Gold World News Flash

Argentina Buys Gold for First Time Since 2005
Ridiculous Claim: Rising Food and Gas Prices Not Being Driven by Fed Policy; The Dollar Hasn’t Gone Down
Resettlement Camps: May Be Performed As DOMESTIC Civil Support Operations
Fleckenstein - Stock Market to Tank, Buffett’s Ego & Gold
Sale, theft of customer lists fuel coin fraud
Greek Election: The ‘Winds of Change’
Atlantic City's newest novelty: Gold from a vending machine
David Rosenberg's Take On Europe
Fabulous Mogambo Essay
Russia has become the first major country to call for a partial restoration of the Gold Standard
Warren Who? Gold bugs still think they have right idea
Friends – Citizens of the World – Countrymen – LEND ME YOUR EAR Beware the Lame-Duck Congress
GOLD IS AT, OR VERY NEAR A LONG TERM BOTTOM
Gold Inside Day at Short Term Support
The End of the Debt Supercycle Draws Near: John Mauldin
Krugman Finally Wins the Argument
Gold Price Lost $6.10 Closing $1,638.60 Silver Down too
Caesar Bryan - The Federal Reserve Is Under The Gun & Gold
Toxic Spiral: Greek Office Vacancies Soar As Tourism Industry Implodes
Enemy of Finance?
A Market Full Of Sound And Fury Signifying Unch
“America Has Become a Piñata…”
Gold Seeker Closing Report: Gold and Silver End Slightly Lower
Gold Daily and Silver Weekly Charts - Psycho Killers Qu'est-ce Que C'est?"
JUST READ THE MANUAL
Gold is limited government, which is more civilized than the alternative
More On Gold And The Economy...
Buy the Bear
It's This Bad Because It's a Bottom: Eric Coffin
Update for the Silver to Gold Ratio

Argentina Buys Gold for First Time Since 2005

Posted: 07 May 2012 06:20 PM PDT

Reuters reports that Argentina purchased gold last September for the 1st time since 2005. No mention on whether the Argentinian Central bank plans on making an investment in caves per Warren Buffett's recommendation.
On a more serious note, if Argentina is finally increasing their gold reserves, the dollar is in serious jeopardy of fully losing its reserve currency status as even the most inept governments and central banks are now distancing themselves from the dollar.
Read More @ SilverDoctors.com

Ridiculous Claim: Rising Food and Gas Prices Not Being Driven by Fed Policy; The Dollar Hasn’t Gone Down

Posted: 07 May 2012 04:37 PM PDT

Government mouthpiece and well known Keynesian economist Paul Krugman makes the case for monetary easing and Fed intervention by claiming that the rising cost of food and gas has nothing to do with the Federal Reserve and easy money dished out to banks, both foreign and domestic, to the tunes of not billions, but tens of trillions of dollars.

The latest economic theory from the Nobel Prize winning economist suggests that the Fed and government intervention couldn't possibly have anything to do with US dollar depreciation – not for the last hundred years, and certainly not today:

Food and gas is not something that's being driven by Fed policy. Sorry, but Ben Bernanke doesn't have that much power. That's being driven by events in China. That's being driven by events in a large world economy.

The dollar hasn't gone down. That's the amazing thing. If you actually look at the Dollar vs. the Euro, the Dollar vs. the Yen, it has not. In terms of the world's other major currencies we have not had a big depreciation of the dollar. Read more......

This posting includes an audio/video/photo media file: Download Now

Resettlement Camps: May Be Performed As DOMESTIC Civil Support Operations

Posted: 07 May 2012 04:10 PM PDT

We've known for years that the U.S. Military has been preparing for civil unrest and riot response within the continental United States. Likewise, the Pentagon, Department of Homeland Security and various other government alphabet agencies have been actively preparing for how to handle natural and man-made crises that include everything from large scale economic collapse to war and asteroid strikes.

As a part of the national security apparatus' continuity of government and emergency response plans it has been theorized for years that any emergency or event of national significance would be met with Presidentially decreed martial law which would call for the deployment of the National Guard and other armed forces assets on the streets of America. Up until recently these ideas have floated in the realm of conspiracy theory. The notion that the U.S. military would patrol American streets, or that the Federal Emergency Management Agency has established scores of refugee relocation facilities capable of housing tens of thousands of inmates, or that Americans could be detained without charge or trial indefinitely, has for some time been reserved for those on the fringe – the tin foil wearing lunatics who spend their free time dissecting covert government activities and mainstream media propaganda. Read more.....

This posting includes an audio/video/photo media file: Download Now

Fleckenstein - Stock Market to Tank, Buffett’s Ego & Gold

Posted: 07 May 2012 04:02 PM PDT

With continued uncertainty surrounding global markets, today King World News interviewed Bill Fleckenstein, President of Fleckenstein Capital, to get his take on the situation. Fleckenstein told KWN that despite the volatility, "stocks are going down." He also predicted continued collapse in Europe and railed on Warren Buffett and Charlie Munger. Here is what Fleckenstein had to say: "I mean, look, they've figured out how to skin the paper money machine pretty well. They've benefitted greatly by government bailouts. Buffett's gotten himself upside down and sideways in various different financial entities, and they've worked out okay in the end."

This posting includes an audio/video/photo media file: Download Now

Sale, theft of customer lists fuel coin fraud

Posted: 07 May 2012 03:44 PM PDT

by Dan Browning Star Tribune:

Sales leads move from firm to firm as salesmen take databases when they move to new jobs or start their own firms.

Dennis Helmer says he got his hands on "The List" in the 1990s, while he was working in sales at a long-defunct Twin Cities coin company called National Rarities. The database included hundreds of thousands of names and phone numbers for established gold and silver customers and others who had expressed interest in precious metals.

Such leads are themselves like gold in the industry, and Helmer knew their value from experience. After his boss at National Rarities was busted for swindling, Helmer said he continued using the list for his own coin sales.

And he found another way to turn it into cash: He sold it to other brokers.

Read More @ Star Tribune

Greek Election: The ‘Winds of Change’

Posted: 07 May 2012 03:15 PM PDT

by Jeff Nielson, Bullion Bulls Canada:

As Western economies and Western societies continue to deteriorate, I find myself frequently appalled but rarely surprised. Thus it was a refreshing change to be "surprised" by this weekend's Greek election – made even better by the fact it was a pleasant surprise. The Western mainstream media had told us to expect the two rancid, Establishment parties in Greece (PASOK and New Democracy) to maintain their grip on power by circling the wagons and forming a Coalition of Convenience, to prevent the possibility of any real change. The script had seemingly been written.

