Monday, July 23, 2012

Gold World News Flash

Gold World News Flash

Better Places to Keep Your Money than the Bank

Posted: 23 Jul 2012 02:00 PM PDT

My local bank in Colorado is literally offering to pay me no interest --just an offensive 0.05% annually, before taxes. The interest rate triples to 0.15% when the balance exceeds $50,000. Absolutely no incentive when one considers the risks the bank imposes on your capital, retaining only pennies on the dollar of your money, then leveraging your capital -- fractional banking. How can I be interested in a 0% savings rate deposited at a relatively risky institution while supporting the fractional banking system?


Gold Market Update

Posted: 23 Jul 2012 08:15 AM PDT

Most would be investors and speculators in the Precious Metals sector at this time look and behave like the raw recruits at the start of the film An Officer and a Gentlemen - listless and muttering pathetically "This might not be the bottom - it could go down again" - so listen up you 'orrible lot and pull yourselves together - by the time you are done reading this you are expected to have cleaned yourselves up, straightened yourselves out and be ready for action - and insubordination will not be tolerated.


Silver Update 7/22/12 Drug Money

Posted: 22 Jul 2012 10:56 PM PDT

This Past Week in Gold

Posted: 22 Jul 2012 10:38 PM PDT

Summary: Long term - on major sell signal. Short term - on mixed signals. Read More...



Guest Post: The 8 MOST Important Issues Facing Americans Today

Posted: 22 Jul 2012 09:52 PM PDT

by Anon Patriot,

The 8 MOST important issues facing us today:

1) A Government Gun Grab
2) The 'FED'
3) GMO's
4) Israeli wars (in which AMERICANS fight and die), and the Pentagon's 'war on terror', now terrorizing US.
5) Obamacare
6) Potential economic collapse or other man-made, or natural disasters, & 'FEMA' Camps
7) DHS/TSA/NSA/FBI/CIA (ever notice how all these gov't agencies have precisely 3 letters?), along with ABC/CBS/NBC/CNN/FOX
8) Preparedness – are you prepared?

#1 – They went door-to-door, right after Hurricane Katrina, and confiscated guns.
#2 – END THE 'FED'! (House Vote on Audit the 'Fed', will be July 24th, 2012)
#3 – Eat organic.
#4 – No more wars for Israel
#5 – Obamacare? Repeal it!
#6 – 'FEMA' camps? Don't go!
#7 – Wall St. is our government. Can you say LIBOR? Our 'Representatives' represent Wall St. Wall St. owns the Media.
#8 – No time like the present.

We, the People – HAVE THE POWER. WE SIMPLY NEED TO 'TAKE IT BACK', meaning, become more, and more self-reliant, and expect NOTHING from the government, or anyone else. THIS IS THE ANSWER.

From the 'comments' section, at http://www.activistpost.com/2012/06/19-reasons-to-start-preparing-for.html

"The Central Bankers WANT a 'global' economic collapse, particularly in the 'EU', and eventually [possibly as early as Aug/Sept, 2012] in the U.S. Why? So, that they can step in with their PRE-PLANNED "SOLUTION": A ONE-WORLD CURRENCY, UNDER THEIR CONTROL. They may even try to back this international currency with GOLD, since Central Bankers own MOST of the above-ground, investment-grade gold – all of this, allowing them to remain in control, as we move from one monetary/currency system, to the next. REMEMBER THIS: THE CENTRAL BANKERS WANT A GLOBAL ECONOMIC COLLAPSE. For that reason ALONE, people should be SERIOUSLY anticipating that IT WILL BE A REALITY, in the not-too-distant future, POSSIBLY within a few months from now, or at the end of 2012, at the earliest. PREPARE NOW: 1) WATER filtration/purification system, 2) FOOD storage, to get you through 6 months to 1 year, 3) SEEDS, non-gmo, non-hybrid, 4) EXTRA MEDICINE(S), ASPIRIN, multi-vitamins, etc., 5) EXTRA PERSONAL HYGIENE ITEMS, 6) DURABLE CLOTHING, especially work boots, pants, shirts (buy Made in USA), 7) PMs, SILVER & a little gold BULLION (coins, rounds, bars), 8) Barter items – alcohol, liquor, cigarettes, chocolate, and any other items that may become highly sought-after, during a total economic shutdown – where even trucks aren't routinely delivering food, or supplies to local stores. DO THE ABOVE, AT A MINIMUM – and, you'll be in MUCH better shape, than the masses of un-informed Americans, who actually believe we are in a 'recovery', right now! It's been 4 years, since the 'downturn' of 2008 – AND NOTHING HAS CHANGED! Imagine what A GLOBAL DEPRESSION would be like!

Addendum: Oh – and the new currency (the global currency) will probably arrive in credit-card form. With a micro-chip embedded in it. They could turn off the chip whenever they want.

