Gold World News Flash |
- Ex-Fed Governor Warsh again confirms gold price suppression
- FITCH HAS JUST DOWNGRADED JP MORGAN 1 NOTCH FROM AA- TO A+, NEGATIVE WATCH
- Rick Rule – This Can Bring Down the Entire Financial System
- By the Numbers for the Week Ending May 11
- How Do Bank Runs Start?
- Gold, silver, copper mining could get Haiti off international welfare
- Silver Update 5/10/12 Jamie's Cryin
- How You Can Profit From the Market's Next Big Collapse
- Silver COT (CFTC - Commitment of Traders) for Period 4/26-5/8
- Gold Bulls Weakest in Month as Investors Buy Dollar
- The Yuan, Rupee and Physical Silver Demand
- Gold Price was Hammered Hard this Week Down $61.10 Gains Made Swapping Gold into Silver
- The Power of Relative Value and the Silver Market! Wow!
- Goldman Market Summary: "Long-Only Buying Vs. Hedge Fund Selling"
- The Next Nasty Surprise
- 20 Years From Now: Gold @ $12,000 & Silver @ $1,000?
- Gold and Silver Disaggregated COT Report (DCOT) for May 11
- Quest for Confidence
- Gold Bull Climaxes
- Gold Seeker Weekly Wrap-Up: Gold and Silver Fall About 4% on the Week
- Treasury Yields Post Longest Consecutive Weekly Decline In 14 Years As Credit Tumbles
- Money Slow Down
- Gold Is Not a Growth Industry—It Can Just Pay Investors Big: John Hathaway
- The Bottom Is Not In Yet For Gold Or Gold Stocks ? Here?s Why
- FT's Gillian Tett provides the rationale for gold price suppression
- Egon von Greyerz: Gold -- what correction?
- Gold, Silver Hit 4-Month Lows as 'Fed Effect' Wears Off
- Gold, Silver Hit 4-Month Lows as 'Fed Effect' Wears Off
- FT's Gillian Tett provides the rationale for gold price suppression
| Ex-Fed Governor Warsh again confirms gold price suppression Posted: 11 May 2012 06:12 PM PDT By Chris Powell, GATA:
Warsh's letter from 2009 denying access to the Fed's gold records is here:
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| FITCH HAS JUST DOWNGRADED JP MORGAN 1 NOTCH FROM AA- TO A+, NEGATIVE WATCH Posted: 11 May 2012 05:59 PM PDT from Silver Doctors:
Full release below: Fitch Ratings-New York-11 May 2012: Fitch Ratings has downgraded JPMorgan Chase & Co.'s (JPM) Long-term Issuer Default Rating (IDR) to 'A+' from 'AA-' and its Short-term IDR to 'F1′ from 'F1+'. Fitch has placed all parent and subsidiary long-term ratings on Rating Watch Negative.
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| Rick Rule – This Can Bring Down the Entire Financial System Posted: 11 May 2012 05:49 PM PDT from KingWorldNews:
Rick Rule continues @ KingWorldNews.com
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| By the Numbers for the Week Ending May 11 Posted: 11 May 2012 04:07 PM PDT This week's closing table. If the image is too small click on it for a larger version. That is all for now, but there is more to come.
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| Posted: 11 May 2012 02:52 PM PDT by Bix Weir, Road to Roota:
These are the questions that will be asked in the days and weeks that follow. Jamie Dimon showed his cards yesterday when he said this… "I do want to remind you that none of this has anything to do with clients." (Listen to the call here). It took just a few days for "clients" of Lehman Brothers to head for the hills which ate up their tier one capital almost instantaneously. Leverage is great when you are winning but a real bitch when you are losing. It is clear to many that JP Morgan's losses are just beginning to surface so how long will it take for their "clients" to head for the hills? Will JPM still be solvent next week? Who knows. I do know one thing though. Every single holder of the "Big Silver Short" has gone belly up! It started with Drexel Burnham in the 1980′s then got passed to AIG then Bear Sterns and it now presides at JP Morgan. If no one takes the torch from JPM we will see the end of Silver market manipulation very soon. Have a restful weekend.
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| Gold, silver, copper mining could get Haiti off international welfare Posted: 11 May 2012 02:38 PM PDT Haiti Hopes Ore Find Will Spur Mining Boom By Martha Mendoza http://www.google.com/hostednews/ap/article/ALeqM5iQ2SuH1RWmiDf088vyEsVY... TROU DU NORD, Haiti -- Its capital is blighted with earthquake rubble. Its countryside is shorn of trees, chopped down for fuel. And yet Haiti's land may hold the key to relieving centuries of poverty, disaster, and disease: There is gold hidden in its hills -- and silver and copper too. A flurry of exploratory drilling in the past year has found precious metals worth potentially $20 billion deep below the tropical ridges in the country's northeastern mountains. Now, a mining company is drilling around the clock to determine how to get those metals out. In neighboring Dominican Republic, workers are poised to start mining the other side of this seam later this year in one of the world's largest gold deposits: 23 million ounces worth about $40 billion. The Haitian government's annual budget is $1 billion, more than half provided by foreign assistance. The largest single source of foreign investment, $2 billion, came from Haitians working abroad last year. A windfall of locally produced wealth could pay for roads, schools, clean water and sewage systems for the nation's 10 million people, most of whom live on as little as $1.25 a day. "If the mining companies are honest and if Haiti has a good government, then here is a way for this country to move forward," said Bureau of Mines Director Dieuseul Anglade. ... Dispatch continues below ... ADVERTISEMENT Prophecy Platinum (TSXV: NKL) and Ursa Major Minerals Company Press Release VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) and Ursa Major Minerals Inc. have signed a binding letter of agreement for a business combination through a proposed all-share transaction. In doing so Prophecy and Ursa have acted at arm's length and the transaction has been negotiated at arm's length. Prophecy will issue one common share in exchange for every 25 outstanding common shares of Ursa. Ursa options and warrants will be exchanged for options and warrants of Prophecy on an agreed schedule. Prophecy's offer represents a value of about $0.15 per each common share of Ursa based on Prophecy's share price of $3.70 as at March 1, representing a premium of 130 percent to Ursa's March 1 closing price of $0.065. Prophecy is to subscribe for $1 million common shares of Ursa by way of private placement financing at $0.06 per share, subject to regulatory approval. Upon placement completion, John Lee and Greg Hall, current Prophecy directors, will be appointed to Ursa's board. Prophecy thus will become a mid-tier resource company with a robust and diversified pipeline of platinum nickel projects, including: -- The fully permitted open-pit Shakespeare PGM-Ni-Cu mine close to Sudbury, Ontario, infrastructure with near-term production capabilities. -- The flagship Wellgreen (Yukon) PGM-Ni-Cu project with more than 10 million ounces of Pt-Pd-Au inferred resource. Drilling is under way and a preliminary economic assessment study is pending. -- Manitoba's Lynn Lake Ni-Cu project with more than 262 million pounds Ni and 138 million pounds Cu measured and indicated. For the complete announcement, please visit Prophecy Platinum's Internet site here: http://www.prophecyplat.com/news_2012_mar02_prophecy_platinum_ursa_major... In a parking lot outside Anglade's marble-floored office, more than 100 families have been living in tents since the earthquake. "The gold in the mountains belongs to the people of Haiti," he said, gesturing out his window. "And they need it." Haiti's geological vulnerability is also its promise. Massive tectonic plates squeeze the island with horrifying consequences, but deep cracks between them form convenient veins for gold, silver and copper pushed up from the hot innards of the planet. Prospectors from California to Chile know earthquake faults often have, quite literally, a golden lining. Until now, few Haitians have known about this buried treasure. Mining camps are unmarked, and the work is being done miles up dirt roads near remote villages, on the opposite side of the country from the capital. But U.S. and Canadian investors