Gold World News Flash

Gold’s Fundamental Role In The Financial System
Contrarian Investors Take Note: Extreme Low of Gold Miners Bullish Percent Index Screams BUY! Here?s Why
Gold Bearish Triangle Nearing Terminus
65 Year Old Video Says Gold Is ‘Good Money'
“It’s Spreading”: US Census Reports Nearly 100 Million Poor in America; Worst Conditions in Fifty Years
Andrew Hepburn: Market rigging by central banks is gaining respectability
Embry expects gold shortage to manifest itself soon
Silver Update 7/23/12 Loco London
Gold Continues To Move Towards The Financial System
Time To Get To Work
Smashing The Can Instead Of Kicking It Down The Road
65 Year Old Video Says Gold Is 'Good Money'
The Gold Price Closed Only $2.60 off it's High Never Stumbling Out of it's Triangle
Financial Markets Forecasting is Looking Bleak
Rising U.S. Dollar Forces Bernankeâ€™s Hand
U.S. Dollar Danger Threatens Gold as Euro Hits 2-Yr Low
Spain the Latest Domino to Fall Into the Eurozone Bailouts?
Euro Meltdown to Force Central Banks to Sell Gold
Sigtarp: “Americans Should Lose Faith In Their Government ... Only With This Appropriate and Justified Rage Can We Hope
Summer Shopping Opportunities for Mining Equities Abound: Rick Mills
Embry - Expect Shortages Of Gold As Soon As Next Month
Moody's Changes Aaa-Rated Germany, Netherlands, Luxembourg Outlook To Negative
Gold Market Update - July 23, 2012
Silver Market Update - July 23, 2012
In The News Today
Same Old Same Old As VIX Dips, EUR Rips, And Equities BTFDs
Money Is Technology!
Gold Daily and Silver Weekly Charts - A War On Silver and Gold
Gold Seeker Closing Report: Gold and Silver End Modestly Lower

Gold’s Fundamental Role In The Financial System

Posted: 24 Jul 2012 01:05 AM PDT

By Vin Maru It is currently estimated that the largest 110 central banks have 16% of their reserves as gold. Anyone who follows the gold market knows that many central banks have become net buyers of gold in the last few years, and the pace of accumulation seems to be growing. While central banks continue [...]

Contrarian Investors Take Note: Extreme Low of Gold Miners Bullish Percent Index Screams BUY! Here?s Why

Posted: 23 Jul 2012 11:58 PM PDT

*Some of the most rewarding set ups in investing come when extremes have been reached. Currently the Gold Miners Bullish Percent Index has dropped to 7.14% – an extreme reading, one rarely ever seen, and not since the panic drop in March of 2009. Following that signal, GDX rallied for the next 2½ years increasing over 4 times in value. As such,*a move up in the Gold Miners Bullish Percent Index from these historically low levels could signal another major move in gold mining stocks….[Let me explain further.] Words: 1078 So says Christopher Wallace in an article* originally posted on Seeking Alpha. [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.[/C...

Gold Bearish Triangle Nearing Terminus

Posted: 23 Jul 2012 11:32 PM PDT

courtesy of DailyFX.com July 23, 2012 02:36 PM Daily Bars Prepared by Jamie Saettele, CMT If a triangle is unfolding from the May low, then the range will tighten for perhaps another few weeks or more before the break. “Gold has oscillated on both sides on 1600 since May 2011. This length of consolidation will probably fuel an impressive break…eventually. The sideways trading from the May 2012 low is taking on the form of a head and shoulders continuation pattern (bearish) but a break below 1548 is needed to confirm. Exceeding 1641 would shift focus to 1671 (May high).” LEVELS: 1526 1548 1554 1600 1611 1625...

65 Year Old Video Says Gold Is ‘Good Money'

Posted: 23 Jul 2012 10:43 PM PDT

[Ed. Note: Thanks to Tyler and the gang at Zero Hedge for pulling this SGTreport video from the archives and re-posting it on our favorite alt media financial web site.]

from Zero Hedge:

From spearheads to shells, this Government-issued 1947 film "Know Your Money" explains that "none of these met all the requirements of good money"…

From such trying historical experience, Gold and Silver emerged as the most durable, most convenient, and most satisfactory money. Luckily, governments took over the management of good money and saved us all the bother of worrying about credibility…

Watch and remember WHY we stack PHYSICAL precious metals.

“It’s Spreading”: US Census Reports Nearly 100 Million Poor in America; Worst Conditions in Fifty Years

Posted: 23 Jul 2012 10:30 PM PDT

by Mac Slavo, SHTFPlan:

It's bad out there. Really bad.

As world leaders finally begin to admit that we are smack dab in the middle of another Great Depression and the economy stands at the cusp of another earth-shaking collapse of the financial system, the US census reports that nearly 100 million Americans are now classified as living in poverty or are considered "near poor."

That's nearly 1/3 of our populace who are living in the worst economic conditions in nearly fifty years.

We haven't seen these highs since the mid '60s. That survey indicates the poverty level has grown from 15.1% to as high as 15.7% [since 2010], and it's spreading at record levels to many socio-economic groups from unemployed workers, suburban families, to the poorest poor.

Read More @ SHTFPlan.com

Andrew Hepburn: Market rigging by central banks is gaining respectability

Posted: 23 Jul 2012 09:36 PM PDT

11:30p ET Monday, July 23, 2012

Dear Friend of GATA and Gold:

Writing again for the Canadian magazine Macleans, sometime GATA researcher Andrew Hepburn argues that it wouldn't have been so odd for the Bank of England to intervene surreptitiously with the LIBOR interest rate reports of Barclays Bank, since central banks lately have been intervening, both openly and surreptitously, all over the place, and since academic rationales for more and more market rigging by central banks are gaining respectability. Hepburn's commentary is headlined "Why the Idea of the Bank of England Tampering with LIBOR Isn't as Crazy as You Think" and it's posted at Macleans here:

http://www2.macleans.ca/2012/07/23/why-the-idea-of-the-bank-of-england-t...

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...

Embry expects gold shortage to manifest itself soon

Posted: 23 Jul 2012 09:27 PM PDT

11:25p ET Monday, July 23, 2012

Dear Friend of GATA and Gold:

Sprott Asset Management's John Embry tells King World News he expects a shortage of gold to develop, perhaps as soon as next month, and overcome the manipulation of the futures markets and renew gold's ascent. An excerpt from the interview is posted at the King World News blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/23_Em...

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

Silver Update 7/23/12 Loco London

Posted: 23 Jul 2012 09:11 PM PDT

from BrotherJohnf:

Gold Continues To Move Towards The Financial System

Posted: 23 Jul 2012 08:51 PM PDT

It is currently estimated that the largest 110 central banks have 16% of their reserves as gold. Anyone who follows the gold market knows that many central banks have become net buyers of gold in the last few years ... Read More...

