Sunday, July 22, 2012

Gold World News Flash

Gold World News Flash

Rick Rule of Sprott USA Interivew: Gold, Water, Stocks, the Economy, and Life Success

Posted: 21 Jul 2012 08:00 PM PDT

Still Think That Money Market Fund Is 'Cash'?

Posted: 21 Jul 2012 06:58 PM PDT

If history is any guide, by the end of this process gold will be the only remaining risk-free asset, and its value in debased fiat currency terms will be astronomical. Read More...



‘Black Friday' Blame-Game Escalates As Spain Is Out Of Money In 40 Days

Posted: 21 Jul 2012 06:38 PM PDT

from Zero Hedge:

With Valencia bust, Spanish bonds at all-time record spreads to bunds, and yields at euro-era record highs, Spain's access to public markets for more debt is as good as closed. What is most concerning however, as FAZ reports, is that "the money will last [only] until September", and "Spain has no 'Plan B". Yesterday's market meltdown – especially at the front-end of the Spanish curve – is now being dubbed 'Black Friday' and the desperation is clear among the Spanish elite. Jose Manuel Garcia-Margallo (JMGM) attacked the ECB for their inaction in the SMP (bond-buying program) as they do "nothing to stop the fire of the [Spanish] government debt" and when asked how he saw the future of the European Union, he replied that it could "not go on much longer." The riots protest rallies continue to gather pace as Black Friday saw the gravely concerned union-leaders (facing worrying austerity) calling for a second general strike (yeah – that will help) as they warn of a 'hot autumn'. It appears Spain has skipped 'worse' and gone from bad to worst as they work "to ensure that financial liabilities do not poison the national debt" – a little late we hesitate to point out.

Read More @ Zero Hedge.com

Forget Corn, Is Soy Poised For Lift-Off?

Posted: 21 Jul 2012 05:54 PM PDT

By now everyone is aware of the silver-like surge in corn prices over the past month, driven by the recognition that what is quickly becoming the most severe drought in US history is here to stay indefinitely longer as elusive rainfall remains just that. As can been seen on the chart below, corn prices have risen by 54% since mid-June. What may come as a surprise is that another critical commodity - Soybeans - has only risen by half as much, or just 28% in the past month. Why "only"? Because as the following two charts from Morgan Stanley show, the fundamental picture for soybeans may be just as bad if not worse as corn, which would mean there is far more price upside in soy in the coming days, especially if strategies based on prayer, for either central bank intervention or rain, remain unasnwered.

First, a relative comparison of corn vs soybeans:

And now, here is what the Corn crop looks like compared to Soybeans: what may come as shock is that percentage of soybeans rated in "good or excellent" condition is even less than corn.

From an inventory standpoint, soy is actually worse than corn. Which means the squeeze may be on even sooner: as a reminder, the US is the world's biggest producer and consumer of soybean. Well, in 2012 it may just be consumer.

Finally, if soybean meal is also about to join corn in the parabolic department, one can just as easily expect downstream protein derivatives to not be long in joining the moonshot party, coupled with margins of unhedged fast food stores collapsing into negative territory in no time.


Valencia, Spain asks for a bailout/Egan Jones lowers credit rating of Spain to CC plus/Spanish 10 yr bond yield rises to 7.27%/Spanish Ibex falls close to 6%

Posted: 21 Jul 2012 05:30 PM PDT

by Harvey Organ, HarveyOrgan.Blogspot.ca:

Good evening Ladies and Gentlemen:

Gold closed the week up $1.00 by to $1585.00. Silver after being whacked early, regained its composure and actually finished up on the day by 4 cents to $27.35. The big news of the day came from Spain where it's 3rd largest city asked for funds as it was basically broke. The Spanish Ibex immediately proceeded to fall close to 6% and the Spanish 10 yr bond yield skyrocketed to 6.27%. Not to be undone, the Italian 10 yr bond yield finished the day at 6.16%. All bourses were in the red but it was Europe that had the deeper red ink. Conditions continue to deteriorate in Europe and this was manifested with a huge fall in the Eur/USA cross finishing the day in the USA at:

1.2154

The German DAX finished its session down 1.9%. Both Paris and Lisbon both had their stock exchanges down 2.14%. The Dow finished down 120 points or .93%. Egan Jones lowered the boom on Spain as they lowered its credit rating to CC plus from CCC-.

Let us now head over to the comex and assess trading on Friday.

Read More @ HarveyOrgan.Blogspot.ca

Economic Countdown To The Olympics 4: Would The Euro Be A Winning Team?

Posted: 21 Jul 2012 05:06 PM PDT

With just a few days left until the pre-opening soccer games begin in the UK, we continue our five part series (Part 1, Part 2, Part 3) on the intersection between markets and the Olympics by considering whether an integrated Europe would have performed relatively better - i.e. would 2+2>4 - and what are the factors. Goldman's analysis of the pros and cons of 'integrating' their Olympic teams is extremely apropos the current deteriorating (yet desperately dreaming of improving) coordination of these 17 disparate nations. The answer, of course, is that there are some benefits from this medal 'integration' in specific cases but since German reunification, their medal performance has deteriorated - even in the team events where aggregating talent pools should have its greatest gains. In a 'zero-sum' context such as competing for Olympic medals, Germany's gains must come at the expense of other countries - and rather notably there are few French medal winners before or after an 'integration. Sounds familiar?

Goldman Sachs: Would the Euro area Make a Medal-Winning Olympic Team?

"Wir sind jetzt die Nummer 1 in der Welt … Jetzt kommen die Spieler aus Ostdeutschland noch dazu. … Es tut mir leid für den Rest der Welt, aber wir werden in den nächsten Jahren nicht zu besiegen sein."

 

(trans.) "We are already the best team in the world, and now we are going to add the top players from East Germany. … It is a pity for everyone else, but we will be unbeatable for the foreseeable future."

 

Franz Beckenbauer, speaking at the press conference following the 1990 World Cup final. In 1990, Germany was reunified (under Chancellor Helmut Kohl) and won the World Cup (under the management of Beckenbauer).

A Unified Approach to the Olympics?

If the Olympic teams of Euro area countries were to unify in the manner of their monetary policies, what impact would this have on their Olympic medal-winning performance?

Applying the logic of Franz Beckenbauer to the Euro area would suggest a significant improvement. If, as Beckenbauer expected, a united Germany would outperform the two separate Germanies, an Olympic team combining the sporting prowess of 17 Euro area countries should excel. At a minimum, on the basis of Beckenbauer's logic, one would expect a combined Euro area team to win more medals than the sum of those won by teams from its constituent individual parts.

