Gold World News Flash |
- A golden idea to save (or doom) the euro
- Peter Schiff Testimony before Congress on Mortgage Loan Guarantees
- Felix de la Cova: The real cost of not owning gold
- By the Numbers for the Week Ending June 8
- Brodsky and Quaintance: Solution is asset monetization, starting with gold revaluation
- Continuation. . .The most important gold market event since 1999
- Presenting the CBO’s ‘Long-Term Outlook’ infographic
- 'Staggering' amount of gold bought during takedown, London trader tells KWN
- The Student Subprime Bubble
- The Gold Price Closed Down for the Week at COMEX $1,590.10
- D-Day, Dick Winters and the boys from Easy Company
- Byron King: Companies Must Pay Dividends to Make Top-10 Gold List
- Kentucky doctor, coin dealer locked in legal battle
- GOLD Alert
- There Is No Gold Bubble...And Here's Proof
- Eric Sprott: THE SILVER CARTELS HAVE CHANGED THEIR M.O.
- Hip to Gold Acquisition
- Praying for Stimulus to Save the Economy
- Stability in the Euro?
- Guest Post: The Trouble with Rand Paul
- Stocks Have Biggest Week Of The Year On Lowest Volume
- Gold and Silver Disaggregated COT Report (DCOT) for June 8
- Peter Schiff - World is Headed Off the Edge of the Fiscal Cliff
- Gold Seeker Weekly Wrap-Up: Gold and Silver End Mixed on the Week
- Gold Daily and Silver Weekly Charts - Monkey Shines
- Yesterday's Gold/Silver Prices - Sign of Times
- COT Gold, Silver and US Dollar Index Report - June 8, 2012
- As India's Richest Ranks Swell, Many Head For Gold
- Strong-Dollar Fallacy
| A golden idea to save (or doom) the euro Posted: 08 Jun 2012 05:26 PM PDT By Eric Reguly http://www.theglobeandmail.com/report-on-business/international-business... ROME -- Gold is back in the news, big time, and not just because the price may be on the verge of another upswing or that Peter Munk is turning Barrick, the world's biggest gold company, into a CEO meat grinder. It's because Germany, it appears, wants to make gold the effective currency of the euro zone before the region plunges to the bottom of the seas like a concrete U-boat. The weakest euro-zone countries are tapped out financially and economically. But a few of them are brimming with gold reserves. Take Italy, the euro zone's third-largest economy. The Italians love gold and it's stashed everywhere, in their central bank and in their jewellery and safe deposit boxes. (I once saw a religious-festival parade of children in a mountain town, with each child groaning under the weight of heavy gold necklaces and other baubles.) At last count, the central bank had 2,451 tonnes of gold, valued at close to E100-billion ($128-billion). That's not a fortune compared to Italy's E1.9-trillion national debt, but it's not bad when Rome is raiding the pantry to pay its ever-rising debt. ... Dispatch continues below ... ADVERTISEMENT Prophecy Platinum (TSXV:NKL) Announces Encouraging Rhodium, Ruthenium, Osmium, Company Press Release VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL; OTC-QX: PNIKF; Frankfurt: P94P) is pleased to provide results of full spectrum 6E (Platinum, Palladian, Rhodium, Ruthenium, Osmium, and Iridium) analysis of platinum group elements on the first batch of samples from the company's wholly-owned Wellgreen PGM-Ni-Cu project in the Yukon Territory, Canada. The company enlisted Activation Laboratories (Actlabs) of Ancaster, Ontario, to conduct a full-spectrum 6E analysis of samples taken from the 2011 drill hole WS11-188. Adding Rh, Ru, Os, and Ir to Pt and Pd increased the total PGE content (6E) by an average of 28 percent, based on a population of 90 samples, most of which are from disseminated sulphide-type mineralization. Assay results with 6E exceeding 0.50 ppm (0.5 g/t) (excluding copper and gold assays) are tabulated at Prophecy's Internet site and are available with assay results from the entire batch of 90 samples here: http://prophecyplat.com/news_2012_may25_prophecy_platinum_announces_rare... Germany's idea is coyly named the European Redemption Pact and it is nothing if not creative. While details are scant, here is roughly how this gilded baby would work. Countries with debts greater than 60 per cent of gross domestic product -- the (ignored) limit under the European Union's Maastricht Treaty -- would transfer those debts into a redemption fund, which would be covered by joint bonds. The scheme has been called "euro bonds lite." Here's the catch. Countries using the scheme (most would, including Germany, because of generally high debt-to-GDP ratios) would have to cover 20 per cent of their debt with collateral, payable in gold or currency reserves. Default on the payments and you lose your gold. The "sinking" fund would retire the debt over 20 years. Italy set the precedent in the 1970s, when it was in the midst of one of its blandly regular financing crises and resorted to a gold-backed loan. The loan was quickly paid off, because there was so much political pressure to do so. If the finance minister had forfeited the Italian family jewellery, the entire government would have been embarrassed and humiliated, then turfed from office. There's a lot to like about the European Redemption Pact, politically and economically, and a lot not to like if you're worried that this German-inspired fund is the mother of all potential loot grabs. On the positive side, the gold bricks are piled up like Lego in central bank vaults. They are unpledged and devaluation-proof, meaning the gold-backed loans would be ultra-cheap -- probably 1 per cent. Politically, a gold-backed loan is defensible, in the sense that it's cheap. The alternative is trying to flog sovereign bonds at crippling yields -- 5 to 7 per cent. That in turn would mean ratcheting up the austerity programs in an attempt to restore enough investor confidence to bring yields down. The downside, of course, is potential default, which would mean transferring a huge chunk of a country's hardest, most gorgeous assets -- and hence economic power -- out of the country. You would have to presume, however, that any country would be ultra-careful to make sure it gets the gold back, as Italy did. The political consequences of the European Redemption Pact are one thing; what the gold-backed loans say about the common currency is quite another. The underlying message is not pretty. Germany, the supervisor of the pact and presumed inheritor of the gold if the loans are not repaid, seems to be saying: We don't trust the euro as it is; it's too weak, so give us a stronger, gold-backed euro. Doubts about the health of the euro only increased on Friday, with more reports that Spain would formally seek a European bailout for its gutted banks as early as this weekend. If the ailing European countries accept the gold deal, it would strengthen the euro. If they were to reject the deal, it would hurt the euro. Why? Because rejection, in effect, would state that they can't muster the fiscal discipline to ensure they get their gold back. The European Redemption Pact is a psychological biggie. If it were to happen, it would say that gold is a key central bank reserve and that it can be an effective crisis-management tool. Two questions. If Europe goes for the gold-backed deal in an effort to save its sorry butt, what does this say about the credibility, or lack thereof, of fiat currencies around the world? And would it save the euro from extinction? Desperate times require desperate measures. We can all agree that the euro is a pig. A pig stuffed with gold is an entirely different beast. Join GATA here: Standard Chartered's Earth Resources Conference Hong Kong Gold Investment Forum Toronto Resource Investment Conference New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf
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| Peter Schiff Testimony before Congress on Mortgage Loan Guarantees Posted: 08 Jun 2012 03:19 PM PDT Peter Schiff edits down his (and other's) testimony to a mere half hour. The setup for the video reads: "Does Washington have the American taxpayers' interests as their top priority? Watch as lobbyists drown out your voice and Peter fights the tide."
