultra-high inflation. If the U.S. economy was not already deceased then 3+ years of 0% interest rates would have already led to out-of-control inflation.

eBay Announces New Changes for Coins Listed in Auction

Posted: 18 Apr 2012 03:12 AM PDT

Gold/Platinum Ratio Much Higher Gold Prices Ahead

Posted: 18 Apr 2012 03:11 AM PDT

from hubertmoolman.wordpress.com:

There is an interesting pattern developing on the Gold/Platinum Ratio. This pattern is similar to a pattern on the silver chart.
Below, is a graphic which features the Gold/Platinum Ratio chart (top) as well as the silver chart (bottom):

Follow Link Below

The graphic is self-explanatory, and indicates that the Gold/Platinum Ratio is in a position similar to where silver was at the end of January 2011. If the ratio was to continue to follow the silver pattern, then we could have gold being 1.7 times the value of platinum in this year. This is consistent with my expectation of a significantly higher "real' gold price (relative to stocks and most commodities).
Note, that it is more probable that an increase in the Gold/Platinum Ratio would mean higher nominal gold prices, instead of lower gold prices. This is due to the fact that the recent decline in the ratio corresponds more with the correction in the gold price, since September of last year.
So, the Gold/Platinum Ratio also supports significantly higher gold prices over the coming months.

Keep on reading @ hubertmoolman.wordpress.com

Murenbeeld: Conservatively positive for gold in 2012

Posted: 18 Apr 2012 03:09 AM PDT

from mineweb.com:

conomist Dr Martin Murenbeeld of Canada's Dundee Wealth Management uses the Denver Gold Group's European Gold Forum in Zurich as the annual platform for detailing his gold forecasts for the year and his reasoning behind his predictions and has come up with some pretty accurate results in the past. He utilises three pricing scenarios and attaches an estimated weighting to each to come up with final weighted averages. Last year he was close enough, erring slightly on the conservative side on the predicted annual average of $1476 as against an actual figure of $1571, but was much closer on his year end forecast of $1546 as against an actual figure of $1530 – a 1% discrepancy -certainly an excusable margin of error!
For the current year, although remaining bullish on gold – but conservatively so – he cited 10 reasons why he feels gold will continue its upwards path, albeit perhaps at a slower rate during the current year given that a bit of momentum seems to have fallen out of the market. In truth, the 10 reasons are mostly those expressed by many others in these pages over the year and basically boil down to the undoubted fact that global financial difficulties remain with us and ultimately will impact the gold market in a positive manner. His ten key points are: Monetary reflation; Global imbalances, Excessive Forex reserves; Central Banks buying, not selling; Gold not being in anywhere near bubble territory yet; Mine supply only rising marginally; Continuing investment demand; Commodity cycle having years to run; Current geopolitical environment; Inflation in emerging markets.

Keep on reading @ mineweb.com

A Massive Spike in the Price of Silver Is Imminent

Posted: 18 Apr 2012 03:02 AM PDT

Gold and silver are very close to entering the mania phase of this bull market. In order for gold and silver to go into the mania phase, value has to be diverted from somewhere, and that "somewhere" is most likely stocks.

King World News: More On the Cyber Attack

Posted: 18 Apr 2012 02:50 AM PDT

from beaconequity.com:

Friday's attack is believed to have been prompted by proprietary trading data offered up by KWN's Anonymous London trader regarding a large "Asian buyer" and this buyer's trading patterns. It now appears that, according to Anonymous, this large buyer has successfully 'cracked the code' of JP Morgan's equally-large client's algorithm used to achieve optimum and cost-effective price-suppression tactics in the gold and silver market. The motive for such a criminal act is obvious to international financiers: capping the gold price lends support to the US dollar.

"Interestingly, the Asian buyers have figured out the algorithms, like breaking an enemy's code in war, and they are using the algorithmic trading to get the best prices each day for physical gold at these levels," Anonymous told KWN in the interview that apparently prompted the attack. "The trading is just taking place at lower levels because these bullion banks and the Fed, which manage the price of gold, get overzealous in their price fixing."

Beginning with the GATA roundtable discussion in March 2010 regarding a vital and material witness to the scheme, Andrew Maguire, and the suspicious mob-like hit-and-run incident that threatened the lives of Maguire and his female companion shortly after Maguire's shocking announcement of his meeting with the CFTC about the JP Morgan scheme, some person or organized cyber cabal has periodically attacked King's servers following key interviews with experts providing play-by-play commentary of the ongoing financial crimes committed by the beleaguered Fed and its primary dealer network.

