Gold World News Flash |
- Interest Rates Key to Silver Direction
- 8 Economic Threats That We Were Not Even Talking About At The Beginning Of The Summer
- Why The Government and The Economy Will Collapse
- The Fed Speaks . . . and Gold Listens
- Gold & Silver Continue BLAST OFF in Thursday Asian Session
- Will September 12th Mark the COLLAPSE of the EuroZone? PLUS, There IS a Developing Shortage of Physical Silver & Gold – Alasdair Macleod
- Nuggets of Value
- The Fate Of The World, Money & Gold
- Bonds Rolling Over, Silver Outperforming Gold; Have We Seen Final Top in 30 Year Bond Bull?
- Mistrust Fuels Continued Gold Demand
- Grandich Client Sunridge Gold
- China Flash PMI Plummets As New Export Orders Collapse To Lehman Lows
- Jim's Mailbox
- Public pension funds lead 'London whale' class action against JPMorgan
- Silver Breakout Leads to Gold Breakout
- World Gold Demand Down 7% in Q2
- The Awesome, Mind-Boggling Tale of Sam Israel and the Shadow Markets
- Mistrust Fuels Continued Gold Demand
- Guns and Butter – August 22, Bonnie Faulkner Interviews Max Keiser (first 25 sec. is a lead-in from previous show)
- Doug Casey on Syria and the Global RoboCop
- THAR SHE BLOWS! … Silver Remains Super EXPLOSIVE!
- Eric Sprott: The Financial System’s Death Knell?
- Rule - Gold & Silver Spike & The Oil Quote May Skyrocket
- The Gold Price Dipped $2.50 Today Closing on the Comex at $1,637.40 Gold May Reach $1,680 by Friday
- The History Of The World's FX Regimes In One Infographic
- Gold Up, Stocks Up, Bonds Up, VIX Up; That Is All
- LGMR: Gold Climbs to 3-Month High, Euro Leaders "Getting Benefit of Doubt", Republicans Call for Fed Audit
- Gold Seeker Closing Report: Gold and Silver Gain About 1% and 2%
- "Rich White Guys With No Life"
- The Smart Money Can't Deny It Any Longer: Go Gold, Or Go Home.
| Interest Rates Key to Silver Direction Posted: 23 Aug 2012 01:07 AM PDT [url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] We have said for some time now that Silver will only benefit in a period in which inflation is the main fear and not deflation. That of course implies that the bond and note markets will begin pushing rates HIGHER out of inflation fears. With this is mind, observe the following chart comparing the price action of Silver to the Yield on the Ten Year Treasury Note. The Silver price is the lighter colored line while the black line is the yield on the ten year. Note how uncannily similar the chart patterns are of the two beginning near the month of October 2010. Why is this? Simple - if interest rates are rising the fears of a slowdown are receding. Silver tends to benefit in such an environment. Today we were treated to a FOMC statement which hinted at a majority moving towards further action on the bond buying program should economic data warrant such. Perversely for the Fed, any attempt to eng...
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| 8 Economic Threats That We Were Not Even Talking About At The Beginning Of The Summer Posted: 23 Aug 2012 01:00 AM PDT from The Economic Collapse Blog:
Read More @ TheEconomicCollpaseBlog.com
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| Why The Government and The Economy Will Collapse Posted: 22 Aug 2012 11:55 PM PDT Guest Post From Monty Pelerin’s World: Most people don’t understand the unsolvable problem the US government has created for itself and its citizens. Sovereign default is beyond a likelihood; it is inevitable. When and which (possibly all) obligations are defaulted on are to be determined. Panicked political decisions, likely in the near future, will produce a complete financial and economic collapse. Hopefully that is the worst that will occur. Official Government Debt The official federal debt is $16 Trillion. This debt represents 100% of current GDP. Ken Rogoff and Carmen Reinhart studied countries with high levels of government debt. This Time Is Different: Eight Centuries of Financial Folly, their well-acclaimed book, contains their findings.*The authors*concluded: [INDENT]In our study "Growth in a Time of Debt," we found relatively little association between public liabilities and growth for debt levels of less than 90 percent of GDP. But burdens above 90 percen...
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| The Fed Speaks . . . and Gold Listens Posted: 22 Aug 2012 11:28 PM PDT Nichols on Gold
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| Gold & Silver Continue BLAST OFF in Thursday Asian Session Posted: 22 Aug 2012 11:20 PM PDT from Silver Doctors:
After clearing big psychological hurdles at $1650 and $30 this afternoon in the wake of the Fed minutes release which indicated the Fed is seriously considering the imminent implementation of QE3, gold and silver have continued their big surges in the access market and early Thursday trading in the Asian market, and have again gone vertical. Silver has blasted back through $30 to $30.30, and gold has shot up $15 north of Sinclair's $1650 angel to $1665.
