Gold World News Flash |
- CNBC Asia posts video of interview with GATA secretary
- Gold to Face the Music Soon
- Gold, Dow and Oil All Plunge On Economic Weakness – Is Gold Still A Safe Haven?
- Gold’s Volatility Signals Big Move Ahead; Tuesday Best Day To Buy Gold & Silver
- Silver Update 6/21/12 Silver Message
- Stuff My Co-Workers Have Said
- MUST READ: Echoes of Watergate Reverberate Around Obama's “Executive Privilege”
- This is Not Rocket Science
- Turk, von Greyerz tell King World News about rising fear in markets
- The Continuing Mystery of the U.S. Treasuries Market
- Greyerz – We Are Headed For Panic As Global Markets Tumble
- Blythe Master’s Next Move – Silver Leads Again
- The Waiting Is The Hardest Part
- Medicaid on brink of financial collapse in Illinois and other states
- Gold Price Lost $50.30 to Close Comex $1,564.50 Swap Gold for Silver Now
- Was BlackRock's Permabull Bob Doll Fired For Stealing Financial Models?
- Summer Lows At Hand?
- “You Can Lose Freedom Only Once”
- Surviving The Apocalypse... In A Lifeboat
- Q & a
- Stocks fall sharply on global growth fears
- Gold, Crude Oil And The CRB Index Approaching Final Bottom
- Oil and the CRB Approaching a Final Bottom
- Secret Treaty Threatens Your Wealth
- Greyerz - We Are Headed For Panic As Global Markets Tumble
- Gold Seeker Closing Report: Gold and Silver Fall Over 2% and 4%
- Gold Daily and Silver Weekly Charts - Goldman Says 'Sell' And So They Do
- Power to China in the I.M.F. – Does this mean Gold to be Mobilized?
- What Does Microsoft's New Tablet Mean for Investors?
- Gold Bulls React to FOMC Statement after Overnight Reflections
| CNBC Asia posts video of interview with GATA secretary Posted: 21 Jun 2012 05:25 PM PDT 1:20p HKT Friday, June 22, 2012 Dear Friend of GATA and Gold: Your secretary/treasurer was interviewed for five minutes this morning on CNBC Asia in Hong Kong by news anchor Bernie Lo. Video of the interview has been posted at the CNBC Asia archive here: http://video.cnbc.com/gallery/?video=3000097894&lay=1 CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment: Company Press Release VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory. The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57. The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows: Payback period: 3.55 years Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics." For the complete press release, please visit: http://prophecyplat.com/news_2012_june18_prophecy_platinum_announces_res... 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: 21 Jun 2012 04:01 PM PDT courtesy of DailyFX.com June 21, 2012 03:30 PM Weekly Bars Prepared by Jamie Saettele, CMT No change…I’m looking lower. “The latest move off of the high is impulsive (5 waves) which favors lower prices from the current level to at least Friday’s low at 1553. The bearish RSI reversal signal that was in place for gold last week is now in place for USD crosses.” The mentioned 5 wave decline was succeeded by a 3 wave advance into former congestion (resistance). Look lower as long as price is below 1641. A break of the December low could result in an historic collapse. LEVELS: 1500 1522 1553 1589 1615 1641...
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| Gold, Dow and Oil All Plunge On Economic Weakness – Is Gold Still A Safe Haven? Posted: 21 Jun 2012 03:39 PM PDT The combination of increasingly ominous economic reports along with the Fed's failure to announce bold new monetary initiatives resulted in a brutal reassessment of risk by investors. Stock, commodity and precious metal markets all plunged with the Dow down 250 points, gold down by $41.60 per ounce to $1,566 and silver off by 4.4% to [...]
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| Gold’s Volatility Signals Big Move Ahead; Tuesday Best Day To Buy Gold & Silver Posted: 21 Jun 2012 03:15 PM PDT By Drew Voros, Chairman, Casey Research:
Hard Assets Investor: Earlier in the year, you wrote an interesting piece about gold's volatility called "The Face of Volatility." We are certainly seeing volatility now. How would you characterize what's happening? Jeff Clark: Yes, are we seeing higher volatility right now, but the big volatility in the past occurred near the end of the bull market, during the actual mania. And obviously we're not in a mania now. What I think the current volatility could mean, however, is that something big is about to happen. When volatility ratchets up, that usually means you're on the precipice of a big move one way or the other. Naturally, given my view of the importance of holding gold at this point in time, I think that big move is going to be higher. But the volatility we have, while it is above what the average has been since 2001, doesn't signal anything else at this point.
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| Silver Update 6/21/12 Silver Message Posted: 21 Jun 2012 03:00 PM PDT |
| Posted: 21 Jun 2012 02:55 PM PDT Draw a Wall Street paycheck long enough and you will work with an amazing spectrum of personalities. Today's note from Nic Colas (of ConvergEx) is an homage to his past coworkers in the form of some offbeat comments that have stuck in his memory over the past 25 years on the Street (and will ring true to anyone who has spent more than a day on a trading floor). On the psychology of money management: "Last year we made $360 million and lost $330 million." On the importance of language in positioning an investment story: "The company's revenues aren't unpredictable; they are just chunky." And our favorite, from long ago: "Who cares if most money managers underperform. They all seem to have big houses and pretty wives." No, not all these quotes are exactly "Politically correct", but they all represent some useful truths about investing and capital markets. Via Nic Colas Of ConvergEx, Over the years I have worked at six firms on Wall Street, doing everything from mail-room duty to mutual fund phone rep to stock analyst and portfolio manager. What sticks in my mind about each assignment is not so much the work involved as the people I have met along the way. To put a little structure around this topic, consider the following thought. If there is a movie genre that most closely replicates life on the Street, I would argue that it is the prison flick. There are set personality types in both, such as the bully, the snitch, and the "Guy just trying to do his time." In my experience, you learn more from your co-workers (or cellmates, if you prefer) about life on the inside than any other source of information. So today I offer up a few of the most memorable pieces of wisdom given to me over the years. "Last year we made $360 million in profits, and lost $330 million." At one hedge fund where I was employed about a decade ago, there was an annual ritual in "The Room" which involved standing up in front of your co-workers and discussing what you had made in your portfolio the prior year and what you were promising to generate in the following period. The most volatile team of traders – a two man operation with regular multi-million dollar intraday swings in profits – led off the discussion. They broke down their gain in the prior year of $30 million into their winning days and their losing days: $360 million versus $330 million. It was as neat a description of the emotional rollercoaster of investing as I have ever heard. On winning days, you feel like a champ. On losing ones, not so much. "Who cares if most money managers underperform. They all seem to have big houses and pretty wives." One of my business school classmates, an especially well-grounded fellow from the right side of the tracks in Memphis, came up