GATA's decade-long work has demonstrated how the precious metals manipulation scheme works in impressive detail, but prosecution of the case requires a witness to the fact alleged by GATA; that witness is Andrew Maguire.

Keep on reading @ beaconequity.com

Mixed messages from silver sector

Posted: 18 Apr 2012 02:00 AM PDT

Silver has repeatedly tested support at $31.50 per ounce, and the supply situation at the physical silver markets remains tense owing to high industrial demand. However, silver reserves at the New ...

The Big Rally in Gold is Getting Closer and Closer

Posted: 18 Apr 2012 01:00 AM PDT

SunshineProfits

Goldman Sachs Rules The World, BOE Next

Posted: 18 Apr 2012 12:43 AM PDT

from infowars.com:

Speculation that Canadian Central Bank head Mark Carney has been tapped to become the next Governor of the Bank of England brings with it the possibility of virtually complete domination of Europe by Goldman Sachs – the very same financial terrorists who helped cause the economic collapse in the first place.

"Mark Carney, the governor of Canada's central bank, has been informally approached as a potential candidate to replace Sir Mervyn King as head of the Bank of England in June next year," reports the Financial Times.
"One of the world's most respected central bankers, Mr Carney, 47, now heads the Financial Stability Board, which oversees global financial regulation. He was approached recently by a member of the BoE's court, the largely non-executive body that oversees its activities, according to three people involved in the process."
Carney is also a 13-year Goldman Sachs veteran and was involved in the 1998 Russian financial crisis which was exacerbated by Goldman advising Russia while simultaneously betting against the country's ability to pay its debt.

Keep on reading @ infowars.com

Perth Mint sales fall on return of stability

Posted: 18 Apr 2012 12:41 AM PDT

from smh.com.au:

GOLD sales from the Perth Mint, which processes all of the country's bullion, fell 9.6 per cent last month as signs of an accelerating economic recovery in the US curbed demand for haven investments.
Sales of gold coins and bars dropped to 38,123 ounces from 42,161 ounces a year earlier, the mint said. Silver sales slumped 39 per cent to 698,559 ounces.
Bullion prices dropped in February and March as US non-farm payrolls expanded, boosting signs that the world's largest economy is recovering even as European countries including Spain tackle the region's debt crisis.

Keep on reading @ smh.com.au

Is There a Commodity.com Bubble?

Posted: 18 Apr 2012 12:25 AM PDT

This morning, the midweek session in New York opened lower as gold notched a fourth day of losses, and traded near $1,640 per ounce. Anxieties connected to China's economy flared in the wake of reports that home prices in that country fell again.

Gold

Posted: 18 Apr 2012 12:22 AM PDT

The McClellan Market Report
Daily Edition (snippet)
Gold

McClellan Financial Publications, Inc
Posted Apr 18, 2012

Gold fell a little bit on Monday, but made up for some of the early losses at the close. I have been wondering when traders of GLD and IAU (gold bullion ETFs) were going to respond like the QQQ traders, and start shedding their positions. So far no response.

Attachment 17401

But a related indicator is shown in this chart, and here we are seeing a bottom-worthy sentiment condition. It compares the total dollar value of all gold futures contracts to the total dollar value of gold bullion ETF holdings. Here again, because the ratio can wander over time, using dynamic levels of declaring where "high" and "low" levels are can be helpful. This is the lowest level for this indicator since those ETFs started trading, and pretty well below the lower 50-1 Bollinger Band. That says that futures players have left the market in a big way, and could lift gold prices with their inflows as they start coming back in.

###

Written Apr 16, 2012
Tom McClellan
Editor, The McClellan Market Report
email: tom@mcoscillator.com
website: www.mcoscillator.com

http://www.321gold.com/editorials/mc...lan041812.html
Attached Images

On Chinese Currency, Be Careful What You Wish For

Posted: 18 Apr 2012 12:19 AM PDT

from wealthwire.com:

Democrats and Republicans don't agree on many economic issues, but one point is an article of faith in both parties: China keeps its currency artificially undervalued, which boosts Chinese exports, restrains imports and steals jobs from deserving Americans.
Much as I like to hear our politicians singing from the same hymnal, it might be time to turn the page.
China took a significant step toward liberalizing its economy and answering its foreign critics over the weekend. As of yesterday, Beijing now allows the Yuan to float within 1 percent, up or down, from the benchmark exchange rate against the U.S. dollar that China's central bank establishes each day. The previous daily limit was 0.5 percent. Under the tighter former restriction, the Yuan appreciated by an average of 4.4 percent per year over the past five years.
But the Chinese currency has not appreciated at all against the dollar thus far in 2012, and it actually fell yesterday in the first day of trading under the new limit. Short-term movements, or the lack thereof, do not necessarily mean the long-term trend has reversed; yet traders are evidently in no hurry to snap up the Yuan, currently valued at a little less than 16 U.S. cents, at a time when Chinese economic growth is slowing and the country faces a leadership transition. The belief that the Yuan continues to be significantly undervalued may already be more a matter of faith than of fact.

