Gold World News Flash |
- Do You Have the Guts to Buy Low and Sell High?
- Q&A With The Doc: If Silver is in Backwardation, Why Not Buy 2017 Contracts at a Discount?
- Plato is winning: From institutions of higher education to labor camp prep-schools.
- BULLS STILL IN CONTROL, BUT TIME IS RUNNING OUT
- The Empire State Vixen Index And Other Befuddled Ironies
- John Embry: Precious Metals Markets Heating Up
- Ugh, The Clueless Gold Hater Joe Weisenthal
- Citi's Buiter On Europe's Bumble And Stumble To Large-Scale Restructuring
- London 2012 and The Real Ancient Olympic Games Gold Medal Winners
- Gold Bears In Trouble As Central Banks Continue Buying
- This Past Week in Gold
- It's A Centrally-Planned World After All, With Ever Diminishing Returns
- Crackpot Economists Don't Know How to End the Fed
- Gold's 'Fearless' Summer Turnaround
- Gold Price Up $13.70 this Week and Remains on Trajectory Buy Now and Beat the September Rush
- History, All Over Again
| Do You Have the Guts to Buy Low and Sell High? Posted: 12 Aug 2012 08:00 AM PDT It's so outrageously simple that few investors can actually do it: buy low and sell high. The manic highs and lows of the market are actually good news for those investors who have mastered the discipline of buying low and waiting, according to Louis James, the senior editor of the International Speculator and Casey Investment Alert. In this exclusive interview with The Gold Report, James talks about how not to be fooled into timing the market and how he finds value in precious metals by scouring some knock-out jurisdictions like Mexico and China.
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| Q&A With The Doc: If Silver is in Backwardation, Why Not Buy 2017 Contracts at a Discount? Posted: 11 Aug 2012 09:30 PM PDT by The Doc, Silver Doctors:
Thanks in advance for you help. Bruce, normal commodity markets trade in contango. There is a reason silver is trading in backwardation- with a discount for back dated 2017 contracts. The owner of the bullion must pay vault storage and insurance fees, so typically a contract 5 years out will be more expensive than a front month spot contract. This means that the free market is concerned about the likelihood that the other side of that trade will be able to deliver that silver in 2017.
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| Plato is winning: From institutions of higher education to labor camp prep-schools. Posted: 11 Aug 2012 09:00 PM PDT from Silver Vigilante:
I first read Aristotle in my sophomore year of high school. The instructor shaped all of her lower-case es the same as in the Greek alphabet. I have been shaping mine the same since. I remember coming home one day with a dilemma: I had found my calling in life. "How do you become a Philosopher?" I asked my mom. This question left me stumped. Paralyzed. I was never able to answer that question, though I really wish I had a mentor back then, someone who could have pointed me to the right outlets for my zeal. These days, the time to major in Philosophy in America has passsed. A current look at the list of course offerings at a private college in California is sobering.
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| BULLS STILL IN CONTROL, BUT TIME IS RUNNING OUT Posted: 11 Aug 2012 08:39 PM PDT In last week's article "Three Weeks Left" I outlined a brief synopsis of what I was expecting based on how the daily cycles were unfolding. So far markets are playing out pretty much as anticipated. This week I'm going to go a bit more in depth and tie cycles analysis with the upcoming fundamental calendar, namely the next two FOMC, and Jackson Hole meetings. As you may recall from the last article, the dollar index is in the process of moving down into an intermediate degree bottom, which in turn is triggering a rally in virtually all risk assets, most noticeable in the energy and grain sectors as the CRB exploded out of its three year cycle low. I think we will probably see the dollar continue to drift generally lower for most of the remainder of this month, possibly even into the Jackson Hole meeting as traders continue to hope for the next round of QE. When the Fed fails to deliver, which they almost certainly will, we should see the market start to move down into its daily cycle low, which coincidentally is due almost exactly on the September FOMC meeting.  The September FOMC meeting will be the opportunity for the Fed to shorten the stock market intermediate cycle and possibly abort most of the move down into the yearly cycle low due in October. However I think the Fed is probably going to balk at the September meeting also, and when they do it will initiate the real move down into the normal timing band for an intermediate, and yearly cycle low in late October, or early November.  