Gold World News Flash |
- $2,000 Gold Will Soon Kickstart Mining Shares
- Les actions argentifères
- Time for a Shock Doctrine Crisis
- US Gov't Ignoring Russians On Our Doorstep – Episode #202
- Gold traders bullish as investors increase bullion holdings
- The US Money Markets And The Price Of Gold
- Max Keiser: The Raping of A Country!
- When Darwin Failed: "Fishing For Perfect Markets"
- James Turk's Q&A with GoldMoney followers
- This Past Week in Gold
- Gold Just Became Money Again, Big Changes Ahead
- The U.S. Economy is Going to Collapse?It is Unavoidable…It?s a Mathematical Certainty?Here?s Why
- Are Central Banks Still Hoarding Gold?
- Gold in Stocks Bear Market
- Global Collapse Now Accelerating As Central Banks Buy Gold
- America's Demographic Cliff: The Real Issue In The Coming, And All Future Presidential Elections
- Why Goldman Refuses To Raise Its S&P 1250 Year End Forecast
- Guest Post: Will Bernanke Save The Equity Markets?
- "The Euro Crisis May Last 20 Years" - The European Headlines Are Back
- ATP Oil And Gas Files For Bankruptcy, CEO Blames Obama
- The Gold Price Gained 20 cents to Close at $1,616.30 Silver Lost 21 cents
- Keiser Report: Consumption-tration Camps
- YOURI CARMA’S LINKS: SILVER & GOLD – MOODY'S, S&P FACE FRAUD CLAIMS – OIL UP – US JOBLESS RISE – MORTGAGE RATES RISING – EUROPE – GAMES & TECH
| $2,000 Gold Will Soon Kickstart Mining Shares Posted: 19 Aug 2012 09:00 AM PDT The lack of excitement haunting the precious metals and mining shares markets over the past year is expected to change in the next few months, according to Michael Fowler, senior mining analyst with Loewen, Ondaatje, McCutcheon Ltd. In this exclusive interview with The Gold Report, he explains why he expects gold to finally break through the $2,000/ounce barrier in 2013 and how this should affect mining stocks.
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| Posted: 19 Aug 2012 12:00 AM PDT Silver Investor
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| Time for a Shock Doctrine Crisis Posted: 18 Aug 2012 11:38 PM PDT Time for a Shock Doctrine CrisisCourtesy of Russ Winter of Winter Watch at Wall Street Examiner "Only a crisis, real or perceived produces real change." -- Milton Friedman The global elite plutocrats may seek a "crisis" to push the presidential election toward the challenger. There are numerous ways to set up a crisis. As the IMF's banking crisis frequency chart shows below, historically crises tend to erupt between late August and September anyway. The global economy is currently staged for catastrophic financial crises without even a push. All it takes is the slightest deviation away from governments' heavy handed intervention in the markets. It could stem from another U.S. credit downgrade or the collapse of yet another lingering Lehmen Bros.-like zombie. I rate a Grexit (Greece's exit from euro) high on the list of possibilities (US Looks to Exploit Greek Re-default) .
The elite plutocrats are concerned about regulation and whether Obama might take a more populist turn, such as actually implementing a millionaire tax, during a second term. The kleptocrats have already milked Obama and the U.S. Treasury more than ever imaginable. Having already successfully carried forth their looting agenda with their Presidente Hopium puppet, the financial elite are tossing him out like a used-up rag. Obama will be replaced with other sycophants readily willing to set up new types of loots. Given that the U.S. Treasury is insolvent, held up only by financial rigging, the next major plutocratic objective will be to subject the developed nations of Europe and the U.S. to the economic model practiced under the Washington Consensus (WC). Western governments and banking interests created the WC in the '80s as a neoliberal policy to severely indebt and trap developing nations and capture their governments during financial crises. The type of WC actually practiced will ignore sounder recommendations of capitalism such as free market interest rates, a degree of fiscal discipline, controlling rent seeking subsidies, and good property rights. Instead the focus or guise is on a corrupted exploitation version of WC doctrine: severe austerity, dismantled social safety nets, privatizing key assets, and distributing even more wealth from the gente, or lower and middle classes, to the elites. All of this was done in favor of the alternative: The restructuring of debt so that the losses fall on global banksters. This is the classic "shock doctrine" or "disaster capitalism" discussed by Naomi Klein. The pick of elitist neoliberal Paul Ryan as Mitt Romney's running mate all but ices the implementation of the neoliberal corrupted version of the WC approach for America's future. The next reason for impetus could play out around Israel. Israel distrusts Obama, sees him as too weak, and wants a U.S. administration that is motivated to provide military backup against Iran. Romney has not only been courting Israel for money, he has all but endorsed its position in a speech in Jerusalem. In the U.S., Israel has the support of strange bed fellows: The evangelicals or "Christian Right." Listen to this American pastor explain why. Romney stated the U.S. with Israel would use "any and all measures" to lead the effort to prevent Iran from developing nuclear weapons. Romney even held an unprecedented campaign fundraiser in Israel. Three days after being put on the ticket, Paul Ryan beat a path to Las Vegas, to meet with Sheldon Adelson, a casino magnate and a key American bag man for Israeli interests. Although the U.S. on its face is a center-right country, the majority of Americans would never give carte blanche support an extreme neoliberal political economy or a Zionist foreign policy agenda. Now leading by a very small margin, Obama needs to shuffle through to the election without troublesome events interfering with the election. Surveys show his previous support base has little enthusiasm for his "hope"-based candidacy, so Obama is depending mostly on a negative campaign to convince voters to support him as the lesser of two evils. I think such a campaign leaves him vulnerable. To ensure his vulnerability will require a crisis or "surprise." The plutocratic agenda requires that the crisis tree be shaken to push the marginal voter into staying home, thus swaying the election toward the GOP and paving the way for the implementation of the WC model.
For additional analysis on this topic and related trades subscribe to Russ Winter's Actionable – risk free for 30 days. The subscription fee is $69 per quarter and helps support Russ's work. Click here for more information. Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to The Wall Street Examiner.