And we can turn our backs on this criminal system any time we want.

First Bankster LIBORGATE Arrests Imminent

Posted: 22 Jul 2012 08:27 PM PDT

from Silver Doctors:

Four years into the financial crisis, not a single Wall Street bankster outside of Bernie Madoff and Russell Wasendorf have been arrested.

Four weeks into the LIBOR rate-manipulation scandal, that is reportedly about to change.

Reuters has just reported that US prosecutors and European regulators are close to arresting individual traders related to their manipulation of global interest rates.

No mention of any arrests for a single high level executive or Central Bank employee (either the ECB, Bank of England, or the Fed)- merely individual trader scapegoats taking the fall for now.
That may likely change in the coming weeks and months as the scandal intensifies.

Read More @ SilverDoctors.com

Why We Can All Kiss This Financial System Goodbye

Posted: 22 Jul 2012 08:00 PM PDT

from KingWorldNews:

Today Michael Pento gave this dire warning to King World News, "The bottom line is we have a world which has been dominated by fiat currencies, and we are now experiencing the end, the final throes of that failed global experiment in a purely fiat money based system."

Pento also warned, "Clearly Europe has chosen inflationary default … but let's not forget the United States. The US is about two years behind Europe's pernicious path. We are now over 100% debt to GDP, and if we want to know our future, all we have to do is look across the Atlantic because that's exactly where we are headed."

Pento went on to discuss gold, but first, here is what Pento had to say about Europe: "You cannot, as a central bank, have a policy of creating inflation in order to keep yields lower. That is why the deflationist's fears in Europe are quickly turning towards an inflationary scare, and more specifically a stagflationary quagmire that will quickly expedite Europe into the abyss."

Michael Pento continues @ KingWorldNews.com

Got Gold Report for July 22, 2012

Posted: 22 Jul 2012 07:46 PM PDT

Vultures (Got Gold Report Subscribers) please log in to the Subscriber pages and navigate to the Got Gold Reports Section to view an appendix of charts for the special video Got Gold Report released Sunday, July 22.  The appendix contains the charts used which are not already linked in the subscriber section.

To continue reading, please log in or click here to subscribe to a Got Gold Report Membership

Moving Closer! U.S. Bond Bubble and Dollar Collapse

Posted: 22 Jul 2012 07:15 PM PDT

The Russian Default Scenario As Script For Europe's Next Steps

Posted: 22 Jul 2012 06:10 PM PDT

Submitted by Nicholas Bucheleres of NJB Deflator

Russian/Euro Credit Crisis Analog

Below is the second half of a timeline on the Russian/Asian Credit Crisis of the late-90s that I amended with what I think are the analogous happenings of the Euro Crisis.  Italicized text is the Euro Crisis equivalent of the Russian analog; full Russian Crisis timeline can be found here.  No event has been rearranged, removed, or edited, so there are some temporal discontinuities between the months leading up to the Russian default and the current Euro Crisis, but the resemblance is remarkable. 

Russia and the southeast Asian countries are analogs for Greece, Spain, and Cyprus, with no particular association between their references within the timeline.  The timeline runs through the Russian pain; things begin to turn around after the timeline ends.

This is meant to serve as a reference point: In retrospect it was clear throughout the late-90s that Russia would default on its debt and spark financial pandemonium, yet there were cheers at many of the fake-out "solution" pivot points.  The Russian issues were structural and therefore immune to halfhearted solutions--the Euro Crisis is no different.  This timeline analog serves as a guide to illustrate to what extent world leaders can delay the inevitable and just how significant "black swan event" probabilities are in times of structural crisis. 

It seems that the next step in the unfolding Euro Crisis is for sovereigns to begin to default on their loan payments.  To that effect, Greece must pay its next round of bond redemptions on August 20, and over the weekend the IMF stated that they are suspending Greece's future aid tranches due to lack of reform.  August 20 might be the most important day of the entire summer and very well could turn into the credit event that breaks the camel's back.

*UPDATE: Over the weekend Germany's Roesler said he was "very skeptical" that Greece can be rescued.

Analog runs through August 13, 1998--the point to where I believe the Euro Crisis has evolved.  What happens after that in Russia may stand as a strong indicator of where things will head in the coming weeks/months in Europe.

May 21, 1998
[Indonesian President] Suharto resigns after 32 years in power. Vice President Habibie succeeds as president.

Greek leadership shake-up over lack of confidence in government, wherein prime minister Papandreou steps down (Spring 2012).

May 22, 1998
The IMF indefinitely postpones aid disbursement to Indonesia of $1 billion scheduled for June 4. US Treasury Secretary Robert Rubin says the aid should be delayed until the political situation stabilizes.

 The US, UK, and Canada refuse to add to the IMF's bailout package for Europe (Spring 2012).