I suspect that the Fed will finally cave at the October meeting and begin an open ended QE with the misguided goal of achieving a nominal GDP target and lowering the unemployment rate. The one caveat would be that the Fed meeting in October would call for a slightly short stock market daily cycle, which is not unusual if the market is experiencing a hard decline. Another possibility, although one with lesser odds in my opinion, would be a final intermediate, and yearly cycle low on the November employment report, or the presidential election results, which would stretch out the daily cycle to its normal duration of 35-40 days. Based on the current cycle count, and taking into account the timing band for the next two FOMC meetings, and the dollar's current intermediate cycle we should trigger a top in the stock market sometime around the end of August. However let me warn bears that the move down into the intermediate bottom is not going to be an easy short. I expect we will see most of September chopping back-and-forth with several retests of the highs before finally rolling over. Most of the losses will probably coming in the final 5-10 days before the bottom. Like I said not an easy market for bulls or bears either one. Gold is a bit of a different animal than the stock market and its intermediate cycle has a different duration. But gold is still tethered to the dollar index as it continues working through the consolidation phase of this new C wave. Here is a chart I posted back in February depicting the extended consolidation that I was anticipating this year.  Considering that gold is still in this consolidation phase I think we are probably going to see a test, or more likely a break of the D-Wave trendline as the dollar completes its move down into its intermediate cycle low later this month. That should be followed by an intermediate decline that should bottom ahead of the stock market in mid to late September.  At that point I suspect gold will start to sniff out the next round of QE and will begin to resist the remainder of the dollar rally, very similar to what happened between May-July.  Open ended QE, which I expect to begin at the October FOMC meeting (there is a small chance that the Fed will act early in September), is going to be the driver of what should be an inflationary spiral, culminating with a parabolic move in the CRB and the next leg up in the secular gold bull (probably to $3500-$4000) as the dollar drops down into its next three year cycle low in mid-2014. The SMT premium newsletter is a daily and weekend market report covering the stock market, commodities, and the precious metals markets.       
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| The Empire State Vixen Index And Other Befuddled Ironies Posted: 11 Aug 2012 06:47 PM PDT Wolf Richter www.testosteronepit.com We’ve all heard about Wall Street employees who lost their jobs and ended up doing something unrelated, chasing after a dream, starting up a software company, working on a crab boat, teaching English to immigrants, run a taco truck, become a pole dancer.... So the other day, as I was flying home from the East Coast, I sat next to a girl of maybe 20. She raved about her newest thing: a course in sustainable agriculture in Vermont. She lived in New York City, but for six months, she’d be on this training farm, do farm work, and learn the ins and outs of sustainable agriculture. Her dream was to become an urban farmer. She’d rent some rooftop at a commercial building in Brooklyn, have someone install the necessary modifications to accommodate soil, etc., and then she’d plant her seeds. Did she have a farming background? She laughed. She had an Ivy-league degree, worked for a hedge fund for nine years, but wanted to do something else. She probably wasn’t 20 anymore. But it made me think: there should be indices that measure these activities—the number of people undergoing sudden, drastic, and unlikely career changes, voluntary or not—to give us a better gauge of the real economy and the job market. But by the time I got off my last flight at 1 a.m., I’d forgotten about it.... Until, while reading my favorite blogs and websites from around the world, I came across the Vixen Index—Hot Waitress Economic Index is the technical term. During the financial crisis, New York Magazine did a whole story on it. Since it’s apparently a favorite phenomenon in New York, let’s re-baptize it the Empire State Vixen Index. The theory is that in good times, attractive young women have desk jobs or sales jobs or run marketing departments, or write software. But when layoffs ravage their industries, these women become available for other jobs, and restaurant managers—hard-hit by plunging receipts—fall all over each other to hire the best-looking babes in order to attract more customers. “The hotter the waitresses, the weaker the economy,” the article said. Ever the thorough blogger, I Googled a bit further. And the first thing I noticed was unabashed irony, not about the index, which Investopedia took seriously somehow, but about internet advertising. The text defined the index by using the politically correct phrase, “good looking servers.” The word servers being a text link, I hovered over it... an IBM ad!