Source: Peter Schiff of EuroPacific Capital via YouTube http://www.youtube.com/watch?feature=player_embedded&v=UvMGHzB37lo Memo from Peter Schiff (June 8, 2012) Dear Friends, Yesterday, for the second time in less than a year, I was invited to Washington to testify in front of a Congressional Committee that was contemplating regulatory moves to aid the struggling economy. This time around it was the House Subcommittee on Insurance, Housing and Community Opportunity that asked for my views on Federal Housing Administration's (FHA) policy in the apartment lending market. Although this is a fairly narrow issue, I told them the same thing I did last year when I testified about job creation: government programs don't solve problems, they just create new ones. While I thank the Committee for inviting me, I believe the congressmen may have gotten more than they bargained for. I can apologize for shaking up what would have otherwise been a sleepy and forgettable proceeding, but I won't apologize for trying to inject respect for the Constitution and free market capitalism into a venue that has been doing its best to destroy both. I have edited down the more than 2 hour hearing into a package of slightly more than 30 minutes. This includes all of my testimony and some of the more noteworthy exchanges I had with the congressmen. The seven other people who testified besides me all represented the many interest groups who benefit from FHA loans. I represented only the interests of U.S. taxpayers, a group that congressmen usually don't hear from when considering legislation.
Peter Schiff Goes To Washington - Round 2
When taking heat from these surprised and offended congressmen, I can't help but think back to the reaction I received when I went down to the Occupy Wall Street protest last year. For those of you who missed that exchange, take a look: Peter Schiff Speaks to Occupy Wall Street. Both venues were dominated by people who knew very little about how capitalism actually works or how the United States rose to economic dominance in the first place. While such ignorance can be excused from scruffy protesters, we should expect more from our elected officials. This video should give all Americans a better idea of how insulated Congress is from the American taxpayers who are being asked to pay for the government's spending and borrowing. If you share my concerns, share this video with a friend. Viral videos have a singular power to influence the national conversation. Let's get it started. Below, I have included the written testimony that I submitted before my appearance. House Financial Services Committee June 7, 2012 - Subcommittee on Insurance, Housing and Community Opportunity - Hearing on FHA Multi-family Programs Testimony of Peter D. Schiff, economist, author and financial expert Chairman Biggert, Ranking Member Gutierrez and members of the Committee, thank you inviting me here to testify today. My name is Peter Schiff, and I own Euro Pacific Capital, a privately held stock brokerage firm. I am more widely known to the general public as an economist, author, speaker and advocate of the free enterprise system. Unlike many of my co-panelists I do not come here representing a specific coalition or group that has an interest in promoting the multi-family sector. I am here to represent the interests of the common U.S. taxpayer who will have to make good any liabilities incurred by the Federal government and who will have to live with the consequences of distortive government policies (as we all have been doing co conspicuously in recent years). I also assume that I have been invited for my track record in forecasting problems in the housing market. A good deal of my reputation was established in 2007 and 2008 when my prior predictions regarding the dangers confronting the housing and credit market were spectacularly realized. There can be no question that if a hearing similar to this had been convened in 2006 to consider federal home mortgage policies, a roomful of qualified experts would have insisted that no crisis was then evident in the mortgage market. And so I can only thank this committee for its circumspection in this instance. I have absolutely no objection to the idea that a healthy rental housing market is needed in this country, especially for those lower income individuals who depend on inexpensive housing options. However, I believe that market forces are sufficient by themselves. In general, free markets are the most efficient mechanism to ensure that market demands are met with the most cost effective options. However, as the housing market has been the subject of an inordinate amount of regulation and market distorting tax and subsidy policies over the years, it has developed in ways that don't conform to the economic realities of our citizenry. In particular the construction and maintenance of rental units has been stunted by Federal policies have greatly favored home purchasers over renters. The Federal Housing Authority and the Government Sponsored Entities of Fannie Mae and Freddie Mac, have undertaken herculean efforts to remove the credit risks associated with home mortgage lending. At the same time the tax code is replete with advantages for home owners, most notably the home mortgage tax deduction, that are not available to renters. In addition, the current policy of the Federal Reserve is to keep interest rates as low as possible, specifically to stimulate home purchases. Taken together, these factors have exaggerated the economic benefits of home ownership and have drawn excessive amounts of investment capital into the sector. Put simply, we are dedicated more resources to the single family home ownership market than we would if government had not decided to make home ownership a priority. As a result, financing for multi-family rental units have suffered. Renting simply offers few of the regulatory advantages than owning does. So the country has not developed as many units as would have been the case had the government refrained from interfering with the country's housing decisions. As it stands now, Americans have extremely low savings rates. The average American family now only has $7,000 worth of savings, which would not be nearly enough to afford a 20% down payment on the average American house. This would mean that the vast majority of Americans should be renters and not owners. Normally, these simple facts would attract investment capital to build affordable rental properties. Critics of the free market like to argue that investors will ignore the needs of the poor as the profits are not significant enough to entice development. There is little in capitalism to support this position. Great riches can be made by serving the needs of low income people. Just ask Sam Walton. Wal-Mart became successful by specifically targeting its inventory and pricing to low to moderate income consumers. Wal-Mart was able to expand, prosper, and attract investment capital without government guarantees or incentives. Such would also be the case in the low income housing market if government had not siphoned away investment capital. If there is demand, a supply will be produced. A paucity of rental units relative to demand is all the incentive that industry needs. But as is usual for government, legislators are now looking to ameliorate the pernicious effects of one set of distortive policies with another layer of regulations. This Committee may be looking to balance a playing field that never should have been tilted in the first place. By insuring a greater quantity of loans to developers of multi-family apartment properties, it is hoped that investment capital can be more willingly targeted to the market. However, hoping to micro manage capital flows always create a raft of unintended consequences. Legislators also rarely consider the unintended consequences of their actions. Credit in the United States is a limited commodity. Money