May 27, 1998
  Russia's financial system is stretched to the breaking point as panic-striken stock and bond markets continue to plunge, forcing the central bank to triple interest rates to 150% to avert a collapse of the ruble.

 The Athens Stock Exchange drops 27% from May 1 through June 1.

May 27-28, 1998
A two-day, nation-wide strike is held in South Korea by union workers to protest the growing wave of unemployment in the country. Since February, South Korean companies have been laying off 10,000 workers per day.

 One of the many strikes within the EMU as companies shed jobs as a result of high-unemployment driven drop in demand.  International shipping companies halt business with Greek ports due to uncertainty over the nation's finances (Spring 2012).

June 1, 1998
Russia's stock market crashes and Moscow's cash reserves dwindle to $14 billion amid unsuccessful attempts to prop up the ruble and pay off burgeoning debts. President Clinton pledges support for Yeltsin.

 Greek bond yields rise throughout 2012 reaching a peak coupon of 30% on the 10yr.  President Obama urges European leaders to handle the situation swiftly (Spring 2012).

June 12, 1998
Japan announces that its economy is in a recession for the first time in 23 years.

 The UK enters double-dip recession (April 2012).

June 17, 1998
The yen's fall to levels near 144 to the dollar rattles Wall Street, prompting the US Treasury and Federal Reserve to intervene to prop up the yen. Japan and the US spend some $6 billion to buy yen in order to strengthen it. Clinton calls on Tokyo to quickly resolve its banking problems and stimulate the economy.

 The Bank of International Settlements (BIS) supports the euro, especially the EURUSD cross, throughout the summer of 2012 through intervention in the foreign exchange market.

June 24, 1998
Russian Prime Minister Sergei Kirienko submits a budget austerity plan to the IMF, which releases a previously held loan installment of $670 million.

 Becoming clear that Germany will be on the hook for financing further bailouts, Merkel filibusters all aid plans that don't include strict austerity measures (Spring 2012).

June 25, 1998
Indonesia and the IMF announce a fourth agreement to rescue an economy quickly sinking into chaos. The IMF agrees to restore subsidies for food and fuel and provide another $4 billion to $6 billion for basic necessities.

 The ECB OKs LTRO2 worth 529.5billions euros to save "an economy quickly sinking into chaos" (February 2012).

July 1, 1998
Russia's lower house of parliament, the Duma, postpones action on spending and tax reforms needed to close the budget deficit and qualify for IMF loans.

 Spanish citizens continue to emigrate from Spain in droves to countries like Argentina to avoid looming austerity measures (Spring 2012).

July 6, 1998
Moscow's markets get pummeled as the government fails to raise cash by selling government shares of a state-owned oil company. Moscow hints that an IMF loan agreement is near.

 Spain's IBEX 35 falls 30% from March 19 through June 1 as the austerity versus growth debate intensifies within Europe.  Political entropy paralyzes Europe.

July 10, 1998
President Clinton calls on the IMF to quickly conclude negotiations over emergency loans for Russia after getting a call for help from Boris Yeltsin, sparking a rally in Moscow's markets.

 Treasury Secretary Geithner reminds Europe's public financiers that currency swap lines are open, which offers little respite to markets (Spring 2012).

 July 13, 1998
The IMF announces a package of $23 billion of emergency loans for Russia. The international lender dips into an emergency line of credit to provide its share of financing. Russian stocks and bonds soar.

 The ECB shores up a 100billion euro bank bailout for Spain, though Spain publicly denied it would need such a bailout until hours before its announcement.  Markets rallied on the rumor of the bailout and promptly sold-off once the bailout was officially announced
(June 2012).

July 16, 1998
Russia's Duma approves some of Yeltsin's $16 billion proposed tax reforms needed to meet conditions for IMF loans. But it rejects higher sales and land taxes.

 Spain lays out a plan to lower its public deficit by 65billion euros by 2015 that includes harsh austerity measures (July 2012).

July 19, 1998
Yeltsin vetoes tax cuts approved by parliament and issues decrees imposing a 3% tax on imports and quadrupling land taxes to close the budget deficit and secure IMF loans. He also pledges renewed efforts to collect taxes.

 In an attempt to raise up more public money, the Spanish government plans the sale of 100 government-owned commercial real-estate properties (July 2012).

July 20, 1998
The IMF gives final approval to a $22.6 billion loan package to Russia. However, because the Duma fails to enact some of the austerity measures mandated in the loan agreement, the first two planned installments are reduced from $5.6 billion to $4.8 billion.

 Finland, an opponent of a no-strings-attached Spanish bailout, votes to officially support the rescue package, and the bailout is OKed by the Eurogroup.  At the same time, more trouble is detected within Spain's regional governments, who were supposedly well capitalized (July 2012).

July 28, 1998
The IMF announces that it will ease conditions on its $57 billion aid package to South Korea which had been blamed for rising unemployment and overburdened welfare programs.