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| Posted: 22 Aug 2012 10:50 PM PDT
Alasdair Macleod, Head of Research for GoldMoney.com joins me to discuss the critical German Constitutional Court decision due on September 12th which may mark the END of Germany's ability to fund the endless Euro Zone bailouts, which now total more than $2 TRILLION for Germany alone! If Germany bails on the bailouts… the EuroZone will fall and all hell will break loose globally. In Part TWO we talk about the developing shortage of physical gold and silver, and the total DENIAL of the average American that there is any problem whatsoever.
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| Posted: 22 Aug 2012 10:45 PM PDT With extraordinary undervaluation based on a variety of metrics, many gold and silver stocks are real nuggets of value. As noted earlier, their performance could easily outperform both gold and silver if we get to a positive TDI weekly posture, which is currently in progress, then a positive TDI monthly trend. Since May 2012, I have accumulated a number of undervalued quality miners on any retracements. The serious "on sale" bear market we all experienced in recent months, and the opportunity it presented, was the primary reason for the development of the Bonanza Project in April 2012, which most overlooked. These nuggets of value could seriously outperform gold and silver over the next year. Vaults of Value [CENTER][/CENTER] In early August, and in preparation for the potential weekly TDI trend change described earlier, I completed an exhaustive study of more then 150 top tier mining and advanced development stocks to see if I had overlooked any undervalued "vaults of...
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| The Fate Of The World, Money & Gold Posted: 22 Aug 2012 10:30 PM PDT from KingWorldNews:
Today top trends forecaster, Gerald Celente, told King World News, "… without Germany there is no euro." He also warned that Finland and other countries are making alternative plans, "… in case the euro collapses." Celente, who is the founder of Trends Research, and the man many consider to be the top trends forecaster in the world, also said this is why "… my money is in gold." He went on to discuss breakout points in gold, but first, here is what he had to say about Europe: "The German Supreme Court is going to rule upon whether or not Germany can continue to put funds into the stability pacts and bailout program, and whether or not there is going to be a euro bond program at all. Bigger than that, whether or not the Bundestag is going to lose control of their own government and take some of the financial decision-making out of their hands and move it into Brussels." Celente continues @ KingWorldNews.com
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| Bonds Rolling Over, Silver Outperforming Gold; Have We Seen Final Top in 30 Year Bond Bull? Posted: 22 Aug 2012 09:55 PM PDT When silver outperforms gold, it's an indication that both metals will perform strongly because the "inflation trade" has returned and given "modern" perceptions of the global monetary system, "professional" traders and investors have an easier time understanding and believing in … Continue reading
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| Mistrust Fuels Continued Gold Demand Posted: 22 Aug 2012 09:30 PM PDT by John Browne, Senior Market Strategist, Euro Pacific Capital via Gold Seek:
In the face of growing fears of a renewed global plunge into economic depression and a climate of low apparent price inflation, investors might expect commodities and precious metals to be falling in price. Instead, gold continues to hover around a relatively high $1,640 an ounce and silver at $29. At the same time, central banks – including those of the ever more important China, Russia and India – continue aggressively to buy gold. At a time when very complex financial instruments allow for the seemingly effective hedging of all manner of risks, why should precious metals, which ostensibly involve considerable downside risk, continue to be attractive? Simply, investors in precious metals see traditional risk management instruments as too dependent upon the challenged financial markets that they fail to represent true and ultimate insurance. The 2008 financial crisis was rooted in a property bubble, but was magnified when reckless risks were often passed on to unknowing, conservative third-parties. This was accomplished by means of increasingly sophisticated and deceptive financial instruments. When the unthinkable happened and property prices turned down, the highly interconnected Western financial world was awash with toxic assets and so-called hedge instruments, including derivatives. At one stage, total financial collapse threatened, so governments stepped in to absorb these toxic assets or pass them off to more solvent banks.
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| Posted: 22 Aug 2012 09:24 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! August 22, 2012 07:05 PM Haywood Comment Ocean Equities comments on Sunridge Gold Corp ENAMCO Intends to Acquire 30% of Sunridge's Asmara Project News Sunridge Gold Corp ('Sunridge' or the 'Company') has announced that it has received a formal indication from the Eritrean government through the Eritrean National Mining Corporation ('ENAMCO') of its intention to acquire a 30% paid participating interest in Sunridge's Asmara Project in Eritrea. The 30% interest is in addition to ENAMCO's existing right to receive a 10% free-carried interest in Eritrean mining projects on the issuance of a mining license. The support from the government of Eritrea is a major milestone for Sunridge and a major validation of the project assisting the completion of the feasibility study, mine permitting and construction financing. Sunridge is the fourth company ...