have spent more than $30 million in recent years on everything from exploratory drilling to camps for workers, new roads, offices and laboratory studies of samples. Actual mining could be under way in five years. "When I first heard whispers of this I said, 'Gold mines? There could be gold mines in Haiti?'" said Michel Lamarre, a Haitian engineer whose firm, SOMINE, is leading the exploration. "I truly believe this is our answer to taking care of ourselves instead of constantly living on donations." On a rugged, steep Haitian ridge far above the Atlantic, brilliant boulders coated with blue-green oxidized copper jut from the hills, while colorful pebbles litter the soil, strong indicators that precious metals lie below. "Just look down," said geologist John Watkins. "Where there's smoke, there's fire." Nearby, 8-year-old Whiskey Pierre and his barefoot buddies stared at a team of sweat-drenched men driving a narrow, shrieking diamond bit 900 feet into the ground. "That is a drill!" shouted Whiskey, bouncing on his toes. "The man drill to get gold!" The workers periodically pulled up samples and knocked them into boxes. The first 40 feet yielded loose rocks and gravel. About 160 feet down, cylinders of rock came back peppered with gold. At 1,000 feet down, rocks were heavily streaked with copper. Geologists extrapolating from depth and strike reports estimate at least 1 million ounces of gold at two sites. In April, prospectors found the first significant silver ever reported in Haiti: between 20 million and 30 million ounces. And in the end, it may be copper that is the most lucrative: geologists suspect that more than 1 million tons lay in just one of many areas under exploration. The prices of precious metals have been volatile in recent years, with copper selling for about $8,000 per ton, silver at $30 an ounce, and gold at $1,600 per ounce. "Ultimately, I think mining is going to dwarf anything else in Haiti," says Michael Fulp, an Albuquerque, N.M.-based geologist who visited the drill sites. "Usually you've got about a one-in-1,000 chance of making a mine from the exploratory stage, but those odds are much better in Haiti because of the lack of any previous modern-day exploration and very, very promising samples." Gold was last gathered in Haiti in the 1500s, after Christopher Columbus ran the Santa Maria onto a Haitian reef. Spaniards enslaved the Arawak Indians to dig for gold, killing them off with harsh conditions and infectious diseases. When the Spaniards learned of even more lucrative deposits in Mexico, they moved on. In the 1970s, United Nations geologists documented significant pockets of gold and copper, but foreigners weren't willing to risk their cash in a country where corruption and instability has long discouraged outside investment. Ironically, it was only after the catastrophic 2010 earthquake that investors saw real opportunity. Fifteen days after a seismic jolt brought down much of Port-au- Prince, a Canadian exploration firm acquired all of the shares of the only Haitian firm holding full permits for a promising chunk of land in the northeast. "Investors want to get in at the bottom," said Dan Hachey, president of Majescor Resources, the Canadian company, "and I figured after that earthquake, Haiti was as low as it could get." Hachey was also betting that the $10 billion in foreign assistance promised for earthquake recovery would force change and accountability. "The eyes of the world will not allow the government to fool around," he said. Three firms are considering mining in Haiti, but so far only SOMINE has full concessions to take the metals out of the mountains. Those permits, for 50 square kilometers (31 square miles), were negotiated in 1996 under President Rene Preval and require the firm to hire Haitians whenever possible. In exchange for minimal permit fees, SOMINE committed to spend $2.25 million in the first two years. In addition, it will pay $1.8 million after a feasibility study, according to the contract. Bottom line: Haitians should get $1 out of every $2 of profits, compared with about $1 out of $3 that most countries get from mining firms. Discoveries of rich resources, whether diamonds, oil or gold, often prompt great economic booms but come with great risk of environmental, health and social problems. Chile, one of the wealthiest nations in Latin America, is the world's largest copper exporter, deriving a third of its income from the metal. Peru, with one of the fastest growing economies in the world, has privatized most of its mines in recent years, and now gets about 20 percent of its total revenues from the industry. Though the contractual terms are generous for Haiti, there is plenty to be cautious about. Haiti's government is repeatedly rated as one of the most corrupt in the world. The mines would ostensibly be regulated by government officials responsible for enforcing environmental, mining and corporate laws, but at this point those officials don't exist and there are neither plans nor budgets to hire them. Further, open pit mines, common around the world, are crater-like holes made up of a series of massive terraced steps that drop thousands of feet into the ground. When the resources are exhausted, usually after about 25 years, the pits can be refilled or converted into reservoirs. In many cases, the mines leave serious problems — environmental contamination, displaced communities and mountaintops torn asunder. From Papua New Guinea to the Philippines to Brazil, mining accidents have allowed tons of waste to be spilled into rivers and lakes, creating environmental disasters. "In low-income countries, the dangers are substantial," said UCLA political science professor Michael Ross. "The great irony of mineral wealth is that those countries that most desperately need infusions of mineral revenue — low-income countries with weak governments -- are also least likely to manage these resources wisely, for the benefit of the country. Already, the hundreds of jobs, the new roads and the community investment in a country where two out of three people have no formal employment is much appreciated. Stone cutter Joseph Bernard, 47, says that before he got a job slicing rock samples, his family was going hungry. They had one cow. Their peanut and bean fields had gone to dust after months without rain. Today, his wife has launched a business selling seeds, and his son and two daughters have started school. "I found a job, but many didn't," he said, wiping a trickle of sweat from his deeply lined cheeks after a recent shift. "If more companies come, more people will work." In a sleepy exploration camp at sunset, Hachey and his competitor, Daven Mashburn of Newmont Mining Corp., met to talk business over bottles of Haiti's Prestige beer, bumping fists in the low-germ "cholera handshake" that has replaced the traditional palm grip after last year's deadly epidemic. The men talked labor -- Newmont got 10,000 applications for 100 jobs when one project started up last month. They talked logistics -- core samples are sliced in half, bagged, and flown to Santiago, Chile, where it takes 21 days to find out how much gold, silver or copper they contain. They talked hurricanes, cholera, political unrest, and, yes, the earthquake -- Mashburn spent four hours buried under piles of rock in Port-au- Prince, eventually pulled out with fractures from head to toe. But mostly they talked about gold. "Of all the places we work in the world," said Mashburn, whose company has operations in eight countries on five continents, "it would be really most satisfying to have success here. Haiti has great mineral wealth, and they surely could use it." 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: ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf
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| Silver Update 5/10/12 Jamie's Cryin Posted: 11 May 2012 02:34 PM PDT |
| How You Can Profit From the Market's Next Big Collapse Posted: 11 May 2012 10:46 AM PDT If you think the bloodbath is over for natural gas stocks, think again... Despite falling 50% over the past year, many natural gas stocks are about to enter another major decline. Read More...