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| US Gov't Ignoring Russians On Our Doorstep – Episode #202 Posted: 18 Aug 2012 09:30 PM PDT from PeterSantilliTV: In the first hour, Nevada Senatorial Candidate David Lory Vanderbeek makes his regular weekly appearance and discusses the Dave Musdaine PR debacle. David expresses his opinion about Alex Jones's intervention by providing a platform for "damage control" after the lead singer for MegaDeath makes and on-stage remarks about false flags, and then retracts his comments in a weak presentation on Alex's show. Mr. Vanderbeek talks about the facts that Russia is known to have nuclear missiles pointed at the USA, and the US Government's only focus in on purchaseing billions of rounds of illegal hollow point rounds to contend with hostile US citizenry. Santilli and Vanderbeek have a conversation about insider trading, Soros gold purchases and stock sales, DHS gluttony and sexual deviance, as well as his candidacy for US Senate. Pete concludes the show with a powerful story about events and ideas which led to the beginnings of The Pete Santilli Show. As in every episode, Pete calls for a proactive "revolution of the mind" to pre-empt and ultimately choke off the cash flow of the elite. He presents a convincing case to the American public that they should rise up now in peace with a national strike, or wait until the collapse occurs and risk a violent and bloody revolution.
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| Gold traders bullish as investors increase bullion holdings Posted: 18 Aug 2012 09:00 PM PDT by Nicholas Larkin, Bullion Street:
A further six were neutral, making the proportion of bulls the highest since July 6. Paulson raised his stake in the SPDR Gold Trust, the biggest gold-backed exchange-traded product, by 26% in the second quarter and Soros more than doubled his holding, U.S. Securities and Exchange Commission filings showed August 14. Global holdings reached a record on August 10, data compiled by Bloomberg show. The euro-area contracted in the second quarter after the worsening debt crisis forced at least six nations into recessions, European Union data showed August 14. gold bar and coin purchases jumped 15% in Europe in the period, the World Gold Council said.
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| The US Money Markets And The Price Of Gold Posted: 18 Aug 2012 08:24 PM PDT from Zero Hedge:
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| Max Keiser: The Raping of A Country! Posted: 18 Aug 2012 07:30 PM PDT from TheAlexJonesChannel : Alex welcomes economist, journalist and American broadcaster Max Keiser to discuss the warning signs of an impending economic collapse, the effect this will have globally and solutions that would bring us back from certain financial doom.
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| When Darwin Failed: "Fishing For Perfect Markets" Posted: 18 Aug 2012 06:35 PM PDT Perhaps the biggest affront to the natural order of things set in motion by central planners' intervention in capital markets of all varieties, is that through sheer brute force (of a printer, of posturing, and of outright politicized pandering), several academics in a low-lit room can suppress, for a brief period of time, the Darwinian survival of the fittest. Key word here is "brief" because in the end nature always gets even, and usually with a vengeance. In the meantime, however, epic distortions in what are already indefinitely irrational markets, which however always eventually regress to a rational mean (in popular jargon a process better known as "crash"), succeed in driving out legacy traders who no longer can navigate the chaos unleashed by the authoritarian ambitions oh the kind that ultimately resulted in the collapse of the Soviet Union, and every other centrally-planned establishment, when abused on a long-enough timeline... For a vivid example of what happens "when Darwinism fails" we go to a parable from a just released letter to client by the English hedge fund Toscafund, which looks at modern day trading from the perspective of fishing in the Polynesian seas, which also does an admirable job in explaining why being lucky is almost always more important than being good (sadly, one can not sell "luck" in newsletter format for $29.95/ month). By Savvas Savouri of Toscafund Asset Management Fishing for perfect markets I have spent many hours impressing upon students this sad reality. Whilst in theory forecasting using good fundamentals should be enough to deliver success, in practice financial markets are stubbornly imperfect and favour bad techniques. To make this point I go fishing for analogies. To set a scene, I ask the audience to imagine watching a Polynesian fisherman going about his work. Having waded into the clear blue water of the South Sea's, he confidently holds a spear above his head and takes aim. With this imagery in mind I then ask the students to reflect on his fundamental technique. Why for instance is the trajectory of his aim not in the direction of where the fish appears to be. My point to them is 'good' forecasting does not confuse perception with reality. We consider the three judgements the fisherman is making; one based upon simple physics, another basic maths and the other behaviour theory. Using these in isolation the fisherman will fail, combine them and he will return home with a good return from his efforts. Our good fisherman is aware the position of the fish is distorted. He may not know the precise science that because light travels at different speeds through air and water it kinks or refracts, but is aware of this distortion all the same. The second element our fisherman contemplates is momentum. He can see the fish is in motion and is aware it will have moved by the time the spear arrives. The third simultaneous judgement our Polynesian fisherman makes is the survival instincts of the fish. If it has not already been made aware it is being stalked by the shadow cast over it, it will certainly become conscious of a threat from the ripples set in motion by the harpoon entering the water. Despite the complications, with painstaking teaching and practice the 'good' fisherman will not go home empty handed. His family is sure to be well fed, and he will impart to his sons the skills he had learned from his own father a transfer of knowledge that almost certainly has gone on for generations. Across our Polynesian fishing village bad fisherman have long vanished; Darwinian logic having seen they have. The population of the village has even steadied to reflect sustainable fishing levels. We have in effect a perfect market. Reaching this point I caution that financial markets have never reached this perfect state. To illustrate what I mean I return to the 'perfect' fishing village where only 'good' fishermen are at work. I ask the student to assume 'bad' fishermen hadn't been eliminated by Darwinian evolution and congest the waters around our good fishermen. Their presence introduces not only complications to our good fisherman but a threat to their very survival. Not simply are the spears being thrown wildly around in such a random way they are a danger to our good fisherman, they are causing chaos in the waters. Where fish once moved sedately in calm waters they are now darting around in panic, and so more challenging targets for even the best of our 'good' fishermen. Matters are worse still for our good fishermen. Many fish have moved away from their preferred coastal water habitat into deeper, colder and more tidal waters; from one inhospitable place to another. Moreover, through their sheer weight of numbers, the bad fishermen are spearing ever more fish as the good fisherman return home empty handed. Before long fish numbers plummet and order in the fishing village has turned upside down. Whilst the families of 'good' fisherman go hungry, 'bad' fisherman boast of their successes, convinced they were good rather than lucky. I end my lecture with these words, "welcome to the imperfect world of investing, if you want perfect markets forget finance go fishing in the south seas".