Keep on reading @ wealthwire.com

Delhi Declaration highlights economic tensions

Posted: 18 Apr 2012 12:18 AM PDT

from goldmoney.com:

Gold and silver prices were flat over the course of yesterday – apart from a dramatic dip and recovery mid morning EDT; the bears managing to knock the gold price down to $1,635 briefly, before news that the Indian central bank was cutting interest rates by 50 basis points encouraged buying. Silver lost around 1.1% at the same time as the decline in gold, but recovered to close up slightly for the day.

Indian gold demand is 50% below demand at the same point last year, and traders in the country had hoped that the upcoming Akshay Tritiya festival would compensate them for the disruptions to metal trading that they have experienced recently. Alas, WSJ quotes Prithviraj Kothari, president of the Bombay Bullion Association, noting "gold purchases during the festival week will likely be no more than 10-15 metric tons, compared with 30-40 tons a year earlier."

In other slightly older news from the subcontinent, the leaders of Brazil, Russia, India, China and South Africa met in Delhi last month for the fourth annual "BRICS summit" – with the summit declaration providing plenty of pointed remarks as far as monetary policy is concerned. In their words: "excessive liquidity from the aggressive policy actions taken by central banks to stabilise their domestic economies have been spilling over into emerging market economies, fostering excessive volatility in capital flows and commodity prices." It also called for an "increase in the voice and representation" of developing economies, and "a just international monetary system that can serve the interests of all countries."

Keep on reading @ goldmoney.com

Central Banks Favor Gold as IMF Raises Euro Collapse

Posted: 18 Apr 2012 12:03 AM PDT

Gold traded sideways prior to gradually creeping up in late Asian trading. It then gave up those gains in European trading and is nearly unchanged from yesterday's close in New York.

China, India, Gold Manipulation and the RMB

Posted: 17 Apr 2012 11:38 PM PDT

from mineweb.com:

To really sell the RMB as an international currency, it helps if it is backed with a significant amount of gold. China would never openly admit this, but a snippet from an embassy in China, via a wikileaks story, as good as confirmed it last month:
"The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro.
Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB."

Keep on reading @ mineweb.com

Bullion Getting Cues from the IMF & Data

Posted: 17 Apr 2012 11:21 PM PDT

Macroeconomic performance and projections help to whipsaw gold prices while cuts in speculative positions in commodities have also impacted the precious metal.

Commodities Exchanges Bullish on Monetary Metals

Posted: 17 Apr 2012 10:25 PM PDT

from wealthcycles.com:

hile the short one-minute video is from 2009, it drives home a diametric difference between the Chinese media and the Anglo-media. In China, the state encourages citizens to save in gold and silver. Savings mediums can easily be exchanged in any commercial bank. This tactic worked to shield Chinese citizens from the price inflation of goods measured in the pegged Yuan–as it is printed one-to-one with the dollar.

In China today, the Shanghai Futures Exchange (SHFE) announced today that they seek input on the details of the silver contract soon to launch. The SHFE is a local-controlled venue where promise-to-deliver contracts (futures) serve physical commodities to China for distribution on into Southeast Asia.

The SHFE is the dominant exchange, similar to the JP Morgan-owned and U.S.-based CME/NYMEX/COMEX. The London Metal Exchange (LME) serves the European market for delivery, and is considering settlement in Yuan. This move would further impact demand and use for Fed dollars.

Keep on reading @ wealthcycles.com

Gold and Silver Bull Market Progress Report

Posted: 17 Apr 2012 10:19 PM PDT

from marketoracle.co.uk:

As the following chart (courtesy Federal Reserve Bank of St. Louis) reveals, Central Bank easing continues 'to the sky.'

See link

Featured is the 5 year gold chart courtesy Stockcharts.com. The blue channel has defined the uptrend since 2008. Except for the credit crunch in 2008, the 300DMA (used here) has not been violated. The chances of a 2008 type of correction are slim, due to the amount of liquidity that has been added to the system. A bounce off the $1600 level and a breakout at line 'B' will lead to the expectation that price is likely to repeat a performance last seen when line 'A' was overcome.

