Gold World News Flash |
- Mogambo Sure-Fire Defensive-Posture Bunker (MSFDPB)
- Why the gold bears have got it completely wrong
- Silver Update 7/28/12 Olympic Silver
- FreedomFest, Rome and Opportunity
- NYC’s Department of Environmental Protection: Drink the (Yellow) Water
- Remedies for ‘Stuck in mud' U.S. economy will drive gold much higher
- $10 Trillion M2 Is Now In The Rearview Mirror
- Austerity At The Olympics: Each "Gold" Medal Contains 1.34% Gold
- 2012 Ranking of Global Gold Mines & Deposits
- Harry Dent's Formula for Surviving the Great Bust Ahead
- UK's biggest internet gold dealer Jewellery Quarter Bullion could be put up for sale
- The 'Recession-Proof' Olympic Dream
- Mass Exodus out of Gold Revealed by Trader Open Interest Reports
- Stock Market and Gold Fibonacci relationsh​ips
- At least three banks seen central to LIBOR rigging
- An Absolutely Stunning Development In The Silver Market
- This Past Week in Gold
- Guest Post: The State As A Fantasy
- Some Stock Markets Are More Equal Than Others: Global Performance Since 2009
- Ronald-Peter Stöferle: “Mining Shares Are One Of The Most Underweighted Sectors In The Globe At The Moment”
- CDU's Michael Fuchs "Greece Cannot Be Saved, That Is Simple Mathematics"
| Mogambo Sure-Fire Defensive-Posture Bunker (MSFDPB) Posted: 29 Jul 2012 09:10 AM PDT Something woke me up. I don't know what. Something, though. But once awake, it seemed to me that it was strangely quiet. And before you ask, the answer is "Yes. It is TOO quiet," which unfailingly means that something bad, usually something VERY bad, is just about to happen, like (as I learned from decades of watching TV) getting attacked with guns and/or arrows.
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| Why the gold bears have got it completely wrong Posted: 29 Jul 2012 08:05 AM PDT It was very interesting to hear a full presentation of the bearish case for gold by Paul Van Eeden, President of Cranberry Capital at the closing session of the Agora FInancial Investment Symposium in Vancouver.
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| Silver Update 7/28/12 Olympic Silver Posted: 28 Jul 2012 11:29 PM PDT |
| FreedomFest, Rome and Opportunity Posted: 28 Jul 2012 09:00 PM PDT by Ron Holland, The Daily Bell:
"From a kingdom of gold to one of rust and iron" – Dio Cassius, a Roman consul and noted historian in 180 AD describing the beginning of the decline of the Roman Empire "Are We Rome?" is the theme for FreedomFest 2013 and an appropriate question every American should ask about the future of the US regardless of which political gang and front man wins the 2012 election. My answer is yes, and America is like the old Roman Empire on steroids. What took decades in Rome to happen can now occur over only a couple of days' time with the Internet and global communications. The potential for military conflict, economic disruption or the EU sovereign debt crisis crossing the Atlantic with a corresponding real or preplanned Washington response in hours is frightening. Imagine a few seconds on investment trading platforms in the failing EU today versus the many months required for information to travel from Germany, "Germania," and France, "Gaul," in an earlier European empire and you'll understand what we face in our fast-paced Internet world. In the world economic environment of today the theme could easily change between now and July 2013 from "Are We Rome?" to "Barbarians at the Gates" almost overnight.
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| NYC’s Department of Environmental Protection: Drink the (Yellow) Water Posted: 28 Jul 2012 08:45 PM PDT from Silver Vigilante:
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| Remedies for ‘Stuck in mud' U.S. economy will drive gold much higher Posted: 28 Jul 2012 07:45 PM PDT by Jeffrey Nichols, MineWeb.com With the U.S. economy 'stuck in the mud' or even likely to move into downright recession, Fed likely to implement more easing, but how much and when will dictate gold price path.