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| James Turk's Q&A with GoldMoney followers Posted: 18 Aug 2012 05:30 PM PDT from Gold Money:
1) John Garvens: Silver hasn't done much recently. Why is this? And what are your thoughts for its future? James Turk: Silver does not appear to have done much recently because its price has been in a sideways trading range for 3 months. But the markets are always telling us something, even when prices go sideways. In the case of silver, the market is telling us that a big base is being built. Bases like these usually result in big rallies, which is what I am expecting for silver. It is subtle, but the rally I believe has already begun. The low in silver was $26.12 on June 28. Silver has been in an uptrend since then. 2) Steven Wood: In the case of mass deflation and/or/ hyperinflation, what are the chances of retaining one's ownership of mining shares in countries like Canada and the USA? JT: I assume you are asking, what is the political risk of investing in America and Canada? It is high in the US, given past experience. A windfall profit tax – like that imposed on oil companies back in the early 1980s – cannot be ruled out if the gold price soars, causing mining profits to soar too.
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| Posted: 18 Aug 2012 03:32 PM PDT Summary: Long term - on major sell signal. Short term - on buy signals. Read More...
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| Gold Just Became Money Again, Big Changes Ahead Posted: 18 Aug 2012 02:51 PM PDT Doug Hornig, Casey Research - On June 18, the Federal Reserve and FDIC circulated a letter to banks that proposes to harmonize US regulatory capital rules with Basel III. BASEL III is an accord that tells a bank how much capital it must hold to safeguard its solvency and overall economic stability.
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| The U.S. Economy is Going to Collapse?It is Unavoidable…It?s a Mathematical Certainty?Here?s Why Posted: 18 Aug 2012 02:43 PM PDT The level of debt has surpassed the possibilities of being serviced. Mathematically, the debt problem cannot be solved, regardless of economic policies. That, unfortunately, is written. For it to be serviceable would be to violate the laws of mathematics and that cannot happen. [As such, [B]America is quickly approaching a catastrophic economic collapse.*As repelling as that sounds, it's in your own best interest to learn just how bad the situation is. This article is an attempt to do just that.] [/B]Words: 310 So says Monty Pelerin ([url]www.economicnoise.com[/url]) in edited excerpts from his original article*. [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.[/...
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| Are Central Banks Still Hoarding Gold? Posted: 18 Aug 2012 02:42 PM PDT A new report shows global gold demand fell in the second quarter from year earlier levels. Demand in the jewellery, investment and technology sectors all posted a decline, as the average price of the precious metal remained elevated, but range-bound. While some investors were discouraged by the price action, central banks were more attracted to gold than ever before.
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| Posted: 18 Aug 2012 02:17 PM PDT With the odds for a new stock bear growing, prudent contrarian investors are looking for bear-resistant destinations for their hard-earned capital. Plain old cash tops the list, as it will not only preserve wealth but increase its relative stock buying power as the markets grind lower. But why merely sideline capital if it can still be grown even during a stock bear? Gold has proven its ability to thrive in such markets. Last week I wrote an essay on the rising chances a new stock bear is looming. This primarily has to do with the bull-bear cycles. The stock markets endlessly march forward in a series of alternating bulls followed by bears. After a bull, a bear is pretty much inevitable. This is true at both scales of the bull-bear cycles, the great decade-plus secular moves and the smaller multi-year cyclical moves within them.
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| Global Collapse Now Accelerating As Central Banks Buy Gold Posted: 18 Aug 2012 01:42 PM PDT  King World News has contacts all over the world that send information to the network directly from the front lines of the global economy. These are the types of things you won't hear in the mainstream media. Today we wanted to share a couple of these important communications. Below is the first one:"I have spent 35 years working in U.S. manufacturing and currently work for a global company that dominates manufacturing of equipment that touches oversea shipping containers, before and after the cargo vessels (the shipyards). 2.5 months ago our backlog was 21 months, today our backlog is 15 months.