I’d run into this before with an article I’d posted on Zero Hedge about perceived nuclear contamination of Japan. One of the readers found a sushi ad from Google next to the post, took a screenshot of it, and sent it to me:
Come to think of it, that would be another index: ironic, funny, or cynical ad-and-content combinations, perhaps showing rising or falling levels of Google ad-server desperation. Hmmm. Back to the Empire State Vixen Index. It doesn’t actually exist. Not in the sense that someone like the NY Fed measures the number of hot waitresses and publishes a market-moving graph once a month that the talking heads on CNBC then vivisect. And most people would prefer competent, friendly wait staff with a good idea about the things on the menu. So, if this index measures anything, it might be attitudes by restaurant management, or their efforts to convert their eateries into me-too Hooters. But what if GDP is a similarly twisted contrivance? It does measure private-sector and government spending and investment but doesn’t take into account where the money is coming from. As it completely ignores debt, it creates the farcical impression that ever more debt is desirable because spending, and thus GDP, goes up—ad infinitum. And it doesn’t take into account, well, happiness, as Fed Chairman Ben Bernanke suddenly discovered last week—he who’d dumped trillions of dollars on the Fed’s cronies to make them happy. Yet, GDP is useful. It just doesn’t describe the health of the economy very well. So we follow numerous other indices to fill in the gaps. Some of my favorites are liquid. And I write about them from time to time. The beer market worldwide, for example: Beer, A Reflection Of The World Economy? Or, closer to home: The Beer War On American Soil. The wine indices are also very useful, particularly with regards to China. I suspect they’re leading indicators.... Ouch! The Wine Bubble Blows Up. If nothing else, they’re less dry and more inspiring than, say, the Case-Shiller Home Price Index. On the more serious side: in an interview, Jim Puplava, CEO of Financial Sense News Hour, talks about the impact of inflationary or deflationary forces—with some disturbing insights into the dynamics of Japan. “The world is focused on Europe,” he says, “but the next crisis jumps from Europe to Japan, and eventually to the United States.” Read... Could Gold Be Tripped Up By A Coming Deflation?
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| John Embry: Precious Metals Markets Heating Up Posted: 11 Aug 2012 06:30 PM PDT by Ed Steer, Casey Research:
The GLD ETF reported that an authorized participant added 103,097 troy ounces of gold yesterday…and there were no reported changes in SLV. While on the subject of these two ETFs, the new short interest numbers for both were posted on the shortsqueeze.com Internet site late on Thursday night. So late in fact, that I never saw them, because I checked twice earlier in the evening, and they weren't there. What they showed, did not amuse either Ted Butler or myself. In silver, there was a whopping increase in the number of shares/ounces sold short in this ETF. The short interest blew out by 30.22%…to 14,784,600 shares/ounces, an increase of 3,431,300 shares/ounces from just two weeks ago.
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| Ugh, The Clueless Gold Hater Joe Weisenthal Posted: 11 Aug 2012 04:30 PM PDT
Aside for this tweet displaying Weisenthal's hate for gold, it displays more confusion per character than I thought possible in a tweet. First and foremost, it is as likely that Ryan is close to a gold standard supporter as it is likely that Weisenthal is the second coming of Jesus Christ. Weisenthal links, not to Ryan, but to a New Republic article which does not quote Ryan either but quotes Frum Forum's Noah Kristula-Green on Ryan. Frum's Green totally misunderstands the gold standard in relation to what Ryan is calling for. Green does get the gold standard itself correct: Read More @ economicpolicyjournal.com.au
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| Citi's Buiter On Europe's Bumble And Stumble To Large-Scale Restructuring Posted: 11 Aug 2012 03:00 PM PDT While still of the belief that a wholesale disintegration of the European Monetary Union remains a distinct tail-risk event, Citigroup's chief economist Willem Buiter succinctly summarizes his core view as "the euro-area will stumble and bumble towards an eventual resolution." However, that 'final' solution does not look like your grandma's European Union as he expects nothing more than a "continued Monetary Union, probably without Greece, having undergone both major sovereign debt restructurings in the periphery and financial debt restructurings for banks in the periphery and core." Transcribed from a three-minute clip, Buiter eloquently answers three key questions: How is the Euro crisis (and its consequent solution) shaping up? Does Germany have the upper-hand? and What sort of moral hazard issues might we see in the near future? He concludes "we won't have a smooth solution to this crisis."