Integration: Pros and Cons

But there is an important caveat here. While combining forces will improve the quality of a team by widening and deepening the pool of talent from which selection can be made, it also reduces the number of entries in the competition. For a team sport like soccer, the benefits of the former are likely to outweigh the costs of the latter: hence Beckenbauer's assertion.

In the Olympics, individual rather than team sports dominate: a unified Euro area team would have a significantly smaller number of competitors than 17 individual countries. Where margins of winning are small and (as a result) luck inevitably plays a relatively more substantial role in determining results, having fewer entrants may lower the final medal tally.

A variety of other relevant factors also support the expectation of better medal performance from a unified team:

  • The intra-Euro area competition implied by the need to select Olympic entrants from a much wider pool may force athletes to train harder simply to be selected, honing their skills in a way that makes them more competitive on the global Olympic stage. 
  • Focusing the resources of the Euro area as a whole on a smaller number of top quality athletes with a real chance of winning medals would improve the overall medal count relative to a situation where those resources are distributed over a broader set of entrants with, on average, less likelihood of taking gold. 
  • Allowing high class athletes to specialise in their best event in the knowledge that others of a similar standard will focus on other events can improve their performance and thus the overall medal return.

Against these, there are other factors which operate in the opposite direction—after all, despite Beckenbauer's confidence, Germany has failed to add to its three World Cup triumphs since reunification:

  • One cannot deny the role that national pride plays in driving sporting excellence. In the unforgiving environment of international sport, the extra motivation taken from representing one's country may have a decisive effect: while athletes may be inspired to extra efforts by competing for Germany or France, representing a Euro area team may not arouse the same passion—and results could suffer as a consequence.
  • Support from the stands—again, something that may make a difference when the line between success and failure is so narrow—may be less passionate for a 'remote' Euro area than for a home country enjoying a greater emotional connection.
  • Lastly, in order to raise their profile and status, small countries may be prepared to devote a greater share of national resources to achieve sporting success. East Germany is a case in point—although its welldocumented programme of institutionalised doping illustrates how such nationalistic ambitions can lead in dangerous and damaging directions.

German Lessons

The German experience offers some insight into how Olympic performance could be improved by unifying teams at the Euro area level. The table on the previous page shows the medals won by Germans at the Olympics before and after reunification in 1990.

At first glance, the table does not suggest that German reunification led to a significant improvement in medalwinning performance. On the contrary, East Germany alone won more medals (and more gold medals) at the six Olympic Games prior to reunification than the united Germany has won in the five Games since. The number of medals won per participant is also much lower for the unified Germany than it was for East Germany before reunification.

Looks Like Team Spirit

This first table shows overall medal performance. Given the distinction we made between team and individual events above, in the second table we focus on team sports and evaluate how reunification influenced Olympic performance in these events. It is in this domain that the benefits of integration are likely to be most pronounced.

We first compare the combined medal performance of the two German teams prior to reunification with that of a unified German team since: the difference in shown in column A of the table below. Economists call this an 'event study' analysis—we simply look at changes 'before and after'. The exercise shows mixed results: better performance in hockey, but worse in football (for example).

But, as economists, we are sceptical of such simple 'before and after' comparisons. In our view, these exercises offer a poor guide to the impact of unification on medal-winning performance: they fail to control for other factors that have influenced German success at the Olympics over the period we are studying. Ideally, we would seek to control for these other factors and identify the impact of unification more precisely, so as to develop a more refined view of what would happen if—other things equal—teams were to unify elsewhere.

To illustrate, consider the rise of China: it only started routinely participating in the Olympics at the Los Angeles Games in 1984, but has subsequently invested heavily in improving its sporting performance (and, of course, has a vast pool of potential talent to draw upon).

Chinese entry has affected the medal-winning opportunities of other countries, including Germany. It was easier to win medals prior to 1984 (and thus before German reunification) than after. If we do not control for this effect, we would end up with a (downward) biased estimate of the impact of reunification, which would lead us to forecast too weak an impact of Euro area integration on Olympic medals won.

Economists use an approach called 'difference-indifferences' estimation to deal with this problem. This approach compares the change in performance in the case of interest with the change seen in a control group over the same period. The differences between these two changes in performance (i.e., the 'difference-indifferences') captures what is special about the case being studied, controlling for other factors that influence the control group.

To use our example above, by comparing how German medal performance changed across reunification with how (say) French medal performance changed over the same period, we purge the impact of Chinese Olympic participation from our estimate of the impact of German reunification, since both Germany and France will have been influenced by China.

Not surprisingly, the key challenge in applying this approach is to identify a good control group. Two criteria are relevant here: (1) controls should perform similarly to Germany prior to reunification; and (2) controls should not experience a spill-over from the impact of reunification on German performance.

The latter criterion is challenging: in a 'zero sum' context like competing for Olympic medals, Germany's gains must come at the expense of other countries. Nonetheless, we apply this difference-in-differences approach and select France as the control. The results are shown in column B of the table on the previous page.

Across the set of sports evaluated, the results remain mixed. We do see some cases of improvement, notably in hockey. But on average we identify a deterioration in German medal-winning performance after reunification.

However, a closer look at the table reveals that France may not be a very good control group. There are few French medal winners in the sports we consider, either before or after reunification. While this suggests caution in interpreting the difference-in-differences result, evaluating the robustness of our base case by using US results as an alternative control (not shown, for brevity) does not alter the conclusions.

Benefits of Sporting Integration

Our analysis identifies benefits from sporting integration in specific cases, but these cannot be generalised across all events. On average, German medal performance at the Olympics has deteriorated since reunification, even in the team events where the benefits should have been greatest.

 

We have identified a large number of potential pros and cons of unification: to capture the benefits, one naturally needs to develop a structure that maximises the former and minimises the latter. This requires a high degree of institutional development.

 

Sounds familiar? These messages may resonate with the Euro area's ongoing attempts to grapple with its financial and sovereign crises.

Andrew Benito and Huw Pill

'Black Friday' Blame-Game Escalates As Spain Is Out Of Money In 40 Days

Posted: 21 Jul 2012 03:06 PM PDT

With Valencia bust, Spanish bonds at all-time record spreads to bunds, and yields at euro-era record highs, Spain's access to public markets for more debt is as good as closed. What is most concerning however, as FAZ reports, is that "the money will last [only] until September", and "Spain has no 'Plan B". Yesterday's market meltdown - especially at the front-end of the Spanish curve - is now being dubbed 'Black Friday' and the desperation is clear among the Spanish elite. Jose Manuel Garcia-Margallo (JMGM) attacked the ECB for their inaction in the SMP (bond-buying program) as they do "nothing to stop the fire of the [Spanish] government debt" and when asked how he saw the future of the European Union, he replied that it could "not go on much longer." The riots protest rallies continue to gather pace as Black Friday saw the gravely concerned union-leaders (facing worrying austerity) calling for a second general strike (yeah - that will help) as they warn of a 'hot autumn'. It appears Spain has skipped 'worse' and gone from bad to worst as they work "to ensure that financial liabilities do not poison the national debt" - a little late we hesitate to point out.