loaned for one purpose in unavailable to be lent for other purposes. Through its effort to take the risks out of home lending, the FHA has directed more credit into the real estate market that would otherwise been the case. That means these funds were not available to be lent to other enterprises which may have put the capital to work in areas that may have been more needed in the economy. I think capital should flow to where it's needed most. Market determined interest rates are the factors that control these flows. The FHA short circuits these signals and harms our economy. It's time that the FHA itself becomes short-circuited. As a reminder to this Committee to proceed with caution and awareness, I submit as testimony portions of my newly released book, The Real Crash- America's Coming Bankruptcy that relate to how government policies created the housing bubble in the last decade, and how those policies continue to prevent a true turnaround in the market today. I hope with benefit of this hindsight, this Committee would abandon its instinct to over involve government in another area of the housing market and instead look to withdraw itself from areas that it has already devastated. Government Creates the Housing Bubble Through Bad Policy Excerpts from Chapter Two of: The Real Crash - America's Coming Bankruptcy: How to Save Yourself and Your Country (St. Martin's Press, 2012) Politicians in both parties decided that government should promote home ownership. Democrats focused on helping poor people own homes by making mortgages easier to get. Republicans spoke of an "ownership society" that would promote personal responsibility. Bankers and realtors, two of the most powerful interest groups in Washington, both agreed, and they helpfully pointed out ways the government could subsidize mortgages. The biggest subsidy for buying a home is the tax deduction for mortgage interest. If you rent your home, none of your rent is deductible. If you buy your home outright, your costs are not tax deductible. But if you borrow in order to buy your house, all of the mortgage interest - which is a majority of the monthly payment for many homeowners - is tax deductible. This is the single biggest tax break most people get, and it's a huge reason to buy a home - especially one that costs a lot. If you borrow $250,000 for a 30-year mortgage at 6 percent, your monthly payments will be about $1,500. About $1,250 of that is interest. In the first year, you'd pay almost $15,000 in interest, and thus be able to reduce your taxable income by $15,000. In seven years, you will have paid $100,000 in interest, saving at least $25,000 on taxes. Also, you can deduct the interest on your second home. The only limit is that you can only deduct the interest on $1 million worth of mortgage. This is a huge mortgage subsidy. Even though it's just a tax deduction, it's still a subsidy, because it distorts the market in favor of homeownership (more precisely, leveraged homeownership). Another reason the mortgage deduction counts a subsidy: other taxpayers pay for it, at least indirectly. According to official estimates, the deduction reduces federal revenue by about $100 billion per year. Total revenue from individual income taxes is just above $1 trillion. So, if Congress abolished this deduction, and instead lowered all tax rates across the board, we could cut everyone's taxes by nearly 10 percent. Put another way, almost 10 percent of your tax dollars go to benefit leveraged home-ownership by Americans. Even if you're one of those homeowners getting the deduction, there's a chance you're still losing out on net. It's important to remember that subsidizing something doesn't just benefit the people buying it. In fact, it often benefits the sellers more. In the case of mortgage subsidies, there are plenty of "sellers" who benefit. First is the homeowner who sold you the home. Decreasing the monthly cost of owning a home also drives up the price of buying a home. After all, you're not the only one with access to the mortgage-interest deduction. The deduction boosts demand, thus boosting price. As a result of the home mortgage deduction, homebuyers end up paying more for their home. So while they get to deduct their interest payments, those payments are much higher due to the price effects of the deduction. Take away the excess demand generated by the deduction, and home prices would fall. True, mortgage interest would no longer be deductible, but the payments would be much lower. Most homebuyers would be better off without the deduction. The real beneficiary of the deduction is the seller, who sells his house at an inflated price. Of course if he uses the proceeds to trade up to an even larger house, he losses out as well. The only winners are those who sell and rent, trade down to less expensive houses - or professional homebuilders, who sell houses for a living. Realtors also profit. Greater demand for buying a home means more homes bought, meaning more commissions. Also, higher demand means higher home prices, meaning higher commissions. Lenders also profit from the home mortgage interest deduction, which encourages people to not only to buy, and thus take out mortgages, but to take out bigger mortgages than they otherwise would. The combined influence of realtors and lenders insured the home mortgage interest deduction. The story of the deduction goes back to 1913. When the income tax was created, all interest - including personal loans and business borrowing - was tax deductible. After credit cards became ubiquitous in the 1980s, Congress ended this deduction, but thanks to the lobbying of the realtors and mortgage lenders, mortgage interest was spared, and it remained deductible. Home ownership gets other special tax breaks, with one big one driving the idea of a home as an investment: the capital gains exclusion. Most investments you might make - say, you start a business, or invest in stock - are subject to capital gains taxes. Your home is not. If you live in your home for two years, you can sell it and earn up to $500,000 in profit on tax free. This is another huge subsidy to homeownership as compared to other investments, and it encouraged serial home flipping during the bubble years. Fannie and Freddie: 'one of the great success stories of all time' The greatest drivers of the housing bubble, after the Federal Reserve, were the Government Sponsored Enterprises Fannie Mae and Freddie Mac, who were supposed to make housing more affordable, but who ended up creating a housing bubble instead. In 2004, if you asked the average Washington politician about Fannie and Freddie, you would have been told that these GSEs were sound, essential, and independent of government. In 2007, as the housing and mortgage crisis became apparent, that same politician would have said that Fannie and Freddie were doing just fine, and they wouldn't need a bailout. Come late 2008, those very same politicians were crying that taxpayers needed to bail out both. In 2004, when Alan Greenspan came before the Senate Banking Committee, the issue of the GSEs came up. Senator Chris Dodd, the largest Congressional recipient of housing related campaign contributions said of them, "I, just briefly will say, Mr. Chairman, obviously, like most of us here, this is one of the great success stories of all time." In July 2008, after the New York Times reported that the federal government might have to take over Fannie and Freddie, stocks of both GSEs fell nearly 50 percent. Dodd chastised the sellers and those of us saying Fannie and Freddie were bankrupt. "There is no reason for the kind of reaction we're getting. These fundamentals are sound. These institutions are sound. The have adequate capital. They have access to that capital. And this is a reason for people to have confidence in these GSEs-in Fannie and Freddie." In the end, Fannie and Freddie collapsed, and rather than let them fail, the government