Gold World News Flash |
- By the Numbers for the Week Ending May 4
- The Ron Paul Silver Certificate
- Economic Nostradamus: We Are Literally Witnessing a Collapse
- 'Civilized people don't buy gold,' Berkshire's Munger says
- Sudden Death
- The Silver Bull Market Is Over?
- SBSS 25. The Silver Door Is Closing
- Silver Update 5/04/12 Unemployment
- David Morgan -The Silver Suppression Scheme Is Ending
- Is Silver’s Industrial Personality Leading to Changes?
- Paul vs Paul: Round 2
- Gold needs a big turnaround to hit $2,000 mark in 2012
- Gold is Not in a Bubble ? Here?s Why
- This Weeks Gold Price Lost $19.30 Closing Comex $1,644.70 Must Not Close Below $1,635
- Is an Ounce of Gold Worth $10,000?
- The Fed and ECB’s Hands Are Politically Tied… Bye Bye to Market Props
- Why Gold and Silver Act as Safe-Havens Today
- Gold Antidote to The Most Investment Destructive Force
- Lindsay: No Final Bottom in Gold before Summer
- Gold and Silver Disaggregated COT Report (DCOT) for May 4
- Graphite Stocks Gaining Investor Interest In Tough Markets
- Guest Post: Dr. Lacy Hunt On Debt Disequilibrium, Deleveraging, And Depression
- The Britney/Beatty Jobs Indicator
- MARC FABER SEES A GOLD CORRECTION
- China Buys Gold…No Matter Who’s Selling
- Paul Versus Paul
- Watch NOW: Money, Power and Wall Street [PBS]
- Charlie Munger: “Gold Is For Pre-Holocaust Jews To Sew Into Their Garments; Civilized People Don’t Buy Gold”
- The Emperor is Naked: David Stockman
- Brutal Day For Stocks As Reality Recouples; Europe Now Negative For 2012
| By the Numbers for the Week Ending May 4 Posted: 04 May 2012 05:04 PM PDT This week's closing table.
Please note: Data for SPDR Gold Trust (GLD) unavailable. That is all for now, but there is more to come.
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| The Ron Paul Silver Certificate Posted: 04 May 2012 04:31 PM PDT |
| Economic Nostradamus: We Are Literally Witnessing a Collapse Posted: 04 May 2012 04:14 PM PDT  With the Presidential election cycle in full swing our incumbent administration, the media, and their financial pundits continue to maintain that the US economy's green shoots have blossomed into fields of golden sunflowers. Despite what we're being told, however, the actual data tells a stunningly different story.Richard Yamarone, a senior economist for Bloomberg Brief, has been called an economic Nostradamus for his prescient forecasting of the 2008 financial crisis, and now he's warning that the worst is not over. In a recent interview with King World News he suggests that not only is the economic outlook a barren desert devoid of any existence of green shoots, but we have a front row seat to witness the collapse of life in America as we know it: Read more....... 
This posting includes an audio/video/photo media file: Download Now |
| 'Civilized people don't buy gold,' Berkshire's Munger says Posted: 04 May 2012 04:08 PM PDT By Margo D. Beller http://www.cnbc.com/id/47298734 Warren Buffett's right-hand man doesn't like gold as his boss does, Charles Munger told CNBC Friday on the eve of Berkshire Hathway's annual meeting. "Gold is a great thing to sew into your garments if you're a Jewish family in Vienna in 1939," the Berkshire vice chairman said, "but I think civilized people don't buy gold, they invest in productive businesses." Munger, 88, said he loves Berkshire Hathaway's portfolio of such businesses, which includes, among many others, the Burlington Northern railroad, specialty chemicals firm Lubrizol, and Geico insurance. ... Dispatch continues below ... 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. "We just have a wonderful portfolio in business, if you average them out," Munger said. "By and large they're doing productive, useful work. It's not outsmarting the computer systems in the trading markets." For the most part, he agrees with Buffett's "simple" investment strategy, which he said is "pretty agnostic." "We've always been opportunistic" in investing, he said. Munger said that unlike Buffett, who announced he is fighting early-stage prostate cancer, he doesn't even bother to get his PSA levels checked. But he understands the concerns about succession at Berkshire. While Buffett's successor has not been publicly named, Munger said he has "never been more comfortable about succession or duration of [Berkshire's] culture than ... right now. Our new investment people show enormous promise." * * * Join GATA here: Las Vegas Money Show Committee for Monetary Research and Education Vancouver World Resource Investment Conference Standard Chartered's Earth Resources Conference Hong Kong Gold Investment Forum Toronto Resource Investment Conference New Orleans Investment Conference * * * 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:
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| Posted: 04 May 2012 03:09 PM PDT by Andy Hoffman, Miles Franklin:
I have been told I am a tad fatalistic, at times turning readers off. However, I have never taken "literary license," as a student, sell-side analyst, or blogger. What makes my work popular is my frank language and no-nonsense approach, which I cannot sacrifice if I am to remain true to myself. Believe me, I'll be the first to report "good news" when I see it. However, as pertains to economic matters, I have seen NOTHING positive for a decade, and sadly, do not anticipate the "return" of good news in this generation. I believe the ENTIRE GLOBAL FINANCIAL SYSTEM will COLLAPSE – starting with Europe – and when it does, only those that PROTECTED themselves with PHYSICAL GOLD and SILVER, FOOD, ENERGY, and other ITEMS OF REAL VALUE will survive – and not just financially. Read More @ Miles Franklin.com
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| The Silver Bull Market Is Over? Posted: 04 May 2012 03:00 PM PDT "In our opinion the bull market in precious metals is far from over" from SilverStrategies.com:
Is the Silver Bull Market Over? This is one question that we feel very confident that the answer to it is no; but still we are specifically watching for articles or news stories suggesting that the precious metals bull market is over. We have seen a few articles announcing the end of the metals bull market and we will explain why this is significant to us later in this article. But first, there are a host of reasons why we think the bull market in precious metals is alive and well and we will address a few of these reasons in this article. Read More @ SilverStrategies.com
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| SBSS 25. The Silver Door Is Closing Posted: 04 May 2012 02:34 PM PDT |
| Silver Update 5/04/12 Unemployment Posted: 04 May 2012 02:29 PM PDT |
| David Morgan -The Silver Suppression Scheme Is Ending Posted: 04 May 2012 02:27 PM PDT |
| Is Silver’s Industrial Personality Leading to Changes? Posted: 04 May 2012 02:00 PM PDT by Michelle Smith, Silver Investing News:
The Commodity Futures Trading Commission report for the week ended April 24 showed further cuts in bullish positions in silver. There was a decrease of 5,016 contracts in the net-long position. Also, Barclay's Capital reported that silver ETP investors dropped 194 tons of the metal last month. Silver started the week taking direction from industrial metals markets, which were under pressure from a weak euro, weak European equities, and overall concern about the Eurozone. Keeping the company of the industrial commodities appears to be starting to affect how silver reacts. Read More @ SilverInvestingNews.com