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| China Flash PMI Plummets As New Export Orders Collapse To Lehman Lows Posted: 22 Aug 2012 08:57 PM PDT It was the best of times (US equities); it was the worst of times (the world's growth engine - China). HSBC-Markit just announced the Flash PMI for August and it's not pretty - printing at a nine-month low (47.8 vs 49.3 in July). Of course, China's own version remains in the Schrodinger-like >50-expansion state for now but with all 11 sub-indices in this evening's data pointing to weakness, we suspect not even the Chinese can sell that data for much longer. So what next - RRR? Massive stimulus? - don't hold your breath given the recent reverse repos and the already creeping-inflation in food and energy prices. The piece-de-resistance of the data-dump though has to be (in line with Japan's trade data last night) is the New Export Orders slumped to 44.7 - lowest since March 2009 when trade finance collapsed post-Lehman.
China Flash PMI lowest in 9 months - almost back to 2009 lows...
as all 11 sub-indices suggest pain...
Source: Markit
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| Posted: 22 Aug 2012 07:40 PM PDT Jim, I find it very telling today that the moment QE was hinted at, the market immediately jumped to pare losses. Gold and other commodities flew as well. The difference was that gold in particular was green all day along with gold stocks while the general market was in decline. After the initial jump Continue reading Jim's Mailbox
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| Public pension funds lead 'London whale' class action against JPMorgan Posted: 22 Aug 2012 07:14 PM PDT By Patricia Hurtado http://www.bloomberg.com/news/2012-08-21/public-pension-funds-named-to-l... NEW YORK -- Public pension funds from Arkansas, Ohio, Oregon, and Sweden will be lead plaintiffs in a group lawsuit against JPMorgan Chase & Co. over trades made by Bruno Iksil, known as the "London Whale." U.S. District Judge George Daniels in Manhattan ruled today that lawsuits against the New York-based bank should be consolidated into a class action. The pension funds allege they lost as much as $52 million because of fraudulent activities by JPMorgan's London chief investment office. The lead plaintiffs named by Daniels are the Arkansas Teacher Retirement System, Ohio Public Employee Retirement System, School Employees Retirement System of Ohio, State Teachers Retirement System of Ohio, Oregon Public Employee Retirement Fund, and the Swedish pension fund Sjunde AP-Fonden. ... Dispatch continues below ... ADVERTISEMENT Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment: Company Press Release VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory. The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57. The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows: Payback period: 3.55 years Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics." For the complete press release, please visit: http://prophecyplat.com/news_2012_june18_prophecy_platinum_announces_res... "The public pension funds, a group that includes some of the largest public pension funds in the world, have far and away the 'largest financial interest' in the relief sought by the class in these cases," Gerald Silk, a lawyer with Bernstein Litowitz Berger & Grossmann LLP, said Aug. 9 in court papers. JPMorgan Chief Executive Officer Jamie Dimon said in July the firm's chief investment office had $5.8 billion in losses on the trades so far, and the figure may climb by $1.7 billion in a worst-case scenario. Iksil amassed positions in credit derivatives so big and market-moving he became known as the London Whale. The pension funds allege they sustained losses after being given false information that hid the nature of the bank's trades. Joe Evangelisti, a JPMorgan spokesman, declined to comment on the judge's ruling. Class-action status allows plaintiffs more leverage in negotiations with defendant banks. Lead plaintiffs direct the litigation on behalf of the class, determining strategy while usually reaping the largest share of any verdict or settlement. The case is In Re: JPMorgan Chase & Co. Securities Litigation, 12-cv-3852, U.S. District Court, Southern District of New York (Manhattan). Join GATA here: Toronto Resource Investment Conference New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT GoldMoney adds Toronto vaulting option In addition to its precious metals storage facilities in Hong Kong, Switzerland, and the United Kingdom, GoldMoney customers now can store their gold and silver in a high-security vault operated by Brink's in Toronto, Ontario, Canada. GoldMoney also has recently partnered with Rhenus Freight Logistics to offer another gold storage option in Switzerland. The Rhenus vault is in the secured zone of Zurich Airport and offers customers superb security as well as the ability to inspect their gold. Storage at the new vaults in Canada and Switzerland is available at GoldMoney's lowest fees. Customers can select their storage location when placing their buy order. 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| Silver Breakout Leads to Gold Breakout Posted: 22 Aug 2012 06:53 PM PDT [url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] Gold put in a very strong showing in today's session the instant the FOMC press release hit the market. All that was necessary was the fact that a few words were changed from "some" to "many" and to "fairly soon". Once traders saw those words, it was off to the races and no looking back. Traders interpretted this change of wording as evidence that the committee was now largely leaning to a new round of bond buying should future economic data releases confirm the slowdown in growth. We have noted for some time that Silver would underperform gold during a time in which deflationary or slowing global growth fears are dominant. The exact converse is true when traders begin shifting towards inflationary expectations. Silver leads and then gold follows. Two days ago silver broke out of its recent congestion pattern as it surged through the $28 level. Gold moved higher that day also pushing through ...
