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Saturday, June 30, 2012

Gold World News Flash

Gold World News Flash

Cooking the Books, Not the Big Macs, in Argentina and Greece

Posted: 29 Jun 2012 06:24 PM PDT

Bullion Vault


The CRB Just Formed a Final Three Year Cycle Low

Posted: 29 Jun 2012 06:21 PM PDT

Gold Scents


John Embry on Gold, Silver, Currencies and Commodities

Posted: 29 Jun 2012 06:16 PM PDT

Hera Research


CNBC - Gold is headed for $700

Posted: 29 Jun 2012 05:43 PM PDT

Hedge Funds Continue to Pummel Silver - Until Today

Posted: 29 Jun 2012 05:18 PM PDT

[url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] If you want to talk about how utterly insane our markets have become and how schizophrenic the trading action has mutated into, look no further than the last two days of trading this very week. On Thursday, silver was mauled by hedge fund selling tied to both long liquidation and brand new fresh short selling. The result? Silver hit a 52 week low! One day later - it rockets to close 5% higher in a single day. This is the type of madness that has been unleashed by Central Bank interference into the market place which is the SOLE CAUSE of this volatility. I could give example after example of commodity futures markets which had hit multi month lows on Thursday only to come storming back higher on Friday. Gasoline hit a 6 month low and then comes flying back $.15/ gallon on Friday because what changed? Crude oil had just reached an 8 month low on Thursday only to them come back on Friday and ris...


By the Numbers for the Week Ending June 29

Posted: 29 Jun 2012 03:43 PM PDT

This week's closing table is just below.   

20120629-Table

If the image is too small click on it for a larger version.

Cooking the Books, Not the Big Macs, in Argentina & Greece

Posted: 29 Jun 2012 03:30 PM PDT

by Adrian Ash and Robin Molinas, Gold Seek:

So does Argentina a decade ago set a template for today's crisis in Greece…?

BACK IN 2001, Argentina was hit by a crisis similar to Greece's today.

Imposing a strict currency peg of 1 Peso to 1 US Dollar meant the currency was over-valued. Or the state should have reined in its spending. Or the economy needed to be more productive. Or all three, depending on your view. But either way, the trade deficit widened as imports became cheaper than exports – especially after neighboring Brazil devalued its Real in 1998-99, adding more pressure to the currency peg, and leading the government to borrow huge amounts of money overseas, including $40 billion arranged by the International Monetary Fund in December 2000.

High tax rates already meant tax evasion was widespread, so raising taxes to try and cover debt interest didn't bring extra revenue. Well aware how such crises had ended before, the middle-class quickly moved to withdraw money from bank deposits, even though interest rates jumped to 16%, because that wasn't enough to beat inflation. Squeezed by falling wages and rising prices, many Argentinians took to the streets of big cities, especially Buenos Aires, banging pots and pans in protest at soaring food costs, corruption and economic mismanagement – protests that became known as cacerolazo.

Read More @ GoldSeek.com

Art Cashin – Shorts Squeezed in Dear God Get Me Out Moment

Posted: 29 Jun 2012 02:00 PM PDT

from KingWorldNews:

With global stock markets on the move, while gold and oil exploded to the upside, today Art Cashin told King World News that for the shorts, "It is a kind of 'Dear God get me out of here and I promise not to do this again.' So a general panic along those lines." Cashin, who is Director of Floor Operations for UBS, which has $612 billion under management, also commented on the spectacular rally in gold and oil. Here is what Art Cashin had to say: "Expectations for this summit were so low that if they came out of it without a fist-fight, we probably would have had a rally. The idea that they may have gotten something moving, caused a spectacular short-covering rally in the euro and put pressure on the dollar. You can see oil is up 8%."

"Some of these things are phenomenal, but that's what happens when you get a huge short-covering rally. Gold is up $50, it's bizarre. It's not necessarily a reasonable progression. It is a kind of 'Dear God get me out of here and I promise not to do this again.' So a general panic along those lines.

Art Cashin continues @ KingWorldNews.com

Investors Need to Understand Basic Geology: Chris Wilson

Posted: 29 Jun 2012 01:25 PM PDT

The Gold Report: Chris, you have described the junior mining industry as being "in disarray." Do you have any ideas for investors who might want to participate in the space, but may be a bit confused or discouraged? Chris Wilson: Well, upfront I would say do not lose heart, but do not go throwing your money at just any junior at the moment. We have to find 80 million ounces (Moz) of gold a year just to replace what is being mined. That is equivalent to the whole of the production from the Carlin Trend. Clearly, any company with a significant discovery will be extremely valuable. That value will grow exponentially moving forward because new discoveries are getting harder to find. The value most likely will be unlocked by the major companies buying the juniors out. It is a big leap for a junior trying to be a miner. When the major companies are mining successfully, but not exploring successfully, acquisitions have to become part of the future. The trick will be finding juniors that ...


The Gold Price Rallied Through Two Resistance Levels with Plenty of Room to Move Higher

Posted: 29 Jun 2012 12:37 PM PDT

Gold Price Close Today : 1,603.50
Gold Price Close 22-Jun : 1,571.20
Change : 32.30 or 2.1%

Silver Price Close Today : 2758
Silver Price Close 22-Jun : 2682
Change : 76.00 or 2.8%

Gold Silver Ratio Today : 58.140
Gold Silver Ratio 22-Jun : 58.583
Change : -0.44 or -0.8%

Silver Gold Ratio : 0.01720
Silver Gold Ratio 22-Jun : 0.01707
Change : 0.00013 or 0.8%

Dow in Gold Dollars : $ 166.05
Dow in Gold Dollars 22-Jun : $ 166.39
Change : $ (0.34) or -0.2%

Dow in Gold Ounces : 8.032
Dow in Gold Ounces 22-Jun : 8.049
Change : -0.02 or -0.2%

Dow in Silver Ounces : 467.01
Dow in Silver Ounces 22-Jun : 471.54
Change : -4.53 or -1.0%

Dow Industrial : 12,880.09
Dow Industrial 22-Jun : 12,646.78
Change : 233.31 or 1.8%

S&P 500 : 1,362.16
S&P 500 22-Jun : 1,335.02
Change : 27.14 or 2.0%

US Dollar Index : 81.627
US Dollar Index 22-Jun : 82.256
Change : -0.629 or -0.8%

Platinum Price Close Today : 1,449.10
Platinum Price Close 22-Jun : 1,427.45
Change : 21.65 or 1.5%

Palladium Price Close Today : 583.05
Palladium Price Close 22-Jun : 610.50
Change : -27.45 or -4.5%

Last Friday I wrote,

" Long and short is this: If the GOLD PRICE doesn't hold $1,525 and silver 2615c, they will drop much further, as low as $1,450 and 2250c."

Yesterday's GOLD PRICE low came at $1,547 and silver's at 2612c. Today gold closed up $53.80 [sic] at $1,603.50 and silver at 2758c, up 133.3c. Those were huge moves, but don't miss this: they took gold through two resistance levels and silver over 2750c.

This merely takes GOLD to the middle of its Bollinger bands, so there's plenty of room to run to the upper boundary at $1,645.01. Gold also closed above its 50 dma ($1,602.51), and within an easy sprint of the 200 DMA $1,666.78. RSI turned up, along with MACD.