Q. How is the Euro crisis and the consequent solution shaping up? Buiter: The euro area is continuing to bumble and stumble to its eventual resolution. There still is the risk of disaster - of wholesale disintegration of the monetray union - but that is still pretty much a tail risk. The most likely outcome will be a continued European Monetary Union - probably without Greece - and having undrgone a significant sovereign debt restructring and financial debt restructuring both in the periphery and for banks in the core also. Q. Does Germany have the upper hand here? Buiter: Nobody has the upper hand. Germany, perhaps, has the most to lose from the collapse of the monetary union and that of course weakens its negotiating power. Like every other EMU member nation, it can veto future aid programs, it can veto enlargement of rescue facilities but that's about it. After that, they only have the nuclear option of 'exit' which is very unlikely to be exercised. This is why nobody has the upper-hand and decision-making remains a long drawn-out clumsy and often frustrating process Q. What sort of moral hazard issues might we see in the near future? Buiter: There isn't really significant risk of moral hazard. Moral hazard could occur if there was large-scale mutualization of sovereign debt and/or a large-scale transfer union but for political reasons that is NOT going to happen. The ECB, which has announced that it is willing to intervene in markets to keep yields under control BUT only after countries (including Italy and Spain) go on programs, is not going to be the agent of moral hazard and neither is a large-scale increase in the size of the facilities. It means of course that, while we won't have moral hazard, we also won't have a smooth solution towards the crisis
Source: Citigroup Velocity
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| London 2012 and The Real Ancient Olympic Games Gold Medal Winners Posted: 11 Aug 2012 02:19 PM PDT Whilst virtually everyone is aware that the Olympics are an ancient Greek sporting festival, however many people may not know is that the Olympics were a religious festival held in the honour of the king of the gods, Zeus, held every 4 years that continued for over 1,100 years and which was focused on 10 main events (men only) held over a 4 day period.
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| Gold Bears In Trouble As Central Banks Continue Buying Posted: 11 Aug 2012 12:46 PM PDT  With market participants eagerly waiting to see if gold and the mining shares will have a major breakout during the month of August, today King World News interviewed 25 year veteran Caesar Bryan over at Gabelli & Company, which has over $31 billion under management. Here is what Ceasar had to say regarding the gold market, Europe, the US, and mining shares: "The gold price has continued to trade over $1,600 as of late. It seems to be putting in higher lows since May, and I would expect the gold price to perform pretty well as the summer ends and we come into the seasonally strong time in autumn."
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| Posted: 11 Aug 2012 12:30 PM PDT Summary: Long term - on major sell signal. Short term - on buy signals. Read More...
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| It's A Centrally-Planned World After All, With Ever Diminishing Returns Posted: 11 Aug 2012 09:54 AM PDT By now it is no secret that the primary beneficiary of the over $7 trillion pumped by global central banks into the financial system in just the past 4 years, and countless other trillions in miss-spent fiscal stimuli has been the stock market. But what about the global economy: after all five years after BNP Paribas stopped withdrawals from their investment funds - the unofficial start of the Great Financial Crisis - whose primary beneficiaries have been corn, gold, silver and brent - we should have seen at least some sustained impact in the economy if all Econ 101 teaches us about the virtuous business cycle is true, and if any of this countless money out of ZIRP air actually made its way into the economy instead of just the stock market. Well, let's take a look shall well. Courtesy of Bridgewater we present a chart of coordinated interventions and their impact not on the stock market, but on the economy. What we find is that it was, is, and will be a centrally planned world after all.
Bridgewater's take:
The scariest thing about the above chart? The ever lower global growth bounce as a result of ever increasing, or exponential, central bank intervention.
In other words, not only is conventional economics wrong about virtually everything, but the impact of whatever the real underlying story is, certainly not one that can be captured by econometric models which continue to falsely model out what is essentially a system of infinite complexity and soaring fragility, has increasingly diminishing returns. Also, when we get to the point on the chart above where global growth is at or below zero irrelevant of how much "money" is pumped into the system, that will be the moment to shut the lights out, because it is then that the central planning fat finger which has to date mostly impacted various intraday inflection points in the S&P, will simply press CTRL-P. And not let go.
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| Crackpot Economists Don't Know How to End the Fed Posted: 11 Aug 2012 07:06 AM PDT It would be very easy to end the Federal Reserve System. Congress would write the following bill. The President would sign it. The Federal Reserve Act of 1913 and all subsequent amendments to that Act are hereby revoked. The gold that belongs to the United States government, and which is kept on deposit with the Federal Reserve System, is hereby transferred to account of the United States Treasury.