bailed them out and took them over. When you think of the 2008-2009 economic crisis, some words might come to mind: mortgaged-backed securities, housing bubble, subprime mortgages, cronyism, moral hazard, derivatives. When you think of these words, you should think of Fannie Mae and Freddie Mac. Franklin Roosevelt created the Federal National Mortgage Association during the Great Depression in order to stimulate home buying ("FNMA" became "Fannie Mae). In 1968, Congress privatized Fannie, and a couple of years later, created a competing agency, the Federal Home Loan Mortgage Corporation, or Freddie Mac. What these agencies do is to buy mortgages from lenders. You can imagine how this opens up the mortgage market. Without someone buying up mortgages, a bank is somewhat limited in how many loans it can make - after all, even with fractional reserve banking and loose reserve requirements, your loans still need to be backed up by some amount of assets. The problem with Fannie and Freddie is that they knew that while their profits were real - and huge - there risk was not real. More precisely, the politically connected bigwigs who ran the halls at these GSEs knew that if their companies ever lost money, the taxpayers would bail them out. This government guarantee was not explicit, but implicit. Of course, Fannie's biggest boosters denied there was any guarantee. Barney Frank, in 2003, famously said: "There is no guarantee. There's no explicit guarantee. There's no implicit guarantee. There's no wink-and-nod guarantee. Invest and you're on your own. Nobody who invests in them should come looking to me for a nickel. Nor anyone else in the federal government." Fannie Mae officials also fiercely denied they enjoyed any subsidy. But they did. Fannie Mae was able to borrow at lower interest rates, because lenders realized that taxpayers would bail them out. Near-zero borrowing costs had two detrimental effects. First, it allowed Fannie and Freddie to buy up massive amounts of riskier mortgages. Second, it made it impossible for anyone to compete with these GSEs.. So, the net effect of Fannie and Freddie was to drive down lending standards and interest rates. Had there been no government subsidized secondary mortgage market, selling mortgages would have been harder for banks, and lending standards and interest rates would have been higher. This was exactly the point. Fannie was in "The American Dream Business," they would say. Their job was get people to buy homes they who otherwise wouldn't buy homes, and to make everyone pay more. Some like to point out that subprime was the real problem and that Fannie and Freddie did not guarantee subprime loans. While that is technically true, they were the biggest buyers of these loans in the secondary market. In fact, without their lavish appetites far fewer subprime loans would have been originated. Not only did their demand help fuel originations, but it helped legitimize the investment merit of the securities. Because the private sector originated subprime loans without any official government backing, many like to blame capitalism, or more specially Wall Street greed, for the problem. However, take the Fed and Fannie and Freddie out of the picture, and subprime would have been a trivial part of the mortgage market. Fannie Mae and Freddie Mac were the most important players in driving the Fed's excess capital into housing, but other policies helped, too. The Community Reinvestment Act was one. The CRA has changed plenty over its 30 years, but the general thrust was always the same: it empowered federal regulators to pressure banks to make more loans to low-income people. George W. Bush pushed his "ownership society," too. Bush spoke at a church in Atlanta in 2002 about "the American Dream," meaning homeownership. The President named some of the new homeowners he had just met and said, "What we've got to do is to figure out how to make sure these stories are repeated over and over and over again in America." To this end, he proposed the "American Dream Downpayment Act" to help folks buy homes even if they couldn't afford downpayments. The law, passed in 2003, provided grants of up to $10,000 to cover downpayment, closing costs, and some home repair for first time homebuyers of below-average means. Of course, the tax preferences above drove the housing market, too. Housing prices soared. At the same time, the American dream was hijacked. Instead of referring to the upward mobility made possible by American capitalism, it was redefined to mean getting rich just by buying a house and extracting equity as it magically appreciated. Come 2006 and 2007, the housing bubble popped. At first, pundits said it was just a little crisis in subprime mortgages. It wasn't. I won't go through the entire story of what happened in the housing and credit markets in 2006 through 2009, but it was a replay (on a much larger scale) of the popping of the dot-com bubble. When bubbles are built upon foundations of massive leverage, the bust brings real destruction. On the smallest level, consider the guy who took out an adjustable rate mortgage in 2005 to buy a big house with a very small down payment. When his home value drops 30%, it's not only his on-paper net worth that suffers. His rate adjusts in 2010, and he can't refinance because his house is underwater. If he sells his house, he won't be able to get enough money to cover his outstanding mortgage and the bank will take all his savings. Banks took a huge hit when everyone realized that the trillions investors and banks had spent on mortgage-backed securities were worth a fraction of what they were supposedly worth. All the financial institutions that had been providing credit to the economy were suddenly in trouble, and couldn't lend like they used to. Those businesses that depended on credit for their day-to-day operations were in trouble. Never was this on display as clearly as 2008. In March, the Fed bailed out failed bank Bear Stearns. In July, Congress passed housing bailouts. In early September, the federal government took outright ownership of Fannie and Freddie (since then, according to Congressional Budget Office numbers, taxpayers have poured $310 billion into the two GSEs). In mid-September, the Federal Reserve, with no authorization from Congress, created brand new Enron-like special-purpose entities to buy an 80 percent stake in insurance giant AIG. This was an attempt to bail out a collapsing financial sector. It wasn't enough. Most important, though, was the way the string of bailouts fit the government pattern: prevent the economy from correcting itself. Once again, rather than let an inefficient allocation of resources shake itself out, politicians and central bankers decided that the right cure for a drinking binge was "the hair of the dog that bit you." That is, when confronted with a crisis caused by government-created moral hazard, cheap money, and central planning, Washington responded with more moral hazard, even cheaper money, and heightened central planning. Corporate welfare and business subsidies have always been around, but the Bush and Obama administration gave government a role more central in the economy than it have ever played. The government owned insurance companies, mortgage companies, automakers, and more. Washington was giving handouts to power companies, banks, small businesses, big businesses, manufacturers, and every type of business imaginable. Government had become a venture capitalist, an insurer, and even an owner of the private sector. If the private sector - even with prodding from Washington - wasn't going to step up and prevent a downturn, the government would. It was just one more step down the same path. When the dot-com bubble popped, they replaced it with a housing bubble. When the housing bubble popped, they replaced it with a government bubble. The greater problem is that while we at least have something to show for the first two bubbles, a few good Internet companies and some pretty nice McMansions, no such benefits will remain when the government bubble pops. Peter Schiff