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| Silver COT (CFTC - Commitment of Traders) for Period 4/26-5/8 Posted: 11 May 2012 10:32 AM PDT Commercials bought a huge 3,032 longs and covered a mild -2,812 shorts to end the week with 47.94% of all open interest and now stand as a group at -89,495,000 ounces net short, a mammoth decrease of almost 20,000,000 ounces ... Read More...
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| Gold Bulls Weakest in Month as Investors Buy Dollar Posted: 11 May 2012 10:30 AM PDT by Nicholas Larkin, Bloomberg:
Europe's financial turmoil is reigniting on the second anniversary of policy makers' first attempt to curb Greece's debt crisis. Demand for physical gold in India, last year's biggest buyer, was almost double the daily average when gold traded close to $1,580.
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| The Yuan, Rupee and Physical Silver Demand Posted: 11 May 2012 10:23 AM PDT May 10th, 2012 by Dr. Jeffrey Lewis China and India together account for a considerable amount of the current demand for physical silver. Each emerging market country has a strong base of support for silver from individual investors, who often purchase the physical metal as jewelry and bullion since it is thought to provide a more reliable store of value than the local currency. Each country also uses silver in various manufacturing processes that result in products intended for export to more developed countries. An especially notable growth of silver use has occurred in China lately as Chinese solar cell manufacturing has expanded tremendously in recent years. This and other factors have resulted in China shifting from being a major exporter of silver to being a net importer of the precious metal instead. Furthermore, the currencies of both of these huge countries have foreign exchange rates that are managed quite actively by their respective central banks. If t...
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| Gold Price was Hammered Hard this Week Down $61.10 Gains Made Swapping Gold into Silver Posted: 11 May 2012 10:09 AM PDT Gold Price Close Today : 1,583.60 Gold Price Close 4-May : 1,644.70 Change : -61.10 or -3.7% Silver Price Close Today : 2885.8 Silver Price Close 4-May : 3038 Change : -152.20 or -5.0% Gold Silver Ratio Today : 54.876 Gold Silver Ratio 4-May : 54.138 Change : 0.74 or 1.4% Silver Gold Ratio : 0.01822 Silver Gold Ratio 4-May : 0.01847 Change : -0.00025 or -1.3% Dow in Gold Dollars : $ 167.36 Dow in Gold Dollars 4-May : $ 163.87 Change : $ 3.48 or 2.1% Dow in Gold Ounces : 8.096 Dow in Gold Ounces 4-May : 7.927 Change : 0.17 or 2.1% Dow in Silver Ounces : 444.27 Dow in Silver Ounces 4-May : 429.17 Change : 15.09 or 3.5% Dow Industrial : 12,820.60 Dow Industrial 4-May : 13,038.27 Change : -217.67 or -1.7% S&P 500 : 1,353.39 S&P 500 4-May : 1,369.10 Change : -15.71 or -1.1% US Dollar Index : 80.286 US Dollar Index 4-May : 79.505 Change : 0.781 or 1.0% Platinum Price Close Today : 1,458.90 Platinum Price Close 4-May : 1,523.80 Change : -64.90 or -4.3% Palladium Price Close Today : 599.80 Palladium Price Close 4-May : 649.90 Change : -50.10 or -7.7% It's been a long while since the silver and GOLD PRICE (let alone the platinum metals) have been hammered this hard in one week. GOLD lost $61.10 (3.7%), Silver lost 152 cents or 5%. Stocks are wallowing in deep swells, too, down 1.7%. To what do we owe all this joy? The US dollar rose 1% last week. Well, and the euro coming unraveled like Frankenstein at the stitching. Clearly, I read the metals wrong yesterday. Today they contradicted yesterday's hopeful signs by closing below yesterday's lows. Gold has all but invalidated its falling wedge formation and silver already has, tumbling down out of the formation. The GOLD PRICE gave up $11.50 to close Comex at $1,583.60. Silver misplaced 27.8 cents to end at 2885.8c. Gold was driven down to $1,572.34 long before New York opened, climbed to $1,590.50 by 10:30, then lost energy the rest of the day. Now that the GOLD PRICE has fallen to $1,583.60, it's time to reckon what will happen if this level holdeth not. First support appears at the low- before-last in December at $1,562.50, next steps forth at $1,535 - $1,525. Next week promises to be bloody unless gold can scramble back above $1,600.00 Only bright spot in today's trading for me was making a lot of swaps from gold back into silver. One customer had a 47% gain in silver ounces over the silver he traded in last year. Now most of them were in the 10% to 25% range, but still, that's not a bad gain for an investment that payeth no interest or dividends. The SILVER PRICE made a new low for this move at 2844.6c. High could not rise above 2910c. Next support for silver hides at 2812c, the early December low, but reaching the ultimate December low at 2615c does not lie outside possibility. I am aware how gloomy all this seems, but the SILVER RSI has dipped below 30, indicating it is heavily oversold. MACD is falling still, but hasn't neared December's lows. About the time y'all think it's the end of the world -- or the bull market at least -- silver and gold will surprise you. Legendary oilman H.L. Hunt said, "Never get really elated in victory; when times are tough, never get down." I may be as self-deceived as an ugly rich boy in love with a show girl, but I expect lows are near. May see them next week, although you'll feel as if somebody threw you into a cement mixer by the time it's over. It all boils down to this: What do you trust? The paper money system, that since 1913 has dragged the dollar down from $20.6718 to the gold ounce to $1,583.60 today? The system that picks your pocket every day, and worse, is now run by thieves, incompetents and tapeworms? Or gold and silver, which mankind has valued since the sun came up on Eden? When I talk about this some folks laugh at me and point out that the system has been chugging away since 1913. This differs nothing from telling me that a 1913 Stanley Steamer is a great car because it still runs. The world can no longer afford parasite capitalism, crony central banks, crooked banks, and prosperity-through-government-borrowing. It's breaking up, and I'd rather belong to the new world building than the old world dying. But y'all hang on to them yankee dollars. I understand Confederate money is worth more than its face value today. US DOLLAR INDEX today is trading 11.7 basis points (0.15%) higher. Greek politicians of the left won't be able to form a government, so more elections will probably be announced this weekend, according to a friend of mine there. If so the euro will gap down on Monday's open and dollar will rise more. Adding fuel to the dollar's tank were JP Morgan Chases revelations that it lost $2 billion in 6 weeks on derivatives. Mmmm. . . If THEY can't do it, who can? CEO Jamie Diamond's admissions raise further doubts about other big banks. Where have all the adults gone? Who put these ridiculous infants in charge? STOCKS had a ragged day, falling off the opening, rising, then falling for the day. Dow lost 34.44 (0.27%) to 12,820.60. S&P500 lost 4.6 (0.34%) to close at 1,353.39. Dow in Gold Dollars remains hovering near the top of its diamond formation, not yet ready to yield and fall. End to all discussions of whether stocks will soar or sink stands in those head and shoulders tops on the S&P500 and Dow's charts. S&P500 drilled through the neck line earlier in the week -- a "break down" -- rose back to the neck line for a final kiss good-bye yesterday, then plunged again today. Dow has all but penetrated the neckline of its own HandS, and will do when it crosses 12,650. MACD and RSI indicators both point earthward, and volume has risen on the decline. Add to that the seasonal summer desert approaching for stocks: "Sell in May, and go away." Somebody explain to me what cause for optimism lurks here. Y'all enjoy your weekend! Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com 1-888-218-9226 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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| The Power of Relative Value and the Silver Market! Wow! Posted: 11 May 2012 09:51 AM PDT May 10, 2012 If this does not get your attention I do not know what will. Imagine buying a $400,000 furnished condo in 2011 with the proceeds of a $6,250 investment that was made in 2003. We know someone who has actually done this by using the power of relative value. Let us explain the concept and then we will explain how the relative value may apply to other great opportunities in our markets today. Example: Year 2003 $5.00/ounce of silver. BUY 1,250 Ounces = $6,250 $400,000 Condo in Las Vegas. (Popular, rising market). AVOID Market Year 2011 $44.00/ounce of silver (Average Sale Price). SELL 1,250 Ounces = $55,000 $55,000 Same Las Vegas Condo. BUY CONDO WITH PROCEEDS Basically, that $6,250 worth of silver grew in value and at the same time the condo fell in price, essentially allowing the $400,000 condo to be purchased with only $6,250 of initial capital. The relative value of silver increasing to $55,000 and the condo falling in price to $55,000 create...