Franfurter Allgemeine: Now Burns Spain

(Via Google Translate)

Spain has no "Plan B" more. The money will last until September. Then you have to spend the Treasury after a break in August and again fresh government bonds. However, if the interest and the risk premium on the record highs of the past "Black Friday" hold, is the fourth largest economy in the Euro zone - to Greece, Ireland and Portugal - the fourth rescue candidate.

 

How much has shaken the unrelenting storm in financial markets and alarmed the country's government can be seen in an almost desperate sounding aggressive opinion of the Spanish foreign minister. At a conference with other European leaders in Palma de Mallorca attacked José Manuel García-Margallo, the European Central Bank (ECB) with unprecedented severity as Tunix bank.

 

García-Margallo accused the ECB, which has reportedly bought for five months, no more Spanish government bonds and thus the pressure on Spain not reduced before, to keep "hidden". Literally, he added. "It does nothing to stop the fire of the (Spanish) Government debt," his claim on the ECB in the sign of European solidarity now to intervene in favor of his country, was not all. When asked how he saw the future of the European Union and its common currency, he replied that it could "not much longer go on," that countries such as Germany, debt free could, while others such as Spain standing water up to his neck.

 

What had happened 20 at that July 2012, the Black Friday signaled as early as the Thursday night by the images of nationwide protest rallies "Greek standards." Here, the organized power of protests by the unions were run primarily employed by the public service with the exception of a few final acts of violence in the capital peacefully everywhere. But the union leaders called the warnings of a "hot autumn", wants a second general strike this year wore on waking certainly not to reassure international investors in regard to the soundness and solvency in Spain.

 

Then came the early afternoon of the next big bang: Valencia asked the first of the seventeen regions of Spain for help from the newly created National Salvation Fund (FLA), because it has serious liquidity problems. Since it did not help that a quarter of an hour later from Brussels came the news that the Euro Group have released the more than 100 billion euros to recapitalize ailing Spanish banks and the first installment of disposable 30 billion for the already partly nationalized banks until the end of July were.

 

The faces of government officials fossilized

Of this and of the parliament on Wednesday adopted drastic austerity program of 65 billion unfazed, overthrew the Spanish stock market fell by almost six percent. At the same time increased the risk premium on Spanish government bonds already well above the Greek-Irish-Portuguese rescue addition to a record level of 610 basis points above German reference value. The interest rates for ten-and thirty-year bonds ended the trading day at around 7.3 percent is also acute in the danger zone.

 

The faces of government officials who had to announce on Friday itself even more bad news fossilized rapidly. Even the hard from her left Façon to be brought Deputy Prime Minister Soraya Sáenz de Santamaría called it "incomprehensible" that the markets in Spain punished in such a way where his government produce it for six months in the timing of the reform and austerity at a time.

 

In desperation sought the Deputy Prime Minister verbal refuge with federal Finance Minister Wolfgang Schaeuble said, "I fully agree with him. The situation we are experiencing is so because of the large uncertainty that exists in the euro zone. "Then dodged all questions, whether on the bank bailout now inevitably will come to the whole country, but closed already no longer sufficient. At the two major ghosts in the background, namely the possible insolvency of Spain or a breakup of the euro, was at that time then stir no more.

 

Six other regions are in need of help

The bad news flipped finally on his own Finance Minister Cristobal Montoro. He admitted that the recession will extend to a negative growth of an estimated 0.5 percent of gross domestic product (GDP) in 2013 for one year. Given falling tax revenues and rising social expenditure - unemployment is expected later this year rising to over 25 percent - is no longer with the previously approved mini growth of 0.2 percent expected. This year it will just as it has several foreign analysts, including the International Monetary Fund (IMF), have predicted to go down significantly: minus 1.5 percent.

 

Then had Montoro, the best pen-pushers in the cabinet of Prime Minister Mariano Rajoy, another piece of bad news: Because of rising interest rates and unemployment benefits would have to increase government spending in the coming year and by 9.2 percent. As an upper limit for the next budget, he called 126 billion euros (116 this year) and estimated the proportion of debt service on up to 39 billion. So this would be the largest budget item in general.

 

As the Minister of Foreign Affairs in Palma went out of his skin diplomats and deposed the emergency call to the ECB, the swirling dust of Valencia had not only not set, but spread to other regions. The six other candidates are called rescue Catalonia - the former "engine" of the Spanish economy alone corresponds approximately to the volume of Portugal - Balearic Islands, Canary Islands, Castile-La Mancha, Murcia and Andalusia may have. It is the largest and most populous region. You scrape all of the insolvent and can along without help from the central Wages Liquidez Autonómico (FLA), neither their use nor pay for the bonds maturing their suppliers.

 

Monti comes to Madrid

18 billion euros to put the government in the FLA pot. Of which 6 billion a called dormant "advance" the government agency with the best credit rating: the National Lottery. Valencia, a stronghold of the conservative People's Party, whose representatives are there over the years contributed megalomaniac buildings and even a new airport, which is never a plane has landed, is expected to require first aid as two billion. In Catalonia, there should be a bit more expensive. Perhaps the most obvious may be the last three decades Socialist-ruled Andalusian black hole, no one even dares to predict.

 

Prime Minister Rajoy also remained true to its strategy over the weekend not to step into self-publication. But it became known that he for the second Mario Monti, has been invited to Madrid - august his Italian neighbors - and co-conspirators against Chancellor Angela Merkel at the last European summit in Brussels. This will enable the two friends in Berlin alone at the thought of causing goose bumps "Euro Bonds" on a common approach and probably speak a new attempt to lure the ECB from its "hiding place". Some doubt now, though, that Monti wanted to identify themselves too closely with the Bredouillenspaniern, yet there is Italy, the 'risk premium' now suspended well.

 

Vice Premier Sáenz de Santa María was meanwhile from the exchange. "Now we need to work to ensure that the financial liabilities (the banks) do not poison the national debt" That's easier said than done if the EU and the ECB is not Spain under the arms . access Brussels to act from the perspective of Madrid always a snail's pace, where the Spanish crisis but is now viewed primarily as a "euro crisis" for which one - need new, credible supporting stability mechanisms - with central bank help. Be if Spain, which this year will have around 60 billion euros to repay loans due rescued, would have, there are two variants: the already "traditional" with loans to macroeconomic conditions and visits to the "Men in Black" or the use of Other funds from the bank bailout fund.