PASOK and New Democracy would unite to serve the bankers and continue their Friedman Austerity: stomping on the poor and middle class to preserve the wealth and privilege of the aristocracy. As they finished the destruction of Greece's economy they would also complete their own self-annihilation. This would have then set the stage for a real "election" in Greece (i.e. an event where "change" was an option).

Read More @ BullionBullsCanada.com

Atlantic City's newest novelty: Gold from a vending machine

Posted: 07 May 2012 01:15 PM PDT

from The Chicago Tribune:

The casino that boasts a Gold Rush theme is offering modern-day prospectors a chance to pick up some real gold and silver. No, they don't have to pan for it in a remote mountain stream, descend deep into some dark, dank mines or rob Fort Knox.

But they will need some cash to make purchases from Atlantic City's newest novelty, a "Gold to Go" machine. The machine made its glitzy debut at Golden Nugget Atlantic City on April 26, when the casino staged a grand opening ceremony to celebrate the completion of its $150 million renovation project.

Read More @ The Chicago Tribune

David Rosenberg's Take On Europe

Posted: 07 May 2012 01:05 PM PDT

From David Rosenberg of Gluskin Sheff

MY TAKE ON EUROPE

Europe is a mess, politically, economically, and fiscally. LTRO gave a short lifeline and at the same time bound the ties even more tightly between bank balance sheets and government bond performance. For all the backslapping, LTRO was a failure, pure and simple. Just as QE — for if QE had been a success, nobody would be looking for a third round (more like the fourth).

I fail to see how any country is going to be able to "grow" their way out of their deficits, barring ECB debt monetization or via German acceptance of a common fiscal policy, which would then allow profligate sovereigns to ride off of Germany's strong balance sheet. The problem is that the German economy is starting to soften, and along with that I expect polls to start showing lesser support for providing backstops to the periphery. And from a geopolitical standpoint, an ever-isolated Germany spells even more instability. Gold and the gold mining stocks should be a beneficiary.

In less than two years, we are now up to a total of seven European leaders or ruling parties that have been forced out of office, courtesy of the spreading government debt crisis — tack on France now to Ireland, Portugal, Greece, Italy, Spain and the Netherlands. Even Germany's coalition is looking shaky in the aftermath of the faltering state election results for the CDU's (Christian Democratic Union) Free Democrat coalition partner.

This is quite a potent brew — financial insolvency, economic fragility and political instability.

Now we have governments, led by Mr. Hollande, who want to adopt "growth agendas" at a time when eroding credit quality is increasingly impeding fiscal borrowing capacity. The French vote comes quickly on the heels of the Dutch government collapse and is joined by a fractious election result in Greece. Germany and other pro-austerity/structural reform entities are the big losers. Then again, how cash-strapped sovereigns who need Germany's comparatively strong financial position embark on this new anti-fiscal-probity drive is an interesting question.
More uncertainty, more volatility, more risk-aversion likely lies ahead — and along with it, a further deterioration in government financial strength.
As it stands, globally, since the time the Great Recession took hold in 2008, we have seen the total value of government debt backed with AAA-ratings decline from over a 50% share of total outstanding sovereign credit to less than 10%. Quality is scarce, and as such should be owned.

In sum, this is not the backdrop for sustained risk-on investment behaviour. Both Bob Farrell and Walter Murphy see the current corrective phase in the market being extended over the near and intermediate term. I'm not sure I'd want to bet against them, even if Mike Santoli in Barron's and Paul Lim in the Sunday NYT are advocating a "buy the dips" strategy.

In terms of scouring the globe for countries that are currently being rated AAA by all three agencies, here they are:

Australia
Canada
Denmark
Finland
Germany
Luxembourg
Netherlands
Norway
Singapore
Sweden
Switzerland
U.K.

If we did a further overlay with respect to the most attractive "real yield" characteristics — low inflation and attractive coupons along with strong national balance sheets — we would find Norway, Australia and Switzerland leading the pack.

Fabulous Mogambo Essay

Posted: 07 May 2012 12:50 PM PDT

by Richard Daughty, mogamboguru.com:

I recently had a revelation of sorts, distilled from my merely noticing what happens when passing by my neighbors, out on their stupid lawns, playing with their stupid kids, or washing their stupid cars, or just doing something stupid. I am sure that you wonder how I can tell that they are stupid. Easy. I've been telling them to buy gold, silver and oil, for so long, and to such little effect, even in the face of such enormous gains accruing to those who followed such Fabulous Mogambo Advice (FMA), that one can only conclude that they are stupid or deaf.

Read More @ mogamboguru.com

Russia has become the first major country to call for a partial restoration of the Gold Standard

Posted: 07 May 2012 12:27 PM PDT

Story is a few years old . . . but these things get recycled . . . Russia backs return to Gold Standard to solve financial crisis

Warren Who? Gold bugs still think they have right idea

Posted: 07 May 2012 12:20 PM PDT

By Jeff Cox
CNBC, New York
Monday, May 7, 2012

http://www.cnbc.com/id/47324444

It's not every day you can find people to take the opposite side of a trade from Warren Buffett and Bill Gates, but then gold is not your average trade.

Gold bugs are known as some of the most passionate investors, so not even high-level slams from the Oracle of Omaha and the founder of Microsoft can cool their fire.

"Absolutely, I would take the other side of that trade," says Michael Pento, founder of Pento Portfolio Strategies in Holmdel, N.J. "The stock market has gone nowhere in nominal terms in 12 years. It makes sense as a default under the current conditions of negative real interest rates to own something that keeps you afloat, that preserves your purchasing power."

Pento is the former senior economist at Euro Pacific Capital, the firm run by noted gold enthusiast Peter Schiff. Pento has nailed the trajectory of gold's price for the past three years running.

... Dispatch continues below ...

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Prophecy Platinum (TSXV: NKL) and Ursa Major Minerals
Sign Combination Agreement

Company Press Release
Friday, March 2, 2012

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) and Ursa Major Minerals Inc. have signed a binding letter of agreement for a business combination through a proposed all-share transaction. In doing so Prophecy and Ursa have acted at arm's length and the transaction has been negotiated at arm's length.

Prophecy will issue one common share in exchange for every 25 outstanding common shares of Ursa. Ursa options and warrants will be exchanged for options and warrants of Prophecy on an agreed schedule.

Prophecy's offer represents a value of about $0.15 per each common share of Ursa based on Prophecy's share price of $3.70 as at March 1, representing a premium of 130 percent to Ursa's March 1 closing price of $0.065.

Prophecy is to subscribe for $1 million common shares of Ursa by way of private placement financing at $0.06 per share, subject to regulatory approval. Upon placement completion, John Lee and Greg Hall, current Prophecy directors, will be appointed to Ursa's board.

Prophecy thus will become a mid-tier resource company with a robust and diversified pipeline of platinum nickel projects, including:

-- The fully permitted open-pit Shakespeare PGM-Ni-Cu mine close to Sudbury, Ontario, infrastructure with near-term production capabilities.