Time To Get To Work

Posted: 23 Jul 2012 06:51 PM PDT

My Dear Friends,

I am allowed to be tired at times so here are two briefs.

Gold:

All the funds required to meet state and federal insolvencies will be produced here and there. Since the insolvencies are coming fast, so is QE to infinity with lots of spin and MOPE.

The price of gold

Continue reading Time To Get To Work

Smashing The Can Instead Of Kicking It Down The Road

Posted: 23 Jul 2012 06:18 PM PDT

Wolf Richter www.testosteronepit.com

“No, absolutely not,” said European Central Bank President Mario Draghi when asked if the euro was in danger. “The euro is irreversible,” he added just as a whiff of panic began sweeping over the Eurozone. Everybody was supposed to enjoy their long vacation, and nothing important was supposed to happen. But, like a group of disruptive homeless guys, the ECB, the International Monetary Fund, and politicians have apparently gotten tired of kicking the Greek bailout can down the road, and they stomped on it instead.

Last week it was the ECB; it announced that it would no longer accept Greek government bonds as collateral, thus cutting Greek banks off from ECB funding. They will now be dependent on Emergency Liquidity Assistance (ELA) by the Bank of Greece, an unsustainable, risky measure.

Over the weekend, word seeped out that the IMF, having lost patience with Greece’s stalled reform efforts, would be unwilling to contribute more funds to the bailout. A huge blow. Vigorous denial by the IMF? Nope. On Monday, it only said tepidly that it would be “supporting Greece in overcoming its economic difficulties.”

Inspectors of the Troika—the EU, the ECB, and the IMF—are trundling into Athens today for meetings and inspections starting on Tuesday. Their final report will be the basis for the Troika’s decision in September to make the next bailout payment, or to let go. Politicians appear to be holding off on their final judgment until then. But they’re talking—and it doesn’t look good for Greece. Its demands to renegotiate the agreed-upon reform measures and then to delay their implementation has hit a wall of resistance.

“We won’t agree to any substantive change of the agreements we made,” said German Foreign Minister Guido Westerwelle. Economics Minister Philipp Rösler was “more than skeptical” that Greece could work out its problems. But any decision would have to wait for the final Troika report. “If Greece cannot meet the stipulations, then there won’t be any more payments,” he said. Greece would have to default, which might encourage it to leave the Eurozone. But no big deal: “Greece’s exit has long ago lost its scariness,” he said.

Giorgos Papakonstantinou, Greek Finance Minister from October 2009 until he was replaced by Evangelos Venizelos in June 2011, doubted the abilities of the Greek government to deal with the challenges and was “not optimistic“ that it could remain in power much longer.

Even the Big Kahuna, who is on vacation, and who’d pushed for these serial bailouts though they put deep rifts into her coalition government, lost patience with Greece. It leaked out that Chancellor Angela Merkel considered it “unthinkable” for her to beg the Bundestag for a third bailout package. And a third bailout package would be required if Greece’s demands for watering down the reforms and for delaying their implementation were met—they’d raise the costs by an additional €30 to €50 billion.

The next opportunity for Greece to default is August 20, when it has to pay the ECB €3.8 billion, which it doesn’t have. As Greece’s debt is now mostly held by public institutions, including the ECB, a default would cost taxpayers outside Greece dearly. Requests for emergency funding have fallen on deaf ears. So Greece could try to sell three- or six-month bills at astronomical rates, but most likely, the ECB will find a way to keep it afloat until a political decision has been made in September.

With Spain under fire, and with Italy—and thus the Eurozone as a whole—at risk, the perception is growing that the Eurozone might be stronger if it scuttled its leakiest ship. The surprise factor has long been wrung out of the system. Markets are ready. After a bit of chaos, there might even be relief. And that perception, if it gains the upper hand, will seal Greece’s fate.

Now the strategy is to prevent contagion. The temporary EFSF bailout fund is too small. What is needed is the larger firewall that the “permanent” ESM bailout fund will provide, once operational. Hence the enormous pressure on the German Constitutional Court to wrap up its review of the ESM and nod it through by September 12 [read.... Euro Desperation: German Justices already Buckled under Political Pressure].

By getting the Greek default over with, politicians and the Troika could focus on bailing out Spain. Unlike Greece, Spain is critical to the survival of the euro—and after Spain there is Italy, whose debt is huge, and even the ESM won’t be able to bail it out. All that remains is hope that contagion somehow stops before it gets to Italy. Hope, or a treaty change that would allow the ECB to buy sovereign bonds on a massive scale and bail out banks directly. The whole debt crisis would be over. To be replaced by a crisis of a different and more pernicious sort. Unlikely that the “northern” Eurozone countries would go for that.

But, but, but.... There are opportunities in Europe: mining. Europeans have a long history of it, yet dealing with regulations and eco-friendly groups has driven countries to switch to importing resources. Now record joblessness has refocused political agendas because mines can employ a lot of people! For investors, that’s exciting news. Read... Profiting from Europe’s New Gold Rush.

And here is yours truly in a conversation with Max Keiser on the Keiser Report, discussing bubbles, central banks, the Eurozone, NIRP, and “stupidity arbitrage” (video, aired over the weekend).

65 Year Old Video Says Gold Is 'Good Money'

Posted: 23 Jul 2012 06:01 PM PDT

From spearheads to shells, this Government-issue 1947 "Know Your Money" clip explains that "none of these met all the requirements of good money". From such trying historical experience, Gold and Silver emerged as the most durable, most convenient, and most satisfactory money. Luckily, governments took over the management of good money and saved us all the bother of worrying about credibility...

(h/t Nihilarian)

The Gold Price Closed Only $2.60 off it's High Never Stumbling Out of it's Triangle

Posted: 23 Jul 2012 05:30 PM PDT

Gold Price Close Today : 1577.10
Change : -5.40 or -0.34%

Silver Price Close Today : 2701.9
Change : -26.0 or -0.95%

Gold Silver Ratio Today : 58.370
Change : 0.358 or 0.62%

Silver Gold Ratio Today : 0.01713
Change : -0.000106 or -0.61%

Platinum Price Close Today : 1396.50
Change : -23.40 or -1.65%

Palladium Price Close Today : 569.70
Change : -15.35 or -2.62%

S&P 500 : 1,350.52
Change : -12.14 or -0.89%

Dow In GOLD$ : $166.75
Change : $ (0.73) or -0.44%

Dow in GOLD oz : 8.066
Change : -0.036 or -0.44%

Dow in SILVER oz : 470.83
Change : 0.78 or 0.17%

Dow Industrial : 12,721.46
Change : -101.11 or -0.79%

US Dollar Index : 83.77
Change : 0.880 or 1.06%

The GOLD PRICE took a left to the jaw, but came back pretty well (Am I saying the same thing those stock gurus are saying? Have I completely lost my mind? I probably have.) Low came at $1,563.61, high at $1,579.74, but gold closed only $2.60 off its high, ending at $1,577.10, down on the day $5.40.