Today's rally was real, as real as an apple pie hitting you in the face. And it will slow down, but that confirms and proves the preceding lows as much as you could ask.

But never forget that markets have to keep on confirming themselves. Gold might fall back to $1,590, but shouldn't close there. It must keep on advancing, say, next week through $1,625.

The SILVER PRICE close above 2750c resistance is today's most welcome news. It nearly reached its 20 DMA (2803c), and other indicators have turned up. Has plenty of room to run on the upside without becoming overbought (like stocks, for instance).

Much as I can tell, that's it for the declines. The SILVER and GOLD PRICE may not run away upside from here, may spend time grinding slowly higher, but that should put the end to these "bottom gonna drop out" scares.

Whole world's crazy as a Betsy bug. The euro, stocks, silver and gold exploded upward today on news that the Europeans are going to bail out their banks DIRECTLY (think the US TARP bailout) rather than giving the money to sovereign governments so they could pay it to the banks. Only trouble is, nobody knows where the money will come from. Let's see, Spain is going to contribute to the fund to bail out Spanish banks? This is financial perpetual motion at its delusional best. Oh, and the greater centralization is there, too, with some euro banking control agency. Well, it's a party today but when the liquor runs out and the headaches and puking begin, they'll stop celebrating . That should come next week some time.

Here's why I don't believe this latest fix -- I've lost count how many "at last" fixes there have been for Europe -- can possibly work. It is a complicated mathematical answer, but bear with me and pull out your calculus manuals: there is not enough money in Europe to bail out the banks. Shoot, there ain't enough money in the world to bail out European governments and banks. But y'all believe what you want. I ain't nothing but a nacheral born fool from Tennessee anyway, so ignerant and unsophistercated I still believe the addition and subtraction tables. So what will they do? They will inflate, like I've been telling y'all so long, and they will send silver and gold rocketing into Outer Space.

STOCKS investors believe that inflation will be good for stocks. They may also believe in fairy dust and Tinkerbelle, for all I know, but they'll sure enough find out. Dow rose 277.38 (2.2%) to 12,880.09. S&P 500 rose a little more, 2.5% (33.12) to 1,362.16.

Technically, the S&P500 could -- and nearly has -- rallied to the HandS neckline it fractured in May, about $1,375. Today took it above the 50 DMA (1,340.21). Shoot, if enough of them pointy-toe-shoe Wall Streeters get hyped up on White Powder, they may take it to 1,400. Outcome will still be tragic, taking millions of unsuspecting Main Streeters to the cleaners later this summer. Dow is in a similar fix, and today slung it nearly to the top Bollinger Band (12,967.24). Don't get no better than that.

If I had to say, Old Ben the Bandit wanted to give the markets a goose for his European accomplices in global crime, so he slapped the dollar, knowing that HUGE short position in the euro was ready to be panicked, driving up the euro. Also, that move would give the latest European "fix" more believability in the gullible's eyes.

Dollar index sank like a lump in a churn today. Overnight it broke 82.60 then plunged straight -- I mean "straight like dropping a stiff corpse over a high cliff" -- bounced once, then plunged to its low (81.43) about 9:00, with ne'er a friend to help. That hurteth the weekly chart not a bit, but the shorter term looks right sick. Last low, and coincidentally the 50 DMA (81.21), was 81.16. If the dollar passes that mark it confirms a downtrend and nixes a rally.

Y'all, this ain't nacheral. US Dollar Index lost 107.1 basis points (1.38%), a Seven League Boots move. Yen lost, too, 0.43% to 125.32/Y100 (Y79.8/US$1). Euro was the big gainer, up 1.83% at $1.2665. That takes it up through 1.2624 resistance, but overhead about 1.2725 loometh the downtrend line. Will most likely rally a while, just to work off that Brobdingnagian short position, but still ain't worth no more than a toupee hairpiece in a tornado.

Just a couple of reminders, friends. Less than $1,000 per head of currency circulates in the USA. Best way to avoid a bar fight is to leave the bar before it breaks out., Same thing holds for bank runs: leave the bank -- take out money -- before it starts. Better get used to keeping your excess funds in gold coin you hold, rather than bank accounts held by thieves, fools, and knaves.

On the Supreme Court's puerile approval of forced medical insurance in Obamacare, here's a axiom for y'all to digest. Whenever government messes in a market, three things inevitably happen, no exceptions:

1. It reduces quantity (availability)

2. It lowers quality

3. It raises price.

I spent all day with my wife Susan in Nashville at Vanderbilt Clinic. She's going to have to have a mitral valve replacement and tricuspid valve repair on 3 July 2012. I humbly ask for you to pray that she would have a successful surgery, that all those who help her would have wisdom, skill, insight, and alertness, and that she might have a speedy recovery. Pray also that I would take it all with hope, calmly, patiently, and with good grace. Hard to watch somebody you have loved for 45 years in pain.

Y'all enjoy your weekend!

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.

Adrian Douglas: A Good Time to Buy Gold

Posted: 29 Jun 2012 11:52 AM PDT

By Adrian Douglas, GATA:

Dear Friend of GATA and Gold:
GATA board member Adrian Douglas, publisher of the Market Force Analysis letter, who has been sidelined in recent months as he has been recovering from illness, returned this week.

Many investors are unsure as to whether gold is a good investment and if gold will continue its rise in price that started twelve years ago. Those who have not invested in precious metals may well be thinking that their investment is too late. Other investors who hold the metal are wondering if gold will fail to reach new highs.
A reassurance that precious metals are nowhere near their potential is that the world has in no way started to resolve the massive debt burden that has been created. Precious metals are one of the few things that can be purchased that have no counter party risk. I prefer to look at precious metals from the different view point that paper money is being debased at an alarming rate due to excessive issuance of paper and it is the precious metals that are not altered. By holding precious metals, one is able to preserve purchasing power. In fact, when panic sets in, the rush for precious metals will actually increase purchasing power.

Read More @ GATA.org

Guest Post: The Supreme Court And Natural Law

Posted: 29 Jun 2012 11:12 AM PDT

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

The Supreme Court And Natural Law

I won a bet today.

A few weeks ago I wagered with a coworker that the United States Supreme Court would uphold the Affordable Care Act otherwise known as Obamacare.  He reasoned that the federal government has no authority under the Constitution to force an individual to purchase a product from a private company.  My reasoning was much simpler.  Because the Supreme Court is a functioning arm of the state, it will do nothing to stunt Leviathan's growth.  The fact that the Court declared no federal law unconstitutional from 1937 to 1995—from the tail end of the New Deal through Lyndon Johnson's Great Society—should have been proof enough.  He naively believed in the impartialness of politically-appointed judges.  For the first time he saw that those nine individuals are nothing more than politicians with an allegiance to state supremacy.

It was a tough but valuable lesson to learn.

As far as unintended effects are concerned, the economic justification for increased government regulation of the health care industry has been argued countless times up to this point.  Proponents of intervention are convinced that more bureaucracies, red tape, and central planning are the answer.  They have no knowledge of the pricing system and how it functions as the most efficient means through which consumers and producers can interact to come to an agreeable deal.  They don't realize that the undersupply of doctors and care providers is a direct consequence of previous government intervention and occupational licensing.  Many actually believe that Obamacare wasn't written by the insurance industry and isn't a fascist-like appeasement of another deep pocketed lobbying campaign.

