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Sunday, May 20, 2012

Gold World News Flash

Gold World News Flash

Wall Street Journal Asks: “Could We Trust Killer Robots?” (We Ask, Would They Be Silver Bugs?)

Posted: 19 May 2012 04:50 PM PDT

from Silver Vigilante:

In the weekend edition of the Wall Street Journal May 19-20, 2012, which I swear I stopped subscribing to but remains to be delivered, a piece entitled, "Could We Trust Killer Robots?" appeared. It details a near-future world in which the United States military has been made wholly robotic. The subtitle reads, "A drone may never have a sense of morality, but it might perform better than a human solder in sparing the innocent."

In this apparently not-so-far-off world, Wall Street Journal uses 2015 (two-and-half-years) as an example, the robot will be able to determine through "infrared cameras, heat sensors, and other tools of surveillance determined whether the target is indeed a militant." The robot will decipher when a person is "ready to attack" on a scale from -1 (a noncombatant) to +1 (a confirmed combatant.) Clearly, this is very complicated stuff.

After the delineation, the robot will then assess whether or not children or other civilians are in the nearby, "and that everything else is in order." Once it chooses the proper weapon it will then proceed to "kill! Kill! Kill!" The robot then assesses the damage and either "kill! Kill! Kill's!"again or, if the enemy is dead, proceeds on patrol.

Read More @ SilverVigilante.com

Silver Update 5/19/12: Silver Ounces

Posted: 19 May 2012 04:23 PM PDT

Alasdair Macleod: All Roads In Europe Lead To Gold

Posted: 19 May 2012 01:58 PM PDT

Submitted by Chris Martenson

Alasdair Macleod: All Roads In Europe Lead To Gold

This week we bring back Alasdair Macleod, publisher of Finance and economics.org, because, as he puts it "every horror that we discussed last time we spoke is coming about". Especially scary since our previous conversation with him was less than three weeks ago...

Today's interview continues building on his excellent synopsis from last month that detailed the origins of the Eurozone crisis. The fundamental shortcomings warned of at the Euro's creation in 1997, combined with the excessive sovereign debts run up since then, have finally expressed themselves at a scale too large to be contained any longer.

Today, Alasdair details in-depth the huge and serious challenges facing Greece and the major Eurozone countries, and the likely impacts of the fast-dwindling options left remaining.

He sees no happy ending to this story, no outcome in which serious pain and permanent behavior change can be avoided. And for those looking for shelter from the unfolding economic storm, he sees few options besides the precious metals (which he believes are severely under priced at the moment): 

Greece

The Greek situation is entirely predictable: when you force enormous pressures on an economy and try and raise taxes from the private sector -- a private sector which isn't used to paying taxes because usually they find away around it -- you start cutting pensions, you start cutting this, cutting that, and the people revolt. They haven't a clue what they are doing, but we get the revolt nonetheless. It looks like nobody there can form a government; and it looks like there will be another election probably in June. That won't resolve anything unless by some miracle, some sense gets knocked into people's heads.

 

The other thing, which nobody has mentioned, is that there are about 90 billion dollars in derivative contracts involved in the Greek economy. This is not just government, but also local governments and towns and cities and all the rest of it. The counterparties to this $90 billion must be getting a bit worried about that, I would think because that looks as if it will default.

 

The people who have been most active in getting these derivative contracts going over time have been people like Deutsche Bank, Goldman Sachs and I suppose JP Morgan -- so you can see the problems aren't just limited to the government and some unfortunate Greek citizens who are caught in the middle of this.

 

We are looking at potentially up to ninety billion dollars worth of derivatives which one side of those transactions is going to default. One side: it is not a balanced figure is it? I don't know that it is necessarily as bad as that, but it is a problem that needs to be dealt with, addressed and contained. I think what they have to do as much as possible, is to try to work for a sensible outcome in this, which probably will involve Greece leaving the Eurozone, but maybe obtaining help from the ECB to set up a currency board. The reason I say that is that I think for Greece to return to the drachma would be complete destruction. You would have a situation where people who owe money in Euros would still owe money in Euros. If the Greek government tried to change that by law, for starts, that could only apply to loans taken out in Euros in Greece; whereas a lot of these have been taken out in Euros elsewhere in the European Union. In any event, I think if they tried to do a law on this, it would be a retroactive, which would be open to legal challenge.

 

Meanwhile, if you have deposits in a Greek bank, you can be sure the Greek government would say we are going to re-designate those into New Drachmas, which would impoverish the depositors. When it comes to trade, I think everybody would just stay well clear. To go back to a New Drachma, I think is the most destructive path Greece can have. Now, they could do that on the basis that, if the European Union wanted to make an example of Greece, then this is a way in which they could just let them go hang. The importance of that would be that the situation for Greece should be so bad that no other member of the Eurozone would contemplate leaving the Eurozone. That is a possibility. But I think that is less likely than coming to terms in such a way to give Greece an exit. But if they do get an exit, again, they've got to have an exit in such a way that it hurts enough and anybody else who wants to take that exit would see, well it is actually probably more painful than staying where we are. It is a very difficult balance to achieve.

