Gold World News Flash |
- Silver Update 7/2/12 LIBOR Liars
- The Top 10 Gold Producing Countries in the World Are?
- Where was the gold?
- Interest Rates Low; Gold Prices Up!
- Richard Russell - Is Anything Safe In Our New World?
- Gold Daily and Silver Weekly Charts - Silver Manipulated, and a Silver Exchange Holiday
- Sentiment in metals at rock bottom, fundamentals superb, Turk tells King World News
- Barclays threatens to implicate UK regulators in rate-rigging probe
- Three Items For The Overnight
- Silver Market Update
- Gold Still Swinging Aimlessly
- Hedging Against The European Union's Economic Collapse
- Guest Post: The Great LIBOR Bank Heist of 2008?
- In The News Today 7/02/2012
- Grandich Client Sunridge Gold
- The Dark (Pool) Truth About What Really Goes On In The Stock Market: Part 3
- Where was the German gold?
- Cambodia—Prospective, Stable and Ignored: Ken Booth
- http://traffic.libsyn.com/kerrylutz/Elijah_Johnson_07-02-2012.mp3
- The Gold to Silver Price Ratio and the Surge in Silver Jewelry Buying
- Precious Metals Paper Sellers Conveniently Trapped
- This Will End In Inflation & Destruction of Paper Currencies
- The Gold Price Lost $6.30 to Close Comex $1,597.20
- Gold Seeker Closing Report: Gold and Silver End Mixed
- Feeling Contraction
- Equities the Way to Benefit from Gold's Strength
- The Path to $10,000-an-Ounce Gold
- How Is Dr. Copper?
- How Government Spending Continues to Add Fuel to the Fire
| Silver Update 7/2/12 LIBOR Liars Posted: 02 Jul 2012 07:15 PM PDT |
| The Top 10 Gold Producing Countries in the World Are? Posted: 02 Jul 2012 06:00 PM PDT In 2011, over 1,800 tonnes of gold were produced in ten countries. These top producing nations, which span four continents, including both emerging and developed nations, are listed below. So reports Michelle Smith ([url]http://goldinvestingnews.com[/url]) in edited excerpts from her original article*. [INDENT]Lorimer Wilson, editor of [B][COLOR=#0000ff]www.munKNEE.com (Your Key to Making Money!), may have edited the article below for length and clarity – see Editor's Note at the bottom of the page for details. This paragraph must be included in any article re-posting to avoid copyright infringement.[/COLOR][/B] [/INDENT]Smith’s report continues as follows: 1. China Mine production: 355 tonnes In addition to being a top gold consumer, China is also the leader of the world's gold-producing nations, a title it took from South Africa in 2007. In 2011, China was the only country whose production exceeded 300 tonnes. Its mine output last year was ten tonnes more than in 2010, re...
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| Posted: 02 Jul 2012 06:00 PM PDT Goldmoney
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| Interest Rates Low; Gold Prices Up! Posted: 02 Jul 2012 05:39 PM PDT Silverstockreport
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| Richard Russell - Is Anything Safe In Our New World? Posted: 02 Jul 2012 04:01 PM PDT  With continued uncertainty surrounding global markets, the Godfather of newsletter writers, Richard Russell, asked an important and intriguing question, "Is anything completely safe in our new world of central bank fiat paper?" Russell also discussed gold at length, but first, this is what Russell had to say about the action in stocks: "I wanted a mechanical way to follow the secular (primary) bear market. This required a moving average that was insensitive to secondary reactions and also insensitive to cyclical (short-term) bull and bear markets. In other words, I needed a long-term moving average that would portray the primary trend while screening out most minor and secondary movements."
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| Gold Daily and Silver Weekly Charts - Silver Manipulated, and a Silver Exchange Holiday Posted: 02 Jul 2012 03:45 PM PDT |
| Sentiment in metals at rock bottom, fundamentals superb, Turk tells King World News Posted: 02 Jul 2012 03:40 PM PDT 10:35a ICT Tuesday, July 3, 2012 Dear Friend of GATA and Gold: GoldMoney founder and GATA consultant James Turk tells King World News that sentiment in the monetary metals markets is at rock bottom even as their fundamentals are superb and Europe is floating away on an ocean of debt. Turk is expecting the metals to rally strongly. An excerpt from his interview is posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/2_Tur... 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: 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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| Barclays threatens to implicate UK regulators in rate-rigging probe Posted: 02 Jul 2012 03:30 PM PDT The rats are starting to turn on each other. Eventually gold and silver market rigging may be mentioned as well. * * * Barclays Chief Threatens to Hit Back By Patrick Jenkins, Brooke Masters, and George Parker http://www.ft.com/intl/cms/s/0/0130d092-c473-11e1-9c1e-00144feabdc0.html Bob Diamond is threatening to reveal potentially embarrassing details about Barclays' dealings with regulators if he comes under fire at a parliamentary hearing on Wednesday over the Libor rate-setting scandal, according to people close to the bank's chief executive. "If he is attacked, he will fight back," said one person familiar with preparations for the Treasury select committee hearing. Such a confrontational tactic could aggravate the fraught relations between the bank and the authorities after Barclays paid L290 million to settle an investigation by UK and US regulators over the bank's involvement in manipulating key interbank lending rates. ... Dispatch continues below ... 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 On Monday, Marcus Agius, Barclays' chairman, confirmed his resignation and the government announced a twin probe into the Libor system and banking standards. Barclays is facing a fierce backlash from politicians and some shareholders following its record fine. But the bank believes it has been unfairly singled out for criticism for reaching a settlement while 20 other banks are still embroiled in the probe. According to two people close to Mr Diamond, the Barclays chief executive is furious that he and the bank have been blamed for "lowballing" the rates at which Barclays said it could borrow from rivals at the height of the financial crisis in 2007 and 2008. Bankers insist the authorities knew these rates were inaccurate but did not object at the time because of fears it could further destabilise already panicked markets. Regulators "knew perfectly well those rates were not the ones where banks were prepared to lend to each other," said one senior banker