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| Posted: 04 May 2012 01:41 PM PDT Submitted by Azizonomics Paul vs Paul: Round 2 Bloomberg viewers estimate that Ron Paul was the winner of the clash of the Pauls. But that is very much beside the point. This wasn't really a debate. Other than the fascinating moment where Krugman denied defending the economic policies of Diocletian, very little new was said, and the two combatants mainly talked past each other. The real debate happened early last decade. To wit:
Readers are free to make up their own minds who won that one. And so, round two. Krugman wants more inflation; Paul is scared of the prospect. From Paul's FT editorial yesterday:
Or, as Professor Krugman sees it:
Ron Paul believes that inflationary interventions into the dollar economy will have unpredictable and dangerous ramifications. Paul Krugman believes that a little more inflation (although he forgets that by the old measure of CPI inflation is already running at 9%, far higher than his supposed target) will spur economic activity and decrease residual debt overhang. Krugman seems to give no credence to the prospect of inflation spiralling out of hand, or of such policies triggering other deleterious side-effects, like a currency crisis. The prospect of a currency crisis is a topic I have covered in depth lately: as more Eurasian nations ditch the dollar as reserve currency, more dollars (there are $5 trillion floating around Asia, in comparison to a domestic monetary base of just $1.8 trillion — the dollar is an absurdly internationalised currency) will be making their way back into the domestic American economy, and that this may have a steep inflationary impact. Additionally, many of the deflationary pressures that existed in 2008 or 2009 (e.g. shadow bank deleveraging) aren't there anymore. I don't really know how much of this is to do with the Fed's inflationary policies, and how much is to do with the United States' role as global hegemon coming to an end. I tend to think that the dollar hegemony has always been backed by American military force, and with the American military overstretched and its funding increasingly debt-fuelled, the dollar's role is naturally threatened. If America can't play the global policeman for global trade, why would the dollar be the currency on global trade? However it must be noted that America's creditors do believe that their assets are threatened by the Fed's inflationism. As the Telegraph noted last year:
Or as a Xinhua editorial put it:
Probably, the egg of American imperial decline came before the chicken of the recent inflationism, but that inflationism certainly has the capacity to worsen the problems rather than lessen them. After all, if America's consumption-based economy is dependent on China's continued exportation, and Krugman is advocating slamming creditors (i.e. China) by inflating away their debt-denominated financial assets, then surely Krugman's suggestions imperil the already-fragile trans-Pacific consumer-producer relationship? And this is a crucial matter — there is nothing, I think, more crucial than the free availability of goods and resources through the trade infrastructure, which is something that Krugman's policies seem to endanger. As commenter Thomas P. Seager noted yesterday:
Time will tell which Paul is right. But I know where I stand.
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| Gold needs a big turnaround to hit $2,000 mark in 2012 Posted: 04 May 2012 01:21 PM PDT from Bullion Street:
They are China, India, Euro zone crisis, US economic situation and central banks buying. Observers said India and China, two of the main drivers of gold's surge to a record last year seem to be easing off, while central bank buying, looks solid.
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| Gold is Not in a Bubble ? Here?s Why Posted: 04 May 2012 12:43 PM PDT “Gold is in a bubble” is a comment that is usually made with little evidence to support this claim. Typically, the primary support is the fact that the Gold price has meaningfully risen over the last decade but citing a rising price is simply insufficient to draw such conclusions. [Let me explain.] Words: 534 So says Eric Parnell *in edited excerpts from his original article* as posted on [url]www.SeekingAlpha.com[/url]. [INDENT]Lorimer Wilson, editor of [B][COLOR=#0000ff]www.munKNEE.com (Your Key to Making Money!), has edited the article 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.[/COLOR][/B] [/INDENT]Parnell*goes on to say, in part: *Gold is not in a bubble. This is true for several reasons. 1.*As the dollar has fallen over the last decade, gold has risen and, given the fact that global central banks including the U.S. Federal Reserve remain engag...
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| This Weeks Gold Price Lost $19.30 Closing Comex $1,644.70 Must Not Close Below $1,635 Posted: 04 May 2012 12:26 PM PDT Gold Price Close Today : 1,644.70 Gold Price Close 27-Apr : 1,664.00 Change : -19.30 or -1.2% Silver Price Close Today : 3038 Silver Price Close 27-Apr : 3134.7 Change : -96.70 or -3.1% Gold Silver Ratio Today : 54.138 Gold Silver Ratio 27-Apr : 53.083 Change : 1.05 or 2.0% Silver Gold Ratio : 0.01847 Silver Gold Ratio 27-Apr : 0.01884 Change : -0.00037 or -1.9% Dow in Gold Dollars : $ 163.87 Dow in Gold Dollars 27-Apr : $ 164.33 Change : $ (0.46) or -0.3% Dow in Gold Ounces : 7.927 Dow in Gold Ounces 27-Apr : 7.950 Change : -0.02 or -0.3% Dow in Silver Ounces : 429.17 Dow in Silver Ounces 27-Apr : 422.00 Change : 7.18 or 1.7% Dow Industrial : 13,038.27 Dow Industrial 27-Apr : 13,228.31 Change : -190.04 or -1.4% S&P 500 : 1,369.10 S&P 500 27-Apr : 1,403.36 Change : -34.26 or -2.4% US Dollar Index : 79.505 US Dollar Index 27-Apr : 78.748 Change : 0.757 or 1.0% Platinum Price Close Today : 1,523.80 Platinum Price Close 27-Apr : 1,570.50 Change : -46.70 or -3.0% Palladium Price Close Today : 649.90 Palladium Price Close 27-Apr : 681.60 Change : -31.70 or -4.7% Look at that scoreboard. Silver took a beating, the GOLD PRICE took a leetle whipping, stocks were taken to the woodshed, and the platinum group taken to the woods and beaten with barbed wire. I was wrong last week when I thought that silver and gold might have seen their final lows. Both went lower this week. For the week the GOLD PRICE lost $19.30 (1.2%) and closed at $1,644.70. In today's trading it made a low for the week, but found loads of buyers there at $1,626.50 and moved up with a plainly impulsive wave. That dive to a new low followed by a higher close is positive. But this also sets out requirements for GOLD, namely, it must not close below $1,635. Up above, $1,682 awaiteth still, daring gold to cross that line and rally. Most optimistic for gold is this: from last week's middle to this week's end, gold pierced the upper boundary of that bullish falling wedge and came back to that boundary line. That famous kiss good-bye? Could be. You'll know when gold crosses above $1,682. This might be a very good time to buy. That falling wedge line was what gold hit today at $1,626. For now, the odds favor gold rising next week. Watch that $1,626. The SILVER PRICE closed Comex today at 3038c, up 42.1c. Friends, at silver's 2974 cent low today it stopped smack on the lower boundary line of that falling wedge, then bounced right back. To this add a vaguely upside-down head and shoulderish or V-bottom pattern. If that was silver's turnaround, then low, it will not again close below 3010c, and next week must speedily trade above 3100c. Otherwise, silver has just been conning us all. GOLD/SILVER RATIO reached 54.5 this week. If you are sick of waiting for my (perhaps quixotic) 57.5:1 ratio, go ahead and swap gold for silver, quickly. A great heaviness has fallen on the SILVER and GOLD markets, but don't let it mislead you. 