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| Felix de la Cova: The real cost of not owning gold Posted: 08 Jun 2012 02:51 PM PDT 10:46a HKT Saturday, June 9, 2012 Dear Friend of GATA and Gold: Writing for GoldMoney, Felix Moreno de la Cova replies to Bloomberg News' most recent disparagement of investing in gold. De la Cova writes: "When debtors are not to be trusted, there is a big difference between holding an IOU and cash in hand. That is the value of owning gold. When even 'cash' is debt, holding a real asset is immensely superior as a means of protecting your wealth. It is just plain common sense. That this particular asset was officially money a few decades ago is just icing on the cake. "But of course those issuing the debt, and their hired propagandists, will tell a different story. They might even try to convince you that if you really, really want to buy gold you should consider buying this shiny new improved 'paper gold,' which is just as good as the real stuff. Fool me once. ..." De la Cova's commentary is headlined "The Real Cost of Not Owning Gold" and it's posted at GoldMoney here: http://www.goldmoney.com/gold-research/felix-moreno-de-la-cova/the-real-... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Platinum (TSXV:NKL) Announces Encouraging Rhodium, Ruthenium, Osmium, Company Press Release VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL; OTC-QX: PNIKF; Frankfurt: P94P) is pleased to provide results of full spectrum 6E (Platinum, Palladian, Rhodium, Ruthenium, Osmium, and Iridium) analysis of platinum group elements on the first batch of samples from the company's wholly-owned Wellgreen PGM-Ni-Cu project in the Yukon Territory, Canada. The company enlisted Activation Laboratories (Actlabs) of Ancaster, Ontario, to conduct a full-spectrum 6E analysis of samples taken from the 2011 drill hole WS11-188. Adding Rh, Ru, Os, and Ir to Pt and Pd increased the total PGE content (6E) by an average of 28 percent, based on a population of 90 samples, most of which are from disseminated sulphide-type mineralization. Assay results with 6E exceeding 0.50 ppm (0.5 g/t) (excluding copper and gold assays) are tabulated at Prophecy's Internet site and are available with assay results from the entire batch of 90 samples here: http://prophecyplat.com/news_2012_may25_prophecy_platinum_announces_rare... Join GATA here: Standard Chartered's Earth Resources Conference Hong Kong Gold Investment Forum Toronto Resource Investment Conference New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf
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| By the Numbers for the Week Ending June 8 Posted: 08 Jun 2012 02:51 PM PDT This week's closing table is just below.
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| Brodsky and Quaintance: Solution is asset monetization, starting with gold revaluation Posted: 08 Jun 2012 01:56 PM PDT 9:55a HKT Saturday, June 9, 2012 Dear Friend of GATA and Gold: In an outline posted Friday at Zero Hedge, fund managers Lee Quaintance and Paul Brodsky make the case for resolving the world debt crisis with an asset monetization and revaluation based on the upward revaluation of gold by 800 to 1,000 percent, creating lots of money with which government debt could be liquidated and bringing hopeless mortgages and the banks that issued them back to solvency: http://www.zerohedge.com/news/brodsky-gold-monetization-and-big-reset The Quaintance and Brodsky outline draws on the paper they published last month and allowed GATA to bring to you here, headlined "Brodsky and Quaintance: Central Banks Aim to Redistribute Gold and Push It Way Up": http://www.gata.org/node/11373 Their thinking closely resembles that of the Scottish economist Peter Millar, whose May 2006 study, "The Relevance and Importance of Gold in the World Monetary System," also brought to you by GATA with the author's kind permission, argued that an upward revaluation of from seven to 20 times would be necessary for central banks to avert debt deflation: Wild as the numbers might seem at first, the current world financial situation is wild too, and the upward revaluation of gold by governments from time to time as they try to escape the consequences of their economic mismanagement and political venality is simply a fact of history, even if it cannot be acknowledged and discussed by many supposed gold market analysts. CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Platinum (TSXV:NKL) Announces Encouraging Rhodium, Ruthenium, Osmium, Company Press Release VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL; OTC-QX: PNIKF; Frankfurt: P94P) is pleased to provide results of full spectrum 6E (Platinum, Palladian, Rhodium, Ruthenium, Osmium, and Iridium) analysis of platinum group elements on the first batch of samples from the company's wholly-owned Wellgreen PGM-Ni-Cu project in the Yukon Territory, Canada. The company enlisted Activation Laboratories (Actlabs) of Ancaster, Ontario, to conduct a full-spectrum 6E analysis of samples taken from the 2011 drill hole WS11-188. Adding Rh, Ru, Os, and Ir to Pt and Pd increased the total PGE content (6E) by an average of 28 percent, based on a population of 90 samples, most of which are from disseminated sulphide-type mineralization. Assay results with 6E exceeding 0.50 ppm (0.5 g/t) (excluding copper and gold assays) are tabulated at Prophecy's Internet site and are available with assay results from the entire batch of 90 samples here: http://prophecyplat.com/news_2012_may25_prophecy_platinum_announces_rare... Join GATA here: Standard Chartered's Earth Resources Conference Hong Kong Gold Investment Forum Toronto Resource Investment Conference New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf
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| Continuation. . .The most important gold market event since 1999 Posted: 08 Jun 2012 01:33 PM PDT London Trader – Staggering 515 tons of gold sold in 4 hours "With many global investors still rattled by the recent price action in gold and silver, today King World News interviewed the 'London Trader' to get his take on these markets. The source told KWN that not only was a shocking amount of paper gold sold in just 4 hours yesterday, but it was also confirmed that the mainstream media is not reporting the staggering amount of physical gold that has actually been purchased by China recently. Here is what the source had to say: 'China has purchased hundreds of tons of gold in the last couple of months. China is not disclosing what their true reserves are. Russia is delaying disclosure and so is Iran. We saw record gold imports of over 100 tons through Hong Kong to China in April, as reported by the mainstream media, but what has been reported is just the tip of the iceberg.'" The London Trader continues: "What we've seen is a dramatic acceleration of physical gold purchases as the price has been drawn down. Staggering amounts of physical gold are being purchased. The acceleration of physical purchases, at these lower levels, is the reason why gold has been holding firm and building such a nice base. I want to be very clear about this, in addition to what is being reported by the mainstream media, we have seen hundreds of tons of additional physical gold being purchased by China over the last three months…." MK comment: In the end, after all the paper trades dissolve into a puddle like the Wicked Witch of the East, someone will have to deliver the physical metal, and that someone will have to go somewhere to buy it. Those sources — despite coercion, political pressure and fast-talking sales representations — are drying up. Therein lies the gold market's deep, darkest and most essential secret. . . . . And, if it might interest you, the most basic reason why this bull market is far from over.