at another institution. "They had all the evidence." The settlement documents themselves allude to prior dealings with regulators over the issue. These include a conversation with the Financial Services Authority about "the extent that the Libors have been understated" and an October 2008 exchange, since revealed to have been between Mr Diamond and Paul Tucker, deputy governor of the Bank of England, in which Mr Tucker asked Mr Diamond why Barclays' Libor submissions were higher than those of other banks. After that conversation, the settlement documents say, mid-level Barclays managers "mistakenly believed" that Barclays had been told by the BoE to reduce its Libor submissions. US settlement documents say that Mr Tucker did not give such an instruction and that Mr Diamond did not think he had done so. On Monday, the UK's Serious Fraud Office said it was "considering whether it is both appropriate and possible to bring criminal prosecutions" of traders at Barclays and elsewhere who allegedly attempted to manipulate Libor. It will make a decision within a month. In a letter to staff, Mr Diamond said: "No one is more sorry, disappointed, and angry about these events than I am." He added that Barclays' pay structures would be changed to reflect the lessons learnt. George Osborne, chancellor of the exchequer, said Martin Wheatley, who oversees the conduct of financial institutions at the FSA, would lead an investigation into the functioning of the Libor rate, while Andrew Tyrie, the Conservative chairman of the TSC, would conduct a six-month parliamentary inquiry into banking standards. Labour insists the review does not go far enough and is demanding a full public inquiry. Ed Miliband, Labour leader, also said it was insufficient that Mr Agius had resigned as Barclays' chairman. "I think there needs to be a more general change of leadership including the chief executive, Bob Diamond," Mr Miliband told ITV's Daybreak. Join GATA here: 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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| Posted: 02 Jul 2012 03:30 PM PDT from TF Metals Report:
First, Trader Dan doesn't have the time to post every day but, when he does, it's almost always worth your time to read. His post from Friday was fantastic. Below is a chart of his which I lifted from the post. It shows that we currently have a "record" amount of naked spec shorts in silver. Surely, this is a bullish, contrarian indicator and it follows along with the theory I've posited here that The Silver Cartel is methodically shifting the burden of being short from themselves to the specs (sheep). http://www.traderdannorcini.blogspot.com/2012/06/hedge-funds-continue-to-pummel-silver.html Read More @ TF Metals Report.com
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| Posted: 02 Jul 2012 03:00 PM PDT by Clive Maund, Silver Seek:
We are not going to do a "post mortem" here regarding what happened last week, other than to say that silver was on the point of breaking to new lows on Thursday, and would have done had little or nothing been achieved at the European summit, as was the case at the previous 18 summits. There are 2 big differences between gold and silver which both suggest that silver has truly explosive upside potential from here. One is that silver has suffered a far more serious decline than gold over the past 2 years, with sentiment towards it becoming extraordinarily negative in the recent past, and the other that silver's COT structure is now at record bullish levels, and far more bullish than that for gold. This is a situation where all it needed was some pivotal fundamental development – and last week we had it – to turn the tide in the other direction.
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| Posted: 02 Jul 2012 01:57 PM PDT courtesy of DailyFX.com July 02, 2012 12:59 PM Daily Bars Prepared by Jamie Saettele, CMT No change…I’m looking lower as long as gold is below 1641. There is very little to say as gold is in its 8th week of consolidation. The sideways trading is taking on the form of a head and shoulders continuation pattern (bearish) but a break below 1548 is needed to confirm. The pattern is cleaner on a continuous contract futures chart as the shoulders both form just above 1600. LEVELS: 1527 1548 1579 1607 1641 1672...
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| Hedging Against The European Union's Economic Collapse Posted: 02 Jul 2012 01:39 PM PDT  The European Union's problems just keep growing. First, it was Greece, which could still implode at any moment. Now it's Spain, which needed a $100 billion loan to prop up its economy. And the pundits say Italy and Portugal are not too healthy, either.When investors think about hedging, one thing that comes to mind is gold. Keeping the money close to home does not hurt either. That means either Canada or the U.S. Let's focus on the U.S. for right now, specifically, Nevada, which has a lot of natural resources, including gold mines like Pershing Gold (PGLC) and/or Newmark Mining. Investing in gold is a great way to hedge against Europe's economic collapse and its ripple effects on the rest of the world. Any intelligent investor will want exposure in this market over the next few years. If you want leveraged speculation in exploration you want to delve into Nevada's gold mining companies. It's not surprising that the talented, mobile and efficient newer mining companies are the ones that make the most resource discoveries, not the majors. The goal of hedging is to invest in the most promising companies when they are quite small. There's an old saying in the mining game: 'Give some money to good people and very often they will discover something." In other words, tapping directly into the talent pool allows a company to nurture its advantages. The size of the company does not really matter. What matters is talent and access to potential resource properties. Small is not synonymous with bad when it comes to gold mining. The smaller companies have the potential to multiply in price if and when they explore successfully. Read more..... 
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| Guest Post: The Great LIBOR Bank Heist of 2008? Posted: 02 Jul 2012 01:01 PM PDT Submitted by John Aziz of Azizonomics The Great LIBOR Bank Heist of 2008? The LIBOR manipulation revelations ask some interesting questions. Washington's Blog notes:
While the implications of this to the $1200 trillion derivatives market would seem to be profound, one question I have not seen asked much yet are the implications of the manipulation to the reality of the 2008 financial crisis.