Common sense economics tells us that Obamacare will only lead to further inefficiencies and rationing as decisions of care continue to be made by third parties.  Once fully enacted, doctor offices will likely start resembling that of the waiting area of your local Department of Motor Vehicles.

All that aside, the Supreme Court's upholding of the Affordable Care Act should serve as an eye opener to those who still believe the state exists as a protector of property and defender of the rule of law.

In the present day, the vast number of edicts coming from Washington can hardly be characterized as laws.  "But wait," you may ask, "when legislation is passed by Congress, signed by the President, and ultimately approved by the Supreme Court, isn't it now considered the law of the land?"  While it is certainly true that whatever scheme envisioned by the political class can be enforced by the state's monopoly on violence, such rules of governance are more often than not laws in the traditional sense.

Historically, what was known as private or natural law rested upon the rational deduction of a set of ethically-based norms.  These norms focused on acts considered morally wrong such as assault, murder, rape, and violations of property in general.  Such aggressions were seen by classical liberal thinkers as detrimental to social cooperation.  According to 20th century legal scholar Edwin Patterson, the concept of natural law evolved from

Principles of human conduct that are discoverable by "reason" from the basic inclinations of human nature, and that are absolute, immutable and of universal validity for all times and places. This is the basic conception of scholastic natural law . . . and most natural law philosophers.

Or as Murray Rothbard wrote in his book The Ethics of Liberty:

The natural law is, in essence, a profoundly "radical" ethic, for it holds the existing status quo, which might grossly violate natural law, up to the unsparing and unyielding light of reason. In the realm of politics or State action, the natural law presents man with a set of norms which may well be radically critical of existing positive law imposed by the State.

Positive law is the kind enacted by the state that bestows special privileges to specific individuals.  Whereas natural law is essentially negative in that it disallows for the violent treatment of others, state-sanctioned positive law is the granting of reward that is necessarily provided by confiscatory taxation or government coercion.

What the state, which is institutionalized predation and force, embodies is antithetical to natural law and the very belief that violence is morally repugnant.  To characterize the Supreme Court as some great upholder of the rule of law in spite of it being a pillar in the state apparatus is insulting to any decent person that has a basic understanding of justice.

In lieu of the upholding of the Affordable Care Act, it's now worth asking what the U.S. government can't do to Americans.  As of right now, a sitting president can call for the indefinite detainment and execution of both citizens and non citizens alike with no due process.  The band of thieves known as Congress can force the public to purchase a good or service and order its goons to read private communications without prior consent or knowledge.  The dollar is constantly inflated to the benefit of major financial institutions, thus destroying the purchasing power of the money Americans are forced into using.  The American people are no longer afforded their rights to their property, privacy, or own lives.  Those discretions are currently in the hands of the various marionettes of Washington.  Whether it is occupied by outright fascists or closet socialists, the state has no regard for liberty in its incremental quest for omnipotence.

As Ludwig von Mises spent his life expounding:

A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings.

In the world of centralized or constitutional government, rules are always made to be broken.  The irony in today's Supreme Court decision is that it was never given the authority to strike down federal laws under the Constitution.  The power of "judicial review" was established by precedent in Marbury v. Madison, 5 U.S. 137 (1803) and was not explicitly granted in the language of the Constitution.  As Lew Rockwell puts it, judicial review is a

Usurped power not present in the constitution. The anti-federalists had anticipated it, however, seeing it as just another of the viciously increased federal powers to be enabled by the new constitution as versus the far more libertarian Articles, which had been overthrown in the federalist coup at Philadelphia.

Many legal scholars argue that judicial review is an implied power.  If that were so, their logic can be applied to each and every blatantly unconstitutional law enforced by the federal government.  And as history has shown, this is precisely what has occurred as the Constitution's purposefully vague language has been the cornerstone for growing Washington's dominance over every aspect of civil society.

The upholding of Obamacare is just more evidence of the totalitarian jackboot that continues to be pressed down upon on America's collective throat.  Instead of Congress or the President, it was the Supreme Court's turn to pave the way toward serfdom.  In a truly free society, all forms of violence would be condemnable and worthy of legal recourse.  Men with badges and guns would receive no special treatment such as they do today.  Thieves would be thieves.  Murders would be murders.  Counterfeiters would be counterfeiters.  And mobsters would be mobsters.  Titles such as "President," "Congressman," "police officer," or "central banker" would mean nothing under a functioning system of proper law.

To those who may object to natural or proper law, it may be asked "would you not defend your life or the lives of your loved ones against potential aggressors?"  For those who answer in the affirmative, they have rationally assumed their property is theirs to protect and their life and the lives of the innocent can be defended from coercion.  The only other option would be for a society where no property, including one's own body, is to be justifiably owned.  The widespread practice of the latter tends to be enforced through brutal totalitarianism.  The former is the foundation for peace, justice, and prosperity.

S.C.O.T.U.S. Changes U.S.A. To R.U.S.S.I.A

Posted: 29 Jun 2012 10:30 AM PDT

by Andrew Hoffman, MilesFranklin.com:

The more "RANT topics" I have lined up, the closer we are to the END GAME, and the more intense the corruption, criminality, and collapse overwhelming the political and economic environment. Between over-the-top PPT and Cartel manipulation, and cascading "horrible headlines" – across the globe – I had four disparate topics to choose from, ALL of them bad. That is, until 10:05 AM EST – yet another market moving announcement at the Cartel's favorite ATTACK TIME – when the U.S. Supreme Court registered its WORST DECISION IN THE NATION'S 230 YEARS.

We all know the Supreme Court is nothing more than a partisan body of political party cronies, altering the course of American history based solely on the amount of Democrats and Republicans in its ranks. In other words, the nation can be "made" or "broken" depending on one thing, and one thing only – which party the President is when justices DIE. Yes, these run-of-the-mill lawyers are appointed for life, via a Constitutional rule on a par with the idiocy of European and Middle Eastern monarchies.

Read more @ MilesFranklin.com

Important Charts for Silver Futures Traders June 29

Posted: 29 Jun 2012 09:49 AM PDT

HOUSTON --  Just below are a few charts we plan to spend some time on in this weekend's GGR.  They are, from top to bottom, the June 29 legacy CFTC commitments of traders (COT) report for large commercial traders in silver futures (LCNS);   the relative commercial net short position or LCNS.TO for silver futures;  the short positions of Managed Money traders of COMEX silver futures; and the net long position of COMEX Swap Dealer commercial traders.  All of the charts have something in common and we plan to discuss that commonality in the upcoming report.  (Hint, they are all historic in one way or another.) 

We expect to release that new report to subscribers sometime late Sunday evening, or early on Monday.  Vultures stay tuned. 

Have a great weekend. 

20120629-Silver-LCNS

Continued... 


20120629-Silver-LCNSto

20120629-MMshortSilver

20120629-Silver-SD-Net

If you made it this far, congrats.  All of the charts above are bull market records.  They suggest a market skewed short as of Tuesday, June 26, which is contrary bullish and can lead to explosive volatility in our simple way of looking at the COT.  We'll explain in the report for subscribers Sunday or Monday.  That is all for now.   