According to FinanceAsia.com/news in an article by Lillian Liu, the gold supply shortfall in China has widened ten times since 2007. China digs up thousands of tonnes of rock and ore each year, but it still cannot produce enough gold to keep up with the country's soaring demand. Despite being the world's biggest gold producer since 2007, China's supply shortfall has deepened by nearly 10 times during the past four years. Chinese investors remain attracted to all that glitters, even as the price of gold has soared. "The shortage in supply has been deepening very fast; from 48 tonnes in 2007 to 400 tonnes in 2011," said Song Xin, chief executive of China Gold International, the listing unit of China National Gold, one of the country's biggest gold producers. According to the China Gold Association, China's gold mines produced a combined 361 tonnes of the yellow metal last year, which was 5.8% more than the year before, but not nearly enough to meet the 33% growth in the country's consumption of bullion, which totalled 761 tonnes.

Keep on reading @ marketoracle.co.uk

COMEX Silver Warehouses Hiding Physical Tightness

Posted: 17 Apr 2012 10:11 PM PDT

from silverdoctors.com:

warehouses Monday, with JP Morgan and Brink's reporting 600,000 ounce deposits, and Brink's reporting a separate 730,000 ounce withdrawal.

As we have discussed repeatedly, the unprecedented pace of volume turnover in COMEX warehouses is a strong indicator of tight supplies of PHYSICAL silver as the banksters shuffle paper silver around as they attempt to keep their game afloat.

Keep on reading @ silverdoctors.com

N.Y. Bureau Chief For The Economist Says Gold is a Better Currency

Posted: 17 Apr 2012 09:19 PM PDT

¤ Yesterday in Gold and Silver

The gold price weakened once again during Far East trading on their Tuesday, with the low once again coming moments before London opened.  The subsequent rally ran out of gas around 12:30 p.m. BST...and then began a slow decline into the Comex open in New York.

Then minutes after the U.S. equity markets opened at 9:30 a.m. Eastern time, the bid disappeared...and the gold price cratered twenty bucks in exactly thirty minutes.  The low came minutes after 10:00 a.m. in New York, a time that corresponded with the London p.m. gold fix.

Once that was in, the gold price came roaring back...regaining all its loses...plus a few dollars more.  The rally ended at precisely 11:30 a.m. Eastern time...and then got sold off about five bucks or so going into the close of Comex trading at 1:30 p.m. Eastern.  From there it traded ruler flat going in the close of the electronic market at 5:15 p.m. in New York.

The gold price closed at $1,650.00 spot...down $2.90 on the day.  Net volume was reasonably brisk at around 135,000 contracts.

Here's the New York Spot Gold [Bid] chart on its own so you can see the detail of what went on yesterday.

It was pretty much the same story in silver, except for the fact that the rally that started once London trading began had far more substance to it.  By the time the bid disappeared in silver just minutes after 9:30 a.m. in New York, silver was already up more than 50 cents from the London open...and by the time the 30-minute sell-off in silver was over at 10:05 a.m. Eastern, that entire gain had vanished.

But, just like gold, silver came roaring back.  It's high tick of the day [$32.04 spot] came at precisely 11:30 a.m. Eastern time...just like gold.

From that high tick, the silver price got sold down 30 cents by the time that Comex trading was finished two hours later...and, also like gold, silver traded ruler flat going in the close of electronic trading.

Silver closed the day at $31.71 spot...up 18 whole cents from Monday...and despite the huge price swings, silver's net volume was rather subdued at 27,000 contracts.  Maybe there was some short covering going on.  One can only hope.

Here's the New York Spot Silver [Bid] chart for comparison against the same chart for gold posted above.  Note the precision of the 11:30 a.m. end to the rallies in both metals.

The platinum and palladium charts were very similar to gold and silver, with both of these metals closing higher than Monday.  For the day, silver closed up 0.57%....platinum up 0.51%...palladium up 1.85%...and gold closed down 0.18%.

The dollar index didn't do much yesterday.  It rallied about 20 basis points up until 7:30 a.m. local time in London...and then gave it all back during the next two and a half hours of trading.  After that it chopped sideways for the rest of Tuesday, closing basically unchanged from Monday.

The big take-down in gold was almost a non-event for the gold stocks, as they dipped into negative territory for only a few minutes during the twenty dollar smash down between 9:35 and 10:05 a.m.  Once the rally began off the bottom, the gold stocks soared over two percent...but the gave back half of those gains after the gold price ran out of gas at 11:30 a.m. Eastern.  The HUI finished up 1.15% on the day.