Here's a really wild hypothesis: if the LIBOR rate was under manipulation in 2008, is it not possible that the inter-bank lending rate spike (and resultant credit freeze) was at least partly a product of manipulation by the banking cartel? Could the manipulators have purposely exacerbated the freeze, to get a bigger and quicker bailout? After all, the banking system sucked $29 trillion out of the taxpayer following 2008. That's a pretty big payoff. LIBOR profoundly affects credit availability — and the bailouts were directly designed to combat a freeze in credit availability. If market participants were manipulating or rigging LIBOR, they were manipulating a variable directly tied to the bailouts. That means that every single tick must be under scrutiny; we know that rates have been manipulated for profit. I am no conspiracy theorist; it may just be a coincidence that a massive spike in a variable we now know to have been manipulated contributed to a credit freeze that led to historically-unprecedented bailouts. Yet it is no great leap of the imagination to say that the crisis may have been deliberately worsened for profit. Investigators should investigate. (H/T to Saifedean Ammous)
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| Posted: 02 Jul 2012 01:00 PM PDT by Jim Sinclair, JS Mineset:
I have received more than likely every bearish case written on gold out there over the past few weeks. My answer to you is that the thesis upon which the gold price bullishly sits is performing exactly as anticipated. Six times in the recent weeks there has been a defined program to break the price of gold and it has failed each time. The manipulators constantly run into major primary buyers in the physical market, more than likely governments with a bullish gold outlook. Rather than arguing with each bear as some wish me to do, or agree with them which the bears want me to do, I am publishing once again a cartoon of sorts, really a teaching illustration given in 2010 when the economy was showing some strength coming out of 2008 and early 2009.
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| Posted: 02 Jul 2012 12:01 PM 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! July 02, 2012 03:25 PM Click here to read the report from Haywood Securities on Sunridge Gold Corp. (It’s a big file and may take a few minutes to load.) [url]http://www.grandich.com/[/url] grandich.com...
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| The Dark (Pool) Truth About What Really Goes On In The Stock Market: Part 3 Posted: 02 Jul 2012 11:26 AM PDT Courtesy of the author, here is the last excerpt from the excellent Dark Pools: High-Speed Traders, AI Bandits, and the Threat to the Global Financial System, by Scott Patterson, author of The Quants. To read the previous excerpts, see here and here. Haim Bodek rushed out the front door of his home, jumped in his all-black Mini Cooper, and sped to the train station in downtown Stamford, thrash metal pounding from the car's speakers. It was the morning of March 25, 2011, his last day on the payroll of Trading Machines. Bodek was scheduled to give a speech later that afternoon at Princeton University, at a conference called "Quant Trading: From the Flash Crash to Financial Reform." He was running late. He hadn't written his speech yet, so he banged it out on his laptop on the train to Princeton. It was hard. He wasn't sure what to say. He'd grown so cynical about the market that he'd become convinced that massive reform was required. But he didn't know if he should be the one to spearhead changing the rules of the game. He worried about his career, whether the new elite at the high-speed firms and exchanges who'd built the market's digital plumbing in the past decade would attack him and make it hard if not impossible for him to build another trading operation. He had a wife and three young children to support, and he was out of a job. The role of market-reform gadfly wasn't high on his list of priorities. But his creeping belief that the market had been hijacked kept bugging him, like a bee buzzing in his face. And it wouldn't go away. In his talk, Bodek went halfway in calling for major changes. He spoke about the structural issues facing the options market, the evolution of algorithmic trading, and the negative impact stock market structure changes were having on the options industry. There was no mention of toxic order types or 0+ scalping strategies. He wasn't ready to take on the whole system—yet. Bodek knew his complaints sounded like excuses for failure. Critics would say he couldn't take the heat. But he was convinced there was more to it. Exchanges and high-frequency firms had been working hand in glove to design a system that gave an advantage to the speedsters. The speed traders had been working closely with the electronic pools for more than a decade, from Island to BRUT to Archipelago. They'd pushed for more speed, for more information, for new exotic order types. And the pools complied willingly. It all added up. In Bodek's eyes, there was nothing implicitly wrong with what had happened—at least at first. The relationship between high-speed firms and exchanges was in ways beneficial for all investors, he thought. The Bots pushed for better execution. That made the markets better for everyone. But a problem developed. High-frequency trading became so competitive that on a truly level playing field no one could make money operating at high volumes. Starting in 2008, there had been a frantic rush into the high-frequency gold mine at a time when nearly every other investment strategy on Wall Street was imploding. That competition was making it very hard for the firms to make a profit without using methods that Bodek viewed as seedy at best. And so a complex system evolved to pick winners and losers. It was done through speed and exotic order types. If you didn't know which orders to use, and when to use them, you lost nearly every time. To Bodek, it was fundamentally unfair—it was rigged. There were too many conflicts of interest, too many shared benefits between exchanges and the traders they catered to. Only the biggest, most sophisticated, connected firms in the world could win this race. One apparent consequence of this hypercompetitive market was its fragility. Because high-speed traders were now competing for wafer-thin profits, they'd grown incredibly pain-averse. The slightest loss was unacceptable. Better to cut and run and trade another day. The result, of course, was the Flash Crash. It was an algorithmic tragedy of the commons, in which all players, acting in their self-interest, had spawned a systemically dangerous market that could threaten the global economy. Bodek knew he'd made mistakes. He'd wasted months trying to hunt for a bug in the code of the Machine, when the problem was actually abusive order types. Then he'd started using the order types himself to protect his firm from the abuses. But it felt dirty. He'd become one of the bad guys. One of the tipped-off insiders. Kill or be killed. He didn't like it, but it had become a matter of survival. It was not how the market should work. Investors should be re- warded for their intelligence, for being able to make accurate pre- dictions and take risk—not for knowing the location of secret holes inside the plumbing (or, worse, creating the holes). That was Bodek's biggest complaint: The Plumbers had won. Finally, Bodek became determined to reveal what he believed was a corrupt insiders' game that came at the expense of everyday investors. Was it outright collusion? He didn't have enough hard information to know for certain. But he believed the exchanges were locked in cutthroat competition, not only with one another but with the dark pools and the internalizers like Citadel and Knight. It was a dynamic that went all the way back to the late 1990s when Island, Archipelago, Instinet, and other electronic networks were engaged in a kill-or-be-killed Darwinian struggle. That struggle led to massive innovation and changes and, to be sure, benefits for nearly all investors. But something else had changed along the way. The competition had become toxic. The exchanges' backs were against the wall, and they'd made a deal with the devil at the expense of regular investors. And so in the summer of 2011, he decided to explain it all to federal regulators. He hired a major law firm to help him use his understanding of toxic order types he'd gained from his exchange contacts while at Trading Machines, combined with the details of his understanding of high-frequency strategies he'd learned from the 0+ Scalping Strategy document, to lay out a road map. The road map detailed his argument that high-speed traders and exchanges had created an unfair market that was hurting nearly all investors. Were the regulators listening?