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| World Gold Demand Down 7% in Q2 Posted: 22 Aug 2012 06:30 PM PDT World Gold Council, 16Aug12 - Gold Demand Down... [[ This is a content summary only. Visit my website http://goldbasics.blogspot.com for full Content ]] 
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| The Awesome, Mind-Boggling Tale of Sam Israel and the Shadow Markets Posted: 22 Aug 2012 05:35 PM PDT I just finished reading Octopus by Guy Lawson, and it's one of those rare books that fit the "I Couldn't Put It Down" category, much like Den of Thieves, published in 1992. It is the tale of Sam Israel, whom you may remember in 2006 was on the lam from his failed hedge fund/Ponzi scheme. He faked his suicide, was captured, and is now hanging out for the next couple of decades (with none other than Bernie Madoff) in a state prison named, of all things, Valhalla. Israel was born into a very wealthy family that made its fortune in commodities trading. Even as a young He began work in the 1980s, working at the bottom of the totem pole at the New York Stock Exchange. He did whatever menial tasks were available, serving as a "runner" and gopher, and the book details his climb up through the trading ranks - - by 1987, serving as a trader for a relatively prominent firm (which was badly damaged in the 1987 crash). Israel actually did quite well during the crash, and after working for a couple of other funds in the ensuing years, he decided to create a fund of his own with two other men - - one of them, Jimmy Marquez, who himself had launched a fund whose losses were so severe that he had to shut it down, and another, Dan Marino, a chubby, almost-deaf accountant who was there to keep (and, later, cook) the books. Israel was, in a way, ahead of the curve since he wanted to base his orders on a very primitive (and today what would be considered ungodly slow) version of high-speed trading. His "Forward Propogation" program would predict the next move of the market with 86% accuracy, he claimed, and for virtually the entire history of the newly-christened Bayou fund, Forward Propogation was the centerpiece of their technological edge in the markets. At first, the fund was off to a good start. In a few months, Bayou had a nice profit to show to their partners (who, at the time, were just a few friends and family, thus yielding a tiny fund of not even a million dollars). Marquez believed a major bull market in gold was forthcoming, so he went heavily long into precious metals. Although Marquez was absolutely right, he was far too early, and what had been a gain turned into a loss. The fund was off to a terrible start, and the three partners were certain their investors would simply leave, thus snuffing out their new business. This left the partners in a very discouraging position, but Marino hit upon an idea: when the business was initially set up, they created two organizations: one of them the fund itself, and the other, the brokerage through which the fund would trade. Marino proposed that they issue a substantial commission "rebate" to the fund. It would create a substantial loss for the brokerage, but since Israel was its only owner, no one would really care. The Bayou fund partners would see a profit instead of a loss, and the line item was plausible enough that it would pass muster with the auditors. The other two partners reluctantly agreed that this was the only easy way out of their predicament. Thus, instead of reporting to their partners a loss of 14%, they proudly issued reports showing a 40% gain. At this point of the book, two themes in the fund's future are already clear: one, the partners were willing to fudge the numbers to hide anything they considered embarassing, and two, when they lied, they lied big. They could have entered a much smaller "rebate", nudging the loss slightly into profitable territory, so at least the partners wouldn't have outright bad news. Instead, they had to create a ridiculous profitable result with the hope of generating interest from new investors. One aspect of the story that the author makes very clear is that, unlike Madoff, the creators of Bayou didn't set out to set up a Ponzi scheme. On the contrary, they genuinely thought they could beat the market, and they sought to create outsized returns for their investors. For the entire history of the fund, Israel traded, and traded, and traded, employing increasingly bizarre and aggressive techniques to try to address what the partners called simply The Problem; that is, the difference between reality (the cash in the Bayou accounts) and fantasy (the sum total of balances all the partners supposedly held). The scheme began, as many crimes like this do, quite "innocently". The men were simply too embarassed to admit a loss to their partners, so they concocted a way to hide what, in retrospect, was a pretty small amount of absolute dollars in losses. Instead of simply stating the facts and assuring they would try harder, they had to present themselves as widly successful in their endeavor and, in their own minds, pledge that they would make up for the difference by their soon-to-be-realized success in trading. Thus, The Problem grew over time from tens of thousands to hundreds of thousands to millions to, ultimately, hundreds of millions. In 1998, the men took a couple of steps to make the company seem more "real." First, at Marquez's urging, they moved from Israel's home basement to a fancy office on "Hedge Fund Row" in Stamford, Connecticut. Although the expensive office was a stretch for a fund just starting out, they wanted to give a larger-than-life impression. Also, once they realized The Problem was getting too big to pass muster with their auditors, they decided to simply make their own auditing firm, run by Marino from a spare desk in the Manhattan office of a friend. Marino came up with a name, business cards, stationary - - everything they needed to make it seem like a separate organization was carefully examining and approving Bayou's statements. The line item on the statements that, in a stroke, resolved all