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Wednesday, May 16, 2012

Gold World News Flash

Gold World News Flash

GoldSeek.com Radio Gold Nugget: Arch Crawford & Chris Waltzek

Posted: 15 May 2012 07:00 PM PDT

GoldSeek.com Radio Gold Nugget: Arch Crawford & Chris Waltzek


Does 12-Year-Old Canadian Victoria Grant Understand More About the Most Important Truth in Life Than You?

Posted: 15 May 2012 06:44 PM PDT

I love this girl! If 12-year old Victoria Grant can explain how banks that print our nation's currency and their puppet global banks are the most immoral criminal institutions on our planet responsible for oppression, mass suffering, and misery, shame on anyone else that is too lazy and/or too misanthropic to take the time or effort to watch this six minute video to understand this essential truth that is probably the most important misunderstood truth in the entire world. No humanitarian efforts will ever make a sustainable impact in this world if we first don't tackle the fact that our modern banking system is criminal and must be destroyed, the truth of which 12-year old Victoria already understands. Trying to implement measures to solve poverty, hunger or war without first correcting the great injustice that we call "modern banking" is akin to never letting your children out of the house as the solution to the presence of an insatiable child rapist that lives in your neighborhood. It is absolutely the wrong approach and one that is destined for failure.

 

I will always have loads more respect for men like Pablo Escobar, "El Chapo" Guzman and "El Señor de los Cielos" Fuentes than any banking executive like Jamie Dimon, Lloyd Blankfein, Ben Bernanke, Mervyn King, Evelyn Rothschild, David Rockefeller, Vikram Pandit et al. For the feeble-minded that will seek to twist these words into an unintended meaning, no, I do not admire or believe that Escobar, Guzman or Fuentes are or were good people. However, I absolutely hold more respect for criminals that are honest enough to be 100% aboveboard about their criminality so that we never mistake or misunderstand their intent versus criminals that deliberately seek to deceive us so that they can utilize our misinformed and ill-gotten trust to enslave us. Even among criminals, a hierarchy of respect exists, as rapists, serial killers, and child molesters are the least respected of criminals within the penitentiary system and the most likely to receive a brutal beating for their sins while incarcerated.

 

Lords of brutal drug cartels, when they despise someone, will spit in the face of the person they despise or simply tell that person that he or she will be executed. There is never any doubt about their evil intentions. On the flipside of this coin are the lords of our banking system. Despite being misanthropes, lords of our banking system will smile in our faces, perpetually lie to us about how banking really works, and tell us that they want to help us. However, the second we turn our backs, they will stab us six inches deep in the middle of our backs or deliberately create massive inflation that silently and secretly sentences people to death from starvation. As John Maynard Keynes stated, "By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth." Keynes went on to explain, "There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic laws on the side of destruction, and does it in a manner which not one in a million is able to diagnose." For those that have internalized banker-cartel propaganda and still fail to grasp the unquestionable and indisputable immorality of our current banking system, simply put, bankers are the equivalent of modern day slave owners and we are the slaves. We will never have freedom, but only the illusion of freedom sold to us by politicians and bankers, as long as our current fractional reserve banking system persists. This is an indisputable fact that even Central Bankers have admitted from time to time. Remember that the notorious Federal Reserve Chairman Alan Greenspan once stated, "gold and economic freedom are inseparable."

 

In conclusion, some may say that the title of this article is slightly misleading because the most important truth in life is love. For those that believe this to be the most important truth, remember that multiplying actions of love and generosity in this world is an exponentially more difficult proposition under our current immoral banking system than under a sound honest one. And for those that don't believe that we can disable our current banking system, remember that there are nearly 7 billion of us that would benefit enormously from the destruction of our current banking system while there are only a few thousand in the entire world that reap tremendous ill-gotten gains from this morally reprehensible system. Our power is in numbers and it is a power that those of us on the right side of this fence have yet to fully utilize.

 

Can 7 billion people defeat a few thousand morally bankrupt people? Without hesitation, the answer is yes. Thus, I urge everyone to forward the below video not to anyone you know that fails to grasp the evils of our debt-based monetary system, but to everyone you know that fails to grasp the evils of our debt-based monetary system. Even those that have been brainwashed by the banking cartel into believing that our banking system is not the reason for failing economies worldwide today will likely suspend their skepticism for a New York minute and grant 12-year old Victoria Grant the benefit of the doubt in that her plea to return to sound, interest-free money as the mechanism to restoring freedom in our world has nothing to do with "selling her book". Furthermore, who can possibly resist listening to an adorable 12-year old child dropping enlightenment in a concise, articulate six minute speech?

 

 

 

About the author: JS Kim is the Founder & Managing Director of SmartKnowledgeU. Follow us on Twitter: @smartknowledgeu and like us on Facebook for more information about how we can defeat the banking cartel and regain our freedoms.

A Rainbow for Gold?

Posted: 15 May 2012 05:56 PM PDT

The Gold Speculator


Pento - Here Is What Is Facing Investors & The World Today

Posted: 15 May 2012 05:27 PM PDT

With continued volatility in global markets, today Michael Pento, of Pento Portfolio Strategies, writes for King World News to discuss what is happening in key markets and what central planners are up to. Here is what Pento had this to say about the situation: "The gold stocks, as evidenced by the XAU and the HUI, are now pricing in a significant decline in gold, taking the metal down to where it was in the middle of the last decade, before QE3 or LTRO's were even part of the global investor's lexicon."


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Is This The Bottom For Gold and Gold Stocks? Not So Fast...

Posted: 15 May 2012 05:20 PM PDT

Since the speculative highs of 2011, the precious metals are continuing to correct and head lower, even in the face of Operation Twist and the ECB's Long Term Refinancing Operation (LTRO) printing. And with the elections in France and even more socialism on its way, it looks like Euroland is ready to run the printing press again and the Fed will join the party. But I am not convinced that gold and silver will take off right away.


Brodsky and Quaintance: Central banks aim to redistribute gold and push it way up

Posted: 15 May 2012 05:19 PM PDT

In their May letter, Paul Brodsky and Lee Quaintance of QB Asset Management in New York argue that the investment case for gold is to a great extent a matter of its likely official revaluation upward to support confidence-based currencies that have lost the market's confidence.