 

In almost all European capitals, including Madrid, has been in the past week vehemently denied that the 100 billion euros would be used not only to clean up the banks. But somewhere in the agreements is a smooth passage in which this kind - would allow - after approval of the euro group, and probably also of the German Bundestag. Perhaps as soon as a Foreign Minister García-Margallo hard to knock.

Eric Sprott tells King World News of the black swan nobody is talking about

Posted: 21 Jul 2012 02:33 PM PDT

4:25p ET Saturday, July 21, 2012

Dear Friend of GATA and Gold:

Sprott Asset Management's Eric Sprott tells King World News that he can see only hyperinflation or default for the world financial system, unless governments decide that their options are impossible and just try to shut the whole system down in a deep freeze -- which would be another form of default. Whatever happens, Sprott says, gold and silver likely will be the only safe havens -- presumably gold and silver in hand. An excerpt from the interview is headlined "The Frightening Black Swan Nobody is Talking About" and it's posted at the King World News blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/21_Sp...

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


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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


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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...

The Economic Collapse For Dummies

Posted: 21 Jul 2012 01:49 PM PDT

If last week's 74-page all-encompassing thesis on "how 'everything' is interconnected and headed for 'complete systemic disintegration'" is a little too much, here is a 10 minute clip that ties together all the loose ends of the reality bubbling just beneath the veneer of hope that so many call our markets. A spectacular gathering of all things bearish that provides everything you wanted to know about the inevitability of a major economic collapse but were afraid to ask: a little too doom and gloomish perhaps, but sadly that does not make it improbable, especially in the current environment where the central planners keep doing the same over and over, hoping that just once "this time will be different." From demographic trends, over-leveraging, corporate profit extremes, deflationary impacts, and hyperinflationary reflexivity- there's a little here for everyone on a warm Saturday afternoon.

Beyond the epic first two minutes of Tice and Dent battling it out for doomiest of all, the thesis gets going...

(h/t Future Money Trends)

Still Think That Money Market Fund Is “Cash”?

Posted: 21 Jul 2012 12:45 PM PDT

When investors decide to close out their riskier positions and move into "cash", they don't actually go to the bank and get a stack of twenties. Most just sell their stocks and let their broker sweep the proceeds into a money market fund which, they assume, is the same thing as cash because it holds high-quality short-term commercial paper that almost never defaults.

That pleasant assumption breaks down as soon as you look at a typical money market fund's holdings and see that it owns, among other disturbing things, a lot of European bank debt.

But at least you can get your money out with a mouse click, right?

Well, maybe not. Apparently the Fed, cognizant of the potential weakness of the money fund system, is considering withdrawal limits:

Fed Eyes Limiting Money-Market Fund Withdrawals
NEW YORK–The Federal Reserve Bank of New York said it supports limiting some types of money-market fund withdrawals in a bid to protect those funds from suffering the equivalent of a bank run.

The recommendations came from a staff report released Thursday. New York Fed President William Dudley in a press release accompanying the document said he "strongly" endorses the ideas put forth by authors Patrick McCabe, Marco Cipriani, Michael Holscher and Antoine Martin.

"Further reform of money funds is essential for our nation's financial stability," Mr. Dudley said.

The analysts propose that money-market funds could be strengthened if they were to have a "minimum balance at risk." As envisaged by the authors, this balance "would be a small fraction of each shareholder's recent balances that would be set aside in the event that they withdrew from the fund," the press release said.

While regular transactions would be allowed as they are now, this special minimum balance would be locked up for 30 days. "The delay would ensure that redeeming investors remain partially invested in the fund long enough to share in any imminent portfolio losses or costs arising from their redemptions," the bank explained.

The idea advanced in the New York Fed paper seeks to force investors to be more mindful of what they are doing with money-market fund investments. Many perceive the funds to be a very safe and liquid place to park funds. But that notion was tested during the 2008 financial crisis, and some have worried that in the current environment, money-market funds could be a prime conduit for importing Europe's ongoing financial crisis to the U.S.

Money-market funds currently hold some $2.7 trillion in assets, according to the paper. They own, as of late 2011, around 40% of all dollar-denominated commercial paper, the New York Fed said.

The report provides fodder for Securities and Exchange Commission Chairman Mary Schapiro as she inches her divided agency toward a vote as early as this summer on a proposal to strengthen money-fund regulations. SEC officials described the New York Fed paper as a "blueprint" for the changes Ms. Schapiro would like to make.

Ms. Schapiro, joined by Federal Reserve and Treasury Department officials, sees money funds as one of the weakest links in the financial system despite reforms adopted two years ago to make the industry more resilient to widespread redemptions. Fund firms and other experts say the cash-like investments rarely run into serious trouble.

To publicly float her proposals, Ms. Schapiro needs "yes" votes from two of her four fellow commissioners. For months, three of the commissioners have said they don't believe there is sufficient evidence additional money-fund overhauls are needed, effectively blocking the proposals' advancement.

A number of Fed officials have been anxious about money-market funds for some time. Central bankers see the funds as a prime source of risk in large part because their structure is such that when trouble, or the fear of trouble, arises, investors have every incentive to withdraw all their funds. That can create the equivalent of a bank run.

In congressional testimony Wednesday, Fed Chairman Ben Bernanke said money-market funds are currently a potential source of financial-market instability. He expressed his support of regulators' attempts to lower the source of risk posed by money funds.

Some thoughts
In a healthy society lots of things can be legitimately seen as risk-free, starting with a sound currency and moving through the financial instruments based on that currency and administered by well-capitalized and sensibly-regulated banks.

In an unhealthy society fewer and fewer things are risk-free. The banks can no longer be trusted to survive, governments run out of money, and even the currency stops functioning as a store of value.

Currency risk and market instability go hand-in-hand, with each amplifying the volatility of the other. So along with inflation-induced booms and busts comes an increase in the incidence of capital controls, where panicked governments limit citizens' and foreign investors' ability to move wealth around. The Fed's proposed money market fund rules are both a perfect example of this and a sign of things to come. Once the crisis really gets going, expect controls to be imposed on bank accounts and international funds transfers initially, and from there who knows. Maybe IRAs and 401(K)s?

If history is any guide, by the end of this process gold will be the only remaining risk-free asset, and its value in debased fiat currency terms will be astronomical.


Gold Daily and Silver Coiling for an Imminent Move

Posted: 21 Jul 2012 11:49 AM PDT

"Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by the deluge of bank paper, as we were formerly by the old Continental paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if any they have, in manufactures, commerce, and other useful pursuits, make it an instrument to burden all the interchanges of property with their swindling profits, profits which are the price of no useful industry of theirs."


SILVER DOGS

Posted: 21 Jul 2012 11:45 AM PDT

Still NO Housing Bubble in Canada ? So What Will Cause Prices to Finally Correct?