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| Posted: 02 Jul 2012 10:20 AM PDT FGMR - Free Gold Money Report I am an avid reader of monetary history. Of late I have been focusing on the monetary events of the 1920s and 1930s. By learning from the maelstrom that riled the global financial scene during those two tumultuous decades, I aim to better understand present circumstances because there are many similarities between then and now. I’ve just finished a fascinating book published in 1955 entitled Confessions of The Old Wizard. It is the autobiography of Hjalmar Horace Greeley Schacht, whose improbable name reflects his North Schleswig ancestry and his father’s admiration of an American newspaper editor. For those not familiar with him, Schacht is generally given credit for ending in 1923 the Weimar Republic hyperinflation and putting Germany once again on a sound monetary footing, commendable feats which earned him the nickname “The Old Wizard”. He did this first as Commissioner of the Currency for the Finance Ministr...
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| Cambodia—Prospective, Stable and Ignored: Ken Booth Posted: 02 Jul 2012 09:55 AM PDT The Gold Report: Why should investors pay attention to Cambodia? Ken Booth: Because of political forces, Cambodia was forgotten and ignored. The French explored during its colonial period in Vietnam and other parts of Southeast Asia. That information was lost. The Australians explored Southeast Asia, but focused more on Indonesia, closer to its backyard. The political strife that ended in the mid-1980s further stopped foreign investment in Cambodia and it became a forgotten place. While things were quiet in Cambodia, the past 20 years have seen significant exploration and development in Vietnam, Laos and Thailand. As a result, Laos has a world-class copper mine and a producing gold mine. Those countries share many geological similarities to Cambodia. For now, there isn't a big database of exploration results for Cambodia. But the country should be on people's maps for mining exploration. And it is beginning to be. TGR: What types of deposits are explorers searching for? Gold? Coppe...
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| http://traffic.libsyn.com/kerrylutz/Elijah_Johnson_07-02-2012.mp3 Posted: 02 Jul 2012 09:45 AM PDT www.FinancialSurvivalNetwork.com presents Elijah Johnson, the 16-year-old seemingly smarter than the Bernank, joins us again today, Monday, July 2, 2012. Elijah has now interviewed quite a few noteworthy people, and what he's learned is that the global economic crisis is inevitable. Elijah has become financially aware and acknowledges the Federal Reserve as a banking cartel. The U.S. is over 16 trillion and counting in debt, and there's really no way to pay it down. According to Elijah, and I must agree, we are left with two options: print more money or default on the debt. Either way, we are currently in a losing battle. Printing more money to pay off our debt will cause the dollar to crash and defaulting will send the U.S. credit rating down the drain. Precious metals are the least risky assets that will protect you from the impending doom. Go to www.FinancialSurvivalNetwork.com for the latest info on the economy and precious metals markets.
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| The Gold to Silver Price Ratio and the Surge in Silver Jewelry Buying Posted: 02 Jul 2012 09:43 AM PDT Some would say that the gold to silver price ratio is meaningless. Others debate whether it will revert back to historic values maintained at a level mandated by law or policy, or if it will be based on actual above and below ground supply. Above ground investment grade silver is reversed, with five times more gold, while estimates indicate that nine times more silver than gold remains to be mined. Yet where does the actual gold/silver ratio matter the most? Perhaps a look at price discovery at the margin in the jewelry markets would be illuminating since price and perception of value are always at play. Another Look at Price and the Sticker Shock Effect In the mind of the mainstream media, gold is expensive, even though it may be a relative bargain on an inflation adjusted basis or given the questionable value of paper money. Few people would think twice before placing a $5 item in their shopping cart, but almost everyone would question their buying habits at a $10...
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| Precious Metals Paper Sellers Conveniently Trapped Posted: 02 Jul 2012 09:42 AM PDT The large and mostly naked holders of short positions in precious metals are conveniently trapped, especially in the silver market. Covering in any meaningful way would blow the U.S. Dollar's cover. The Dollar's increasingly serious valuation issues are also being ignored, but this may only last as long as the Euro continues to remain in the currency market's spotlight as a target for selling pressure as Europe's debt problems deepen. Financial Repression Financial repression was implemented after World War II to help melt away the war's oppressive debt burden. It consisted of maintaining the following conditions: 1. A moderate rate of inflation 2. Some amount of growth 3. A compelling situation for large banks to buy debt Nevertheless, the extra, and unmentionable, fourth ingredient to the official policy of financial repression is modern day coin clipping. Since physical silver has long been absent from circulating currency, the next best thing is to bury its v...
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| This Will End In Inflation & Destruction of Paper Currencies Posted: 02 Jul 2012 08:48 AM PDT  KWN has been receiving a tremendous number of emails, from readers and listeners, asking how this financial crisis will end. So this week we turned to the man who has studied monetary history for over four decades to ask him how this will all be resolved. Bill Haynes, President and owner of CMI Gold & Silver, had this to say about what is happening today with the ongoing crisis and where we are ultimately headed: "With all of the bearish reports on the metals, some investors are scared. Still, others call up and say, 'If they're going to give me this stuff, this cheap, I'm buying.' Eric, let me tell you, this feels like 2000. Remember those days, gold below $300, silver below $5, and we were (called) 'idiots' for buying it."