Gold and silver still the best protection against the derivatives blow up that started with JP Morg

Posted: 15 May 2012 05:17 PM PDT

The immediate reaction to the $2 billion and counting loss at JP Morgan has been a flight from risk trades and a sell-off of all financial assets, gold and silver included. However, investors ought to pause for thought about what this really means for the future. If JP Morgan cannot get the derivatives market right what hope is there for any mere mortal. These are the guys that write the derivatives and ought to know best how to trade them.


Timmins Gold Reports Profit From Operations of $12.7 Million for Q1 2012

Posted: 15 May 2012 05:05 PM PDT

Timmins Gold Corp. (TMM.TO)(TGD) (the "Company") is pleased to report its first quarter of 2012 financial results for the period ended March 31, 2012. For comparative purposes, Q1 2011 below refers to the three months ended March 31, 2011. All results are presented in United States dollar unless otherwise stated. Readers should refer to the Q1 2012 management discussion and analysis (MD&A) and consolidated financial statements for more complete information.


Is a Plan Afoot to Introduce a New Dollar to Repudiate America?s Piles of Debt and Derivatives?

Posted: 15 May 2012 05:00 PM PDT

Any thinking person with a calculator knows that the current global monetary system is going to fail given enough time. Rather than going through the charade of more quantitative easing, what if the central banks, the collaborating Western governments, and the financial elites decide to let the system fail now? [What if]…people in control…have a plan…to accelerate the emergence of a new dollar. So says*Robert Fitzwilson in edited excerpts from an interview with King World News as provided by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!). This paragraph must be included in its entirety in any re-posting to avoid copyright infringement. Fitzwilson goes on to say, [you can read the full article here] in part: It would not be the end of the dollar as the king of currencies, just the end of the current dollar as we know it. The new dollar could be realigned not only against other currencies, but would allow for the effective repudiation of the ma...


Guest Post: President Obama, The View, And The False Notion Of Too Big To Fail

Posted: 15 May 2012 04:56 PM PDT

Submitted by James E Miller of the Ludwig von Mises Institute of Canada,

 

If there is one thing Barack Obama has proven throughout the first term of his presidency besides his expert use of grandiose, simplistic rhetoric, it is his ineptness at understanding economics.  Last year, the President hilariously blamed automatic teller machines and kiosks for unemployment.  Because politics is defined by reactionary and short term consideration, Obama doesn't see the additional employment and capital surpluses that result by eliminating labor costs.

Such Luddite-esque thinking often provides all the more justification for government interference in the marketplace to try and equalize outcomes.  This view is paired with the perception that rather than society giving legitimacy to the state first, the state and its enforcers are destined to guide society.  Under the pretenses of promoting the public good, central planners see failure not as a necessary process of the market but an opportunity to usurp more authority.  Ludwig von Mises accurately recognized the inevitable goal of economic regulation decades ago:

Interventionism cannot be considered as an economic system destined to stay. It is a method for the transformation of capitalism into socialism by a series of successive steps.

Nowhere is this more prevalent than in today's financial sector.  The recent $2 billion trading loss by Wall Street giant JP Morgan has given more ammo to the crowd that wishes Washington to have more of a say over the operation of the big banks.  Obama, ever the politician, has taken the loss as an opportunity to tout the merits of banking regulation.  In an interview on the daytime talk show The View, the popular ladies get his thoughts on Jamie Dimon's big flub.  From McClatchy:

WHOOPI GOLDBERG: So now I'm wondering because I watched this JP Morgan Chase thing just go down. I'm wondering (A) what do you think happened and (B) sir what are you going to do about it because this has to be the last straw.

 

PRESIDENT BARACK OBAMA: Well look, first of all, JP Morgan is one of the best managed banks there is. Jamie Dimon the head of it is one of the smartest bankers we got and they still lost $2 billion dollars and counting precisely because they were making bets in these derivative markets. We don't know all the details yet. It's going to be investigated, but this is why we passed Wall Street reform. The whole point was, even if you're smart, you can make mistakes and since these banks are insured backed up by taxpayers, we don't want you taking risks where eventually we might end up having to bail you out again, because we've done that, been there, didn't like it

 

BARBARA WALTERS:  Specifically, though, Mr. President, you have all of these things in place, some working, some not.  Are you — is the federal government going to do anything more so that this doesn't happen?

The very fact that one of the ladies of The View asked Obama "what are you going to do about it" is revealing of the type of mindset they have and their lack of knowledge on all things economical.  Like many Hollywood stars that drool over the awesome power of Washington, the ladies of The View made a fortune in entertainment.  That is their personalities draw in viewers.  Watchers of The View have a myriad of other choices of television shows to watch but, for whatever reason, find that catty chatter of Joy Behar and Whoopi Goldberg appealing.  The ladies of The View have success in the market by selling their respective talents.  There is no coercion involved.  There is no expectation on the part of the American people that the federal government would step in to save the show should it lose ratings and go belly up.

This is how capitalism is supposed to work.  Private business prospers by satisfying consumers.  Success is never guaranteed therefore the threat of failure is ever present.  Shareholders know this.  Employees know this.  Management knows this.  Each takes the risk of dedicating their time and money to the venture in order to garner a return.  The danger is that customer preference can change in an instant.  What used to be a steady cash flow can dry up almost immediately.

And this happens everyday as businesses go under, shed jobs, and sell off assets in fire sales to the highest bidder.  These freed up resources are then used by entrepreneurs looking to thrive in the same market.

In a true free market the idea of a government bailout is counter intuitive.  It assumes that companies that go into bankruptcy quite literally disappear.  That the newly laid off employees end up begging in the streets never to work again and the previously employed assets rust away into nothingness.  But the human condition is one of constant change.  There is always demand to be met and wants to be satisfied.  Adjustments happen and the market process continues as before.  What business failure really entails is that it sends a signal that whatever practices were being engaged in before were not satisfactory to consumers or profitable.  It tells the businessman and shareholders in charge to adapt to shifting circumstances or close up shop.

