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- Gold is At or Very Near, a Long-Term Bottom
- EndlessMountain: Silver Update Exotic Charts 5.8.12
- Buy Annaly Capital For Diversification
- 5 Compelling Reasons To Buy Bank Of America
- Why China Isn’t Going to Dump the Dollar
- Valuation Matters: 7 Ways To Value Stocks
- Nightmare Week for Angela Merkel as Austerity Bloc Crumbles
- Double Boost For Aussie Gold Ahead?
- Gold Daily and Silver Weekly Charts - Psycho Killers Quest-ce Que Cest?"
- Meadow Bay Drills 21.34 m of 2.77 g/t Au at Atlanta
- Silver Falls to Lowest Since January, China and India Could Offer “Key Support” for Gold
- Argonaut Gold Provides Exploration Update on San Antonio and La Colorada
- Huldra Silver Provides Additional Underground Sample Results For Treasure Mountain
- Stick to Depopulating the Planet, Bill Gates
- Gold prices fall as traders run to the dollar
- More on Frontline’s Astonishing Whitewash of the Crisis
- Turkey Exports “Massive Quantities Of Gold” to Iran and Arab Spring Nations
- WoW! Gold’s Wall of Worry
- Bullion Gets a Thorough (Underserved) Smackdown
- LME Receives a Number of Proposals That May Lead to Takeover
- Morning Outlook from the Trade Desk 05/08/12
- Silver Hits 4-Month Low, Gold Also Down
- Turkey Exports 'Massive Quantities Of Gold'
- What Would Jefferson Say?
- Gold & Silver Market Morning, May 08 2012
- The Golden Rule Reinterpreted
| Gold is At or Very Near, a Long-Term Bottom Posted: 08 May 2012 06:35 AM PDT It's been made painfully clear that Bernanke is not going to tolerate a rising dollar, at least not for very long. Cycles are still working, and still generating bounces out of daily cycle lows, but they are never allowed to get any traction before the next beat down starts. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EndlessMountain: Silver Update Exotic Charts 5.8.12 Posted: 08 May 2012 06:27 AM PDT Silver Update Exotic is defined as "Originating in or characteristic of a distant foreign country." and what is foreign is not having the charts play out in a normal setup and sorting out the most volatile movements. from endlessmountain: ~TVR | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Buy Annaly Capital For Diversification Posted: 08 May 2012 06:05 AM PDT By Sammy Pollack: In today's volatile market environment, investors are often in search of ways to diversify their portfolios. In the past, diversification simply meant having a solid mix of both stocks and bonds. However, because of the advent of index investing, the correlation between different stocks has risen substantially. Meanwhile, due in part to actions by the Federal Reserve, bonds have not maintained the strong inverse relationship to the stock market that they always have had in the past. As you can see, yields on the 30-Year Treasury bond are close to record lows while the stock market is far off its lows. The quest for diversification has sent investors into new products such as volatility futures products such as iPath S&P 500 VIX Short-term Futures ETN (VXX) and Velocity Shares Daily 2x VIX Short-term ETN (TVIX). However, these products have significant flaws that have led to massive loses for investors. Investors Complete Story » | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5 Compelling Reasons To Buy Bank Of America Posted: 08 May 2012 05:36 AM PDT By Global Value Investor: In gold old contrarian fashion, Warren Buffett delivered a lecture on August 25th, 2011, by disclosing a $5 billion investment in beleaguered banking giant Bank of America (BAC). As the sentiment swings from panic buying to panic selling and back again, the most extreme events, investors that are able to detach themselves from such wildly mood swings should be able to capitalize on the concept of mean reversion. Basically, this concepts asserts that any security will revert to a historical, long-term average valuation metric against which the security is measured. This could e.g. be based on a relative valuation approach (average P/E or average P/B) or fundamentals themselves (EPS per share, average ROE ...). I am convinced that neither the current investment climate nor the extraordinary legacy challenges reflect the true earnings power of BAC (or any other financial institution for that matter). Since BAC is good enough for Warren Complete Story » | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Why China Isn’t Going to Dump the Dollar Posted: 08 May 2012 05:05 AM PDT Will people pleeease stop incessantly nattering about the possibility of China dropping the dollar as a reserve currency? What else are they going to use? Monopoly money? Taiwanese dollars? Collectable postage stamps? | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Valuation Matters: 7 Ways To Value Stocks Posted: 08 May 2012 04:56 AM PDT By Jae Jun: You could purchase the best stock in the world, but if you buy it at a lofty premium, it is a bad investment. Vice versa, the stock could be the worst company in the world, but if bought it cheap enough, it could work out to be an excellent and profitable investment. Valuation matters. To help you figure out the value of your stock, here is a compilation of seven valuation methods I have written about to refresh your memory. The problem I fell into as I began valuing stocks was trying to use a single valuation method for every company. But that is wrong. A gold miner cannot be valued the same way as a tech company, just as how you cannot use the same valuation technique to value a capex-heavy company and free cash flow (FCF) cow. Valuation is an ArtMost important of all is to remember Complete Story » | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nightmare Week for Angela Merkel as Austerity Bloc Crumbles Posted: 08 May 2012 04:25 AM PDT "Europe's political center is starting to crumble, replicating the pattern of the early 1930s as the crisis ground into its third year under a similar mix of fiscal and monetary contraction." -Ambrose Evans-Pritchard The Telegraph April 24, 2012 "Elected governments have already been swept away – or replaced by EU technocrats without a vote, indeed to prevent a vote – in every Eurozone state where unemployment has reached double-digits: Spain 23.6%, Greece 21%, Portugal 15%, Ireland 14.7% and Slovakia 14%." Editor: Since these are probably government numbers you should multiply them times two for true answers. Europe is ready to economically and socially implode. "The political carnage has been striking. Ireland's Fianna Fail, creator of the Irish free state, has lost every seat in Dublin. Greece's Panhellenic Socialist Movement (PASOK) – torch-bearers