Not that I wish to be accused of "looking for black bears in dark rooms that aren't there" once again...but take a few seconds to think about who might be catching a falling knife in the gold stocks during that 30-minute price smash, as I'm certain there would have been selling of some type.  What were the intentions of the buyers who bought in that period?

As we are more than keenly aware, the precious metals stocks have been savaged...and everyone has their own personal whipping boy as to why gold and silver stocks are getting hit out of all proportion to the metal itself.

I just checked the netdania.com website...and as of 10:24 p.m. Eastern time yesterday evening, gold was up 5.62% on the year...and silver was up 14.79%.

I'm firmly of the belief, along with John Embry and others, that the precious metals stocks are being managed just as much as the metal itself.  'Da Boyz' buy when others are selling...and sell not only when others are buying to blunt any big upside rally...but to exacerbate any down moves in the gold and silver stocks as well.

This hypothesis is just as good as some other comments I've read about why the precious metal stocks are doing so poorly.  But, it's only an opinion...and you can either accept it or reject it.

The silver stocks did just OK yesterday...and the ones that made up Nick Laird's Silver Sentiment Index faded a bit into the close...and the SSI closed up only 1.15%, the same percentage as the HUI.

(Click on image to enlarge)

The CME Daily Delivery Report showed that only 18 gold contracts were posted for delivery tomorrow....but the out-of-the-blue surprise was that Jefferies issued another 115 silver contracts for delivery on Thursday.  The Bank of Nova Scotia stopped 106 of those contracts...and 8 went to JPMorgan.  The link to the Issuers and Stoppers Report is here.

There were no reported changes in either GLD or SLV yesterday...and no sales report from the U.S. Mint, either.

For whatever reason, I received another update from the Zürcher Kantonalbank yesterday.  That's the second one in less than a week.  According to the update, this is for the period from April 10th to 13th.  Their gold ETF showed a withdrawal of 4,322 troy ounces...and their silver ETF had 91,276 troy ounces withdrawn.

Monday was another big day over at the Comex-approved depositories.  They reported receiving 1,308,917 troy ounces of silver...and shipped 734,127 ounces out the door.  All the big activity was at Brink's, Inc...and JPMorgan came in a distant second.  The link to that action is here.

I'm sure that Ted Butler will have a lot to say about the activity levels in both SLV and Comex silver stocks in his mid-week comments to his paying subscribers later today.

I have the usual number of stories...and I'll leave the final edit up to you once again.

I really don't know what to make of what happened during the New York trading session in all four precious metals yesterday.
It feels like not even lipstick will work now: Peter Grandich. Wealthy Continue to Panic into Hard Assets: Richard Russell. Interview with CEO of First Majestic Silver Corp.

¤ Critical Reads

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Taxpayers Warned to Beware of E-Mails From I.R.S.

While the Internal Revenue Service encourages electronic filing of returns, it doesn't yet make use of e-mail or social media tools to begin communication with taxpayers, because of security concerns. The agency says that is important to keep in mind in light of recent tax-related phishing schemes that try to lure taxpayers into visiting fictitious Web sites and providing sensitive financial information.

The I.R.S. emphasizes that it "does not initiate contact with taxpayers by e-mail or any social media tools to request personal or financial information." Further, it says, the agency doesn't "send e-mails stating you are being electronically audited or that you are getting a refund."

"This includes any type of electronic communication, such as text messages and social media channels," the agency says.

This short item appeared in yesterday's edition of The New York Times...and if you're an American taxpayer, it's worth the read.  I think Phil Barlett for sending it...and the link is here.

Obama to Urge Congress for More Regulation of Oil Markets

President Barack Obama urged Congress to bolster federal supervision of oil markets, including bigger penalties for market manipulation and greater power for regulators to increase the amount of money traders must put up to back their energy bets.

Obama asked Congress to fund a six-fold increase for surveillance and enforcement staff at the Commodity Futures Trading Commission to put "more cops on the beat" overseeing oil markets.

"We can't afford a situation where some speculators can reap millions, while millions of American families get the short end of the stick," Obama said in remarks in the White House Rose Garden today.

I wonder if these increased powers, if they ever materialize, will be used against short side manipulators as well as those on the long side?  Just asking.  This Bloomberg story from yesterday was sent to me by reader Andrew Holland...and the link is here.