In fact, the recent gold-price rally that took the yellow metal back over the psychologically important $1,600 an ounce level reflects rising market expectations that the Fed will announce further economic stimulus following the July 31-August 1 Federal Open Market Committee policy-setting meeting. Aggressive action by the Fed – in the form of another round of quantitative easing (QE3) or a reduction in the interest rate paid to banks on reserves deposited with the central bank – could give gold another quick boost and trigger the resumption of a durable bull-market advance.
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| $10 Trillion M2 Is Now In The Rearview Mirror Posted: 28 Jul 2012 07:11 PM PDT Two weeks ago we observed that the broadest money aggregate tracked by the Fed, M2, was less than $10 billion away from crossing the historic $10 trillion mark. As of this week, this number now officially has 14 digits for the first time ever, or $10,035,100,000,000 to be precise (technically the non-seasonally adjusted number crossed $10T last week, but for some reason bank deposits need to be seasonally adjusted, so waiting for the traditionally fudged data seemed appropriate). And we have a $50 billion increase in savings deposits, aka deferred buying power to those who still have the capacity to save, in one week to thank for putting $10 trillion in the rearview mirror.
Which actually brings us back to a point we have discussed previously, namely that even though M1 may be flattish and declining in direct proportion with the amount of excess reserves held by banks, and currency in circulation is rising at a glacial pace of about $1 billion each week - a key reason why the inflationary animal spirits have not bee unleashed yet, it is M2, i.e., total deposits, where the bulk of electronic money is contained, and which is rising at a soaring pace as seen on the chart below. And this is happening even despite ZIRP and soon - NIRP. Because this is real, well technically electronic, money that is just waiting for the signal to be withdrawn and spent on other things. Like bread. And wheelbarrows.
Now as the chart below shows, while the ratio of total deposits (checking, savings, small-denomination time deposits, and other) to currency has declined from a peak of 13.0x in 1987 to just over 6.0x in 2000, this ratio has been increasing since 2000 and is now back to 8.0x.
Which then begs the question: if and when the US currency in circulation starts picking up, due to conversion of reserves into dollar bills, and if the current ratio of reserves to currency persists, then the conversion of another $1.6 trillion in reserves into currency (since the Fed will be absolutely unable to withhold the reserve avalanche from converting into real circulating money without raising the IOER to a level which would crush the stock market, directly in opposition of what the Fed's prime and only directive is) would mean, all else equal, total bank deposits would rise from the current $8.4 trillion to $21 trillion. What the price of a loaf of bread, or a bar of silver, will be at that point, is anyone's guess. Or a wheelbarrow for that matter.
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| Austerity At The Olympics: Each "Gold" Medal Contains 1.34% Gold Posted: 28 Jul 2012 06:27 PM PDT As every Olympic athlete knows, size matters. The London 2012 medals are the largest ever in terms of both weight and diameter - almost double the medals from Beijing. However, just as equally well-known is that quality beats quantity and that is where the current global austerity, coin-clipping, devaluation-fest begins. The 2012 gold is 92.5 percent silver, 6.16 copper and... 1.34 percent gold, with IOC rules specifying that it must contain 550 grams of high-quality silver and a whopping 6 grams of gold. The resulting medallion is worth about $500. For the silver medal, the gold is replaced with more copper, for a $260 bill of materials. The bronze medal is 97 percent copper, 2.5 percent zinc and 0.5 percent tin. Valued at about $3, you might be able to trade one for a bag of chips in Olympic park if you skip the fish.