 

The people who will do this, I don't believe are the politicians. It would have to be the sensible people in the ECB and perhaps some of the more backroom boys who could put together some sort of face-saving mechanism without this becoming too much of a political hot potato. It is very, very tricky, it really is, and quite honestly, the way political governance has been going in Europe, the chances of them getting some sort of orderly withdraw in the interest of continuing relationships, et cetera, I think are actually probably slim. That is what we are up against: this is not easy. There is no precedence for this at all and I know that lots and lots of people are saying it has got to return to the Drachma; I just think that a New Drachma would collapse almost immediately. I think that a currency board in the Euro is actually a more sensible result given where we are.  

France

France is a mess. They have outstanding debt of 1.3 Trillion Euros, something like that. Their debt/GDP is around about 85-90% going on a hundred quite rapidly. That is a very liquid and nasty situation. Unemployment is running close to ten percent.

 

It is almost impossible to employ anyone in France because the taxes are so high. Do you know the total tax that you pay as an employer, more than doubles the salary that you pay an individual? This is absolute craziness, but it is been like that in France forever and a day. The result is an awful lot of the market is black market.

 Spain & Italy

Spain is a worse situation. Government debt alone is just under a trillion. A trillion dollars equivalent, I should say, and that is a lot of money. That is a lot of money. Italy is over two trillion dollars. That really is a very, very big one, so this contagion must not be allowed to happen. 

Germany

Their economy is performing reasonably well, but it is not performing well because they are doing well for Europe; they are doing well because they are selling the most cars, machine tools and everything else to China, to Brazil, to Russia. Africa's a great growth area. Europe, as far as Germany is concerned is dead. Which of course brings us on another question; that is why should Germany continue to support all these bust Europeans? There is a sort of conscience if you like about the last two world wars, but there is going to come a point where that wears pretty thin I would have thought. The trouble is that it is all very well, everyone turning around and saying, Germany has to help. Actually, what they are saying is that Germany's citizens should give up their savings, their hard won savings to rescue a project, which is obviously dead or deceased. I think Germany really should bust out as soon as possible and I am sure that there are an increasing number of businessmen and bankers in Germany who are beginning to feel that way. 

On Gold

People who have gold or silver, I think actually had a very rough ride over the last couple of months. A lot of them are wondering what on Earth is going on because every time you get good news, gold seems to rally along with equities, but every time there's bad news and gold actually should be giving you some protection, it goes down the swanny.

 

I think the problem there is that the whole system is run by people who went to college and were taught keynesian economics. In my day, when I first went into the stock market and I enjoyed that first bull market in gold when it went from thirty-five bucks to eight-fifty, the traders and investment managers were all practical people. They all cut their teeth, all learned their trade the hard way. Some of them had degrees in college, but generally it would have been something like classics or history or something like that. If they got a degree in economics, they probably would have left because they never would have understood it in those days. But now it has changed. Everybody who is employed has a degree and if they are anything to do with investment strategy, or the investment business, it is all economics degrees. So they have been brainwashed in the keynesian thing. This sort of neoclassical approach where gold is yesterday's story, paper money is the future. They really do believe it and it is the opinions of these people who drive the markets in the short term.

The result is that gold and silver have become very, very seriously mispriced. I don't think I have seen a stretch like this as I can remember; by stretch, the difference between perhaps where it should be. We must be careful not to tell the market what the price should be, but it is so underpriced at a time of enormous systemic stress, that I think when gold and silver snap back into a more sensible, logical valuation relationship with the markets, the move actually could be very, very sharp and quite large. If gold ran up through the $2,000 level very quickly, which I think is a very strong possibility, because it is been held down so much, that could bring other problems. The central banks, who might have sold gold and not told us about it will find that they are embarrassed. I think also the bullion banks in London who operate a fractional reserve system with gold, exactly the same way as to do with any paper currency, will be hurt very, very badly on the run. Any shorts in the futures market equally could be hurt very, very badly. We have a situation, where there is a potential for a huge run in gold and I personally wouldn't be surprised to see it.  

Click the play button below to listen to Chris' interview with Alasdair Macleod (48m:07s):

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or Read the transcript here.

Will Rogue Fundamentalist Christian Military Leaders Start a Nuclear War in the Middle East?

Posted: 19 May 2012 01:04 PM PDT

Before You Write Off This Threat … Read This

Russian Prime Minister Dmitry Medvedev said that if the U.S. invades the sovereignty of countries like Syria or Iran, it could lead to nuclear war.   And see this.

Russia and China have previously stated that an attack on Iran would be considered a direct threat to their national security.

And Iran and Syria have had a mutual defense pact for years. China and Russia might also defend Syria if it is attacked. So an attack on Syria could draw Iran into the war … followed by China and Russia.