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| Goldman Market Summary: "Long-Only Buying Vs. Hedge Fund Selling" Posted: 11 May 2012 09:38 AM PDT Curious how the world's most important trading desk saw the action today? Here it is.
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| Posted: 11 May 2012 09:24 AM PDT May 11, 2012 [LIST] [*]"Fortress balance sheet" is breached as J.P. Morgan is stuck in the same boat as your average retiree... [*]Dan Amoss, Barry Ritholtz on a "flashing sign" that warns of threats to the banking system [*]Stocks yawn in reaction to JPM news, while gold looks a lot like early 2009... [*]Can balloons really "end the Fed"? [*]When nickels are worth more than 5 cents... a reader's suggestion to fix Congress' little red wagon... ominous parallels between the USA and Nazi Germany (identified in 1944)... and more! [/LIST] We pause this morning to pity a fallen idol... a mighty colossus in its field, revealed to be mortal after all... facing a blow to its sterling reputation, a blow even its most fearless allies are hard-pressed to defend. Undoubtedly, there will be much soul-searching as twilight falls later on this Friday. What went wrong? Where was that wrong turn? What larger lessons are to be learned? We speak, of course, of the fact Ti...
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| 20 Years From Now: Gold @ $12,000 & Silver @ $1,000? Posted: 11 May 2012 09:05 AM PDT Should both Gold & Silver Bulls & Bears take a long winter sleep?
When we look at Silver prices from 1985 to today (Green line in the chart below) and compare the evolution to the one from 1967 to 1974 (black line in the chart below), we can see a very similar pattern. If price would continue to track this pattern, it could mean that silver has just entered a 20 years lasting winter sleep. In the meantime, it would trade between $20 and $50, before taking off again in 2032… From then on, it could gain over 2,000% to reach nearly $1,000.
A similar pattern can be observed in the price of Gold, although the time scale is slightly different.
Why the hell would Gold drop towards $1,000 per ounce by 2015, while all the fundamentals are pointing to a "screaming buy"? Well, if Martin Armstrong is correct and we would get a Sovereign Debt "Big Bang" sometime late 2015, then that could be the reason for Gold's drop (please have a look at the following slide which he presented in 1998 & click HERE for the complete presentation). All of Martin Armstrong predictions in 1998 came true, so the chances are high that the last one will too.
Jim Rogers was recently quoted saying: "It's extremely unusual for any asset in history to move higher for 11 straight years. That's why I expect the recent correction in gold to continue." He's not selling any of his gold. And he's not shorting it, either. Back in 2008 when Gold was trading around $900 (after having traded above $1,000 for the first time in history), he said in an interview with the Chinapost he would buy Gold if it were to drop towards $750. Eventually, it bottomed 10% lower around $680, before nearly trippling over the next 3 years. Assume Rogers is right, and Gold drops towards $1,100 (the point where he would add to his positions), and history repeats (meaning Gold bottoms about 10% lower), that would put Gold at $1,000 an ounce, which is also the price target of the second chart above. Now why should Gold & Silver take a break?
Now let's have a look at the markets. I have written extensively about how the HUI index has been under performing Gold, just like in 2008. The pattern is still holding so far, which does not look good at all:
However, sentiment in Gold Stocks is VERY depressed at the moment, as only 10% of the Gold stocks have a BUY signal on the Poing & Figure chart, as shown in the following chart ($BPGDM). On top of that, the HUI index has now hit the 50% Fibonacci Retracement level from the bottom in 2008 to the top in 2011:
Gold stocks are trading at historical low valuations compared to Gold, so this combined with the extremely depressed sentiment could mean that Gold Stocks are at or near a bottom, although the similarities with the 2008 crash are still striking and therefore worrisome. I haven't bought Gold stocks since I sold them in 2011, right before Silver hit nearly $50 per ounce, but am now back in the market. I have decided to only accept new subscribers until June 30th. From then on my services will be open to existing subscribers ONLY. To secure your membership now, visit www.profitimes.com and subscribe now!
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| Gold and Silver Disaggregated COT Report (DCOT) for May 11 Posted: 11 May 2012 08:50 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.
(DCOT Table for Friday, May 11, 2012, for data as of the close on Tuesday, May 8. Source CFTC for COT data, Cash Market for gold and silver.)