Everyone Is Ignoring One Troubling Statistic About Oil

Few question the prevailing wisdom that tensions with Iran have caused the recent rise in oil prices.  But another possibility exists – and it's a much greater long-term threat to economic growth.

One troubling statistic that the media largely ignores, according to independent financial consultant Jim Hansen, is the background depletion rate from existing oil wells, which Hansen conservatively pegged between 3% and 4%.   This is the percent reduction in production from existing wells.  With total world crude oil production now at 75 million barrels per day, the same wells will produce only 72 or 73 million next year.  That 3%-4% depletion rate has to be made up for by new wells coming on line if world production is not to decline.

That problem, Hansen said, looms larger than the growth in demand.  Chinese demand, for example, might grow by 10% next year, which is less than the 2-3 million barrels lost to depletion.  "Everyone focuses on China," he said, "and overlooks depletion which never takes a break like China may if its economy slows."

"Even if there is spare capacity," Hansen said, "There is still a problem."

This businessinsider.com story from yesterday is a must read from top to bottom...and confirms what I, and many others, already know...peak oil is here.  The original title of this piece was "The Real Reason to Worry About Oil".  I thank Roy Stephens for this first offering of the day...and the link is here.

On The Goldman Path To Complete World Domination: Mark Carney On His Way To Head The Bank Of England?

Back in November we penned "The Complete And Annotated Guide To The European Bank Run (Or The Final Phase Of Goldman's World Domination Plan)" in which we described what the long-term reality of Europe, not that interrupted by the occasional transitory LTRO cash injection and other stop-gap central bank measure, would look like.

And yet there was one piece missing: after Goldman unceremoniously set up its critical plants in Italy via Mario Monti and the ECB via Mario Draghi, one key target of Goldman domination was still missing. The place? Why the center of the entire modern infinitely rehypothecatable financial system of course: England, which may have 1,000x consolidated debt/GDP, but at least it can re-pledge any asset in perpetuity thus giving the world the impression it is solvent (no wonder AIG, MF Global, and now the CME are scrambling to operate out of there). Which is why we read with little surprise that none other than former Goldmanite, and current head of the Bank of Canada, is on his way to the final frontier: the Bank of England.

This story was posted over at the zerohedge.com website yesterday evening...and it's well worth reading.  I thank Australian reader Wesley Legrand for bringing it to my attention in the wee hours of this morning...and the link is here.

Sociopathy Is Running the US: Doug Casey

I recently wrote an article that addresses the subject of sociopaths and how they insinuate themselves into society. Although the subject doesn't speak directly to what stock you should buy or sell to increase your wealth, I think it's critical to success in the markets. It goes a long way towards explaining what goes on in the heads of people like Bernie Madoff and therefore how you can avoid being hurt by them.

But there's a lot more to the story. At this point, it seems as if society at large has been captured by Madoff clones. If that's true, the consequences can't be good. So what I want to do here is probe a little deeper into the realm of abnormal psychology and see how it relates to economics and where the world is heading.

If I'm correct in my assessment, it would imply that the prospects are dim for conventional investments – most stocks, bonds and real estate. Those things tend to do well when society is growing in prosperity. And prosperity is fostered by peace, low taxes, minimal regulation and a sound currency. It's also fostered by a cultural atmosphere where sociopaths are precluded from positions of power and intellectual and moral ideas promoting free minds and free markets rule. Unfortunately, it seems that doesn't describe the trend that the world at large and the US in particular are embarked upon.

In essence, we're headed towards economic and financial bankruptcy. But that's mostly because society has been largely intellectually and morally bankrupt for some time. I don't believe a society can rise to real prosperity without a sound intellectual and moral foundation – that's why the US was so uniquely prosperous for so long, because it had such a foundation. And it's also why societies like Saudi Arabia will collapse as soon as the exogenous things that support them are pulled away. It's why the USSR collapsed. It's the reason why countries everywhere across time reach a peak (if they ever do), then stagnate and decline.

This long essay by Doug Casey was posted on the Casey Research website yesterday...and is a must read from start to finish.  I thank reader U.D. for bringing it to my attention...and the link is here.

China's Foreign Direct Investment Declines a Fifth Month

Foreign direct investment in China dropped for a fifth straight month in March on a slowing economy, limited prospects for gains in the yuan and renewed concerns that Europe's debt crisis will worsen.

Inbound investment fell 6.1 percent from a year earlier to $11.76 billion, the Ministry of Commerce said today in Beijing, after a 0.9 percent drop the previous month. That's the longest run of declines since the global financial crisis.