 

The Paper Clip Rally

Posted: 29 Jun 2012 09:12 AM PDT

The 5 min. Forecast June 29, 2012 12:56 PM Dave Gonigam – June 29, 2012 [LIST] [*]They fixed Europe (again!): Monster rally ensues to end the second quarter [*]Byron King on the “strange investment climate” wrought by the Supreme Court [*]China takes its next step toward supplanting the U.S. dollar… but they’ll have to sell a bunch of Audis and Maseratis along the way [*]Only in government: A “world’s biggest” grows even bigger… How hot pizza qualifies for food stamps… a special message for only our best customers (that’s you)… and more! [/LIST] “Maybe we can stop calling it the most boring financial crisis in history?” mused Greg Guenthner this morning. It’s a “risk-on” day, that’s for sure. Traders are celebrating another paper-clip-and-rubber-band solution to the eurozone saga… [LIST] [*]The Dow has crested 12,800. The S&P has pushed above 1,350 [*]Gold is toyi...


Gold Daily and Silver Weekly Charts - End of Quarter Rally After Steady Price Capping

Posted: 29 Jun 2012 08:47 AM PDT


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

The Grass Is Always Greener on the Other Side

Posted: 29 Jun 2012 08:44 AM PDT

Synopsis: 

On-the-ground report from Denmark: Why living in a socialist nanny state is not only a suffocating but also a rather expensive experience.


Dear Reader,

I am writing you, briefly, during my trip to Argentina, followed by Paraguay. As is the case in much of the world, both countries are undergoing a certain amount of turmoil – the former because of a giant snowball of misguided policy decisions. As for the latter, the turmoil is the result of Congress having grown fed up with a big-talking socialist who has steadily tried his best, and with considerable success, to turn Paraguay into another Venezuela.

While I understand from acquaintances in Asunción that the new team is more business friendly than the old, one can never tell, but one can have hope. I'll see what I can see while there.

As for this week's missive, even though I had planned on letting our own Vedran Vuk run with it, I had a couple of experiences at a wedding last weekend in southern Vermont that I wanted to share.

In addition, just before wheels up, my friend and fellow La Estancia owner Pete Kofod sent over an article from a friend of his in Denmark that Pete helped edit. As I thought most of you would find it interesting, and because it is something of a follow-on from my article last week, "Marx Madness," I am including it here as well.

First, however, to my wedding tales.


You Can't Eat Gold

A former partner of mine got married over the weekend to a former lover from his youth. Separated by tides of life that kept them apart for a couple of decades, against all odds their paths once again crossed, resulting in a beautiful ceremony that took place, most dramatically, in a tent in the middle of a raging storm.

The less sentimental among you will be pleased to know that I'm not planning on waxing lyrically about love and marriage and all that. Instead, I'll share a couple of stories from the wedding, as they seemed particularly revealing to me, and maybe to you too.

The first was a conversation with a mutual friend of the groom whom I hadn't seen in a number of years. I had heard he'd moved on from a previous sales job in the ski business to a position as a broker at a major brokerage house, but we hadn't had more than a passing conversation until we washed up next to each other at the wedding.

Since he knows I am involved in the research business, he steered the conversation toward investment markets, giving me an opening to do a little on-the-ground research. Specifically, I asked him if he or his clients were invested in gold or gold stocks. "Nope," he said with a cheerful broker's smile, adding, "You can't eat gold."

"Err, excuse me, can you repeat that?" I said (or words to that effect).

 "You know, like something of value, like vegetables – you can't eat gold," he explained somewhat haltingly.

"Ah, you must have heard Buffett's quote about gold not being a productive asset," I said aloud while thinking maybe he hadn't paid very close attention when his branch manager had been trying to brief him on how to answer clients looking to buy gold.

"Do you know the history of Buffett's anti-gold stance?" I asked.

Blank but friendly stare.

"Well, as I figure it," I continued, "Buffett's mentor was Benjamin Graham, who only really advocated two asset classes during his career: stocks and bonds. The idea being that depending on relative valuations, a portfolio should be allocated between stocks and bonds in varying percentages."

"Uh-huh," he said, his handsome smile failing to mask that he had only the vaguest idea what I was talking about.

"In any event, the reason that Graham – who had a huge affect on how Wall Street views portfolio allocation – never bothered with gold was because throughout virtually his entire career, it was illegal to own."

"Gold was illegal to own?"

"Yep, Roosevelt banned it, which was why Graham never included it in his allocations. But since gold has again been legal to own, there have been two distinct periods when gold was the far better asset class than either stocks or bonds. We are currently in just such a period, which is why the performance of gold has completely trashed even that of Buffett over the last decade."

"Get out of town! It's outperformed Buffett? Really?"

"Yes."

"Well, that may be, but I always tell my customers, you can't eat gold, and you can't go wrong with a dividend-paying stock."

Seeing that further discourse on the topic was going to be unproductive, the talk quickly turned to the weather and then I drifted away.

Now don't get me wrong, this is an entirely nice young fellow. But that he has been working for a major brokerage house – actually advising his clients on where to put their money – for over eight years now and clearly didn't know a thing about gold or, as far as I could tell, any aspect of investing other than parroting the stock touts his brokerage firm gives him, was big- time eye-opening.

Is gold in a bubble? Hardly. But I'll sure know when it is – and that will be when this fellow calls me up to ask for a hot tip.

The mainstream media continue to bash gold, warning that investors in the yellow metal are in danger of enduring a nasty correction. Yesterday, for example, CNBC ran an article titled "Is Gold on the Edge of a Violent Turndown?" in which Yoni Jacobs, chief investment strategist at Chart Prophet Capital, said gold could drop to $700 an ounce.

Central banks apparently disagree with this assessment, as they have increased their gold hoards by 400 metric tons in the 12 months through March 31, 2012, up from 156 tons during the prior year. We strongly believe investors should follow the lead of central banks, and to help those new to the gold market, we've created a free special report that reveals the three best ways to invest in gold.


Bar Fight

The second incident I wanted to share occurred immediately following the wedding reception when a group of us decided to stop for a nightcap at the small pub in our hotel.

Standing at the bar waiting for an audience with the sole barkeep, I was engaged in a conversation by a couple of middle-aged guys, about nothing much in particular. Quickly, however, we learned that they knew someone I know in my hometown.

Having discovered a mutual acquaintance, the conversation became even more chummy – until I mentioned, for reasons I don't recall, that this particular acquaintance and I got along even though we didn't always see eye to eye on the matter of government.

All I said, almost literally, was, "Yes, I tend to favor a smaller government, because in my observation it doesn't matter if the country is run by Republicans or Democrats. It is always poorly run, so it seems to me that the smaller a government is, the less damage it can do."

That single comment caused the same reaction as if I had tossed a bag of wasps at these guys. One second, comradely conversation, the next I was confronted by two snarling primates.

"WHAT ARE YOU GOING TO DO ABOUT THE PEOPLE WHO CAN'T AFFORD MEDICAL CARE?!!!?!!"

"Well, in the days before Medicare..."

"DON'T GIVE ME THAT BULLSHIT, WHAT ARE YOU GOING TO DO?!!"

"But you didn't give me a chance to answ..."