 While negotiating stimulus versus austerity, Merkel eases a bit on her reform timeline, which offers little relief to GIPSI government debt yields, which continue to scream higher (Summer 2012).

August 3, 1998
Wall Street reacts to the deepening crisis; the Dow plunges 300 points in its third-biggest loss.

 Cyprus requests a bailout worth 10% of its GDP; Cyprus is the fifth European nation to formally request a bailout.  Trader commitments reach all-time bearish levels (June 2012).

August 4, 1998
Amid speculation that China will be forced to devalue its currency, Hong Kong's dollar and stock market come under attack.

 Global markets begin to sell-off again amid consistent global GDP growth downward revisions and sovereign European credit downgrades after a short-covering rally in June (July 2012).

August 6, 1998
The World Bank approves a $1.5 billion loan for Russia as Moscow puts pressure on striking miners and tax deadbeats in an effort to put its finances in order. Asian markets plummet as Hong Kong and China step in to defend their currencies against attack.

Even after the 100billion euro Spanish bailout is approved, Spain's 10yr government bond yields still flirt with the 7% threshold that would banish them from the debt market by making borrowing costs unsustainable (July 2012).

August 11, 1998
The Russian market collapses. Trading on the stock market is temporarily suspended. World markets are rocked by fears of a financial meltdown in Asia and Russia.

 Greece admits to not adhering to reforms attached to their bailout; the IMF plans to stops loan tranches to Greece.  Global markets close July 20, 2012 in the red across the board, erasing the week's gains.

August 13, 1998
Russia's markets collapse on fears that Moscow will run out of money and default.

 Catalonia, in addition to Valencia, will need a regional Spanish bailout (July 2012)

August 14, 1998
Yeltsin calls for an emergency session of parliament and declares that "there will be no devaluation" of the ruble. In Hong Kong, authorities spark a stock rally by moving to foil speculators with surprise purchases of stocks and dollars.

August 17, 1998
Russia announces a devaluation of the ruble and 90-day moratorium on foreign debt repayment, triggering panic in Moscow as Russians line up to buy dollars. Western leaders denounce the Russian default. Latin American stock and bond markets plunge on fears of default and devaluation in South America.

August 19, 1998
Russia fails to pay its debt on GKO or treasury bills, officially falling into default. The IMF and Group of Seven (G-7) say they won't provide additional loans to Russia until it meets existing promises.

August 21, 1998
Russia's economic crisis shakes world markets, bulldozing stocks and bonds in Latin American and reverberating through the US and Europe. Russia's Duma calls for Yeltsin's resignation. Investors pile into US Treasury bonds as a safe haven from the storm, causing yields to drop to record lows.

August 24, 1998
Yeltsin dismisses Kirienko and names Viktor Chernomyrdin as primeminister.

August 31, 1998
After weeks of decline, Wall Street is overwhelmed by the turmoil in Russia and world markets. The Dow Industrial average plunges 512 points, the second-worst point loss in the Dow's history.

Sept. 4, 1998
Federal Reserve Chairman Alan Greenspan says that the US is ready to cut interest rates to keep the crisis from snuffing out US growth. "It is just not credible that the United States can remain an oasis of prosperity," he says. Latin stocks and bonds plummet.

Sept. 7 or 8, 1998
Russia's Duma rejects Prime Minister-designate Chernomyrdin and the central bank chairman resigns, deepening the country's political and economic turmoil. Russian investors and lenders estimate their losses at $100 billion. The Dow surges 381 points after Greenspan suggests that policy makers are considering an interest cut.

Sept. 10, 1998
The Dow loses 249 points as Brazilian stocks fall 16%, adding to drops that have erased half the Brazil market's value. In Mexico, the Central Bank sells some $50 million in its first attempt to buoy the peso in three years. Yeltsin nominates Yevgeny Primakov as prime minister.

Sept. 11, 1998
The IMF announces that the debacle in Latin American markets is "an overreaction to Russian events" and that it is ready to lend Latin American countries, using an emergency line of credit. Investors flee Brazil, drawing out more than $2 billion a day despite an interest rate rise to 50% by the Central Bank.

Sept. 17, 1998
Tokyo's Nikkei index hits a 12-year low amid steep declines in Hong Kong, France, Britain and the US. The Dow drops 216 points. Congress blocks Clinton's request for $18 billion in funding for the IMF.

Sept. 23, 1998
Pushed by the New York Federal Reserve, a consortium of leading US financial institutions provides a $3.5 billion bailout to Long Term Capital Management, one of the largest US hedge funds, amidst fears that a collapse could worsen the panic in the financial markets.

Sept. 24, 1998
Stocks on Wall Street and in Europe swoon amid fears that the losses suffered by the world's largest banks in the Long Term Capital debacle could put the entire banking system at risk.