China's economy expanded the least in almost three years in the first quarter and a widening of the yuan's trading band this week signals that the government may tolerate more two-way moves in the currency against the dollar. The outlook for investment is still "grim" as Europe's crisis persists and competition increases from other developing countries vying for foreign money, ministry spokesman Shen Danyang said today.

This businessweek.com story from Monday was something I dug out of yesterday's edition of the King Report.  The link is here.

Interview with Keith Neumeyer...CEO of First Majestic Silver Corp.

Posted: 17 Apr 2012 09:19 PM PDT

Something that's not widely know about Sprott's last PSLV offering was that Keith Neuymeyer of First Majestic Silver was out pounding the table to get other silver producers to participate.  First Majestic laid $10 million of shareholder money on the table [for which we thank them] and bought into the offering themselves.

Let's hope that the next time Sprott does another offering that more silver miners will be receptive to the idea when Keith comes calling.  Along with his considerable efforts on our behalf, one can safely assume that he will never be considered for the job of president of The Silver Institute...and he's probably no longer on their Christmas card list as well.

read more

Three King World News Blogs

Posted: 17 Apr 2012 09:19 PM PDT

The first is from Richard Russell...and it's headlined "Wealthy Continue to Panic into Hard Assets".  The second is with Peter Schiff...and it's entitled "Gold Bears to Get Pummeled, No Crash in Stocks".  And lastly is this Rick Rule blog that bears the headline "read more

Perth Mint sales fall on return of stability

Posted: 17 Apr 2012 09:19 PM PDT

Gold sales from the Perth Mint, which processes all of the country's bullion, fell 9.6 per cent last month as signs of an accelerating economic recovery in the US curbed demand for haven investments.

Sales of gold coins and bars dropped to 38,123 ounces from 42,161 ounces a year earlier, the mint said. Silver sales slumped 39 per cent to 698,559 ounces.

Sales from the mint may rebound later this year following a pattern seen last year, the mint's wholesale manager, Neil Vance, said.

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Gold & Silver Market Morning, April 18 2012

Posted: 17 Apr 2012 09:00 PM PDT

Fed Chiefs: ‘To QE, or Not to QE?’

Posted: 17 Apr 2012 07:40 PM PDT

The implications of this for investors is that the debasement of fiat currencies can be expected to continue, and despite recent choppiness in the gold and silver markets, precious metals remain a solid bet in such a climate.

As the Commodity Bull Slows

Posted: 17 Apr 2012 05:39 PM PDT

Everything evolves. Even the commodity story. Take this week's production figures from BHP Billiton and Rio Tinto. BHP's first quarter iron ore production was down 8% from the previous quarter. Rio's iron ore production was up. But its copper production was down 18%. BHP cited the cyclone season as the reason for the iron ore decline and Rio said lower US ore grades affected copper output.

Neither figure means iron ore or copper production is in crisis. But we reckon the figures are a reminder of something nearly all of our speakers said last month at the After America symposium in Sydney: the next 10 years of the commodity bull market won't be anything like the last 10 years. The best investments of the last 10 years are probably not going to be the best investments of the next 10 years.

This doesn't mean there won't be good investments. For example, both BHP and Rio are poly-metallic miners. They aren't just copper and iron ore companies. BHP has a huge energy business. That business, in our reckoning, will probably drive most of its earnings growth.

This is all part of the development cycle of emerging markets - assuming they don't blow up from their own debt crisis, a US dollar collapse, or their own internal pressures (see China). The record profits and great share price performance of bulk materials companies such as BHP and Rio were driven by two factors: a huge and unexpected surge in demand and an inability to boost supply in response to that demand quickly.

But as industrial and base-metals-driven growth in China abates (a decline in fixed-asset investment and an official shift to more consumption-led growth and less export-led growth), China's demand for Australian commodities will shift to other markets. Those markets may be even more lucrative. Alex Cowie is working on just one these stories in his upcoming report of Diggers and Drillers.

There's no guarantee this transition will be seamless. In fact, we recall Greg Canavan's speech in Sydney last month, The Myth of the Seamless Transition. Great periods of monetary instability are a nightmare for investors. It's nearly impossible for you to perfectly protect your portfolio from value destruction. You have to work really hard at it.

Regards,

Dan Denning
for The Daily Reckoning Australia

From the Archives...