The House approved a resolution Thursday preventing containment as a method of making sure that Iran does not obtain nuclear weapons, rejecting:

any policy that would rely on efforts to contain a nuclear weapons-capable Iran.

The next day, the House authorized the use of force against Iran to keep it from developing nukes.

Of course, while the Middle Eastern wars are mainly driven by oil (and perhaps protecting the dollar) – and while real conservatives are anti-war-  many in the U.S. military view the wars as a literal crusade, and see Islam itself as their mortal enemy.

For example, Wired reported last week:

The U.S. military taught its future leaders that a “total war” against the world’s 1.4 billion Muslims would be necessary to protect America from Islamic terrorists, according to documents obtained by Danger Room. Among the options considered for that conflict: using the lessons of “Hiroshima” to wipe out whole cities at once, targeting the “civilian population wherever necessary.”

If this sounds nuts, remember that … and atheist Neocons and Neolibs are using religion to rile them up to justify war against Iran.

And Professor Michel Chossudovsky documents that the U.S. is so enamored with nuclear weapons that it has authorized low-level field commanders to use them in the heat of battle in their sole discretion … without any approval from civilian leaders.

What could possibly go wrong?

This Billionaire Just Bought 400% More Gold

Posted: 19 May 2012 12:00 PM PDT

by Shaun Connell, Seeking Alpha:

A few weeks back, I wrote an article asking Is George Soros Wrong About Gold? He made waves a couple of years ago by claiming that gold is the "ultimate asset bubble," only to then invest heavily in gold.

Last year, he made a lot of cuts to his position, easily missing the heavy correction that occurred mid-to-late 2011. But now? He's getting back in the game.

According to Fox Business, George Soros' hedge fund just quadrupled it's holding in SPDR Gold Trust (GLD), and even opened a new position in call options for Newmont Mining (NEM).

Read More @ SeekingAlpha.com

"Dear Angela, Dear Francois, Dear Mario" - From Citi, With No Love At All

Posted: 19 May 2012 10:41 AM PDT

The big banks are getting restless. Nowhere is this more evident than in the latest just released letter from Citi's European Credit Strategy, literally a letter to Europe's trio of leading politicians, which follows hot on the heels of yet another recent Citigroup missive from Willem Buiter, which was largely ignored in the noise, yet which made it all too clear that when all else fails, it is the Chairman's sworn duty to paradrop money. Because if anyone, it is the banks that know that if things aren't fixed (they aren't), it is up to the central banks to do something to prevent the vigilantes from forcing the politicians hands, as they did in the summer and fall of 2011 (which will not provide a long-term fix, but at least allow bankers to hope that the next collapse won't take place before bonus season). As Citi says, "Until the gravity of the situation is made clear, until the self-reinforcing mechanisms that already seem to be in motion are understood, we don't see how the solutions, the answers, and the certainty that market craves can be brought to the table." Which simply means that things are about to get much, much worse as it will be up to the markets to bring the world to the edge of collapse once again, just so Europe, with the help of the Fed of course, once again is forced to get over the political bickering and prop up risk assets, in yet another iteration of "this time it's different", even though it isn't. Sure enough: "Our impression is that markets will need to act as the proverbial 'attack dog', forcing the issue on the political agenda. We can't escape the sense that it is probably politically easier to let the markets run loose for the time being to make it apparent that further intervention is needed. But 1000bp on Crossover is much closer than you imagine." In other words, Citi just gave the green light for the bottom to fall from the market just so Europe's increasingly impotent political elite does something, anything. Look for many more banks to sign off on the same letter.

From Citi:

Dear Angela, Dear Francois, Dear Mario

It seems that we are at a watershed once again. Judging by the movement we have seen in the credit market and in other risk assets over the last week, a chain of events that could lead to implosion has been unleashed, unless checked by policy action.

2012 started so well. The LTROs allayed market fears about a liquidity crisis in the European banking system and created additional demand for periphery sovereign debt during the first quarter.

However, we reckon it is now time to face the fact that the market does not believe Schäuble's firewall works. Most urgently, the market fears a Greek exit, or the reintroduction of capital controls to stem deposit outflows, might spark deposit flight from banks across a number of other countries. Playing down the importance of a Greek exit now is hardly reassuring, when Mario Draghi said the consequences for the Eurozone would be 'incalculable' only last December.

While the lack of an elected government in Greece complicates matters, the market sees a growing risk any new government will not be able to make the concessions demanded by the Troika quickly enough – or at all. Then what? If a hard line is to be taken on Greece, then we reckon the firewall must be reinforced at least with a pan-European deposit guarantee scheme of some form. The market knows that it is not easy to sell politically in Germany.

It doesn't help that the Spanish spread to Bunds has drifted to record levels again, while there is no clarity on where the funding necessary to  recapitalise the Spanish banking system will come from. It may be that LTRO-driven bank demand can sustain the auctions for now, but it seems likely to us that foreign investors will continue to pull out.