Today's low carried the GOLD PRICE all the way to the bottom boundary of that even-sided triangle we have been eternally watching, but it bounced clean back up to the middle of the range. Okay, Moneychanger, how is that different from what stocks did today?

Plainly in this wise: Stocks dropped THROUGH their rising wedge's bottom boundary. True, they closed back up within the wedge, but only barely. Gold never stumbled out of its triangle.

The SILVER PRICE repeated gold's performance, and I call both of those successful tests. Stocks didn't rank the same in my eyes. Hope I'm not just talking my position, in preparation for having my head handed to me on a platter.

Silver's low came today at 2666 cents about 8:30 but it spent the next 3-1/2 hours climbing up to 2717c. Afterward it gave back a little, but only levelled off above 2700c. Comex silver lost 26 cents to end at 2701.9c.

This sideways-to-lower times are about as comfortable as walking on sharp gravel barefooted. I know that, but it's summertime and the world's economies and fiat currencies are coming apart. You have to expect a little confusion under those circumstances. I am not worried, silver and gold will yet vindicate themselves, and I don't expect we will see lower prices that we have already seen this year.

Keep your eyes on the horizon, not on the potholes. Nothing has changed. Silver and gold remain in a bull market.

Just to set the record straight with all the possibilities and to de-calumniate the Nice Government Men from any of my wrongful accusations, it is certainly possible that those sudden spike-up/spike-down could be caused by hedge fund computerized program trading. They set the program to trade certain percentage moves, and if those occur, the computer automatically enters the trade. So it might not be NGM alone spiking the gold market. They may be getting help from computerized trading. Of course, that does NOT say they do not manipulate the gold market, as that manipulation is plainly attested by statute, statutory mandate, and policy. See the "Exchange Stabilization Fund" in the 1935 Gold Reserve Act.

French and German stock markets dropped nearly 3% today on fresh (?stale) worries that Spain may need a bailout, which, of course, is impossible given its size. Ten year Spanish government bond yields hit 7.5% while Spain's stock market regulator banned all short selling for three months. Italy followed suit, but with a shorter ban. Fear slopped over into US stock markets, but most interesting was that the US treasury yields touched record lows. Hard to pick a top in that market, but sometime here US treasuries will either absorb all the money in the world, or their price will peak and they will drop (remember, bonds move opposite to their yields, so higher bonds mean lower yields).

The gigantic belly laugh in all this, if you like Gallows Humor, is that the US dollar and yankee government debt are being called "safe havens." Safe from what? From default? Nope, that's happened several times in US history. From inflation? Not since 1913. I may be a natural born fool, but Thunderation! I ain't durned fool enough to believe a proposition THAT stupid.

If you think the Dow down 0.79% (101.11 points) at 12,721.46, or the S&P down 0.89% (12.14 points) at 1,350.52 is bad, you should have seen them at the lows, down a meaty 2.8%. Those Nice Government Men must have had a brain-busting day, bringing the Dow back from 360 points down.

Listen, there's more Looney-dom in the air. Commentators and gurus are bragging about how much the indices came back during the day. Folks, if you got to brag about something like that, you got nothing to brag about. Like one wino bragging to another that his rags are better than the other winos.

These people must think we are REALLY dumb.

US dollar index rose 88 basis points or 1.06% from Friday's close. High came at 83.99.

However, 'tain't all it seems. On the long term chart that only took the US dollar to the top boundary of its trading range stretching back to the end of 2011. Yes, the dollar MIGHT break through that channel line and run for 90, but it hasn't done yet, and the rule says sell the top of the channel and buy the bottom.

Personally, I can't imagine that international criminal Bloviating Ben Bernanke going home early tonight, not without calling his co-conspirators in the other central banks and making plans to keep the dollar from rising sunward and the euro from sinking earthward. In other words, tomorrow would be a good time for some announcements timed to knock the dollar in the head and boost the euro.

Owch. Speaking of the euro, it lost another 0.33% today to end at ANOTHER new low, $1.2118. Yen actually poked it's little noggin through the downtrend line, and ended up 0.17% at 127.58c (Y78.38).

Something about the terrible shooting in Aurora Colorado I just can't swallow. Almost always it comes out later in the small type that the shooter was on some anti-depressant, but this whole play, with the utterly unlikely shooter, looks like a genuine Manchurian Candidate operation.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com
1-888-218-9226
10:00am-5:00pm CST, Monday-Friday

© 2012, The Moneychanger. May not be republished in any form, including electronically, without our express permission.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

WARNING AND DISCLAIMER. Be advised and warned:

Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold and silver on margin or with debt.

What DO I recommend? Physical gold and silver coins and bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose. No, I don't.

Financial Markets Forecasting is Looking Bleak

Posted: 23 Jul 2012 05:08 PM PDT

I hope you had a great summer weekend. This week could be a huge one for stocks and commodities. This morning the dollar index is taking another run at our weekly chart resistance level. If it can break out and start to rally this week then a possible 4-6 week sell off in stocks and commodities may be just starting.

Rising U.S. Dollar Forces Bernankeâ€™s Hand

Posted: 23 Jul 2012 05:04 PM PDT

Could it be that world governments and central banks are now taking drastic measures to re-inflate their economies because they don’t believe their own economic statistics? For example, China reported that GDP growth came in at 7.6% last quarter. That’s slower growth, but still not so bad. However, China’s electricity consumption has slowed much faster than growth in official GDP (electricity generation was unchanged in June from a year earlier at 393.4 billion kilowatt-hours), when they normally move in tandem. Turning to the U.S., the Labor Department announced last week that initial jobless claims fell 26k to 350k. Sounds great…but wait. Digging into the unadjusted data, there was actually an increase of 69,971 claims for the week—an increase of 19% from the week prior. Now that’s some seasonal adjustment!

U.S. Dollar Danger Threatens Gold as Euro Hits 2-Yr Low

Posted: 23 Jul 2012 04:59 PM PDT

WHOLESALE gold bullion prices fell to $1569 an ounce during Monday morning's London trading – 0.9% off Friday's close – as stocks, commodities and the Euro also traded lower and US Treasuries gained, following news that two Spanish regions plan to ask for bailouts. Silver bullion fell to $26.88 an ounce – a 1.9% drop on where it ended Friday.

Spain the Latest Domino to Fall Into the Eurozone Bailouts?