When Goldberg asks "what are you going to do about this," it's is clear that the notion of "too big to fail" is still a consideration years after the financial crisis.  But there is one reason why large financial institutions such as JP Morgan are still considered TBTF.  Rather than a competitive marketplace, Wall Street has suctioned its influential and cash-rich tentacles to Leviathan.  It's no secret there exists a revolving door between the Street and Washington, namely through the regulatory complex.  Banking executives get high-level jobs overseeing the banks they used to run, learn the loopholes to bypass whatever arbitrary red tape was constructed to give voters the sense that Uncle Sam is looking out for them, and then cash out by going back to manage another large financial institution.  This incestual relationship was cemented almost a century ago with the formation of the Federal Reserve which was a product of scheming bankers such as John Pierpont Morgan to ensure themselves infinite liquidity should they engage in far too risky business.  The banks now act as a middleman between the federal government and the printing press.  Jamie Dimon even sits on the board of the New York Fed which is supposed to act as the Street's top regulator.

And therein lies the root cause of Wall Street's dicey business model.  In a recent New York Times editorial, economist and big government worshipper Paul Krugman uses the JP Morgan trading loss to emphasize the necessity of banking regulation.  He writes:

Just to be clear, businessmen are human — although the lords of finance have a tendency to forget that — and they make money-losing mistakes all the time. That in itself is no reason for the government to get involved. But banks are special, because the risks they take are borne, in large part, by taxpayers and the economy as a whole.

And after being asked what he would "do" in regards to JP Morgan's $2 billion loss on The View, Obama responded:

"This is the best, or one of the best-managed banks. You could have a bank that isn't as strong, isn't as profitable making those same bets and we might have had to step in.  That's exactly why Wall Street reform's so important."

Does it ever cross the President's mind that perhaps the big banks take risks precisely because he stands ready to throw Joe Taxpayer's hard earned money at their mistakes?  Right on national television, Obama affirmed what every Wall Street banker has been conditioned to; that should things get too hairy and big losses are imminent, a government bailout awaits.  This was the real purpose behind the Federal Reserve's role as "lender of last resort."  It took away the prudence necessary with the prospect of failure and transferred the losses into the form of devalued currency that all dollar holders must inevitably suffer from.  The end result was industry cartelization as existing banks are now protected from competition by smaller, more flexible ones.

The same goes with the Federal Deposit Insurance Corporation that puts taxpayers on the hook for $250,000 of demand deposits for each depositor in thousands of banking institutions.  With some TARP funds still outstanding and dubious accounting on part of the U.S. Treasury showing a profit for taxpayers, there is hardly a question if Washington will come to the rescue should another financial crisis wreck the balance sheets of supposed "too big to fail" banks.

As Fox Business Network Senior Correspondent Charles Gasparino points out,

But if JPMorgan's loss had been truly life-threatening, no one in Washington would've let it fall into bankruptcy.

 

Dimon has stated publicly he's against "too big to fail." If JP fell apart, he says, the government should just put it out of business. Problem is, the ripple effects in the global markets would be huge — not to mention JPMorgan's $1 trillion-plus in federally insured (that is, taxpayer-insured) customer deposits.

Just as "common ownership" incentivizes maximum use with minimum upkeep, government guarantees against failure throw the practice of risk management right out the window.  Why hold back on the excesses of high-risk trading when you are protected from insolvency?

From the 2008 financial crisis to Bernie Madoff, federal regulators have consistency proven too incompetent or too in-the-pocket to actually catch big disasters before they happen.  Their interests, like all government employees, are politically based.  State bureaucracies seek more funding no matter performance because their success is impossible to determine without having to account for profit.  There is never an objective way to determine if the public sector uses its resources effectively.

The news of JP Morgan's loss has reignited the discussion over whether the financial sector is regulated enough.  The answer is that regulation and the moral hazard-ridden business environment it produces is the sole reason why a bank's loss is a hot topic of discussion to begin with.  Without the Fed, the FDIC, and the government's nasty history of bailing out its top campaign contributors, JP Morgan would be just another bank beholden to market forces.  Instead it, along with most of Wall Street, has become, to use former Kansas City Fed President Thomas Hoenig's label, a virtual "public utility."

Take away the implied safety net and "too big to fail" disappears.  It's as simple that.


What is Money When the System Collapses?

Posted: 15 May 2012 04:37 PM PDT

What is money?

Economist Mike Shedlock defines money through the eyes of Austrian economist Murray N. Rothbard as "a commodity used as a medium of exchange."

"Like all commodities, it has an existing stock, it faces demands by people to buy and hold it. Like all commodities, its price in terms of other goods is determined by the interaction of its total supply, or stock, and the total demand by people to buy and hold it. People buy money by selling their goods and services for it, just as they sell money when they buy goods and services."

What is money when the system collapses and the SHTF?

In disaster situations, the value of money as we know it now changes, especially if we are dealing with a hyperinflationary collapse of the system's core currency. This article discusses money as a commodity in an event where the traditional currency (US Dollar) is no longer valuable. Read more........


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

Revolution Trailer: “It’s Gonna Turn Off, and It Will Never, Ever Turn Back On”

Posted: 15 May 2012 04:33 PM PDT

A new series this Fall from NBC looks like an exciting must watch for preppers (and we think some non-preppers may just be swayed into at least putting something away for an emergency).

While we can't speak for the quality of the show, it looks quite interesting, especially the collapse of the power grid, which is something we've detailed in numerous posts and videos over the years.

Like Jericho, this one may prove to be pure Doomer entertainment at its best.

Revolution – coming this Fall: Read more......


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U.S. ‘Fiscal Cliff’ Looms: Will Lawmakers Heed Bernanke’s Warnings?

Posted: 15 May 2012 04:30 PM PDT

by Morgan Korn, Finance.Yahoo.com:

In late February Fed Chairman Ben Bernanke started warning lawmakers about the looming "massive fiscal cliff" that would bring the U.S. economy to its knees if Congress cannot agree on long-term fiscal decisions. Bernanke explained that the confluence of events happening Jan. 1, 2013 – the expiration of the Bush-era tax cuts and extended unemployment benefits, the $1.2 trillion automatic spending reductions and the end of the payroll tax holiday — will likely lead to a recession in the U.S.