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| Presenting the CBO’s ‘Long-Term Outlook’ infographic Posted: 08 Jun 2012 01:30 PM PDT by Simon Black, Sovereign Man :
In political circles, the CBO is considered an honest broker… an objective referee that simply presents the facts without taking a position on the numbers. As such, it's usually interesting when the CBO publishes something new about the macro situation of the world's largest economy. Today they've released an infographic showing America's debt to GDP ratio over the last 100-years, through World War I, the Great Depression, World War II, the Nixon Gold shock, and the Global Financial Crisis.
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| 'Staggering' amount of gold bought during takedown, London trader tells KWN Posted: 08 Jun 2012 01:11 PM PDT 9a HKT Saturday, June 9, 2012 Dear Friend of GATA and Gold: The London trader source of King World News, who is well known to GATA, explains in an interview today how the Federal Reserve's bullion bank agents rig the gold market to profit from both rises and declines. But the trader also reports that "staggering" amounts of real gold and silver were purchased by Eastern powers during this week's price takedown and that those powers are not promptly reporting those purchases officially. The interview with the London trader is headlined "London Trader: Staggering 515 Tons of Gold Sold in 4 Hours" and it's posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/6/8_Lon... Also at the King World News blog, futures market analyst Dan Norcini describes the danger facing the whole world's economy: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/6/8_Nor... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Platinum (TSXV:NKL) Announces Encouraging Rhodium, Ruthenium, Osmium, Company Press Release VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL; OTC-QX: PNIKF; Frankfurt: P94P) is pleased to provide results of full spectrum 6E (Platinum, Palladian, Rhodium, Ruthenium, Osmium, and Iridium) analysis of platinum group elements on the first batch of samples from the company's wholly-owned Wellgreen PGM-Ni-Cu project in the Yukon Territory, Canada. The company enlisted Activation Laboratories (Actlabs) of Ancaster, Ontario, to conduct a full-spectrum 6E analysis of samples taken from the 2011 drill hole WS11-188. Adding Rh, Ru, Os, and Ir to Pt and Pd increased the total PGE content (6E) by an average of 28 percent, based on a population of 90 samples, most of which are from disseminated sulphide-type mineralization. Assay results with 6E exceeding 0.50 ppm (0.5 g/t) (excluding copper and gold assays) are tabulated at Prophecy's Internet site and are available with assay results from the entire batch of 90 samples here: http://prophecyplat.com/news_2012_may25_prophecy_platinum_announces_rare... Join GATA here: Standard Chartered's Earth Resources Conference Hong Kong Gold Investment Forum Toronto Resource Investment Conference New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf
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| Posted: 08 Jun 2012 01:00 PM PDT by Bill Bonner, Whiskey and Gunpowder:
"Student loans," said our new friend, Barry Dyke. From the far north…well, from New Hampshire…Barry has been following the money. And he sees a lot of it going to the education. Why? "It worked just like subprime," he explained. The feds bankrolled it. Guaranteed it. Regulated it. And conveniently didn't notice as it got to monstrous proportions… And then, when it blows up…they'll be there again, pointing fingers and promising to "regulate" more heavily. Read More @ WhiskeyAndGunpowder.com
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| The Gold Price Closed Down for the Week at COMEX $1,590.10 Posted: 08 Jun 2012 12:57 PM PDT Gold Price Close Today : 1,590.10 Gold Price Close 1-June : 1,620.50 Change : -30.40 or -1.88% Silver Price Close Today : 2847 Silver Price Close 1-June : 2849 Change : -2 or 0.07% Gold Silver Ratio Today : 55.85 Gold Silver Ratio 1-June : 56.88 Change : 1.03 or 1.81% Franklin did not publish commentary today. He will return Monday. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com 1-888-218-9226 10:00am-5:00pm CST, Monday-Friday © 2012, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. No, I don't. 
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| D-Day, Dick Winters and the boys from Easy Company Posted: 08 Jun 2012 11:30 AM PDT by David Schectman, MilesFranklin.com:
There is no other possibility. Who could be so stupid as to think it would be announced today? Are you angry because gold was smacked down today? Don't be. Read Sinclair's quote, above and just chill out. By the end of the month, gold will reflect a different (QE3) reality. If you are interested in WHY gold was trashed today, be sure and read Bill Holter's comments. Bill is a very bright and insightful guy! His comments are always at or near the top of the articles I present to you in this daily. Today is no exception!
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| Byron King: Companies Must Pay Dividends to Make Top-10 Gold List Posted: 08 Jun 2012 11:27 AM PDT The Gold Report: Among the 14 investments in your Outstanding Investments portfolio of precious metals companies and funds, there are 10 companies and 4 funds. All 10 companies have market caps above $1 billion. How did you select them? Byron King: Let me answer the question by referring to something that Chuck Noll said when he coached the Pittsburgh Steelers in the 1970s. Every year, during the National Football League draft, people would ask him what position he was going to draft for. Noll's answer was that he didn't draft for position; he looked for the best all-around player. I do the same for the Outstanding Investments list. I don't pick a particular type of play or method of operations. I look for the best particular company in any given month when I'm making a recommendation. I want a company with long-term potential and portfolio staying power. TGR: Is it important that all of those companies pay a dividend? BK: It is. I want paying the shareholders to be part of mana...
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| Kentucky doctor, coin dealer locked in legal battle Posted: 08 Jun 2012 11:00 AM PDT [Ed. Note: Another story that illustrates why we strongly encourage physical 'bullion' coin and bar Ag purchases over spending multiples of silver's melt value on costly numismatics.] by Brett Barrouquere, AP via Bloomberg Business Week:
Dr. Christopher Babcock paid more than $500,000 for what he thought were rare gold and silver coins a dozen times from a dealer in New Jersey. Babcock, an oral surgeon in Louisville, thought the coins were not the quality advertised and demanded his money back from by Anthony's, an online rare coin dealer in Englewood Cliffs, N.J. Anthony's sued Babcock in New Jersey and Babcock filed suit Wednesday in Louisville. The lawsuits contain allegations of "bait and switch" sales techniques and fraud. "Disputes of this kind are not infrequent," said Dave Harper, editor of the coin collecting newsletter, the Numismatic News in Iola, Wis.