Add in the prospect of Moody's downgrading more banks across Europe and North America, the persistent negative bias in the economic data  relative to consensus, the upcoming Irish referendum, all the funding Italy still needs to do this year and the prospect of Portuguese PSI discussions in only a few months – and it is small wonder that market confidence is breaking down.

Through the LTROs and extremely low interest rates policymakers have ensured that financial markets are flush with cash. We don't recall a time where the liquidity situation and the technical position of the credit market has been much stronger than now. But that isn't enough. Quite simply, the uncertainty is killing any incentive to take risk. What goes in financial markets generally goes in the wider economy too. Companies are flush with cash, but we struggle to see them investing – especially in the countries where investment is sorely needed – while there is no visibility on the Euro project. Meanwhile, things grind to a halt.

We understand the political constraints key policymakers operate under. We know that many backbenchers and ECB board members are not fully onside. We can see in the election results and the opinion polls that a large part of the electorates are not onside either. There seems to be a dangerous perception in many places that enough has been done already.

However, don't be fooled by the apparent resilience of many corporate bonds (and equities). Aside from the sheer amount of cash funds have been left with, it is only the perception that the policy intervention will come eventually, triggering a very large short squeeze that is preventing more selling. Every day seems to bring headlines that challenge that perception. We could be close to the breaking point. Already in the last week there are clear signs in credit that the selloff is becoming more systemic. If you have come across our 'five phases of grief' framework – it appears we are moving straight from 'depression' back to 'anger'.

Until the gravity of the situation is made clear, until the self-reinforcing mechanisms that already seem to be in motion are understood, we don't see how the solutions, the answers, and the certainty that market craves can be brought to the table. Our impression is that markets will need to act as the proverbial 'attack dog', forcing the issue on the political agenda. This would not be the first time that markets have had to bark to get a credible policy response. We can't escape the sense that it is probably politically easier to let the markets run loose for the time being to make it apparent that further intervention is needed. But 1000bp on Crossover is much closer than you imagine.

Moreover, every bark comes with a loss of credibility – a loss of faith in the institutional capacity of the European Union to address the fundamental imbalances. Reining in the market eventually may end up taking a bigger effort than policymakers are bargaining for.

The market needs to know what policymakers are committed to and it needs to see actions that validate those commitments. Inaction is just a carte blanche for investors to sit on the sidelines and wait for things to deteriorate further.

Yours sincerely,

Citi Credit Strategy

Master-class at Hard Assets Conference, NYC 15th May

Posted: 19 May 2012 09:38 AM PDT

Last week I gave an investing master-class at the Hard Assets Investment Conference in New York City. The lecture was in two parts:

&iddot;         Economics behind gold (PDF)

&iddot;         The gold bullion market (PDF)

Regards

Alasdair Macleod

macleod@financeandeconomics.org

www.financeandeconomics.org

Gold Bottom is In, But is it September 2008 or October 2008?

Posted: 19 May 2012 08:51 AM PDT

We began the week by making a ballsy prediction about the precious metals complex. We believed a major bottom could happen this week. In the wake of the European debt crisis and potential "credit events," the precious metals became extremely oversold based on a number of metrics. Technically, we saw that Gold and Silver were nearing the December lows which produced a good rally. The gold stocks were nearing the 50% retracement of their 2008-2011 bull move. The combination of an extreme oversold condition and technical support usually produces bottoms. It wasn't a difficult call but putting it on paper was. With the low in, the question now becomes, is this an interim bottom or will it be the major low we initially expected?


Gold Tripple Bottom & Stocks Oversold (Short Term) – Now What? (Excerpt)

Posted: 19 May 2012 08:50 AM PDT

Since the original article was very long, I hereby provide an excerpt of the article "Gold Tripple Bottom & Stocks Oversold (Short Term) – Now What?" (Subscribers, click HERE to read the entire article).

On Gold:

Gold has now made a bullish reversal on a weekly basis, as price rallied sharply on Thursday and Friday.
Support held, which means Gold could be on the verge of setting a double/tripple bottom around $1,550:


Chart courtesy Prorealtime.com

On a monthly basis, we can see that the Bollinger Bands are narrowing, indicating that volatility has been low over the past couple of months (although it might not have felt like that for some traders). Volatility will not stay this low forever, so Gold is now getting ready for the next BIG MOVE. Notice that I am talking about a MONTHLY chart here, I am not talking about the day-to-day volatility (which has been quite extreme from time to time). This also means that it might take several more months before the next BIG move actually starts. However, keep an eye on the monthly Bollinger Bands, and follow the trend when the next Big Move starts.