"CUT THE CRAP!!!! YOU PEOPLE HAVE BEEN RUNNING THIS COUNTRY FOR 40 YEARS, AND LOOK WHERE IT'S GOTTEN US!!!!"

"Excuse me, but 'my' people haven't been anywhere near the government in forever. Maybe you misunderstand my posi..."

"WHAT ARE YOU GOING TO DO ABOUT THE PEOPLE WHO CAN'T TAKE CARE OF THEMSELVES?!!!"

It was at this moment that my increasingly fine-tuned CP Alert went off like a klaxon in a leaking submarine. For those of you unfamiliar with the term, CP Alert stands for "Crappy People Alert." 

Lest you misunderstand, these were crappy people not because they clearly held views opposed to my own, but because they reacted so rabidly, allowing not even a scintilla of a reasonable exchange of views. In fact, all they wanted to do was, literally, yell at me.

Actually, it was worse than that.

Without the slightest exaggeration, I firmly believe that, if given the opportunity, these two individuals would have stripped me of every penny I have ever saved from a lifetime of hard work. Then they would have burned down my house and beaten me to death. Placing their attitude in a historical context, these were the very same types of people who donned the red caps and dragged out the guillotines in France circa 1792.

Now, there is one thing, and only one thing, to do when your CP Alert goes off, and that is to unhesitantly and immediately disengage.

"Sorry, guys, this conversation is not going anywhere good, so goodnight," I said abruptly, then returned to my table.

They shouted after me, one of them even attempting to get me to reengage by saying they would actually let me finish a sentence. I declined with a pleasant smile and a "No, thanks" and henceforth ignored them, and so they soon slipped out of the bar and out of my life, which is exactly what one wants to happen to crappy people.

I will tell you, however, that what I saw in their faces – sheer mindless hatred over the idea that government should shrink – made a deep impression on me. Even though they could have no idea who I am, or what I really believe, the pent-up anger they feel at the damaged economy and their hardened belief that it was due to the free market was visceral. And dangerous.

I have no idea what percentage of the population now harbors this level of antipathy and overt hostility, but I fear it will only grow over time as the economy worsens.

My dear business partner, Mr. Casey, has previously commented on the origins of the saying, "to cut anchor," but as it seems apropos, I will do so again here. Specifically, it refers to the order a ship's captain might issue, in the days of sailing ships, upon spotting a sudden and dangerous squall rushing down on them. If, in his estimation, there was insufficient time to pull up the anchor, the captain would order the anchor rope cut in order to run ahead of the storm and survive another day.

While each of us has to make their own plans, and one doesn't want to be paranoid about these things, my brief and very unpleasant encounter in that pub thoroughly confirmed my decision to build in La Estancia de Cafayate, far from the maddened crowd in the remote wine-growing region in the northwest of Argentina.

While the decision to spend an increasing amount of time there is largely due to my love of the incredible peace and beauty of the place, that it gives me the ability to quickly cut anchor should things become too stormy in home waters is massively appealing.


Speaking of Argentina

I am writing you from the lobby of the Hotel Legado Mitico in Salta City, Argentina, where we are staying a couple of days on house business before making the incredibly scenic drive to Cafayate.

Even though we are on the cusp of the Argentine winter, the sky is sunny and the temperatures are in the low 70s during the day and a refreshing 53 degrees at night.

Yesterday, in Buenos Aires, we ate at one of our favorite restaurants. The restaurant, though on the low end of pricey, was packed with the lunchtime crowd.

It never fails to impress me how different meals are in Argentina, and much of the world outside of the US, for that matter. While a restaurant in the US is typically fairly staid, with people quietly conversing or, increasingly, not conversing at all but rather sitting at the same table checking emails on portable electronic devices, in Argentina a meal is like a celebration, with people talking passionately about topics they care about, laughing loudly and otherwise enjoying the experience and each other's company.

Even so, there is something in the proverbial air in Buenos Aires – a detectable energy that something big is about to happen. Specifically, that the erratic government of Cristina Kirchner may be about to fall. Everyone we spoke with commented on her failings, and insane flailings, as she tries to cling to power.

One friend, a saintly young woman, said it well when she said, "The government, this country, is living a fantasy. Nothing is real. Cristina says inflation is 9%, but it's 30%. They say the dollar exchange rate is 4.5, but it is really closer to 7. Her government says everything is well, but everyone knows it isn't. It's all a fantasy, but it can't last."

As we went about our business, we encountered two medium-sized but peaceful protests surging through the streets. Then, as we headed toward the airport for our flight to Salta, we passed a convoy of large trucks headed side by side into the city for a massive blockade of the city's main plaza on Wednesday, June 27. It was hard not to be impressed at the slowly moving wall of trucks snaking for as far as the eye could see.

So, not only has Kirchner angered the middle and upper classes of the country, she has now angered the lower classes as represented by the powerful truckers' union.

With the recent example of Paraguay's turfing its leftist leader (we're headed there next week) to inform them, I think that there is a good chance Kirchner could be forced out before the end of her term, though no one I talked to has any idea who will replace her: her vice president is currently up to his neck in corruption charges.

Unfortunately, while one likes to hope for the best, I doubt whoever follows her will be any better – but it would be hard for them to be any worse.

Meanwhile, as hoped, prices for those of us whose savings are not denominated in pesos are going down, and fairly significantly... provided you don't go through official channels for your currency exchange. Which, as far as I can tell, no one does. In fact, the typical conversation now goes something like, "I got 5.8 for my dollars today." – "Oh, yeah, I got 6." – "Really? What's the name of your money guy?"

As I have said before, humans share certain traits with rats – none more noticeable than our adaptability. No matter what a government may concoct, we humans will find a way to get around it. And when the government's actions make the getting-around-things too difficult, we will either slip on to the next departing ship or bare our teeth and make them regret it.

I think Cristina is about to see a lot of teeth.

And with that, I will sign off for the week by turning the edition over to Pete Kofod who arranged and helped edit this article from a friend in the socialist paradise of Denmark. It feels to me like an important piece, well worth passing along. Feel free to do it as well.

David


The Grass Is Always Greener on the Other Side

By Jan Gindrup

Introduction by Pete Kofod:

As some readers may know, I was raised in Denmark for the better part of my childhood before moving to Brazil and eventually the United States. Not surprisingly, I am often confronted by big-government apologists that herald Scandinavia as living proof that socialism does indeed work. While I know that the facts on the ground do not match the myth, I am not immersed in Danish culture, and as such do not have extensive empirical evidence to draw upon when refuting the position.

When I wrote The Rise of the Praetorian Class, I was overwhelmed by the kind feedback I received from the readers of the Casey Daily Dispatch. One email I received was from Jan Gindrup in Denmark. We continued to converse via email, and I encouraged him to join us for the Harvest Festival at La Estancia de Cafayate, where I met him and his wonderful wife. During our stay in Cafayate, the Gindrups became good friends. The stories he told me about current affairs in Denmark were quite astonishing and far from the idyllic image portrayed in mass media, particularly in the arena of universal healthcare. I felt very strongly that his story needed to be shared and encouraged him to start writing about it.