with this gem. This was over two decades ago, so the sentiment is a touch sexist, to be sure. But it does point to one subtle but critical fact: investors just want to make a decent return. If a portfolio manager mildly underperforms in a rising market, he or she is unlikely to lose a lot of assets. Such was the case for active managers of equity portfolios from the 1980s to the early 2000s, for example. And such is the still the rule for fixed income managers. The bottom line is that investors ultimately care about real returns as much as relative ones. Deliver decent real returns and most people will not ask if it was the market or your prowess. "The company's revenues aren't unpredictable; they are just chunky." With all the focus on what makes for a successful initial public offering lately, I remembered some of the lessons I learned helping out on equity capital market transactions as a sell-side analyst in the 1990s. For every hour spent actually pitching an issuer to use your firm for their IPO or secondary offering, about 20 hours of time go into creating the "Pitchbook." Every word is scrutinized for its ability to put the issuing company in its most positive light. Even the "Investment Concerns" section has to be rah-rah positive. So when one highly experienced capital markets officer reviewed a pitchbook with the word "Unpredictable" listed as "Potential Investor Concern #1" he quickly replaced it with "Chunky." When I asked him why, his explanation was, "Chunky, Nicky…. Like peanut butter. Everyone like peanut butter. No one likes anything unpredictable." "I am not saying ball bearings can cure cancer. I am saying 'What if' they could." On the same topic of selling IPOs and secondaries, one bit of the process that gets short shrift is the role of the equity salesperson. It is they who call their money management clients with the pitch, tailoring the given company's story so that it appeals to as many potential buyers as possible. Valuation is always a struggle – not just in high flying social networking IPOS. Portfolio managers always want the stock cheaper. Good salespeople become adept at finding as many potential levers of earnings growth to counter the objections of the potential buyer of the stock. One especially talented salesman explained his rap with this only-slightly exaggerated example:
"He bought the first hundred poorly." Back to the hedge fund gig for the last two quotes. We used to get Excel spreadsheet printouts of every trader's pad (their portfolio) left on our chairs in the evening. These lists included the positions of the owner/founder of the firm, one of the most talented (and now wealthiest) traders on Wall Street. One day I noticed that he was long 1 million shares of a large telecomm company. Now, this was during the tech bubble of the late 1990s and this stock was going nowhere fast. Why would a highly skilled hedge fund manager be long 1 million shares of a stock that doesn't move? I asked this question out loud, and the trader next to me mumbled, "He bought the first hundred poorly." Lesson #1 in trading is to never, ever double down. Buy something stupidly, and the right answer is to ditch it. Never add. Our boss had gotten to a level where he could break that rule. The position turned positive the next day, and he sold. But it was very much a case study in "Don't try this at home, kids." "I will make it all back." Every trading room has its flamboyant tough guy. Ours traded cyclical stocks, and he was famous for having been "Put on the beach" early in his career for losing too much money in one week. He took the leave, got his head straight, and returned a stronger trader for it. But one day after I had arrived, he got caught out overnight and the pre-open reports had him down $1 million on a $20 million portfolio. Our founder walked into the room, took one look at the sheets, and said to the tough guy – "Hey! Are you down $1 million? Do you want to go back on the beach?!" Much razzing ensued, which infuriated the tough guy trader. He responded, "I am going to make it all back. Every penny. Today. And then you will apologize to me." OK – his language was much, much cruder. But you get the idea. No one did a stitch of work that day. We all watched the tough guy trader's pad, tick by tick. At 4:01pm he was up something like $50,000 versus the initial $1 million losing start to the day. Huge standing ovation from the room for his performance. Even the founder joined in. The lesson here was a visible display of the old adage that "If you think you can do something, or if you think you can't, you are probably right." The point is he tried, he believed, and he succeeded. And of all the lessons in this brief note, I try to keep that one the closest.
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| MUST READ: Echoes of Watergate Reverberate Around Obama's “Executive Privilege” Posted: 21 Jun 2012 02:54 PM PDT [Ed. Note: We would like to make clear that despite posting LaRouchePac information, we in no way wholly endorse all of LaRouche's positions, or the 'Democrat' hat he has been known to wear. But the clarity and candor with which he speaks about the collapse in which we find ourselves, makes his material always worth a listen, or in this case, a read.] Note: Lyndon LaRouche said today that he is optimistic that something will happen soon which will result in Obama being removed from office. He said the situation is out of control. It can happen and it most likely is going to happen. Obama and Holder have put themselves in a Nixon-like bind. It is here and it is coming. Get ready! It is going to take off. They can't get around it. They are caught in a trap of their own making. They can't get out of this. Something is going to happen very soon and it is not going to be pretty. There is no peaceful resolution. Obama is a dangerous idiot. He is dangerous to himself and to everyone else. He should never have been made President. from LaRouche Pac:
The attempts yesterday by the Obama Administration to evoke "executive privilege" in the case surrounding Operation Fast and Furious is now being identified by numerous news agencies as being Obama's "Nixonian Mistake" which could turn the Fast & Furious scandal into "President Obama's Watergate", and have raised questions such as "what did the president know and when did he know it?". What is Obama trying to cover up? Could this topple the President? The Telegraph ran an article today, June 21, titled "The Fast and Furious scandal is turning into President Obama's Watergate" by Tim Stanley. The article in part reads:
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| Posted: 21 Jun 2012 02:23 PM PDT Today's severe decline in Gold, Silver and the XAU came at a critical time when their respective positive daily trends were attempting a transition to a positive weekly basis, as noted below. Regrettably, it failed and now all major time frame trends in all these markets continue to be negative. The reason is quite simple. The higher and more powerful forces of the negative weekly and monthly TDI trends are still in effect. This was previously outlined in "Trend Forces in Collision" here. In addition, the speedometer index for the XAU ran to 97 MPH (0-100 parameters) before turning down and the USD[COLOR=#e06666] is showing signs of emerging from its down trend.[/COLOR] [CENTER]In Summary [/CENTER] The daily positive trend from 5/26 was certainly nice but has now ended. No real significant advance will occur without a positive posture in the daily, then weekly time frames. We also await confirmation that the 5/17 lows are valid. Without that confirmation and without positive t...