Sept. 29, 1998
The Fed cuts interest rates by a quarter point.

Sept. 30, 1998
Worries that the Fed isn't doing enough to rescue the US and global economies cause a 238-point drop in the Dow, for a loss of more than 500 points in a week. Investors around the world flock to US Treasury bonds for safety, causing the yield on 30-year bonds to drop below 5% for the first time in three decades.

Oct. 3, 1998
Japan announces a $30 billion aid package for Southeast Asia to help the region recover from recession.
G-7 ministers create a rescue plan for Brazil.

Oct. 5-8, 1998
In Washington, the IMF and World Bank hold a joint plenary session to debate the global economic crisis.

Oct. 15, 1998
The Fed cuts interest rates for a second time to prevent weak financial markets from tripping the US into a recession. The Dow shoots up 331 points and world markets rally.

Oct. 22, 1998
Amid warnings of winter food shortages in Russia, Moscow creates an emergency food reserve and approves an emergency spending plan that will require the central bank to print at least $1.2 billion to help pay back wages, rescue banks and bring food to desperate regions.

Oct. 27, 1998
Brazil's President Fernando Cardoso announces an austerity plan of $80 billion in tax increases and spending cuts over three years in order to secure an IMF assistance package.

Oct. 31, 1998
The IMF refuses to disburse to Russia a $4.3 billion installment of the $22.6 aid package it agreed to in July, and says it will not resume negotiations about disbursement until Russia produces a realistic budget for 1999.

Nov. 5, 1998
Russia strikes an agreement with foreign investors to accept repayment in rubles of $40 billion of debt frozen in August, but says it will not be able to repay $17.5 billion of debts due in 1999 and will reschedule them. Russia also wins an $800 million loan from Japan, originally part of the IMF rescue deal.

 

 

Silver Market Update

Posted: 22 Jul 2012 05:51 PM PDT

The long-term 15-year chart of silver relative to gold is interesting as it shows several interesting things. The first is that during the early days of the Precious Metals bullmarket silver underperformed gold, and it got treated ... Read More...



HSBC Rampant Drug Money Laundering, Deals With Iran, Record Billion Dollar Fine Rumored

Posted: 22 Jul 2012 02:54 PM PDT

"And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that." John Dalberg Lord Acton This HSBC scandal is being overshadowed by LIBOR a bit in the States at least, and the usual diversions of the day to day, but it seems about to explode into the headlines of the insular major media.


On FX

Posted: 22 Jul 2012 01:00 PM PDT

I’ve been running a short EURUSD for the past six weeks. I got in at 1.2650 (Link) on June 30, and doubled up on July 8 at 1.2260 (Link). I was delighted to see the Euro get cheap in Friday’s trading, but the market action forced a decision. I wrote some things down on a pad, thought about it a bit, and said, “Screw it”,  and cut the whole position. Some of my thinking:

+

I hate trading FX at the end of July . The markets shut down with the approaching European August vacations. The last week of the month is about cleaning up positions, not putting new ones on. August is never a time to be involved, unless you have to.

+

There was something odd about the EURUSD trading Monday through Thursday. Tyler Durden, at Zero Hedge, made note of this (Link).

.

.

The red arrows that Tyler drew bother me. This stinks of “official guidance”. It’s tough to make a buck at the FX casino, it’s tougher still when the tables are rigged.

 
+

In May and June the Swiss National Bank (SNB) bought CHF 110Bn worth of Euro’s. That’s a staggering amount. I’m convinced that the intervention was heavy in July as well. Reserves are headed up another CHF50Bn. I think these numbers still understate what is happening, as the SNB has been writing calls on the Franc.

In the course of just three months ¼ Trillion Euros have crossed into the Alps. This is unsustainable. At some point it will have to result in a messy blow up. But not necessarily in the month of August.

I don’t think the SNB is going to fold its cards just because they are under attack. If the SNB were to quit intervening, the EURCHF would be nearing par in a matter of days. The cost to the SNB would be CHF40Bn (15% of GDP).

Before taking a loss of this magnitude, the SNB, (with the blessings of the government), would implement a variety of exchange controls. I think this is a something that could come sooner than the market believes.

It is my understanding that there is significant macro hedge fund positioning in the EURCHF. I don’t believe that the SNB is going to simply write a monster check to some fat cats up in Greenwich. There will be (at least) one more chapter in this story.

Should there be something that makes people blink on the CHF, it could end up causing short positions in the EURUSD to get jumpy. I'd rather not be part of a jumpy crowd.

+

I’m worried about what Bernanke may do on August 1st. We could see something that brings the US negative short-term interest rates. (My thoughts on this: Link). It’s very difficult for me to be a dollar bull. I’m much more comfortable playing the dollar from the short side.

 
+

The Euro weakness on Friday was related to a big selloff in Spanish bonds. The Spanish ten-year ended up at 7.27%. This means that a Spanish bailout is not far off and Italy is next in the crosshairs.