Size Matters...(via BBC)
Though Olympic gold is no longer 100 percent gold, a medal can still fetch big money. In 2010, a gold medal worn by Mark Wells, a member of the 1980 "Miracle on Ice" U.S. men's hockey team, was auctioned off for $310,700. Several years before that, Wells had sold his medal to cover medical expenses. Just before the auction, the medal was valued at $100,000 but it earned three times that amount. Heritage Auctions of Dallas identified the 2010 buyer as a rancher from the western U.S. The question remains - with the minimum 103 medals expected to be won by US athletes, will Bernanke be forced to reduce the size of NEW QE as 'all that precious metal is horded and repatriated back to the USA'? Source: Dillon Gage
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| 2012 Ranking of Global Gold Mines & Deposits Posted: 28 Jul 2012 04:32 PM PDT How many ounces of in-situ gold exist? How many gold mines exist in Canada and elsewhere? How rare is a 1.0 million ounce undeveloped deposit? This report answers these questions and more while providing insight into the scarcity of mines & deposits. So says Roy Sebag in an introduction to the following infographic from [url]www.visualcapitalist.com[/url] which is brought to you courtesy of Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds). This paragraph must be included in any article re-posting to avoid copyright infringement. Visual Capitalist * [INDENT] [B]HAVE YOU SIGNED UP YET?[/B] [LIST] [*] [COLOR=#ff0000]Go [B][COLOR=#ff0000]here to receive Your Daily Intelligence Report [/COLOR]with links to the latest articles posted on munKNEE.com.[/COLOR][/B] [*] [COLOR=#ff0000]It’s [B]FREE and includes an “easy unsubscribe feature” sh...
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| Harry Dent's Formula for Surviving the Great Bust Ahead Posted: 28 Jul 2012 02:48 PM PDT With a perfect storm brewing on the horizon, investors should be building their cash cache and running for cover, warns Harry Dent, author of The Great Crash Ahead. In this exclusive interview with The Gold Report, Dent explains how central bank stimulus programs are fighting a futile battle because a huge army of aging baby boomers has reached the stage in their economic lifecycles when they curb spending. How is Dent preparing for the gathering storm? Read on. . . The Gold Report: Your considerable research over many years indicates that the size and age of its citizens drive a country's economic growth or decline. Because people have predictable consumption patterns throughout life, you can predict well in advance national economic growth or decline. How does that work?
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| UK's biggest internet gold dealer Jewellery Quarter Bullion could be put up for sale Posted: 28 Jul 2012 02:39 PM PDT The company behind Bullion By Post, the UK's biggest internet gold and silver dealer, could be up for sale after appointing Grant Thornton to provide strategic sales advice. 
This posting includes an audio/video/photo media file: Download Now |
| The 'Recession-Proof' Olympic Dream Posted: 28 Jul 2012 02:31 PM PDT With the 2012 London Olympics now underway, ConvergEx's Nic Colas takes a look at the business of the Games. As it turns out, the five-circle logo of the International Olympic Committee is essentially one of the strongest brands on the planet. Broadcasters and advertisers spent $4.9 billion to associate themselves with the upcoming Olympics as well as the 2010 Vancouver Winter Games. Future commitments to the IOC for upcoming games are already well beyond these results. The reason for this success seems to boil down to two fundamental drivers. In the developed economies of the world, the games represent an opportunity to reach a large audience that has grown fragmented and hard to reach due to everything from the social media to DVR devices. In emerging markets, ever-larger middle classes represent excellent growth opportunities for global brands. The bottom line is that the Olympics may prove to be the last piece of media content that remains relevant and interesting to the majority of the world's consumers. ConvergEx: Olympic Economics Over the next 17 days over 4 billion people will tune in to watch some portion of the 2012 Olympic Games. They will cheer on the athletes from their native lands. They will enjoy the spectacle of the opening and closing ceremonies. And they will see sports as diverse as equestrian dressage, judo, and water polo. But what this majority of the earth's population will not see are all the contests which have been relegated to the history books of Olympic Games. Early on in the development of the modern games, the host country had the option of adding sports in which they had an outsized chance of claiming a medal. This lead to some truly unusual sporting choices, including:
From humble, if occasionally oddball, beginnings, the Olympics have become a very large business indeed. Much of the most dramatic growth has come in the last 20 years. We've included a broad range of data about the games in the tables after this note, but here is a highlight reel:
The bottom line is that the IOC has a fantastic business, and this week the organization announced that its 'Reserves' now total $558 million. That is up over $400 million from the reserves reported in 2001, at just $105 million, although down slightly from last year's $592 million. Advanced bookings for upcoming games – Winter 2014 in Japan and Summer 2016 in Brazil – already stand at $3.6 billion and the target is to raise over $4 billion. Corporate sponsor revenue for these two events is already at $1 billion, up from the $957 million for London/Vancouver. (See here for more reporting).