Posted: 23 Jul 2012 04:44 PM PDT

Today's AM fix was USD 1,571.50, EUR 1,298.12, and GBP 1,011.91 per ounce. Friday’s AM fix was USD 1,583.00, EUR 1,291.30and GBP 1,007.83 per ounce. Silver is trading at $26.98/oz, €22.36/oz and &ound;17.94/oz. Platinum is trading at $1,396.00/oz, palladium at $564.80/oz and rhodium at $1,190/oz.

Euro Meltdown to Force Central Banks to Sell Gold

Posted: 23 Jul 2012 04:39 PM PDT

Gold is not a good investment in deflation. It...

[[ This is a content summary only. Visit my website http://goldbasics.blogspot.com for full Content ]]

Sigtarp: “Americans Should Lose Faith In Their Government ... Only With This Appropriate and Justified Rage Can We Hope

Posted: 23 Jul 2012 04:23 PM PDT

The Special Inspector General for Tarp Issues a Wakeup Call … Lambasts the Government and the Banks

The government’s special inspector general in charge of oversight of the Troubled Asset Relief Program (the “TARP” bank bailouts) – Neil M. Barofsky – wrote a stunning editorial for Bloomberg yesterday, concluding:

Americans should lose faith in their government. They should deplore the captured politicians and regulators who distributed tax dollars to the banks without insisting that they be accountable. The American people should be revolted by a financial system that rewards failure and protects those who drove it to the point of collapse and will undoubtedly do so again.

Only with this appropriate and justified rage can we hope for the type of reform that will one day break our system free from the corrupting grasp of the megabanks.

See this for background.

This is not the statement of a raving blogger (although some of the best reporters write blogs) or a conspiracy theorist living in his mom’s basement (even though some conspiracies are real).

This is the former government official who oversaw the bailouts.

Summer Shopping Opportunities for Mining Equities Abound: Rick Mills

Posted: 23 Jul 2012 03:31 PM PDT

The Gold Report: Prices of the mining equities were languishing when we spoke in January, particularly precious metals equities, and we've had little respite since then. But you foresee potential for a bullish resurgence in gold equities. What's your rationale behind that outlook? Rick Mills: I believe we're going to see higher levels of inflation. We're going through a deflationary bout now because most of the money issued by the Federal Reserve is actually parked at the Fed. It isn't out there being spent, so it's not causing inflation. It's basically just propping up the banks. When the banks start lending and when the money gets into circulation, we'll see increased levels of inflation and, of course, that will be good for gold. [INDENT] Related Articles: Derisking Gold Juniors, Step by Step: Rick Mills How to Minimize Risk and Increase Returns on Juniors: Joe Mazumdar Gold Producers in the Catbird Seat: Jay Taylor [/INDENT]TGR: Lack of access to capital for small business d...

Embry - Expect Shortages Of Gold As Soon As Next Month

Posted: 23 Jul 2012 03:10 PM PDT

Today John Embry stunned King World News when he warned, "We are moving toward a fundamental shortage of gold, and I believe it may start as soon as next month." Embry also cautioned, "The problem now is that the global economy is contracting at a time when the debt levels are catastrophically high."

Embry, who is Chief Investment Strategist of the $10 billion strong Sprott Asset Management, also discussed Europe, but first, here is what Embry had to say about the drought and inflation: "I am very concerned about this drought that is happening, particularly in the United States. You look at a weather map in the Midwestern United States, the temperatures are just staggeringly hot and there's no moisture."

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

Moody's Changes Aaa-Rated Germany, Netherlands, Luxembourg Outlook To Negative

Posted: 23 Jul 2012 02:57 PM PDT

In a first for Moody's, the rating agency, traditionally about a month after Egan Jones (whose rationale and burdensharing text was virtually copied by Moody's: here and here), has decided to cut Europe's untouchable core, while still at Aaa, to Outlook negative, in the process implicitly downgrading Germany, Netherlands and Luxembourg, and putting them in line with Austria and France which have been on a negative outlook since February 13, 2012.The only good news goes to Finland, whose outlook is kept at stable for one simple reason: the country's attempts to collateralize its European bailout exposure, a move which will now be copied by all the suddenly more precarious core European countries.

From the report:

Moody's changes the outlook to negative on Germany, Netherlands, Luxembourg and affirms Finland's Aaa stable rating

London, 23 July 2012 -- Moody's Investors Service has today revised to negative from stable the outlooks on the Aaa sovereign ratings of Germany, the Netherlands and Luxembourg. In addition, Moody's has also affirmed Finland's Aaa rating and stable outlook.

All four sovereigns are adversely affected by the following two euro-area-wide developments:

1.) The rising uncertainty regarding the outcome of the euro area debt crisis given the current policy framework, and the increased susceptibility to event risk stemming from the increased likelihood of Greece's exit from the euro area, including the broader impact that such an event would have on euro area members, particularly Spain and Italy.

2.) Even if such an event is avoided, there is an increasing likelihood that greater collective support for other euro area sovereigns, most notably Spain and Italy, will be required. Given the greater ability to absorb the costs associated with this support, this burden will likely fall most heavily on more highly rated member states if the euro area is to be preserved in its current form.

These increased risks, in combination with the country-specific considerations discussed below, have prompted the changes in the rating outlooks of Germany, the Netherlands and Luxembourg. In contrast, Finland's unique credit profile, as discussed below, remains consistent with a stable rating outlook.

RATIONALE FOR OUTLOOK CHANGE

Today's decision to change to negative the outlooks on the Aaa ratings of Germany, the Netherlands and Luxembourg is driven by Moody's view that the level of uncertainty about the outlook for the euro area, and the potential impact of plausible scenarios on member states, are no longer consistent with stable outlooks.

Firstly, while it is not Moody's base case, the risk of an exit by Greece from the euro area has increased relative to the rating agency's expectations earlier this year. In Moody's view, a Greek exit from the monetary union would pose a material threat to the euro. Although Moody's would expect a strong policy response from the euro area in such an event, it would still set off a chain of financial-sector shocks and associated liquidity pressures for sovereigns and banks that policymakers could only contain at a very high cost. Should they fail to do so, the result would be a gradual unwinding of the currency union, which Moody's continues to believe would be profoundly negative for all euro area members. The rating agency has reflected this risk by raising the score for the "Susceptibility to Event Risk" factor in its sovereign rating methodology from "very low" to "low" for these three countries.