Really? I don’t think so. It's not going to be that easy.

The Euro technocrats are not going to fold in August. They may be going down, but I fear more battles are in the offing first.  SMP purchases of sovereign debt is likely next week.

+

Realized gains have been elusive for me this year.

+

Now that I don’t have a position to worry about, I’m worried about not having a position. I will be looking for an opportunity to re-load a short Euro exposure. Hopefully it will be at higher levels than Friday. Either way, I will act before September rolls in. The Euro is still toast.

.

Gold bugs bank on QE3 to ride to the rescue

Posted: 22 Jul 2012 01:00 PM PDT

The gold price has risen for 11 years in a row, but could 2012 be the year when this bull run ends?


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

Paul Craig Roberts: World financial system now can be sustained only by fraud

Posted: 22 Jul 2012 11:33 AM PDT

The Libor Scandal In Full Perspective

By Paul Craig Roberts
Institute for Political Economy
Thursday, July 19, 2012

http://www.paulcraigroberts.org/2012/07/19/the-libor-scandal-in-full-per...

The recent article about the Libor scandal, co-authored with Nomi Prins --

http://www.paulcraigroberts.org/2012/07/14/the-real-libor-scandal

-- received much attention, with Internet repostings, foreign translation, and video interviews. To further clarify the situation, this article brings to the forefront implications that might not be obvious to those without insider experience and knowledge.

The price of Treasury bonds is supported by the Federal Reserve's large purchases. The Federal Reserve's purchases are often misread as demand arising from a "flight to quality" due to concern about the EU sovereign debt problem and possible failure of the euro.

Another rationale used to explain the demand for Treasuries despite their negative yield is the "flight to safety." A 2% yield on a Treasury bond is less of a negative interest rate than the yield of a few basis points on a bank certificate of deposit, and the U.S. government, unlike banks, can use its central bank to print the money to pay off its debts.

It is possible that some investors purchase Treasuries for these reasons. However, the "safety" and "flight to quality" explanations could not exist if interest rates were rising or were expected to rise. The Federal Reserve prevents the rise in interest rates and decline in bond prices, which normally result from continually issuing new debt in enormous quantities at negative interest rates, by announcing that it has a low interest rate policy and will purchase bonds to keep bond prices high. Without this Fed policy there could be no flight to safety or quality.

... Dispatch continues below ...


ADVERTISEMENT

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


It is the prospect of ever-lower interest rates that causes investors to purchase bonds that do not pay a real rate of interest. Bond purchasers make up for the negative interest rate by the rise in price in the bonds caused by the next round of low interest rates. As the Federal Reserve and the banks drive down the interest rate, the issued bonds rise in value and their purchasers enjoy capital gains.

As the Federal Reserve and the Bank of England are themselves fixing interest rates at historic lows to mask the insolvency of their respective banking systems, they naturally do not object that the banks themselves contribute to the success of this policy by fixing the Libor rate and by selling massive amounts of interest rate swaps, a way of shorting interest rates and driving them down or preventing them from rising.

The lower is Libor, the higher is the price or evaluations of floating-rate debt instruments, such as collateralized debt obligations, and thus the stronger the banks' balance sheets appear.

Does this mean that the U.S. and U.K. financial systems can be kept afloat only by fraud that harms purchasers of interest rate swaps, which include municipalities advised by sellers of interest rate swaps, and those with saving accounts?

The answer is yes, but the Libor scandal is only a small part of the interest rate rigging scandal. The Federal Reserve itself has been rigging interest rates. How else could debt issued in profusion be bearing negative interest rates?

As villainous as they might be, Barclays bank chief executive Bob Diamond, Jamie Dimon of JP Morgan, and Lloyd Blankfein of Goldman Sachs are not the main villains. The main villains are former Treasury Secretary and Goldman Sachs Chairman Robert Rubin, who pushed Congress for the repeal of the Glass-Steagall Act, and the sponsors of the Gramm-Leach-Bliley bill, which repealed the Glass-Steagall Act. Glass-Steagall was put in place in 1933 in order to prevent the kind of financial excesses that produced the current ongoing financial crisis.

President Clinton's Treasury Secretary, Robert Rubin, presented the removal of all constraints on financial chicanery as "financial modernization." Taking restraints off of banks was part of the hubristic response to "the end of history." Capitalism had won the struggle with socialism and communism. Vindicated capitalism no longer needed its concessions to social welfare and regulation that capitalism used in order to compete with socialism.

The constraints on capitalism could now be thrown off, because markets were self-regulating as Federal Reserve Chairman Alan Greenspan, among many, declared. It was financial deregulation -- the repeal of Glass-Steagall, the removal of limits on debt leverage, the absence of regulation of OTC derivatives, the removal of limits on speculative positions in future markets -- that caused the ongoing financial crisis. No doubt but that JP Morgan, Goldman Sachs, and others were after maximum profits by hook or crook, but their opportunity came from the neoconservative triumphalism of "democratic capitalism" and its historical victory over alternative socio-politico-economic systems.