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| Posted: 08 Jun 2012 10:30 AM PDT by Eric Sprott & David Baker, Sprott:
1) The Chinese gold imports from Hong Kong in April, 2012 surged almost 1300% on a YoY basis. Total gross imports for the month of April were 103.6 tonnes and the net imports were 66.3 tonnes1. It is not the data for April alone which has caught our eye. There has been a stunning increase of gold imports through Hong Kong for export into China over the past 2 years. Between May 2010 and April 2011, China imported a net 66 tonnes of physical gold through Hong Kong. Between May 2011 and April 2012, that number jumped to 489 tonnes. This represents an increase of 640%.
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| There Is No Gold Bubble...And Here's Proof Posted: 08 Jun 2012 10:12 AM PDT ONLY in America!How can there be a "bubble" in Gold when not one person on the street when offered a solid Gold coin for $25 cash accepts the opportunity? These people do not have any concept of the value of Gold. Shocking, or sad? Selling 1 Oz Gold Coin for $25 (when it's worth over $1,500)Published on May 29, 2012 by MarkDice Mark Dice tries to sell a 1 ounce solid gold coin for $25 outside of a coin shop in San Diego, CA. HINT- It's worth WAY more than $25, but does anyone want it? 
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| Eric Sprott: THE SILVER CARTELS HAVE CHANGED THEIR M.O. Posted: 08 Jun 2012 09:48 AM PDT from Silver Doctors:
This is a portion of Eric's thoughts regarding Thursday's smash in the metals and the crisis in Spain coming to a head. When asked whether Thursday's gold and silver raid coinciding with Bernanke's testimony to Congress felt like Deja-Vu to the Leap Day Massacre Eric responded: It might be that the silver cartels have changed their MO. The MO used to be that whenever the jobs number came out they'd go to work, which let them take a shot at the markets once a month.
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| Posted: 08 Jun 2012 09:39 AM PDT June 8, 2012 [LIST] [*]A precious metals record set this week... an "official leak" from China's central bank... and other gold nuggets from around the globe [*]Gold and the dollar suddenly moving in tandem: Abe Cofnas spies a trading opportunity [*]A Bernanke bummer for the market? How "tough new rules" will play to the advantage of too-big-to-fails [*]Readers weigh in on decelerating "progress"... A warning that your house might be up for auction even if you own it free and clear... and more! [/LIST] Gold hit a record this week... priced in Indian rupees, that is. And demand is still off the charts, as we begin some virtual globe-trotting this morning. "Despite higher prices in the last four days," writes Shivom Seth at Mineweb, "gold counters especially in south India reported an estimated 20-25% jump in sales." People in the world's largest gold-buying nation have become skittish about stocks; the benchmark Sensex index is down 20% in the last 18 months — with...
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| Praying for Stimulus to Save the Economy Posted: 08 Jun 2012 09:31 AM PDT Bill Bonner View the original article. June 08, 2012 08:12 AM Q…E… Waitin' for ya Prayin' for ya Not much follow through in the stock market yesterday. The Dow was up…but only 46 points. Meanwhile, gold fell $46. We long for clarity. For a day of reckoning. But it seems far in the future. Yesterday, the world waited for Mr. Bernanke to reveal his intentions. Instead, he said he was keeping his options open. That was good enough to keep some steam in the stock market. But not enough to keep gold going up. Both gold bugs and stock market bulls are counting on the Fed to come through. And it probably will. We saw yesterday how the 1% got to be so rich. The feds — aided and abetted by consumers and the financial industry — bubbled up the amount of cash and credit in the US by 50 times in the last 50 years. "That explosion of credit changed the world," writes Richard Duncan in his new book, The New Depression. Yep…for one thing it made the rich richer. That ...
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| Posted: 08 Jun 2012 09:11 AM PDT The dollar has progressed to new highs for the move, as the sovereign debt crisis resumes. The short squeeze on the DX, which is one of the features of a post-bubble contraction, continues. We had thought that the action would ... Read More...
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| Guest Post: The Trouble with Rand Paul Posted: 08 Jun 2012 08:49 AM PDT Submitted by John Aziz of Azizonomics, Rand Paul just endorsed a man who is deeply hostile to human liberty. Perhaps that's Rand's idea of playing politics? Come to the table, strike a deal, get what you can. Trouble is, it's tough striking a good deal when the guy on the other side of the table believes that the government should be allowed to claim — without having to produce any evidence whatsoever — that certain people are terrorists, and therefore should be detained indefinitely without any kind of due process. That's textbook tyranny.
Except, if the government had any evidence they were really members of al-Qaeda and engaged in a war against America they could be charged with offenses under current laws and tried in front of a jury of their peers. As was proven when Judge Katherine Forrest struck down the indefinite detention provision of the NDAA as unconstitutional, the real detention targets are people like the ones who brought the case — writers, investigative journalist and whistleblowers: people like Chris Hedges, Noam Chomsky, Daniel Ellsberg, Jennifer Bolen, and Birgitta Jonsdottir. Rand Paul might have done some good work trying to filibuster the Patriot Act, but endorsing Mitt Romney goes beyond the pale. The NDAA is Romney's most egregious transgression against liberty, but not far behind are his desire to start a war against Iran, to increase military spending, to start a trade war with China and his belief that corporations are people. I know I will never agree with any politician on every single dimension of every single issue, and that to some extent politics will always involve compromise. Certainly, I disagree with Ron Paul on some issues. But Mitt Romney's stances on these issues seem much, much, much closer to Barack Obama than they do to Ron Paul. In fact, he might as well have endorsed Obama for President. And the Ron Paul supporters are noticing: Rand has probably burnt most bridges to his Father's supporters now. His Facebook page has seen a huge outpouring of fury:
Did George Washington, Thomas Jefferson and James Madison try to compromise with King George? Or — when it became obvious that they were facing tyranny — did they stand up for the principles of liberty? I have always been uncomfortable with the children of politicians becoming politicians. Every anointed child feels like a step away from meritocracy. Dynasties are dangerous, because the dynasty itself comes to be more important than the qualities of the politicians. Who would Rand Paul be if he wasn't Ron Paul's son? Just another neocon. Neocons often have a few "unfashionable" libertarian or constitutionalist sympathies; look at Charles Krauthammer. But — unlike Ron Paul — the neocon never has the spine to do much about their libertarian or constitutionalist sympathies. They just ride on the establishment steamroller, into foreign occupations, empire building, corporate welfare, and banking bailouts. Into Iraq, and soon into Iran. Rand Paul just got on the steamroller.