Secondly, even in the absence of any exit, the contingent liabilities taken on by the strongest euro area sovereigns are rising as a result of European policymakers' continued reactive and gradualist policy response, as is the probability of those liabilities crystallising (as Moody's already observed in a recent Special Comment, entitled "Moody's: EU Summit's Measures Reduce Likelihood of Shocks but at a Cost", published on 5 July 2012). Moody's view remains that this approach will not produce a stable outcome, and will very likely be associated with a series of shocks, which are likely to rise in magnitude the longer the crisis persists. The continued deterioration in Spain and Italy's macroeconomic and funding environment has increased the risk that they will require some kind of external support. The scale of these contingent liabilities is of a materially larger order of magnitude for these countries due to their size and their debt burdens; for example, the size of Spain's economy and government bond market is around double the combined size of those of Greece, Portugal and Ireland. Although the rising likelihood of stronger euro area members needing to support other sovereigns has not yet affected Moody's assessment of these sovereigns' "Government Financial Strength" in its rating methodology, the rating agency nevertheless believes that it needs to take some account of the impact that additional financial commitments would have on the assessment of their financial strength, given the material deterioration in these countries' fiscal metrics since 2007. Over the long term, Moody's believes that institutional reforms within the euro area have the potential to strengthen the credit standing of most or all euro area governments; however, over the transitional period (which could last many years), the additional pressure on the strongest nations' balance sheets will increase the pressure on their credit standing.

Accordingly, Moody's now has negative outlooks on those Aaa-rated euro area sovereigns whose balance sheets are expected to bear the main financial burden of support -- whether because of the need to expand the European Stability Mechanism (ESM) or the need to develop more ad hoc forms of liquidity support. These countries now comprise Germany and the Netherlands, in addition to Austria and France whose rating outlooks were changed to negative on 13 February 2012. The credit profile of these sovereigns is most affected by the policy dilemma described above.

Finland, with its stable outlook, is now the sole exception among the Aaa-rated euro area sovereigns. Although Finland would not be expected to be unaffected by the euro crisis, its net assets (Finland has no debt on a net basis), its small and domestically oriented banking system, its limited exposure to, and therefore relative insulation from, the euro area in terms of trade, and its attempts to collateralise its euro area sovereign support together provide strong buffers which differentiate it from the other Aaas.

Today's actions on the four sovereigns' outlooks incorporate the implications of certain euro area developments, such as the rising risk of a Greek exit, the growing likelihood of collective support for other euro area sovereigns, and stalled economic growth. By the end of the third quarter, Moody's will also assess the implications of these developments for Aaa-rated Austria and France, whose rating outlooks were moved to negative from stable in February. Specifically, Moody's will review whether their current rating outlooks remain appropriate or whether more extensive rating reviews are warranted.

***

MOODY'S CHANGES OUTLOOK ON GERMANY'S Aaa RATING TO NEGATIVE

In the context of today's rating actions, Moody's has changed the outlook on Germany's Aaa government bond ratings to negative from stable. The Aaa rating itself remains unchanged.

The key drivers of today's action on Germany are:

1.) The rising uncertainty regarding the outcome of the euro area debt crisis given the current policy framework, and the increased susceptibility to event risk stemming from the increased likelihood of Greece's exit from the euro area, including the broader impact that such an event would have on euro area members.

2.) The rising contingent liabilities that the German government will assume as a result of European policymakers' reactive and gradualist policy response, which comes on top of a marked deterioration in the country's own debt levels relative to pre-crisis levels.

3.) The vulnerability of the German banking system to the risk of a worsening of the euro area debt crisis. The German banks' sizable exposures to the most stressed euro area countries, particularly to Italy and Spain, together with their limited loss-absorption capacity and structurally weak earnings, make them vulnerable to a further deepening of the crisis.

In a related rating action, Moody's has today changed the outlook to negative from stable for the long-term Aaa rating and short-term P-1 rating of FMS Wertmanagement. Like Germany's Aaa rating, the ratings of this entity remain unchanged.

FMS Wertmanagement is a resolution agency or "bad bank" scheme for 100% state-owned Hypo Real Estate (HRE) Group created under the Financial Market Stabilisation legislation in Germany ("Finanzmarktstabilisierungsfondsgesetz" -- FMStFG). The German government has a loss compensation obligation via the government's Financial Market Stabilisation Fund (SoFFin) who owns FMS Wertmanagement.
Moody's views FMS Wertmanagement's creditworthiness as being linked to that of the German government because the government remains generally responsible for any losses and any liquidity shortfalls of FMS Wertmanagement.

--RATIONALE FOR NEGATIVE OUTLOOK

As indicated in the introduction to this press release, the first rating driver underlying Moody's decision to change the outlook on Germany's Aaa bond rating to negative is the level of uncertainty about the outlook for the euro area and the impact that this has on the country's susceptibility to event risk. Specifically, the material risk of a Greek exit from the euro area exposes core countries such as Germany to a risk of shock that is not commensurate with a stable outlook on their Aaa rating. The elevated event risk in turn increases the probability that the contingent liabilities will eventually crystallise, with Germany bearing a significant share of the overall liabilities.

The second and interrelated driver of the change in outlook to negative is the increase in contingent liabilities that is associated with even the most benign scenario of a continuation of European leaders' reactive and gradualist approach to policymaking. The likelihood is rising that the strong euro area states will need to commit significant resources in order to deepen banking integration in the euro area and to protect a wider range of euro area sovereigns, including large member states, from market funding stress. As the largest euro area country, Germany bears a significant share of these contingent liabilities. The contingent liabilities stem from bilateral loans, the EFSF, the European Central Bank (ECB) via the holdings in the Securities Market Programme (SMP) and the Target 2 balances, and -- once established -- the European Stability Mechanism (ESM).

The third rating driver is based on the German banking system's vulnerability to the risk of a worsening of the euro area debt crisis.
German banks have sizable exposures to the most stressed euro area countries, particularly to Italy and Spain. Moody's cautions that the risks emanating from the euro area crisis go far beyond the banks'
direct exposures, as they also include much larger indirect effects on other counterparties, the regional economy and the wider financial system. The German banks' limited loss-absorption capacity and structurally weak earnings make them vulnerable to a further deepening of the crisis.

--RATIONALE FOR GERMANY'S UNCHANGED Aaa RATING

Germany remains a Aaa-rated credit as its creditworthiness is underpinned by the country's advanced and diversified economy and a tradition of stability-oriented macroeconomic policies. High productivity growth and strong world demand for German products have allowed the country to establish a broad economic base with ample flexibility, generating high income levels. Germany's current account surplus supports the resiliency of the economy. Moreover, Germany enjoys high levels of investor confidence, which are reflected in very low debt funding costs, leading to very high debt affordability.

--WHAT COULD MOVE THE RATING DOWN

Germany's Aaa rating could potentially be downgraded if Moody's were to observe a prolonged deterioration in the government's fiscal position and/or the economy's long-term strength that would take debt metrics outside scores that are commensurate with a Aaa rating. This could happen if (1) the German government needed to use its balance sheet to support the banking system, leading to a material increase in general government debt levels; (2) any country were to exit the European monetary union, as such an event is expected to set off a chain of financial-sector shocks and associated liquidity pressures for sovereigns that would entail very high cost for wealthy countries such as Germany, and cause contingent liabilities from the euro area to increase; (3) debt-refinancing costs were to rise sharply following a loss of safe-haven status.