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| Turk, von Greyerz tell King World News about rising fear in markets Posted: 21 Jun 2012 02:20 PM PDT 10:17a HKT Friday, June 22, 2012 Dear Friend of GATA and Gold: Growing fear and possible panic throughout the world financial system are the subjects of King World News' latest interviews with GoldMoney founder and GATA consultant James Turk -- http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/6/21_Tu... -- and gold fund manager Egon von Greyerz: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/6/21_Gr... As gold investors, Turk and von Greyerz themselves don't seem terribly frightened. CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf Join GATA here: Hong Kong Gold Investment Forum Toronto Resource Investment Conference New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment: Company Press Release VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory. The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57. The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows: Payback period: 3.55 years Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics." For the complete press release, please visit: http://prophecyplat.com/news_2012_june18_prophecy_platinum_announces_res...
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| The Continuing Mystery of the U.S. Treasuries Market Posted: 21 Jun 2012 02:10 PM PDT by Jeff Nielson, Bullion Bulls Canada:
Previously, my own writing has focused upon one particular aspect of this absurdity: the highest prices for U.S. Treasuries at a time of maximum supply. This in itself is an absolute financial contradiction. The highest supply in history directly implies the lowest prices in history, for every market in the world – except U.S. Treasuries. But that is merely Act One of this Theater of the Absurd. These maximum prices are occurring at the point in history where the U.S. has never been less solvent. This also directly implies that U.S. Treasuries should be fetching the lowest prices in history – as is occurring with their Deadbeat counterparts in Europe. Read More @ BullionBullsCanada.com
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| Greyerz – We Are Headed For Panic As Global Markets Tumble Posted: 21 Jun 2012 01:56 PM PDT from KingWorldNews:
Von Greyerz continues @ KingWorldNews.com
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| Blythe Master’s Next Move – Silver Leads Again Posted: 21 Jun 2012 01:49 PM PDT from Silver Doctors:
We shall see how the managed money responds over the next few days and if they think a bottom is in and they feel lucky. Either way, they get killed one way or the other as this is nothing but a bear trap being set in the darkness of the COMEX wilderness for unsuspecting money managers who have a quick hand on the till and tight stops. We have seen hundreds of articles in the last couple of weeks that the bottom is in for the PMs and they are about to go upward and onward…Not so, I have been telling everyone for months that prices are headed down, down, down. But down is a very good thing for us who are in the physical scene because we can add far more ounces to our stash for the same fiat money number we have sitting on the sidelines.
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| The Waiting Is The Hardest Part Posted: 21 Jun 2012 01:15 PM PDT from TF Metals Report:
So, here we are. It's now June 21 and it's as if June 1 never happened. Do you remember that day? We were all excited. The Gold Cartel had allowed gold to trade past it's 2% daily cap and it climbed almost 4%, or $58, after the extremely lousy (even after the imaginary B/D adjustments) BLSBS data. At the time, it was easy to be excited. Maybe gold was breaking out? Maybe QE3 was right around the corner? Maybe it was simply the long-awaited spec short squeeze that we had discussed here ad nauseam. And now, after squeezing the spec shorts three weeks ago, The Gold Cartel is hustling those same, brainless algos are right back into shed. Two weeks from tomorrow, the next BLSBS report comes out and, barring any unforeseen opportunities before then, the SSS (Spec Short Sheep) will once again be fleeced. Until then, we wait. (The picture in the left was taken on June 1 and it shows an SSS get worked over. The image on the right was taken yesterday and it shows an SLS getting the same treatment.) Read More @ TF Metals Report.com
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| Medicaid on brink of financial collapse in Illinois and other states Posted: 21 Jun 2012 12:45 PM PDT by Jonathan Benson, Natural News:
Representing a whopping 39 percent of the entire state's general budget, Medicaid in Illinois is currently an enormous drain on the system, especially because hospitals and healthcare providers often, greatly over-bill for services and drugs dispensed under the program. This is one of the issues Gov. Quinn hopes to address with his new legislation, as well as issues of eligibility. Gov. Quinn is also cutting various Medicaid programs, which some say will eliminate health insurance coverage for thousands of Illinoisans.
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| Gold Price Lost $50.30 to Close Comex $1,564.50 Swap Gold for Silver Now Posted: 21 Jun 2012 12:33 PM PDT Gold Price Close Today : 1564.50 Change : -50.30 or -3.11% Silver Price Close Today : 2683.30 Change : -155.0 or -5.46% Gold Silver Ratio Today : 58.305 Change : 1.412 or 2.48% Silver Gold Ratio Today : 0.01715 Change : -0.000426 or -2.42% Platinum Price Close Today : 1437.10 Change : -28.20 or -1.92% Palladium Price Close Today : 607.40 Change : -10.95 or -1.77% S&P 500 : 1,325.51 Change : -30.18 or -2.23% Dow In GOLD$ : $166.14 Change : $ 1.98 or 1.21% Dow in GOLD oz : 8.037 Change : 0.096 or 1.21% Dow in SILVER oz : 468.59 Change : 16.75 or 3.71% Dow Industrial : 12,573.57 Change : -250.82 or -1.96% US Dollar Index : 82.32 Change : 0.807 or 0.99% The GOLD PRICE lost $50.30 today to close Comex at $1,564.50. Gold also began sinking at the open and kept it up all day. However, judging from our overloaded phone lines today, gold will find plenty of buyers down here. Gold shattered its uptrend line from the May low. Last low was at 1,556.40 (intraday), so that is a possible stopping point. However, that strong support around $1,526 offers a backstop, too. Break that, and gold is facing $1,475 or $1,450. Brace yourself: MACD points downward. points downward, too. Meanwhile, remember that great Texas oil man, H.L. Hunt, who said, "Never get really elated in victory; when times are tough, never get down." The GOLD PRICE will recover. Be patient, keep your eyes on the horizon, not the rocky path under your feet. The SILVER PRICE lost a meaty 155 cents today to end at 2683.3, a 5.5% loss. Owch. Silver's chart looks pretty much like gold's steadily declining from the open until 1:30, then flattening out. SILVER must now either hold 2625c or fall further, as low as 2250c. I'm inclined simply to shut my mouth and watch until it stops. People call me and, trying to make a decision, ask what I think the market is doing. My best answer is that I've watched lots of investors, and the successful ones don't hesitate. They decide what price they are willing to pay and buy and take the consequences. Several years ago I found some notes from when gold has risen to $340. I was trying to figure out whether it would correct to $320 or $300. Mmmm. Would you buy gold at $340 today? From that perspective, that forty bucks doesn't amount to a hill of beans. Equivalent decline here from $1,600 would take gold to $1,386.70 (no, that is NOT my target, merely a comparison). We're buying silver and gold for the