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| Posted: 11 May 2012 08:45 AM PDT Synopsis: Financial experts weigh in on pending economic doom, the evil influence of politics, the US budget surplus for April, and why banking shouldn't be left to the bankers. Dear Reader, Sorry to have been such a lousy correspondent of late. As I'll explain in a moment, over the last couple of weeks I've been on a quest for the truth about the economy. Much of today's missive revolves around what I discovered, though I also have some guest commentaries to share on a couple of seemingly important stories recently in the news. As my topic is rather large, let's get straight into it. The Big Question For pretty much everyone, no matter where they are located in the economic strata, few if any questions are more germane to making plans for the future than whether the US and other major global economies are in recovery. Getting the answer to that question right is of special importance to investors and businesses. Stating the obvious, if the broader economy really is in recovery, then investors would be well served by investing in the equities of solid companies positioned to take advantage. Similarly, those very same solid companies would be rewarded by increasing their productive capacity through investments in the plants and people necessary to meeting growing demand. On the same side of the ledger, bond investors would want to begin shorting up their durations or leaving the bubbly bond market altogether, in anticipation that the flood of funds into fixed income would reverse, sending rates higher (and bond prices lower). Conversely, if the recovery is a head fake, then an entirely different course of action is called for. For instance, one would want to adopt a cautious attitude about common stocks. And because of the nature of the crisis – crushing levels of sovereign debt – one would want to take advantage of pullbacks in precious metals to buy more, along with other so-called "tangibles." That way they would have some measure of protection against the inflation that fiat-currency powers make all but a certainty. In addition, reducing personal and business spending in order to conserve rainy-day cash would be advised. And what about US bonds in the no-recovery scenario? A sound case can be made for including them in a portfolio as that puts you in lockstep with the government's desperate need to keep interest rates down – or, better yet, have them fall further still. Given the highly politicized nature of our economy, that seems reasonable – and anyone who has been long bonds over the last few years has done very well, indeed. While you'll have to make your own call on bonds, my own enthusiasm is curbed by looking at the charts of the upwards spiking interest rates on the bonds of Spain, Greece, Italy and so forth. When Mr. Market ultimately becomes disenchanted with the fiscal excesses of the sovereign deadbeats, he can express his ire most energetically. When the current bond bubble here in the US ultimately bursts, as it must, it's going to be a bloodbath. Of course, there is much, much more at stake to coming to the correct answer on the recovery, or lack thereof, than that. For instance, poor economies make for poor reelection odds for political incumbents. And when it comes to maintaining a civil society, the lack of jobs inherent in poor economies often leads to a breakdown in civility. On that note, overall unemployment in Spain is now running at depression levels of almost 25%, and youth unemployment at close to 50%. How long do you think it will be before the citizens of this prominent member of the PIIGS will refuse being led to the slaughter and start taking out their anger on the swine (governmental and private) seen as bearing some responsibility for the malaise? Meanwhile, back here in the United States, the commander-in-chief is striding around the deck of the ship of state trying to look like the right man for the job in the upcoming elections, despite the gaping hole of unemployment just under the economic water line. His future prospects are very much entangled with this question of recovery. So, what's it going to be? Recovery… no recovery… or worse, maybe even a crash? We all have a lot riding on getting the answer right. The Quest for Confidence Ultimately, the purpose of searching for the truth about the recovery isn't about either fear or greed. It's about confidence. If you really knew what's coming, then the right moves to make become obvious. You could then make those moves with the calmness of spirit that comes from certain knowledge and get on with your life. While others struggle or miss an opportunity by betting on the wrong future, you'd have set up your affairs to survive and prosper. Of course, given that we are talking about a complex system – the economy – total certainty is never completely possible. But for reasons I'll share, the nature of the current crisis paradoxically allows for more certainty than would normally be the case. And so, with that characteristically long-winded wind-up, I want to share my conclusion about how I believe things will unfold from here, followed with some support for that conclusion. While, as readers of any duration are well aware, we here at Casey Research foresaw the current crisis years in advance and have remained firm in our conviction that the recovery is a charade… based on my own readings, and after spending the last two weeks in the company of a couple dozen very plugged-in economists, top-performing money managers and top financial analysts, my conclusion is as thus: The world's largest economies, including the US, Europe, Japan and China are speeding for the equivalent of a brick wall. In short, I believe that before this crisis is over, we will experience the Greater Depression my dear friend and business partner Doug Casey has long anticipated. In case that conclusion fails to communicate my current view sufficiently clearly, I will condense it as follows: The world's largest economies are screwed. And I will even set my conclusion to music, in the form of the song "Somebody That I Used to Know" by Gotye, which seems appropriate because the economy that we used to know won't be back again for many years to come. Trust me, stating an opinion on the direction of the economy in such unequivocal terms troubles me. For starters, I wish my conclusion could be otherwise because no one likes to be a harbinger of doom. Mostly, however, I have long resisted adopting a set-in-cement position on something as wiggly as the future. In my experience, anyone who absolutely, totally buys into a particular future is almost always proven wrong by time. Yet, as my quest for certainty unfolded, I could come to no other conclusion than that the world as we know it is headed for an economic catastrophe. Allow me to explain. The quest started with our Casey Research Recovery Reality Check Summit, April 27-29, in Weston, Florida. We took our mandate of getting to the bottom of this matter of recovery seriously, including faculty members with a variety of perspectives to see if an overarching conclusion about the recovery could be ascertained. In addition to our own team of Doug Casey, Bud Conrad, Terry Coxon, Louis James, Marin Katusa and Jeff Clark, included in the faculty were… Lacy Hunt, former economist with the Dallas Fed and the world's most successful bond manager; Jim Rickards, money manager and author of Currency Crisis; John Mauldin, best-selling author of Endgame and the just-released The Little Book of Bull's Eye Investing; John Williams of ShadowStats fame; Porter Stansberry, founder of Stansberry Research; Michael Lewitt, editor of The Credit Strategist; Gordon Chang, China analyst; Harry Dent, author of The Great Crash Ahead (who also debated James Rickards on the question of inflation or deflation); Andy Miller on real estate; Greg Weldon of the Weldon Report; John Hathaway of the Tocqueville Funds; resource market guru Rick Rule of Sprott Asset Management; Caesar Bryan, a senior portfolio manager for the Gabelli Fund group; and David Stockman, the head of the Office of Management and Budget during the Reagan administration. (Plus, on the taking-action front, there was a special panel on international diversification as well as panels where a dozen or so experts on everything from gold stocks to uranium, to rare earths, to graphite, to technology, to energy gave their best picks.) In other words, a full program. Then, immediately following the conclusion of our summit, Olivier Garret, Casey Research CEO and partner, and I climbed on a plane for California and John Mauldin's Strategic Investment Conference. John's event is geared more for hedge fund and very high net worth investors and, as such, includes a more mainstream slate of speakers, but what a slate it was. For the better part of three days, Olivier and I hunkered down to hear presentations and meet with the likes of David Rosenberg, the star analyst of Gluskin Sheff; H. "Woody Brock," an economist with some of the deepest credentials in the business (you can Google any of these guys for bio info); economic historian and best-selling author Niall Ferguson (great speaker, by the way); Marc Faber of the Gloom, Doom and Boom Report; David McWilliams, the popular and very erudite Irish economist; David Harding of Winton Capital Management; Jeffrey Gundlach of DoubleLine Capital; Lacy Hunt again… and my favorite for this conference, Mohamed El-Erian of PIMCO fame. In other words, for the better part of two weeks, I was immersed in presentations and one-on-one discussions with truly some of the smartest, best-studied people in the world today on economics and investment markets – with the primary topic being whether the so-called recovery is real, and the consequences if it falters. While the speakers used a variety of methodologies to approach the topic, when all was said, the only conclusion that could be reached was that the world is headed for a very challenging period. That conclusion was for the most part derived from three aspects of the many presentations:
[Me] "All of the speakers, you included, point to the current trend of higher debts and deficits and say they are untenable and so the big economies will hit a wall in the not-too-distant future. Yet, hardly anyone actually then defines what hitting the wall will look like." [Him] "Yes, well, things will likely get a bit messy if the politicians can't pull together to address the structural problems in the economy." "But wouldn't you agree that, given the nature of our democracy, the odds of the politicians taking action before we hit the wall are almost nil?" "Not at all. If everyone in this country would read my new book, they would understand the situation and rise up to force their elected representatives to take the right action." "Seriously? The only way to avoid the next leg down is if everyone in the US reads your book? That's it?" At which point, I kid you not, he picked up his plate and changed tables. (There's a reason I am only rarely allowed out in public.) But the fact remains that other than perhaps Doug Casey and a small handful of other presenters at our conference, almost no one even attempted to anticipate just what happens when the crisis swells up to its full height and then comes crashing down. Or, specifically, what the consequences are likely to be when the world's largest economies all hit the wall at more or less the same time. For the record, I have compiled a list of the ten largest economies in the world, and a reasonable assessment of their current situation follows in descending order by size of GDP: United States – screwed China – really screwed Japan – massively screwed Germany – pretty screwed, especially in that export economies take a big hit in a crisis France – le screwed! Brazil – somewhat screwed United Kingdom – blimey, screwed, too Italy – properly screwed Russia – hardly screwed at all (lots of resources and next to no government debt) Canada – pretty screwed, eh? As concerning as it is to see how many of the world's largest economies are in trouble, the biggest problem of all is that the central bank reserves of virtually every country in the world are stuffed with US government IOUs masquerading as tangible assets. So, what happens when the world's reserve currency enters collapse and the dollar turns into a hot potato? Don't know, but I'm pretty sure we'll find out in the not-so-distant future. The Crux of the Problem Sorting though my notes for a few key pieces of support for my stark assessment of what the future holds, I find the following that should help make the point. The first is from Lacy Hunt, who was voted the most popular speaker at our summit (in addition to being very smart, he's also a very nice guy).