-- The flagship Wellgreen (Yukon) PGM-Ni-Cu project with more than 10 million ounces of Pt-Pd-Au inferred resource. Drilling is under way and a preliminary economic assessment study is pending.

-- Manitoba's Lynn Lake Ni-Cu project with more than 262 million pounds Ni and 138 million pounds Cu measured and indicated.

For the complete announcement, please visit Prophecy Platinum's Internet site here:

http://www.prophecyplat.com/news_2012_mar02_prophecy_platinum_ursa_major...

Primarily because of the Federal Reserve's weak-dollar policies, Pento expects gold to continue to hold its place as an inflation hedge, as well as a safe-haven asset to buffer against global debt contagion.

For 2012 he thinks gold should be able to hit $1,900 an ounce.

"I would ask Mr. Buffett if he could own a lone share of a representative of the S&P 500, or would he rather have the equivalent of an ounce of gold," Pento says. "Which investment has done better over the last dozen years? The answer is clear: gold."

Buffett and Gates primarily don't like gold because of its lack of intrinsic value. It's not the same as holding shares in a company that has a clear revenue stream and business model, which in turn make it comparatively easy to value. (Buffett's right-hand man at Berkshire Hathaway, Charlie Munger, has been less diplomatic, suggesting in an interview Thursday that no "civilized person" should own gold.)

Rather than being cowed by Buffett's legend as a buy-and-hold investor, some gold advocates instead consider him out of touch with present-day conditions.

"His track record since 2008 has not been very good," says Kathy Boyle, president of Chapin Hill Advisors in New York. "He might be the Oracle of Omaha for the long term, but short-term since 2008 his trades have not been that great."

Boyle owns gold through the iShares Gold Trust, an exchange-traded fund that tracks the daily prices of bullion.

"Most of the typical advisers out there and money managers don't look at gold as an investment -- they don't look at it as a tradeable asset in their portfolio," she says. "There's going to be a flight to quality and a flight to safety. The dollar will go up, gold will go up and Treasurys will go up."

The safe-haven theme is a popular one, boosted by the notion that Europe's sovereign debt crisis is setting off a national recession that ultimately will spill to the U.S. shores.

Capital Economics in London has established a $2,200 per ounce price target by the end of the year for gold, though the firm thinks investing in the metal will not be profitable in 2013, when the price slips to $2,000

"Gold is still likely to benefit from safe haven demand and the continuation of ultra-loose monetary policy, including in the US," Julian Jessop, Capital's chief global economist, said in a note. "We suspect that gold would still do better than the dollar in a scenario where the issue is not just sovereign defaults but the very survival of the euro, and that in this scenario it would revert to a negative correlation with equities."

Jessop said a mass breakup of the European Union could send gold as high as $5,000, while a scenario in which Europe stays united and the global economy recovers could kick gold down to $1,000. However, he sees neither extreme scenario as likely.

To be sure, the sentiments of Buffett and Gates have support in the markets.

The agreement comes primarily from those who believe that the U.S. economy can survive and grow independent of Europe's problems, allowing stocks to keep pushing higher and negating the need for the rainy-day sentiment behind gold investing.

"Businesses have dramatically improved their balance sheets, there's a horde of cash out there and companies are slowly starting to deploy some of that cash," says Chip Cobb, senior vice president at Bryn Mawr Trust in Bryn Mawr, Pa. "There's a far better place in equities than in gold or fixed income."

Even a breakdown in Europe might not drive gold higher, as an economic slowdown would not produce inflation, argues Gary Clark, commodities strategist with Roubini Global Economics in London.

Clark says his firm -- and its famed namesake, "Dr. Doom" Nouriel Roubini -- remains neutral on gold with a near-term price target of $1,700 an ounce.

"Fundamentally, we're in a disinflationary environment for the moment. We see inflation decelerating for the rest of the year in many developed markets," Clark says. "On top of that I would say with the votes against austerity for Greece and France, that provides upside for the U.S. dollar. These are all downside risks for gold prices ahead.

Hedge fund manager Dennis Gartman, who authors the widely followed Gartman Letter, says he's a "tad skeptical" about gold -- which he owns in euros —--but understands its allure.

"One should own a bit of gold but one shouldn't be enamored of gold. It's nothing more than a hedge against Armageddon," he says. "The best one can say is the (chart) trend seems to be in very broad terms from the lower left to upper right. That's the best one can say, and anything more than that will make you look foolish."

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Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters

From a Company Press Release
November 22, 2011

VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.

"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."

Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.

For the company's complete press release, please visit:

http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf

Friends – Citizens of the World – Countrymen – LEND ME YOUR EAR Beware the Lame-Duck Congress

Posted: 07 May 2012 11:35 AM PDT

from ArmstrongEconomics:

It is a shame how corrupt the American Main Stream Press really is and how they refuse to tell the truth about how the government manipulates even the economic statistics. I have stated before, when we were first looking to open up offices outside the USA, I had lunch with a client who was the head of a major Swiss bank in Geneva. The names we were going to use would have been European. He asked me to name one foreign analyst. I was embarrassed since I could not. He told me then that the reason everyone used Princeton Economics was because European analysts were biased. If he was British it was God Save the Queen, as the French screamed Vive la France, and the Germany hailed the Fatherland. He said Americans were the only ones who did not care whether dollar rose or fell.

More @ ArmstrongEconomics.org

GOLD IS AT, OR VERY NEAR A LONG TERM BOTTOM

Posted: 07 May 2012 11:29 AM PDT

I am making Monday's premium report available to the public.

I doubt anyone was surprised by the reversal in the dollar index today.

It's been made painfully clear that Bernanke is not going to tolerate a rising dollar, at least not for very long. Cycles are still working, and still generating bounces out of daily cycle lows, but they are never allowed to get any traction before the next beat down starts.

I would say there's a pretty good chance that today's reversal is signaling that the current daily cycle topped on day four, and the pattern of lower lows and lower highs is still intact.

Presumably the dollar will now start to decline and penetrate the May 1st intraday low before the next significant bounce. The daily cycle timing bands have adhered pretty closely to standard durations in the dollar index. I don't see any indication that has changed, so we can probably expect the next significant bounce sometime around the last week of May.

Stocks:
If the dollar cycle has topped then the half cycle low scenario is still on the table.

In this scenario the stock market is on day 19 of its daily cycle and due to form a half cycle low at any time. As most of you probably remember, I've been expecting an extended consolidation in the general stock market. A dollar cycle topping on day 4 and a half cycle low on day 19 would be consistent with that theory.

If by some chance the dollar can recover and continue to rally for a few more days it could force stocks to penetrate the April 10th low. In that scenario I would re-phase of the daily and intermediate cycles as shown in the chart below.