long run, for the BIG rise, and these little fluctuations, painful as they are, pass quickly. GOLD/SILVER RATIO today rose above 58, so if you have been waiting to swap gold for silver, you'd better get cracking. Clearly today knocked all my short-term optimism for the silver and gold on the head, but today's events go way deeper, and in fact strengthen my long term outlook for metals. What happened? Proximate cause for falls of 5.5% in silver, 3.1% in gold, 2.2% in the S&P500, 2% in the Dow, and a 1% rise in the US dollar index was -- an announcement. Moody's rating service downgraded the credit of 15 banks, mostly metastatic ones like Credit Suisse, Morgan Stanley, Goldman Sachs, JP Morgan Chase, and Citigroup. Apparently -- get this, and stop snickering -- nobody out there knew that these big banks were having trouble, so the announcement came as a surprise. Have mercy. Ask yourself: if an announcement of what everybody already knew can roil markets like that, how fragile are they? The latest explanation du jour of market events is the "risk-on, risk-off" trade. Schizophrenic investors one day run to risky investments (stocks, gold) and then, affrighted by the crisis du jour, run back to [what they perceive as] less risky ones, like the US dollar and US treasury debt (I never said this would make sense, only that it's the explanation du jour). Now attempt to unravel with me this knotty skein. Mega banks' credit rating downgraded, megabanks in trouble. Who bailed them out last time? Federal Reserve and US gummit. Who will bail them out this time? Federal Reserve and US gummit, because the banks own the Fed and the gummit. How will the Fed and the USG bail them out? By printing/loaning/ floating more dollars. What will this do to the dollar? Gut its value. Whether this happens sooner or later, 'twill happen. Oh, and add thereto the virtual certainty that as the stock market plunges over the black cliffs of depression, taking the economy with it, the Fed and the US gummit will create even more dollars. Y'all got the picture now? So, let me ask a question: would you -- personally -- rather own green pictures of famous Americans or certificates signed by the US gummit that promise to pay pictures of famous Americans, or would you rather own something real? Beans, goats, a Chevrolet, gold, silver, anything. Or, you could just follow the crowd into its black panic, until the crowd reverses and runs the other way. Moody's announcement came out in the afternoon, but somebody must have known because the dollar started climbing at 8:00 a.m. and never looked back. Time the doors were shut the US dollar index had gained 80.7 basis points (1.04%) to 82.316. Dollar bounced off that 81.16 low clean up to is 20 day moving average (82.31). Looks like a turnaround to the upside to me. 'Twas not a happy day for the yen and euro. Yen gapped down on its way to the ocean floor, jumping over its 50 dma (125.24) to lose 0.94% and end at 124.60c/Y100 (Y80.26/US$1). Euro slammed down through that 126.24 support resistance like it had two anvils tied to its feet, fell clean to the 20 DMA (1.2532), down 1.28%, and closed $1.2543. Most likely this begins another plunge, this one toward $1.2000 or lower. Dow today lost 250.82 or 1.96% and closed at 12,573.57. S&P outdid the Dow by dropping 2.23% (30.18 points) to 1,325.51. S&P500 will only confirm that it has turned down when it closes below 1,305, but today it fell through the neckline of that supposed upside down head and shoulders, which also is support/resistance from the January high. Should the Dow close tomorrow below today's close, it will have duplicated what the S&P500 did today. Possibility exists that stocks will recover and proceed higher, but that's the least likely outcome. 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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| Was BlackRock's Permabull Bob Doll Fired For Stealing Financial Models? Posted: 21 Jun 2012 12:02 PM PDT Two weeks ago, when we remarked with great satisfaction that Wall Street's original pentagram of bull had now been cut to three, with the departure of BlackRock's hypermabull Bob Doll, we had one lingering question: why would a strategist, and not a trader, leave Wall Street in the "prime" of his CNBC prime-time years? After all, it is not like Doll ever was right, or was judged by the quality of his predictions - if that was the case he would have been fired years ago. Basically, there was a big question mark surrounding this departure. Today, we may have gotten our answer: as Reuters reports, it appears Doll may have been dipping into the wrong model. Financial model that is. From Reuters:
While we respect Reuters attempt at political correctness, we are somewhat more blunt when we ask: was Bob Doll "told to quit" after it became clear, from other sources, that he was incapable of even constructing the simplest financial model on his own and had to "borrow" others'? In other words: not only did Doll never have an original idea, he couldn't even come up with his unoriginal ideas on his own. To everyone who has ever worked on the Street, a model, whether an M&A model, financing model, or some other generic form of pro forma excel analysis is the very first thing one learns as a financial analyst. An example of one can be seen below:
The inability to create one demonstrates nothing less than a total inability to tie in the income statement, balance sheet and cash flow statement. In other words - failing both Accounting and Finance 101. Which just happens to describe precisely the "skillset" of your typical broken record permabull. Such as Bob Doll and all the other CNBC regulars. More from Reuters:
Shocker.
Even worse, what it really indicates a laziness bordering on incompetence, and ultimately a complete collapse of faith in the manager, which, if justified can lead to the departure of the individual in question. Just like Doll. What is great however, is that with each and every incident of this kind, main street is exposed to the real "talent" behind Wall Street's glamorous and grossly overpaid facade: a hollow core, where incompetence is masked by big and meaningless words such as "key input factors" and "relative weighting", where failure is rewarded with seven figure bonuses, and where the exposure of the real ugliness beneath it all is either promptly swept under the rug, with the quiet disappearance of the "weakest link" or in the worst case with Hank Paulson going to Congress with a three page termsheet and demanding a blank check for years of piling error upon error, or else guaranteeing the end of the world. And that is really all Wall Street is.
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| Posted: 21 Jun 2012 11:09 AM PDT Aden Article June 21, 2012 By Mary Anne & Pamela Aden Courtesy of www.adenforecast.com In a key turnaround, gold bounced up from its December lows this month on fresh safe haven buying as QE3 possibilities came back to the table. The psychological $1600 level was quickly surpassed. This is essentially the level that will determine if 2012 ends up being the 12th consecutive up year for gold. For now, we are seeing some backing and filling, which isn’t a bad thing... as long as the December lows hold. This is currently a very important juncture for gold, and for silver. HELP ON THE WAY? When Europe or the U.S. looks vulnerable, especially in the jobs area, it quickly fuels emotions. And we all know how Bernanke feels about this... he will save the system at all costs. In fact, all of the monetary policy makers worldwide are being pressured to help the ailing global economy. This is why the markets bounced up after their sell-off. A liquidity in...