What the News on Bond Yields Say About the "Resolved" Eurozone Crisis
2012-04-13 - Eric Fry

The Art of Selling Stocks
2012-04-12 - Chris Mayer

Misguided Faith in an Economic Recovery
2012-04-11 - Joel Bowman

Beware the Big Government Debt Switcheroo
2012-04-10 - Dan Denning

The Discount Rate: Borrowers, Lenders and Bonds
2012-04-09 - Nick Hubble

Similar Posts:

Chinese Communism and the Human Cost of the Cultural Revolution

Posted: 17 Apr 2012 05:37 PM PDT

It's true that the destruction of financial wealth - stocks and bonds - has repercussions in the real economy. You get lower economic growth. You also get social instability. This kind of instability makes politicians nervous, which brings us back to the story of Bo Xilai in China.

The most plausible story line emerging from the sordid tale is that one faction has seized on events as a chance to improve its position and the position of the Chinese Communist Party in Chinese society. If former Chongqing party chief (and Bo Xilai's wife), Gu Kailai, is implicated in the poisoning death of British businessman Neil Heywood, it can either be a negative or positive event for the Party.

It's a negative if the public sees the affair as evidence of corruption and hypocrisy at the heart of the Party. Stories are now emerging that Heywood may have helped Gu Kailai move money out of China into offshore accounts. Whether that money was ill-gotten or not is unknown. His death may have been a result of a request for a larger fee for his help in moving funds. Or, it could also be a result of the fact he knew a lot of potentially embarrassing information that could damage the position of one of China's rising political stars.

It's worth noting that at exactly the time the Party stripped Bo of his position in Chongqing and on the 25-member Politburo, Wen Jiabao addressed a Party gathering and said that if political reform did not follow economic reform in China, not only would the public lose trust in the government, but also that, "mistakes like the Cultural Revolution may happen again."

That's a stunning comment. And it was most certainly directed at Bo Xilai, who had begun reviving the Maoist tradition of mass "red sing-a-longs". Bo got modern too, Tweeting portions of Mao's Little Red Book. Wen essentially warned Bo and non-reformist members of the party that a return to a political hardline in China would be a disaster.

It's hard to understate the human cost of the Cultural Revolution. Mao's sociopathic attempt to create a cult around his personality resulted in the deaths of millions of Chinese. Mao tried to erase traces of capitalism from Chinese society and also traces of traditional Chinese society. It's always the radicals with infinite self-belief that end up sending millions to their death.

Excessive self-belief in rational ideas about how to reorganise society almost always leads to mass death and poverty. Why? When you decide that you and your henchman are smarter than years of tradition, the rule of law and that the Cult of the Leader is more important than organic relationships such as family, or even consensual economic relationships (voluntary exchange), you are behaving in a decidedly sociopathic fashion.

And when you use force to remake society in your own image, with your own laws or personality as the centre, you have gone crazy in a dangerous and predatory way. This happens in communist countries. It happens in fascist countries. And it happens when the cult of personality replaces natural relationships between individuals. It always ends in bloodshed. And it always springs from the same idea that smart people can reorganise the world to the way things "should" be.

Wen seems keen to direct public anger at the behaviour of China's princelings to Bo, and concentrate it there. The Party's credibility with the public can be preserved if it's seen to discover and punish the most corrupt officials. One reading of current events is that it's the party acting to restore its image by hanging out to dry one of its most ambitious but over-reaching stars.

Maybe the rot is already too deep. Maybe the economic and political forces unleashed by China's furious two decades of growth are too wild and powerful for the Politburo and the Communist Party to channel and contain. It wouldn't be the first time a small group of elite technocrats placed too much faith in their own ability to manage a complex system. It's what Hayek called the fatal conceit.

Or maybe this is the evolution that has to happen in China. The 18th Party Congress this year will elect the fifth generation of Chinese leaders. Those leaders will be in office for 10 years. And in that time, they will surely have to deal with the endgame of the world's current monetary system. Can they do it and prevent China from coming apart at the seams economically and politically?

The stakes couldn't be higher for Australia. It's a story worth watching. And more importantly, it's worth taking action now, before events pick up speed. Stay tuned.

Regards,

Dan Denning
for The Daily Reckoning Australia

From the Archives...

What the News on Bond Yields Say About the "Resolved" Eurozone Crisis
2012-04-13 - Eric Fry

The Art of Selling Stocks
2012-04-12 - Chris Mayer

Misguided Faith in an Economic Recovery
2012-04-11 - Joel Bowman

Beware the Big Government Debt Switcheroo
2012-04-10 - Dan Denning

The Discount Rate: Borrowers, Lenders and Bonds
2012-04-09 - Nick Hubble

Similar Posts:

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