Neither political party wants this worst-case scenario to come to fruition but lawmakers are likely to "kick the can down the road" instead of addressing these pressing policy issues before the November elections says Greg Valliere, chief political strategist at Potomac Research Group. Bernanke reiterated his concerns to a select group of lawmakers last week, escalating his rhetoric about the necessity of resolving these budget concerns sooner rather than later.

"I think [Bernanke] is worried, and people at the Fed are worried because this is such a dysfunctional group," says Valliere in the accompanying video. "And there's talk now of a government shutdown on Oct. 1 when the new fiscal year starts."

Read More & See Video @ Finance.Yahoo.com

Nic Colas On India's Temple Of Gold

Posted: 15 May 2012 04:19 PM PDT

Via Nic Colas of ConvergEx,

Summary: India is known for its historically high per capita demand for gold, particularly before festivals and the wedding season, which peaks in the months of October to December. With more than ¼ of the entire global world market for the metal, the country has long been leading world demand, though fellow BRIC member China is catching up. But recent developments in India have gold bugs stirring – protests, boycotts, and a proposal for a tax on the sale on gold jewelry has severely dampened demand ahead of one of the most lucrative festivals in the country. And with global gold prices down more than 10% since their February high of $1,787.75, there seems to be good reason to worry about India's role in the decline. But a longer-term analysis of Indian demand, global gold prices, and global GDP yield some surprising results about the country's connection to the metal. While acceleration in gold prices and Indian GDP seem to link up as do Indian demand and global GDP growth, increases in demand have little correlation to gold price growth. Similarly, rampant inflation has almost no role in stifling demand for the metal. If these correlations hold true in 2012, gold investors might be able to sleep a little easier.

Gold trend-adjusted seasonal performance...


Note from ZH: We did a little seasonality check (chart above - black dotted line) and noted three things: 1) 2012 (orange) so far is looking a lot like 2009 (green) - which neared its trough around this period; 2) Trend adjusted, the period from late February to early June is a weak cycle (red arrow on regression channel) which is followed by a trend-adjusted upwards bias through the summer; and 3) Trend adjusted, the period from mid-October to early December is a very strong cycle

Note from Nic:  A recent article in The New Yorker about a surprising find in an ancient Indian temple got me thinking about gold, the subcontinent, and Charlie Munger's recent comment that "Civilized people" don't buy precious metals, but rather financial assets like stocks.  Gold has, in fact, been in a bit of a freefall of late, so I asked Sarah to pick up these disparate thoughts and see where they lead.  Her note, on Indian gold demand, follows here...

In the summer of 2011, while U.S. politicians were hotly debating the latest increase in the Federal debt ceiling, Indian authorities were facing quite the opposite situation: what to do with $22 billion worth of gold and rare jewels discovered under a temple in the southern state of Kerala. Rumors that the Sree Padmanabhaswamy temple sat on top of a horde of riches go back centuries, the result of millennia of donations to the gods, but the stories were only confirmed after a former Indian Police Service officer petitioned the Indian Supreme Court to order the opening of the temple to ensure "transparency in the running of the Trust" which overseas temple finances. The discovered wealth – which exceeds the annual education budget for the entire country – is now in limbo as two parties face off for ownership of the fortune. The Travancore Royal House, charged with the maintenance of the temple since the 18th century, assert that the riches belong to the gods they were offered to – and many Hindus in the region support their cause. Others think the wealth should be distributed to the poor; that $22 billion (and it could be far more once definitely valued) could potentially feed, clothe, and shelter every citizen of the region for years to come. The decision is ultimately up to the Indian Supreme Court, who have already stationed two dozen police officers around the temple for 24/7 surveillance. Just in case.

The $22 billion treasure found in Kerala is astounding, to say the least, but it represents barely half of the $46.4 billion Indians spent on gold in 2011. And while you may have read about Western central banks, Chinese citizens, and scores of other buyers for the yellow metal, India in fact outpaces every other country on the planet in gold consumption:

  • In 2011, India was the clear leader in global gold demand with 27.1% of the market, according to the World Gold Council's statistics.
  • 61% of this spending went to jewelry, while 39% went to coins, bars, and other investments. This ratio has been converging for several years: in 2006 73% went to jewelry and 27% to other investments.
  • China has been slowly closing in on the lead, however, with 22.3% of the global gold market last year. 67% of this went to jewelry and 33% to other investments.
  • Gold ETFs got their start in India in 2007, and the seven such funds on offer to Indian citizens now have $1.9 billion in assets under management.
  • The next closest country in the ranks after India and China is the US, representing a much smaller 5.7% of global demand.

Clearly, India and China together are imperative to the global gold trade, as they account for almost half of all global demand.

In fact, as we show in the charts following above and below and the few data points below, the gold trade is a useful proxy for Indian economic growth, and demand from both of these countries is strongly connected to global GDP acceleration.

  • Annual Indian GDP acceleration or deceleration has a 0.4 inverse correlation with acceleration or deceleration in gold prices. In other words, when gold prices increase by a greater amount than the year before, it's likely that Indian GDP will decelerate that same year. We've used the last six years as the baseline for this comparison, encompassing both the turmoil of the Financial Crisis in western economies and India's volatile GDP growth rates of anywhere from 6-10% over the period in question.
  • China's acceleration, on the other hand, is virtually unconnected to gold prices with a 0.03 R² over the same period. Clearly India is significantly more dependent on gold's price appreciation than their neighbors to the East.
  • When this same correlation is lagged by one year – 2011 gold price acceleration matched up with 2010 GDP acceleration, for example – the correlation is essentially perfect: 0.9965. So if the Indian economy accelerated in 2011, you can probably expect gold prices to follow suit in 2012, and vice versa. In China, this correlation is much weaker at 0.53, but still significant for a one variable economic analysis.
  • Annual acceleration and deceleration in Indian and Chinese gold demand also have an almost perfect correlation to annual global GDP growth: 0.94 and 0.95, respectively. Essentially, when demand in these two countries drops, based on this correlation you might see global GDP fall as well.