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| “You Can Lose Freedom Only Once” Posted: 21 Jun 2012 10:55 AM PDT Wolf Richter www.testosteronepit.com Poor Angela Merkel. The beleaguered German Chancellor just can’t catch a break. She has already committed hundreds of billions of German taxpayer euros to bailing out collapsing Eurozone countries, or at least their bondholders, which would be the ECB, various German and French banks, and the other usual suspects. In return, she wants these countries to live within their means and restructure their economies so that the bailouts would not have to continue ad inifinitum. While the ECB’s printing press—though it’s not supposed to have one—could solve the debt crisis in one fell swoop after the model of the US, Japan, the UK, and Zimbabwe, it would create a host of problems that Germans would rather avoid. Hence bailouts in return for structural reforms and efforts to whittle budget deficits down to some “sustainable level.” Sounds reasonable. And yet, these laudable efforts have landed her in the company of Axis-of-Evil perpetrators and other maligned characters, according to the British magazine New Statesman, and it doesn’t appear to be, though it reads like, British humor:
And it came with this awesome Terminator-inspired cover art, which does, however, have certain humorous aspects:
So, in this crazy world of ours, preaching the importance of living within one’s means, rather than consuming wildly and blowing borrowed money that can never be paid back, has been equated with state terrorism. And that within the harmonious community of nations of Europe! No wonder that the Swiss are anxiously watching from their tiny enclave amid this mayhem. And people in power have started to speak up. There was Thomas Jordan, President of the Swiss National Bank, who admitted that “it’s conceivable that the entire European banking system gets into trouble.” For his clear tough words, read.... Bracing for a Euro Crash: The Swiss Caught in a Vice. Now there is Ueli Maurer, Defense Minister, member of the Swiss Federal Council, and major figure in the right-wing Swiss People’s Party (SVP), the largest party in the Federal Council. He warned in an interview that Switzerland was surrounded by many heavily wounded nations that might be “looking for success in foreign countries. And Switzerland is a sitting duck.” Maurer lived the Swiss Dream: boy of a farmer, he served in the Swiss Army where he rose to the rank of major and commanded a bicycle infantry battalion (don’t laugh, war by bicycle was serious business). And so he has become an advocate of Swiss independence, even in a tightly interwoven world. “Independence is the highest good we have,” he said. “We have to defend it everywhere we can.” Switzerland should not join any kind of union. Least of all the European Union, despite the government’s policy of rapprochement between Switzerland and the EU, which he dismissed: “Today, no one who isn’t completely crazy wants to join the EU.” And he is worried. “We have to watch out that they don’t take away our wealth and our freedom.” If push came to shove, he’d choose freedom, of course. “You can lose wealth, and you can regain it,” he said, “but you can lose freedom only once.” It wasn’t up to Switzerland to help these “tumbling giants,” he said; the country was too small and didn’t have a lot of options. “It’s a matter of monetary policy,” he said dryly. Instead, Switzerland would have to look for new allies. “We’re enjoying, for example, many sympathies in Asia. We have to profit from that,” he said. “Europe has crossed its peak.” He raved about Switzerland’s economic and democratic model. “Handing responsibility to the people, that’s the future. Europe is in bad shape because it assumed that responsibility could be relinquished to a higher level. But in the end, no one is responsible.” Which sums up the Eurozone bailout strategy. At the G-20 summit last November, bailing out Greece was the main topic, and it turned into a fiasco. At the G-20 summit this week, Greece was still front and center, but now it was escalated to bailing out the Eurozone, nay, the “world financial system.” Read.... The G-20 Farce: Saving The Eurozone From Collapse. Doug Casey of Casey Research believes that we’re in the fourth year of “The Greater Depression,” that we’re not in a recovery but in “the eye of the hurricane” on our way to “the other side of the storm.” It would be “far more severe” than 2008 and 2009 and would last quite a while, “depending on how stupidly the government acts.” And yet, he sees reasons for optimism. Read his stunning predictions and strategies.... How to Save Your Money and Your Life.
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| Surviving The Apocalypse... In A Lifeboat Posted: 21 Jun 2012 10:53 AM PDT No, this has nothing to do with uber ultra-rehypothecation, fractional reserve banking gone terminally nuts, gold being allowed to rise above $2000, or a second tier Keynesian economist in charge of the Fed's plunge protection team. For the doomsday prepper who has everything, WIRED magazine introduces the water-ready modular bunker (called STATIM pods). Designed to make sure you get through the first wave when the next big Tsunami hits, the 'inland lifeboats' are eerily reminiscent of the Movie '2012' or perhaps 'Waterworld'.
Brace for the Apocalypse! Surviving the worst in an inland lifeboat
 Because the STATIM pods are modular, you can customize them for your particular nightmare scenario. First things first. Before worrying about food storage or access to clean water during a major disaster, you need to make sure you get through the first wave safely. But never fear: When the next big tsunami hits, a water-ready modular bunker called the STATIM pod aims to float you above the flooding. Invented by Miguel Serrano, President at Brahman Industries, the STATIM (Storm, Tornado And Tsunami Interconnected Modules) pods are designed to withstand the awesome power of tsunamis, while giving survivors a fighting chance in the aftermath. Brahman Industries calls the pods "inland lifeboats." The reason: they're buoyant and self-righting, so when the floods come, they will bob to the surface. They're also low-tech, easy to maintain, and easy to construct, which means there's a possibility for wide deployment. The company's plan is to install and anchor them in flood-prone areas so when the alarm bells ring, those most at risk can rush to the safety of the pods. Inside, up to 50 people can cling to secure seating arrangements.  It's the end of the world, but this guy is feeling fine. The biggest issue with rescue-shelter design is always cost. We already know how to make structures that can withstand natural disasters; it's just incredibly expensive. The key to keeping costs down is using concrete, a cheap and well-understood building material. "We're addressing a high-priority need with a low tech approach," says Serrano. When STATIM reaches scale, Serrano aims to offer the 50-person pod at around $1,800 a head. The tubular hull is made from a series of pre-cast concrete modules. The modules can be created at local factories, shipped separately, and then aligned and winched together on site to create a watertight seal. "Everyone knows how to do this," says Serrano. According to the company, the assembly process for the pre-cast parts requires about the same amount of knowledge as installing a drain system.  A STATIM pod waits to be assembled. The pod continues to serve the people inside long after the first wave of disaster. "After Katrina, they spent three weeks just rescuing people with helicopters," Serrano says. Because the pods are buoyant and equipped with communications devices, rescuers will be able to easily meet up with the pods to tow them away. A boat or helicopter can transport 50 people at a time to safety. And because the parts are modular, the pods are customizable. By including different segments equipped with all kinds of survival gear, your personal STATIM pod can be modded to your anticipated needs. The next step, says Serrano, is creating pods that house critical infrastructure. The company has proposed a variation on STATIM called the Genset, which houses working generators. Having survivable power sources would have prevented the Fukushima meltdown, Serrano says, by providing power to the nuclear plant's critical systems after the tsunami. Other variations include pods with desalination facilities and a version of the pod that can withstand an EMP blast, ensuring that critical electronics would survive a nuclear strike.  The eerily calm diagrammatic disaster illustration. Not pictured: STATIM occupants bracing before nature's fury. While the intention of the STATIM system is that they be temporary shelters, let's indulge ourselves in a little bit of design fiction for a moment. What about the pod's potential to facilitate long-term living in environmentally extreme places?