Chart courtesy Prorealtime.com

On Silver:

Shorter term, we can see that the Commercials have reduced their Net Short positions in Silver to 15,980 contracts, a level not seen since late 2011, a time when Silver set a bottom at roughly the same price level as where it is trading today:

On Gold Miners:

The chart below illustrates the fact that Sentiment in Gold Mining Stocks is extremely low (illustrated by the Bullish Percent Index, which shows the % of stocks with a Buy signal on the Point & Figure Chart) . The green vertical lines show that almost every time sentiment is depressed, the HUI index is about to turn UP. The only 2 times it didn't mark a bottom was in late 2008 and more recently, a couple of weeks ago.


Chart courtesy stockcharts.com

Not only is sentiment in Gold stocks depressed, it is also depressed relative to sentiment in the SP500, as illustrated by the chart below, which plots the ratio of $BPGDM by $BPSPX (the % of stocks in the SP500 with a Buy signal on the Point & Figure chart).

We can see that whenever sentiment in Gold miners (lower part) was depressed, it was not just "depressed", but it was also depressed relative to sentiment in the SP500, and soon sentiment turned up in favor of Gold mining stocks


Chart courtesy stockcharts.com

On Equity markets:

The SP500 has now reached the 61.80% Retracement Level from the bottom in October 2011 to the top in April 2012.
Bollinger Bands are still widening, indicating that the Bottom is still not in sight. We haven't seen real capitulation yet, although the SP500 was down 11 out of 13 trading days, with a maximum 0.25% rally on May 10th.
Next support comes in at 1,250-1,260 (50% Retracement Level & previous resistance line).


Chart courtesy Prorealtime.com

…

52.40% of the stocks in the SP500 are trading at the lowest level in 50 days, which is 5 standard deviations from the mean, which doesn't occur that often:


Chart courtesy indexindicators.com

The following chart shows that the best times to buy stocks was in 1949 and 1982, and the best time to sell stocks was in the mid-60′s and in 2000. If history is any guide, then we should wait to buy stocks until this cycle is finished. This means it could take another 8-10 years before the next big Bull market starts:


Chart courtesy thechartstore.com

I then checked out the SP500 Inflation-Adjusted Total Return Index itself. We can clearly see that the index has been in a consolidation phase since 2000, just like from 1929 to 1949 (20 years) and from 1962 to 1982 (20 years). If this cycle (consolidation phase) also lasts 20 years, it means we have to wait until 2020 before the next bull market starts, which is in line with the statement above:


Chart courtesy thechartstore.com

On Bonds:

TLT is trading at 24.98% above its 150 weeks Exponential Moving Average and 29.82% above its 200 weeks Exponential Moving Average, which is quite stretched:


Chart courtesy stockcharts.com

In the original article, we look at Sentiment Charts, Put/Call ratio's, UP issues Ratios, and more.

The entire article is available for subscribers only.

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!

Celente - The “Golden” Days Are Just Ahead & A New Cycle

Posted: 19 May 2012 08:47 AM PDT

Today top trends forecaster Gerald Celente discussed gold at length, as well as other important trends with King World News. Celente is the founder of Trends Research, and the man many consider to be the top trends forecaster in the world. Celente also discussed the difference between the current cycle and the 1970s. Here is what Celente had to say: "A lot of people are saying that, 'The Gold bubble has burst,' and I'm not one that believes that.  I'm a trends forecaster and my forecast is gold will continue to rise.  It may go down short-term, but long-term I'm bullish. And I don't speculate in gold, I buy gold."


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

Spain bombshell Friday night as they adjust budgetary deficit to 8.9% from 8.5% – LCH raises European bank margin requirements – Ireland in need of another bailout

Posted: 19 May 2012 08:39 AM PDT

by Harvey Organ, HarveyOrgan.Blogspot.ca:

The total silver comex continues to baffle the bankers and CME officials. It seems that the big bad Wolf (JPMorgan) has huffed and puffed trying to blow down the silver longs from the silver tree to no avail. On Friday, the total OI rests at 113,766 a rise of 133 contracts from Thursday. These longs are resolute and ready to take on the bankers in July (after they do battle with the gold shorts in June). The front delivery month of May saw its OI surprisingly rise by one contract despite 3 delivery notices on Thursday. So again we slowly increased additional ounces standing by 4 contracts or 20,000 oz. It seems that the modus operandi of these stoic longs is a slow and sure approach and obtaining as much silver as there is available.

The next delivery month for silver is July and here the OI fell by a tiny 528 contracts as some of these boys decided to stay in the game but roll to September. The estimated volume at the silver comex on Friday was 44,860 which is still quite good. The confirmed volume on Thursday was astounding at 55,373. The high volume and constant OI means our bankers are not happy campers this weekend.

Read More @ HarveyOrgan.Blogspot.ca

Is Major Decline in Gold and Silver Stocks Underway?

Posted: 19 May 2012 08:04 AM PDT

All eyes are on Greece which is heading toward national elections six weeks after the last vote. Many feel that a Greek euro exit would be a chance to cauterize a festering wound and move on. There are also those that feel that Greece could be the first of several dominoes to fall, much larger economies such as Spain, Italy, for example.