of Greek democracy since the Colonels – has fallen to 14% in the polls and faces ruin next month." "This week the tornado has smashed into the core, bringing down Holland's govenment and probably the French leader Nicolas Sarkozy as well in a cacophany of anti-EU diatribes." "Keynesians blame budget cuts, convinced that the pace of fiscal tightening – a net 2.5% of GDP in Spain and 3.5% in Italy -is beyond any sensible therapeutic dose, and is already shown to be self-defeating in Greece, where economic collapse has left the deficit stuck near 10%." "Monetarists blame the European Central Bank, accusing Frankfurt of tipping half of Europe back into slump by responding to last year's oil shock with rate rises. The effect was to compound drastic falls in real M1 deposits across Club Med, and trigger a credit crunch just as banks were slashing balances sheets to meet new rules. While the ECB has since launched its €1 trillion liquidity blast, this is not quantitative easing and has toxic side-effects." "The results are in: the hard-left and hard-right are on the rampage across Euroland. We have not reached a breaking point of July, 1932 when Nazis and Communists won over the half the Reichstag seats. That tragedy was … the Brüning deflation, rigidly imposed to uphold the Gold Standard – the Euro's trial-run." "We forget now, but Germany was heavily indebted to foreigners in 1930, like Spain today. It was the refusal of the creditor powers (US and France) to reliquify the system and slow monetary contraction that pushed Germany over a cliff. The parallels are haunting, but the politics are more genteel this time – up to a point." "France's Marine Le Pen presents herself as a latterday Jeanne d'Arc, openly comparing France's pro-EU camp with the Burgundians who plotted "English Annexation" in the 1430s – or indeed "Les Collabos" who bought peace after 1940. "Let us break the chains of the French people. Bring on the French Spring," she tells Front National rallies." "The mood feels different from past episodes of irritation with EU aggrandisement, whether the "No" votes against the European Constitution in 2005 or the Irish "No" to Lisbon and Nice, or the Scandinavian "Nej" votes against the Euro." "Mme Le Pen has gone to the heart of the matter, asserting that monetary union cannot be fudged, that it is incompatible with the French nation state. She has won 18% of the vote campaigning to pull France out of the Euro and smash the whole project. Unlike her father – who never seriously expected to be president – she has a realistic chance of peeling-off enough Gaulliste votes to emerge as paramount leader of the French Right." "In Holland, the right-wing Freedom Party leader Geert Wilders brought down the coalition on Monday with open defiance against the "Diktats from Brussels". He too wants a Euro exit. 'We must be master of our own house,' he says. Whether Mr. Wilders stands to gain in the snap election this summer remains to be seen. The Euroskeptic Socialist Party is poised to snatch first place with fulminations against EU austerity. Labor and Christian Democrats, the two great forces of post-War Dutch politics, are sliding-off the map." "What is clear is that the drive to slash the budget deficit from 4.6% to 3p% during a deep recession has destabilized Dutch politics in ways that few in Brussels, Frankfurt or Berlin expected." "Socialist leader Emile Roemer said cuts on such a scale at this time 'would only have plunged our country further and deeper into crisis.' It would also risk a 'negative feedback loop' in an economy with a housing slump, Club Med levels of unsold homes and EMU's highest household debt ratio." "Germany's Handelsblatt said Chancellor Angela Merkel is facing a 'nightmare week' in EU politics as the austerity front breaks apart. She campaigned for Nicolas Sarkozy – in breach of a diplomatic etiquette, after receiving bad advice on the likely outcome – only to face the prospect of a President François Hollande vowing to tear-up the EU fiscal compact and bring the ECB to heel." "Her adviser Peter Altmaier said France risks "isolation". Some might retort that Germany looks isolated, confronted by a radically new constellation in Europe – perhaps a variant of 1936, when Leon Blum's Popular Front broke with Pierre Laval's "deflation decrees" and Gold Standard genuflections." "Mr. Hollande leaves us guessing whether he really will lead a Latin Revolt and force Germany to make a fateful choice it has so long evaded: whether to allow fiscal and monetary reflation: or, precipitate a strategic crisis and risk losing its diplomatic investment in the post-War order. Large matters, and Mr. Hollande is no Leon Blum."         This posting includes an audio/video/photo media file: Download Now | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Double Boost For Aussie Gold Ahead? Posted: 08 May 2012 04:00 AM PDT | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Daily and Silver Weekly Charts - Psycho Killers Quest-ce Que Cest?" Posted: 08 May 2012 03:53 AM PDT | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Meadow Bay Drills 21.34 m of 2.77 g/t Au at Atlanta Posted: 08 May 2012 03:45 AM PDT
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| Silver Falls to Lowest Since January, China and India Could Offer “Key Support” for Gold Posted: 08 May 2012 03:44 AM PDT
WHOLESALE MARKET gold prices fell to $1625 an ounce during Tuesday morning's London trading – their lowest level in over a fortnight – as stocks and commodities also ticked lower and the Dollar extended recent gains, with markets still digesting the weekend's French and Greek election results. "Support [for gold] is at $1625, where we have seen very good support since early April," says the latest technical analysis from bullion bank Scotia Mocatta. Silver prices meantime fell to $29.55 per ounce – their lowest level since mid-January. A day earlier, gold prices traded lower on Monday, while the Euro fell to a 3-month low against the Dollar. "It is a much more hazardous [gold] environment at the moment because of the downside risks to Euro/Dollar," says Michael Lewis, chief commodity strategist at Deutsche Bank. "One of the supportive factors [is] we've already seen quite a dramatic scaling-back in speculative length in gold over the last few months, so that might reduce the positioning risk for the market, but it is definitely going to be an environment where gold is going to struggle." In New York, the difference between bullish and bearish gold futures and options contracts held by noncommercial traders on the Comex – the so-called speculative net long – rose 5.7% in the