'Tis not the heaviness of a bull market that has turned to bear, but the dolor of a bull market correcting long and hard. The bull loves to wear out its riders so it can throw them off and laugh at them in the dust while it runs away. All the media have soured on silver and gold, the market has gone flat and keeps disappointing. It's just about time for the turnaround. Before you listen to those croakers, listen here: silver and gold are barely one-third of the way through their price gains. Now is not the time to panic, but to gird up your loins and buy more. Wall Street was telling us on Tuesday that the millennium had arrived, but doesn't look like it today. Dow puked back 168.32 points (1.27%) to close barely above 13,000 at 13,038.27. S&P500 really took it hard with a 22.47 (1.61%) drop. I often call it the Potemkin Dow because we know that the US government manipulates that market, and has since 1987 (See President's Working Group on Financial Markets). Of all stock indices in the world, only the Dow and S&P500 have held up. Odd, don't you think? Today we saw that difference emerge as the much broader (500 companies) S&P500 sank 1.6% while the narrow Dow (30 companies) sank only 1.27%. More, the S&P500 also sank through emotional/morale/psychological support at the round number 1,400. Charts don't match, either. Since February 2011 the S&P500 has formed a clear head and shoulders, which usually signals a top but can sometimes signal only a consolidation. Today it closed nearly slap on the neckline, and stands one and one half gnat's whiskers from breaking down. If it does break through that neckline, support appeareth not before 1,275, where awaiteth the 200 day moving average. HandS is complete. The Dow has formed a like HandS, but the right shoulder went to a slightly higher high than the head. Does that point to a continuation upward? Today it broke down badly, falling through the 20 and 50 DMAs (13,040 and 13,061). HandS neckline stands at 12,650, so the Dow hovers 400 points above that, but the S&P500's condition flashes bright yellow caution lights on the Dow. Folks, I don't believe this. I don't believe the phony Dow, I don't believe the stock rally, I don't believe the banks are all just fine and fatter'n October hog, I don't believe the economy is recovering, and I don't believe ne'er a word that falls from the mouths of Federal Reserve and government toadies. The closets are stuffed full of corpses, and some day soon, the doors will begin falling open. And in the Potemkin currency markets this week, the US dollar index jes' performed mighty miracles. Broke down last week out of a two month forming triangle, and in a rational world would have followed through lower. Not the dollar! It's the World's Reserve Currency, right up there next to grocery coupons. It came back up to the lower boundary of that triangle -- yea, against all odds -- and closed at 79.505, up 31.3 basis points today and 75.7 basis points for the week. Now I may be foaming at the mouth about nothing. Maybe the dollar index merely has climbed up to that line to give it a final kiss good-bye, but today it closed above the line a tad, and above the 20 and 50 DMAs (79.33 and 79.37). This week's trading low at 78.60 has a twin in the first of April, so this may very well mark a double bottom for the dollar from which it will launch into the stratosphere. Well, to the tops of small outbuildings at least. How can you tell which? If the dollar closes above 80.00 it will have sliced clean through the nose of that triangle to the upper side. That will attract more buyers. If the dollar falls below 79, then we will either suffer more of this sideways trading or a lower dollar. On 4 May 1981 the Federal Reserve raised its interest rate to 19%. That was down from 21.5% in December. Paul Volcker had been appointed as FedHed in 1979 with the brief of wringing inflation out of the monetary system. One thing for sure: raising the interest rate to 21.5% will pull people into dollars. Whatever sense the Fed had back then (and it wasn't much) is long gone now, along with all the serious people and adults. 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. No, I don't. 
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| Is an Ounce of Gold Worth $10,000? Posted: 04 May 2012 11:45 AM PDT By Adam J. Crawford Casey Research:
Currently, the US government reportedly holds roughly 260 million ounces of gold. Thanks to Benny and his inkjets, the monetary base is currently flirting with the nosebleed level of $2.7 trillion. Using the government's gold price formula of yesteryear, gold's "shadow price" is roughly $10,000 an ounce ($2.7T/260 million).
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| The Fed and ECB’s Hands Are Politically Tied… Bye Bye to Market Props Posted: 04 May 2012 11:15 AM PDT As many of you know, my primary forecast regarding Europe is that the EU will be broken up and/or collapse within the coming months. The reasons for this are political, financial, and monetary in nature. In bullet form they are:
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| Why Gold and Silver Act as Safe-Havens Today Posted: 04 May 2012 11:10 AM PDT On Friday morning, gold futures for June delivery declined to just under $1,627 per ounce, while silver futures slipped under $30. However, both precious metals managed to rebound after the latest unemployment report.
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| Gold Antidote to The Most Investment Destructive Force Posted: 04 May 2012 10:57 AM PDT “[Fed Chairman Ben] Bernanke and the Fed have zero credibility… Bernanke has never been right about anything. “We have inflation in the U.S., and it’s going to get worse. “They’ve printed staggering amounts of money. They’ve taken staggering amounts of debt on their balance sheet. Much of it is garbage.
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| Lindsay: No Final Bottom in Gold before Summer Posted: 04 May 2012 10:12 AM PDT For more than a decade an important bottom could have been expected for early this year. Lindsay targets significant bottoms using a 12-year interval. A 12-year interval extends from a significant high to a time interval, 12years, 2months to ... Read More...
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| Gold and Silver Disaggregated COT Report (DCOT) for May 4 Posted: 04 May 2012 09:57 AM 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. 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). There is a slight chance our notations this week will be delayed until sometime Monday, depending on how well the fish are biting Sunday morning! 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. That is all for now.