Given this data, it is understandably concerning to fans of the yellow metal that Indian gold demand has not been as robust as expected so far this year. Part of the slowdown is due to a series of shutdowns by gold merchants, who closed shop for 20 days at the end of March to protest a rise on an excise tax on gold jewelry sales and a doubling of the import duty on the metal to 4%. And though the excise tax is now off the table, by one estimate (from the Bombay Bullion Association) gold merchants were seeing 50% less volume than the year ago period just before the Akshay Tritiya festival in late April, a traditionally strong period for gold sales. Some of the decline can also be attributed to rising inflation, according to some analysts: at 7.18% year-over-year so far in 2012, the rupee is down 8% in dollar terms and therefore represents a diminished source of gold purchases which are dollar-based.

But there are several reasons not to be pessimistic about gold prices even with the recent relative decline in Indian demand:

  • Gold prices are heavily correlated to the U.S. dollar – a strong greenback hurts gold demand around the world by lifting local prices.  The Indian Rupee has fallen victim to the global "Risk off" trade in recent weeks, falling below 54/dollar for the first time since last December.  At the same time, the Reserve Bank of India has reportedly launched aggressive interventions in the currency market to support the local currency.  And while we're reluctant to base any investment analysis on the counter-market moves of any central bank's activities, there is a lot at stake for the RBI in this case.  India, you see, has very little in the way of energy reserves and must import most of its oil – 80% by some counts – from overseas.  And those products are also priced in dollars, just like gold.  A stronger Rupee is therefore critical to continued economic growth, with gold demand in India an incidental beneficiary of this dynamic.
  • China is more than making up for the loss. Indian demand dropped by -7.2% in 2011, from 1,006.3 total tons in 2010 to 933.4. Chinese demand increased 21.7%, from 666.8 to 811.2. That's a net gain of 71.5 tons. And with an annualized demand increase of 22.9% since 2006, it's likely that China may surpass India as the largest gold consumer in the world in the next few years.

There is even cause to be bullish, if our Indian GDP correlation can be believed. The IMF projects that the Indian economy will decelerate by -0.9% this year, to 6.9% from 7.8% in 2011. If we plug in this -0.9% deceleration into the formula derived from "Change in annual Indian GDP growth vs. change in annual gold price growth", we find that gold prices may actually accelerate by 2.8% in 2012 – meaning they will grow an additional 2.8% to the 27.2% appreciation from last year, resulting in a 30% increase. Based on yesterday's closing prices, that puts the metal at $2,022.15 – just above the $2,000 mark some analysts have forecast.

The thought that a decline in the rate of Indian economic output would cause an increase in local demand is not as tortured as it might seem.  The appeal of gold is largely based on its long-proven value as a store of wealth.  The vaults at the Indian temple where we started this note weren't filled with IOUs from Roman traders or shares of stock from the old East India Company.  That's good news for the Hindu gods that first received these gifts, as well as their modern adherents who may benefit from the centuries of donations.  Gold does hold its value over long periods of time, and no country has a better case study of that fact at the moment than India.  So even if the economy there does slowdown in 2012, the resultant uncertainty doesn't preordain a decline in gold demand.  It may even help.

While none of this guarantees that gold will experience some kind of meteoric rise to $2k, especially given all the other factors that contribute to prices, I think it's safe to say that the supposed softening demand in India shouldn't be too concerning. China is emerging as a critical consumer of gold on the world stage, and may even surpass India this year if trends continue. The country has more than offset declines in demand from their southeastern BRIC partner, and has helped drive up world consumption at a time when many other countries – particularly our own – are dropping out. The US has bought 42% less gold than it did in 2006. So when it comes to declining gold prices, don't jump to blame India. After all, it isn't even wedding season yet...

BANK RUNS IN GREECE: Greeks Rush the Banks; Lines Form at ATMs; Nearly $1 Billion Withdrawn in Past Week

Posted: 15 May 2012 03:51 PM PDT

by Mac Slavo, SHTFPlan:

Without a government for the last eleven days, and amid mainstream discussion of a Euro Zone exit, the Greek people are realizing that the economic and political system as they know it is rapidly descending into chaos.

With massive jobless rates that have forced many into bartering to survive, and facing credit destruction across the entirety of the country that has led to shortages of critical supplies like life saving medicines, those with any money left at national banks are taking the desperate step of withdrawing as much of their savings as they can from a banking system on its last leg.

This is what it looks like when a populace plagued with uncertainty finally loses trust in the credibility of their country's leadership and financial system.

Read More @ SHTFPlan.com


JP Morgan and the Invisible Pickpockets of Paper Currency! Stefan Molyneux hosts the Corbett Report

Posted: 15 May 2012 03:46 PM PDT

from stefbot:

We analyze the major causes of the recent multi-billion-dollar loss at J.P. Morgan, discussing inflation, fiat currency, ridiculously low interest rates, the lessons of history, and the utter madness of expecting the debt-addicted Federal Government somehow promote fiscal responsibility in the financial sector!

Silver Update 5/15/12 Collapse Coming

Posted: 15 May 2012 03:19 PM PDT

Silver Plunges Below Marginal Cost: Commentary from a Retired Geologist

Posted: 15 May 2012 02:05 PM PDT

from Liberty Blitzkrieg

Last week as silver headed toward the $29/oz level, I received an excellent piece of commentary from a retired Canadian geologist that goes by the handle "Rhody." In it he states that at sub $30/oz silver is below cost, which I take to mean marginal cost. For those not familiar with the commodity markets, marginal cost is the price that must be maintained to support new projects in order to keep supply growing to meet demand. This cost includes capital investment in addition to all other costs as well as an implied return on investment. I am not sure if Rhody included a return on capital in his $29/oz figure so it could be even higher. In any event, he goes on to make some extraordinarily poignant statements on the overall macro backdrop in general. So much so that I asked him if I could post it and he agreed. Without any further ado…

Read More @ LibertyBlitzkrieg.com

“Confiscate, Secretly and Unobserved”

Posted: 15 May 2012 02:03 PM PDT

from Testosterone Pit.com:

"Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some."