(Click on image to enlarge) The takeaway from this chart is that the world's largest economy is in unchartered waters in terms of debt. This chart, or one telling much the same story, was used by a number of speakers. They used it for the simple reason that it points to a problem that is truly untenable –unfixable by any other methods than overt default or covert default through inflation. And the picture is much worse than that, because this doesn't show unfunded liabilities – for example, the trillions that aging Americans expect the government to fork over for Medicare and Social Security benefits. Toss those into the pot, and you are talking a total liability overhang of closer to $65 trillion. Of course, it's far from just here in the US… Lacy referenced a recent ECB study of the unfunded state-sponsored pension plan liabilities in 19 European Union countries and found that those liabilities came to five times the GDPs of those countries (actually a bit better than the situation here in the US). The always agreeable John Williams of ShadowStats and I had an on-stage discussion about the work he does to strip away the government's tampering and obfuscations when reporting economic data. The first chart here shows the government's rather encouraging picture of recovery in GDP.
(Click on image to enlarge) Now, here's the same picture adjusted for actual inflation. Not quite so good.
(Click on image to enlarge) How about housing starts? Recovery there? You tell me.
(Click on image to enlarge) The all-important matter of unemployment? Ouch.
(Click on image to enlarge) Because I am already running way behind on time, let me try to jump to some of my key takeaways from my two-week quest.
In other words, the crisis we face isn't just that there is no mathematically possible way for the debts and obligations of the governments to be met… or that the population at large is struggling under its many debts (thanks in no small part to regular enticements by the government and banking sectors)… it is that the political systems in the larger economies structurally reward ever greater prolificacy in public finances. Which means this train is speeding up toward the wall and won't stop until the crash. Earlier on I wrote that, paradoxically, predicting the future is easier than usual these days. That's because the major economies are so highly politicized. Thus, when you see the hard data that says things are broken beyond all politically tenable ways for them to be repaired, you can go one step further and ask, "What would a politician do?" And asking that question, you can be unusually confident we're headed for a wall. Some, like Harry Dent, believe that the crash will come in the form of a massive deflation. This would occur if the politicians misgauged their many interventions in the economy and the deflationary pressures from debt deleveraging in the private sector were able to outstrip the inflationary actions of the government. That said, a good case can be made that we will see a period of deflation, followed by the blowout inflation that brings the crisis to its tumultuous end. The important thing, at least to my way of thinking, is to recognize that we are speeding for a wall. That will put you well ahead of the average person who has literally no idea and so will be caught unawares. Timing? While we can see that the crisis is not over and is headed into a very dangerous period, other than in general terms, the matter of timing is almost impossible to pin down. The reason is that while we can see cascading structural problems looming just ahead, we can't anticipate how the governments around the world are going to attempt to deal with these problems. For example, we can only guess at how the US government will be able to keep funding itself as well as rolling over trillions of government bonds over the next year. Or how Congress will deal with the triple witching hour of another approaching debt ceiling, along with the mandated sequestering of funds resulting from the political wrangling around the last debt ceiling fiasco, compounded by the scheduled year-end expiration of the Bush tax cuts, all of which together promise to suck trillions out of the economy. Thus, while the crisis should come to a head before the end of next year, that assessment assumes that some form of "standard" for government action exists. In other words, that the government will stay within predictable boundaries when dealing with economic setbacks. Because it doesn't, it's literally anyone's guess just how far it will be willing to go before finally allowing the free markets to once again operate and things are resolved. For instance, many people now think that quantitative easing is the final word in the government's economic meddling. In contrast, I take the view that QE may be the last in the category loosely defined as "warm and fuzzy" options used by the government to try and retain power by fixing the unfixable, but it's a far cry from how draconian they can get. History has shown us the far fuller slate of options available to the state, including exchange controls, confiscation, nationalization, punitive taxation, wage and price controls, war and even assuming dictatorial powers. Simply, the morally and economically bankrupt super-powers haven't even begun to fight, and so this crisis could drag out for years to come. Now, as to how to protect yourself. First and foremost, while it may seem a shameless tout, I would highly recommend you buy the CDs from our just concluded Recovery Realty Check Summit. In addition to everything you need to make your own confident assessment about where things are headed (invaluable), you will also hear a lot of solid, specific ideas on how to position your investment portfolio to preserve your wealth and even profit through the challenging times ahead. More information and details on the CDs from the recently concluded Casey |
| Posted: 11 May 2012 08:45 AM PDT Zealllc
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| Gold Seeker Weekly Wrap-Up: Gold and Silver Fall About 4% on the Week Posted: 11 May 2012 08:28 AM PDT Gold fell $20.28 to $1573.72 by about 3:30AM EST before it climbed back to $1590.53 by late morning in New York, but it then fell back off into the close and ended with a loss of 0.8%. Silver slipped to as low as $28.436 by midmorning in New York before it rallied back to $29.15, but it also fell back off in afternoon trade and ended with a loss of 0.58%.