Back in the present, Brahmin's disaster-related design pulled in seed funding earlier this year. Serrano says that they anticipate the first demonstration units will be available in early 2014. In the meantime, keep watching the horizon.  An exploded view shows how the modules of a STATIM pod are assembled. Images courtesy of Brahman Industries.
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| Posted: 21 Jun 2012 10:40 AM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! June 21, 2012 01:12 PM As noted earlier, I’m going to sample questions sent to me and respond to a few on the blog: Dear Peter: I have been following your blog closely for 2 to 3 years. This is the first time that i send you email. I have invested a lot in Gold ETF. Here are my questions: 1. Will gold drop below $1,520? 2. Do you think gold will rebound to at least 1,800 by the end of this year? 3. What will be the major global developments to trigger the rebound of gold price to 1,800? Gold bless you. Anthony Alberta, Canada I feel gold is in a trading range of just above $1,500 *on the bottom and around $1,640 on the upside. A significant break below or above those levels are likely to lead to a $100 -$300 move in the direction of the break. Obviously, I suspect it shall ultimately be to the upside. A conservative approach woul...
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| Stocks fall sharply on global growth fears Posted: 21 Jun 2012 09:31 AM PDT 21-Jun (Financial Times) — Stocks and commodities sold off as fears over the outlook for global growth mounted after weak manufacturing data from Germany and China. Some in the market are also expressing disappointment at the US Federal Reserve's decision not to take aggressive stimulus steps – particularly gold bugs, who have reacted by selling the bullion down by $21 to $1,585 an ounce. An easing of eurozone sovereign debt tensions – illustrated by falling Spanish bond yields – provided some support. But the mood was sour. Selling accelerated in the US after Goldman Sachs recommended investors to sell stocks, with a target for the S&P 500 at 1,250. [source]
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| Gold, Crude Oil And The CRB Index Approaching Final Bottom Posted: 21 Jun 2012 09:03 AM PDT June has been the month of major bottoms. Stocks and gold have already formed major yearly cycle lows. Now it's the CRB's turn to put in a major three year cycle bottom. This bottom will almost certainly form well above the 2009 low, establishing a pattern of higher lows and setting up for what I believe will be an extreme inflationary scenario over the next two years, culminating in a parabolic spike much higher than the one in 2008.
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| Oil and the CRB Approaching a Final Bottom Posted: 21 Jun 2012 08:58 AM PDT June has been the month of major bottoms. Stocks and gold have already formed major yearly cycle lows. Now it's the CRB's turn to put in a major three year cycle bottom. This bottom will almost certainly form well above the 2009 ... Read More...
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| Secret Treaty Threatens Your Wealth Posted: 21 Jun 2012 08:40 AM PDT The 5 min. Forecast June 21, 2012 11:31 AM Dave Gonigam – June 21, 2012 [LIST] [*]Trade treaty negotiated in secret: How it threatens Internet freedom and national sovereignty… and what you can still do about it [*]Post-Fed letdown: Bernanke & Co.’s attempt to split the difference triggers sell-off [*]While Bloomberg pushes lithium as the hot new metal play, Byron King eyes a related opportunity even bigger [*]Ritholtz eyes “mediocre” growth… Fining people who’ve violated no law… New rubber-stamp dollar bill suggestions… and more! [/LIST] “I am a bit surprised,” a reader writes, “that the TPP treaty (Trans-Pacific Partnership) has slipped under your radar. This is huge by anyone’s definition.” One element of the Trans-Pacific Partnership we’ve already drawn attention to, even if we didn’t identify the TPP by name: the ease with which its signatory governments could impose capital co...
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| Greyerz - We Are Headed For Panic As Global Markets Tumble Posted: 21 Jun 2012 08:21 AM PDT  With global stock markets plunging and gold coming under serious selling pressure, today Egon von Greyerz told King World News the entire financial system is under immense pressure and we will eventually see a massive panic. Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland. Here is what Greyerz had to say about the ongoing crisis: "Eric, the entire financial system is under immense pressure. First you have the ESFS, the European Stability Fund, they are saying they must buy euro debt. The problem is that fund is now just 440 billion euros, which is nowhere near enough to support all of these failing European countries or their banking systems."
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| Gold Seeker Closing Report: Gold and Silver Fall Over 2% and 4% Posted: 21 Jun 2012 08:20 AM PDT Gold fell to as low as $1564.57 and ended with a loss of 2.5%. Silver slipped to as low as $26.849 and ended with a loss of 4.13%.
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| Gold Daily and Silver Weekly Charts - Goldman Says 'Sell' And So They Do Posted: 21 Jun 2012 08:15 AM PDT |
| Power to China in the I.M.F. – Does this mean Gold to be Mobilized? Posted: 21 Jun 2012 08:00 AM PDT While the B.R.I.C.S nations are contributing to the I.M.F.'s funding with the purpose of shoring up the global financial system, they've stipulated that they want more power in the I.M.F. China is contributing $43 billion, so as it races to become the world's leading economic and financial nation it wants a bigger part of the decision making process, commensurate with its rising power. So the first question to be asked is, "Will it get it?"