week ended last Tuesday, according to data from the Commodity Futures Trading Commission. "Despite the improvement, net speculative length remains relatively weak…signaling a continued lack of confidence," says Standard Bank commodities strategist Marc Ground. "While investors are not overtly bullish, short positioning is also relatively low, a mildly encouraging sign that investors appear cautious of running too short." "Gold eased on Monday," adds a note from Swiss precious metals group MKS, "after French and Greek elections that reflected strong anti-austerity feelings raised concerns over European ability to battle its debt crisis, knocking [the Euro] down." Newly-elected French president Francois Hollande is due to visit Berlin one week from today, where German chancellor Angela Merkel says she will welcome him "with open arms", according to press reports. Merkel added however that there will be no renegotiation of reform measures such as the Fiscal Stability Treaty, which aims to reduce Eurozone government debt-to-GDP ratios. During his campaign, Hollande said that is "is not for Germany to decide for the rest of Europe", and called for pro-growth policies as well as a change in the rules governing interventions by the European Central Bank. Europe needs "to strike a balance" between austerity and growth said Olli Rehn, European Commissioner for economic and monetary affairs, said in a speech on Saturday, ahead of the French election result. "We need to further boost investment to supplement the other policies of our growth agenda," he said. Rehn added that the European Investment Bank – which makes loans to businesses on behalf of the European Union – should have its capital increased. "Countries need to keep a steady hand on the wheel," said International Monetary Fund managing director Christine Lagarde Monday. "If growth is worse than expected, they should stick to announced fiscal measures, rather than announced fiscal targets…in other words, they should not fight any fall in tax revenues or rise in spending caused solely because the economy weakens." Greece meantime faces the prospect of fresh elections after Sunday's poll failed to deliver a majority for the incumbent coalition, made up of the New Democracy party and Pasok, both of which publicly support the EU/IMF bailout deal. Former Greek finance minister Evangelos Venizelos has said the terms of Greece's bailout should be renegotiated, and spending cuts spread over three years rather than two. Over in Spain, the government is reportedly preparing to bail out Bankia, the banking group created at the end of 2010 by the merger of seven smaller banks which were struggling with bad property loans. One Spanish newspaper reports the bailout could be around €7 billion – on top of the €4.5 billion Bankia received from the government shortly after it was set up. India's finance minister Pranab Mukherjee announced Monday that the government is withdrawing the 1% excise duty on all precious metal jewelry, branded or unbranded. The withdrawal is effective from March 17 – the day after Mukherjee's Union Budget in which he extended the tax to unbranded jewelry. Many Indian gold dealers closed down for three weeks in protest following the Budget, which also saw import duties on gold doubled – a policy that remains in place. "People who were on the sidelines will come back to the market," says Prithviraj Kothari, president of the Bombay Bullion Association. "Jewelry demand will improve in the coming weeks…it's a good move by the government." In China, imports of gold bullion from Hong Kong – widely regarded as a proxy for overall Chinese gold imports – rose 59% month-on-month in March to nearly 63 tonnes, according to official Hong Kong government data. The volume of gold heading the other way, however, also rose to just under 25 tonnes, leaving net exports at a little over 38 tonnes. "Rising prosperity levels among the population coupled with tighter laws governing property speculation are likely to contribute to sustained high demand for gold in China," says a note from Commerzbank. "Above all, Chinese gold demand should lend key support to the price of gold during the course of the year." "China's strong demand for bullion may help support gold prices at lower levels," adds James Steel, commodity analyst at HSBC in New York. "A recovery in Indian gold demand should [also] be an important factor in support of gold prices." At the annual Berkshire Hathaway shareholders' meeting, attended this year by U2 frontman Bono, legendary investor Warren Buffett repeated his regular advice not to buy gold – a sentiment echoed by his number two Charlie Munger and Microsoft founder Bill Gates. Ben Traynor Gold value calculator | Buy gold online at live prices Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. (c) BullionVault 2011 Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
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| Argonaut Gold Provides Exploration Update on San Antonio and La Colorada Posted: 08 May 2012 03:38 AM PDT Argonaut Gold Inc. (TSX:AR) ("Argonaut" or the "Company") is pleased to report on exploration results at its San Antonio project in Baja California Sur, Mexico and the La Colorada project in Sonora, Mexico. 2012 Exploration Update:
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| Huldra Silver Provides Additional Underground Sample Results For Treasure Mountain Posted: 08 May 2012 03:35 AM PDT Vancouver, British Columbia – May 7, 2012 – Huldra Silver Inc. (TSX-V:HDA) (the "Company" or "Huldra") is pleased to announce sample results from the underground exploration and resource definition program on its 100% owned Treasure Mountain Property. All of the samples presented are from the Level 2 drift and raises extending 55m to Level 1. The mine is developed on 4 levels over a vertical height of 295m following the vein down dip. The results from the underground sampling program will be used in conjunction with previously released surface drill results in planning mine development and preparing an updated NI-43-101 compliant resource estimate. The Company expects to commence an underground drilling program in the near future for further exploration and definition of vein structures below level 2. The following tables are the underground chip sampling results from the Level 2 Drift and Raises on the Treasure Mountain Mine. The samples were taken at 5m intervals throughout the drift and raises. Each set of three samples (i.e. P2C1-1, P2C1-2, P2C1-3) represent one sample location at each 5m interval. Each sample location includes footwall rock, vein and hangingwall rock.