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| Graphite Stocks Gaining Investor Interest In Tough Markets Posted: 04 May 2012 09:39 AM PDT Check out my recent quote in Mining Weekly's article on Graphite. It would seem as if there is a new darling in the minerals market, as investor interest in graphite was seen rocketing over the past year. From a total of about four listed companies making it their business to supply hungry markets with the carbon allotrope in 2011, the number of listed firms had increased to about 30, with most listings taking place since the beginning of the year. Analyst Jeb Handwerger said that during the year, graphite had performed strongly, outpacing the generally depressed market. "Graphite stocks have hit new highs and have recently pulled back, while gold and silver miners have hit two-year lows. This demonstrates excellent relative strength in an overall weak natural resource equity environment," he said. For example, AngloGold Ashanti, Africa's biggest gold producer, fell 4.2% to R269.50 a share in April, the weakest in more than two years, while Gold Fields, the world's fourth-biggest gold producer, dropped 5% to R100.73 a share during the same period. On Friday, silver miner Minera Atacocha, the Lima-based zinc and silver mining company, fell by 5.4%. He expected global demand for graphite to increase exponentially from the current production of about 1.1-million tons over the next few years, possibly reaching 1.6-million tons in five years on the back of the rapid adoption of smart phones, laptops and hybrid-electric cars – all using lithium-ion batteries…. However, there are not many new serious development-phase projects coming on-stream soon, with the last significant graphite mine built 30 year ago. "There are not many graphite mines outside of China. Large economic deposits are rare and right now most operating mines in North America are small. We could see the need for 30 to 40 new graphite mines over the next decade," Handwerger said. Read the full article at Mining Weekly by clicking here… Subscribe to my premium service to follow the nascent graphite space and to learn why we may soon be hitting a bottom in the Venture…
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| Guest Post: Dr. Lacy Hunt On Debt Disequilibrium, Deleveraging, And Depression Posted: 04 May 2012 09:26 AM PDT Via Lance Roberts of StreetTalkLive, STRATEGIC INVESTMENT CONFERENCE - DAY 1 May 3, 2012? If you have not read the notes of the first three presentations here are the links to Niall Ferguson on "Civilization", Dr. Woody Brock on "American Gridlock" and David Rosenberg from Gluskin Sheff. The last presentation I will report on from Day 1 of the conference is Dr. Lacy Hunt from Hoisington Research. Dr. Hunt was a previous member of the Federal Reserve board and is the Executive Vice President of Hoisington Investment Management who has run arguably one of the best performing bond funds over the past 25 years. With that I present the notes from Dr. Lacy Hunt. ____________________________________________ I want to begin by taking us back to the economic classroom. In any economic model there are two basic conditions - "Equilibrium" and "Transition" For many years professors have drummed into students that equilibrium is the dominant condition and that transition occurs but it is generally smooth, unimportant and short. The commonest example is that of an airplane. When the airplane is on the tarmac it is at equilibrium. The takeoff and climb to altitude is the transition which is a generally short period relative to the overall trip. Once the plane reaches cruising altitude it is again back at equilibrium. However, what we have learned is that equilibrium, in relation to economies, is very short. It is the transition periods that are long in nature. Economies consistently move towards equilibrium, achieve it temporarily, then began to transition again. In the U.S. today, along with the rest of the world, we are currently engaged in "debt disequilibrium". Currently, we simply have too much debt relative to GDP. This is not just a domestic problem. Excessive indebtedness is a global problem. Furthermore, as we take on consistently more debt, each additional increase in debt is becoming less effective, due to the law of diminishing returns, and eventually will produce a negative return. The reality is that for debt to be effective it must produce a positive return. In the U.S. today the current debt to GDP ratio is roughly 360%. This is not the first time that debt to GDP has peaked. In 1875 the debt to GDP ratio peaked at 156.4% after the panic of 1873 following the collapse of the railroad boom. After that peak the economy remained in malaise for a very long period of time until the excess leverage was reduced. The process was repeated again in 1916 as debt to GDP hit 170.4%. This in turn led to the 1920-1921 depression where Federal spending was reduced by 50%, deleveraging happened very quickly and the economic cycle began to recover. However, this time the re-leveraging cycle quickly ensued in the roaring 20's which pushed debt to GDP to the next peak in 1933 at 299.8%. Of course, the following gestation period and debt deleveraging cycle took a very long period of time as the psychological impact of the "Great Depression" changed behavior. It wasn't until 2003, 70 years later, before the debt to GDP ratio breached the 1933 peak at 301.4%. Debt since then has continued to soar rising another 80 points in 2009 to a peak of 382.8%. The debt deleveraging process has only just begun and if history is any guide it will be a very long and arduous process. As stated previously by Dr. Woody Brock the addition of debt is acceptable as long as it produces a positive rate of return. Unfortunately, the U.S. has engaged in massive increases in the levels of debt but the average standard of living has not risen. The "debt disequilibrium" problem has now reached the point of producing negative impacts on the economy. This is not just a domestic problem. It is a global problem. The Eurozone is at 450% of debt to GDP - which roughly 100 points higher than the US. The UK is at 470% and Japan is at 500% of debt to GDP. Furthermore, Japan is the template of the US experience. This is not a popular view and is widely dismissed under various assumptions. However, Japan has done everything that the Keynesian and Freidmanite schools of thought have asked them to do. The results are not good. Yet, the current administration has failed to understand the consequences of those actions and have engaged upon the same path over the last decade. The current debt problems occurred primarily between the years of 1998 to 2006. The issue that has yet to be realized is that you cannot solve a debt problem after the fact. It has to be resolved before it reaches critical mass. In the early stages of a rising debt buildup it leads to both rising income and asset prices. It is in these early stages where actions should be taken to limit the debt buildup. However, since the corresponding increases in debt lead to a rise in incomes and asset prices - no one is willing to stop It The problem then becomes the crushing reality of declining prosperity as the negative ramification of excessive debt sets in.