Gold Stock Capitulation

Posted: 19 May 2012 07:35 AM PDT

Gold stocks have been pummeled mercilessly this month, their price action looking almost apocalyptic.  The psychological stress spawned by such extreme weakness is intense, breaking the wills of this sector’s few remaining bulls.  This week their selling cascaded into a full-blown capitulation, a mass surrender by weary investors.  While exceedingly miserable, these events flag major long-term bottoms.


Podcasts

Posted: 19 May 2012 05:50 AM PDT

The following podcasts may be of interest:

https://www.youtube.com/watch?v=4KQPZs3gxtM with Rahul of Alternative Investors Hangout

http://financialsurvivalnetwork.com/2012/05/alasdair-macleod-explains-why-the-future-of-fiat-currencies-is-dark/ with Kerry Lutz of Financial Survival network

And for The GoldMoney Foundation:

http://www.goldmoney.com/podcast/2012-05-09-ronald-stoeferle-and-alasdair-macleod-22-audio.html with Ronnie Stoeferle, precious metals analyst at Erste Bank

http://www.goldmoney.com/podcast/2012-05-09-michael-checkan-and-alasdair-macleod-23-audio.html with Michael Checken, of Asset Strategies International

http://www.goldmoney.com/podcast/austrian-school-economics-and-the-croatian-gold-market-explained-by-sven-sambunjak.html with Sven Sambunjak, organiser of the Second Precious Metals Conference in Zagreb

Alasdair Macleod

macleod@financeandeconomics.org

www.financeandeconomics.org

Thank You!

Posted: 19 May 2012 05:36 AM PDT

Thanks to the ‘Crash JP Morgan, Buy Silver’ campaign that rocketed silver 100% higher last year JP Morgan has been forced to lean even more on its fragile balance sheet resulting in a 2 . . . er, I mean … Continue reading →

Read “Buy Britain’s Gold Bank.’ We told you Britian would be forced to buy back the gold it sold.

Posted: 19 May 2012 05:28 AM PDT

Buy Britain's Gold Back

Currency collapse dynamics

Posted: 19 May 2012 05:19 AM PDT

From: Alasdair Macleod [mailto:alasdair.macleod@gmyf.org]
Sent: 19 May 2012 18:17
To: Undisclosed recipients
Subject: -----SPAM----- Weekly article for GoldMoney

The following article has been posted at GoldMoney, here.

Currency collapse dynamics

2012-MAY-19

Image001
The reason we accept paper money as a store of value is habit. This habit has its origins in history, when banks took our gold as deposit and issued paper receipts for it. The gold has gone, but the paper with its habitual value remains, and we accept it without question. The only backing is a vague government promise.

There is no sound theoretical basis for why unbacked government-issued money should retain a store of value: it depends for its value on a market-based acceptance of financial credibility. So it follows that if a government loses all financial credibility in markets, its paper becomes worthless. This is confirmed by experience in all paper money collapses.

The fact it can and has happened elsewhere confirms that all faith can theoretically disappear from the dollar, pound, euro or yen. This is a very different understanding about currency values compared with what is commonly accepted. Instead, we assume that any change in purchasing power is tied firmly to price inflation, and we factor out any reliance upon faith. But this is a cop-out, a way of not addressing the basic assumptions that uplift the value of government-issued money from zero to what it will actually purchase.

It is vital to understand that price inflation and maintenance of fiat currency premiums are only loosely related. In a sound money economy, an economy where the medium of exchange is backed by gold, changes in the available quantity of money will affect the prices of goods and services exchanged for it. This is because sound money is itself a commodity, whose function happens to be to act as a medium of exchange. However, you cannot say this of fiat money, where the link with value is based entirely on faith. It is a mistake to assume that supply and demand factors that give sound money its value as a means of exchange also apply to unbacked government money. The value of fiat currencies is purely subjective.

In the case of fiat money, additional quantities in circulation increases demand for goods, whose prices rise driven by this extra demand: the rise in prices comes from the goods themselves, and not a change in the value of the money. In stagflation, where there is no extra demand, price rises emanate from changing values in the paper money itself, usually tied to foreign exchange movements.

The implications are profound. To state that in hyperinflations fiat money loses purchasing power because of massive issuance of money is a misunderstanding. The collapse in purchasing power is due to loss of faith in fiat money, and not from its extra supply: if it was otherwise, you would have to establish it had an objective value in the first place.

It is entirely possible, even increasingly likely in these times of growing systemic risk, that a collapse of paper-money values will happen not as a result of rising consumer prices, but of its own subjective value. If this happens there will be little or no warning and it could be substantial if not total.

So the argument in favour of a flight into sound money, best exemplified by precious metals, is getting stronger by the day.