As you will see, in Denmark it is culturally frowned upon to call out the deficiencies of the state. As such, Jan represents the rare brave soul willing to call matters as he sees them. Jan's style of writing is a freeform narrative that is emotionally compelling. You will feel like you are having lunch with him in Cafayate as he tells you the story others are not willing to tell. It is therefore with much pleasure that I introduce Jan to Casey Daily Dispatch readers.

Have you ever thought of life being better somewhere else?

It is often said that the grass is greener on the other side. Could it be that sometimes one's own grass just has grown so high that one can't judge the conditions over there?

We all know the Middle East is in terrible shape and that they don't enjoy "the blessings of democracy," so of course we have to "improve their circumstances," even if it means slapping them silly in the process.

On the other hand, most people, especially Americans, know that Denmark is home to the happiest people in the world and that it is a wonderful fairytale country with peace and the best social welfare system ever. The movie Hans Christian Andersen with Danny Kaye probably reinforced that impression. Never mind that no one knows where Denmark is.

Well, here's a chance to hear from the happiest people on earth and their wonderful little country.

First, let's look at parts of Danish history that we Danes gladly share with pride:

Denmark used to be a warrior nation. During the Viking Age (approx. 800-1200 AD), we beat the living daylights out of everybody and ruled from Moscow to America and from the North Pole to Constantinople. In the 16th century, after fighting mostly each other for a while, we built larger ships, acquired cannons and beat everybody again.

We fought the Swedes, the Brits and the Germans. We colonized parts of India and Africa, and owned Iceland, Greenland and the Virgin Islands. We had plantations, freed the slaves, and made and sold a lot of rum.

Now some parts of Danish history that we are less proud of:

We caught and transported many slaves – slaves that served as the backbone of the plantations in the Caribbean. In 1801 and 1807, the British attacked Copenhagen, sank and stole our navy, and burned down most of the city.

In 1864 we fought the Germans, were beaten yet again, lost a part of our territory, and since then we have been very tame and have developed a habit of being very faithful to authority and compliant to bullies. This was sadly the case with the German invasion during World War II, where the Danish government tacitly cooperated with the Nazis and condemned partisan freedom fighters, who were labeled "terrorists."

In 1917, we sold the Virgin Islands to the United States for $25 million; in the '70s, our government gave the oil-drilling rights to Maersk Shipping, a trade that made the firm and family very wealthy. Many left-wing politicians cooperated with the Warsaw Pact without consequence, and in 1972 the politicians got us into the European Union, which has bureaucratically evolved into the United States of Europe.

Back in the '50s and '60s, Denmark was still a sleepy little farm country. Mothers were housewives, and everybody was slim and fit. Frogs, lizards, storks and grasshoppers were abundant, and generally life was pastoral and idyllic. The king would wave from his balcony, everybody knew everybody, and the policeman even stopped the traffic for passing ducks.

The sun was always shining and all was good… or at least, that is what we remember.

As Danes, we have always believed in our hearts that we are better than the rest of the world. We know that there is no other country like Denmark. A funny Danish song says, "In all other countries, they live in caves and fight all day. Darn, we have never been like that!" We trust our politicians, believing that they are honest and represent the people. We have a democracy and a Constitution. We have many political parties; heck, even the communists are Danes.

We are all friends.

Danes truly believe that no harm can ever come to or change Denmark. We know that everybody in the whole wide world loves us and that that, among other things, is due to us helping the Jews escape from Denmark during WW II.

Many Danes don't want to go on vacation – even to Poland, a southern neighbor, or many other countries – because they know that the people there are of a lower social standing and will steal their money and cars.

Until the Berlin Wall came down, the Soviet Union was "the beast in the East," and we were scared to death of the threat of a nuclear war. Later, during travels to the Baltic countries, I learned that they had exactly the same fear of us coming to "take them."

Before my travels to Eastern Europe, many Danes told me that I would face former communist mafia everywhere and that I would be kidnapped and robbed. Stunningly, I managed to visit the Baltics without incident. I have never felt so safe as I did in the Baltic states. As an interesting aside, I also later learned that they have a far superior fleet of cars.

The United States is, in the mind of many Danes, also a dangerous place to go. America's ills range from rampant daily shootings in the streets to a superficial, consumer-driven culture devoid of any redeeming traits.

Danes skiing in Austria or France have chosen to fly home with injuries, operating under the belief that "down there," they don't have the knowledge or education to provide proper medical treatment. This is despite the fact that they are used to dealing with plenty of snow, big mountains and therefore thousands of ski injuries. Denmark, on the other hand, has neither mountains nor significant snowfall. Though it can get quite cold in the winter, we rarely see snow for long, and when we do, it is mostly brown, sloppy mush.

Many Danes wouldn't dream of emigrating, because they know that no country has an educational system like Denmark, and we don't want our kids growing up ignorant and brainwashed, like they do in other places. A professor at the Danish Polytechnic University was quoted as saying, "Well, maybe they educate one million engineers in India, but they are nowhere near our level!"

Whenever we hear of a successful endeavor from abroad, we are always ready to look knowingly at each other and say, "Yes, but it's not like the Danish (fill in the blank)!"

And that's the image we like to portray.

How Do You Keep People Happy?

How do you keep a population happy? You do it the same way that you keep a dog happy. You provide basic necessities, education, a justice system and entertainment to keep people from spending too much time thinking, in order to keep them from looking outside the fence for new masters. In time, people will start telling each other that they are happy. The North Koreans are probably told the same story.

I guess it all comes down to how you define happiness; if happiness means not starving and not wanting to worry about anything besides the weather, then Danes can be considered happy. But so could many cultures – at much lower costs, I suspect.

What we can readily do without shame is happily brag about being the most taxed and perhaps also most regulated country in the world.

It has jokingly been said that North Korea and Cuba envy Denmark for being the only place where socialism has been successfully implanted without anybody noticing. Let me correct that to mean implementing a form of "fascist, socialistic, bureaucratic capitalism," defined as a society controlled by technocrats where almost all wealth is collected and distributed by the state from the regulated "free" market. In all fairness, this is accomplished without the boots and guns. After all, you don't need guns when you have groomed a compliant population and implemented rules, laws and punishments for everything that is a conceivable part of daily life – all implemented "for your own good."

Compared to the Third World, Denmark seems rich, but no more than any other Western country. In my childhood in the '60s and '70s, it was a luxury for people to own a TV or a car – and by car I mean a small one, like a Ford Cortina or a VW Beetle. We got dishwashers in the '70s, and electric car windows were not common before the late '90s. Today it is still only luxury cars and cabs that have automatic transmission. In other words, not much progress there. Today I know that the USA was far ahead of Europe in all these matters, as some of these items were already on the market in the '40s.

Danes my age were taught, growing up, that they are the freest people on earth. Our school, health care, political, tax and social systems were second to none. All envied us, and therefore we viewed other nations as third-world countries, a prevailing belief to this very day. Some of these beliefs might have been fairly accurate in the past when our parents – the "grasshopper generation," so called because they took everything and left nothing – enjoyed full employment and ample tax deductions, making it a great time to expand consumption and lifestyle. Furthermore, the double-digit inflation made it an ideal time to buy houses as one's debt burden in real terms was shrinking every year.