The ongoing crisis cannot be addressed without restoring the laws and regulations that were repealed and discarded. But putting Humpty Dumpty back together again is an enormous task full of its own perils.

The financial concentration that deregulation fostered has left us with broken financial institutions that are too big to fail. To understand the fullness of the problem, consider the lawsuits that are expected to be filed against the banks that fixed the Libor rate by those who were harmed by the fraud. Some are saying that as the fraud was known by the central banks and not reported, that the Federal Reserve and the Bank of England should be indicted for their participation in the fraud.

What follows is not an apology for fraud. It merely describes consequences of holding those responsible accountable.

Imagine the Federal Reserve called before Congress or the Department of Justice to answer why it did not report on the fraud perpetrated by private banks, fraud that was supporting the Federal Reserve's own rigging of interest rates (and the same in the UK.)

The Federal reserve will reply: "So you want us to let interest rates go up? Are you prepared to come up with the money to bail out the FDIC-insured depositors of JPMorganChase, Bank of America, Citibank, Wells Fargo, etc.? Are you prepared for U.S. Treasury prices to collapse, wiping out bond funds and the remaining wealth in the United States and driving up interest rates, making the interest rate on new federal debt necessary to finance the huge budget deficits impossible to pay, and finishing off what is left of the real estate market? Are you prepared to take responsibility, you who deregulated the financial system, for this economic Armageddon?"

Obviously, the politicians will say, "No. Continue with the fraud." The harm to people from collapse far exceeds the harm in lost interest from fixing the low interest rates to forestall collapse. The Federal Reserve will say that we are doing our best to create profits for the banks that will permit us eventually to unwind the fraud and return to normal. Congress will see no alternative to this.

But the question remains: How long can the regime of negative interest rates continue while debt explodes upward? Currently, everyone in the United States who counts and most who don't have an interest in holding off Armageddon. No one wants to tip over the boat. If the banks are sued for damages and lack the money to pay, the Federal Reserve can create the money for the banks to pay.

If the collapse of the system does not result from scandals, it will come from outside. The dollar is the world reserve currency. This means that the dollar's exchange value is boosted, despite the dismal economic outlook in the United States, by the fact that, as the currency for settling international accounts, there is international demand for the dollar. Country A settles its trade deficit with Country B in dollars; Country B settles its account with Country C in dollars; and so on throughout the world.

For whatever the reason -- perhaps to curtail their accumulation of suspect dollars or to bring Washington's power to an end -- the BRICS countries, Brazil, Russia, India, China, and South Africa, are agreeing to settle their trade between themselves in their own currencies, thus abandoning the dollar.

According to reports, China and Japan have reached agreement to settle their trade between themselves in their own currencies.

The moves away from the dollar as the currency of international transactions means that the dollar's exchange value will fall as the demand for dollars falls. Whereas the Federal Reserve can create dollars with which to purchase the Treasury's debt, thus preventing a fall in bond prices, the Federal Reserve cannot prop up the dollar's exchange value by creating more dollars with which to purchase dollars. Dollars would have to be taken off the foreign exchange market by purchasing them with other currencies, but to have these currencies the United States would have to be running a trade surplus, not a long-term trade deficit.

In the short run, the Federal Reserve could arrange currency swap agreements in which foreign central banks swap their currencies for dollars to supply the Federal Reserve with currencies with which to soak up dollars. However, only a limited number of swaps could be negotiated before foreign central banks understood that the dollar's fall in value was not a temporary event that could be propped up with currency swaps.

As the value of the dollar will fall as countries move away from its use as reserve currency, the values of dollar-denominated assets also will fall. The Federal Reserve, even with full cooperation from the banking system employing every fraud technique known, cannot prevent interest rates from rising on debt instruments denominated in a currency whose value is falling.

Think about it this way. A person, fund, or institution owns bonds or any debt instruments carrying a negative rate of interest but continues to hold the instruments because interest rates, despite the increase in debt, are creeping down, raising bond prices and producing capital gains in the bonds. What happens when the exchange value of the currency in which the debt instruments are denominated falls? Can the price of the bond stay high even though the value of the currency in which the bond is denominated falls?

The drop in the exchange value of the currency hits the bond price in a second way. The price of imports rises, and this pushes up prices generally. The inflation measures will show higher inflation. How long will people hold debt instruments paying negative interest rates as inflation rises? Perhaps there are historical cases in which bond prices continue to rise indefinitely (or even hold firm) as inflation rises, but I have never heard of them.