The sub-drift is approximately 22m below the level 1 drift where current mining operations are underway. The sub-drift was driven in 1988 during the mine development to explore for parallel structures between Levels 1 and 2. The samples are approximately 5m into the footwall of the Raise. Click here to view sample results All samples are delivered by truck to Acme Analytical Laboratories' facility in Vancouver, BC, where the sample is crushed, split and pulverized to -200 mesh. A 0.5 gram portion of the pulp is then digested in hot aqua regia and analyzed for 31 elements by ICP MS method. Over limits for Ag are by fire assay with gravimetric finish, and over limits for Pb, Zn and Mn are by multi-acid digestion and ICP ES finish. Technical information in this news release has been reviewed and approved by Jim Cuttle P.Geo a Qualified Person as defined in NI 43-101. For more information see the Company's technical report entitled "Technical Report, Project Update, Treasure Mountain Property" dated June 15, 2011, available on SEDAR at www.sedar.com. About Huldra
Huldra is currently working on plans to put its Treasure Mountain Project, located 3 hours east of Vancouver, BC, into development, subject to permitting and financing utilizing an offsite mill being constructed at the Company's property outside of Merritt, BC. The Company is also actively assessing other opportunities for acquisition and development. On behalf of the Board of Directors "Ryan Sharp" For additional information contact: NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE. Disclaimer for Forward-Looking Information
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| Stick to Depopulating the Planet, Bill Gates Posted: 08 May 2012 03:30 AM PDT It must be "Bash Gold" week on the CNBS network. Warren Buffet has been leading the charge by talking down the precious metal. Buffet's partner in crime Charlie Munger recently pitched in. And Bill Gates went on CNBS Monday to try and explain the error in investing in the barbarous... | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold prices fall as traders run to the dollar Posted: 08 May 2012 03:15 AM PDT Goldmoney | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| More on Frontline’s Astonishing Whitewash of the Crisis Posted: 08 May 2012 03:05 AM PDT As readers may know, a recent post, "Frontline's Astonishing Whitewash of the Crisis,"discussed the first half of the Frontline series, "Money, Power & Wall Street." Producers Mike Wiser and Martin Smith sent a letter taking issue with this review, and I made an exception to my usual practice and posted their missive. The major dispute is over whether their series lets the financial services industry off too lightly. The producers contend they attempted to provide "an accurate and informative telling of the crisis," that they were indeed tough on financial firms, and that I "misunderstood" their program. The bulk of the letter then consists of extracts from the program meant to address specific criticisms. I'll deal with their particular claims in due course. But most important, their letter fails to engage the basic issue raised in the initial post: that of the overall message conveyed by this segment. Their assertion is that I misunderstood, when it it the obligation of Frontline to make sure its message is clear. And as we'll also see, I am far from alone in "misunderstanding" their show. Any form of storytelling, be it print or televised journalism, fiction, even scholarly work, involves choices as to what material present, how to guide the reader/viewer through the information, and what points to emphasize. Emphasis can take place in numerous ways, including by presenting information early (first impressions stick and are hard to dislodge), repetition, amount of time spent. One major choice is whether to provide a range of points of view and let viewer decide, or supplying a clear perspective. The use of a narrator (and this series had a narrator) signals that the producers intended to provide a perspective. What happens if you fail to give non-expert viewers sufficient guidance through a complex fact set? The audience not only gets little in the way of illumination, but it also reionforces the idea that the situation is complicated and hard to grasp. That message is bank friendly. We've stressed repeatedly that complexity, opacity, and leverage serve the interests of financiers to the detriment of society at large. Treating this evolution as something that just happened is far too kind to the authorities and big banks. It represents a fundamental shift from the financial services industry providing mainly valuable services to becoming increasingly extractive. As we said in our original post:
In fairness, Part 2 does cover the swaps sold to municipalities in some detail, but even then, as we'll discuss in a later post, this discussion also falls short. But the most charitable conclusion you can reach is, in the words of a colleague who has taught at the Columbia School of Journalism for over ten years, is that this is "mediocre journalism," that the producers didn't recognize that the story they thought they were conveying was different than the one they actually presented. Various viewers of the program also found that the overall message was favorable to Wall Street. I'm told there were many critical tweets on the first and second program. This assessment came via e-mail:
And this e-mail reacted to the producers' letter:
Let's now deal with their responses, many of which do not engage the issues raised, but instead seek to cast doubt about the accuracy of the post. First is their objection to the idea that they "cribbed" from Gillian Tett's account of the development of the credit default swaps market, Fool's Gold. In fact, the series starts with the same narrative that Tett used, that of JP Morgan staffers first coming up with the idea of CDS at a corporate retreat, and even has the same hijinks. While people who read Fool's Gold would see the inclusion of Tett in that part of the documentary as a way of acknowledging her influence, that does not obviate the fealty of Frontline to Tett's storytelling. While "cribbed" may be deemed to be unduly strong, some readers saw this comment as "the lady doth protest too much." The much more important issue with starting with the genesis of credit default swaps is it launches the program on a pro-Wall Street footing (yes, there is the meant-to-rivet-your-attention, "we had a meltdown" juxtaposed with Occupy Wall Street protestors, but that is quickly undercut by various statements by apparent experts as to how complicated this all is, so the criticism is almost immediately diffused). The producers chose to start with the genesis of the corporate credit default swaps market, which is a bizarre place to begin. Corporate credit default swaps had nothing to do with the crisis. The narrator describes their creation as "innocent" (!). CDS are depicted as an "innovation" repeatedly, with all of its positive overtones (and recall that no less than Paul Volcker begs to differ). They are also presented simply as a way to transfer risk, and that is presented as salutary, as opposed to a way to solve a big problem for JP Morgan and other banks (as the readers above noted, lack of agency is all too common in this broadcast). The only reason to go that early might be to depict the missed opportunity to regulate them and prevent the creation of a standardized template for CDS on asset-backed securities, which as we described long form in ECONNED, is responsible for the toxic phase of subprime origination (third quarter 2005 to summer 2007). They try to have it both ways in their letter, saying they covered that ground in another Frontline documentary. Sorry, that doesn't pass muster. A presentation needs to be self contained. And even with hard core Frontline viewers, this also demands that they recall content from an earlier program, when in our information-overloaded society, that is a lot to expect of those who do not follow the finance beat. The letter continues to argue that the program did cover the notion that corporate credit default swaps were devised to transfer risk, which benefited banks. But this softpedals the motivation, which was set forth in our post: that JP Morgan was carrying more corporate credit risk than it was comfortable with (my recollection is that Fool's Gold discussed specifically that JPM's growth would be constrained). And recall in the viewer quotes above, that they also found that the issue of "cui bono" from the creation of CDS was skipped over. (I also have to note that one of the people they quoted in this section is Mark Brickell, identified in the program as a former JP Morgan employee. Most viewers would assume that that means he would give an unbiased take. In fact, Brickell is an uber financial services and even shows up twice in Frank Partnoy's Infectious Greed as a bad guy of sorts). Next, they shift to arguing that their discussion of CDS did cover the idea that they were tantamount to unregulated insurance. But merely citing text where CDS are referred to by various interviewees as insurance is inadequate for a generalist audience. Contractually, a financial product cannot be both a "derivative" (price or payoff defined in terms of a readily priced underlying instrument) and "insurance" (payoff when an event of loss takes place). The JP Morgan misbranding of CDS as derivatives has been remarkably effective. If you look at the transcript, the CDS are referred to a full 22 times as "derivatives" and there are three additional mentions of general concerns about derivatives that in context before you even hear the word "insurance". These include seven separate comments by the narrator, some of which use the word "derivative" multiple times with reference to CDS, starting with this one:
So get this: the narrator, the proxy for the producers, defines credit default swaps as a derivative, and presents them as being part of a proud history of derivatives. And how does the booming narrator first use the word "insurance" in the CDS discussion?