John Maynard Keynes penned these words after World War I (The Economic Consequences of the Peace); and all Fed governors, certainly Chairman Ben Bernanke, should be required to read them out loud each morning.

When inflation isn't particularly hot, it's praised as something desirable, though in its gradual, nearly invisible way it continues its insidious work. And the inflation data released today (BLS PDF) fall into that category: flat for the month and up 2.3% over the last 12 month. It will trigger palliative lingo such as "moderate" or "well anchored," and any spikes would be "temporary." But spikes in inflation, along with moderate, well-anchored, and temporary inflation, unless followed by deflation, become permanent. Result: a CPI-U index value of 230.085, where "100" represents price levels of 1982-84. Hence, 130% inflation over the last 30 years. In the process, the Fed "debauched" the dollar, to use Keynes' term, by 56.5%.

Read More @ TestosteronePit.com

ROGUE METALS REPORT: Stacker Splatter Alert

Posted: 15 May 2012 01:35 PM PDT

from Silver Doctors:

Precious metals investors were taken to the woodshed today in yet another indication that fundamentals are governing trading. Analysts at JP Morgue, resigned to investors' fate, were seen making paper airplanes in the New York offices of the fortress balance sheet bullion bank. "We told everyone these things are nothing more than dog squeeze," remarked one analyst who declined to be named. His colleague, Bubba John Lapdog, estimated that supply and demand trends for silver peg its true fair value at $1.75 per ounce. "Ouija Board metrics indicate silver must trade below North American natural gas prices before we hit bottom," Lapdog barked.

Read More @ SilverDoctors.com

In The News Today

Posted: 15 May 2012 01:28 PM PDT

Jim Sinclair's Commentary

As if I do not have enough gold bears on my back as it is. Look at what came to visit my back door – a modest sized black bear.

 

Jim Sinclair's Commentary

Here is the latest from John Williams' ShadowStats.com.

- Core‰ CPI-U Inflation Hits Cycle High -

Continue reading In The News Today

Gold Has Plenty of Room Below December Low

Posted: 15 May 2012 01:01 PM PDT

courtesy of DailyFX.com May 15, 2012 02:36 PM Weekly Bars Prepared by Jamie Saettele, CMT Gold has broken below a major trendline (and channel) that extends off of lows in 2008, 2010, and 2011. Focus is now on the December low at 1522.50 and then support from May 2011 and resistance from December 2010 at 1430/60. Look lower against the Monday high of 1586. LEVELS: 1612 1586 1522.50 1477 1462 1448 1431...


Short-, Medium- & Long Term Technicals For Gold & Silver

Posted: 15 May 2012 12:18 PM PDT

We now have a Bullish Extreme in the USD. Over the last 5 years, Bullish extremes have been very good indicators that a top was within a hand's reach.


Chart courtesy sentimentrader.com

On top of the Bullish extreme in the USD, we also have a Bearish Extreme in Gold sentiment. Bearish extremes have been good indicators that a bottom was near.


Chart courtesy sentimentrader.com

Silver Sentiment is also very depressed at the moment, with only 29.70% bullishness. However, sentiment hasn't pierced the "standard deviation bands" yet, and thus has more downside potential…


Chart courtesy sentimentrader.com

All this Dollar-bullishness/Gold-Bearishness has caused mining companies to sell off BIG TIME.
Some of them are now 75-80% below their top, and when you look at their charts, it looks like the world is coming to an end for those companies.
That being said, the BPGDM index from stockcharts, which shows the % of mining stocks that have a BUY signal on the Point&Figure chart, is very depressed at 10.71% at the moment. In late 2008, this index reached 0% for a very short time. Funny to see that that time, the mining stocks had set a higher low. The HUI index has now dropped below the 50% Fibonacci Retracement level from the bottom of 2008 to the top of 2011, so the next target would be the 38.20% level, which comes in slightly below 350. My expectations are that we might get close to this level over the next couple of days, followed by a very sharp rebound (possibly as high as 450, which is the 61.80% level). What happens then is still unknown, but as I pointed out, the severe underperformance of the HUI stocks to Gold is very similar to 2008, which means that the decline might not be over yet, even though a sharp bounce is overdue now with the extreme bearishness…


Chart courtesy stockcharts.com

Let's have a look at the weekly charts. Gold is ready to set a tripple bottom. However, if that attempt fails, look out below (especially below $1,450). The MACD has just turned negative, which doesn't look well…


Chart courtesy stockcharts.com

When we have a look at the following chart, which is a weekly chart from 1980, we can notice a similar pattern:


Chart courtesy stockcharts.com

When the MACD just turned negative in 1980, Gold was trading above $500 per ounce. It fell all the way to $300 in the next 1.5 years or so.


Chart courtesy stockcharts.com

Silver is also at a critical point right now. If this level holds, then we have a tripple bottom. If not, look out below…


Chart courtesy stockcharts.com

Now over to the monthly charts:
Gold's MACD is extremely stretched, and we have negative divergence between price and RSI. Since this is on a monthly basis, this is not a good sign for the future.


Chart courtesy stockcharts.com

Silver's MACD looks set to drop lower (potentially much lower). First support comes in around $19-$20:


Chart courtesy stockcharts.com

The Quarterly chart for silver shows an extremely stretched MACD, and an RSI that is still hovering around overbought levels:


Chart courtesy stockcharts.com

The situation is even worse for Gold:


Chart courtesy stockcharts.com

When we finally look at the Yearly chart, we can see that Silver has set a bearish reversal candle last year, which we have commented on late last year. On top of that, the yearly RSI is still OVERBOUGHT!


Chart courtesy stockcharts.com

Last but not least, the comparison between Silver Now and the Nasdaq is still very accurate:


Chart courtesy stockcharts.com (Nasdaq Bubble)


Chart courtesy stockcharts.com (Silver "Bubble"?)