Tags: fiat currency, inflation, sound money

Alasdair Macleod

John Hathaway: “This Is The Bottom For Gold”

Posted: 19 May 2012 05:07 AM PDT

Interesting interview with John Hathaway…

Greg Canavan: The physical gold market -- from the weak to the strong

Posted: 19 May 2012 05:05 AM PDT

1p ET Saturday, May 19, 2012

Dear Friend of GATA and Gold:

Writing for the Australian edition of the Daily Reckoning, financial letter editor Greg Canavan explains how gold becomes scarcer even as the price of gold futures contracts -- paper gold -- is falling. He adds that governments try to control the gold price and thereby earns his tin-foil hat.

Canavan writes: "The presence of such a huge paper gold market means that at certain times (liquidity crises) gold will sell off with all financial assets. As we've tried to explain, though, a very low gold price is not in a government's interest because physical gold would leave the system and end the paper money game. So governments simply try to control gold's rise, making sure it doesn't throw off too much of a red-alert signal. For the gold price to genuinely fall, we need to see a rise in real interest rates. In a world buckling under the weight of debt at all levels, that is just not going to happen."

Canavan's commentary is headlined "The Physical Gold Market -- From the Weak to the Strong," and it's posted at the Daily Reckoning here:

http://www.dailyreckoning.com.au/the-physical-gold-market-from-the-weak-...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


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

Company Press Release
Friday, March 2, 2012

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

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

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

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

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

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

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

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

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

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


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

From a Company Press Release
November 22, 2011

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

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

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

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

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

This Past Week in Gold

Posted: 19 May 2012 04:35 AM PDT

Summary: Long term - on major sell signal. Short term - on sell signals. Both long and short term on sell signals and cycle is down but at levels of previous bottoms. A multi week corrective rally can start anytime and tradable if ... Read More...



Expatriation in the Wake of the Facebook IPO

Posted: 19 May 2012 12:00 AM PDT

The Maryland House of Delegates just voted to raise taxes. Should we move to Florida…or Delaware?

If we move to Palm Beach, will we ever be able to visit our beloved Maryland homeland again?

The Financial Times reports that thousands of wealthy French people are now moving to London. Their motive? They want to escape the taxes proposed by France's new president, Francois Hollande.

Should the French impose an exit tax on these "ex-patriots"? Should it then bar them from visiting France?

Of course not.

In England in 1215, the right to travel was enshrined in Article 42 of the Magna Carta:

It shall be lawful to any person, for the future, to go out of our kingdom, and to return, safely and securely, by land or by water, saving his allegiance to us, unless it be in time of war, for some short space, for the common good of the kingdom: excepting prisoners and outlaws, according to the laws of the land, and of the people of the nation at war against us, and Merchants who shall be treated as it is said above.

Here's the United Nations Universal Declaration of Human Rights. Article 13:

(1) Everyone has the right to freedom of movement and residence within the borders of each State.
(2) Everyone has the right to leave any country, including his own, and to return to his country.

Article 12 of the International Covenant on Civil and Political Rights incorporates this right into treaty law:

(1) Everyone lawfully within the territory of a State shall, within that territory, have the right to liberty of movement and freedom to choose his residence.
(2) Everyone shall be free to leave any country, including his own.
(3) The above-mentioned rights shall not be subject to any restrictions except those provided by law, are necessary to protect national security, public order (ordre public), public health or morals or the rights and freedoms of others, and are consistent with the other rights recognized in the present Covenant.

People should be able to move where they want, no? They should be able to look for lower tax places to live, shouldn't they? After all, we're Americans, aren't we? Aren't we all descendants of people who tried to improve their lives by moving to a new place?

Apparently, a lot of Americans don't think so. Facebook is going public. And one of Facebook's founders has moved to Singapore. He will save, by one estimate, $67 million in taxes by giving up his US citizenship. He says that's not the reason he gave it up. But you can believe what you want.

And now the politicos are up in arms. Mr. Saverin has helped to give them an asset worth about $100 billion. Are they grateful? Do they bend down and kiss his derriere?

No! They want to tax him even more heavily…and prevent him from ever setting foot in the US again.

Yes, dear reader, there is no thought so dumb…so short-sighted…so low…that it won't become the law of the land. Bloomberg reports:

Chuck Schumer, D-N.Y., has a status update for Facebook co-founder Eduardo Saverin: Stop attempting to dodge your taxes by renouncing your US citizenship or never come to back to the US again.

In September 2011, Saverin relinquished his US citizenship before the company announced its planned initial public offering of stock, which will debut this week. The move was likely a financial one, as he owns an estimated 4 percent of Facebook and stands to make $4 billion when the company goes public. Saverin would reap the benefit of tax savings by becoming a permanent resident of Singapore, which levies no capital gains taxes.

At a news conference this morning, Sens. Schumer and Bob Casey, D-Pa., will unveil the "Ex-PATRIOT" — "Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy" — Act to respond directly to Saverin's move, which they dub a "scheme" that would "help him duck up to $67 million in taxes."