Let's take a look at the U.S. versus China China: Debt To GDP = 16.3% U.S. Debt to GDP = 102% China is an unsustainable model. The critical danger is their rapid deceleration in growth. While many people are looking at external factors to influence China's economy the reality is that the system can be disrupted purely by internal factors. It has clearly happened in the past. 4 Archetypes of the Deleveraging Process - McKinsey Global Study of 32 Countries. There are only 4 major ways for a country to deleverage itself based on the study of 32 countries. "Belt Tightening" — most common. (50% of countries studied) Types 2-4 were relatively rare and occurred in conditions that are not present today in the mature economies. The record suggests that today's mature economies are most likely to deleverage through a belt tightening process as deflationary forces keep a lid on inflationary pressures even as currency printing increases. The massive increase in debt in the U.S. economy over recent years is now having deleterious effects on the consumer. The personal savings rate is declining as consumer debt is being made available. In recent quarters we have seen huge increases in debt to fuel consumptive spending due to the stagnation of incomes and rising cost pressures. What is very interesting to look at is the massive surge in student loan debt that is now becoming another concern. Student loans are increasing but not because there has been a sudden increase in the number of people attending colleges. The student loans have been going to fuel consumption. If you want to know how weak the economy really is all you need to do is look at the 30-year bond. It is one of the best economic indicators available today. If economic conditions are robust then the yield will be rising and vice versa. What the current low levels of yield on 30 year bond is telling you is that the underlying economy is weak. "The 30-year yield is not at these low levels DUE to the Federal Reserve; but in SPITE OF the Fed," Hunt said. The actions of the Federal Reserve have continued to undermine the economy which is reflected by the low yield of the 30 year bond The "cancerous" side effects of nonproductive debt are being reflected in real disposable incomes. Just over the last two years real disposable incomes slid from 5% in 2010 and -0.5% in 2012 on a 3-month percentage change at an annual rate basis. This is critically important to understand. While the media remains focused on GDP it is the wrong measure by which to measure the economy. A truly growing economy leads to rises in prosperity. GDP does NOT measure prosperity — it measures spending. It is the measure of real personal incomes that measures prosperity. Prosperity MUST come from rising incomes. GDP, on the other hand, can be distorted through government spending, which masks the effects of declining prosperity through weaker incomes. GDP does NOT lead to a increase in prosperity. This brings us to the issues with various debt driven stimulus and liquidity programs. While they may have a short term positive effect they ultimately all have a diminishing rate of return over time. Take a look at the effect of the QE programs on the stock market. QE1 - stocks increase 36.4% While the liquidity interventions by the Fed have increased stock prices — it has also continued to create pressure on the average American by deteriorating prosperity. The Velocity of Money The velocity of money is at what speed is money moving through the economic system. The commonest measure is: GDP (nominal) = Money X Velocity The velocity of money tells you the effectiveness of debt relative to the overall economy. From 1953 to 1980 the velocity of money was stable which was showing that the loans being made by banks to individuals and businesses were being put to productive uses. Today, as debt is taken on, it is no longer the case as additional bank lending produces little return. In other words there is relatively little return for each dollar lent. The increases in debt without a productive return will ultimately lead to a larger proportion of government debt in the economy, versus private debt, with no relative increase in GDP. To put this into perspective - without changes to the current system government spending will reach 40% of GDP by 2050. This will not happen as the system will collapse long before then. While we should be in the process of working off debt and deleveraging the system — in actuality we are doing the opposite and in 2013 we will be at 110% of debt to GDP. To put this into an investment perspective let's take a look at "20 Year Periods With A Negative Risk Premium" A negative risk premium is when there is a negative return between the total return of stocks versus the total return of bonds. This will not be the first time this has happened. 1874-1894 = S4.4% in stocks vs. 5.4% in bonds = -1% equity risk premium The bad news is that with the massive total increases in debt combined with the current policies being implemented under the current administration it is very likely that could extend the current 20 year cycle much longer. This has profound investment ramifications for individuals going forward.
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| The Britney/Beatty Jobs Indicator Posted: 04 May 2012 08:57 AM PDT Dave Gonigam – May 4, 2012
Traders weren't expecting much from the Bureau of Labor Statistics' April jobs report. In the event, the report delivered even less.
"The Street" — by which we mean a few dozen economists polled by Bloomberg — was looking for 165,000. Meanwhile, the U3 unemployment rate fell a bit, to 8.1%. The U6 measure — which includes people who've given up looking for work and part-timers who want to work full time — held steady at 14.5% So what gives? How can there be so few new jobs and the unemployment rate still falls? Because nearly 600,000 people dropped out of the labor force last month. They no longer figure into the denominator of the unemployment rate.
The total number of Americans counted as "not in labor force" — that includes little kids, the elderly, the wino on the street corner — topped 88 million, exceeding the upper limits of the existing chart. It was quickly adjusted to reflect the new reality. We've helpfully highlighted the adjustment for you in yellow…  True, the number will always climb as the population grows… but the percentage of the working-age population not in the labor force fell last month to 63.6%. Not only is that a new post-bubble low: The number is now its lowest since December 1981… when Britney Spears was born, Muhammad Ali lost his final fight and Warren Beatty inflicted Reds upon unsuspecting moviegoers.  linked with Warren Beatty [photo by Romina060693]. That was also the dawn of the era when the Bureau of Labor Statistics began fiddling with the criteria for the U3 unemployment rate. Calculated the way it was back in the day — and as John Williams at Shadowstats.com still does — the number ticked up last month to 22.3%.
"Fresh concern over energy demand in the world's biggest crude-consuming nation," as the AFP wire service puts it, has sent a barrel of West Texas Intermediate down more than 4%, to $98.19. It's the first time WTI has dipped below $100 in three months. Interestingly, Brent crude — the benchmark price for most of the world — is proving less sensitive to the U.S. figures. It's down only 2.5%, to $113.27.
The question is posed by former CIBC World Markets chief economist Jeff Rubin… who proceeds to answer, "Economic growth has downshifted into a much lower gear nearly everywhere you look." And he goes on to raise several more disturbing questions. "Even China and India, the global economy's principal engines of growth, can't escape the toll exacted by high energy prices. When policymakers in Beijing tried to sustain double-digit economic growth, food and energy inflation quickly slammed on the brakes. The economies of China and India will soon struggle to grow at half the torrid pace of recent years." "In a world where distance costs money, China will increasingly look to its own 1.3 billion consumers to drive economic growth," Mr. Rubin goes on. "If China decides to focus on tapping the potential of its huge domestic market, rather than supplying cheap goods to faraway Wal-Marts, the economic balance of power will tilt decidedly eastward." "What happens if the People's Bank of China then decides that buying U.S. Treasuries is no longer a necessity? U.S. taxpayers, for one, don't want to find out. They'll be left footing the bill for Washington's budget deficit — currently at $1.25 trillion." That's when the mother of all financial bubbles really does pop. But what does that mean for you, exactly? Addison is teasing out one surprising implication for the next issue of Apogee Advisory. If you worry about whether the government might confiscate your 401(k) or IRA accounts, you can't afford to miss it: He'll identify two warning signs that will be your cue to run for the exits. Not a subscriber yet? Sign up here to make sure you receive the issue next week.
As happened last Friday when the GDP number disappointed, traders are perhaps sensing the Fed will soon react by doing something reckless. Thus, gold is still on its feet at $1,640. Silver has survived its latest brush with $30, currently $30.19.
Despite this big move, Abe Cofnas' mock trade of the week is still good. As long as copper closes the day above $3.695… this suggested move would deliver an 8.6% gain. Not bad for four days. And it would mean nine winners in the last 10 weeks. Want to play Abe's trades for real? Learn more about this one-of-a-kind service at this link.
Peru has had three currency "do-overs" since 1863, he tells us. "This is when a country scraps an old currency entirely after its government renders it nearly worthless with ceaseless money printing. In its place, it creates a new one." The most recent is the nuevo sol, which dates to 1991. "In 2000," says Chris, "it took 3.5 nuevos soles to buy a U.S. dollar. Today, it takes only about 2.6 nuevos soles. In recent years, it continues to strengthen." Chalk that up to the nation's resource wealth in the midst of a commodity bull market. "The mining riches are no secret, though. Big miners are all over Peru. And it has some homegrown champions as well. An example is Buenaventura, a $10 billion enterprise that trades on the NYSE." "In my experiences from Mongolia to Colombia, the best opportunities in these situations often come not from mining, but from owning real estate first of all, and also simple consumer businesses and the stock exchange (if you can). I'll be more interested in what I discover along these lines." You can follow along with Chris' entry-level newsletter Capital & Crisis — which you can get right now for a steal… and we'll ship you a free copy of his new book World Right Side Up. "It is a thoroughly researched, carefully crafted book with a host of investing ideas," writes Brenda Jubin in a review at Seeking Alpha. "I thoroughly enjoyed it. " Right now, you can get the book and a year of issues for a price lower than many readers have paid for the issues alone. Seriously. Act here.