Posted: 21 Jul 2012 11:40 AM PDT

Canada’s housing prices continue to escalate [there has been no housing collapse as there has been in the U.S., Spain, U.K., Australia and elsewhere over the past 4-6 years] but concern is rising as to whether they are now, finally, ‘in a bubble’ and about to correct either modestly or severely. This article discusses what would cause a change in direction in Canadian housing prices. Words: 500 So says Ian R. Campbell (www.StockResearchPortal.com) in paraphrased excerpts from one of the components of his subscription service* which is presented here with his kind permission for posting on www.munKNEE.com (Your Key to Making Money!). This paragraph must be included in any article re-posting to avoid copyright infringement. Campbell goes on to say, in part: Clearly things that could/would cause the direction of Canadian housing prices to ‘go downward’ include: [LIST] [*]at a micro-level: [LIST] [*]Canadian consumer household debt levels, [*]Canadian unem...


Gold futures still have bullish tilt, Arensberg's GGR says

Posted: 21 Jul 2012 11:27 AM PDT

1:22p ET Saturday, July 21, 2012

Dear Friend of GATA and Gold:

Analyzing the reported positions of commercial traders in gold futures, Gene Arensberg of the Got Gold Report finds that swap dealers have moved from slightly long to slightly short, which he construes as still bullish, as ordinarily they would be even shorter. Arensberg's commentary is headlined "Comex Swap Dealers Ease Back to Net Short Gold" and it's posted at the GGR Internet site here:

http://www.gotgoldreport.com/2012/07/comex-swap-dealers-ease-back-to-net...

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


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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


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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...

Guest Post: Why Is The Fed Not Printing Like Crazy?

Posted: 21 Jul 2012 09:10 AM PDT

Submitted by John Aziz of Azizonomics

Guest Post: Why Is The Fed Not Printing Like Crazy?

I try to read all sides of the economics blogosphere, and try and grasp the ideas of even those who I would seem to radically disagree with.

One thing that the anti-Fed side of the economics blogosphere seems to not fully appreciate is the depth of disappointment with Ben Bernanke from the pro-Fed side. For every anti-Fed post bemoaning Bernanke's money printing, there is a pro-Fed post bemoaning Bernanke for not printing enough. Bernanke, it seems, is tied to everybody's whipping post.

And in fairness to the pro-Fed side, the data shows that the Fed is not printing anywhere near as much as its own self-imposed interpretation of its mandate demands. (Of course, I fundamentally disagree that price stability should be interpreted as consistent inflation, but that is an argument for another day).

Scott Sumner notes:

Recall that the Fed tries to keep inflation close to 2.0% and unemployment close to about 5.6% (the Fed's current estimate of the natural rate.)  One implication of the dual mandate is that they should try to generate above 2% inflation during periods of high unemployment, and below 2% during periods of low unemployment.

 

In July 2008 unemployment rose above 5.6%, and it's averaged nearly 9% over the past 46 months.  So the Fed's mandate calls for slightly higher than 2% inflation during this 46 month slump.  Last month I reported that the headline CPI had risen 4.6% in the 45 months since July 2008.  Now we have the May data, and the headline CPI has gone up 4.3% in the 46 months since July 2008.  So the annual inflation rate over that nearly 4 year period has fallen from a bit over 1.2%, to 1.1%.

Raw data:

Note that downward slope in inflation into 2012?

That's the Fed not doing QE3 when everyone (especially gold prices) expected them to, and when their own self-imposed interpretation of their mandate calls for them to inflate more. And nobody can say that the Fed is out of bullets; central banks are never out of bullets — there was a time when a central bank was limited to the number of zeroes it could fit on a banknote, but in the era of digital currency, even that limit has been removed.

Here's the younger Bernanke's views on the subject:

Franklin D. Roosevelt was elected President of the United States in 1932 with the mandate to get the country out of the Depression. In the end, the most effective actions he took were the same that Japan needs to take — namely, rehabilitation of the banking system and devaluation of the currency to promote monetary easing. But Roosevelt's specific policy actions were, I think, less important than his willingness to be aggressive and to experiment— in short, to do whatever was necessary to get the country moving again. Many of his policies did not work as intended, but in the end FDR deserves great credit for having the courage to abandon failed paradigms and to do what needed to be done. Japan is not in a Great Depression by any means, but its economy has operated below potential for nearly a decade. Nor is it by any means clear that recovery is imminent. Policy options exist that could greatly reduce these losses. Why isn't more happening?

 

To this outsider, at least, Japanese monetary policy seems paralyzed, with a paralysis that is largely self-induced. Most striking is the apparent unwillingness of the monetary authorities to experiment, to try anything that isn't absolutely guaranteed to work. Perhaps it's time for some Rooseveltian resolve in Japan.

And here's Paul Krugman pulling a Bernanke on Bernanke:

Bernanke was and is a fine economist. More than that, before joining the Fed, he wrote extensively, in academic studies of both the Great Depression and modern Japan, about the exact problems he would confront at the end of 2008. He argued forcefully for an aggressive response, castigating the Bank of Japan, the Fed's counterpart, for its passivity.

 

Presumably, the Fed under his leadership would be different. 

 

Instead, while the Fed went to great lengths to rescue the financial system, it has done far less to rescue workers. The U.S. economy remains deeply depressed, with long-term unemployment in particular still disastrously high, a point Bernanke himself has recently emphasized. Yet the Fed isn't taking strong action to rectify the situation.

 

It really makes no sense — except in terms of politics. I really believe that we have reached a point where the Fed is afraid to do its job, for fear of being accused of helping Obama.

I am fairly certain the answer to why Bernanke isn't increasing inflation when his former self and former colleagues say he should be is actually nothing to do with domestic politics, and everything to do with international politics.

Most of the pro-Fed blogosphere seems to live in denial of the fact that America is massively in debt to external creditors — all of whom are frustrated at getting near-zero yields (they can't just flip bonds to the Fed balance sheet like the hedge funds) — and their views matter, very simply because the reality of China and other creditors ceasing to buy debt would be untenable.

Why else would the Treasury have thrown a carrot by upgrading the Chinese government to primary dealer status (the first such deal in history), cutting Wall Street's bond flippers out of the deal?

As John Huntsman (in his days as ambassador to China) reported in a cable back to Washington, China is keen to stop buying low-yield treasuries and start buying other assets, but the US is desperately pushing China back toward treasuries:

The Shanghai-based Shanghai Media Group (SMG) publication, China Business News:

"The United States provoked a trade war again by imposing high anti-dumping duties on Chinese-made gift boxes and packaging ribbon. China has become the biggest victim of the U.S.'s abusive implementation of trade remedy measures. 