An overlay of the two charts speaks more than a thousand words:

For those of you who want to call me an "idiot" who doesn't look at fundamentals, Martin Armstrong wrote in his latest report:

"Fundamentals really mean little. The whole fiat reasoning means nothing since gold declined for 19 years from 1980 when it was still fiat. The same is true in stocks when the price can decline on good news and it is explained by saying the market was expecting results "better" than that. Markets trade technically because they are influenced truly by everything. Each market is interlinked to everything else so it becomes a delicate dance of comparison and capital flows like water to the lowest cost for the greatest gain. Focusing upon just one market exclusively ensures failure."

For more articles, analyses and trading updates, visit www.profitimes.com

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Gold Drops to New 2012 Low : a Historic Buying Opportunity

Posted: 15 May 2012 11:54 AM PDT

"It's not over," says Louis James, chief metals &...

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U.S. Dollar Ranks #4 Behind Currencies of Australia, Canada and New Zealand Among G10 Countries Based on Monetary Policy ? Here?s Why

Posted: 15 May 2012 10:52 AM PDT

Merk Investments has ranked the attractiveness of the currencies of each G10 country based on the monetary and fiscal policies of each country and the strength of each country’s economy to come up with what they call*the Merk Currency Score™. This Score*should prove invaluable in supporting investment decision-making across countries and regions.*Go here to see where your country ranks. Words: 367 Axel Merk, Kieran Osborne and Yuan Fang (http://www.merkfunds.com/) have recently published the*Merk White Paper – Monetary Policy* and it*can be found here in its entirety*compliments of*Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!). This paragraph must be included in any article re-postings to avoid copyright infringement. By way of introduction to the linked White Paper, the authors state,*in marginally edited excerpts, that: We have developed a score for each currency within each category, that is, a Merk Monetary Score™, a Merk Fiscal Score™, and a ...


Soros Quadruples His Investment In Gold

Posted: 15 May 2012 10:42 AM PDT

Everyone in the precious metals/mining stock sector is looking for anything to grab onto for optimism.  Nothwithstanding that this type of sentiment always demarcates a bottom, and notwithstanding the fact that the basic fundamentals underpinning the precious metals - like catastrophic Government deficit spending and disastrous Central Bank negative interest rate policies - get stronger by the day, here's an excellent harbinger of a potential bottom/upturn in the metals/miners:  Soros has quadrupled his exposure to gold via GLD:  LINK.

This sell-off in the miners has become silly.  One particular stock AUMN (which acquired ECU Silver) is now selling at a little over 20 cents per old ECU-equivalent share.  At one time in 2007, ECU was over $3.30/share.  This valuation implies that AUMN's silver in ground is valued at 30 cents/ounce.  That is retarded.  A couple years ago silver miners were selling for $1/oz in the ground.  The price of silver is higher now and margins have exploded.

I don't know when this sell-off in the sector will end and the next move up will commence, but I just got off the phone with a longtime friend in NYC who told me that he just spoke to a very plugged-in "insider" (i.e. politically connected) type who told my friend that a massive QE in Europe and in the U.S. is coming and that this is the flush in precious metals that you want to use to back up the dump truck and buy because there might not be another opportunity like this going forward.

Back to Soros, I've noticed over the years that he has had good success as a market-timer in gold and mining stocks.  As a matter of fact, he was the largest shareholder at one point in the predecessor company (Apex Silver) that became Golden Minerals that took over ECU.  He sold Apex almost at its apex.  At any rate, it is my strong belief that he uses GLD to index the price of gold for trading purposes.  He's smarter than me and must know the potential Enron-type legal structure that belies the GLD trust structure.  I would also bet a lot of money that Soros, given that he is a Holocaust survivor and concentration camp escapee, has accumulated a massive personal holding of physical gold.

For what it's all worth...

Silver and Gold Daily Bulletin/COT Review for period 4-26 to 5/8/2012

Posted: 15 May 2012 10:32 AM PDT

I must first apologize to my readers for this report being so late this week as the JP Morgan debacle has garnered my full attention. Silver plummeted $-1.471 this past reporting period and gold drove $57.90 into the ground ... Read More...



By Request - TLR Road Kill Bargain Chart

Posted: 15 May 2012 10:17 AM PDT

By request we share the "Road Kill Bargain" chart for Timberline Resources (TLR)  we first shared at the New Orleans Investment Conference in October of 2011 just below (updated through today, Tuesday, May 15).  In this buyer's strike/panic selldown for mining shares TLR has reached the same broad zone it did in the 2008 panic. 

We also update readers on our own scheduling just ahead. 

20120515-TLR

In the past four years TLR has only turned in one monthly close below its low today, Tuesday, May 15 ($0.27) - in February of 2009, although the soon-to-be-low-cost gold producer traded to lower prices intra-month in 5 different months from  November 2008 to April 2009. 

For those who may not remember we began adding TLR in the fall of 2008 in the $0.50s and were, at times then, the only bidder for shares in the $0.20 range in February of 'ought-nine.' 

TLR rewarded our faith then as the chart shows clearly.  Although the recovery took the better part of  nine months, as we recall it did not seem like a long period of time then - time being relative to all parties, of course. 

The chart below summarizes the 2008 event, which we think can be used as a loose model for today's action.  Emphasis on the word "loose." 

20120515-TLR-2008 trade

Once the irrational, low volume panic selloff ran its course and established Overwhelming Support (OS), TLR advanced to about 800% above its panic lows, more or less.  So when we say we were rewarded then, that will give an idea of what the opportunity was then – even though the contemporary mood was morose and defeatist in the extreme.  Sound familiar? 

Timberline is one of the issues we had in mind when we recently sold a small amount of our physical gold (in the $1640s) in order to take advantage of the panic sales underway today.  Full disclosure, we added to our stake in TLR in today's panicky action and intend to add more in future down-spikes.  Call us crazy Vultures, but that's what we do sometimes. 

Our view is that we are in another 2008-style panicky period, with the causes of that panic ultimately being supportive for gold, silver and the companies that mine them.  While in the panic portion of the event (now) we are served up generous portions of resource company Road Kill as fearful sellers hit the weakened bid no matter the price.   It rarely gets better than this from a bargain hunting point of view.  That's if one believes the world is not about to end and the market will return to a more normal state in the near future. 