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| The Gold Price Lost $6.30 to Close Comex $1,597.20 Posted: 02 Jul 2012 08:48 AM PDT Gold Price Close Today : 1597.20 Change : -6.30 or -0.39% Silver Price Close Today : 2746.80 Change : -11.2 or -0.41% Gold Silver Ratio Today : 58.148 Change : 0.008 or 0.01% Silver Gold Ratio Today : 0.01720 Change : -0.000002 or -0.01% Platinum Price Close Today : 1455.60 Change : -23.40 or -1.58% Palladium Price Close Today : 576.50 Change : -15.35 or -2.59% S&P 500 : 1,363.78 Change : 1.62 or 0.12% Dow In GOLD$ : $166.38 Change : $ 0.36 or 0.21% Dow in GOLD oz : 8.049 Change : 0.017 or 0.21% Dow in SILVER oz : 468.02 Change : 1.01 or 0.22% Dow Industrial : 12,855.65 Change : -24.44 or -0.19% US Dollar Index : 81.63 Change : -1.071 or -1.30% Franklin will not be publishing commentary today as he is nursing his wife who is recovering from heart surgery. 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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| Gold Seeker Closing Report: Gold and Silver End Mixed Posted: 02 Jul 2012 08:31 AM PDT Gold fell to $1587.11 by a little after AM EST before it climbed to as high as $1602.14 in late morning New York trade, but it then drifted back lower into the close and ended with a loss of 0.02%. Silver slipped to $27.217 in Asia before it climbed to as high as $27.62, but it then drifted back lower into the close and ended with a gain of just 0.22%.
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| Posted: 02 Jul 2012 08:22 AM PDT Dave Gonigam – July 2, 2012
It's a figurehead post in a country with fewer people than Minneapolis… ordinarily not worthy of note in The 5. Nor do we doubt that President Olafur Ragnar Grimsson has his faults. But Mr. Grimsson "turned his ceremonial office into a position of power," reports TheJournal.ie, "and rejected a deal that would have put taxpayers on the hook for $5 billion." Mr. Grimsson, in other words, told the zombie bankers to go jump in the lake. Not bad for a country Addison characterized at year-end 2008 as "a valuable lesson in the pitfalls of leverage, debt and central banking." Today, some of Iceland's bankers are in jail… and as we noted a few days ago, the government is paying off its loans to the International Monetary Fund ahead of schedule. GDP is growing at a 4.5% annual clip — the strongest in the developed world.
 The ISM manufacturing survey rang in this morning at 49.7 — below 50, signaling contraction. The last time that happened was July 2009, as the U.S. exited the "official" recession. There's little good news in the internals: New orders collapsed and are now shrinking. Export orders are likewise shrinking. Prices are contracting at the fastest pace since April 2009. Whatever numbers are positive won't stay that way long without new orders.
At 50.2, the official government number still indicates growth — but it's the lowest in seven months. A separate survey by HSBC covering smaller private-sector companies fell to 48.1; it's been in contraction mode for eight straight months. Orders are falling. Exports are weak.
The S&P 500 is off a mere quarter-percent this morning. The Nasdaq has barely budged. Most of Friday's gains remain intact. "Last week's surges," according to our market-sentiment maven Abe Cofnas, "provide strong technical and psychological conditions for a similar surge not repeating this week." "While a superficial layer of gloom and doom has been lifted, it is not a one-way pass to new highs in the markets. Surprises can happen, but this week we are betting on markets staying within very wide ranges."
If that remark has the ring of eerie familiarity, it should: "The copper crisis will make the current rare-earth crisis look minor by comparison," said metals consultant Jack Lifton in our virtual pages last April. Seems unlikely this morning with copper at $3.46 a pound — almost a dollar less than a year ago. But the warnings are too persistent for our Byron King to ignore. Duff's remark, Byron says, "dovetails with what I've been hearing from experts across the mining industry, from Canada to Europe to South Africa. The old mines are playing out. There aren't enough new mines coming online, despite the visibility of a few projects." "There are still high-grade plays," he says, but only "in remote and difficult jurisdictions." "Yes, the market has been selling down the copper miners. But what goes down is eventually destined to head back up. The assets and capabilities are too important to languish."
It's called "nicotinamide riboside" — a cousin to niacin, or vitamin B3. "Some scientists believe that NR is a naturally occurring vitamin," says Patrick, "capable of acting like a natural, but effective weight-loss drug with steroidlike abilities to increase muscle mass and strength." Early tests in rats, conducted by Cornell University and a team of Swiss researchers, are promising: A summary published by Cornell found NR to "prevent obesity in mice that are fed a fatty diet, and also increase muscle performance, improve energy expenditure and prevent diabetes development, all without side effects." "If the theory is correct and the animal data prove true in humans," says Patrick, "NR supplementation will dramatically improve how we process carbohydrate and fats. This, in turn, should improve cholesterol, triglyceride and glucose levels. It should also lead to the production of less fat and more muscle." One of the companies on Patrick's watch list is developing NR for commercial release. "To give you an indication of how valuable this vitamin could be, realize that Abbott Laboratories bought Kos Pharmaceuticals for $3.7 billion. All Kos really had to sell was a time-released form of niacin"
Many small banks weathered the Panic of 2008 just fine. The problem lies with the protector of big banks, the Federal Reserve: "Last month, the Fed determined that even the smallest lenders must comply with the new Basel III accords. These compliance costs can easily top a million dollars. For a small bank, that may be more than they make in profits all year." The Federal Reserve policy of keeping interest rates low hurts too. It crimps small bank profit margins. These banks rely on the lending spreads. They don't have big fancy trading desks or big fee businesses. And the lousy economy doesn't make life any easier. It's tough to grow. Thus smaller banks are selling out: The Wall Street Journal tallies 90 transactions so far this year. "My favorite small banks to own," says Chris, "are the recently converted thrifts (or savings & loans). A thrift conversion is when a thrift converts to a publicly traded bank. To do this, it offers shares to the public. But unlike a traditional IPO — like Facebook — there are no selling insiders. All of the money raised, less underwriting fees, goes back to the bank. So the new shareholders own the cash they put in, less fees, plus the bank." "Converted thrifts," according to Barron's, "have outperformed the broad market significantly in the past 20 years, and that could remain the case. In the 10 years ended Dec. 1 [2011], the SNL Thrift MHC Index, based on 30 partially converted thrifts, returned 188%, versus a return of just 63% for the small-cap Russell 2000." Readers of Chris' premium advisory, Mayer's Special Situations, have been on to thrift conversions for 18 months now. The three recommendations he made then are up an average 26%. "These are not the kind of ideas that have the potential to double or triple in a year. But they are a safe place to park some cash with the promise of a decent return." [Ed. Note: A select group of readers is already clued in to all three of the aforementioned investment ideas: Chris' thrift conversions, Patrick's tiny developer of nicotinamide riboside and Byron King's copper recommendations — one of which delivers a 7% dividend. They have access to all of our stock-picking advisories... with none of the options-trading services that don't suit their temperament. If that sounds like you, we cordially invite you to consider membership in Agora Financial's Equity Reserve. You'll have full access to all nine of our stock-oriented advisories, including four high-end services that cost hundreds or even thousands of dollars a year. To help get you started, we're willing to spot you a minimum of $1,044 for your membership. But depending on the subscriptions you currently have, your loyalty reward could be much higher. Learn how to take advantage right here. Time is limited, though: This offer expires at midnight on Thursday.]