The Olympics is therefore an unequivocal business success story, unharmed by global recession, sovereign debt woes, and the other economic problems of the moment. But why? A few thoughts to close out this note:
Source below for more charts (pdf): Olympic Marketing Fact File 2012
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| Mass Exodus out of Gold Revealed by Trader Open Interest Reports Posted: 28 Jul 2012 02:24 PM PDT Gold has been deeply out of favor lately, languishing in its usual summer doldrums. This sentiment wasteland is driving traders to flee wholesale, including the futures players. Their mass exodus from the gold market is readily apparent in futures data. But provocatively such behavior is a powerful contrarian indicator, heralding the birth of major new uplegs in gold. Bearish futures traders are a bullish omen.
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| Stock Market and Gold Fibonacci relationsh​ips Posted: 28 Jul 2012 02:17 PM PDT In the last two days I talked about Fibonacci relationships in the Elliott Wave structure. Generally, in an impulsive (5-wave) move where wave [iii] is the largest, then wave [v] is often equal to wave [i], or some other Fibonacci relationship may apply. This morning I gave it my best shot, suggesting that wave [v] would be equal to wave [i] at 136.75. Actually, my calculation was off. The correct target was 136.52. Not enough coffee, perhaps.
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| At least three banks seen central to LIBOR rigging Posted: 28 Jul 2012 02:07 PM PDT By Carrick Mollenkamp and Emily Flitter http://www.reuters.com/article/2012/07/28/us-banking-libor-traders-idUSB... New details from court documents and sources close to the Libor scandal investigation suggest that groups of traders working at three major European banks were heavily involved in rigging global benchmark interest rates. Some of those traders, including one who used to work at Barclays Plc in New York, still have senior positions on Wall Street trading desks. Until now most of the attention has involved traders at Barclays, which last month reached a $453 million settlement with U.S. and UK authorities for its role in the manipulation of rates. Now it is becoming clear that traders from at least two other banks -- UK-based Royal Bank of Scotland Group Plc and Switzerland's UBS AG -- played a central role. ... Dispatch continues below ... ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf Among them the three banks employed more than a dozen traders who sought to influence rates in either dollar, euro, or yen rates. Some of the traders who are being probed have worked for several banks under scrutiny, raising the possibility that the rate fixing became more ingrained as traders changed jobs. The documents reviewed by Reuters in analyzing the traders' involvement included court filings by Canadian regulators who have been investigating potential antitrust issues; settlement documents with Barclays filed by the U.S. Department of Justice and the U.S. Commodity Futures Trading Commission in Washington and by the Financial Services Authority in the U.K.; and a private employment lawsuit filed by a former RBS trader in Singapore's High Court. The scandal, which began to come to light in 2008, has become a time bomb for regulators and a big focus for politicians on both sides of the Atlantic. At issue is the manipulation between at least 2005 and 2009 of rates that are used to determine the cost of trillions of dollars of borrowings, including everything from home loans to credit card rates. One former Barclays employee under scrutiny, Reuters has learned, is Jay V. Merchant, according to people familiar with the situation. Merchant, who oversaw the U.S. dollar swaps trading desk at Barclays in New York, worked for the bank from March 2006 to October 2009, according to employment records maintained by the U.S. Financial Industry Regulatory Authority (FINRA). Merchant currently holds a similar position at UBS, where he works out of the Swiss bank's offices in Stamford, Connecticut, according to FINRA. He did not return requests for comment. People familiar with the investigation said authorities are looking at whether some individuals on Merchant's trading desk tried to influence the rate on Libor by communicating with other traders in London to