This posting includes an audio/video/photo media file: Download Now |
| Posted: 18 Aug 2012 01:30 PM PDT
Sadly, the market which due to central-planner meddling, has long lost its discounting capabilities, and is now merely a reactive mechanism, will ignore this biggest threat to the US financial system until it is far too late. After all it is the unsustainability of America's $100+ trillion in underfunded welfare liabilities that is the biggest danger to preserving the American way of life, and will be the sticking point in the presidential election in 80 days. However, don't expect either candidate to have a resolution to the demographic catastrophe into which America is headed for one simple reason. There is none. The problem in a nutshell: the first wave of Baby Boomers, born between the years of 1946 and 1964, officially reached retirement age in 2011. There are a whole lot of Baby Boomers - just under 76 million, to be exact - that will depend on new money flowing into the system to help keep the entitlements coming. According to the latest Social Security and Medicare Board of Trustees 2012 Annual Reports Social Security now pays out more than it takes in, and is expected to do so for the next 75 years. And while the market, and its "discounting" may now be largely irrelevant, those who care to be educated about the facts behind America's Demographic Cliff, here is ConvergEx and "Talkin' 'bout your generation" According to the Census Bureau's Current Population Survey, about 40.2 million people – 13% of the entire US population – are 65 years or older and eligible to receive government entitlements such as Medicare and Social Security. At current levels, spending on these entitlements make up about 8.7% of GDP – about $1.3 trillion. While this may sound sustainable over the short term, in coming years the amount of entitlement outlays necessary to keep up with retiring Baby Boomers is going to send spending through the roof. By 2030, for example, a full 19.3% of the population will be claiming SSI and Medicare benefits, based on the Census Bureau's population projections (the CB uses an adjustment factor for the age cohorts based on mortality rates, foreign-born immigration, and life expectancy). For simplicity's sake, here's a decade-by-decade look at where the aging population – and expenditures – will be in the years to come, courtesy of the Census Bureau and the Congressional Budget Office (CBO):
It's a pretty tough picture, to say the least; as the population ages, we're looking at more and more money dedicated to retirement benefits with a smaller workforce to fund the spending. We're not the only ones, either: Japan is in worse shape than the US, with 23.1% of the population already over 65. In 2050, government statistics forecast that number to be 39.6%. Europe's in the same boat: 17.4% of the population in EU countries was 65+ in 2010, and it's expected to be about 30% by 2060. The developed world, essentially, is facing a demographic "Fiscal cliff" with no clear-cut strategies for how to fund the liabilities inherent in an entirely predictably aging population. Are there any social positives that might mitigate this plethora of indisputable financial concerns? The math is the math, as quants are fond of saying, so I don't expect that there are overwhelming offsets to the problem of an aging population. But there are some notable "Positives" which don't get the attention they deserve because they offer such a lightweight counterbalance to the challenges I outlined above. Still, here are a few thoughts:
Unfortunately, these societal "benefits" are only a thin silver lining on a very, very dark cloud. Social Security and Medicare spending are projected to grow exponentially as healthcare costs explode and the biggest population wave in the history of the US starts to enter retirement. The Congressional Budget Office expects spending to increase by 150% over the next 25 years, which is hardly sustainable with barely 2 workers for every retired person in 2035... there's a storm a comin'
Sources here: http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook.pdf
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| Why Goldman Refuses To Raise Its S&P 1250 Year End Forecast Posted: 18 Aug 2012 12:13 PM PDT The S&P 500 is at its 2012 highs, and rapidly approaching all time highs, even as nothing has changed over the biggest near-term challenge facing America: the fiscal cliff. Ironically, with every tick higher in the market, the probability that Congress will come to a consensus over what would be a haircut of up to 4% to next year's GDP as soon as January 1 2013 gets smaller. Why - the same reason that Spain is unlikely to demand a bailout now that its 10 Year bond is back to the mid 6% range (ironically on expectations it will demand a bailout!): complacency - both by investors, and by politicians. After all, it's is all a matter of perception, and the market is seen to be "perceiving" an all clear signal. It means that the impetus to do something constructive simply does not exist, as we explained recently in the case of Spain (and Italy). It also means that Congress has no reason to be proactive about the biggest threat facing the economy: just look at the S&P - it sure isn't worried, and the market is supposed to be far more efficient than elected politicians. At least on paper. This line of thinking is also the reason why Goldman's head of equity strategy David Kostin (not to be confused with the person he replaced: permabull A Joseph Cohen, who off the record sees the S&P rising to 1600 or more) refuses to raise his year end forecast for the S&P, which has remained firmly at 1250 for the entire year. More muppetry, more dodecatuple reverse psychology, or is Goldman telling the truth? You decide. From Goldman's David Kostin: The 'fiscal cliff' and downside equity risk: Why we maintain our year-end target of 1250 Why are we maintaining our year-end forecast in spite of the market's recent rally back above 1400, the positive developments in Europe, and tentative evidence the US economy may be sprouting "green shoots"? A look at the 2011 trading pattern of the S&P 500 explains the reason for our belief that the market has an asymmetric risk profile and offers more downside risk than upside opportunity. Political realities and last year's precedent suggest the potential that Congress fails to reach agreement in addressing the 'fiscal cliff' is greater than what most investors seem to believe based on our client conversations. Scenario analysis in Exhibit 4.
Two of the three pillars of our 2012 framework for analyzing the US equity market have stood firm, but one has not – valuation. Because consensus profit forecasts have been steadily reduced since the start of the year, the positive index returns have stemmed from P/E expansion. Of our three-part framework, we have the highest conviction in our earnings forecast followed by our economic outlook. We have the lowest confidence in valuation given the number of policy and political variables. The ECB's early August promise to provide sufficient funding to prevent the collapse of the Euro coupled with Chancellor Merkel's supportive comments of ECB policy lowered global risk premiums by thinning the left tail of possible negative outcomes for the European financial system. The resulting P/E expansion explains the 4% surge in S&P 500 during the last two weeks. The index has now advanced 12% YTD and ranks among the top performing bourses in 2012. But P/E multiples can just as easily compress as expand. Numerous uncertainties exist and any one of them could spark a reversal of the recent equity market rally. Known risks include the US fiscal cliff (federal debt ceiling tax policy, sequestration); US election; China growth; European political, sovereign debt, and bank funding crises; and Iran/Israel tensions. Our year-end 2012 target of 1250 is nearly 12% below the current index level. Why are we maintaining our forecast in spite of the market's recent rally back above 1400, the positive developments in Europe, and tentative evidence that the domestic economy may be sprouting "green shoots"? A look at the 2011 trading pattern of the S&P 500 explains the reason for our belief that the market has an asymmetric risk profile and offers more downside than upside. Last year the deadline for Congress to raise the federal debt ceiling was known months in advance. Nevertheless, Congress was unable to reach an agreement that satisfied all factions. Investors were stunned and the S&P 500 plunged 11% in 10 trading days (and more than 17% from the level one month prior to the