 

The United States no longer sits still; it frequently uses evil tricks to force China to buy U.S. bonds.

 

A crucial move for the U.S. is to shift its crisis to other countries – by coercing China to buy U.S. treasury bonds with foreign exchange reserves and doing everything possible to prevent China's foreign reserve from buying gold.

 

Today when the United States is determined to beggar thy neighbor, shifting its crisis to China, the Chinese must be very clear what the key to victory is.  It is by no means to use new foreign exchange reserves to buy U.S. Treasury bonds.  The issues of Taiwan, Tibet, Xinjiang, trade and so on are all false tricks, while forcing China to buy U.S. bonds is the U.S.'s real intention."

And that, in a nutshell, is why Bernanke is not printing nearly as much as Krugman wishes. In my view only a brutal 2008-style collapse can bring on the kind of printing — QE3, NGDP targeting and beyond — that the pro-Fed blogosphere wishes to see, because it is only under those circumstances that China and other creditors will happily support it.

To a heavily-indebted nation, creditors have big leverage on monetary policy.

COMEX Swap Dealers Ease Back to Net Short Gold

Posted: 21 Jul 2012 09:04 AM PDT

  • But not a lot and they are still near flat gold which some traders read as more bullish than bearish.

HOUSTON --  One week ago we reported that for only the third time in the six years of Commodity Futures Trading Commission (CFTC) disaggregated trader data, commercial futures traders the CFTC classes as Swap Dealers reported a net long position in gold futures on the COMEX bourse in New York. (Link to the July 14 article.) 

New data released by the CFTC Friday, July 20, show that the veteran Swap Dealers are no longer net long, but they are not all that net short either. 

20120721-SD-net

Source:  CFTC for COT data, Cash Market for gold. 


As of Tuesday, July 17, as gold edged $15.88 or 1% higher on the Cash Market in New York to close at $1,583.04, Swap Dealer commercial traders reported holding 55,690 gold contracts long and 56,308 short for a combined net short position of a small 618 lots according to data released by the CFTC on July 20.

So as gold edged about $16 higher in the choppy, range bound COT trading week, the traders classed as Swap Dealers flipped from 799 contracts net long (which is unusual) back to 618 contracts net short, a net swing of 1,417 contracts added to the net short side of the equation.   (A rather small move, barely visible in the chart above.)

Meanwhile, as shown in our weekly recap of COMEX DCOT trader positioning yesterday, Producer/Merchant commercial traders, which include bullion banks and the largest bullion dealers, increased their net short positioning by a modest 4,636 lots to show a net 158,201 contracts net short.

Continued...

All the other classes of traders, Managed Money, Other Reportables and Non-Reportables reported higher net long positioning, with smaller traders doing the bulk of the net buying, as shown in the DCOT recap linked above.

Swap Dealers are commercial derivatives traders who primarily trade in the form of swaps in other markets and then hedge those sophisticated positions using futures contracts.

The CFTC requires all large traders to report their open positions as of the close on Tuesday each week and then releases that Commitments of Traders (COT) data to the public, usually the following Friday.

A net long futures position benefits if prices rise. A net short position increases in value if prices fall.  Either or both positions can be used to hedge opposite exposure in the same market or in other markets.  

The bottom line for this message is that it didn't take very much of a rise in gold to send the normally net short Swap Dealers back from net long to net short, but they are not very far from net flat, which is itself remarkable.  Traders we correspond with are nearly unanimous that is a more bullish than bearish condition, especially taken in context of Managed Money traders covering or reducing their short bets by a larger 6,340 contracts or 18% to report 28,444 shorts. 

20120721-MM-shorts

(Just short positions, not net short. Managed Money also reported holding 109,800 long contracts and are therefore net long a low 81,356 contracts.)  Source:  CFTC for COT data, Cash Market for gold. 

Swap Dealers near flat; Managed Money traders near their lowest net long position in four years; Other Reportable traders within 5,000 contracts of their highest ever net long position, all in a summer, light liquidity, nervous environment.  The largest trader positioning is a high-octane powder keg recipe for explosive volatility just ahead, we believe.

Get ready for the fireworks, but whichever side of the battlefield one favors be sure and MIND YOUR TRADING STOPS (for short term trading).  Stick with the real deal physical metal for peace of mind and protection against currency debasement, purchasing power preservation and contagion insurance.     

We will have more in our subscriber charts by the usual time on Sunday.  Subscribers just log in and click on whichever chart is of interest. – Gene Arensberg

Gold may be last hope for Sudan to avert economic collapse

Posted: 21 Jul 2012 08:13 AM PDT

By Ulf Laessing
Reuters
Wednesday, July 18, 2012

http://www.reuters.com/article/2012/07/18/us-sudan-gold-idUSBRE86H0SX201...

KHARTOUM, Sudan -- In his office in Khartoum's gold market, central bank sales agent Mohamed Adam sips tea and watches while his staff load bundles of cash worth tens of thousands of dollars from the safe into four boxes.

The government will use these piles of Sudanese pounds to purchase gold, which it plans to sell for the dollars needed to pay for imports of food and other essentials.

"We buy all gold from local traders and people who search for gold," Adam said. Outside his office, gold traders make deals in the busy market in a rundown downtown building, where paint is peeling from the walls.

Sudan is looking to expand gold mines and boost production of the metal to help keep the economy afloat.

... Dispatch continues below ...


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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


Oil had been the main source of state revenues as well as the dollars needed to pay for imports, but Sudan lost three-quarters of its oil production when South Sudan split off last year.

A scarcity of dollars has driven the annual inflation rate to 37.2 percent in June, double the level of June 2011, and officials warn prices will rise further.

The country sits on what could be Africa's largest gold reserves, and the government has handed out exploration contracts to more than 600 mining firms to search for gold and other minerals.

Khartoum hopes to make up to $3 billion from gold exports this year, double the amount from last year. It made $603 million by the start of April, according to the latest official data.

Much of that output currently comes from small, individual miners, lured by high gold prices to seek gold in remote corners of the country. The central bank is now buying up their gold, which in the past was often smuggled abroad.

The government estimates that about 250,000 Sudanese search for gold, mostly in the north of the vast Arab African country, where the Nubian desert has been a source of gold since the Egyptian pharaohs.

"I always go and buy up gold from local people and sell it to the central bank," said gold trader Jumaa Mohamed Said, who travels every month to a desert area 300 kilometer (190 miles) north of Khartoum.

"Sometimes I buy a few grams, sometimes 500 grams, a kilo. I'm always busy," the 25-year old Said said. He brings the gold to Khartoum, where he does business with the central bank. Experts verify its grade before it ends up on Adam's desk.

The central bank has appointed three sales agents at the gold market, who buy gold for a little less than the global price, Adam said.