"It's no surprise," writes Fox News producer Ruth Ravve, "as word spreads about the miles of white sandy beaches, rain forests and mountains that have become a major draw for hikers and climbers. Unique geologic rock formations left by volcanic eruptions of the past have become sought-out tourist attractions." In introducing the country to folks whose knowledge of the place is confined to decades-old headlines, the cliches are hard to avoid: "Where were the gun-toting, camouflage-wearing rebels I remember seeing on grainy television news footage years ago?" Ms. Ravve writes. We know the feeling well: "If you've been reading The 5 and have wondered about what's going on down there in the land of Ollie North and the Sandinistas," Addison wrote in February, "you owe it to yourself to come down and check out our project." We'd like to present you the opportunity to do so later this year… and at the same time educate yourself about diversifying your portfolio offshore: We're organizing the second Rancho Santana Sessions. The first Sessions back in March were an intimate gathering of 30 people eager to learn how to legally and safely park a portion of their assets overseas… all in the stunning setting of Nicaragua's "Pacific frontier."  We've just set the dates for the next Sessions: Dec. 5-9, 2012. Watch this space as the details start coming together…
"The idea of a 10-part series is GRRRRReat," writes another, channeling Tony the Tiger. "I have been reading The 5 since its inception, and I really enjoy it to the max. This is the first time I have written in, but I feel it's a worthwhile cause." "Excellent way," writes a third, "to get the story of the treasure hunters out into the universe. I know I would thereby get to see it!" "One part or 10 parts," says a fourth, "either way, just do it."
"He uses the honor system — he just asks people not to copy it, sell it or give it away. He's printing money with this method. Feel free to copy it. I think your subscribers would happily pay $5 to have a copy of your documentary." The 5: Thanks to all for the feedback… and the encouragement! The distribution concept is still in a germinating stage… We'll keep you abreast of new developments here in The 5.
"Thanks for everything!" The 5: It's our privilege to serve; we couldn't do it without you. Have a good weekend, Dave Gonigam P.S. "This book might inspire us to think and act more like we should," writes Laissez Faire Books executive editor Jeffrey Tucker of this week's selection for the Laissez Faire Club. It is The Idea of America — the collection of essays thoughtfully chosen by Agora, Inc. founder Bill Bonner and Pierre Lemieux. "This volume," says Jeffrey, "is very different from the thousands of other collections that seek to present a picture of the American civic order by reference to classic writings. This is all the stuff you have never read, the material suppressed by those who conflate the nation with the state."  Every member of the Laissez Faire Club will receive an e-book edition of The Idea of America today. If you're not yet a club member, you can start your weekend with a small act of subversion and sign up for a host of benefits that space simply doesn't allow listing here. More from Jeffrey about the book… and the benefits of club membership… at this link.
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| MARC FABER SEES A GOLD CORRECTION Posted: 04 May 2012 08:57 AM PDT A 10% to 15% correction would be expected if the stock market goes down 20% to 30%. People would need to sell everything to meet margin calls. I'd buy more if it drops below $1,500. All that matters in the long run is whether you believe Bennie will print in response to the downturn we [...]
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| China Buys Gold…No Matter Who’s Selling Posted: 04 May 2012 08:45 AM PDT Someone is selling in size…Someone is buying in size. That's what makes markets, as the saying goes. But that's also what makes market manipulations, according to the bloggers at Zero Hedge. The seller in this case is very large and very sloppy, perhaps intentionally so. The buyer is also very large, but very patient and methodical. Trapped between these two powerful opposing market participants we find a "range-bound" gold market. Let's take a closer peek at the curious goings-on… Last Monday, a large early-morning sell order in the gold market whacked the price of the precious metal by about $15 in a matter of seconds. "The CME Group Inc.'s Comex division recorded an unusually large transaction of 7,500 gold futures during one minute of trading at 8:31 a.m.," The Wall Street Journal reported. "The sale took out blocks of bids as large as 84 contracts in one fell swoop and cut prices down to $1,648.80 a troy ounce [from $1,663.00]. The overall transaction was worth more than $1.24 billion. "Gold traders buzzed with speculation that the transaction was an input error — a so-called 'fat finger' trade," the Journal continued. "'Or a Gold Finger as it might be known in the bullion market,' traders at Citi joked in a note to clients. "Still, not everyone agreed Monday's slip in gold was caused by a keystroke error," said the Journal. "Chuck Retzky, director of futures sales for Mizuho Securities USA, said that silver prices suffered a similar leg down at the same time as gold, tumbling 35 cents to $30.805 a troy ounce, but other markets like Treasurys, currencies and stocks were unperturbed. 'To do it both in gold and silver tells me that it wasn't a trade done in error,' Retzky said." A second trader chimed in, "No one who has the account size and the money to trade thousands of gold contracts would do it in one transaction, that's just stupid." Or maybe this "stupidity" was intentional, as the folks at ZeroHedge suspect. Again yesterday, a large 3,000-plus lot gold sell order hit the Comex overnight trading system around 1:30 AM, Chicago time — causing the gold price to quickly fall more than $5. "Volume that size is unusual for that time of the day on the COMEX," ZeroHedge remarks. A few hours later, shortly after the Comex opened the gold pits for the regular daytime trading, a couple of very large sell orders knocked $10 off the gold price in a matter of minutes. These large, sloppy sell orders are no accident, ZeroHedge insists. They are simply some of the most flagrant examples of what could be market manipulation by Western central banks. ZeroHedge does not point fingers at any particular "fat finger," but it does wonder aloud if the Bank for International Settlements (BIS) may be involved. "[A few weeks ago]," says ZeroHedge, "somewhat tongue-in-cheekly, we presented the 'people bringing you currency manipulation on a daily basis,' or in other words, the BIS execution team for Europe's central banks, which is most directly engaged in FX and precious metals 'interventions' when needed. "The execution chain we presented was headed by one Richard Austin Jones, head of central bank services at BIS, Basel, yet more importantly the actual trader at the bottom of the totem pole was a Mikaël Charozé, whose various tasks included the 'management of the liquidity for big amounts' primarily interventions and portfolio diversification, as well as 'holding and managing proprietary positions on all currencies including gold.' "We posted this observation on April 5," reports ZeroHedge. "Funny then that just 10 days later, one would never know that Mikaël no longer counts 'holding and managing proprietary positions on all currencies including gold' among his duties as well as task of 'management of liquidity for big amounts including interventions.' [I.e. the BIS Website removed all of this language from Mikaël's job description]. In fact his entire profile, since our little humorous exposés, appears to have been rather completely altered. Inquiring minds would love to know: why?" Why, indeed? Many gold-market participants have long-suspected that Western central banks (and other agencies of currency debasement) conspire to suppress the gold price. According to this conspiracy theory, the central banks periodically pound on the gold price in order to prop up the value of the paper currencies they print. But despite the anecdotal evidence supporting the conspiracy theory, no one has ever caught one of the conspirators in the act. Like Sasquatch, the conspirators leave lots of great, big footprints, but no one ever manages to trap them in their caves. So maybe there are no conspirators, just lots of really stupid and sloppy gold sellers. Meanwhile, the buy side of the gold market is much less mysterious. "Earlier this month it was revealed that Hong Kong gold imports into China totaled nearly 40 tonnes in the month of February, representing a 13-fold increase over the same month last year." Sprott Asset Management observes in its April letter. "China has now imported 436 tonnes of gold through Hong Kong over the past 8 months, compared with only 57 tonnes over the same 8 month-period a year earlier (July 2010-February 2011)."