the losses and falsified profits of the firm was called Due From Brokers. This imaginary asset was, incredibly, never questioned by any partner or prospective investor. The impressive returns that Bayou was creating month after month managed to prove that, by and large, greed beats prudence with most folks. Due From Brokers was an ever-growing accounting bucket that balanced the books neatly for all concerned. New investors started to come in at a steady pace, and by 2000, the fund was about $10 million. Israel actually played the bursting of the NASDAQ bubble quite well, and although The Problem was larger than ever, it was still plausible that superb trading could bridge the gap between reality and pretend. On September 10, 2001, Israel's computer program did something it had never done before - - all ten indicators pointed in the same direction: green. That is, go long, and go long in a big way. Sam did just that, loading up on futures, options, and stocks, all predicated on the forthcoming rally that would save him from the deep hole Bayou was in. What happened the next morning changed all of that. When the market finally opened the next week, Bayou took devastating losses, making the hole that much deeper. Of course, the letter Bayou sent to its partners solemnly stated that while the profit had been reduced, the year was nonetheless still profitable - - an incredible (and completely untrue) feat. The money kept tumbling in from new investors, and by the end of 2001, Bayou claimed $85 million in assets. This was an inflated figure, of course, since it counted both dreamed-up profits and masked losses, but there's no doubt the fund was getting popular momentum. Things were going less well in Israel's personal life. His wife kicked him out of the house (they had a couple of kids by then), and Israel decided to live the life of a hedge fund bachelor, renting a $22,000/month mansion owned by Donald Trump in Mount Kisco, New York. As with the Stamford office, Israel figured this would a sensible way to dazzle potential investors. Because The Problem had become so large, Bayou started making much riskier investments in the hope that they would jettison the firm back to true profitability. Bayou started acting more like a venture capital firm than an equity hedge fund, plowing $50 million into various startups, none of which ever paid off. On the last day of 2003, the Forward Propogation program again signaled (for only the second time) an "all clear" to go long the market in a big way, with all ten signals flashing green. Israel backed up the truck once more. Although no terrorist attack took place like last time, the market still moved against him, and $20 million of (additional) losses later, he closed those positions too. It was around then that Israel encountered Jack O'Halloran (whom you may remember as the mute character Non from the Superman movies). This part of Octopus is probably the most enjoyable, because O'Halloran tells Israel stories, plots, and conspiracies that are incredible in the truest sense of the word (several of which involve the Kennedy assasination). Through O'Halloran, Israel is introduced to the man who dominates the second half of the book, Robert Booth Nichols. No description I lay out here would do justice to Nichols, but I'll summarize by saying he is a mix between Chuck Norris, Rambo, and James Bond. He was a real-life spy and mercenary and, unknown to Israel, a world-class con artist. His ability to con put to shame anything a poser like Bernie Madoff or Sam Israel could concoct. He executed what is known in the underworld as "the long con" - - the creation of a completely separate reality, utterly convincing and singularly devoted to separating the mark (Sam Israel) from his money (the entire Bayou account). The movie Matchstick Men, which is superb, illustrates a long con beautifully. Nichols spent weeks telling Israel how the world really worked. All the conspiracy theories were true. Thirteen families ran the planet. The governments, the Fed, all the politicians - - they were merely a front for the DeBeers and the Rothschilds and the other multi-billionaires that owned and ran everything. This played beautifully into Israel's distorted and paranoid view of the world. For someone who had been so prone to cheating, the idea that everything in the world was just one big cheat surely must have been comforting. The real news for Israel, as Nichols laid it out, was that there was a shadow market that traded the money of the super-wealthy and produced returns that were astonomical. Risk-free trades would throw off 100% gains in just a couple of weeks, and of course, by repeating these trades, there really was no limit to how many billions one could garner in profits. The Problem, in comparison to the opportunity presented, was miniscule. Israel was convinced that he would not only turn Bayou around, but that he would shut his piddling fund down soon thereafter and amass the countless billions that such a brilliant trader deserved. To help allay whatever smidgen of guilt Israel might have been able to conjure up, Nichols also made it clear that the super-wealthy of the world allocated about half of their astronomical profits to good works, such as seeking a cure for AIDS and providing clean drinking water to the poor (yes, it sounds laughable to read it here, but once Israel was deep into the upside-down world of Nichols, anything seemed possible). So Israel was not only destined to become one of the world's richest men, he would also cure AIDS and save the wretched masses at the same time. Of course, once the $150 million in Bayou's account was transferred to London, "the trade" never seemed to materialize. No, Nichols didn't simply run off with the money; that would be too easy, and the account was strictly under the control of Israel. This long con would take a lot more work that that. But Nichols and his confederates spent months adding more details, color, and credibility to their plot. Yet as anxious as Israel was to place his first trade, there was always an excuse as to why it wasn't happening yet, often involving ridiculous excuses like not being able to find the bonds whose serial numbers matched properly. Nichols then gave Israel a history lesson about Yamashita's gold (a legend with which I wasn't familiar until I read this book). This was just one of many gold mines that Nichols claimed could be "re-hypothecated" (shades of Corzine!) and was valued always at some ludicrous sum, such as $156 billion. Shockingly, Israel also trained under Nichols to become a violent killer, learning how to - as Israel reports it - rip out throats and gouge out eyeballs. At the height of the long con, Nichols even synthesized an attempt on Israel's life, which Israel was able to foil (as was the plan) with a pistol he carried with him at all times. In Israel's own recollection:
To me, it was breathtaking to read how one relatively normal person had become a murderer (and would recall the incident with such detachment). It's pretty evident that Sam Israel had deeper mental issues than simply being a liar and thief. He was also a fool, though, because in all probability, the gun they provided him was filled with blanks, and the "exploding head" (conveniently) was of a man wearing a turban rigged to realistically explode as if it had been shot. From that point on, the bond between Nichols and Israel made them inseparable. It was at this time that Nichols asked for a $10 million "loan" from Israel, ostensibly for some important personal opportunities. Nichols even provided $100 million in collaterial as security. What was the collateral, you ask? Why, a box of bonds from the Yamashita Gold hoard, secured in a box which, if opened incorrectly, would spray a deadly nerve agent, killing everyone present. Yes, you read that correctly, and Israel believed it, straight up and down. He wired the $10,000,000 to his friend. A little later, when Israel went to his bank to withdraw a few thousand dollars from the Bayou account, the teller told him the balance was $0. The night before, the entire sum had been wired to a confederate of Nichols', and it was simply by chance that Israel's attempt at a small withdrawal brought it to his attention. The bank was able to undo the wire just in time, although Israel had no idea of the connection, if any, between the person who sucked the account dry and his new best friend, Mr. Nichols. Back in the U.S., Israel got a visit from the FBI. It probably won't surprise you to read that the FBI wasn't there to expose the scam - - heavens, no, that would imply competency. They were there since they were concerned - - based on what happened with the wire in Europe - - that Mr. Israel might be victim to a scam (yes, the irony is delicious). Incredibly, Israel sat with the two FBI agents in his giant rented mansion and explained the lunatic tale of the shadow markets, the 13 families that controlled the Earth, and all the other hare-brained nonsense that Nichols had fed him. The agents were puzzled, to say the least, but still felt a need to try to protect Israel from any unsavory characters that might be out ot get him. Their boss, upon later being told the same stories by Israel, was skeptical of who this kook was and what he was up to. As Israel's behavior became increasingly bizarre, his partners started to send in redemption requests. By taking $50 million from the $150 million account (in which no trades in the Shadow Market had taken place, naturally), Bayou was able to cover the redemptions, but it was clear that time was running out, and Israel was getting frantic to make his promised billions and move on with his life. By 2004, after all, Bayou had in actuality lost $75 million of investor money, in addition to claiming $175 million in extra profits that weren't real. A quarter-billion dollar shortfall isn't easy to make up with a $150 million fund. As Israel got more and more desperate, he started partaking in absolutely lunatic schemes, no more plausible than the Nigerian scams that appear in your email inbox from time to time (and this is not an exageration, because he would wire hundreds of thousands of dollars to lawyers that pledged a vast fortune was coming from places such as Nigeria, once they had the initial deposit in hand). Amazingly, the government employee who actually figured out something was wrong wasn't from the SEC (easily Earth's most incompetent body) or the FBI. It was a fellow named Cameron Holmes, who worked in the Financial Remedies section of the Arizona Attorney General's office. He got a suspicious activity report of a $100 million wire that had been sent to a suburban branch of Wachovia bank. (Israel had grown tired waiting for the Shadow Market trades, so he repatriated the money). After a little digging, Holmes grew confident that a scam was afoot, so he had the money frozen at Wachovia. It was around this time that Bayou's largest investors were demanding their money back. To buy a few weeks, Israel made an announcement that the fund was shutting down. Part of his letter to clients read,
Israel still held out hope that in the few weeks they required to "close the books" and cut the checks, some kind of miracle would take place. Of course, no miracle took place. When a partner received his $52 million check, and it bounced, he made a trip to the Bayou office and found it deserted. He did find a draft of a suicide note that read, "I know God will have no mercy on my soul." He probably concluded at that point that the bounced checked wasn't a mistake. The principals at Bayou were sentenced to twenty years each. Israel was granted a few weeks before commencing his sentence. He took the opportunity to fake his suicide and try to start a new, anonymous life. He got away with it for a couple of weeks, but after a (real) subsequent suicide attempt on his part, which failed, he turned himself in to the authories and gave up the chase. Another two years was tacked on to his sentence. I think I've done a good job capturing the essence of the book, which I frankly think would make an amazing movie. Get it and read it; you'll probably agree with me that it's an awesome tale.