As the Federal Reserve can create money, theoretically the Federal Reserve's prop-up schemes could continue until the Federal Reserve owns all dollar-denominated financial assets. To cover the holes in its own balance sheet, the Federal Reserve could just print more money.

Some suspect that the Federal Reserve, to forestall a declining dollar and thus declining prices of dollar-denominated financial instruments, is behind the sales of naked shorts every time demand for physical bullion drives up the price of gold and silver. The short sales -- paper sales -- cancel the impact on price of the increased demand for bullion.

Some also believe that they see the Federal Reserve's hand in the stock market. One day stocks fall 200 points. The next day stocks rise 200 points. This up-and-down pattern has been ongoing for a long time. One possible explanation is that as wary investors sell their equity holdings, the Federal Reserve, or the "Plunge Protection Team," steps in and buys.

Just as the "terrorist threat" was used to destroy the laws that protect U.S. civil liberty, the financial crisis has resulted in the Federal Reserve moving far outside its charter and normal operating behavior.

To sum up, what has happened is that irresponsible and thoughtless -- in fact, ideological -- deregulation of the financial sector has caused a financial crisis that can be managed only by fraud. Civil damages might be paid, but to halt the fraud itself would mean the collapse of the financial system. Those in charge of the system would prefer the collapse to come from outside, such as from a collapse in the value of the dollar that could be blamed on foreigners, because an outside cause gives them something to blame other than themselves.

-----

Paul Craig Roberts was assistant secretary of the treasury for economic policy for President Reagan and associate editor of The Wall Street Journal. He also has a columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments.

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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...

This Video ? Already Viewed by 876,000 ? Clearly Explains Why Economic Collapse of U.S. Is Inevitable

Posted: 22 Jul 2012 11:10 AM PDT

This short video – on the unsustainability of government spending – should be watched by everyone, including those not yet old enough to vote. It should be shown in every high school and college classroom. Anyone that cannot understand this presentation should not be allowed out without a guardian. *So says Monty Pelerin ([url]www.economicnoise.com[/url]) in edited excerpts from his original post*. [INDENT]Lorimer Wilson, editor of [B][COLOR=#0000ff]www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) has edited the article below for length and clarity – see Editor's Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.[/COLOR][/B] [/INDENT] Pelerin goes on to say, in part: Most people have no idea of the unsustainability of government spending. The path which the government blindly follows ensures a complete and total colla...


HSBC Scandal: Rampant Drug Money Laundering, Deals With Iran, Record Billion Dollar Fine Rumored

Posted: 22 Jul 2012 08:54 AM PDT

Sunday Thought

Posted: 22 Jul 2012 07:10 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 22, 2012 03:45 AM As someone who once served money far more than God, I found this story beyond belief despite once craving for the almighty dollar. This is the ultimate greed and the Bible is full of why greed is bad. Below is Chapter 10 of my book, “Confessions of a Wall Street Whiz Kid”: God and Money As I was starting to come out of my first depression, I found myself in a mega-bookstore asking the sales clerk to point me toward the books on money and finance.* I felt if I spent some time reading about my business, perhaps I would get fired up again and know the choices I was making were "right." But, instead, I just got more flustered. What I saw was overwhelming: shelves and shelves of books talking about money and finances. Though there were scores of titles, the saleswoman told me the average shelf life of each book ...


“Stuck in a half-million dollar house, her parents began living off food stamps.”

Posted: 22 Jul 2012 07:03 AM PDT

US poverty on track to rise to highest since 1960s


Twitter Weekly Updates for 2012-07-21

Posted: 22 Jul 2012 05:10 AM PDT

[LIST] [*]What Happens IF the U.S. Dollar and/or the Euro Collapse? Got Gold? [URL]http://t.co/gOZRRA1V[/URL] # [*]Leeb: Lack of Gold On Deposit to Eventually Result in Panic, Massive Turmoil & Total Chaos! Here's Why [URL]http://t.co/MepLKnAt[/URL] # [*]von Greyetz: Gold Going to $3,500-$5,000 in 12-18 Months – and $10,000 Within 3 Years! [URL]http://t.co/8ZeEgSKl[/URL] # [*]How NOT to Run a Country: What's REALLY Happening – and About to Happen – in Argentina [URL]http://t.co/ok1XO5pB[/URL] # [*]Rick Rule: Epic Collapse in Confidence Coming – Here's How to Protect Yourself [URL]http://t.co/ELIpilfL[/URL] # [*]Gold in Massive Accumulation Mode Leading Up to a Massive Move to the Upside [URL]http://t.co/70I5teuX[/URL] # [*]Richard Russell: Market Caught in Standstill Between 2 Opposing Forces – Which Will Win Out? [URL]http://t.co/S8QeE3Ds[/URL] # [*]Selected non-Gold/Silver Articles from [URL]http://t.co/6mwbROM1's[/URL] FREE "Your Daily Intelligence Report" [URL]http:/...


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