--WHAT COULD MOVE THE OUTLOOK BACK TO STABLE

Conversely, the rating outlook could return to stable if a benign outlook for the euro area, reduced stress in non-core countries and less adverse macroeconomic conditions in Europe in general were to ease medium-term uncertainties with regard to the country's debt trajectory.

***

MOODY'S CHANGES THE OUTLOOK ON THE NETHERLANDS' Aaa RATING TO NEGATIVE

Moody's Investors Service has today changed the outlook on the Netherlands' Aaa government bond rating to negative from stable. The Aaa rating itself remains unchanged.

The key drivers of today's action on the Netherlands are:

1.) The rising uncertainty regarding the outcome of the euro area debt crisis given the current policy framework, and the increased susceptibility to event risk stemming from the increased likelihood of Greece's exit from the euro area, including the broader impact that such an event would have on euro area members.

2.) The rising contingent liabilities that the Dutch government will assume as a result of European policymakers' reactive and gradualist policy response, which comes on top of a marked deterioration in the country's own debt levels relative to pre-crisis levels.

3.) The Netherlands' own domestic vulnerabilities, specifically the weak growth outlook, high household indebtedness, and falling house prices, whose impact is amplified by this heightened event risk.

--RATIONALE FOR NEGATIVE OUTLOOK

As indicated in the introduction of this press release, the first driver underlying Moody's decision to change the outlook on the Netherlands' Aaa bond rating to negative is the level of uncertainty about the outlook for the euro area and the impact that this has on the country's susceptibility to event risk. Specifically, the material risk of a Greek exit from the euro area exposes core countries such as the Netherlands to a risk of shock that is not commensurate with a stable outlook on their Aaa ratings. The elevated event risk in turn increases the probability that further contingent liabilities will eventually crystallise, with the Netherlands bearing a significant share of the overall liabilities.

The second and interrelated driver of the change in outlook to negative is the increase in contingent liabilities that is associated with even the most benign scenario of a continuation of European leaders' reactive and gradualist approach to policymaking. The likelihood is rising that the strong euro area states will need to commit significant resources in order to deepen banking integration in the euro area and to protect a wider range of euro area sovereigns, including large member states, from market funding stress. As a large, wealthy euro area country, the Netherlands bears a significant share of these contingent liabilities.
The contingent liabilities stem from bilateral loans, the EFSF, the European Central Bank (ECB) via the holdings in the Securities Market Programme (SMP) and the Target 2 balances, and -- once established -- the European Stability Mechanism (ESM).

The third factor underpinning this outlook change is that domestic vulnerabilities are being amplified by the stress that is emanating from the euro area. The Dutch growth outlook is relatively weak, both in relation to Aaa-rated peers and to its own track record. In fact, according to the Dutch central bank, the country's growth performance between 2008-14 will be its lowest for any seven-year period since the Second World War. Some of the reasons for this are unrelated to developments in the euro area such as declining real disposable incomes (which are expected to fall by nearly 4% in total in 2012-13), the Netherlands' high degree of household leverage (over 200% of disposable income, though household assets are also substantial) and falling house prices. However, negative developments at the euro area level are amplifying these negative trends, which are in turn contributing to weak confidence and an overall contraction in domestic demand. This dynamic creates additional fiscal headwinds and means that the Dutch government's debt burden will begin to fall later and from a higher level.

--RATIONALE FOR NETHERLANDS' UNCHANGED Aaa RATING

The Netherlands' Aaa sovereign rating is underpinned by very high levels of economic, institutional and government financial strength.

The Netherlands is a large, wealthy and open economy that is highly developed and diversified. Although the growth outlook over the forecast period is quite weak relative to the country's historical experience, the Dutch economy remains highly competitive, a fact that is reflected in the sizeable current account surplus. Moreover, unlike some of its fellow euro area countries, the Netherlands has already pursued substantial labour market reform, which has translated into a highly productive labour force whose participation rate is above the EU average.

In view of the country's strong tradition of building consensus on key economic policy changes, Dutch institutions have built a robust and highly transparent institutional framework to facilitate this process.
The country also has a strong tradition of relying on independent institutions at key points in the fiscal policymaking process.

The Netherlands also enjoys a broad, long-standing consensus on fiscal discipline. In 1994, the Dutch introduced trend-based budgeting with expenditure ceilings (expressed in real terms) for a government's entire term. Under Dutch fiscal rules, revenue windfalls cannot be used to finance expenditures and, in general, departments need to compensate for any overspending themselves. Within a few days of the collapse in April
2012 of the governing minority coalition over budget negotiations, the outgoing coalition was able to reach agreement with three opposition parties on additional fiscal consolidation measures. The speed with which agreement could be reached illustrates that the consensus in favour of fiscal discipline remains in place.

--WHAT COULD MOVE THE RATING DOWN

The Netherlands' Aaa rating could potentially be downgraded if Moody's were to conclude that debt metrics are unlikely to stabilise within the next 3-4 years, with the deficit, the overall debt burden, and/or debt-financing costs on a rising trend. This could happen in one of three scenarios, all of which imply lower economic and/or government financial
strength: (1) a combination of significantly slower growth over a multi-year time horizon and reduced political commitment to fiscal consolidation, including discretionary fiscal loosening or a failure to respond to a deteriorating fiscal outlook; (2) the exit of any country from the European monetary union, as such an event is expected to set off a chain of financial-sector shocks and associated liquidity pressures for banks and sovereigns that would entail very high cost for countries such as the Netherlands, and cause contingent liabilities from the euro area to increase; or (3) a sharp rise in debt-refinancing costs following a loss of safe-haven status.

--WHAT COULD MOVE THE OUTLOOK BACK TO STABLE

Conversely, the rating outlook could return to stable if a combination of less adverse macroeconomic conditions, a more benign outlook for the euro area and deficit reduction measures were to ease medium-term uncertainties with regard to the country's debt trajectory.

***

MOODY'S CHANGES THE OUTLOOK ON LUXEMBOURG'S Aaa RATING TO NEGATIVE

Moody's Investors Service has today changed the outlook on Luxembourg's Aaa rating to negative from stable. The Aaa rating itself remains unchanged.

The key drivers of today's action on Luxembourg are:

1.) The rising uncertainty regarding the outcome of the euro area debt crisis given the current policy framework, and the increased susceptibility to event risk stemming from the increased likelihood of Greece's exit from the euro area, including the broader impact that such an event would have on euro area members, including Luxembourg.

2.) The rising contingent liabilities that the Luxembourg government will assume as a result of European policymakers' reactive and gradualist policy response, although the country's level of gross indebtedness is markedly lower than that of the other Aaa-rated euro area sovereigns.