get a higher return on certain swaps the desk was trading. His specific role is unclear. The Department of Justice declined to comment. Merchant's attorney, John Kenney of Hoguet Newman Regal & Kenney, did not respond to requests seeking comment. A UBS spokeswoman said that the bank has "no reason to believe Mr. Merchant has engaged in any improper conduct at UBS." The spokeswoman, who noted that Merchant is on a two-week vacation, declined to comment on the broader investigation. Barclays declined to comment. In a statement, an RBS spokeswoman said the bank is cooperating with the investigation. This week Reuters reported that federal prosecutors in Washington have begun reaching out to lawyers for some of the individuals under scrutiny as they get closer to bringing possible criminal charges. The dollar and euro rate rigging appears to have begun in earnest in early 2005 in the dollar market, according to the documents reviewed by Reuters. By August of that year Barclays traders were reaching out to traders at other big global banks to manipulate their rates to make them favorable to Barclays' trading positions. Soon the trading had crossed to the euro rate markets, according to the settlement documents filed in the Barclays investigation. And by 2007 traders at RBS and UBS were seeking to influence the yen rate market, according to documents filed in 2011 in Singapore's High Court and in Canada's Ontario Superior Court. Traders at Barclays are believed to have participated in manipulating the rate for the dollar and the rate for the euro known as Euribor, according to documents filed in the Barclays settlement last month. RBS and UBS traders are a focus of the global investigation because of their alleged involvement in seeking to influence yen-denominated rates. Two RBS traders in London, Brent Davies and Will Hall, are alleged to have agreed to help a trader at UBS, Thomas Hayes, to manipulate yen Libor, according to court documents filed by the Canadian Competition Bureau. UBS is cooperating with Canadian and U.S. authorities, according to people familiar with the situation. Hayes worked at UBS from 2006 to 2009. He later moved to Citigroup where he remained until 2010, after which he left the bank. Hayes, Davies and Hall could not be reached for comment. The documents reveal that Hayes also contacted traders at other banks in London to get them to manipulate yen rates. They include Peter O'Leary at HSBC Holdings Plc, Guillaume Adolph at Deutsche, and Paul Glands at JPMorgan. A second UBS employee sought to get a Citigroup trader, who formerly had worked at UBS, to influence rates. None of these traders could be reached for comment. In addition, a former trader at RBS, Tan Chi Min, said in a wrongful termination lawsuit filed in the Singapore High Court in 2011 that he was forced out for "improperly seeking to influence" the setting of Libor. Tan, who ran a trading desk at RBS, said in the suit that improper rate-rigging was known by some at the bank and condoned. Tan denied trying to manipulate Libor, and alleged in the 2011 court filing, and one in March this year, that about a half dozen other RBS traders openly tried to request specific rates. Tan's attorney, N. Sreenivasan, declined to comment because the court case is ongoing. Beyond traders at the three European banks, authorities are still probing the role of others. For example, traders at JPMorgan Chase & Co also interacted with some of the traders under scrutiny who worked for Barclays and RBS, according to a person familiar with the situation and court documents filed in Singapore. Similarly, Deutsche Bank AG also had several employees whose trading is under scrutiny by authorities, according to people familiar with the situation and court documents filed in Canada. JPMorgan and Deutsche Bank declined to comment. Join GATA here: Toronto Resource Investment Conference New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment: Company Press Release VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory. The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57. The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows: Payback period: 3.55 years Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics." For the complete press release, please visit: http://prophecyplat.com/news_2012_june18_prophecy_platinum_announces_res...