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| Mistrust Fuels Continued Gold Demand Posted: 22 Aug 2012 04:12 PM PDT In the face of growing fears of a renewed global plunge into economic depression and a climate of low apparent price inflation, investors might expect commodities and precious metals to be falling in price. Instead, gold continues to hover around a relatively high $1,640 an ounce and silver at $29. At the same time, central banks - including those of the ever more important China, Russia and India - continue aggressively to buy gold.
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| Posted: 22 Aug 2012 04:07 PM PDT (AUDIO) Guns and Butter – August 22, Bonnie Faulkner Interviews Max Keiser Guns and Butter "Countdown To Currency Collapse" with Max Keiser. Escalating financial fraud; pump and dump scams; Wall Street banks; auditing fraud; absence of regulation; default or hyperinflation?; … Continue reading
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| Doug Casey on Syria and the Global RoboCop Posted: 22 Aug 2012 04:02 PM PDT Synopsis: Doug Casey argues that concerns about Syrian chemical weapons are misguided. (Interviewed by Louis James, Editor, International Speculator) L: Doug, I just saw that Obama is threatening the regime in Syria with military force if they use chemical weapons in their fight to retain power. Unlike most of the pundits filling the airwaves with comments, you've actually been there. What do you make of what's going on? Doug: I've been there twice, actually. On one of those, I was basically there over the Christmas holiday season. I rented a car in Damascus, drove around, and saw a lot of the country. I, of course, did the tourist things, like visiting the great mosque in Damascus and the Krak des Chevaliers – which is one of the best-preserved medieval castles anywhere – and the Roman city of Palmyra. But I also got down off my horse, as it were, and walked the souqs. I even checked out local beachfront real estate. They don't have much, but there's about 50 miles of beachfront, so I went to see if there were any bargains. I'll buy almost anything, anywhere, if the price is low enough, especially cheap beach land. I didn't see anything appealing – being the only foreigner on the whole strip didn't seem likely to work out too well, and not much fun in a culture that frowns on alcohol and bikinis. Overall, I have to say that the country seemed reasonably calm and busy – in the "business" sense – without a great presence of police. I understood there was a significant secret police presence – it was definitely not a place to voice political opinions – but I didn't see signs of widespread public fear. The people did not seem particularly ground down with poverty or repression. L: So, do you doubt the uprising now is a genuine rebellion by the oppressed masses – perhaps it's just a power struggle between different factions, some claiming to speak for the oppressed? Doug: Well, you really have to live somewhere to get to know the place, and I didn't. I'm just saying that my impression of Syria, for all its evil reputation in the West – a veritable Mordor in the eyes of TV watchers – was not so bad. It was definitely less repressive than the USSR or Eastern Europe before 1990. Of course, the government was and is run by criminals – but that's true almost everywhere. I don't know who the good guys are in the current conflict or even that there are any. L: So it looked fairly normal to you? But normal in that part of the world has hardly been a shining beacon of liberty and prosperity for all. Doug: No, it hasn't. Since the USSR collapsed, the Mid-East, Central Asia, and Africa have competed for having the most repressive regimes and backward economies. One interesting thing to me was that the country seemed to be in a time warp – it was like going to other places as they were 40 years ago. There was almost no new building going on – I remember the big fuss at the time was that the Kuwaitis were building a Four Seasons hotel. That was going to be by far the classiest joint in Damascus, when done. At the time I was there, the best place was a rather down-at-the-heels Sofitel. Another thing that you never hear on the news is that the country has exchange controls. Reporters seem to consider that part of the natural landscape. They're insulated from the effects of FX controls by their corporate expense accounts, and they don't understand those effects. This is one reason most reporting is so pedestrian and vapid – but I digress. Repressive governments always have exchange controls, because they make it very inconvenient for the locals to pick up and leave; as we've discussed in the past, the US is moving in that direction. Locals have to exchange their basically worthless currency for that of some neighboring country; otherwise, they have no way to spend when they get there. I can also say that there wasn't an obvious military presence in Syria that I could see, but it makes sense that a huge portion of the GDP went to buying Soviet-era military hardware – tanks and jet fighters. In today's world, that stuff amounts to junk. And that's entirely apart from the fact that most Third-World armies are