3.) Concerns about the country's economic resilience in view of its significant reliance on financial services industry for employment, national income, and tax revenue.

--RATIONALE FOR NEGATIVE OUTLOOK

As indicated in the introduction of this press release, the first driver underlying Moody's decision to change the outlook on Luxembourg's Aaa bond rating to negative is the level of uncertainty about the outlook for the euro area and the impact that this has on the country's susceptibility to event risk. Specifically, the material risk of a Greek exit and the broader impact that such an event would have on euro area members exposes core countries such as Luxembourg to a risk of shock that is not commensurate with a stable outlook on their Aaa ratings. In Luxembourg's case, Moody's particular concern is over the impact that this development could have on the financial services industry, which directly accounts for 25-30% of Luxembourg's GDP. In addition, Luxembourg is exposed to a potential rise in contingent liabilities if additional euro area support is needed for banks and sovereigns in financial distress. In the case of Luxembourg, this concern is mitigated by its relatively low level of sovereign indebtedness.

In light of Luxembourg's interdependence with the euro area's real economy and the global financial sector, Moody's has broader concerns about the country's economic resilience. Luxembourg's direct dependence on its financial services industry is substantial, both due to its contribution to government taxes and social security contributions (23% of the total) and to the country's employment (12% of employees). Of course, problems in the sector would inevitably generate second-order impacts on the national economy. While Moody's notes that Luxembourg's economy has a track record of being relatively resilient to shocks or crises, the above factors have prompted Moody's to examine whether this resiliency has gradually weakened.

--RATIONALE FOR LUXEMBOURG'S UNCHANGED Aaa RATING

Luxembourg's Aaa rating is underpinned by the country's position as one of the wealthiest countries in the world on both a GDP per capita and purchasing parity power basis. The rating also reflects the country's solid track record of economic growth, mainly driven by the financial services industry. In the past, the national authorities have been able to leverage their first-mover advantage in implementing EU directives by improving the business environment, being able to attract a highly skilled labour force and preserving some advantages related to bank secrecy legislation. Although the total assets of the banking sector and financial services' overall impact on the Luxembourg economy are very large, Moody's acknowledges that contingent liabilities emanating from it remain low. The domestic retail banking sector is dominated by three banks (Banque et Caisse d'Epargne de l'Etat, BGL BNP Paribas, BIL) and has assets that equate to just over 200% of GDP. These banks have, in aggregate, maintained strong, double-digit core Tier 1 ratios, thus capping the potential liabilities that could crystallise on the government's balance sheet. The off-shore part of the financial system is much larger and is composed of the investment fund industry (with assets under management that equate to 50x GDP) and the offshore banking operations (with assets that are 20x GDP). Moody's assesses the contagion risk between and within these different segments of Luxembourg's financial industry to be low due to minimal balance sheet linkages between the different segments of the financial sector (excluding intra-group exposures in the off-shore banking system which account for around 40% of the aggregated balance sheet of the system).

The Aaa rating is supported by the very high fiscal flexibility, characterised by the low fiscal inertness of the government and its ability to adjust tax rates (especially VAT considering the structure of economy), capital expenditures (4% GDP) and social security parameters.
Luxembourg still exhibits sound fiscal metrics, relative to other Aaa-rated countries, in spite of the fact that the government had to use its balance sheet to support both the economy and the banking sector during the financial crisis, which caused debt levels to increase to a still-modest 18.2% of GDP in 2011 from 7% in 2007. In addition, the government has significant financial buffers in the form of national pension fund assets that are equivalent to 27% of GDP.

--WHAT COULD MOVE THE RATING DOWN

Luxembourg's Aaa rating could potentially be downgraded if Moody's were to observe a large increase in the government's debt burden. Luxembourg's debt level is still low relative to rating peers, but the country's small size probably means that it is limited in its ability to take on large quantities of additional debt. More broadly, if events in the euro area develop in a way that undermines the resilience of the Luxembourg financial sector or economy, that could also result in a downgrade of the sovereign.

--WHAT COULD MOVE THE OUTLOOK BACK TO STABLE

Conversely, the rating outlook could return to stable if a benign outlook for the euro area, reduced stress in non-core countries and less adverse macroeconomic conditions in Europe in general were to ease medium-term uncertainties with regard to the country's debt trajectory and economic resilience.

***

MOODY'S AFFIRMS FINLAND'S Aaa RATING AND STABLE OUTLOOK

Moody's has today

Gold Market Update - July 23, 2012

Posted: 23 Jul 2012 02:56 PM PDT

Clive Maund 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 [ame="http://en.wikipedia.org/wiki/An_Officer_and_a_Gentleman"]An Officer and a Gentlemen[/ame] - 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. Now that I've got your attention we will start by looking at the 3-year chart for gold. On this chart we can see that following the peak attained last August, gold has been consolidating/reacting in some sort of triangular pattern. Some see this pattern as a bearish Descending Triangle and a top area. There are various reasons why this is not thought to be so. One is that there has been...

Silver Market Update - July 23, 2012

Posted: 23 Jul 2012 02:53 PM PDT

Clive Maund Silver investors and speculators are amongst the manic-depressive you can possibly find in the investment world. When they are playing maximum credits on the slots and passing round boxes of cuban cigars and taking out massive loans to buy Ferraris and Lambos you know it's time to watch out. When they retreat into the shadows, only coming out to hurl themselves off bridges and other tall structures, mumbling about the "cartel" as they plummet earthwards, you know it's getting time to buy - and that is the situation we now find ourselves in. In this update we are going to examine evidence which suggests that, despite the fragile looking price pattern, silver is going to turn surprisingly strong in short order, or alternatively, if it does break down, it turns out to be a false move that is swiftly followed by a dramatic recovery. On its 3-year chart we can see that silver has been severely testing its key support at and above its September and December lows in ...

In The News Today

Posted: 23 Jul 2012 02:37 PM PDT

Jim Sinclair's Commentary

Why would that surprise anybody?

In PFG Scandal, JPMorgan Chase Had Surprising Role: It Held Customer Accounts Posted: 07/12/2012 1:11 pm Updated: 07/12/2012 2:59 pm

The investigation into the collapse of Iowa brokerage firm Peregrine Financial Group is notable for one name that has not yet turned up: JPMorgan Chase.