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| Gold's 'Fearless' Summer Turnaround Posted: 11 Aug 2012 05:47 AM PDT When does a precious metal known for feeding off investors' fears need the opposite of fear to move higher? Answer: Right now! Austin Kiddle, an analyst with bullion broker Sharps Pixley, asked the following question in a recent commentary: "Can fear refuel the investment demand for gold?" It's a question many investors are now asking and well worth addressing.
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| Gold Price Up $13.70 this Week and Remains on Trajectory Buy Now and Beat the September Rush Posted: 10 Aug 2012 04:42 PM PDT Gold Price Close Today : 1,619.70 Gold Price Close 3-Aug : 1,606.00 Change : 13.70 or 0.9% Silver Price Close Today : 2806.20 Silver Price Close 3-Aug : 2779 Change : 27.20 or 1.0% Gold Silver Ratio Today : 57.719 Gold Silver Ratio 3-Aug : 57.791 Change : -0.07 or -0.1% Silver Gold Ratio : 0.01733 Silver Gold Ratio 3-Aug : 0.01730 Change : 0.00002 or 0.1% Dow in Gold Dollars : $ 168.57 Dow in Gold Dollars 3-Aug : $ 168.57 Change : $ 0.00 or 0.0% Dow in Gold Ounces : 8.155 Dow in Gold Ounces 3-Aug : 8.155 Change : 0.00 or 0.0% Dow in Silver Ounces : 470.67 Dow in Silver Ounces 3-Aug : 471.25 Change : -0.58 or -0.1% Dow Industrial : 13,207.95 Dow Industrial 3-Aug : 13,096.17 Change : 111.78 or 0.9% S&P 500 : 1,405.87 S&P 500 3-Aug : 1,390.99 Change : 14.88 or 1.1% US Dollar Index : 82.559 US Dollar Index 3-Aug : 82.320 Change : 0.239 or 0.3% Platinum Price Close Today : 1,398.40 Platinum Price Close 3-Aug : 1,412.90 Change : -14.50 or -1.0% Palladium Price Close Today : 581.50 Palladium Price Close 3-Aug : 577.40 Change : 4.10 or 0.7% 'Twasn't a legendary week for the silver or GOLD PRICE, but I'll take what I can get, especially silver above 2800 cent resistance. Today the GOLD PRICE scraped out another $2.60 to end at $1,619.70. Knocked on $1,626, but couldn't burst through yet. Y'all keep a close watch, because one day soon gold's liable to surprise with a Great Leap Upward. That SILVER PRICE lost a measly 3.5 cents today to end still stalled at 2806.2c. It's about to work my nerves to a nub. As with gold, the five day silver chart leaves one with the taste that somebody tried to trash it today, failed, and it broke through 2820 resistance that has stymied it all week. However, it couldn't hold on at 2832c, and faded on the close. Aftermarket didn't believe that close, and is trading 2814c. I bought silver today. When it closes through 2860c, I'll buy more. The SILVER PRICE and GOLD PRICE remain on the trajectory I've outlined, slugging their way across August building a base for a rally in September. Buy now, and beat the September rush. Simple-minded as I am -- so simple-minded I can only follow a long term strategy of riding the primary trend in silver and gold -- I was instructed and enlightened late yesterday to read in Andrew Peaple's Wall Street Journal blog that 9 August marked the 5th anniversary of the global financial crisis' beginning, when the ECB injected E95 billion of emergency liquidity. Now what investment do y'all reckon has returned the most since then? Wasn't US bonds, or dollars or stocks. Nope, tied for No. 1 were gold and corn, both up 144%. Silver came in next, up 122%, followed by Brent crude oil, up 61%. US Treasuries? Not quite so fruitful with only a 38% return. Stocks? Well, S&P500 has returned a rich 7.7% in five years. I'm not saying a word. Here's a tee-tiny fact that catches the inquiring eye of a suspicious mind. US dollar index ended up about the same place it was last week, almost as if . . . Somebody were managing it. Anyhow, it coughed up 9.1 basis points (0.12%) to end at 82.559. Up above stands the 50 DMA at 82.66, while below the dollar dances along a rising fan line. Trend is down, but don't expect any big breaks since the Nice Government Men are holding down the dollar like a basketball underwater. Does the euro no good, though. It dropped again today, down 0.11% to $1.2289 and near falling through the 20 day moving average ($1.2262) gapped down twice this week, sick as a bull eating Jimson weed. This is getting so painful to watch you start wishing somebody would step forward and put the euro out of its misery. Y'all believe me now about the utter vanity of Draghi's promises? It's dead-dog easy to tell when a central banker is lying. Y'all know how? If his lips are moving, he's lying -- same as a presidential candidate. Y'all remember them Greek plays? Whenever the plot backed itself into a corner, stagehands back stage would tie a rope to an actor and lower him down on the stage. He was the "God out of a machine," Zeus or Mammon or Luigi, who would miraculously set everything aright. Don't know what them Greeks called him, but the Romans called him "deus ex machina." Even in those days, it was a cheap and corny way to solve a plot. Well, the deus ex