deadline). Eventually Congress reached a compromise on raising the debt ceiling. We believe the uncertainty is greater this year than it was 12 months ago. We are in the midst of an acrimonious election season. The likelihood that sitting Representatives and Senators will leave the campaign trail to sit in Washington, DC to negotiate and cast votes on controversial issues involving taxes, unemployment compensation, and sequestration seems remote, in our view. If no agreement on 'fiscal cliff' issues is reached before the election, it will require a lame duck Congress to address the topic. Although the official debt ceiling is likely to be reached in December, Treasury legerdemain will allow the government to be financed under the limit until February 2013, by which point the debt ceiling must be raised. Political realities and last year's precedent suggest the potential that Congress fails to reach agreement in addressing the "fiscal cliff" is greater than what most market participants seem to believe based on our client conversations. In our opinion, equity investors seem unduly complacent on this issue. Portfolio managers have been swayed by hope over experience. What is the downside market risk if Congress does not address the "fiscal cliff"? Goldman Sachs US Economics research estimates that the impact of the fiscal cliff would weigh on real 2013 GDP growth by nearly 4 percentage points if scheduled year-end policy changes were to take effect permanentl. Applying this to our US economists' forecast, GDP would contract by roughly 0.4% in 2013. Our current baseline 2013 GDP growth forecast of 2.0% assumes the following: payroll tax cuts expire after 2012, jobless benefits are phased down to a maximum of 59 weeks, income tax cuts are extended through 2013, and automatic spending cuts do not take effect. This fiscal drag represents roughly 1.2 percentage points. Conversely, if everything is extended, the effect of Federal, state, and local fiscal policy on GDP growth would be -0.5 percentage points and 2013 GDP growth would be about 2.7%. The sensitivity of our sales, margins, and earnings models suggests a 100 basis point shift in 2013 GDP growth rate equals roughly $5 per share in S&P 500 EPS. We currently forecast 2013 EPS of $106. If nothing is done to address the 'fiscal cliff' and the US economy contracts by 0.4% the resulting EPS would equal $93, a year over year decline of 6% from $100 of EPS in 2012. Similarly, if everything is extended and the economy expands by 2.7%, then 2013 EPS would equal about $110, reflecting year over year growth of 10%. Assigning a P/E multiple to various 'fiscal cliff' and earnings scenarios is difficult because ultimately we expect Congress will address the situation. But investors must confront the risk they may not act until the final hour. Exhibit 4 contains a matrix of potential year-end 2012 S&P 500 index levels based on different 'fiscal cliff' resolutions and multiples. Our 1250 target reflects our 'fiscal cliff' assumption and a P/E slightly below 12x. Full expiration with P/E of 12x equals 1120 (-21%). A 14x P/E and full extension implies 1540 (+9%), but the two outcomes are not equally likely in our view.
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| Guest Post: Will Bernanke Save The Equity Markets? Posted: 18 Aug 2012 11:51 AM PDT Submitted by Vedran Vuk of Casey Research Will Bernanke Save The Equity Markets? How far is the Fed from reaching the bottom of its ammunition box? Well, both Mario Draghi and Ben Bernanke said no to yet more monetary stimulus recently. Wall Street unsurprisingly was disappointed. Wall Street expected more stimulus, as institutional investors are analyzing monetary policy from their own perspective rather than the central bank's viewpoint – understandable, but a big mistake. Wall Street's Conundrum: with the S&P 500 up less than 7% in 2012, the year is almost over, and the investment firms have little to show for it. This 7% return might be OK in calmer markets, but instead investors have been taken on a rollercoaster ride – all for a measly 7% return. So what could send stocks higher? Well, if the European crisis just disappeared, things would turn for the better… but that's not likely to happen. Or perhaps if US unemployment finally moved downward… but that's not going to happen either. The only short-term savior for equity markets is another round of extreme monetary stimulus, which will keep things propped up a bit longer. Hopefully in that time, unemployment and the general economy would improve, which would lead to a reduction in the fiscal strain on troubled governments. So Bernanke has control of the only immediate game-changer left on the table, and he's not playing Wall Street's tune. Without that money, Wall Street faces the reality of a stagnant market. Frankly, fund managers don't need a meltdown to be badly hurt here; failing to produce adequate returns is a bad enough outcome. After all, how many people would place their money in a high-risk market after a few years of low single-digit returns? Probably much fewer than today. As a result of this conundrum, Wall Street sees monetary stimulus as the only way forward – hence the strong belief that Bernanke and Draghi will produce stimulus at any moment. To Wall Street, this makes sense, but unfortunately for them, the Federal Reserve has different incentives. Bernanke realizes that he is low on bullets. The last few landed way off target, and his final bullet might miss the mark even more so. Bernanke is stuck with two options here: he can fire off his last bullet now (as Wall Street desires) and can send the market up maybe 1,000 points on the DJIA. Or he can wait to save this last bullet in case the market crashes. But if Bernanke shoots his bullet now and the market crashes anyway, he's going to go down in history as the worst Federal Reserve chairman ever. And if he tries to shoot the gun again in an emergency after he has overheated it, Bernanke might very well send the economy into a hyperinflation. In such a scenario, he would become a cautionary tale for econ graduate students for the next hundred years (and I'm not kidding about that… economists are still discussing the monetary policy of the Great Depression). Would you take such a risk for a couple of hundred extra points on the DJIA? I don't think so. Wall Street's incentive and Bernanke's couldn't be further apart on delivering another monetary stimulus before it's desperately needed. You may ask yourself: "Didn't Bernanke boost the stock market only a few years ago? Why wouldn't he do it again now?" Times change. A few years ago, Bernanke had a lifetime wealth problem on his hands regarding the average US consumer. When someone loses 25% of their home's equity and their 401(k) crashes by 35%, they become shell-shocked as a result of their total lifetime wealth taking a sudden large dip. Economists understand that the spending behavior of someone with a $500,000 nest egg saved for retirement isn't the same as for a person with half as much. It's really a simple concept: when we feel more comfortable about our future, we can spend more today. Even if one had no risk of losing his or her job in the crash, personal spending habits would often change in reflection of reduced lifetime wealth. Beforehand, by boosting equity markets, Bernanke could stimulate the economy by increasing everyone's sense of their lifetime wealth, inducing them to spend more in the present. Unfortunately, as we've reported on many occasions, this strategy didn't work so well. Now Bernanke again holds the option of boosting equities with yet more stimulus. Will another thousand points on the DJIA really send the economy back into a recovery? Most likely not. That said, another round of monetary stimulus isn't completely out of the question. A High-Risk Gamble: However, with the possibility of a European-led market crash around the corner, an early stimulus would be a very high-risk gamble in Bernanke's eyes – a gamble that may seal his fate forever. While Wall Street fund managers are worried about delivering returns to their clients, Bernanke has a million problems on his mind, and equity prices are not one of them. Though the market will continue to get overexcited at the possibility of more monetary stimulus, we probably won't see another round of a truly massive program until things really hit the fan and the Fed is forced to reach toward the bottom of the ammunition box. While Ben scrambles around on the floor for more bullets, investors need to rethink their strategy to get them through to the other side of this crisis, because it's far from over.