But a senior official at an international organization said the agents sometimes pay above the global price to stop other traders from snapping it up for smuggling to Dubai, a large gold market.

"The central bank sometimes pays well above market prices," he said, declining to be identified. "It fuels inflation, but they need the dollars from gold exports."

The targeted $3 billion in gold revenue for this year is still well below Sudan's 2010 oil revenue of at least $5 billion. But the government hopes it will keep the economy afloat while it seeks a negotiated solution over oil export fees from South Sudan.

Khartoum faces a budget deficit of 6.5 billion pounds ($1.4 billion) following South Sudan's independence a year ago under a 2005 peace deal.

The finance ministry had counted on export fees paid in dollars by the landlocked new nation, which needs to ship its crude through northern pipelines and the Red Sea port of Port Sudan to get to international markets.

But Juba shut off all oil wells in January after talks over export fees failed, and Khartoum started taking some oil to cover what it said were unpaid pipeline dues.

Meanwhile, the government is trying to attract more investment as it hopes to boost gold production, which amounted to 33.7 tonnes last year.

The mining industry is one of the few areas growing in the economy, in crisis due to the shortage of foreign exchange.

Out of the 600 licenses granted for mineral exploration, 88 have gone to large companies. New fields will be opened for investment, the state-linked Sudanese Media Center said last week.

"Sudan is right up near the top in Africa in terms of mineral potential," Tucker Barrie, a Canada-based mining consultant knowledgeable about Sudan, said.

"Northeast Sudan is very high on the list in Africa to look for gold," he said. "There are going to be discoveries."

Companies had long neglected the country amid its civil war and ethnical conflicts, but they are now turning to it as one of the last large unexplored areas in Africa.

Last week, Canadian mining firm La Mancha Resources, the biggest player in Sudan, said it had agreed to be bought by a firm owned by Egyptian tycoon Naguib Sawiris.

La Mancha said the deal would help it develop the Hassai mine, Sudan's biggest gold mine which is run by the Ariab Mining Co, majority-owned by the Sudanese government and 40 percent by the Canadian firm.

"With the influx of cash from a wealthy Egyptian, the company should fair well and keep exploring and developing," Barrie said.

Foreign firms face a number of obstacles, however, in dealing with a government desperate for cash.

The royalties they have to pay are higher than those of other African countries such as Ghana or Eritrea, which have issued more investor-friendly laws, industry insiders say.

"Under pressure they are now reviewing the laws," said Abulrahim Hamdi, a former finance minister.

Mining projects in Sudan tend to be expensive because equipment must be trucked in over long distances. Few qualified miners graduate from local universities, and firms tend to rely on large expatriate workforces.

A U.S. trade embargo, in place since 1997 over Khartoum's role in hosting prominent Islamists in the past including Osama bin Laden, deters most Western firms and makes life difficult for those that come. Western banks routinely reject project funding in Sudan.

While the government hopes for quick cash, Hamdi said many projects would take three to five years to start producing.

La Mancha, for example, expects its attributable gold output to fall by some 16 percent this year because the top layer at the main Hassai mine is being depleted after being mined for 20 years. It needs to invest in new technology to drill deeper.

Jumaa Mohamed Said, the gold trader doing business with the central bank, said amateur diggers at the field he visits every month face the same problem.

"First they just were walking around with metal detectors and discovering gold on the surface. Now people need to drill deeper. It gets more expensive," he said.

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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...

“The Stationary State”

Posted: 21 Jul 2012 07:00 AM PDT

Dave Gonigam – July 21, 2012

What?! Europe isn't fixed yet?

This stunning revelation — specifically, the rediscovery that Spain is a basket case — is what the financial media blame for yesterday's stock market sell-off.

Who'da thunk it?

At The 5 Min. Forecast, one of our aims is that you come away from each day's issue having learned something you didn't know before. If you missed an issue or two this week, here's your chance to catch up with 5 Things You Need to Know…

Fed pumps up stocks… according to the Fed! "Research" by the New York Fed surmises that were it not for actions taken by the U.S. central bank over the last decade, the S&P would sit today at 600, and not at 1,363. "Thanking the Fed for stock market returns," muses Chris Mayer, "is like thanking the fire department for putting out fires it started." But no matter what the Fed does, Chris says there's one enduring — and profitable — truth it can never change.

Innovate or Die…

That is the rather pressing theme of this year's Agora Financial Investment Symposium in Vancouver, Canada. And in the run-up to this year's event, we've got a special offer for you…

As always, we're recording the entire lineup of speakers and are making them available to you on both MP3 and CD formats. But this year, we're going a step further…

For the first time in the 13-year history of the Symposium, you will also be able to SEE all of the presentations, in stunning HD video!

So even if you weren't able to join us at this year's event, you don't have to miss out on a single piece of analysis or recommendation.

And right now, before we kick off the event, they're available at an incredible discount. Click here to get yours now. But hurry — the price will go up as soon as the conference begins.

Empty cities? Bridges to nowhere? It's growth! Chris Mayer, making rare consecutive appearances in 5 Things, has two problems with the latest Chinese GDP numbers. First, GDP itself "is a nonsensical abstraction." Second, even if it weren't a nonsensical abstraction, it's highly unlikely that, as the saying goes, "the bottom is in." If anything in your portfolio is riding on China's immediate future, you don't want to miss Chris' take.

2008 was bad. 2012 is worse. So it goes for world grain markets now that 42% of the continental United States is in drought classified as "severe" or worse. Corn and soybean prices hit record highs on Thursday. As always, winners and losers alike will emerge from these developments; Dan Amoss handicaps them here.

New Breakthrough Fuel Could Power Your Car

It took the Earth 300 million years to make the oil we burn.

Imagine if we could squeeze that whole process into just a few months… a few weeks… or even a few days. Because that's exactly what could be happening.

At least a half-dozen labs and companies are working on this right now.

If they get it right, we could literally "make" as much gas for your car as you need. We could make fuel for planes, trains and diesel trucks this way too.

Find out more by clicking here.

"You didn't build that," thoughtfully reconsidered. We tried to unpack a now-infamous speech by the president and unwittingly found ourselves dragged into the election-year gutter. Perhaps we should have known better. Lost in the resulting noise were two strictly nonpartisan points — about the notion of "playing by the rules" and about humans' capacity for cooperative effort outside the scope of government. Now that the hubbub is dying down, you can revisit those ideas here.

Escaping Adam Smith's "stationary state." Professor Niall Ferguson says most developed economies are descending into stagnation, or as Adam Smith called it more than two centuries ago, "the stationary state." There are two means of escape: One Ferguson sums up as "more free trade, more encouragement for small business, less bureaucracy and less crony capitalism." In the unlikely event that should come about, the other means of escape becomes far more likely.