At the moment I have no idea which scenario has a greater odds of playing out, although I must admit the reversal today does not look good for the dollar.

Gold:
In my opinion gold is trying to move down into one more failed and left translated daily cycle, which I'm fairly confident would mark an intermediate degree bottom. However, as you can see from the chart below, as soon as Bernanke broke the dollar rally gold lost all of its downside momentum.

This has turned gold's B-Wave decline into a mostly sideways consolidation for the last two months. If the dollar has indeed topped then I have my doubts that gold will be able to finish its intermediate decline and penetrate the April 4 low. The fact that the current daily cycle is running out of time may indicate that we are going to have to leave the April 4 low as an early intermediate bottom.

I would prefer to see gold drop down and penetrate $1612 as it would make the intermediate cycle count "fit" better. I know that's not what most of you would like to see. Most of you probably just want the draw down to end as quickly as possible. I on the other hand understand that this is a secular bull market and that this is going to be a winning trade (well unless the bull market has ended ). So I'm not overly worried about a draw down. In a bull market timing mistakes get corrected.

To me a move below $1612 means that we didn't waste an entire daily cycle on a sideways consolidation and that we have all of a new intermediate cycle still ahead of us. That's why I would prefer to see gold poke through the April 4 low. It would signal that we have more time to rally, an entire daily cycle more.

So even though we weren't able to time a perfect bottom, I'm confident that we have entered "close enough" and when the regression to the mean occurs, and it always eventually does, our mining positions are going to deliver a very hefty profit.

Heck, if one was willing to just turn their computer off and wait for the bubble phase of the bull market, our current positions are probably set up to deliver a 500-1000 percent gain. Of course the cost is that you have to ignore the market and go on with your life for the next several years.

When you think about it, that's a pretty good bargain. Do absolutely nothing, and get rich doing it.

I think we are at, or very close to what is likely to be a once or twice a decade opportunity in the metals sector, especially the mining stocks. If you like today's report the $10 one week trial is still available. That includes the archives, cycle counts, COT reports, and model portfolio. I strongly suggest one read the last several weeks of reports so they understand how we got here and what is unfolding.

Gold Inside Day at Short Term Support

Posted: 07 May 2012 11:00 AM PDT

courtesy of DailyFX.com May 07, 2012 02:04 PM Daily Bars Prepared by Jamie Saettele, CMT Gold has returned to its range but is holding support from the trendline that extends off of the 4/4 and 4/23 lows. With the failed break on May 1, consider a bearish triangle. ALSO keep in mind that gold is testing a multiyear trendline. Ideas:...

The End of the Debt Supercycle Draws Near: John Mauldin

Posted: 07 May 2012 10:40 AM PDT

The Gold Report: What does your new partnership with Casey Research mean for investors going forward? John Mauldin: We're creating a joint venture, Mauldin Economics, which will have its own brand and publications. We'll be starting out with a fixed-income letter. Casey Research and Mauldin Economics will be sister companies. It's not so much a partnership with Casey as it's a partnership with the team that runs Casey. There will be a number of other letters, too. Editors and writers whom I like and have worked with will be writing rather than me. My personal letter will still always go out Friday. I'll still be doing Outside the Box and some other services. David Galland and Olivier Garrett will become the publishing managers. Galland is one of the greatest marketers in the country. This gives me an opportunity to let him run everything while I spend more time on reading, writing and research, which are what I do best and enjoy the most. TGR: You have spoken about the end of the ...

Krugman Finally Wins the Argument

Posted: 07 May 2012 10:33 AM PDT

Courtesy of John Rubino.

Today's world can be summarized in two sentences:

Unless continuously fed with new credit, the global financial system will implode. And when confronted with this possibility, governments will always respond with new credit.

This has been true at least since the Long Term Capital Management collapse in 1998, and in the ensuing 14 years the global financial markets and the world's governments have been partners in a dance in which crisis elicits monetary ease, which ignites an asset bubble, which bursts and elicits a new flood of credit. After each sequence the total amount of debt — and the system's fragility — is even higher than before.

Through it all a few brave souls like Ron Paul have tried to stop the music and liquidate the debt, while other — far more numerous — authorities like New York Times columnist Paul Krugman have called for even more debt to produce higher inflation in order to liquidate the old debt. These worldviews — sound money to which the world must adapt versus flexible money that adapts to the needs of the economy — are mutually exclusive. Only one can win.

With all due respect to sound money advocates, there was never any doubt about the outcome. When voters suffer, governments armed with a printing press will always respond with easy money.

Today the debate ended. France has elected a socialist leader who will demand an end to austerity. The head of the European Central Bank has accepted that growth should henceforth take precedence over balanced budgets, and Fed chairman Ben Bernanke has made it clear that he's ready to step in with more easing if necessary. Elections in Greece, Ireland and elsewhere will solidify this consensus.

So now begins the next, purely-inflationary stage of the process, in which governments and central banks abandon whatever restraints they once recognized and vow to do whatever it takes to put people back to work in the here-and-now. That means tax cuts, even bigger deficits, continued low interest rates and aggressive asset purchase programs.

Whether this "works", i.e. whether the coming round of global devaluation produces higher employment with a minimum of instability, is an open question because we've never been here before.

No society in history has owed this much money, and the forces of global debt liquidation have never lost. Kondratieff Winter has never been bypassed and converted to Spring. But the world has never been armed with an unlimited printing press either. See The Long Wave Versus The Printing Press.

One thing that's certain is that today's tentative policies with one eye on deficits will soon be replaced by single-minded money printing, with a Krugman-esque goal of sustained 4% inflation. So now we know exactly what the world's governments want. The question is, can they get it?

Visit John's Dollar Collapse blog here >

Gold Price Lost $6.10 Closing $1,638.60 Silver Down too

Posted: 07 May 2012 10:09 AM PDT

Gold Price Close Today : 1638.60
Change : (6.10) or -0.37%

Silver Price Close Today : 3007.20
Change : 30.8 cents or -1.01%

Gold Silver Ratio Today : 54.489
Change : 0.352 or 0.65%

Silver Gold Ratio Today : 0.01835
Change : -0.000119 or -0.65%

Platinum Price Close Today : 1525.60
Change : 1.80 or 0.12%

Palladium Price Close Today : 645.60
Change : -4.30 or -0.66%

S&P 500 : 1,369.58
Change : 0.48 or 0.04%

Dow In GOLD$ : $164.11
Change : $ 0.25 or 0.15%

Dow in GOLD oz : 7.939
Change : 0.012 or 0.15%

Dow in SILVER oz : 432.58
Change : 3.41 or 0.79%

Dow Industrial : 13,008.53
Change : -29.74 or -0.23%

US Dollar Index : 79.58
Change : 0.085 or 0.11%

Today on Comex the GOLD PRICE lost $6.10 to close $1,638.60 while the SILVER PRICE lost 30.8 cents and ended at 3007.2c.