In other words, this is presented as a minority view, well after "CDS = derivatives" is well cemented in the viewer's mind, and not adequately explained. Even before getting to the way CDS are described in the documentary, given the common lumping of CDS with true derivatives, it would take a clear statement that CDS are tantamount to insurance, likely with some factual support, to overcome the sloppy use of terms. In context, the narrator comment presents "CDS are insurance" as a minority position. Yet the implications of it being economically equivalent to insurance are fundamental to understanding why the product blew all the major guarantors up. Insurers receive money up front. They may not take enough money (they underestimate the risk and price it too low) and/or they don't husband it well (among other things, they pay too much in bonuses and dividends, leaving too little for policyholders). If that happens on a big enough scale, they go bust when the payments come due (or alternatively, engage in all sorts of fraud to escape payment on legitimate claims). Satyajit Das, who was interviewed for this program, and others have stressed that if you required protection-writers to post enough margin to allow for jump to default risk, CDS would be uneconomical. Pretty much no one would buy it. Underpriced insurance produces over time losses to insurers, and insurers who write enough are pretty certain to hit the wall, eventually. And that is pretty much what happened. So we have the show coming out firmly behind industry PR, yet denying it when challenged. The next new charge they turn to is our remark:
They argue that they thought this oversight was OK because Goldman made "millions" while Deutsche lost "billions." That isn't true. Goldman lost $1.2 billion on mortgage securities. It appears to have made boatloads of money on a net short position 2007, but the subprime short traders at Goldman were eating more than half the firm's total risk exposure, and Blankfein and senior management told them to cover their short. They appear to have traded the February 2008 swoon and March rally in subprime well, but they went into the worst of the crisis net long and took losses that more than offset their earlier short gains (admittedly, they were behaving badly in 2008 in scrambling to offload risk, but they had lots of company in that exercise). The producers next turn to this charge:
They next quote a former Georgia governor stating that mortgage loans were securitized tranche and a "feeding frenzy" resulted. That is not an explanation. The next bit they quote was one I had pointedly avoided addressing because it so embarrassingly wrong and hate criticizing Chris Whalen, who is very sound when it comes to traditional banking:
I'm sure Chris knows the difference between a mortgage-backed security and a CDO, but listening to this, you'd have no idea they were two different beasts. And he is completely wrong about CDS being used within any CDOs (and only an extremely limited basis in RMBS in the late 1990s) to lay off risk and get a better rating (there are such things as synthetic and hybrid CDOs, where all or most of the assets are credit default swaps, but that bears no resemblance to what Chris is discussing). There's no excuse for including this garbled bit of an interview. I know Frontline spoke at length to at least one serious CDO expert who could have prevented misinformation like this being conveyed. They also quote Gillian Tett saying that "many investors" took more risk (RMBS risk? CDO risk?) because they thought they had laid most of it off with CDS. I beg to differ. "Investors" ex hedge funds rarely use CDS. The reason is that it typically requires the creation of a unit that can post collateral and that in turn requires regulatory approvals for most fiduciaries. And the use of the term "investors" obscures which player were the biggest holders of CDOs and users of CDS to reduce the risk: the banks themselves. We described in ECONNED The "investors" that did that in a serious way weren't what viewers would consider to be investors. It was Eurobanks who (remarkably) retained or in some cases even bought AAA tranches of CDOs, then hedged the risk with CDS, which their firms treated as "freeing up capital" which was tantamount to discounting all the future profit of the trade (interest from the CDO less hedge and funding cost) and booking it in the current period. This was system gaming on a massive scale, and was one of the big culprits in the crisis (US firms like Merrill and Cit wound up in similar positions through different mechanisms). So let me repeat: the program never makes clear the relationship between RMBS and CDOs, and it fails to explain that CDOs kept the subprime party going well beyond its sell by date, and were directly responsible for driving demand to the very worst mortgages. The discussion of the second hour contains a remarkable display of cognitive blindness. We pointed out, as did many readers, that the program set up the false dichotomy of "bailout versus disaster". In any complex situation, there are always alternatives besides taking a specific course of action and doing nothing. There was robust debate before the crisis of various options for dealing with insolvent banks, including the approaches used by Nordic countries in the early 1990s and forced haircuts of bondholders (Nouriel Roubini was early to argue for this remedy). Yet remarkably, in trying to defend that the show did not convey that message, Mike Wiser repeats a quote from Phil Angelides, which was particularly prominent by closing April 24 program (emphasis mine):
I'm gobsmacked that Wiser can't see that the section he quotes supports my point perfectly. He provides more material from Angelides, Born, and Stiglitz which all talk about how regulators had become lax well before the crisis. And he also boldfaces this bit:
This is completely besides the "bailout or disaster" message. This accepts and reinforces the meme that by 2008, the authorities' hands were tied, they had no choice other than rescue the now-terribly-important financiers they had allowed to run wild. This is nonsense. I've said, for instance, that I'm not convinced that Bear was insolvent, as opposed to illiquid (remember how Jamie Dimon kept crowing what a great deal he had gotten, until he seemed to realize that if he kept saying that, any future rescues might not have such generous subsidies?). Bear was initially offered a 28 day loan by the Fed, which, with no explanation ever given, was turned into an overnight loan, enough to carry the beleaguered firm into the weekend. Why no 28 day loan? That would have given the Fed and Treasury a ton more time to look at Bear's books and make a much better assessment of the impact of a firm failure on the markets, particularly CDS counterparties, and make other provisions for dealing with any fallout if the run on Bear was warranted. And as we mentioned in our original post, the "we lacked authority" is also bollocks. Regulators have powerful tools. Frontline reported Paulson told Wells Fargo that it would be declared capital insolvent if it didn't play ball. They could have threatened the investment banks with halting or curtailing their direct access to Fedwire (in simple terms, the Federal Reserve operated payment system used to settle net interbank balances at the end of day and for large payments during the day). The authorities didn't just lack will. They had been part of the problem and were unable to recognize how disastrous their policies had been until the evidence was undeniable. I recognize the Frontline producers strove to adopt a polite tone in their letter and they may take umbrage at this reply. But the stakes are too high to allow for courtesy to dilute a message they seem unwilling to hear. This disagreement isn't a matter of mere aesthetic or reportorial choices. Most people in this country are not very well informed about the financial services industry. As you can tell from the comments on the Frontline website, many take this series to be gospel truth. For Frontline to let the banking industry off easy does the public and the cause of reform a great disservice.
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| Turkey Exports “Massive Quantities Of Gold” to Iran and Arab Spring Nations Posted: 08 May 2012 02:43 AM PDT gold.ie | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 08 May 2012 02:42 AM PDT
Gold is grinding out a wall of worry that began construction out of a natural unwinding of the momentum that came in during the acute phase of the Euro crisis. More bricks were added weekly by various luminaries calling bearish; the most recent being Buffett's right hand man, Charlie Munger: "Gold is a great thing to sew into your garments if you're a Jewish family in Vienna in 1939 but civilized people don't buy gold – they invest in productive businesses." The Munger quote was forwarded by a subscriber as was another piece by an analyst extrapolating George Lindsay's work to forecast a coming "Thelma & Louise moment" (as in cliff dive) for gold. Add to the list an analyst calling 'buy' on US stocks and 'sell' on gold (after the Au-SPX ratio has made a long consolidation to support) and the first few minutes of this BNN interview with respected geologist Brent Cook http://watch.bnn.ca/ – clip671131 ("we're going to see some real destruction across the board in the junior sector") and we can see the makings of some nasty sentiment that is With the methods I use, timing is applied to the intermediate swings and on this swing the sentiment backdrop is now pervasively bearish. That means that the conditions are right for a bullish setup, although as you will see in this week's report, the technical situation remains far from resolved in gold, and still negative in the miners. Here is a little illustration of the events pre and post the Euro panic blow off compliments of the Au-SPX ratio chart.  I do not mean to make light of the events in play, but I have seen too often in my years of market management the tendency for analysis and commentary to come out in justification of whatever trend happens to be in play. Credit to Buffett and Roubini, they always hate the idea of gold and what it represents. Gartman is just following his interpretation of chart signals. No problem there either. He is only notable because he is widely followed by a lot of big entities with the ability to move markets. Then came the last two gentlemen (among many others), making proclamations that it is time to buy stocks and shun gold. These high-risk statements are being made just as the relic is settling down into a support zone vs. the S&P 500 after an intermediate-term bullish-looking consolidation of last summer's excess. Interlude on Deflation: What If? Let me interject within my own commentary for a moment by stating that if US policy makers stand on the verge of changing policies designed to promote inflation, then the gold bull market would likely be over; stopped dead in its tracks. It is debatable as to how the above chart would react, because many companies (esp. financials) in the S&P 500 benefit from the policies of interest rate manipulation, debt monetization and money printing out of nowhere. So the SPX could still decline faster than gold. But gold's bull market in nominal terms would be cooked as a real deflation of the massive credit bubble that has been carried forward would be undeniable. This bubble began with mortgage related credit and now has morphed into the credit extended to Uncle Sam. In fact Uncle Sam, already out on an un-payable limb, is basically setting the terms of his own credit with the help of the Federal Reserve. That is one of the scariest things imaginable from a monetary standpoint. So if Uncle Sam aborts this modus operandi (Wimpy: "I'll gladly pay you Tuesday for a hamburger today"), or if the people force him to do so then it is time to button everything down and prepare for 'Prechter time'. EWI has been out in the wilderness for years, foretelling the hell that would be an undeniable deflationary unwinding of credit.  As I have noted several times over the years, Robert Prechter is one of my primary influences. Biiwii.com and NFTRH are not gold bug services. In fact, it has been very difficult at times for me personally to continue to move forward with inflationary themes over the last 10 years with Prechter in my ear making so much sense. So, is the US government going to stop eating free hamburgers? Is the government going to stop devouring whole barbecued pigs at a single sitting? Is the government going to get itself under control? Or is the government going to go forward as is, enabled by a Federal Reserve that has taken to manipulating the government's own debt in search of favorable outcomes in a presidential election year? Maybe here in the midst of an agonizing time for the tattered gold 'community' it would be productive to think about a setup that is settling in; one that sees no signs of inflationary 'price' pressure (was that crude oil I saw getting hammered at the end of last week?), and an economy starting to decelerate. There is one main reason to be fundamentally bullish gold, and that is due to pressure on policy makers to compromise currency in the name of inflationary growth.  Here is the status of nominal gold as it finished the week. NFTRH projected the low 1600's with the potential for the low 1500's about 7 months ago and has been managing the EMA 70 (currently 1588) since the December low marked it as an important support level. Those objectives are in the books. The weekly chart shows a Symmetrical Triangle, which is a bullish 'continuation' pattern. MACD is thoroughly drained of momentum but it is triggered down (recall that it is and has been triggered down on a monthly chart for some time now) which means momentum is still going in the 'wrong' direction.  