machina struck the stock market today when in the last 45 minutes of trading after a whole day underwater stocks suddenly got religion as buyers were lowered down on ropes by the NGM. Dow rose 42.76 (0.32%) to 13,207.95. S&P500 rose 0.22% (3.07 points) to 1,405.87. Congratulations! The NGM got to the end of the day and their pre-prandial martini without the world flying apart. Y'all don't keep hoping that deus ex machina will return. That rope's frayed already and liable to break. On 10 August 1821 Missouri became the 24th state to join the Union. Ironically, Missouri within a few years also prompted the first supreme court test of the constitution's Article I Section 10, "No State shall make any Thing but Gold or Silver Coin a Tender in payment of debt." As I remember, Missouri started a state bank and made its notes a legal tender. Somebody sued, and the supreme court, which in those days required that justices possess a brain bigger than a tunipseed, found that paper was not gold or silver after all. More irony: Missouri is the only state I know of that has exercised its power under Article I Section 10 to declare a tender, and declared that US 90% silver coin is its tender. That was a while ago. Y'all enjoy your weekend. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com 1-888-218-9226 10:00am-5:00pm CST, Monday-Friday © 2012, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. No, I don't. 
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| Posted: 10 Aug 2012 02:27 PM PDT "It is easy to prescribe improvement for others; it is easy to organize something, to institutionalize this or that, to pass laws, multiply bureaucratic agencies, form pressure groups, start revolutions, change forms of government, tinker at political theory. The fact that these expedients have been tried unsuccessfully in every conceivable combination for 6,000 years has not noticeably impaired a credulous unintelligent willingness to keep on trying them again and again." — Albert Jay Nock, from Memoirs of a Superfluous Man —————————————————— Stocks went nowhere yesterday. Gold dropped a few bucks. No big deal. So, let's move on… We've been thinking lately about cycles. Not the kind you pedal along winding roads out in the French countryside…but the kind you experience day to day…year to year…generation to generation. And sometimes, beyond… Some cycles are short. Election cycles, say. Barely has one president finished fluffing his White House pillows when it's time to start penning the empty slogans and gearing up for the next election campaign. Presidents occupy their position for four short years…eight if they're particularly adept at fudging numbers and whipping the nation into a prideful frenzy. In the grand scheme of things, that may not seem like a lot of time to make a complete mess of things. Nevertheless, the politicians do their best. In 2009, the year of the current president's inauguration, US federal debt stood at about $10 trillion, give or take a few hundred billion, with roughly half that amount held by "the public." By 2013, when the next term begins, that figure will have ballooned to over $17 trillion. The public will by then be on the hook for $10.6 trillion. Maybe more. Only in the few years immediately following WWII was the debt-to-GDP ratio higher than it is today. And then only marginally. The graph, if you've seen it, has a very "hockey stick" feel to it. And so, these mini-cycles proceed, on and on, with a parade of cheats, scammers and dodgy salesmen marching in turn through the Oval Office. They really ought to install a revolving door. One might think this process would quickly erode a country's resources but, as Adam Smith was famously said to have remarked, "There's a lot of ruin in a nation." In any case, string a half-dozen or so of these mini-cycles together and you get…slightly longer cycles. Generational cycles, we'll call them. No doubt you've heard of these before. They're made up of fathers who vote one way their whole lives…and of wives who go along just the same. (Or maybe it's the other way around.) These people spend their years voting Labor or Tory, Republican or Democrat…or they go in for the Independents in a mild-hearted effort to "throw the bums out!" The supply of bums yearning for power, however, appears to be without exhaustion. Good folk who dedicated their entire lives to casting these rascals out of office go to their graves having made no change at all, save for validating the system they so raged against. Then, the mantle passes to the next generation…along with a whole lot more debt, bureaucracy and rot corrupting the process. "The plans differ," noted French political scientist, Frédéric Bastiat, but "the planners are all alike." Still, we're only talking here about relatively short cycles. What, after all, is a quarter century? The cycle of political systems themselves, for instance, can be, and often