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| "The Euro Crisis May Last 20 Years" - The European Headlines Are Back Posted: 18 Aug 2012 11:10 AM PDT In Europe, the "no news" vacation for the past month was great news. The news is back... As is Merkel.
The first five years of the global crisis are over, investors flee from complex financial products and into gold, silver and commodities. Experts warn against a false sense of security. "We should not give us the illusion that the crisis will soon be over," says Patrick Artus of the French bank Natixis. Years of negative developments such as the growing debt, or the de-industrialization of specific sectors should now be reversed. "Such a process takes time." Arthur looks to get politically and economically unstable savers years. "Investors have to live with depressed markets and considerable fluctuations learn." In his view, it must not remain in a lost decade. "The euro crisis may also last 20 years," says Arthur.
German Finance Minister Wolfgang Schaeuble said on Saturday that there were limits to the aid that could be granted to Greece and said the crisis-stricken country should not expect to be granted another programme."It is not responsible to throw money into a bottomless pit," Schaeuble said at a government open day in Berlin. "We cannot create yet another new programme."
Euro-currency area countries are evaluating a multitude of reform options, Sueddeutsche Zeitung reports, citing unidentified people with knowledge of the plans. These are to be whittled down into a coherent strategy in the "coming weeks". If Greece exits, members will boost plans to support other vulnerable countries. Options include increasing aid to Ireland and Portugal. ECB would consider supporting Italy and Spain through bond purchases. Greece's new start would be supported by EU funding. These questions will be discussed "in the autumn".
Deutsche Bank AG (DBK) is among four European banks being investigated by U.S. regulators for alleged money-laundering violations, according to an attorney with knowledge of the matter. Federal regulators, including the U.S. Treasury's Office of Foreign Assets Control, the Federal Reserve, the Justice Department and the New York District Attorney's office are all involved in the probe of Deutsche Bank and three other European banks, said the attorney, who asked not to be identified because the investigations are confidential.
If Greece doesn't meet IMF and EU requirements, it must leave the euro, Hans-Peter Keitel, president of Germany's BDI industry federation, says in an interview with Wirtschaftswoche magazine. Keitel previously said Greece must stay in the euro at all costs: WiWo Keitel says clear progress is being made in combating the euro crisis. The German federal government is not ambitious enough in its savings program, Keitel says.
Rainer Holznagel, head of German taxpayer association, says payment of Spanish bank debt would require 3% VAT increase in Germany, Euro am Sonntag reports, citing interview. ESM reduces the rights of the German parliament and the independence of nation states, Holznagel says: Euro am Sonntag
German Finance Minister Wolfgang Schaeuble's proposal to separate traditional banks from their investment banking units isn't possible, Bundesbank Vice- President Sabine Lautenschlaeger tells Wirtschaftswoche magazine. Both types of banks would still be dependent on market confidence, Lautenschlaeger says. Lautenschlaeger favors an investigation into the relationship between lenders and those banks which trade in unregulated financial products.
Relaxation of the agreed on terms for Greek assistance would be misunderstood by countries such as Spain, German Foreign Minister and FDP member Guido Westerwelle told Tagesspiegel am Sonntag in interview. Spanish prime minister would have difficulty passing reforms in parliament if terms were eased for Greece, Westerwelle says. Westerwelle gives his "solidarity" to the people of Greece. Greek Prime Minister Antonis Samaras to visit Berlin on Friday And just to prove that Europe's beggars continue to refuse to get the memo...
The European Central Bank must take forceful and unlimited steps to buy sovereign debt to help Spain reduce its refinancing costs and eliminate doubts over the euro zone's future, Spain's economy minister said in comments published on Saturday. "There can be no limit set or at least (the ECB) can't say how much they will use or for how long," when it buys bonds in the secondary markets, Luis de Guindos told Spanish news agency EFE. and:
France and southern European nations are in favor of a third rescue package for Greece should it prove necessary, Welt reports, without saying where it got the information. Germany rejects a new rescue package. Germany opposes giving Greece more time to enact cost cuts. Preparations underway for Greece possibly leaving the euro. Main consideration is how to protect other euro crisis countries from the fallout.
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| ATP Oil And Gas Files For Bankruptcy, CEO Blames Obama Posted: 18 Aug 2012 08:52 AM PDT
Forbes continues:
There is truth to Bahlman's allegations, although a lot of it may be attributable to sheer bad luck. After all it was just as the company had rolled out its massive expansion project: the $800 million Titan deepwater production platform, that disaster struck with the Deepwater Horizon leading to a drilling moratorium.