Riddle this: Gold's low today at $1,632.66 was higher than Friday's low at $1,626.50. Don't make a lick of sense. Today's high came in lower than Friday's by $4 at $1,642.50.

Anyhow, this was not Disaster Day for the GOLD PRICE. It remains above the upper boundary of that falling wedge (which foretells a leap up), sliding down that boundary like a kid on a playground slide. This constitutes no "break down", is a higher low than Friday's, and overall offers some hope that gold made its low for this move on Friday.

Time I walked in the office this morning silver was at 2978c and had been as low as 2968.9. That was only a few cents lower than Friday, so that might mark a double bottom.

I am sure waxing tired of these predictable days in silver and gold where "somebody" enters the market on open or an hour later and sells the snot out of it, driving it down suddenly, only to watch it bounce back to reclaim most of the loss. So it was today, so I just bought some down there under 3000c. That close above 3000c was good for silver morale, and shows some strength. However, silver lost against the GOLD PRICE today. GOLD/SILVER RATIO rose from 54.138 on Friday to 54.489 today, making that swap from gold to silver shine even brighter.

How is silver doing on that falling wedge? Well, it fell through the top boundary toward the lower one and I'd say it bounced off. As long as silver does not close below 2950c, that falling wedge remains intact and points to an upside move.

Imagine that at the US election in the fall, both Republicans and Democrats together fail to win 49.5% of the vote. Neither O'Bama or Romney (or whatever other apparatchik the Republicans front) wins, but Ron Paul wins the presidency while the Green Party wins control of the House.

That is something like what happened in Greece over the weekend, where the New Democracy Party and PASOK (the establishment parties) failed to win 49.5%, couldn't form a government, and the far left party stepped up to bat next. They are trying to form a coalition with a far right party, and both the press is predictably terming "fringe" parties because they spout not the establishment line, i.e., "bail out the banks."

To heap hand grenade on dynamite for the euro, in France Sarkozy, who has served as German Chancellor Merkel's faithful toady in bailing out the banks, was overthrown by a socialist, Hollande. Don't get too excited, in spite of the name the Socialists in France are roughly like Demos and Repubs here, an establishment party. Expect no revolution there.

All this sayeth not exactly that Greece will exit the euro and the euro will implode, but it surely increaseth the likelihood. Markets thought so, anyway. The Nice Government Men in the US must have lost lots of sleep over the weekend as those rogue elections sent the dollar shooting above 80: "Send in the Manipulators!" Didn't do the euro any good, It gapped down and fell clean to 1.2960 over the weekend, but climbed above $1.3000 to end today at $1.3053, down only 0.24%. That $1.3000 stands as the Euro's last support between it and $1.2600. Japanese yen stayed out of the fray, closing at 125.18c (Y79.88/US$1), about unchanged.

US DOLLAR INDEX closed up only 8.5 basis points (0.11%). That leaves it ambiguously poised just above its 20 day moving average (79.33) but beneath the upper boundary of the triangle (or diamond) it's been painting since January. If the euro breaks $1.3000 and gets into serious trudging, dollar could hit 81 overnight, nice government men notwithstanding.

Strange, strange US stock markets today. Dow chart looks like an ironing board, with most of the action in the legs, down below Friday's close. Dow lost 29.74 points (0.23%) to end barely clinging by its hangnails to 13,000 at 13,008.53.

On the other hand, the S&P500 and Nasdaq Comp. charts look nearly identical, with both indices underwater until 12:30, then rising to end the day barely up (0.04% and 0.05%). S&P500 gained a -- get out your magnifying specs -- 0.48 point -- to 1,369.58.

Last week I kept telling y'all about that head and shoulders in the stock charts, and this week the S&P500 stands right on the neckline, ready to fall through that trap door. Dow has not yet completed its right shoulder, but today closed below its 20 and 50 DMAs (13,044 and 13,062). If any of this argues for higher stock prices, it's such a squeaky small voice I can't hear it.

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.

Caesar Bryan - The Federal Reserve Is Under The Gun & Gold

Posted: 07 May 2012 09:57 AM PDT

With continued volatility in gold and silver, today King World News interviewed 25 year veteran Caesar Bryan. Gabelli & Company has over $31 billion under management and Caesar Bryan has managed the gold fund since its inception in 1994. Caesar told KWN Europe is moving away from austerity and the fundamentals for gold are still solid. He also addressed the mining shares, but first, here is what Caesar had to say about the situation in Europe: "There is a difference between the underlying fundamentals on gold and current sentiment. The fundamentals for gold are still very solid. We are going to move from an austerity program in Europe to more of a political program in Europe."

This posting includes an audio/video/photo media file: Download Now

Toxic Spiral: Greek Office Vacancies Soar As Tourism Industry Implodes

Posted: 07 May 2012 09:35 AM PDT

While the theatrics of the Greek parliamentary elections are all good and fine, keeping the masses distracted, and will most likely provide an encore performance in just about one month as no government will likely be formed under the current configuration of elected parties, the reality is that unless something drastically changes for the better in the Greek economy, the political situation will only get more and more chaotic until finally the country succumbs to outright anarchy, and possibly far worse. Unfortunately, as history has shown us, economic depressions usually become toxic death spirals where absent major external shocks, there is no hope of recovery. Sure enough, the latest news of Greece confirms just that. As Ekathimerini reports, the real news is that while superficially change may be coming to Greece, beneath the surface absolutely nothing is improving and in fact things are getting worse as measured by two key indicators: i) vacant Athens office space, which has soared to 20% in Q1 2012 compared to 15.5% a year earlier, which means far less corporate tax revenues and business spending, and ii) the lifeblood of the Greek economy - foreign tourism - is drying up, plunging by 12.5%, as foreigners suddenly have better things to do than go to countries better known for the Syntagma Square riot cam than the beaches of Santorini. Not surprisingly, the biggest source of foreign tourists, Germany, has seen its share dry to a trickle from 15% to just 3% - one can't imagine why those called Nazis by the neo-Nazis would have reservations about spending 2 weeks in the former tourist haven. The result: far less tax revenues, far greater reliance on debt as source of cash, and an economic collapse in 2012 that will put 2011 to shame. So much for the IMF estimate of an unchanged GDP print in 2013 on which the entire second Greek bailout package was based...

From Kathimerini:

Athens has the highest rate of empty office space in Europe, according to data for the year's first quarter presented by BNP Paribas Real Estate.

Its report on the course of the European office market showed that the availability rate in the Greek capital soared to 20 percent in the January-March period from 15.5 percent in the same period last year.