We do not belive the world is about to end, by the way, and we certainly do hope we are right about that one.  We are scheduled to spend a week fishing in two different events just ahead and wouldn't want to miss that! 

Everyone can and should make up their own mind about such things of course.   

Timberline is awaiting permits from the state of Montana to begin mining at its underground high-grade Butte Highlands project 15 miles south of Butte.  The company is also in the process of exploring at its flagship Lookout Mountain project near Eureka, Nevada. 

Additional information about the company here:    http://www.timberline-resources.com/ 

Some previous coverage:   http://www.gotgoldreport.com/2010/06/add-timberline-resources-to-the-radar-screen-pronto.html

Scheduling:  In the past we used to take most of the month of May off for an anual hiatus.  Although we won't be taking the entire month away, we will be quite scarce from time to time from now to just after Memorial Day.  We plan to place some super-stinky stink bids and "hit the trail" soon, so hold down the fort.  The markets will still be here when we return. 

Disclosure: Timberline Resources is a Vulture Bargain Candidate of Interest (VBCI) and is our fully fledged Vulture Bargain #4. Members of the GGR team are actively accumulating shares of TLR and continue to hold a speculative long position in the company. Past performance is no guarantee of future results.

20120329-Vik"Bargain Road Kill - it's what's for dinner..."   

Later today or tomorrow:  The Vulture Bargain Road Kill chart for Riverstone Resources. 
 
 

Gold Slides to New 2012 Low: Buying Opportunity or Bull Market Breakdown?

Posted: 15 May 2012 10:06 AM PDT

The Gold Price Lost $3.80 Here are the Reasons for a Turnaround this Week

Posted: 15 May 2012 09:48 AM PDT

Gold Price Close Today : 1556.80
Change : (3.80) or -0.24%

Silver Price Close Today : 28.054
Change : (0.265) cents or -0.94%

Gold Silver Ratio Today : 55.493
Change : 0.385 or 0.70%

Silver Gold Ratio Today : 0.01802
Change : -0.000126 or -0.69%

Platinum Price Close Today : 1430.70
Change : -12.30 or -0.85%

Palladium Price Close Today : 594.25
Change : -0.60 or -0.10%

S&P 500 : 1,330.66
Change : -7.69 or -0.57%

Dow In GOLD$ : $167.73
Change : $ (0.41) or -0.25%

Dow in GOLD oz : 8.114
Change : -0.020 or -0.25%

Dow in SILVER oz : 450.27
Change : 1.98 or 0.44%

Dow Industrial : 12,632.00
Change : -63.35 or -0.50%

US Dollar Index : 81.25
Change : 0.595 or 0.74%

Metals slowed their downward trajectory a bit the GOLD PRICE lost $3.80 (0.24%) to $1,556.80 silver lost 26.5 cents (0.94%) to 2805.4c.

I've been musing and musing on this, trying to take my own medicine and remember not to let a correction cast me down. Here are a few items that point toward it ending:

** Dow in silver double topped today at 450.20, matching its end-December top.

** Dow in Gold Dollars closed slightly over its end-December top.

** Buy-side premium for US 90% silver coin has climbed from an 80 cent per ounce discount to a 50 cent per ounce discount. That premium usually rises at lows.

** On 28 December 2011 silver reached its low against its 300 DMA at 80.2%. Next day, the day it bottomed, that percentage rose. Last two days silver repeated that performance. Seems crazy that the slow moving 300 DMA would pinpoint bottoms, but I reckon silver is so volatile and moves so fast that it works that way. Has in the past.

Let us hear the worst of the matter: the GOLD PRICE might yet drop to $1,525 and silver to 2615c.

But the SILVER PRICE has not been this oversold since last September, and before that since 2008. Gold's RSI is MORE oversold than last September, and you have to stretch back to fall 2008 to find it any more oversold.

Of the last 11 days, gold has declined 9. Silver has fallen 11 out of the last 12 days.

All these things argue for a rally in silver and gold soon. In the aftermarket today silver fell 40 cents and gold $12.50. Is that exhaustion selling? May be.

Today gold's low came at $1,541.53 and silver's at 2756c. Right now they are trading barely above those lows. Watch for more exhaustion and a turnaround this week.

GOLD/SILVER RATIO rose to 55.493 today. Time to swap gold for silver. Don't miss this opportunity. That ratio is notoriously quick to turn.

I've been thinking about this mess -- I mean this long, demoralizing silver and gold correction. You can only know after events prove your judgement, but I think I'm close to an answer.

Greece's feared new elections and possible withdrawal from the euro have markets moiled and sweating. What do they do when they're worried, God have mercy on 'em? They run to US dollars, which they see as "safety." Me, I see that as escaping a lion by running into a bear's den -- with the bear inside. I reckon they'll discover that.

US dollar index not only gained 59.5 basis points (0.77%) today but also cut through 81 like Napoleon through Italy. Shot straight up, and keeps on trying to steal the next base in the aftermarket. Dollar has now passed its last high and is working on passing its March high (80.74), maybe tomorrow. Dollar has risen for 11 days without a break, and as it slices through those resistance zones, bids fair to climb even more.

The euro took a tough beating with a big club. Lost 0.73% to $1.2732. Remember when -- a few days ago -- it seemed that $1.3000 would catch it? After gapping down yesterday, the euro's plunge accelerated today. Euro is more oversold than high heel shoes to women, but fear can make it more oversold still. Watch out for a short-covering rally that catches all those shorts, well, with their shorts down.

Yen lost 0.47% today to end at 124.62 cents (Y08.24/US$1). Yen may have spent all its fuel here. A rise above 126 would disprove that suspicion.

STOCKS tried to rally through 12,750, but when they got near that resistance, it hit 'em like Roundup sprayed on dandelions and knocked em dead. Owch, a lower low today, too (12,608). Is there comfort for stock investors in the S&P500? Well, Dow closed 12,632, down 63.35 (0.5%) and the S&P lost 7.69 (0.57%) to end at 1,330.66. Not as much comfort as a pillow full of two-inch bolts.

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.
at

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