The senators will call Saverin's move an "outrage" and will outline their plan to re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country. Their proposal would also impose a mandatory 30 percent tax on the capital gains of anybody who renounces their US citizenship.

The plan would bar individuals like Saverin from ever reentering the United States again.

If Chuck Schumer has his way, entrepreneurs like Eduardo Saverin will think twice before setting up shop in America!

[Editor's Note: After yesterday's column, Run, Saverin! Run!r, we were delighted to discover that a brave Fellow Reckoner had actually linked to The Daily Reckoning...on Chuck Schumer's Facebook page. Ha! Feel free to "like" our bitty missive here and to "share" it on Facebook. Call it non-violent protest. And of course, you can always "be our friend" here.]

Down, down, down…day after day… Stocks down. Yields down.

But what's this? Gold rose nearly $40 yesterday.

Our "Alert Flag" went up yesterday morning. The Dow fell 156 points during the day. Not that there's any connection. Most likely, after so many down days, stocks will bounce today. But watch out…

We have a hunch.

Facebook is the biggest deal in the stock market…perhaps ever. It's a company that didn't even exist 10 years ago. We know all about the company's founding; we saw the movie. Twice. Because our daughter has a role in the movie. She's the waitress in the scene where Zuckerberg means Sean Parker.

Not a bad flick. But from an investment standpoint, Facebook is probably one of the worst moves you can make. Most likely, it will be gone 10 years from now. $100 billion of market capitalization will disappear. Poof! It's just a website, after all. We looked at a Facebook page, once… We couldn't figure out why anyone would waste his time.

The trouble with new technology is that in a few years it's old technology.

Here's our hunch: The Facebook IPO may mark a major peak…and the beginning of a major bear market on Wall Street.

It happens every time. There's a big, big deal. And then, it's over. We'd give you some examples, if we could think of them. But we can't. You'll just have to trust us on this.

We don't really have any evidence or logic to back this up. It's just a hunch.

But our intuition tells us that when investors finally get the full Facebook treatment, they are going to be turned off by the stock market and Wall Street. Not only will the company turn out to be not worth a fraction of the IPO price…investors will also get a clearer picture of how Wall Street really works.

About that IPO… The idea is to generate a lot of excitement…a frenzy…so that people are eager to get the shares. And with all these Facebook users, who like…like…Facebook…and think they can tell a good investment when they see one…it ought to be easy to create a buying frenzy. Besides, everyone knows shares are intentionally priced below what their backers believe they can get for them. This causes the share-price to "pop" right after the IPO.

Of course, the distribution is tightly controlled. You have to be an insider to get IPO shares. Say…you'll get them at about $40…and then, you expect them to go to $50 on the "pop." If it works out as planned, you make $10 per share. This is a lot of money. Easy money. So, the insiders all want a piece of the action.

How do you get to be an "insider"? You have to be a friend of Morgan Stanley. Which is to say, you help Morgan Stanley make money. How? For example, if you are a pension fund or hedge fund you put through a lot of trades. Morgan Stanley makes money on the churn. You make money on the churn, too. Customers don't make any money on the churn. They pay for every transaction. But who cares about them?

Everyone is convinced that buying…selling…and trading investments makes money. As long as the illusion lasts, Wall Street is happy. The customers are happy too…more or less. They're participating in the Great Illusion — all trying to make money without actually doing anything.

So everyone churns. And the more you churn with Morgan Stanley the more likely you are to get an allocation of IPO stock. There could be about 50 million shares handed to insiders in this manner. Let's say they go up $10 in the "pop." That's half a billion in gains …in only a few hours.

Dan Ariely explains:

Morgan Stanley and the rest of the investment banks involved will … make sure that their favorite fund manager client "friends" are given lots of free money. Assuming that these "friends" are given 75% of the total number of IPO shares, or a total of 291 million shares, and assuming that the stock does rise from $40 to $50, then these fund managers will collectively, in one day, make $2.9 billion dollars in realized or unrealized profits. That's right, 2.9 BILLION DOLLARS.

…where and out of whose pocket does this money come from?

Well, just think of it this way… Let's assume you own a very expensive piece of waterfront real estate, and you hire a broker to sell it for you. After exploring the market and after getting indications of interest, your broker advises you that $10 million would be a great price for your home. You meet with the potential buyers and decide to sell it for $10 million. After the $1 million commission you have to pay your broker, your net proceeds are $9 million. An hour later, you drive by the house and see your broker in the driveway shaking hands with some different people. You pull over to see what's going on, and you find that the people you just sold the house to for $10 million are very close friends of your broker. To your dismay, you also find out that those friends just sold your (former) house to somebody else for $15 million.

The same exact game is going on here… By the time you drive around the block, these folks will have sold their shares at $50 per share.

I am not sure about you, but I find all of this very depressing.

Regards,

Bill Bonner,
for The Daily Reckoning

Expatriation in the Wake of the Facebook IPO originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".
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