Since Stockcharts.com defaults to log scale charts (as opposed to the linear scale I usually use because I feel they show a more 'real' picture) and many chartists use log, let's review above what they are seeing. The trend line is broken out of 2008 (this happens to all trends eventually) and there is another, shorter term Symmetrical Triangle in play. It does not change the analysis. The Triangle or a 'higher low' to the December low must hold for the bullish technical case to remain on track. I am supposed to be bearish. Everybody says so. And indeed NFTRH would have no choice but to be bearish on the 'price' of gold if the Symmetrical Triangle and the weekly EMA 70 are violated. Perhaps some people find this type of plodding analysis unacceptable. But I find that it pays not to write something up as having happened (in the face of everyone telling me it is going to happen) until it, well… happens. Perhaps the Sym-Tri is patently obvious and it is just a matter of time before it breaks down. Indeed, current analysis certainly allows for a breakdown because current analysis as of last week's 'jobs' report on the back of previous economic reports, implies a lurch toward economic contraction. And in an economy built on inflationary policy, economic contractions have a nasty habit of turning into deflationary episodes. The play we are working is not one where gold and USD rise to the heavens during a deflationary episode. It is one where Uncle Buck benefits on his own for a time as gold potentially declines but out performs most assets. This is the RPG (real price of gold). Subscribers and blog readers have probably noted my lack of patience with authoritative figures out there micro managing the nominal price of gold. That is because they did the same in 2008, scaring many people out of position, only to see gold double. But also, it is because the gold mining fundamental case depends on a rising RPG, and the RPG is not dependent on a rising 'NPG', or nominal price of gold. It is dependent upon what happens on the economic counter-cycle, like what appears to be setting up now in the economy. This is when gold out performs other markets and tangible assets. That is the bigger picture, but the here and now is another matter and it is near time now to leave this rambling segment and get on to some analysis. I'll leave you with some words from Mark Hulbert http://is.gd/vjD8hH, a rare member of the mainstream media who I have found to be helpful throughout the gold bull market and the various Walls of Worry that have been erected over its lifespan: "While bullion's listless behavior over the last couple of months is undeniably frustrating, a very robust wall of worry is being built. Eventually, gold will begin to climb it." "Gold traders' increasing impatience has led even more of them to throw in the towel than before — which, in turn, is why contrarians are confident that gold's next major move is most likely up… When I wrote about gold sentiment two months ago, this average stood at 16.7%. Today, in contrast, it is at minus 14.8%, which means that the average gold timer is now allocating about a seventh of his gold-oriented portfolio to shorting the market. That's a relatively aggressive bet on lower gold prices… In fact, except for a couple of days in late March when the HGNSI dropped marginally lower to minus 15.7%, its current level is the lowest it's been since March 2009, more than three years ago. And that's really quite amazing, given that gold at that time was trading only slightly above $900 an ounce. In other words, gold traders today are just as pessimistic about gold's prospects as they were when gold was trading for more than $700 less. No wonder contrarians are impressed by the wall of worry that exists in the gold arena these days." All of the above illustrates why we proceed in a manner that emphasizes risk management and survival in anticipation of the moment when this massive wall breaks down in the gold stock sector and in the metal itself. The correction has gone on longer and in the gold stocks' case, deeper than I originally anticipated, but is right in line with the short-term parameters set when HUI broke down from the early 2012 uptrend (Bear Flag to resistance at 555) and then, the 475 'neckline'. This proves why it is always a good idea to manage risk and keep cash for opportunity. The 'Wall of Worry' will probably prove bullish ultimately, but it will only feel that way to patient individual players who are positioned for it. Things have been tough in this sector since the mini mania blew out last year, first in silver and then in gold's euro crisis momentum. That was last year and this is the hangover. Either the bull market has ended (I see no evidence of that) or this intermediate swing is a rare opportunity point in the precious metals. There is no middle ground. NFTRH will continue to manage risk with an eye toward opportunity and I would be delighted to have you would join me for weekly precious metals market management, along with other areas of interest anticipated to provide opportunity in the future. http://www.biiwii.blogpspot.com
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| Bullion Gets a Thorough (Underserved) Smackdown Posted: 08 May 2012 01:36 AM PDT If, as we have said before, you can tell something of a market from how it behaves under adversity – then what does today's surprise fall to a five month low to key technical support on the trendline tell us? | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LME Receives a Number of Proposals That May Lead to Takeover Posted: 07 May 2012 11:52 PM PDT .......here comes China!! The London Metal Exchange, the world's biggest metals bourse, received multiple proposals that may lead to a takeover. The proposals will be considered by the board, the LME said in a statement today. They were from companies that had been shortlisted after assistance from Moelis & Co., the LME's adviser, according to the statement Hong Kong Exchanges and Clearing Ltd. said April 30 that it was one of several companies looking to buy the LME. CME Group Inc., NYSE Euronext (NYX) and IntercontinentalExchange Inc. made preliminary offers, three people with direct knowledge of the matter said in February. Takeover bids for the LME, which handles more than 80 percent of industrial metals futures, had to be submitted by yesterday. Claire Miller, a spokeswoman for ICE in London, Allan Schoenberg, a spokesman for CME in London, and James Dunseath, a spokesman for NYSE in London, declined to comment. Chris Evans, a spokesman