The good professor kicks off the 2012 Agora Financial Investment Symposium next Tuesday in beautiful Vancouver, British Columbia. We'll bring you full coverage of the conference next week in The 5 Min. Forecast… augmented by Jim Amrhein's colorful "roving reporter" dispatches. If you can't be with us, there are always the recordings to be had; until the conference opens Tuesday, they can be had at the lowest price available.

Cheers,

Dave Gonigam

P.S. In response to popular demand, we're also making video available with this year's Symposium recordings. Now you can follow along with each speaker's PowerPoint presentations. Of course, if you prefer audio only, that's still available. Check out your options at this link.

America’s Competitive Spirit

Posted: 21 Jul 2012 06:36 AM PDT

From our good friend Frank Holmes at U. S. Global Investors:

One of the few things that Barack Obama and Mitt Romney can agree on is that our economy is still struggling to regain its strength. Stubborn unemployment and sluggish growth at home combined with a slowing China and a dysfunctional eurozone have cast a dark shadow on America's eternal optimism. The media favors negative news and the 24/7 cycle of gloom and doubt can be dispiriting.

We are always looking for the economic points of light around the globe and strive to provide a counterpoint to the pervasive pessimism. As Warren Buffett once said, "It's never paid to bet against America. We come through things, but it's not always a smooth ride."

I moved from Toronto to San Antonio more than twenty years ago. A Canadian pursuing the American Dream. I bought a business that became U.S. Global Investors. I believed back then, as I still do today, that there is nowhere else in the world where opportunity abounds and initiative is rewarded as it is in the U.S.A. "Despite all its setbacks, the U.S. remains at the center of world competiveness because of its unique economic power, the dynamism of its enterprises and its capacity for innovation," according to IMD, a well-regarded Swiss business school.

IMD recently released the findings of its annual World Competitiveness Yearbook (WCY). Its rankings survey more than 4,200 international executives and measure how well countries manage their economic and human resources to increase prosperity. The top three most competitive of the 59 ranked economies in 2012 are Hong Kong, the U.S. and Switzerland.

The World Competitiveness Scoreboard 2012

Barron's editorial page editor Thomas G. Donlan wrote, "It's worth contemplating the advantages that a group of international business executives and analysts still can find in the U.S. economy. At the top is access to financing, following a strong research-and-development culture, an effective legal environment, dynamism of the economy, a skilled workforce, and reliable infrastructure. At the bottom, they find the U.S. lacks competency of government and a competitive tax regime."

During tough times, Americans must be vigilant in safeguarding our competitive edge by continuing to be a compassionate and generous nation while resisting the siren calls of socialism. A system that strangles private property rights and sponsors excessive bureaucracy, regulation and taxation cannot deliver on a promise of prosperity to its people. We must not lose our collective faith in capitalism because it has proven to be the only social system that rewards individual ability, initiative and achievement.

What Henry Ford said a century ago holds true today, "What's right about America is that although we have a mess of problems, we have great capacity—intellect and resources—to do something about them."

The Economist Cover

The Economist's cover story last week heralded America's economy the "Comeback kid." "Led by its inventive private sector, the economy is remaking itself. Old weaknesses are being remedied and new strengths discovered, with an agility that has much to teach stagnant Europe and dirigiste Asia," according to the story.

The story notes that while America's overall growth is unimpressive, some components show signs of boom. We have shifted from a consumption-driven economy to a more outward-facing one. In the post-recession economy exports contributed 43 percent of growth, one of the strongest showings in any recent economic recovery. While sales to traditional markets in the OECD have risen just 20 percent since the end of 2007, they are up 51 percent to Latin America and 53 percent to China.

Post Recession Recoveries

According to The Economist, emerging markets have also reinvigorated America's role as a big commodity producer. Grain exports are soaring, agricultural land values are rising, and higher oil prices have triggered new output. American innovation in discovering new techniques to release oil and gas from shale has paid massive dividends to the energy sector and created thousands of new jobs in the industry. I wrote about this employment boom recently in Frank Talk and we see this explosion of growth first-hand just south of San Antonio with the development of the Eagle Ford Shale.

Cheap, plentiful natural gas benefits industries as diverse as glass, fertilizers, plastic and steelmakers. Last year for the first time in decades, America became a net exporter of refined products. And our nation's gap between oil consumption and domestic production is shrinking.

US Petroleum and Other Liquids

A way to take advantage of a potential upturn in commodities is by choosing dividend-paying global resources equities. In the S&P 500 Index, nearly all of the materials and utilities stocks and more than half of energy companies pay a dividend that is higher than the 10-year Treasury. Materials and utilities companies yield an average of 2.3 percent and 4.1 percent, respectively, while energy stocks pay an average yield of 2.2 percent. We like the combination of income with growth and it is an important factor in our stock selection process for the Global Resources Fund, as well as our other equity funds.

We believe there are many great American companies to invest in. We like those that are growing their top line revenues and paying robust dividends. Currently 47 percent of the S&P 500 stocks pay a dividend yielding more than a 10-year Treasury, demonstrating the resiliency and strength of American enterprises.

Professor Stephane Garelli, director of IMD's World Competitiveness Center, said, "U.S. competiveness has a deep impact on the rest of the world because it is uniquely interacting with every economy, advanced or emerging. No other nation can exercise such a strong 'pull effect' on the word. In the end, if the U.S. competes, the world succeeds!"

It is the nature of humans to compete. The Summer Olympics commencing next week in London will bring together more than 10,500 athletes from 204 countries to compete for the gold. I look forward to watching this showcase of the human spirit and the drive to succeed.

July 20, 2012 (Source: U. S. Global Investors)

http://www.usfunds.com/investor-resources/investor-alert/

The LIBOR scandal has started the Great Revealing of Financial Tyranny. Mass arrests must begin with mass charges, and mass court cases — and that has now arrived.

Posted: 21 Jul 2012 05:47 AM PDT

TRANSCRIPT OF MAX KEISER'S BIG MELTDOWN This event was significant enough of a "breakthrough" in mainstream media that I transcribed it. Once Max Keiser starts yelling, I deleted all the overtalk so his message is presented intact: MIKE HANNAH: [11:55] … Continue reading →


Interesting Gold Article

Posted: 21 Jul 2012 05:35 AM PDT

The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! July 21, 2012 03:34 AM Read [url]http://www.grandich.com/[/url] grandich.com...


Fed Inactions Generally Disappointing

Posted: 21 Jul 2012 02:00 AM PDT

Candadians now outwealth Americans, crushing economic decisions to come in 2013, shallow recession predicted, the debt bubble the next elephant in the room, the threat of a higher gold is real, Alfred Adask discusses Keynes and Kondratieff and depressions.
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