And while the company's demise was surely not ameliorated by this administration's energy policies, there is a far more pragmatic reason why it had to file for bankruptcy: debt. $3.5 billion in debt to be precise, as that is how much it filed on its bankruptcy petition. Because had the company carried a clean balance sheet, it would have been able to mothball any temporarily non-viable project, cut costs to a minimum, and wait until the skies overhead shift. Instead, it was locked into a refinancing game to the bottom, with leverage into the stratosphere, that merely lay in wait for the spark to arrive, and set all that insurmountable debt on fire. And come it did. Not only that, but despite the GOM setback, the company set off on an even more aggressive, and even more leveraged expansion scheme:
Finally, the fact that ATP was just very badly run was hardly among the pressing issues the CEO felt like blaming his bankruptcy on:
The irony is that in the end, it is the administration's fault, but not for the reason noted. What Obama, in conjunction with Wall Street, and the Fed are guilty of, is encouraging people like Bulmahn, and everyone else, to lever up to the hilt on cheap, cheap debt. The more debt the better: just ask America's student and the record $1 trillion in debt they currently hold, more than all credit card debt combined, and the next credit bubble to pop. Just ask the second coming of the housing bubble as Wall Street investors, eager to build out rental empires are engaging in a wild borrowing spree to be among those participating in the REO-to-rental program, which too will soon implode. Also, blame the administration for allowing companies with atrocious balance sheets (if quality assets) such as Chesapeake to remain in existence, as despite an untenable leverage profile, ZIRP forces investors to plough ever more money into unsustainable businesses such as CHK. Why? It provides just a few more bps of yield, which in the past three years has become the mantra among the fixed income community. ATP is just the first: massively levered company, with a balance sheet priced to perfection, ignorant of the risk borne by a massive debt load. Yes: interest rates may be at record lows, but soaring debt still has to be serviced. When the money inflows end, for one reason or another, and the debt interest can no longer be paid, it is game over. This is what Obama is guilty of: forcing everyone in America to increasingly rely on debt as the only source of capital, leading to a world where even the tiniest gust of wind in an unexpected direction, or any other unpredictable development, can lead to immediate insolvency. Unless one is Too Big To Fail of course, and can afford to hold the world, and the US economy hostage. And finally, since there is no such thing as a free lunch, as that the current administration is doing in allowing record low interest rates, is onboard the balance sheet risk to the tune of $1+ trillion in sovereign US debt added to the tally of current and future generations of Americans. Why not: after all rates are low, and the USD is the reserve currency. What can possibly go wrong. In a word everything: as the last 3 weeks showed, a year's worth of gains in the bond market can go poof in the span of days, if not hours. As for the reserve currency argument, well, there is always our favorite graphic.
Finally, as to what lies in store for ATP next, simple: the carcass will be picked clean as more debt is added, however this time to a fresh start company. In the process all the existing debt and quity will be wiped out. Just like what should have happened with America's just as insolvent financial system in the fall of 2008.
In a few years time, the US itself, leveraged far, far more than ATP ever possibly could, may be seeking buyout bids for itself. And China will be delighted to oblige. At pennies on the then devalued dollar of course.
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| The Gold Price Gained 20 cents to Close at $1,616.30 Silver Lost 21 cents Posted: 18 Aug 2012 03:56 AM PDT Gold Price Close Today : 1,616.30 Gold Price Close 10-Aug : 1,619.70 Change : -3.40 or -0.2% Silver Price Close Today : 2,799.50 Silver Price Close 10-Aug : 2,806.20 Change : -6.70 or -0.2% Gold Silver Ratio Today :57.735 Gold Silver Ratio 10-Aug : 57.719 Change : 0.020 or 0.0% Silver Gold Ratio : 0.0173 Silver Gold Ratio 10-Aug : 0.0173 Change : -0.0000 or -0.0% Dow in Gold Dollars : $ 169.78 Dow in Gold Dollars 10-Aug : $ 168.57 Change : $1.21 or 0.7% Dow in Gold Ounces : 8.21 Dow in Gold Ounces 10-Aug : 8.155 Change : 0.06 or 0.7% Dow in Silver Ounces : 474.20 Dow in Silver Ounces 10-Aug : 470.67 Change : 3.53 or 0.7% Dow Industrial : 13,207.95 Dow Industrial 10-Aug : 13,207.95 Change : 67.25 or 0.5% S&P 500 : 1,418.16 S&P 500 10-Aug : 1,405.87 Change : 12.29 or 0.9% US Dollar Index : 82.61 US Dollar Index 10-Aug : 82.56 Change : 0.05 or 0.1% Platinum Price Close Today : 1,471.80 Platinum Price Close 10-Aug : 1,398.40 Change : 73.40 or 5.2% Palladium Price Close Today : 604.50 Palladium Price Close 10-Aug : 581.50 Change : 23.00 or 4.0% The SILVER & GOLD PRICE suffered a wretched week, until you look closer. Both ended down 0.2%, but place that against the attack they survived this week, and their bouncing back therefrom. Today the GOLD PRICE gained 20 cents [sic] to end at $1,616.30 while silver lost 21 cents and ended 2799.5c. GOLD ended Friday a week ago at $1,619.70, fell as low as $1,591 by Wednesday, but carved out a bottom and finished the week only $3.40 lower at $1,616.30. It's a subtle thing but all of August has been spent fighting off these attacks at successively higher levels. Next week gold will be tapping on $1,620. Only a close below $1,585 would pose any threat to gold's upward bias. Must clear $1,640 to break out upside. Sometime in gold's near future -- in September, or, if the NGM turn on the screws to keep gold low before the election, then in November -- lies a strong rally. The correction lies behind us, left in the rearview mirror like a string of Burma-Shave signs. Gold's future will happen at higher prices. Same holds true for silver. The SILVER PRICE started the week at 2806.2 & ended a few cents lower, but after a Wednesday low at 2750c climbed to a high at 2833 today. One bright dawn silver will cross 2860c & the shorts will run like Democrats escaping a Southern Baptist convention, or Republicans fleeing an AFL-CIO convention. So here we are, as a friend accused me this week, trying to look at a buffalo with a microscope. Folks, gold & silver are a BULL buffalo, & they are fixing to stampede. Since nothing happened in most markets this week, I'll explain why platinum shot up $76.90 and palladium $27.10 in the past two days. Supply & demand for both platinum & palladium is quirky. About 75% of platinum comes from politically unstable Southern Africa and about 75% of palladium comes from politically unpredictable Russia. Other 25% of platinum comes from Russia, and of palladium from southern Africa. A third or more of demand comes from auto catalyst use, so a bad year for auto