This clearly illustrates the blow that the recession has inflicted on the country's business activity, resulting in a major drop in demand for the lease of office space.

High-standard offices in the city's main business districts have an annual lease rate of 216 euros per square meter, against an average of 264 euros/sq.m. last year. Athens's rate is on a par with those of The Hague, Bucharest and Lisbon.

And even worse:

Online tourism bookings from abroad are pointing to a 12.5 percent decline for this year, according to the Airfasttickets travel agency.

Nikos Koklonis, head of the company that owns the agency, says that the biggest drop in bookings for Greek destinations this year is from the German market, which last year accounted for 15 percent of all bookings. Its share has now shrunk to just 3 percent.

Surprisingly, most bookings from abroad this year originate from Italy, followed by Britain, Spain, France and Austria. One in four clients the agency handles chooses Greece as its destination.

Association of Hellenic Tourism Enterprises president (SETE) Andreas Andreadis expects receipts from tourism to drop below 10 billion euros this year, after climbing to 10.5 billion in 2011.

Well, at least Santorini has not erupted yet...

Enemy of Finance?

Posted: 07 May 2012 08:53 AM PDT

Dave Gonigam – May 7, 2012

So will the Greeks leave the euro… or will the Germans beat them to the punch? Dan Amoss with the investing take-aways from European elections
Chris Mayer unearths the story China bulls refuse to see in U.S. earnings
Oil prices slump, but a wedding shoot-'em-up highlights a new crude threat… Food prices retreat, but for how long?
Going for "mock trade" winner No. 10… reader worries about being put on "the list"… unprecedented access to Chris Mayer's high-end advisory… and more!

"My real enemy," declared the president-elect of France, "is the world of finance." The world of finance, for its part, seems rather unconcerned.

For a few hours last night after the election results from France and Greece, index futures looked ugly, indeed. But in the end, traders have gone all Alfred E. Neuman on us.

The Euro Stoxx 50 index ended the day up more than 1.5%. Here in the States, the S&P sits where it did at Friday's close. The Dow is holding on, however tenuously, to 13,000.

And with that, stocks have yawned in reaction to a new phase of the most-boring financial crisis in world history. Beneath the surface, however, lurk some new threats, indeed…

"In France," says our macro strategist Dan Amoss, "there's no political appetite for even mild spending cuts (like raising the retirement age by a year)."

"The new president will push for Keynesian stimulus spending that could ultimately push France into the PIIGS league."

France is already so badly in hock that interest on the debt is the second-biggest line item in the budget, after education. And M. Hollande, the new president, plans to dig even deeper into an empty pocket for 60,000 more education jobs.

For the moment, France's CAC 40 index already priced in the news; it closed the day up 1.7%. But make no mistake; the election result could prove "a sharp turning point in the ongoing eurozone crisis," says Dan — "perhaps a hyperinflationary endgame for the euro currency and a return to the deutsche mark for Germany."

"The Greek election results increase the chances of a 'hard default' on its debt in 2012," Dan adds.

"Many Greek political parties want to renegotiate the terms of their bailout, and they will find a cold reception from core countries like Germany."

The results from the Greek parliamentary elections might prove instructive wherever you live: For months, the parties generally considered "adult" and "responsible" had insisted the only way to solve Greece's crushing debt load was to take on even more debt as a condition of securing additional bailout funds from the European Union and the IMF.

A few voters, recognizing this plan isn't working, opted for the far left and neo-Nazi right — handing those parties enough seats to deny anyone a majority.

Traders can deal with "the devil they know" in France. But they can't handle uncertainty; Greece's ASE index was crushed another 6.7% today. From its October 2007 high, it's down 88% — a drop on the scale of the United States, 1929-32.

"Bottom line," says Dan: "Germany may decide to bite the bullet, leave the euro and recapitalize its own banks."

"If so, the euro would go the way of the numerous French currencies of the 20th century. The PIIGS plus France would be left in a Latin American-style inflationary depression, while Germany would find its export powerhouse hamstrung (but not overcome by) the strength of its own currency."

The investment take-away: "Avoid all European stocks, especially banks."

Something's different about earnings season this quarter, says Chris Mayer: "There are a number of companies citing China's slowdown as the cause of earnings shortfalls."

There was Caterpillar, the big earthmoving equipment maker. It overestimated Chinese demand. "Its inventories in China were so high it was now moving machines to other developing countries where demand was still tight," says Chris. "Caterpillar is now forecasting Chinese construction demand to fall 5-10% this year."

Then there was UPS: Demand volumes to and from Asia are, to use its own words, "flat." So it's cut 10% of Asian capacity, and it may not be done yet. "'Asia' pretty much means 'China,'" Chris points out.

"There were others," he says, "but these two stuck out because they are good bellwethers of broader activity. In the other camp, you still have delusional executives such as the team at Vale — the big Brazilian iron ore miner. They think demand from Chinese steel mills will accelerate, despite all evidence so far that, if anything, Chinese steel demand is falling."

Chris warned of a China slowdown in this space more than nine months ago. "Now there is no doubt of a slowdown," he says.

"The debate is how low it will go. Right now, officially, China is growing 8% — if you believe government numbers. (I don't.) And this is what consensus falls back on: 'Well, China is still growing 8%…' But that is hard to square with what we see coming out of companies there."

"Meanwhile, the U.S. seems to be getting attention as a positive" in the same earnings reports, says Chris. "UPS was upbeat on the U.S. economy. Oddly, that's where all the good news was in its report."

"In an update on the competitiveness of U.S. manufacturing, GE CEO Jeff Immelt said: 'The sheer competitiveness of the U.S. is better than at any time in the past 25 years.'"

"GE wants to build up its industrial businesses. In the last decade, it's become more of a finance company. So this was another meaningful snippet on the brighter outlook for U.S. manufacturers."

Thus, an opportunity Chris has unearthed — a U.S. company already beating China at the manufacturing game. By his calculations, it could deliver a 143% gain in the next 24 months. And you can learn all about it only minutes from now with Chris' high-end advisory, Mayer's Special Situations. We're making it available at in a remarkable "2-for-1" offer for the next few hours. Details here.

Like most of the eurozone stock indexes, the euro currency is holding up under the weight of the election news — down, but not overwhelmingly, to $1.306. Thus, the dollar index is up slightly to 79.6.

Precious metals are reacting little to the news. Gold is off a couple of bucks to $1,639. Silver's holding the line on $30, barely, at $30.08.

But the euro-scare has dealt another blow to crude. A barrel of West Texas Intermediate is down more than 1%, to $97.29.

For a few moments last Friday, it traded below $96 — a dramatic move that our market-sentiment maven Abe Cofnas says can't stick.

"This week," he writes, "our mock trade is U.S. crude. Its huge drop on Friday presents a great opportunity for a double-digit return."