Not just any bike, either: These bikes generate electricity to power streetlights in the neighborhood surrounding the Santa Rita do Sapucai prison. "For every 16 hours spent pedaling to charge a battery connected to the bike," reports Discovery Channel's TreeHugger site, "prisoners of good standing will shave a day off their sentences. The energy will then be used to power streetlights in the city that might otherwise be dark, making the community a safer place at night for everyone."  Readers of The 5 are long familiar with the streetlights being yanked out of places as diverse as Colorado Springs and the suburbs of Detroit. Maybe if you can't afford the penalty — er, tax — for failure to buy health insurance, this is how you'll work it off? Eek…
"We're all going to bite the bullet to ensure that the less fortunate have access to health care while simultaneously giving those very same people government assistance to go out and buy the very foods that make them sick. A perfect storm?"
"Due to a series of unfortunate personal events including a major disability — I've gone from being a high-wage earner ($500,000/year) to zero and had a series of investment and real estate meltdowns that leaves me as a disabled veteran trying to scrape by on less than $2,000 a month and salvaging some of my investments. (I once had $500,000 in Stanford CDs — crap.)" "My disability income of $1,800 (the Florida limit is $1,200/month) excludes me from Medicaid and food stamps. It took seven years of appeals to finally get the disability approved. During that time period, I lived by liquidating whatever assets I had left and had absolutely no access to real medical care — that only made my condition worse." "I have not had any dental care for nine years, as it is completely unaffordable — but if I were Medicaid eligible, I would have dental care and not have constant massive pain." "After my living, insurance, utility and auto expenses, I have a food budget of $125 month. It doesn't go far. Fast food or a restaurant meal is a fantasy. So yes, I would love to get a break and have access to dental care and food stamps. And no, I would not be buying salty and sweet snacks and junk foods." "So please, when you bash (and rightfully so) the welfare stupids, try to put some balance in your writings. Many of us are truly suffering and trying to get out of this mess." The 5: We don't doubt that… but we're not sure who you're upset with. Here at The 5, we aim to zing all members of the zombie class — starting with the Federal Reserve governors who protect the zombie banks and have turned a dollar in 1971 into 18 cents today. We'd have a lot fewer people "truly suffering" without their machinations. Cheers, Dave Gonigam P.S. The dollar you saved in 1971? Today it "doesn't even cover the price of a postage stamp or a can of Coke," writes Addison in The Little Book of the Shrinking Dollar. "It's practically worthless." Still, it's what you use to perform most of your daily transactions… so it's a good idea to take some protective measures and preserve what purchasing power your dollars still have. The book is chockablock with nearly four dozen ideas to do so. Some of them you can put to work in an afternoon. Don't have your copy yet? Here's your best available deal. P.P.S. "This week, we are betting on markets staying within very wide ranges," said Abe Cofnas earlier in this episode. Which brings us to this week's "mock trade" — targeting the Japanese yen. Despite the rotten outlook among U.S. and Chinese manufacturers, the Bank of Japan's quarterly Tankan survey reveals factory owners in the Land of the Rising Sun feel upbeat. "With a bit of relief from fears regarding Europe," says Abe, "the Japanese economy may get a lift. This is negative for further stimulus in Japan, as the Bank of Japan has to make a monetary policy decision on stimulus in its meetings on July 11 and 12. At the same time, the yen price action has been stuck in a tight range." This morning, it takes 79.43 yen to equal one U.S. dollar. Abe expects the yen will end the week between 78.75-81.25. You can play that expectation with a two-part trade: As long as the yen closes on Friday within that range, half of the trade will deliver a 6.9% gain, and the other will jump 17%.  Not bad for four days, no? "With everyone being so Eurocentric, this trade is refreshing and worth the effort," says Abe. To learn more about his unique four-day trading strategy, give this a look.
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| Equities the Way to Benefit from Gold's Strength Posted: 02 Jul 2012 08:00 AM PDT Henk J. Krasenberg, analyst and founder of the European Gold Centre and author and publisher of the GOLDVIEW newsletter, sees no lack of potential among small-cap equities, especially for investors willing to look beyond the U.S. borders. In this exclusive Gold Report interview, Krasenberg counsels patience because "you have to wait for the development."