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| An Absolutely Stunning Development In The Silver Market Posted: 28 Jul 2012 01:29 PM PDT  Today King World News is reporting on an absolutely stunning development, this time in the silver market. Acclaimed commodity trader Dan Norcini told KWN that in the silver market, "... the hedge fund outright short position is the largest position that I've got on my records going back to the beginning of 2007. We're talking about a five and a half year period." Norcini also noted there would be a huge move in silver, "if they (hedge funds shorts) get caught on the wrong side of that market ... because all of those shorts are going to head to the exits at the same time." The acclaimed trader also discussed hegde fund problems in the gold market, but first, Bill Haynes, President of CMI Gold & Silver, had this to say about QE: "Eric, it's guaranteed, it's just a question of when. Probably within a few weeks. Subastian Mallaby, a contributing editor to the Financial Times and a member of the Council on Foreign Relations, in Wednesday's Financial Times, chided Bernanke and the Fed for not showing some audacity, some aggressiveness in attacking the problem of an economy that will not get going."
This posting includes an audio/video/photo media file: Download Now |
| Posted: 28 Jul 2012 12:06 PM PDT Summary: Long term - on major sell signal. Short term - on mixed signals. Read More...
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| Guest Post: The State As A Fantasy Posted: 28 Jul 2012 11:44 AM PDT Submitted by James E. Miller of the Ludwig von Mises Institute of Canada The State As A Fantasy
This talk of super secretive government would be all fine and good for a minion of the security state except for one thing: Senator Feinstein is one of the biggest leakers in Congress herself. And it just so happens that her husband has benefited financially from contracting with the U.S. military. For all her talk of protecting the American people, Feinstein is just another well-connected thief in the societal racket known as the state. As Salon's Glenn Greenwald trenchantly observes: That the powerful Senator who has devoted herself to criminally punishing low-level leakers and increasing the wall of secrecy is herself "one of the biggest leakers in Congress" is about as perfect an expression as it gets of how the rule of law and secrecy powers are sleazily exploited in Washington In the scum filled world of politics, unscrupulous behavior is a permanent fixture. It's why the rule makers go out of their way to convince the voting public that its best interests are being taken to heart. The vision of a righteous government is sold to the people not just on Election Day but everyday thereafter. As long as voters stay complacent in the fantasy that their elected representatives are fighting the good fight, outspoken critics of the state will remain a minority. No amount of shoddy logic, guilt tripping, or blatant lies will awake the masses before it's too late and all previous memories of freedom have been violently stripped away. The truth is suppressed by the fantasy being continually force fed to the public, not just by politicians and their teleprompters, but by the a vast portion of the media which acts more like a squawk box for the state itself rather than an independent observer. The New York Times, the supposed great standard-bearer of journalistic quality, recently admitted that its stenographers and reporters allow their writings to be contorted by the same public officials who they claim to cover objectively. These reporters, so desperate to get a few words with any government official, are willing to give full discretion on what is reported right back to the people whose interest lies in manipulating the information the public receives. As the Times article reveals: From Capitol Hill to the Treasury Department, interviews granted only with quote approval have become the default position. The unconscionable behavior of the political class should be thought of as a contagious disease that infiltrates any industry that comes within influence of the state. Government contractors, lobbying associations, favored corporations, and even the press all seek to use the monopolized power of government to further their own interests. Instead of attempting to roll back stifling regulations, many of these firms simply wish to get in on the spoils of the great extortionary scheme. The results are always the same. Politicians pretend to be saving the people from cold-natured capitalism while politically-connected businessmen and bankers act as if their commercial success is completely of their own doing. The hidden truth is both act in tandem to fleece the average taxpayer. The fantasy then continues unabated. As F.A. Hayek recognized in The Road to Serfdom, central planners and their intellectual patrons achieve their power by gathering the "support of all the docile and gullible, who have no strong convictions of their own but are prepared to accept a ready-made system of values if it is only drummed into their ears sufficiently loudly and frequently." No matter how many times government policy fails to deliver on its promises, the reasoning stays the same: Politicians just need more tax dollars to spend goods into existence, central bankers need to print more money, human rights must be stripped away to ensure safety, consumers need to spend more and save