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| What Does Microsoft's New Tablet Mean for Investors? Posted: 21 Jun 2012 07:55 AM PDT Synopsis: A battle brewing between Apple and Microsoft could spell trouble for the latter's original equipment manufacturers. By Alex Daley, Chief Technology Investment Strategist This device is the talk of tech right now:
(Click on image to enlarge) It is not an iPad, nor is it one of the many iPad wannabes from competitors like Samsung and Motorola. It's a Microsoft tablet. Not a tablet built by Dell or HP or Lenovo running Microsoft Windows, but an actual device built and sold by Microsoft. The device, dubbed "Surface," has no publicly disclosed release date nor an indication of its price, but it is already making waves because it marks the first time that Microsoft has decided to build its own computer. The apparent decision to jump into the fray and compete head-on with Apple in the tablet market has sparked all sorts of reactions. On one side of the equation, you have those people who are quick to point to the Kin (a failed Microsoft-built phone for Verizon Wireless) and Zune (a failed portable music device meant to compete with the iPod) as proof that Microsoft doesn't have the internal chops to do hardware right. The design process is different. The supply chain is an entirely new animal for a company used to just packing up software. And the company's DNA just doesn't support it, they say. Plus, what about the current original equipment manufacturers (OEMs) that sell Windows machines? Isn't making tablets their territory? On the other side seem to be boosters of the strategy. The "ecosystem model" has failed, they say. Commodity hardware doesn't deliver. These pundits have been quick to point out that Apple is basically unrivaled in market with the iPhone, with the iPad, and with more traditional computers like the MacBook they make far more money than any other OEM. These people want alternatives to Apple without having to sacrifice quality and ending up with some flimsy, plastic HP notebook and a slow, buggy Agros tablet. Some in the latter camp even argue that Apple has so decisively run away with both the media and market share that Microsoft is being compelled to change its business model from software-platform licenser. Essentially, it is said, Microsoft has no choice now but to copy Apple. So, just how bad is the picture?There is some serious merit to the competitive threat of Apple's integrated model, though it may not be as bad as first thought. According to data from NPD group, Apple is the undisputed champion of mobile computing:
But there is some controversy over how the data are tallied. First, it is units shipped – not sold – and with Apple in control of the overwhelming majority of its supply chain, things like channel stuffing are quite possible. Absent any of that chicanery, though, the big rub with this figure is that it contains tablet shipments as well. Of the 17.2 million mobile PCs shipped by Apple in the first quarter of 2012, a full 13.6 million were iPads. This means that Apple only ships a handful of traditional computers. Consulting firm Gartner pegs its net share of PCs at only 9.3% of the global market. That's about double where Apple was a few years ago, but it's still small in comparison to the number of total PCs or relative to the double-digit percentages that HP, Dell, Acer, and Lenovo – all of which ship Windows machines nearly exclusively – command of the market. All in, Microsoft still controls 90% of the PC market, and that market continues to grow globally. That does not sound like a situation that warrants an about-face on business plan by Microsoft. But what about this tablet thing? Tablets are simply a different market than the PC altogether. In that market, the numbers look much different for Microsoft. In the tablet market, Microsoft doesn't even have an entry. The current market share statistics peg Apple's place in that market at a whopping 63%. The remainder is rounded out by Android-powered devices from Amazon, Samsung, Motorola, and the like. None of Microsoft's largest partners has a stake in the tablet game today. That can largely be attributed to the fact that Microsoft hasn't given them anything to work with – Microsoft Windows is simply not designed to run on tablets today. That, however, is about to change. The company has made it clear that Windows 8 will be an entirely new animal. It will be optimized for touch screens like tablets. It will have gesture and voice control. It will enable companies like Lenovo and Dell to ship tablets, touchscreen desktops, even living room PCs with similar inputs to the Xbox. So, with Windows 8 just a few months from production, why is Microsoft just now dropping the bombshell that it might compete head-on with Dell and HP, potentially alienating its longtime partners? The answer may actually lie in another, similar market. The smartphone arena has been equally tough for Microsoft to find its way into. The company came to the market late, with a weak software offering, and relying on its traditional PC business model. OEMs like Dell followed them in, producing early smartphones. But they were universal bombs. That may be because Microsoft's biggest OEM partners make the majority of their sales to businesses, and the smartphone revolution – rather the second leg of the revolution, after the Blackberry and defined by touchscreens – has been about consumers. In the smartphone game today, the picture looks a lot like tablets: Microsoft's share barely even registers on a graph; Apple dominates as a single vendor; and the collective clout of Android is increasingly powerful.
That's because a rift has opened in the computer market with the introduction of these new classes of devices. The economics of these markets are far different than the PC market, and Microsoft's model has failed to adapt. While the PC market is going strong, Microsoft likely sees the tablet and smartphone markets as a mix of opportunity and threat to its core business. The opportunityIf Microsoft does intend to dive into the consumer-electronics business model of the tablet and smartphone, it would certainly not be the first time, as many have pointed out. The company has two notable failures under its belt with the Kin (and all other Windows phones to date) and the Zune. But it has also become the unrivaled market leader in another business very similar to tablets: gaming consoles. The Xbox has about 47% market share, according to the latest statistics to come out of E3 in May. That's a very similar share to the iPad in tablets. Microsoft makes and sells the console directly, just as Apple does with the tablet. The comparisons don't stop there, though. The core business model for each is that the device cost is kept as low as is reasonable. In the case of the iPad, prices start at $399 – a huge difference from its average computer cost, which at about $1,200 is nearly double that of HP, whose average computer sells for only $650. The iPad and Xbox both are sold with some individual profit per unit, but the margins are far thinner than they are on the normal sale for each company. Instead, the companies make up for those thin margins in the royalties they get from the sale of media: games, music, movies, etc. The iPad has iTunes and the App Store. Apple makes about 20-30% of the retail cost of most items sold in those electronic stores. And it has an exclusive – no one else can sell apps to an iPad owner without going through Apple. The same is true for the Xbox. Xbox has music and movie stores and also offers Netflix and other services for which it collects a bounty for new customers. It also has the Xbox Live gaming service, with millions of subscribers paying a monthly fee to chat and game online with friends and strangers. On top of that, Microsoft collects a royalty from game publishers, just as Apple does for the App Store – in fact, one could argue that Apple grabbed its iPhone and iPad business plans from Microsoft, just as Microsoft is regularly accused of stealing ideas from Apple. The result is that the companies keep margins high by encouraging customers to consume lots of paid content over the multiyear lifecycles of the devices, helping to boost revenues and lift margins as little work is needed to collect a share of those sales. Since the introduction of the iPad, Apple's quarterly sales have tripled. Even at its size, the company has posted a 41% annual growth rate for the past five years... Microsoft, just 6.76% in the same period. What growth Microsoft has seen has primarily come from the Xbox's "Home and Entertainment" division. That unit, mostly driven by Xbox, accounts for about $1.9 billion in quarterly revenues, less than half the value of Windows. Thus, for Microsoft – whose goal like any other company is to grow revenue – the tablet opportunity