In other words, on the other side of every sloppy gold sale by a BIS trader (or whomever) you are likely to find an eager Chinese buyer. The recent surge in Chinese buying represents a whopping 25% increase in total global investment demand for gold. "There isn't a physical market on earth that can withstand that type of demand increase without higher prices over the long run," Sprott declares, "and the gold market is no different. There are no sellers of physical gold that we know of who can satiate that scale of new demand, and global gold mine supply has been virtually flat for over the last 10 years…Where is the gold going to come from? We ask because we don't actually know." So there you have it…The invisible "fat fingers" are selling gold. The very visible Chinese are buying it. Place your bets! Eric Fry China Buys Gold…No Matter Who's Selling originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".
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| Posted: 04 May 2012 08:42 AM PDT Synopsis: Fresh takes on the Paul Krugman-Ron Paul debate, the Greek aversion to austerity, and a peek at some truly incredible debt numbers. Dear Reader, Vedran Vuk here, filling in for David Galland. Today's issue is full of good stuff, including some observations on what may end up being the monetary-policy throw-down of the year, some alarming debt statistics from one of our newest analysts, and of course, some Friday Funnies. Let's get started.
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| Watch NOW: Money, Power and Wall Street [PBS] Posted: 04 May 2012 08:26 AM PDT Bix Weir: THE PERFECT TRADE IS BUYING PHYSICAL SILVER UNDER $30 AND EXITING THE SYSTEM Bix Weir's latest implores readers to buy physical silver NOW in what will likely be the last time physical silver is EVER available under $30 an ounce. Bix states that large buyers already have massive physical silver orders in place under $30, and that these big boys are laying in wait to make that final purchase that will remove them completely from the electronic monetary system at the very last moment, and go out in style with "The perfect trade". From Bix: What is my 6th sense telling me? BUY, BUY, BUY! The manipulation "SET UP" that we saw at $50 is not there. There is no excitement around silver. No talking heads coming on TV to promote silver as a "must buy". The Commitment of Traders numbers are telling the smart silver traders that there are no weak hands left. There is none of the mainstream "hype" that we typically see right before the Bad Guys slam us down again. What we do have is A NEW UNDERSTANDING OF WHAT HAPPENS IN SILVER! The cat is out of the bag after all these years. The way to "play the silver market" is not on the COMEX or in the LME or any other electronic exchange. The way to play the silver market is down to PHYSICAL SILVER ONLY! MF Global taught some very big players that nothing is sacred anymore. Segregated funds are not segregated today…and they rarely were. Brokerage houses and banks have always "pooled resources" because delivery or cashing out rarely happens. Your stock broker doesn't even buy your stocks when you place an order…they debit your electronic account, make a note in the pool of shares that floats around the DTCC and proceed to leverage up the money you gave them. "Failure to Delivers" are happening by the millions yet nobody sees it. "Ponzimodium" is alive and well in our free markets. So with this new found knowledge what are the Big Boys doing? Do you think they are continuing to risk their life savings in a system that THEY KNOW is doomed to fail? I don't think so. I think they are laying in wait. Laying in wait to make that final purchase that will remove them completely from the electronic monetary system at the very last moment. Go out in style with "The perfect trade". THAT PERFECT TRADE IS BUYING PHYSICAL SILVER UNDER $30 AND EXITING THE SYSTEM. Sub $30 silver will be the final nail in the coffin for the Banking Cabal as the game is no longer about electronic gains and losses but about MONETARY SURVIVAL. Taking physical silver off the market and removing yourself from THE SYSTEM that is now only a house of cards teetering on the abyss more than ever. The end game was always THE TRANSFER OF PHYSICAL ASSETS from the global electronic Ponzi Scheme. Everyone else will lose. Do I think the price of silver will go below $30? Probably. "They" CAN place the price there with their computers and as everything else crumbles around us it provides the perfect cover…but don't expect to buy any physical silver below $30 as that's where the BIG MONEY will be playing a game to the death. The scariest term these days heard muttered in the backrooms of the Big Money Players is… LAST ONE OUT'S A ROTTEN EGG! My advice is the same as it's been since the crash began in 2007….REMOVE YOURSELF from their system by taking delivery of physical silver and hold on tight as the Walls Come Crumbling Down. THIS IS THE LAST SMART THING YOU'LL NEED TO DO TO PRESERVE YOUR WEALTH. Read more from Bix Weir's Road to Roota: __________________ Jim Grant: The Federal Reserve is the Squid of Squids, it is the Vampire Squid of Vampire Squids 'The way to think about the $120 million sale of 'The Scream' is not as modern art but as modern currency. I say this is the flight of paper into things, and the artist in question in Ben S. Bernanke comma, PhD. and his associates who are driving art and who are driving credit instruments.' Grant continues by stating 'it is intriguing that the Treasury will soon be selling floating rate notes, and that the notes will be priced off the federal funds rate, which the fed has under its thumb.' 'It's a Barnum and Bailey world, and its as phoney as it can be. This is the world in which we invest. It's a world of immense wall-to-wall manipulation by our friends in Washington. People get off on Goldman Sachs because its done this and this to futures. The Federal Reserve is the Giant Squid of Squids. It is the Vampire Squid of all Vampire Squids..EVERYTHING IS RIGGED!' Watch Grant's full crucifixion of the Fed below: Program: FRONTLINEEpisode: Money, Power and Wall Street: Part OneAs Wall Street innovated, its revenues skyrocketed, and financial institutions of all stripes tied their fortunes to one another. FRONTLINE probes deeply into the story of the big banks -- how they developed, how they profited, and how the model that produced unfathomable wealth planted the seeds of financial destruction.Episode: Money, Power and Wall Street: Part TwoBeginning with the government bailout of the collapsing investment bank Bear Stearns in the spring of 2008, FRONTLINE examines how the country's leaders -- Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and New York Federal Reserve President Timothy Geithner -- struggled to respond to a financial crisis that caught them by surprise.Watch Money, Power and Wall Street: Part One on PBS. See more from FRONTLINE. Episode: Money, Power and Wall Street: Part ThreeFRONTLINE goes inside the Obama White House, telling the story of how a newly elected president with a mandate for change inherited a financial crisis that would challenge his administration and define his first term. From almost the very beginning, there was a division inside the economic team over how tough the White House should be on the banks that were at the heart of the crisis.Watch Money, Power and Wall Street: Part Two on PBS. See more from FRONTLINE. Episode: Money, Power and Wall Street: Part Four FRONTLINE probes a Wall Street culture that remains focused on risky trades. Bankers left an ugly trail of deals extending from small U.S. cities to big European capitals. For more than three years, regulators have tried to fix an industry steeped in conflicts of interest, excessive risk taking, and incentives to cheat. New regulations are being written, but can they fend off the next crisis? Watch Money, Power and Wall Street: Part Three on PBS. See more from FRONTLINE. Watch Money, Power and Wall Street: Part Four on PBS. See more from FRONTLINE. 