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| Stocks Have Biggest Week Of The Year On Lowest Volume Posted: 08 Jun 2012 08:28 AM PDT The S&P 500 gained over 3.5% this week (with a dip-and-rip today on dismal volume). This is the best week of the year amid the lowest volume of the year (ex-holiday weeks). Gold, Stocks, Treasury yields, and the USD all recoupled from last Friday's decoupling and limped higher, ending at the top of the day's range today. Financials and Tech outperformed - up over 1.1% - with the majors best as financials won on the week +4.8%. Treasuries close to close were dull but intraday saw rather notable vol as 30Y yields dropped over 10bps before round-tripping back to its high yields of the day. All-in-all, broad risk assets did leak higher today but nothing like as exuberantly as stocks which was somewhat surprising into a weekend likely full of equity dilution for Spanish banks (and more burden for Spain) - or none at all. The USD rallied into the European close and sold off after for the fifth day in a row. HYG outran stocks on the day and maintained the bid (ES closed at overnight highs) but IG and HY credit lagged on the day - though are al better on the week. Cross asset-class correlations dropped notably into the close, as implied correlation dropped and VIX was very stable given the rally into the close, holding above 21% - even as S&P 500 e-mini futures ended the day more than 2 sigma above VWAP (as we suspect futures roll effects kept some out into the weekend). Lastly, this push higher today in stocks saw a major drop in average trade size - certainly not offering the kind of follow through to yesterday's (or the week's) gains that one would expect on a new bull leg. Today saw ES retrace perfectly 38.2% of its last few day's rally only to bounce and push back to close at those highs...
S&P 500 rose over 3.5% on the week, best week in six months, as volume lagged dramatically...
led by financials best week in 3 months...
But Stocks, Bonds, USD, and Gold all resynced from last week's decoupling and limped along together...
As the S&P 500 e-mini futures closed at overnight highs and rather surprisingly around 2 sigma (light blue) above VWAP (red) with a late-day shift in peak volume (the dark blue line) suggesting we had auctioned up to retest those levels as we note some bigger blocks going through at the close...
For the fifth day in a row, the dollar strengthened into the European close and then faded after...
Charts: Bloomberg
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| Gold and Silver Disaggregated COT Report (DCOT) for June 8 Posted: 08 Jun 2012 08:21 AM PDT HOUSTON -- This week's Commodity Futures Trading Commission (CFTC) disaggregated commitments of traders (DCOT) report was released at 15:30 ET Friday. Our recap of the changes in weekly positioning by the disaggregated trader classes, as compiled by the CFTC, is just below. (DCOT Table for Friday, June 8, 2012, for data as of the close on Tuesday, June 5. Source CFTC for COT data, Cash Market for gold and silver.) In the DCOT table above a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting "longer" and red figures are traders getting less long or shorter. All of the trader's positions are calculated net of spreading contracts as of the Tuesday disaggregated COT report. We are targeting the middle of the month or shortly before then for the next full Vulture Bargain Roundup update, to be produced in a new, easier to view format.
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| Peter Schiff - World is Headed Off the Edge of the Fiscal Cliff Posted: 08 Jun 2012 08:20 AM PDT  With gold rallying $30 off the lows and global stock markets mixed, today King World News interviewed Peter Schiff, CEO of Europacific Capital, to get his thoughts on what lies ahead. Schiff told KWN when the Fed will come in with QE3, but first, here is what Schiff had to say about the action in the gold market: "People jumped on the fact that Ben Bernanke didn't come out and say we're doing QE3 right away, as a reason to sell gold. But if you believed that QE3 was coming before he spoke yesterday, he said nothing during that testimony that would alter what you believe."
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| Gold Seeker Weekly Wrap-Up: Gold and Silver End Mixed on the Week Posted: 08 Jun 2012 08:19 AM PDT Gold continued yesterday's dive and fell another $34.70 to as low as $1556.90 in early Asian trade, but it then climbed its way back higher for most of the rest of the day and ended with a gain of 0.19%. Silver slipped to as low as $27.948 by a little after 4AM EST before it also rallied back higher in London and New York and ended unchanged on the day.
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| Gold Daily and Silver Weekly Charts - Monkey Shines Posted: 08 Jun 2012 08:10 AM PDT |
| Yesterday's Gold/Silver Prices - Sign of Times Posted: 08 Jun 2012 07:38 AM PDT Why Read: It is very important to think about financial market psychology, trading patterns, and risk in these volatile and uncertain times. Read More...
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| COT Gold, Silver and US Dollar Index Report - June 8, 2012 Posted: 08 Jun 2012 07:33 AM PDT COT Gold, Silver and US Dollar Index Report - June 8, 2012
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| As India's Richest Ranks Swell, Many Head For Gold Posted: 08 Jun 2012 07:18 AM PDT "It was either all Ben Bernanke's fault...or 'da boyz' used his speech as fig leaf to beat the living snot out of the gold, silver and platinum prices." ...
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| Posted: 08 Jun 2012 07:17 AM PDT Adam Hamilton June 8, 2012 2811 Words After a shocking upset in Greece’s parliamentary elections, the US dollar surged dramatically. Soaring 5.4% in May alone, the world’s reserve currency won legions of fans among traders. “King Dollar” was universally lauded, with everyone jumping on the strong-dollar bandwagon. But this dazzling strength was merely a short-term phenomenon. Zoom out a little, and today’s “strong dollar” is a fallacy. Perspective is everything in the markets. Attaining it is challenging and takes a lot of effort, but the fruits are well worth the toil. We humans naturally tend to extrapolate the present and very recent past out into infinity, expecting short-term situa...
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When you hear two politicians in the US going toe to toe arguing about public finances (i.e. money that isn't theirs), they'll often cite numbers published by the Congressional Budget Office (CBO).
What's the next industry to bubble up…pop…and collapse?
QE to infinity here and in Euroland is as sure as death and taxes. Denials are also as sure as death and taxes before it occurs.
There have been key developments in the physical gold market over the last few weeks which we feel are worth highlighting:
The Doc sat down with Sprott Asset Management's Eric Sprott this weekend to discuss the European debt contagion, the latest gold and silver massacre, the massive rush into physical metals, and his outlook on gold and silver for the rest of 2012 and beyond.
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