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| The Path to $10,000-an-Ounce Gold Posted: 02 Jul 2012 07:57 AM PDT There's a plausible path to $10,000 an ounce gold. And it doesn't require a breakdown in civil society… Speculators see central bankers as modern-day superheroes, able to push markets around with a single phrase. In the minds of most investors, Ben Bernanke, Mario Draghi and Masaaki Shirakawa might as well be wearing tights, masks and capes. These superhero central bankers continuously swoop down into the financial markets to defend them from downticks…and to insure that they always deliver capital gains. The reality, of course, is that these superheroes are frauds. They have no superpowers…other than the power of mass delusion. The powers of Mario Draghi and the other central bankers in Europe are waning. Excess debt is like kryptonite: Each new wave of printing has less impact on markets. As the popular phrase goes: "This is a solvency problem, not a liquidity problem." In other words, new money supply cannot restore health to sick loans and government bonds. The only way to restore solvency to the system is to deflate the economy or slash the amount of debt in the system through mass bankruptcy. Or is there another way? Is there a "reset button" that central bankers can push (with the approval of political leaders) that would restore balance to the system? We know central bankers would never want to deflate the economy or crash the value of debt, which would destroy the banking system. So how about inflating the money supply to dilute the value of debt? All in one fell swoop? Right now, central bankers are diluting the value of debt very slowly by pushing interest rates below the rate of inflation. Some call this "financial repression." It's an unspoken policy that has many negative consequences. What is an alternative, since all attempts to "fix" the current system with more borrowing and printing are failing? How about the classical gold standard, which stands out as the least flawed of all the systems we've tried. Each nation could choose to peg its local currency to gold at a price that allows for enough growth in bank reserves to greatly reduce the burden of public- and private-sector debts. Re-pegging a currency like the US dollar to gold at the current price (about $1,550) has its pitfalls. Most notably, it would not deleverage an overleveraged banking system. But re-pegging the dollar to something like $10,000 an ounce might do the trick. Hedge fund managers Lee Quaintance and Paul Brodsky from QB Asset Management wrote a fascinating outline on the potential reintroduction of gold into the monetary system, while simultaneously implementing what one might consider a debt jubilee. I recommend reading the entire outline. Zero Hedge posted it at this link. QB explains the mechanics of how it could work in the US: Using the US as an example, the Fed would purchase Treasury's gold at a large and specified premium to its current spot valuation. The higher the price, the more base money would be created and the more public debt would be extinguished. An eight-to-10-fold increase in the gold price via this mechanism would fully reserve all existing US dollar-denominated bank deposits (a full deleveraging of the banking system)." Below is what the remonetization of gold would look like in chart form. The yellow line would rapidly approach the blue line. And the blue line will keep rising as we see further growth in the money supply. QB's "Shadow Gold Price" divides the US monetary base by official US gold holdings. Policymakers, who always feel the need to manage something, would appreciate that this is the same formula used during the Bretton Woods regime to peg the dollar at $35 per ounce. In other words, the Shadow Gold Price is the theoretical price of gold after the Fed inflated the supply of dollars to a level that would cover systemic bank liabilities and then re-pegged the dollar to gold. Behold the path to $10,000 gold:
This path would weaken the economy-sapping effects of debt created since President Nixon closed the gold window. It would transform a debt-based currency into an asset-backed currency. No longer would one ask the unpleasant question "What backs the dollar?" and come away with even more questions (and a headache). Right now, the dollar is backed by Treasuries held on the Fed's balance sheet, which are in turn backed by dollars, which are in turn backed by faith in fiat money — i.e., nothing! QB's monetization scenario would impose losses on certain parties as the reset button is hit, but unlike most of the policy prescriptions we've seen lately, it seems to solve more problems than it creates. Most notably, politicians could argue that this reset would involve "migration of value, in real terms, from leveraged assets to unleveraged goods, services and assets." Wage earners would be winners relative to asset owners, because "stable to higher nominal asset prices would require even higher nominal wage and consumable pricing looking forward." This scenario argues for holding some shares in producers of physical commodities (especially gold miners), even if it feels like we're in a deflationary environment. A gold standard, after a one-time debt monetization, would make for a more-balanced, efficient global economy less prone to violent booms and busts. As an added bonus: Central bankers would no longer be viewed as superheroes! Just meager servants, pegging the money supply to gold and letting the free market determine the price of money. After all, when in history has central planning worked better over time than the free market? We can hope the central bankers of the world stumble their way to a solution like that proposed by QB Asset Management before they inflict even more damage to the foundation of the global economy. Unfortunately, conditions may have to get much worse in financial markets, banking systems and economies before such "outside the box" ideas are considered. A defensive portfolio with exposure to gold and other real assets seems like the right mix in today's environment. Regards, Dan Amoss The Path to $10,000-an-Ounce Gold originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".
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| Posted: 02 Jul 2012 07:51 AM PDT Synopsis: What are copper's prices and stock movements suggesting about the global economy these days? Dear Readers, We've been called gold bugs from time to time – an accusation that doesn't really bother us, but isn't actually true. Under current market conditions, for all the many reasons we've covered in our reports, precious metals are a critical part of our portfolios now, and related equities are our favorite speculations. That much is true – but it would be copper, nickel, iron, aluminum, etc. under different conditions. Even smaller specialty metal markets – like lithium and the rare earths – get our attention when windows of opportunity open up. We do keep an eye on these other markets, however, always looking for good opportunities to buy low. With that in mind, and without further ado, we've got a quick update on the copper market for you today. And I wish a happy Independence Day (not 4th of July – Independenc...