must seem very compelling... especially when you consider that the market, only two years old in its current form (tablet computers have come and gone for a number of years, but only since the iPad have they become popular enough to be considered a market unto themselves), has proven itself to be much larger than the game console market. After seven years on the market, the Xbox 360 has sold only 67 million consoles. Apple hit that same threshold – 67 million units shipped – in April 2012, just two years after the release of the iPad. At the current rate of sales, it should double that number in the next 18 months. (It took Apple three years to sell 67 million iPhones and 24 years to sell that many Macs). For any business to have sufficient impact on Microsoft's top line, the company has to be able to add $3.5 billion/year in revenue, or 5% of the total. Anything smaller than that would hardly register in its sales totals; even a $250 million annual business is only one-third of 1% annual growth. To really make a difference, it has to be worth four times that, or $14 billion per year. Few new businesses can do that. Microsoft makes $20 billion or so per year off of Windows. It makes even more than that from the sale of software like Office that runs on Windows. The home and entertainment division is now right up there for the company. So what's next? Well, Apple is poised to make more than $25 billion this year on the sale of iPads alone – over 25% more than Windows is bringing in for Microsoft. And that is before the value of the game and media revenue shares it takes in... all with just one-fifth of the volume. Apple makes a similar gross income from the sale of iPhones – again, before software and royalties. To Steve Ballmer, those must look like very compelling businesses. The appearance that tablet and smartphone sales haven't hurt PC sales probably adds much to their allure. But their OEMs will see every tablet that Microsoft sells as one they don't. So the company is hedging its bets. It will allow those companies to get into the tablet game, even chopping the price of Windows for those smaller devices, as it has for Nokia on the phone as well. But the company isn't going to sit around and hope its OEMs sell five times the tablets as they do PCs, like Apple – that would just not be possible – in order to make as much as it does from Windows today in the new market. Instead, it's going to play both sides of the fence. In theory, if Microsoft's tablet can sell nearly as well as the iPad, it only has to sell one for every four copies of Windows it does not sell to make up for the lost revenue. However, evidence suggests that tablets are a separate market. Thus, that kind of drop in Windows sales won't happen unless one of its partners walks away. Can HP, Lenovo, or Dell afford to stop selling Windows machines? Not a chance. Those companies are captive. Moreover, they have failed to break into the consumer-electronics market where Microsoft has succeeded at least once with its Xbox. Microsoft will give them another chance with Windows 8... but they all have seen this movie before. The company has been down the road of trying to apply its Windows model to the phone business. Many years in, it has failed completely. Even its most recent salvo with Nokia is rapidly showing signs of not being nearly enough. The consumer-electronics market is the proverbial forbidden fruit on the tree (wasn't that mythical fruit itself an apple too?) for Microsoft. But it can only go so far before it gets caught. However, the company is cash rich, has its OEMs relatively captive, and is in search of new multibillion dollar opportunities. Apple has shown that it's possible to grow similar businesses to Xbox without hurting core PC sales, and one has to imagine that Microsoft is very excited about that. By playing both sides of the fence, the company may see more success than it has with phones, where it held to the Windows business model dogmatically while the market opportunity marched right on by. Who knows, maybe the company will end up buying RIM and/or Nokia, giving itself the manufacturing capability to go head to head with Apple. With $60 billion in cash on its books, Microsoft has enough to buy both companies four times over at their current market caps. Of course, that's just wild speculation... but proposing that Microsoft would skip its OEMs and go right to the tablet market with its own device would have been equally as wild a thought just a few months ago. The Surface is only a minor threat to Microsoft's core business, while it's a huge opportunity to build shareholder value – but only if the company is willing to go all in and market the device heavily. Otherwise, tablets will only be a small add-on business to Windows, even if Dell, HP, Lenovo, and the like wipe the floor with the iPad come Windows 8. And it will be more of the same, single-digit growth for the Redmond software giant. Microsoft's foray into the computer-tablet market promises to capture more and more headlines in the world of tech – just as Facebook's IPO and Netflix's decision to kill Qwikster did. And while major stories like these are important, they tend to deflect investor attention from other opportunities in tech that hold far more promise. Those opportunities, as is so often the case, are found in little-known companies working on breakthrough technologies in myriad realms – everything from treatment of diseases to quantum physics. Alex Daley, editor of Casey Extraordinary Technology, analyzes hundreds of such companies every month, looking for diamonds in the rough that offer investors the chance to make outsized rewards. For more from Alex, check out his recent radio interview on the Financial Sense Newshour.
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| Gold Bulls React to FOMC Statement after Overnight Reflections Posted: 21 Jun 2012 07:01 AM PDT [url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] What a difference one day can apparently make in the minds of traders! Yesterday, following an initial sharp downside knee jerk reaction to the lack of an imminent QE3, Gold (and Silver) both rebounded well off their lows as traders became convinced that the Fed had surely left the door open to a round of QE should there be one more month of disappointing payrolls numbers. That sentiment sure proved fleeting, not only in the precious metals markets, but across the entire spectrum of commodities, as well as the bond markets. Die-hard equity bulls, who were consoling themselves that if they did not get their dearly beloved and eagerly anticipated round of drugs yesterday, would surely get it from their dope-dealing masters at the Fed soon, were throwing away everything that they had purchased yesterday at a big, fat, whopping loss. As mentioned in my piece on King World News, the equity markets...
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Precious metals analyst Jeff Clark says there is something quite different about gold's volatility this time around and that there are certain days that are better for buying silver than others.
The U.S. Treasuries market is currently the dominant financial mystery of the present time. Much like the proverbial "lead zeppelin" defies the laws of physics, the current status of the U.S. Treasuries market defies all of our financial fundamentals. It is a market which cannot exist, and yet it does.
With global stock markets plunging and gold coming under serious selling pressure, today Egon von Greyerz told King World News the entire financial system is under immense pressure and we will eventually see a massive panic. Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland. Here is what Greyerz had to say about the ongoing crisis: "Eric, the entire financial system is under immense pressure. First you have the ESFS, the European Stability Fund, they are saying they must buy euro debt. The problem is that fund is now just 440 billion euros, which is nowhere near enough to support all of these failing European countries or their banking systems."
What we see today is a complete change in method by JP Morgan to drop the silver price below $27 to find a new bottom to generate paper long interest in the white metal.
With a tip of the hat to Tom Petty, here we are once again. Stuck, rangebound and waiting.
The taxpayer-funded government healthcare disaster known as Medicaid is on the brink of collapse in Illinois and a number of other states, according to reports, and legislators are working feverishly to come up with solutions to keep the welfare program afloat. A recent Reuters report explains that Illinois Governor Pat Quinn, for instance, has signed into law a string of new bills that will supposedly trim roughly $2.7 billion from his state's Medicaid's expenditures in order to keep the program going.
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