We became accustomed to a plethora of state benefits ranging from Medicare to art. Social welfare has been a boon for a large segment of the population. In fact, a few years ago it was normal that after ten years on welfare, people were automatically transferred to a permanent disabled pension at a young age. We have experienced massive immigration by people from the Middle East during the last thirty years, something that has dramatically changed the fabric of our society.

Then there is the "Jante Law," the perfect tool to keep people in line. In Denmark we have been raised with a perverse Danish mentality, brilliantly captured by the writer Aksel Sandemose in his 1933 book A Fugitive Crosses His Tracks. In the book, the lead character is mistreated by the citizens of Jante, a fictional yet representative town in Denmark.

From this book came the 10 commandments, known as the Jante Law, which was meant to serve as a sarcastic constitution emblematic of the Danish culture:

The Jante Law says:

1. Don't think yo


Art Cashin - Shorts Squeezed in Dear God Get Me Out Moment

Posted: 29 Jun 2012 08:39 AM PDT

With global stock markets on the move, while gold and oil exploded to the upside, today Art Cashin told King World News that for the shorts, "It is a kind of 'Dear God get me out of here and I promise not to do this again.' So a general panic along those lines." Cashin, who is Director of Floor Operations for UBS, which has $612 billion under management, also commented on the spectacular rally in gold and oil.  Here is what Art Cashin had to say: "Expectations for this summit were so low that if they came out of it without a fist-fight, we probably would have had a rally. The idea that they may have gotten something moving caused a spectacular short-covering rally in the euro and put pressure on the dollar. You can see oil is up 8%."


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Commodities Soar as EU Summit Trumps (Very Modest) Expectations

Posted: 29 Jun 2012 08:32 AM PDT

courtesy of DailyFX.com June 29, 2012 04:44 AM Commodity prices raced higher after EU leaders delivered a more ambitious than expected effort at battling the region’s debt crisis and pledged funds for stimulus. Talking Points [LIST] [*] Crude Oil, Copper Aim to Follow Stocks Higher on EU Summit Optimism [*] Gold and Silver Gain as Safe-Haven Flows Reverse Out of the US Dollar [/LIST] Commodities are pushing higherahead of the opening bell on Wall Street after EU leaders delivered an unexpectedly forceful response to the region’s debt and banking crisis following the first day of negotiations at a summit in Brussels. Prior reports also suggested that policymakers will spend €120 billion on growth-driving efforts as well as top up the European Investment Bank (EIB) with an additional €10 billion in capital. Policymakers agreed to create a joint bank supervision scheme, to be established by the end of the year. Once that is operational, the E...


Brian Sack's Window Dressing Farewell Gift To Wall Street

Posted: 29 Jun 2012 08:30 AM PDT

Stocks opened around 2% gap higher this morning after the late-night headlines from Europe made many think that the tooth-fairy and Santa are real once again. S&P 500 e-mini futures saw some selling into the open but then stabilized amid a very narrow range for much of the rest of the day - leaking higher on low volume-driven short-covering. The news from Germany of ESM ratification was greeted with absolutely no price movement as an indication of just how insane things are but the need to drive stocks up in the last few minutes was crazy. Into the close, volume exploded as ES rose 10pts in minutes from absolutely nowhere. Average trade size was very heavy during this period and delta skewed notably to block selling into the ramp though it is never that obvious. ES closed above its 50DMA back to its highest since 5/8.

The Window-Dressing Roadmap

It would appear that the No 'New' QE from the FOMC on 6/20 left a lot of all-important funds long-and-very-wrong. Today's rampfest miraculously lifted (window-dressing) Energy and Financials (two of the MOST sensitive sectors to QE) back to perfectly unchanged from the exact time of the FOMC announcement. Notably, since that exact time 'safe' sectors of Staples, Healthcare, and Utilities have outperformed as Tech, Materials, and Discretionary are underperforming (though all did their very best to end the month up (especially relative to the FOMC news moment)... fascinating eh?

 

Stocks were on their own with the last 10 points or so of the day as USD, Gold, and Treasuries all started to point south into the close (orange oval)...

 

Everyone enjoyed the day's window-dressing escapades aside from JPM which dropped 3% from its opening levels and closed in the red. This chart is performance from the open of today...

While stocks exuded every bit of total insanity, Treasuries ended the week lower in yield across the whole complex (leaving Gold, the Long Bond, and the USD all almost perfectly +2.8% YTD). WTI is down 14.5% YTD to close Q2 thanks to a huge VW-like 9% squeeze higher today (that acounted in correlated risk terms for around half of equity's performance) up to around $85. Equity and HY credit have recoupled but HYG is the most expensive relative to its fair-value in over a month. The USD plunged on EUR strength (and AUD carry trades) to end the week -0.66% but Gold and Silver more than doubled those implied gains ending the week +1.8%. VIX tested below 17% late on but ended above it (down 2.6 vols) closing at 6/20 closing levels. The main takeaway is that most risk assets recovered to last week's highs but stocks turned the amplifier of insanity to 11 and pushed back to near two-month highs not to be outdone into quarter-end (wink wink).

Broadly speaking risk assets lost ground on the quarter with only the long-bond and USD up from 3/30. Interestingly, the Bond, Gold, and USD are all perfectly in line as we close Q2.

Equities surged above last week's highs into the close as a combination of stop-runs and algos looking to tickle us for large block order exits (the blue bars in the chart) made the day just that little more exciting...

but WTI was the winner of the day in terms of multiple-sigma moves...

The S&P just had its best June since 1999 - makes perfect sense for all those funds that needed a good quarter...

now for the implementation of that 'save-europe' plan...

Charts: Bloomberg

Gold and Silver Disaggregated COT Report (DCOT) for June 29

Posted: 29 Jun 2012 08:30 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.

20120629-DCOT

 
(DCOT Table for Friday, June 29, 2012, for data as of the close on Tuesday, June 26.   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.

Vultures, (Got Gold Report Subscribers) please note that updates to our linked technical charts, including our comments about the COT reports and the week's technical changes, should be completed by the usual time on Sunday (18:00 ET).  
   
As a reminder, the linked charts for gold, silver, mining shares indexes and important ratios are located in the subscriber pages.  In addition Vultures have access anytime to all 30-something Vulture Bargain (VB) and Vulture Bargain Candidates of Interest (VBCI) tracking charts – the small resource-related companies that we attempt to game here at Got Gold Report.   Continue to look for new commentary directly in the charts often.

That is all for now.  

Gold Seeker Weekly Wrap-Up: Gold and Silver Gain About 2% on the Week

Posted: 29 Jun 2012 08:20 AM PDT

Gold climbed $50.09 to as high as $1607.09 in early afternoon New York trade and ended with a gain of 2.68%. Silver surged to as high as $27.918 in early New York trade before it pared its gains a bit, but it still ended with a gain of 3.93%.


Is the Table Set for a Mania in Precious Metals?

Posted: 29 Jun 2012 08:00 AM PDT

It may feel like I'm out of touch with the precious metals markets to broach the subject of a mania today, but I think the table is being set now for a huge move into gold and silver.

There are, however, very valid reasons to reasonably expect a mania in our sector. For one thing, manias have occurred many times before, but the main issue is that a mania in gold and gold stocks is the likely result of the absolute balloon in government debt, deficit spending, and money printing. Saying all that profligacy will go away without inflationary consequences seems naïve or foolish. Inflation may not attract investors to gold and silver as much as force them to it.