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| Treasury Yields Post Longest Consecutive Weekly Decline In 14 Years As Credit Tumbles Posted: 11 May 2012 08:24 AM PDT BTFD/STFR Deja-Vu - check. Credit underperforming - check. USD higher - check. Treasury Yields lower - check. Ask an equity guy how today was and you'll likely get a shrug of the shoulders (unless he owns JPM or CHK); ask a credit guy (if you can pull him away from the bar) and you'll get a very different response. Investment grade credit markets were crushed today on the back of pressure on JPM's hedge and unwind expectations - this was across pretty much all the indices that are out there (with over 90 names in the IG9 index also in the on-the-run IG18 index - the numbers simply reflect the series or portfolio that is being referred to). This was the worst week in IG credit of the year and lifted spreads to 4-month wides and at the same time (until late in the day) high-yield and high-beta credit did not follow suit (very unusual and very indicative of the dramatic positioning in the IG indices that JPM has basically blown up). Treasury yields have now fallen for the 8th week in a row - the longest streak since 1998! Away from pure equity and credit, risk assets remained wildly unimpressed by the incredible 8 sigma rip-fest this morning in stocks as commodities all close lower from yesterday day-session closes - though bounced to end around their European open levels on the day (except for underperforming Copper). The USD leaked higher all day with a small interruption thanks to CAD strength on their jobs data this morning (AUD, EUR, and GBP all close at the week's lows). A horrible end to an ugly week as S&P 500 e-mini futures ended very close to their 50DMA on above average volume though low average trade size (which we suspect was dominated by algos in the rip this morning). The losses JPM faces from today's index shifts are already large and with risk managers everywhere asking their traders if they hold any of that 'trash', we suspect more selling and unwinds are to come; and while JPM got all the press, Morgan Stanley is now down year-to-date. Treasury yields down for 8 weeks in a row - longest streak since 1998...
IG credit was destroyed and as we noted earlier - the rest of the credit complex can't just sit idly by and watch as its all relative-value and so into the close everything was rolling over...
IG credit longer-term...
Once again gold seemed to anchor equities as they tried to pull away but ended drifting back to reality again (red ovals) just like yesterday...
And while JPM got all the press, it is worth noting that Morgan Stanley is now red for the year...
but stocks oscillated and dipped-ripped-n-dipped again...
and finally - risk assets in general (as proxied by CONTEXT) - stayed far less sanguine and in the end equities rolled over and followed their message for the day
leaving ES with its lowest close in 2 months as VIX pushes back up towards 20%, and 30Y Treasury prices are now green again for the year! YTD performance...
Charts: Bloomberg Bonus chart: The 8-Sigma ripfest this morning (green arrow) - yellow band is 1 Sigma...
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| Posted: 11 May 2012 08:19 AM PDT Many have called for very high levels of inflation possibly leading to hyperinflation. Their reasoning is that over printing of the US dollar will cause the dollar to weaken and inflation to set in ... Read More...
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| Gold Is Not a Growth Industry—It Can Just Pay Investors Big: John Hathaway Posted: 11 May 2012 08:19 AM PDT The Gold Report: When we spoke last October, you were bullish on gold and gold equities. You blamed lagging gold‐mining stock performance on competition from exchange‐traded funds (ETF), lack of investor confidence and investor doubts on the sustainability of higher gold prices. Now that prices are hovering around $1,600 an ounce (oz), will that dynamic change? John Hathaway: The dynamic will change based on higher gold prices. When one looks at Newmont Mining Corp. (NEM:NYSE), which is trading at about five times cash flow, one has to scratch one's head and say, in a world of $1,600/oz gold, what is that discounting? The market expects gold prices to go lower. Otherwise, at $1,600/oz gold, a Newmont could trade at least at an eight or nine times multiple of cash flow. I'm using that as an example. Looking at the research material on Newmont—we included input from 29 sell‐side analysts—the consensus expectation for gold prices in five years is $1,270/oz. That...
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| The Bottom Is Not In Yet For Gold Or Gold Stocks ? Here?s Why Posted: 11 May 2012 08:19 AM PDT Are gold and gold stocks set to bottom? Not yet, according to my long-term measures of greed and fear. [I think*a look at each of them below will substantiate my*conclusion.] Words:*390 So says Cam Hui ([url]www.humblestudentofthemarkets.blogspot.ca[/url]) in edited excerpts from his original article*. [INDENT] Lorimer Wilson, editor of [B]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.[/B] [/INDENT] Hui*goes on to say, in part: The Silver-to-Gold Ratio Consider, for example, the silver-to-gold ratio. Silver has long been regarded as a high-beta play on gold. The chart below of this ratio shows that while sentiment has descended from levels indicating excessive bullishness, they are not at levels consistent with a long-term bottom yet * * The TSX Venture-to-TSX Composite Ratio Here i...
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| FT's Gillian Tett provides the rationale for gold price suppression Posted: 11 May 2012 08:00 AM PDT Explaining "financial repression" as the coercion of investors to purchase government bonds that pay negative real interest rates, Gillian Tett of the Financial Times this week provided the perfect rationale for the Western central bank gold price suppression scheme -- all without mentioning gold at all.
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| Egon von Greyerz: Gold -- what correction? Posted: 11 May 2012 07:49 AM PDT 3:50p ET Friday, May 11, 2012 Dear Friend of GATA and Gold: Matterhorn Asset Management's Egon von Greyerz today shrugs off the recent setbacks in the gold and silver markets. His commentary is headlined "Gold -- What Correction" and it's posted at Matterhorn's GoldSwitzerland Internet site here: http://goldswitzerland.com/gold-what-correction/ CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf 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: ADVERTISEMENT Prophecy Platinum (TSXV: NKL) and Ursa Major Minerals Company Press Release VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) and Ursa Major Minerals Inc. have signed a binding letter of agreement for a business combination through a proposed all-share transaction. In doing so Prophecy and Ursa have acted at arm's length and the transaction has been negotiated at arm's length. Prophecy will issue one common share in exchange for every 25 outstanding common shares of Ursa. Ursa options and warrants will be exchanged for options and warrants of Prophecy on an agreed schedule. Prophecy's offer represents a value of about $0.15 per each common share of Ursa based on Prophecy's share price of $3.70 as at March 1, representing a premium of 130 percent to Ursa's March 1 closing price of $0.065. Prophecy is to subscribe for $1 million common shares of Ursa by way of private placement financing at $0.06 per share, subject to regulatory approval. Upon placement completion, John Lee and Greg Hall, current Prophecy directors, will be appointed to Ursa's board. Prophecy thus will become a mid-tier resource company with a robust and diversified pipeline of platinum nickel projects, including: -- The fully permitted open-pit Shakespeare PGM-Ni-Cu mine close to Sudbury, Ontario, infrastructure with near-term production capabilities. -- The flagship Wellgreen (Yukon) PGM-Ni-Cu project with more than 10 million ounces of Pt-Pd-Au inferred resource. Drilling is under way and a preliminary economic assessment study is pending. -- Manitoba's Lynn Lake Ni-Cu project with more than 262 million pounds Ni and 138 million pounds Cu measured and indicated. For the complete announcement, please visit Prophecy Platinum's Internet site here: http://www.prophecyplat.com/news_2012_mar02_prophecy_platinum_ursa_major...