Indeed, Abe expects crude to end the week above $98.25. If it does, it would mean a four-day gain of 108%… based on a price move of only 0.4%.

"I call it vibrating your way to profits," he says. Indeed, tiny moves can deliver big gains in the market Abe follows, unique among North American trading advisories.

Abe's had nine winners in 10 plays here in The 5. If you think you'd like to try his trades for real, here's your chance.

A gunfight at a wedding party in Africa over the weekend spotlights one of the ongoing threats to oil prices.

"Separate attacks in northeast Nigeria targeting a village and a wedding party killed at least eight people Saturday," reported The Associated Press, "in a region that remains under near-daily assault by a radical Islamist sect, authorities said."

Nigeria's a messy, complex place. But two things are for certain: It's one of the United States' top five oil suppliers. And there's a huge Christian-Muslim divide there.

The two factors are slowly coming together: "Nigeria's oil production is under threat," says UPI, "because of escalating piracy off West Africa, a simmering insurgency in the Niger Delta, the theft of up to 150,000 barrels a day by militants and pirates and deadly Islamist terrorism linked to al-Qaida."

Food prices worldwide took a breather in April… but they're still sky-high and new threats loom, says the United Nations Food and Agriculture Organization, or FAO.

The FAO food price index fell for the first time in three months… but it remains at a very high level by recent standards.

What's more, weather threats remain. The corn and soybean crops are especially vulnerable.

"Although the production outlook for corn has improved, it will unlikely be enough to compensate for the low stocks-to-use ratio," warns FAO grains analyst Abdolreza Abbassian. "The upcoming summer will be critical to U.S. yields and if there are any weather problems, this could push up the price."

Persistently high food prices open up a unique investment space, one Chris Mayer has spotlighted before: phosphate. You can't make fertilizer without it. And supplies are having trouble keeping up with the world's growing food demand. It's the "gravest resource shortage you've never heard of," says Foreign Policy magazine.

Chris has identified a phosphate play set to deliver big gains as the chart above stays near historical highs. He's also found an oil play — far from Nigeria — with 200% or more profit potential over the next 12 months. Plus the aforementioned U.S. manufacturing play that's putting China to shame.

He's eager to tell you about all three of them… and we're eager to provide you access to his premium advisory, Mayer's Special Situations. In the last two years, readers have collected gains of 77%… 136%… even 463%. You can join their ranks and secure an unprecedented deal — including a year of free access — through midnight tonight. It's available at this link.

"That," says a reader who caught our item about 600,000 people leaving the U.S. workforce last month, "can only mean the simple fact that fewer people need to support more people whether through government plans, retirement plans, charity plans, family plans or some other plan.

"Good thing there are so many plans to take care of the problem!"

"I am surprised," a reader writes, "you missed the story of the college student detained by the DEA for four days in San Diego!"

"He was thrown in a cell and forgotten! He drank his own urine to survive, and finally was taken to a hospital barely alive! That is the scariest scenario I have read about; even Guantanamo residents are fed. It sounds like a story of someone that had been kidnapped by the Taliban!"

"Now I am scared, and will have to hide food and water in my underwear going back to the USA. I am sure that I am on the LIST now for getting Agora!"

The 5: We only have so much room for the government's outrages in our mere 5 Mins.

As for "the list"… you might as well go "all in" and join the (intellectual) resistance.

Cheers,

Dave Gonigam
The 5 Min. Forecast

P.S. "The teachings of the principles of economics," writes professor Peter Boettke, "should inform as much on what not to do, perhaps even more than providing a guide to public action."

In other words, hands off. Or laissez faire.

"His new book," writes Laissez Faire Books executive editor Jeffrey Tucker, "which ought to be read by every college student who secretly suspects that economics is not as dreary as they say, is Living Economics, just published by the Independent Institute. It's a big book, but a luxurious read from Pages 1 to 450."

Mr. Tucker's review got a ton of traffic over the weekend from Marginal Revolution, one of the most widely read economics blogs out there. You can read the review for yourself at this link. Just click under "editorial reviews"… and then get yourself a copy!

P.P.S. Final reminder: You can get a full year of Chris Mayer's premium advisory, Mayer's Special Situations, absolutely free… if you act before midnight tonight.

A Market Full Of Sound And Fury Signifying Unch

Posted: 07 May 2012 08:37 AM PDT

Three important things occurred today: 1) US equities converged down to high-yield credit's less sanguine view of the world; 2) US equities converged to US Treasuries hope-less view of the world; and 3) Gold was the leading indicator for where risk assets should be today - as its stability was the only rock upon which to anchor expectations of intervention once again. The equity market fulfilled every technical analyst's wet dream today with a low volume gap-fill - which notably left today's VWAP at almost exactly the closing price from Friday (i.e. gave bigger players a chance to get out without losing their short - which was exemplified by the sell-off into the close on much bigger than average trade size). Never have we heard just whimsical exuberance at the market closing practically unchanged (ES +2pts) but critically risk markets in general did nothing but revert ahead of tomorrow's real action as the UK (and that means the European credit market) comes back from a long-weekend. Broadly speaking - US equities outperformed risk-assets modestly until the late-day give back dragged them back to reality but overall - IG credit underperformed, HYG outperformed (inflows dominant), and HY and S&P 500 e-mini futures (ES) stayed in sync. The morning's excitement about WTI being down so much and the consumer buying more iPads was short-lived as it surged back above $98. Copper outperformed (and Silver underperformed) but Gold which was modestly lower was the picture of stability and the USD, Treasuries, and Stocks all pulled up to meet its reality. Treasuries ended the day unchanged after dropping 4-5bps in yield at their open last night. The USD is fractionally higher from Friday's close though EURUSD limped higher all-day to 1.3050 (though remains rich to its swap-spead-implied fair-value). AUD weakness into the close stumbled the risk-on vibe and we note that a quite dramatic drop from the open in VIX today has the volatility term-structure back to its flattest in five-months.

ES filled its overnight gap, pushed to nearby resistance, and as VWAP hit Friday's close, exits started (blue bars at right) as we pulled back close to unchanged and support...

Notice below that once VWAP (light blue line) had reached up and filled the gap to Friday's lows, volume (red oval) started to pick up and form the top in stocks - leaving ES with a closing VWAP almost exacvtly (green arrow) equal to Friday's close - who says algos dominate trading eh? ES auctioning up like this to fill the gap and not following through does not suggest risk-on...

HYG (high yield bond ETF) and SPY (stocks) have reconverged after a couple of months of hope...

We called it last night with Gold's stability and sure enough it seemed a strange attractor for today's reversion as perhaps Gold's insight into intervention was enough to snap equities back to unchanged (though if the Fed is willing to move on a -1.5% day - we are all in for a treat over the next few years)...