manufacturers will be a bad year for platinum & palladium. On 16 August striking miners at the Rustenburg, South Africa mine of Lonmin threatened police with pistols, spears, & knives & the police opened fire, killing 34 & wounding 78. Strikers had already beaten to death two policemen and burned two mine security guards alive. Inevitably a gigantic political crisis results, & this was enough to send platinum's price rocketing. As a general rule, platinum costs more than gold. Go back 20 years, and you'll rarely find the Platinum/Gold spread (platinum divided by gold) below 1.00. Generally also, when platinum costs less than gold it will be a profitable idea to swap gold for platinum. From 2000 to 2008, platinum thrice reached more than 2.35 times gold. Since then, however, the ratio has been dropping. In August 2011 platinum dropped below gold. and has remained below gold since then. Hasn't done any thing like that since 1982 and 1985. So which comes first, the market set-up for a move, or the news that precipitates the move? Probably the set up, but I can't win by championing that notion, so I'll let it alone with the final word that if you have a LOT of gold, you might consider swapping a little bit for platinum. Don't go hog wild, just do a little. This week markets stayed flat as a fritter. Silver lost pennies, gold lost $3.40, stocks rose half a percent, and dollar index had a face as flat as a dog that chases parked cars. Lo! The dollar index went nowhere today, rising 23.7 basis points (0.30%) & giving up lots of that in the aftermarket. Dollar remains in tightly controlled 82.80 - 82.20 range. Natural as a bottle blonde. Today the euro lost most of what it gained necessary, giving back 0.19% to $1.2332 & lodged again against the 20 day moving average (1.2284). Yen kept on falling today, down another 0.27% to 125.68c (Y79.57). Now free falling below its 50 & 200 DMAs. More downside coming. Stocks, as I observed yesterday, are moving higher. People often rag me, complaining how wrong I am about stocks, how they've kept moving higher in the face of my denunciations. Frankly, if I do anything at all to keep y'all from buying stocks or convince y'all to sell them, I'll be doing you a huge favor. Stocks are in a primary down trend, a bear market, & trying to scrape off a little profit in a counter-trend move in a bear market is like juggling straight razors -- ain't no way you can win. Adjust stocks for inflation or measure their performance in gold or silver since 2001 & you'll see what I mean. Stay away from stocks, especially mutual funds, unless it is a very special situation. But right now stocks are headed higher. Dow ascended a less-than- lofty 25.09 (0.19%) today, S&P500 rose 2.65 (0.19%) to 1,418.16. Both indices will soon meet or slightly better their highs of this year, then they will fall off a cliff. I don't care whether the NGM can keep this anvil floating in the air until after the election, or it falls sooner, fall it will. We had a fierce lightning storm last night that fried -- french-fried -- our telephone system. I got nearly to my office at the farm this morning and just as we were crossing the last creek on Robinson Branch, there lay a tree plumb across the road. Too big to move & me without a chainsaw. We have a gaudy lavender phone attached and are limping along, and full service will be restored Monday. I am lightninged out. Struck the transformer in front of my house last Saturday, and ruined our phone, satellite dish, well pump, & mood. Y'all might want to protect all those delicate electronics -- even your phones -- with a surge protector. Last week I mentioned to y'all the Transformations & Renewals gathering that I am sponsoring with Catherine Austin Fitts of Solari.com. You can read all about it at http://transformationsgathering.com/. It's not for everybody. If you're looking for the world to collapse & plan on digging a hole and pulling it in after you, it's not for you. If you want to build the world that will REPLACE the failing one, it IS for you. We have no grand plan to remake the world or overthrow the existing system: it's doing that all by itself. However, Transformations is for those people who want to build a new economy, working from their own workbench in their own community. Go check it out. 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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| Keiser Report: Consumption-tration Camps Posted: 18 Aug 2012 03:15 AM PDT We discuss consumption-tration camps, savers subsidising fraud in the City of London and JP Morgan sacrificing their balance sheet and the US dollar. In the second half of the show, Max Keiser talks to the one and only silver guru, … Continue reading
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| Posted: 18 Aug 2012 02:37 AM PDT "That deal is ridiculous," one analyst said, adding "We should not be rating it." "We rate every deal," the second analyst replied. "It could be structured by cows and we would rate it," the first analyst replied. From: Instant messages … Continue reading
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Gold traders are the most bullish in six weeks as investors boosted their bullion holdings to a record on concern that economic growth is slowing and after billionaires John Paulson and George Soros bought more metal. Fourteen of 26 analysts surveyed by Bloomberg expect prices to rise next week and six were bearish.
What do USD money markets have to do with gold? Money market funds invest in short-term highly rated securities, like US Treasury bills (sovereign risk) and commercial paper (corporate credit). But who supplies such securities to these funds? For the purpose of our discussion, participants in the futures markets, who look for secured funding. They sell their US Treasury bills, under repurchase agreements, to money market funds. These repurchase transactions, of course, take place in the so-called repo market. The repo market supplies money market funds with the securities they invest in. Now… what do participants in the futures markets do, with the cash obtained against T-bills? They, for instance, fund the margins to obtain leverage and invest in the commodity futures markets. In summary: There are people (and companies) who exchange their cash for units in money market funds. These funds use that cash to buy – under repurchase agreements – US Treasury bills from players in the futures markets. And the players in the futures markets use that cash to fund the margins, obtain leverage, and buy positions. What if these positions (financed with the cash provided by the money market funds) are short positions in gold (or other commodities)? Now, we can see what USD money markets have to do with gold! Let's propose a few potential scenarios, to understand how USD money markets and gold are connected…
GoldMoney's followers on Facebook and LinkedIn recently had the opportunity to submit their questions on the gold and silver markets to James Turk. Here are James's responses to the thought-provoking queries he received.
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