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| How Government Spending Continues to Add Fuel to the Fire Posted: 02 Jul 2012 07:21 AM PDT "France is rotten," said a friend yesterday. "I don't know why you came back. Half the people are broke. The other half are crazy… "…and you foreigners still come here, pay $1 million for a hole-in-the-wall apartment…and walk around the city and step in dogsh*t." Yes, dear reader, that is a fair description of France circa 2012. The new president, Francois Hollande, says he won't wait for the private sector to create jobs. He will do it himself. He'll hire more teachers. Never mind that the payback on educational spending is zero — or less. It sounds good to the lumpen-voters. And how will he pay for these new teachers? This week, he is expected to raise taxes on the rich. The top marginal rate, he says, will go up to 75%. And the wealth tax will go up too. In short, the elites who control France will soon control, directly, more of it…and more of the rich will move to Switzerland, England or Belgium. Rotten…rotten…rotten… But here at The Daily Reckoning, we like rotten countries. For example, in a state of even more advanced decay, there is Argentina, where president Cristina Fernando de Kirchner has just announced a solution to the housing problem. We pause to give dear readers a quick résumé of how housing got to be a problem south of the Rio Plata. In the '80s, the generals who ran Argentina tried to pay their bills by printing money. This led to consumer price increases of more than 1,000% per year. They had to throw out one currency, start a new one, and then throw that one out too. And then there was the war with England. Eventually, people got sick of it and threw the generals out. Then, President Carlos Menem promised a "hard" currency for Argentina, which he would achieve by tying the peso directly to the dollar. No one is more persuasive than an Argentine when he is trying to borrow money. And since the currency risk was eliminated — or so investors thought — the Argentines soon were able to borrow more money than they could possibly repay, which led to the biggest default — about $100 billion — in world history. The official inflation rate is now still in single digits. But the actual inflation rate — which is apparently illegal to report — is near 25%. This — combined with the fact that when you lend Argentines money they don't pay it back — greatly reduces the availability of credit…and housing. People have to pay all cash…or nearly all-cash…to buy a house. Well, you can imagine what America's housing market would look like if people had to save money before buying a house. There wouldn't be so many houses. And that's why there aren't so many houses in Argentina. And many of those that were built in the past are not in great shape. So, in comes Cristina. Rather than give any hint that her predecessors and her own political party bear any responsibility for the housing problem, she offers another crackpot solution. We will come to that in just a minute. We just want to point out that this situation is classic. Government causes problems. It then offers solutions that make them worse. On a macro level that is what is happening in the US. The feds created a credit-based economy, increasing the supply of credit 50 times in the past 50 years. This huge swell of credit swamped the entire world…leading to (among other things) the explosion in factory output in China…the bubble in housing in the US…the big increase in wealth for the 'rich'…the blow up in '08-'09…high unemployment…and little real growth. But rather than recognize that, they set the house on fire…the feds arrive on the scene like firefighters, pretending to put it out. Trouble is, they keep adding tinder — more credit! The feds have added $4.39 trillion to the national debt since Obama moved into the White House. On an accrual basis, they'll add $20 trillion by the end of this year. And that's the fiscal side. Over on the monetary side, the Fed has been doing its part. It has added $2 trillion to its balance sheet (the foundation of the US money supply) since the crisis blew up in '08-'09. Even with all that gasoline and dry sticks, they've had trouble keeping the fire going. Consumers…and households…have been a wet blanket. They're trying to de-leverage. That is, they want to get rid of credit, not add more. But the government comes to the rescue with more student loans, housing loans, bailouts, subsidies, free bread at home…military circuses abroad. And Paul Krugman, Joseph Stiglitz, Larry Summers et al urge the feds to do even more! In our view, they've done enough damage already. Not that we're complaining. It's all very entertaining and instructive. But today's note is about rotten economies. And while the US is developing large brown spots and a sticky-sweet smell…it's not nearly as ripe as some others. For example…Argentina. Here's Cristina's solution to the housing problem; if the private sector won't make mortgage loans, the government will: She'll take money from pension accounts (that she seized 2 years ago) and then lend it to homebuyers at one-tenth the rate of inflation! Gee, you'd think that people would line up around the block to get that kind of money…which is exactly what they do. So, how do they decide who gets a loan? By lottery! Here's the report: Argentina Denies Runaway Inflation Subsidizing Loans: Mortgages June 29 (Bloomberg) — Argentines are lining up at banks again. This time, they're leaving with loans. Veronica Cajal, who wants to move out of her mother's house, is among 1.4 million Argentines who applied for subsidized home-construction loans in the first week they were offered as part of a program designed to ease a chronic housing shortage and help revive growth in South America's second-biggest economy. The plan calls for the national pension agency to lend about 20 billion pesos ($4.4 billion) for new homes at rates as low as one-tenth the pace of consumer-price increases. The government is trying to foster home building as private banks balk at issuing long-term loans amid inflation that economists estimate at 24 percent a year, a legacy of government policies that followed a $95 billion default in 2001, when Argentines queued at banks to buy dollars before a currency devaluation. The program calls for making 100,000 loans by the end of 2013. Recipients will be chosen randomly from all eligible applications. Why didn't you think of that, Mr. Market? You dumb-bell. All you can think of is tired old formulas — protecting the value of the money…then letting willing buyers and sellers work out for themselves how much credit they want…and at what price. Bo…ring! C'mon, Mr. Market…use some imagination…! Bill Bonner How Government Spending Continues to Add Fuel to the Fire originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".
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Thanks to all who submitted guesses for the latest hat contest. The contest is now closed. Recognizing you need a new thread for the overnight, here are three things to discuss.
Much of what is written for the Gold Market update applies equally to silver, so it will not be repeated here. There are, however, some important differences that we will focus on here, which suggest that silver now has really big upside potential from this point, despite its comparatively anemic reaction on Friday to the news out of Europe, compared to other commodities.
My Dear Friends,
Iceland re-elected its president this weekend.
Meanwhile, back in the thoroughly zombified and alleged Land of the Free… the manufacturing sector is now shrinking.
China's manufacturing numbers, which came out overnight, are better — but "better" is a relative term.
The market reaction to the manufacturing numbers are… well, muted.
Gold sits where it did at day's end on Friday, at $1,597. Silver's perked up a bit, to $27.61.
Over the next 25 years, "demand for metals such as copper will outstrip demand throughout our entire history," declares Canadian mining expert Damian Duff.
One of milk's lesser-known ingredients might hold the key to solving chronic obesity and heart disease, according to research Patrick Cox is reading.
"The end of small banks in America seems near," says Chris Mayer. "But the small banks will go out with a bang — one that investors can capitalize on.
From the "don't give them any ideas" file, we see that prisoners in Brazil can now reduce their sentences by… climbing aboard a stationary bicycle.
"Food stamps and Obamacare," a reader writes, juxtaposing two recent topics here in The 5: "Does anyone else see the absurdity in this?"
"Sorry, but the bashing of the poor and needy without ANY freaking balance tells me you all are just angry bigots," a reader vents.
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