HYG outperformed (after opening on its 50DMA and bouncing) only to fall back towards the close (on a side note, HYG vol looks modestly cheap relative to SPY vol if anyone is looking to play some low cost lomng vol trades here). IG underperformed significantly (while HY clung to ES all day) and chatter was that credit was quiet but some tranche hedging (and cheap macro protection buyers) as opposed to down-in-quality rotation was evident...

It did not take much for stocks to dump to convergence with Treasuries reality but of course they had to pull away higher today once again - will Treasuries prove right once again?

Equities pulled away from broad risk assets (CONTEXT) around the US day session open (green arrow) and correlation (which was extremely high overnight) started to flag. As we closed, equities drifed back to risk-asset reality...

and finally the volatility term structure has flattened to five-month lows...

So while European sovereigns were weak today, and stocks bounced, the credit connection in Europe is yet to awaken and if IG's performance over here is anything to go by, we will see any early bounce in Europe tonight get sold...

Charts: Bloomberg and Capital Context

Bonus Chart: EUR-USD swap spreads imply EURUSD at least 80pips lower here...

“America Has Become a Piñata…”

Posted: 07 May 2012 08:27 AM PDT

"America's national government has moved way beyond a political spoils system," wrote Charles Goyette in his book The Dollar Meltdown. "A spoils system leaves the host alive so that a politician's occasional ne'er-do-well brother-in-law can be put on the payroll."

In contrast, Goyette suggested, "America has become a piñata: Everybody gets a crack at it. Presidents and other elected officials pass the big stick around as a reward to those who help keep them in charge of the piñata party."

Goyette's book came out in 2009. Since then, we have learned that the party is even more debauched, nay demented, than he ever imagined. And you, dear reader, were not invited…

It turns out Federal Reserve officials hold regular meetings with well-connected insiders, tipping them off to future Fed moves. On Aug. 15, 2011, Chairman Ben Bernanke clued in an economist named Nancy Lazar about "Operation Twist" — the Fed's attempt to bring down long-term interest rates.

Ms. Lazar's clients, according to The Wall Street Journal, pulled down double-digit returns on 10-year Treasuries between the time of that meeting and the time Operation Twist was unveiled to the public on Sept. 21. Sorry you missed out.

Treasury Secretary Hank Paulson sat down for lunch with hedge fund managers on July 21, 2008, and informed them a federal takeover of Fannie Mae and Freddie Mac was imminent. Ten days earlier, he swore up and down to Congress no such takeover was in the works.

The takeover, in fact, occurred on Sept. 6 — giving the hedge fund managers their own handsome payday in a six-week span. Again, you were excluded.

Before you object too loudly, we daresay you might wish to consider the consequences.

The Repeal of Habeas Corpus? When Free Speech No Longer Matters

On December 31, 2011, President Obama signed the Department of Defense Authorization Act into law. This is normally the routine annual budget for the Pentagon. But inserted into this year's bill is language giving the president the authority to use the military to imprison terrorism suspects — including US citizens — indefinitely, and without charges.

In other words, the "great writ" of habeas corpus is in danger of repeal. No longer would the government have to justify to a judge why it holds someone in custody.

"Take away this great writ," writes The Future of Freedom Foundation's Jacob Hornberger, "and all other rights — such as freedom of speech, freedom of religion, freedom of the press, gun ownership, due process, trial by jury and protection from unreasonable searches and seizures and cruel and unusual punishments — become meaningless."

Without habeas corpus, you could be thrown in prison for the "terrorist" act of criticizing the government and the government would never have to declare the precise reason it hauled you away. And in theory at least, the First Amendment would still be in force!

"This defense bill," says The Rutherford Institute's John Whitehead, "not only decimates the due process of law and habeas corpus for anyone perceived to be an enemy of the United States, but it radically expands the definition of who may be considered the legitimate target of military action."

"This bill will not only ensure that we remain in a perpetual state of war — with this being a war against the American people — but it will also institute de facto martial law in the United States."

135 SWAT Raids per Day: "Life Goes on, But It Is Debased…"

Rampant corruption and the apparatus for wide-scale repression: These are the hallmarks of what military theorist John Robb calls "the hollow state."

"The hollow state has the trappings of a modern nation-state ('leaders,' membership in international organizations, regulations, laws and a bureaucracy), but it lacks any of the legitimacy, services and control of its historical counterpart," Robb wrote in 2008. It is merely a shell that has some influence over the spoils of the economy.

"The real power," Robb continues, "rests in the hands of corporations and criminal/guerrilla groups that vie with each other for control of sectors of wealth production. For the individual living within this state, life goes on, but it is debased in a myriad of ways. The shift from a marginally functional nation-state in manageable decline to a hollow state often comes suddenly, through a financial crisis."

It is in this context that the growing "militarization" of police looks even more ominous than it does on the surface.

The Pentagon has distributed $2.6 billion in military surplus to local police agencies since 1997. Thus do towns of only a few thousand people have their own SWAT teams. Time was their use was limited to hostage-takings and other high-stakes situations. SWAT raids nationwide numbered only 3,000 per year in the early 1980s, according to University of Eastern Kentucky criminologist Peter Kraska.

Nowadays, SWAT teams are used to serve routine warrants. By the time Kraska stopped counting in the mid-2000s, the annual number had exploded to 50,000 — an average of more than 135 per day.

What happens when the tinder-dry combination of piñata-party corruption and a police-state structure meet the spark of violence?

We don't know where all this is going… but we know it makes us uneasy…which is why we are increasingly interested in casting our gaze for investment opportunity far, far away from US shores.

The US remains a land of (some) opportunity, but it has lost its monopoly.

Regards,

Addison Wiggin,
for The Daily Reckoning

"America Has Become a Piñata…" 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?".

Gold Seeker Closing Report: Gold and Silver End Slightly Lower

Posted: 07 May 2012 08:21 AM PDT

Gold fell to $1632.98 at around 11AM EST before it bounced back higher midday, but it still ended with a loss of 0.23%. Silver slipped to as low as $29.665 before it also rebounded, but it still ended with a loss of 0.76%.

Gold Daily and Silver Weekly Charts - Psycho Killers Qu'est-ce Que C'est?"

Posted: 07 May 2012 08:18 AM PDT

This posting includes an audio/video/photo media file: Download Now

JUST READ THE MANUAL

Posted: 07 May 2012 07:26 AM PDT

Is this just tinfoil hat stuff, or is the government preparing for the inevitable collapse of our economic system? You decide. Resettlement Camps: May Be Performed As DOMESTIC Civil Support Operations Mac Slavo May 7th, 2012 SHTFplan.com We've known for years that the U.S. Military has been preparing for civil unrest and riot response [...]