Now, one could make the argument that any rush into gold and silver will be muted if no one has any savings, especially given that demographers say a quarter of the developed world will soon be retired. But even if individuals are wiped out, the world's money supply isn't getting any smaller, and all that cash has to go somewhere.

I wanted to look at cash levels among various investor groups to get a feel for what's out there, as well as how money supply compares to our industry. Data from some institutional investors are hard to come by, but below is a sliver of information about available cash levels. I compared the cash and short-term investments of S&P 500 corporations, along with M1, to gold and silver ETFs, coins, and equities. While the picture might be what you'd expect, the contrast is still rather striking.

Corporate Cash and M1 vs. Gold and Silver Investments

Naturally, not all this money or even a big chunk of it will be used to buy GLD, Barrick, or American Eagles, but it's clear that if any significant fraction of the cash sloshing around the economy were to be used to buy gold, it would have a major impact on the price of gold — which would trigger the mania I fully expect. Let's take a quick look at what kind of impact our sector could experience if just a small amount of available funds were devoted to various forms of gold and silver.

  • The entire worldwide value of all gold exchange-traded products (ETPs) currently represents just 2.1% of the cash and short-term investments held by S&P 500 corporations. If 20% of these companies decided to put a mere 5% of their available holdings into these precious metals vehicles, their value would more than double.
  • If just 1% of the physical currency (M1) floating around the system were used to buy gold Eagles, it would be 13 times more than the entire value of all coins purchased last year.
  • If corporations chose to invest 1% of their cash in silver ETFs, it would surpass the total current value of all such ETFs.
  • If corporations moved 5% of their "short-term investments" evenly into gold stocks, the market cap of every gold company would increase by 20%.
  • If they chose silver stocks, they'd each grow by a factor of six.
  • Five percent of M1 would increase the market cap of gold producers by 14%. The same fraction would be 3.4 times bigger than the entire current value of all primary silver producers.

This is just S&P 500 corporations — there are many more corporations in the world, as well as pension funds, hedge funds, sovereign wealth funds, mutual funds, private equity funds, private wealth funds, insurance companies, and other ETFs.

It's striking, when you really stop to think about just how big the impact could be if some significant fraction of the larger financial world started chasing the small niche market that is gold. Such cash inflows will send our industry to the moon.

In the meantime, keeping our eye on the big-picture forces that have yet to play out is the plan to follow. Sooner or later, though, I'm convinced the catalysts will kick in that will pull/push/drag/compel/force the mainstream into our sector. I suggest beating them to it.

And when the mania arrives, we'll all wonder why anyone doubted it in the first place.

Regards,

Jeff Clark,
for The Daily Reckoning

Is the Table Set for a Mania in Precious Metals? originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".

COT Gold, Silver and US Dollar Index Report - June 29, 2012

Posted: 29 Jun 2012 07:33 AM PDT

COT Gold, Silver and US Dollar Index Report - June 29, 2012


There's no plan and everything is a lie, Sprott tells King World News

Posted: 29 Jun 2012 06:51 AM PDT

1:42a ICT Saturday, June 30, 2012

Dear Friend of GATA and Gold:

Sprott Asset Management CEO Eric Sprott tells King World News today there's no plan to fix the European financial system, that everything from government officials is a lie, and that there's nothing to do but wait for governments to get out of the business of gold price suppression. An excerpt from the interview is posted at the King World News blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/6/29_Sp...

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

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Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment:
38% Pre-Tax IRR, $3.0 Billion NPV, and a 37-Year Mine Life

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
Initial capital investment: $863 million
IRR pre-tax (100% equity): 38 percent
NPV pre-tax (8% discount): $3 billion
Mine life: 37 years
Total mill feed: 405.3 million tonnes
Mill throughput: 32,000 tonnes per day

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

From a Company Press Release
November 22, 2011

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

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

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

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

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

Precious Metals Mining Stocks: Long- and Short-Term Outlook

Posted: 29 Jun 2012 06:40 AM PDT

Today's market session is very volatile, not only in case of euro, dollar and stock indices, but also in case of precious metals. The rally in the mining stocks is much less significant than one might expect based on gold's and stocks' rally. Read More...



All Gold Stock Hands On HUI Deck

Posted: 29 Jun 2012 06:12 AM PDT

Super Force Signals - A Leading Market Timing Service We Take Every Trade Ourselves Morris Hubbartt Weekly Market Update Excerpt posted Jun 29, 2012 Historical Weekly Dollar Chart [LIST] [*]The US dollar is the “world reserve currency”. The euro crisis continues, so it will likely continue to attract capital in the short term. My chart analysis suggests that the dollar could rally as high as 85. [/LIST] [LIST] [*]In the longer term, getting your money out of fiat currency and into physical gold & silver is probably a very good idea. Ultimately, I see the dollar reversing its recent gains and making new all-time lows. [/LIST] [LIST] [*]The MACD indicator shows very little power. If this is all the power the US dollar can muster while the euro crisis rages like an inferno, what will happen to the dollar if the crisis were to begin waning? [/LIST] [LIST] [*]The CCI indicator is at a spike high. [/LIST] [LIST] [*]I’m highligh...


Junior Gold Exploration 2

Posted: 29 Jun 2012 05:54 AM PDT

Scott Wright June 29, 2012 2512 Words Over the course of gold's secular bull the demand for this precious metal has skyrocketed. And as a result gold's primary supply source, mine production, has been forced to respond. Thankfully with the price of gold soaring to all-time highs, there's been no shortage of mining companies hitting the hills to look for the next deposit. As a result of more and more miners looking for gold, more and more gold is being found. And thanks to an industry-wide boost in capex to develop these finds, this bull's exploration cycle has recently started to bear its fruit. This fruit is production growth for three years running, including a 2011 tally that came in at an all-time high. In peeling away the layers of this production growth, it is no doubt interesting to see where in the world gold's mined supply is coming from. And thanks to deta...


A ‘Lehman Moment' Will Ensure Gold and Silver Will Soar Again

Posted: 29 Jun 2012 05:52 AM PDT

"What happened during the Comex trading session in New York yesterday has been superseded by the news out of Brussels earlier this morning." ...


LGMR: Gold Gets "Shot in the Arm" from Europe, But H1 2012 Numbers Show Gold "Has Taken a Breather"

Posted: 29 Jun 2012 05:51 AM PDT

London Gold Market Report from Ben Traynor BullionVault Friday 29 June 2012, 08:00 EDT SPOT MARKET gold prices hit $1584 an ounce ahead of Friday's US trading – a 2.3% rise from the previous day's low – while stocks, commodities and the Euro also rallied following news of an "important" agreement at the European Union summit in Brussels. Silver prices climbed to $27.38 by lunchtime in London – a 4.6% gain on yesterday's low. "Resistance [for gold prices] is at the top of the past week's range in the $1587-88 area," says technical analysts at bullion bank Scotia Mocatta, who add that further resistance is seen at $1625. News of an agreement among European leaders on the use of bailout funds ""has been positive for the Euro and positive for confidence in general," adds Scotia's head of precious metals Simon Weeks. "[This] means that equities and commodities, including gold for the time being, have all received a shot in the arm." European leaders meeting in Brussels ha...


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