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| Posted: 04 May 2012 08:14 AM PDT Becky Quick’s CNBC interview with the Charlie Munger
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| The Emperor is Naked: David Stockman Posted: 04 May 2012 08:11 AM PDT The Gold Report: David, you have talked and written about the effect of government-funded, debt-fueled spending on the stock market. What will be the real impact of quantitative easing? David Stockman: We are in the last innings of a very bad ball game. We are coping with the crash of a 30-year–long debt super-cycle and the aftermath of an unsustainable bubble. Quantitative easing is making it worse by facilitating more public-sector borrowing and preventing debt liquidation in the private sector—both erroneous steps in my view. The federal government is not getting its financial house in order. We are on the edge of a crisis in the bond markets. It has already happened in Europe and will be coming to our neighborhood soon. TGR: What should the role of the Federal Reserve be? DS: To get out of the way and not act like it is the central monetary planner of a $15 trillion economy. It cannot and should not be done. The Fed is destroying the capital market by pegging and manipula...
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| Brutal Day For Stocks As Reality Recouples; Europe Now Negative For 2012 Posted: 04 May 2012 08:08 AM PDT Months of hope that the economy could finally start a 'virtuous cycle' were once dashed in a puff of smoke, after the jobs report came and cemented that the economy is now rolling over and picking up speed to the downside. Only this time, in a very ominous development for the permabulls, the MORE QE IS COMING, BUY ON DIPS crowd was nowhere to be seen. Why? Because for QE to be unleashed everything has to tumble first. And in a harbinger of what is coming to the US, just look at Europe: the EuroSTOXX 50 just turned negative for the year. Details: ES has now retraced the entire QE hope rally:
For once equity is ahead of credit to the downside:
Elsewhere, Treasurys continue their relentless move higher, with the 10 year now under 1.88% and at a 3 month low yield. So much for "that" Goldman call:
At this pace ES and the 10 Year will soon recouple, with credit once again having been correct.
The biggest causalty of the day was oil, in the aftermath of the CME doing what we fully expected it to do when Obama became the Margin Hiker-in-Chief and last night's CME hike for member to spec levels being as we predicted back in April. WTI is now just shy of its 200 DMA. When that support, a critical threshold for more QE, is taken out, watch out below.
In fact, post the last NFP and the Bernanke hope rally, gold, silver and oil have again recoupled:
But most importantly, for the first time in along while, gold has finally recoupled from the risk trade. If this is indicative of the future, watch out gold bears:
Bottom line: unreality is once again recoupling with reality... Just like it did back in 2011, and 2010, only for the central planners to step in and put everyone in their place. Will they do it again? Does the pope no longer bank with JPM? charts: BBG Bonus Chart: YTD performance of major asset classes - Oil red YTD and underperforming 30Y bonds now...
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We just received this photo from SGTreport readers and HUGE Dr. Paul supporters Kevin & Eric who recently had the chance to meet Ron Paul in person. I got to meet Ron Paul recently too. Why didn't I think of this?! Brilliant.
Amidst another vicious Cartel attack, it's tempting to write about something somber.
Silver lacked strength again this week, closing lower each day on the New York spot market. On several occasions it portrayed uncharacteristic behavior that appears to be consistent with its shift toward an industrial personality. Given the macroeconomic backdrop, it seems that as silver moves in that direction, the market's optimism toward it is decreasing.
LONDON(BullionStreet): Gold continued to revolve around the five key factors from whom it wants to get the impetus to move forward to the coveted $2000 mark.
For the last two days, the S&P 500 clung to the 1,400 level by some very close-cut fingernails. This morning, the index lost its grip. At last check, 1,375 is in jeopardy.
The BLS statisticians could conjure only 115,000 new jobs last month. Not even enough to keep up with population growth.
Indeed, so many people exited the workforce last month that the chart-meisters at the St. Louis Fed were momentarily confounded.
If the unemployment numbers delivered a wicked Ali right hook to stocks, crude's been knocked out.
Indeed, Brent has held above $100 since February of last year… which prompts the following question: "What happens when the world's most-important source of energy becomes unaffordable?"
Oil isn't the only commodity getting pummeled by the unemployment figures today. The broad CRB commodity index has sunk to its lowest level all year, at 296.
The one exception in the commodity complex: precious metals.
Copper prices have tumbled 30 cents this week. At last check, the bid is $3.74 per pound.
"Peruvians have mashed something together that looks like it will hold up — at least for now," writes the globe-trotting Chris Mayer, who's boning up in preparation for his next trip.
"Curious world travelers are gradually starting to seek out this formerly menacing place," reads an article this week that demonstrates how mainstream Nicaragua is fast becoming.
"Great idea" says the first of several emails on our suggestion yesterday that Addison's documentary Risk! be presented on the Internet as a 10-part series.
"Wouldn't releasing Addison's Risk! on the Agora website be severely limiting its exposure?" another inquires. "If you want the most eyeballs to view it, consider prime time (that's TV). Maybe even RT.com. PBS? Naw, no thinking person watches PBS anymore."
"Louis CK has developed a great way to deliver his stand-up special— instead of giving control to Comedy Central or HBO, as has been the norm, he produced it and put it on the Web. You get to download it for $5.
"Of course, it is only fitting that The Scream sold in **this** specific economic environment," a reader writes after yesterday's musings. "If my recollection of that useless university art history class serves me right, Munch's drawing is of some worker bee in Peoria after he found out Jon Corzine had 'lost' his life savings."
"Happy birthday!!!" reads our final correspondence of the day. "I am reading The 5 since Day 1. It is part of my libertarian community base. Or should I say, part of my Common Sense Community?
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