for the LME, said there's nothing more to add to the statement. The LME may be valued at about $1.3 billion, Greenwich, Connecticut-based Equity Research Desk, an adviser to hedge funds, said in February. The LME is owned by 70 of its 94 members, including Goldman Sachs Group Inc., JP Morgan Chase & Co. and UBS AG. Any bid will have to be approved by more than 50 percent of shareholders, with the owners of at least 75 percent of shares backing the move. Exchange Rankings Hong Kong Exchanges is Asia's largest bourse, CME is the world's largest futures exchange, NYSE Euronext is the biggest U.S. exchange owner and ICE operates the second-largest U.S. futures market. Hong Kong Exchanges is confident about its chances of acquiring the LME, the South China Morning Post reported today, citing an interview with Charles Li, chief executive officer. Metals prices rallied in the past decade as demand from China, the world's biggest consumer, overwhelmed supplies from mines, attracting a surge of interest from investors. The LME handled a record $15.4 trillion of contracts in copper and other industrial metals last year, compared with $2.5 trillion in 1999. It operates London's last open-outcry transactions through a 6-meter-wide (20-foot) ring in which traders shout out orders. To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Morning Outlook from the Trade Desk 05/08/12 Posted: 07 May 2012 11:46 PM PDT The talking heads actually convinced the markets yesterday that the election outcomes in Greece and France were of no issue. Mmmm , European equities down sharply today. US futures look weak and Euro, pips away from breaking 1.30. Gold again right at significant support in the mid $1,620's. silver now clearly through the $30 level. In silver there are incidental support levels, but nothing major until $26 ish. All the gold bugs cried heresy yesterday when Buffet suggested it was a worthless asset. I don't agree with him. Gold is as good or bad as any investment. Buying stocks in 2002, was a bad idea. Buying them in 2008 was very smart. Real estate today much better than buying in 2006. Gold at $400 great , at $1,900 not so smart. In the short to medium term 0-9 months, it is conceivable that the Euro may test 1.10. strong dollar not good for metals. But I have zero faith in the US government coming through, which will again signal weakness in the dollar and stronger metals. The basis of holding metals on an adjusted cost base as a percentage of a diversified portfolio still and will continue to make sense. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Silver Hits 4-Month Low, Gold Also Down Posted: 07 May 2012 11:14 PM PDT Wholesale market Gold prices fell to a two-week low of $1,625 per ounce Tuesday morning in London – the first day of London trading since yesterday's bank holiday – as stocks and commodities also fell and the dollar extended recent gains. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Turkey Exports 'Massive Quantities Of Gold' Posted: 07 May 2012 10:57 PM PDT Gold edged lower on Tuesday despite the weaker euro and stock markets after furious citizens in Greece and France voted against austerity measures. Gold prices are being supported by bargain hunters who continue to buy dips. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 07 May 2012 10:42 PM PDT Jefferson The Futurist
Jefferson on Debt Jefferson on Handouts
Growing is an awareness and uneasiness about the fundamental dilemmas that exist within the paradigm. I preserve optimism and hope for our future, as I believe the tides will turn. And in the worlds of The Futurist, "I hope our wisdom will grow with our power, and teach us, that the less we use our power the greater it will be". ~Mike V Foley, J.P. (1900). The Jeffersonian Cyclopedia: A Comprehensive Collection of the Views of Thomas Jefferson. New York, NY: Funk and Wagnalls Company. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold & Silver Market Morning, May 08 2012 Posted: 07 May 2012 09:00 PM PDT | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 07 May 2012 08:56 PM PDT
from news.goldseek.com: In an April speech in Berlin, Dr. Andreas Dombret, a member of the Executive Board of the Deutsche Bundesbank (the German central bank), offered a startlingly frank assessment of the current problems in Europe. Although his comments were meant to apply to the tensions and imbalances that exist between the northern and southern tier of the 17-member eurozone, they shed inadvertent light on the broader global economy. Rebuffing calls that Germany do more to support the faltering southern economies, Dr. Dombret said: …Exchange rate movements are usually an important channel through which unsustainable current account positions are corrected….In a monetary union, however, this is obviously no longer an option. Spain no longer has a peseta to devalue; Germany no longer has a deutsche mark to revalue. Other things must therefore give instead: prices, wages, employment and output. The question now is which countries have to shoulder the adjustment burden. Naturally, this is where opinions start to differ. The German position could be described as follows: the deficit countries must adjust. They must address their structural problems, reduce domestic demand, become more competitive and increase their exports. In economics it is axiomatic that positive and negative current account balances will ultimately be offset by changes in relative currency valuations. The currencies of surplus countries are supposed to rise and the currencies of the deficit countries are supposed to fall. But the current global political alignment has altered this process. Like many of his German and continental peers in government and finance, Dombret is likely in favor of maintaining a common currency at all costs. But as he outlines, when currencies fail to adjust something else has to give. He insists that the giving come from those who have been getting. Given their weak economies and strained fiscal positions, it should be evident that citizens of Greece, Portugal, Spain and Italy have been living beyond their means. Their relative prosperity over the last decade has largely been maintained by the purchasing power of the euro which itself has been buoyed by the strong German economy. Rather than forcing Germans, whose savings rates and current account surplus results from years of fiscal prudence, to lend even more money and suffer higher inflation so that the southern tier can receive more monetary stimulus, Dombret argues the citizens of deficit economies must spend less while working, producing and saving more. In other words, their living standards must match their productivity. Keep on reading @ news.goldseek.com | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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