JPMorgan,

Continue reading In The News Today

Same Old Same Old As VIX Dips, EUR Rips, And Equities BTFDs

Posted: 23 Jul 2012 02:33 PM PDT

UPDATE: TXN misses and guides down:For the third quarter of 2012, TXN expects:

Revenue: $3.21 – 3.47 billion vs consensus Exp. of $3.53 billion,
Earnings per share: $0.34 – 0.42, vs consensus Exp is $0.43

VIX opened north of 20%, traded to 20.49%, and then it was decided that this level of premium over a recent calm realized vol period is too much and the front-end of the volatility market was crushed over 2 vols lower. While VIX closed up 2.3vols at 18.6%, the sell-off into Europe's close recovered handsomely on low volume leak back up to VWAP (thanks to HYG and VXX's stability) and then an afternoon push to last Monday's close before giving most of the afternoon gains back in a few mins after the cash close. The EUR dip-and-rip, the stick-save in the S&P whenever it tumbles with any kind of velocity, the fearless selling of short-dated vol, juxtaposes the general state of safe-haven seeking in Treasuries (and Swiss/German bonds) as the entire TSY curve saw record closing low yields amid a 3bps flattening at the long-end. Equity volume was meh, average trade size was meh - though as cash closed near day-session highs we saw heavy blocks selling, and ES traded between its 61.8% and 50% retracements of the March-to-June swoon. Broad risk assets did not play along with stocks this afternoon (though equities and gold recoupled) and neither did TRIN which remained very flat all day. The USD ended stronger by 0.2% (in line with EUR weakness) but SEK was the day's best major performer as AUD lagged (down 1% against the USD today). Volatility pulled plenty cheap to equities once again which remain notably more sanguine than credit and TSYs but the magic 1340 level in ES appears to be the line in the sand for now - though given a 10Y at 1.40%, do not expect NEW QE anytime soon - though Gold outperformed its peers on the day as WTI slid over 4% from Friday's close.

ES found some significant short-term support and resistance as it auctioned down and up today...

All 8 sectors of the S&P lost ground on the day but there appeared to be heavy rotation intraday as BTFD'ers were playing along ahead of AAPL's earnings, but VIX's undershoot on Friday's close (OPEX) forced a responsive overshoot on today's open which was enough ammo to drive a vol compression all day...

FX market saw their by now ubiquitous EUR selling into the US open and EUR buying into the European close. Notably SEK was a major outperformer relative to its peers...

but gold and stock stayed coupled until the drop in the early part of the day-session only for stocks recouple right into the close (and then selloff)...

but leaves ES at the lower end of a trend channel (though failing to make higher highs this time)...hovering at the 1340 level...

Risk assets didn't play along this afternoon - and rather notably, ES just reverted back down after the close...

Charts: Bloomberg

Money Is Technology!

Posted: 23 Jul 2012 02:30 PM PDT

Money, although most people don't view it as such, is technology.

Think about it. Money is not a "natural" thing.

Money is a human abstraction. Money is an idea that's harnessed to certain standards. For example, archaeologists tell us that primitive societies used colored stones, seashells or pieces of bone as money.

Then for much of human history (including now, depending where you are), mankind used gold, silver and copper as money. In the 13th century, Kublai Khan introduced what some consider the first paper currency (the "chao") throughout China — an idea that Marco Polo brought back to Europe.

The point is that across the ages, money is a construct — an invented tool — whether it's seashells, gold, paper currency or even digital ones and zeros on a mobile device app.

Another way of viewing it is that money is an agreed-upon standard. Money is like time zones, where it's the same time to the east, west, north and south. Money is like a standard unit of measurement, where a pound of steel weighs the same as a pound of feathers. Or money is like the width of railway gauge, so that rail cars from one railroad can run on the tracks of another railroad.

Thus, money is, at root, technology as much as any other basic machine like the wedge, lever or wheel. And along with other basic machines, the idea of money has evolved over many thousands of years of human history.

Today, Kublai Khan's Chinese "chao" have evolved into modern U.S. Federal Reserve notes, as well as the multitude of other world currencies, from pounds to euros to yuan and much more.

When Money Breaks Down…

Now, I'd like you to consider what happens when a system of money — a system of technology — doesn't work, or just breaks down. It brings to mind an old expression from the Soviet Union, that "They pretend to pay us, and we pretend to work."

In other words, the Soviet Union was a society with a centrally planned command economy. The system of account, exchange and value was geared for the good of the state, but not much geared for the overall good of the people.

Over time, the currency — the Soviet ruble — ceased being much good for anything. Indeed, the ruble was a dodgy unit of account, a poor medium of exchange and a problematic store of value. Basically, there was little to buy in the Soviet command economy, and the Soviet people behaved accordingly. Their "money" (such as it was) shaped their attitudes.

The Soviets may have had good technology when it came to things like building tanks, rockets and nuclear bombs. But the Soviet economy failed to deliver for the good of the people. Eventually, the Soviet ruble was an economic technology that failed — along with the national construct known as the Soviet Union.

The Best Time-Tested Technology: Precious Metals…Silver

Looking ahead, I'm concerned with the trajectory of U.S. governance and the future of the economy. But I don't anticipate that the U.S. federal system will somehow collapse, like what happened with the Soviet Union — although I'm willing to have that talk at another time and place.

Still, for the life of me, I cannot envision how the U.S. will avoid more inflation. Federal spending is out of control, and the economy is struggling to gain traction.

I don't see how U.S. "monetary technology" — the dollar — can hold its value over the long haul. Next to moving out of the country to Singapore (like Jim Rogers, for instance), my fallback position is to keep building a precious metal portfolio based on physical metal and investing in well-run miners.

Along with gold, every portfolio should have exposure to silver.

Indeed, if you don't own physical silver — coins, small ingots, bars, etc. — then get some! Buy metal and take delivery. I've been saying that for a number of years, since silver was selling at $10 per ounce. Don't dwell over the near-term ups and downs. Silver is your safety fund for if (or when) the wheels come off the economic bus.

The recent silver selloff is due to turn around — silver is currently selling in the range of $27 per ounce. That's far above the historical lows of $5-10 per ounce from the early 1980s, 1990s and early 2000s. But it's also far down from the high over $45 last year.

Silver has a long, steadfast history as money, going back to ancient times. Yet it's also a substance with a promising future, thanks to its critical role as an industrial-technological metal. Aside from the traditional uses as money, silver has innumerable uses in electronics, medicine and other metallurgical applications.

In the past several years, silver prices have moved due to demand driven by investors. Silver appeals, along with gold, as a safe (at least, safer) haven as an investment in times of economic uncertainty. Like now.

Money is technology. Many modern currencies are a failing technology. It's time to get back to basics, and that means silver.

Regards,

Byron King
for The Daily Reckoning

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

Gold Daily and Silver Weekly Charts - A War On Silver and Gold

Posted: 23 Jul 2012 02:21 PM PDT

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

Gold Seeker Closing Report: Gold and Silver End Modestly Lower

Posted: 23 Jul 2012 02:16 PM PDT

Gold fell to as low as $1563.41 by about 8:45AM EST, but it then rallied back higher throughout the rest of the morning in New York and ended near its noontime high of $1580.30 with a loss of just 0.42%. Silver slumped to as low as $26.671 before it also rallied back higher and ended with a loss of just 1.14%.