less, and government will always know best. Today as most major economies are taking a turn for the worse, news outlets are filled with the pleas of esteemed intellectuals for further monetary stimulus and spending. Even those economists generally considered in favor of markets are looking to central banks, which are given a totally non-free market government grant of privilege, to induce a boom in lending and demand through printing money. As Pater Tenebrarum pointed out, it appears that Federal Reserve is close to announcing another round of monetary expansion. The Telegraph's veteran economics commentator Ambrose Evans-Pritchard even went as far as to pen an editorial titled "Weimar solution beckons as manufacturing crashes in US Fifth District?" No one seemed to ask the more important question of "since when does destroying a nation's currency and setting the foundation for the rise of a murderous regime actually help out manufacturing when all is said and done? " Even the man on the street, unlike Evans-Pritchard and his money-crankish peers in academia and print media, realizes that adding to the stock of currency does not add to society's overall stock of wealth. More paper dollars, euros, yen, etc. isn't the same as more foodstuffs, personal computers, and cellular phones. When Zimbabwe's stock market was skyrocketing to heavenly heights in 2007, the inflation lovin' crowd must have looked on with delight at the uninhibited fruition of their favored policy. Grandmothers carrying wheelbarrows full of cash to the supermarket to purchase a few loafs of bread meant nothing in the face of accelerating GDP figures. But again, the fantasy at play here is the idea that the state can create something out of nothing with the magic of the printing press. But as history proves time and time again, unbacked credit expansion always sews the seeds of its own destruction as the boom must inevitably turn to bust. The real beneficiaries of newly created fiat money isn't society in general but, as Murray Rothbard notes, "the State, State-manipulated banks and their favorites" who are first in line to receive the currency first. Proponents of central banking must spend a good deal of time concocting nonsensical explanations to ensure the overall public realize how ripped off it really is. At no place in time were governments ever formed with good intentions in mind. This is the unvarnished truth as opposed to the fantasy world that is indoctrinated first within public school classrooms and is repeated in various outlets until old age. The state being a burden on society is a universal principle that transcends through all governmental levels and sizes. It was recently reported that a thirteen year old had his hot dog cart shut down by city officials in the city of Holland, Michigan. Because of zoning restrictions aimed at protecting already established restaurants, the boy, Nathan Duszynski, saw his small enterprise succumb to the crookedness of local government officials. Now just think about this for a minute. A thirteen year old was savvy enough and had the foresight to purchase a significant amount of capital to start a modest business. When most kids his age are sitting in front of the television, Duszynski was gaining real world business experience. His customers didn't say no to his effort; the government did. The public is typically told that zoning laws are for their own safety when quite the opposite is true. Zoning laws, like practically any decree that stems from closed-door dealings of politicians, are to the benefit of some individuals at the expense of others. Mr. Duszynski, by virtue of his entrepreneurship, has already accomplished more productive-wise than any lifelong bureaucrat or politician. It is this writer's hope that the shutting down of his small business will serve as a lesson for him in that he won't buy into the fantasy that the state exists to provide peace and liberty.
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| Some Stock Markets Are More Equal Than Others: Global Performance Since 2009 Posted: 28 Jul 2012 10:19 AM PDT Back in March 2009, when the US financial system was imploding, one of market oddities was that European financial risk was far more muted than that of its American counterparts, with European stock markets trading, on a relative basis, far better than the epic collapse that the S&P had just experienced having plunged by over 50% in months. It was this freefall that forced the Fed to take on the most daring capital markets rescue attempt ever attempted, and by injecting and guaranteeing tens of trillions at the nadir of the financial crisis, it spawned a doubling of the US stock markets (at a huge cost: US capital markets are now all centrally planned, and the price of gold: that inverse indicator of faith in fiat currencies, has also doubled in the past 4 years following an epic fiat dilution orgy). Over the same time period, Europe has demonstrated what happens to capital markets when there is no central planner willing and able to accept the risk of runaway inflation in the future (not to mention soaring deficits and deferred austerity) in exchange for instant stock market gratification right here, right now. End result: the French, Italian and Spanish stocks markets have barely budged since their 2009 lows (and Spain is well below). How does this look in the context of all global stock markets on a Price to Book ratio? The answer is below.