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| Gold, Silver Hit 4-Month Lows as 'Fed Effect' Wears Off Posted: 11 May 2012 07:44 AM PDT |
| Gold, Silver Hit 4-Month Lows as 'Fed Effect' Wears Off Posted: 11 May 2012 07:44 AM PDT |
| FT's Gillian Tett provides the rationale for gold price suppression Posted: 11 May 2012 07:42 AM PDT 3:36p ET Friday, May 11, 2012 Dear Friend of GATA and Gold: Explaining "financial repression" as the coercion of investors to purchase government bonds that pay negative real interest rates, Gillian Tett of the Financial Times this week provided the perfect rationale for the Western central bank gold price suppression scheme -- all without mentioning gold at all. That is, investors might be powerfully discouraged from buying such crappy bonds and thereby subsidizing profligate governments if, meanwhile, a rising gold price was trumpeting a rate of inflation substantially greater than the bond interest rates or if gold itself, via capital gains, was offering a substantially better return than those bonds. In an essay published in The Wall Street Journal last December, recently resigned Federal Reserve Board member Kevin M. Warsh was among the first to complain about "financial repression," which he described as a matter of policy makers' "suppressing market prices that they don't like": http://www.gata.org/node/10839 We can infer that gold's is among those disliked prices if not the primary price in mind -- but we can only infer, since, despite GATA's importunings, not even The Wall Street Journal itself, publisher of Warsh's remarkable essay, could be persuaded to ask him, for purposes of a news story, to specify the prices suffering "financial repression" and to explain whether he learned of such price suppression during his recent service at the Fed. On a planet with actual financial journalism, such questions might be posed directly to central bankers and former central bankers, with public answers demanded and refusals to answer reported prominently. On this planet -- or at least in what is still sometimes called the Free World part of this planet -- we have to settle for mere hints and implications. But, as shown by Tett's column this week, appended here, such hints and implications can be found all over the place. CHRIS POWELL, Secretary/Treasurer * * * Repression on Bonds Heralds Masochism By Gillian Tett http://www.ft.com/intl/cms/s/0/58078892-9abc-11e1-94d7-00144feabdc0.html Almost exactly a year ago, the economists Carmen Reinhart and Belén Sbrancia wrote a path-breaking International Monetary Fund paper about "financial repression." It initially caused many Western investors to blink. For while such "repression" has been extensively discussed in emerging markets in recent years, not many people in America knew what this dark-sounding phrase meant. (Answer: "Financial repression" occurs when governments engineer a situation in which investors feel compelled to buy bonds at unfavourable rates, ie below the prevailing level of inflation, thus helping to reduce national debt.) How times change. A year later, the word "repression" is being bandied about at investor conferences across the Western world. No wonder. In the eurozone, there are growing signs that governments in places such as Spain and Ireland are "encouraging" -- if not forcing -- banks and state pension funds to buy public sector bonds, at potentially unfavourable prices. ... 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. Meanwhile, in America something just as remarkable is under way: Investors are gobbling up government debt at unfavourable rates without needing to be "repressed" at all. This week demand for 10-year Treasuries was so high -- as fears exploded about the eurozone -- that the US government sold debt with a record low coupon of 1.75 per cent. And while the nominal yields on 10-year Treasuries, of about 1.91 per cent, are above last year's lows, in real terms they are in negative territory, given inflation over 2.5 per cent. Anybody buying Treasuries, in other words, is essentially agreeing to subsidise the US government in coming years -- unless you believe that deep deflation looms. Call it, if you like, a form of "voluntary" repression; either way, it will almost certainly end up helping the US state, to the detriment of investors. So can it continue? If you ask US policy makers and financial officials that question, you are apt to hear an embarrassed cough. Last week, for example, I questioned a group of Federal Reserve presidents at a debate at the University of California at Santa Barbara. In public, none of those Fed leaders was willing to describe the picture as overt "repression." After all, they said, monetary policy in America is independent, meaning that the raison d'etre of the Fed's super-loose monetary policy is to boost economic demand, not support fiscal policy. If this helps cut debt, this is just a happy accident; or so the argument goes. Nevertheless, what is crystal clear is that Fed and Treasury officials alike are determined to keep those Treasury yields ultra low, if not negative in real terms, for the foreseeable future. And they may well succeed. Never mind the fact that the Federal Reserve has been gobbling up Treasury bonds, as part of its loose monetary policy; or that private sector banks are raising their holdings of government debt to satisfy new regulations, such as the Basel liquidity coverage ratios. What is more fascinating is how investors are stealthily embracing a "voluntary repression" mindset too. Consider what has happened with US pension funds. Five years ago, these typically had a 60 per cent equity allocation, with 30 per cent in bonds. But last month, according to the Milliman survey, the top 100 funds placed 41 per cent of their $1,300 billion worth of assets in fixed income -- topping the equities ratio for the first time. That shift might have looked rational a few years ago; after all, annualised returns for Treasuries in the past decade have been 6.8 per cent, versus 2.9 per cent for the S&P 500. But the timing looks terrible, given that, as David Goerz, chief investment officer of HighMark Capital says, "Aa 2 per cent Treasury yield is equivalent to a price/earnings ratio of 50x compared to a forward earnings multiple of 13x for the S&P 500 today." Or to put it another way, it would make more sense, Goerz says, for funds to switch back into equities. Alternatively, managers such as Scott Minerd of Guggenheim, think investors should be looking to corporate bonds for decent returns. But the experience of 2007 and 2008 has left investors so scarred -- and scared -- they are more focused on capital preservation and liquidity, than returns. Or to put it another way, if everyone else (including the Fed and banks) is piling into Treasuries, many investors want to follow the crowd. Correlation of fear rules the day. This creates big risks in the long run; if inflation suddenly surges, growth resumes, or there is another US fiscal row that creates default scares, prices could swing and many investors will get badly hurt. But, in a world awash with spare cash, it is a fool's errand to predict exactly when this bubble might burst. I suspect we could see this voluntary repression prevail for some time; or call it, if you prefer, the era of mass market financial masochism. 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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When, in September 2009, as he denied GATA's request for access to the Federal Reserve's records involving gold, did Fed Governor Kevin M. Warsh really mean to acknowledge that the Fed has gold swap arrangements with foreign banks that must remain secret? Did Warsh, who left the Fed this year, not understand that, in acknowledging these gold swap arrangements, he was confirming the U.S. government's long-running gold price suppression scheme?
A 1 notch downgrade means JP Morgan will have to post in the range of $1-$2 billion in new collateral…on top of the $2-3 billion already reported lost on Bruno Iksil's hedging trade gone bad.
Today King World News interviewed one of the wealthiest and most street-smart pros in the business, Rick Rule. Rule, told KWN there is a "mismatch of some amount of money in the $100 billion range between credit default swaps." He also said this is similar to what "brought down Long Term Capital Management (LTCM)." Rule, who is now part of Sprott Asset Management, also discussed gold and the mining shares, but first, here is what he had to say about what is taking place: "Well, I think that frames a big issue. We've been asking our clients to consider the macro question, if the institutional risk-off trade is to the US dollar and US Treasuries, that suggests the institutional investors believe that this rally and recovery in the United States is real. That's big news if it's true."
How do bank runs start? Why do they happen so suddenly? What happens when a "too big to fail" bank actually fails?
Record-low 
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