is, larger. Much larger. In the US, the system of constitutional republicanism came to supplant that of King George III's own particular brand of monarchy. In Russia, the Bolsheviks booted out the Tsars, paving the way for the Union of Soviet Socialist Republics (USSR)…which eventually gave way to communism…(and after the perestroika)…to rule by oligarchy…and, at present, a curious form of politics known as "Putinism." The cycle of political systems can be short, sharp and oftentimes violent…or they can be long, slow undulations spanning many, many hundreds of years, remaining almost imperceptible to we busy little humans. One could, for example, have lived and died in communist Russia (as many poor souls did) without ever having known anything different…without seeing either the beginning nor the end, of the political cycle. Same thing in the US, where the current system has been around, more or less in its current form (though gradually, steadily degenerating) for two and a quarter centuries. Broadly, we're talking here about centralization and decentralization. At times, political systems work toward honing and focusing power, concentrating it into fewer and fewer hands. Centralizing it, in other words. At its height, the Roman Empire represented the pinnacle of centralized power. "Right as diverse pathes leden the folk the righte wey to Rome," wrote Chaucer, almost a millennium after the Great Empire's fall. But as with all cycles, short and long, the wheels of history were always turning. During Rome's later, degenerate stages, and certainly after its collapse, the continent of Europe fragmented into hundreds of smaller, feuding principalities. The Middle Ages (roughly 450-1350) were, by and large, an era of a great political decentralization. Princes and dukes wielded absolute power over their small territories, weakening various kings' claims on their lands. Indeed, it wasn't really until the Renaissance that any meaningful, large scale consolidation took hold on the continent. During this period, stronger principalities, those that had prospered in trade and were therefore better equipped to withstand military attacks and plagues, began working together and expanding their territories. Once again began a cycle of centralization, of disparate states coagulating into a mass of cells, fused together by broader, overarching legal and political systems, trade agreements and strategic alliances. Wealthy families, too, began to gain power and control over larger territories during this time. It was an era that gave rise to the Medici's, for example, a family of bankers from Florence that gained control of governments in various Italian regions and, later, even assumed the papacy. The Medici appointed family members as princes in lands afar and assured their protection by the Medici-controlled Vatican. Once again, power came to rest in fewer and fewer hands. It was as if history itself had inhaled, drawing closer the disjointed peoples of once-warring regions into bordered, sovereign states. By the 18th and, especially, the 19th century, principalities had fallen almost entirely out of favor…and the world witnessed the birth of the modern nation state. So where does that leave us? Ah…you'll have to tune in next week, Fellow Reckoner. Joel Bowman History, All Over Again originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".
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Doc- Thanks for all you do. I must be very ignorant but I read an article stating that you can buy silver futures as far out as April 2017 for less money than you can buy physical silver for now. I know you say if we don't have it on us that we don't really own it and to stay away from paper silver but why not lock in the price of silver now for a period 5 years out which rather than averaging in over a five year period and paying higher prices as it continues to go up. That gives you a chance to put money away for five years and have it available in 2017 when the contract comes due. It seems you could own more 5 years from now if you bought a futures contract now, at a price that is actually less than if I bought it today.
Aristotle is rolling in his grave right now. At least, had he not been a flaming ultra-nationalist he would be.
The CME Daily Delivery Report did not disappoint me yesterday, as 963 gold contracts were posted for delivery within the Comex-approved depositories on Tuesday. The biggest short/issuer was JPMorgan out of its in-house/proprietary trading account, with 902 contracts…and all the rest [61 contracts] are to be delivered by the Bank of Nova Scotia. The big long/stoppers were HSBC USA and Deutsche Bank…with 571 and 326 contracts respectively. Morgan Stanley took delivery of the remaining 66 contracts. One silver contract was also posted for delivery. The link to yesterday's Issuers and Stoppers Report is 
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