The next logical question becomes: just why is the global investor willing to pay over 2 times book value for the average US stock, and unwilling to pay more than 0.8 Book for Italy and Spain. And how long until the realization that the rickety house of cards supporting the US stock market's 2.0+ P/B ratio is resting purely on the shoulders of a profligate Fed now that US corporations have once again resumed their downward "profitability" trajectory?
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| Posted: 28 Jul 2012 09:04 AM PDT
When asked about the current market sentiment Ronald said, "At the moment the sentiment is at the most bearish levels since 2008-2009, which for a contrarian is a very positive sign…I think during the correction we've seen all the speculative demand kind of being washed out." In regards to an important pillar of strength underneath the gold price Ronald explained that, "Negative real interest rates are by far the most important factor—we're not seeing negative real interest rates only in the US and the Eurozone, we're seeing them also in China, in India, in Vietnam, in Turkey, and so-on. This is also a big chapter in my report, I think that emerging markets…are much more important for the demand side at the moment, much more important for physical demand that the US or the Eurozone." With respect to the value to be found in the mining sector, Ronald added that, "You have to differentiate between both physical gold…and on the other hand gold mining shares which are an investment. I think that both are very attractive at the moment, the risk reward ratio for gold mining equities is very, very attractive…I think it is one of the most underweighted sectors all over the globe. From a fundamental perspective gold mining shares are really cheap."
To listen to the interview, click the following link and/or save to to your desktop: Interview with Ronald-Peter Stöferle To learn more about Ronald-Peter and Erste Group visit: Erste Group Enjoy the interview? Please share the URL page link with friends, family, or your favorite chat forum. Thanks,
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| CDU's Michael Fuchs "Greece Cannot Be Saved, That Is Simple Mathematics" Posted: 28 Jul 2012 08:17 AM PDT Since it has now become the norm to spread myth, fairy tales and magic during the week, only to collapse the wave function of an insolvent "developed world" with a double dose of reality during the weekend when markets are conveniently closed (recall the Draghi in a Box phenomenon) only to repeat it all again the coming week, here is some more truth which may force Citi to hike its estimate of Greece leaving the Eurozone from 90% to 110% (or about how much of QE3 is now priced into the market): "Greece cannot be saved, that is simple mathematics," Michael Fuchs, deputy leader of the parliamentary group of Merkel's Christian Democrats and their Bavarian sister party told weekly business magazine Wirtschaftswoche." Indeed, truth hurts, especially when accompanied by math. Which sadly is the problem these days in a world where math and surreality can no longer coexist. And sadly, in the absence of money growing trees, where one can create wealth out of thin air, not fiat dilution, disappointments such as these will only propagate until the game (over) theoretical equilibrium we discussed yesterday has no choice but to finally make its appearance.
To summarize: euphoria meets despair, as everyone from one side of the stock market ship scrambles to get to the other, and as the amplitudes of market moves become larger and larger, thanks entirely to central bankers destructive influence on capital allocation, until finally one day the entire market drops to below zero, which as the Fed itself was kind enough to tell us it would have been in 2009 if it wasn't for the Fed itself.
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Are We Rome?
New York City's department of environmental protection tells residents of New York not to worry when their water is yellow or brown. According to the agency, this is merely an "aesthetic problem." The city assures that "discolored water is safe to drink, but residents who are experiencing discolored water coming from the faucet should let the sediment settle before drinking."
Disappointing news for the U.S. economy is good news for gold investors. Recent economic data show an economy that is "stuck in the mud," to quote Fed Chairman Ben Bernanke. And, in response to signs of a slowing economy, the U.S. central bank is, sooner or later, likely to embark on another round of monetary easing.
I had a fascinating follow up interview with Erste Group analyst Ronald-Peter Stöferle, regarding his recent 2012 updated release of the "In Gold We Trust" gold report
This was yet again another must-listen interview for market students and participants of the precious metals space. Additionally, Ronald's report "In Gold We Trust" is required reading for anyone considering investing in precious metals and mining sector.
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