worthless for fighting real wars; their main purpose is to build a power base for the regime and suppress the people. Also, it's well known – thanks to Julian Assange and WikiLeaks, among other sources – that Syria is one of the places the CIA used to ship… um… dissidents, for lack of a better word, to be tortured. These things are not usually signs of a happy, peaceful population. And there are deep-rooted reasons for tension. Syria – like almost all of the countries in Africa, the Middle East, and Asia – is an artificial construct put together, completely arbitrarily, by politicians in the boardrooms of Europe. In the case of Syria, it was assembled from some of the remnants of the Ottoman Empire by the Europeans after World War I. As in neighboring Lebanon and Iraq, it's got at least a dozen major religious/tribal/ethnic groups that are loyal mainly to themselves. The idea of a Syrian nation is a fantasy. It was inevitable that eventually Syria would fall apart – just as it was and is inevitable for most of the other artificially constructed countries to fall apart. This applies to the EU now as well, for similar reasons. L: I didn't know that – about the dozen different religions. I would have expected the lines on the map to be artificial, since the people in the area were historically nomadic, but I would have thought they shared more in common, culturally. I suppose it only seems that way because I'm on the outside and have not looked closely. Doug: Yes. Just to begin with, there's the Shia and Sunni Muslims, but there are many subdivisions within these and other schools of thought. There are also a number of different sects of Christians still there, and Jews as well. Some people worship Jesus, some worship Yahweh, some worship Allah. Nobody seems to agree on what these various gods really say or what they tell you to do or not do, but most everybody seems to take it pretty seriously – and in the Middle East, much more than almost anywhere else. Religious wars seem to be a specialty of the various children of Abraham; the Hindus, Jains, Buddhists, Zoroastrians, pagans, atheists, and what-have-you, are historically much, much more live and let live. L: So, presuming that the majority of those who control the government in Syria are of one religious/ethnic/cultural group, as is often the case, do you think they'd have any qualms against using chemical weapons against the rebels? It could seem like "us vs. them" to them. Doug: I wouldn't doubt that at all – although chemical weapons are messy, and hugely overrated. But all this fuss and bother about Syria's chemical weapons is distorted and misguided – just as was the case with the nonexistent weapons the Iraqis were said to have. In the first place, if one believes that governments should exist at all and that the need for a military is one of the justifications for the state, then one can't argue that such states should not have weapons. The details of the weapons are irrelevant once you grant the basic premise. And it certainly makes no sense to argue that some governments should have certain weapons, and some should not. The US has huge arsenals of chemical weapons, and no one is calling for military force to take them away. Why does the US have them? Who might they use them against? L: Well, some governments are thought to be more responsible, or less evil, than others… Doug: Doesn't matter. The people running any given government, and their intentions, can change very quickly. You can't accept the idea of sovereign nations and argue that some should be able to have weapons that others cannot. And if you did try to impose different weapons rights on good-guy countries and bad-guy countries, you'd have to have some sort of super-country to make it stick, and that would be very dangerous indeed. Who decides who is a good guy? The fact is that the Germans during World War II actually thought they were the good guys. L: Many people think the UN should be in charge and make that determination. Doug: Those people are deluding themselves and are woefully ignorant of history if they think bigger government is better government... and dangerously and pathetically naïve if they think one super-state with the power to rule them all would be impervious to corruption. If the UN became the mightiest force on earth, then no one could stop them, and very bad things would happen. The UN having real power would be about the worst possible outcome. Thankfully, right now it's nothing more than an incredibly corrupt and dysfunctional homeowners' association for governments. If it got real power, it would become a much more serious magnet for sociopaths than it currently is. L: One ring to rule them all and in the darkness bind them. Doug: Exactly. It's the fact that the nations of the world are not united that has saved us from global mismanagement and despotism. It's too bad that there are only about 200 sovereign states; ideally we would have seven billion. L: Power corrupts; absolute power corrupts absolutely. The antidote is decentralizing power as much as possible. Doug: Yes. Just look at what the US is already doing, because it sees itself as top dog. The US has increasingly been taking on the role of global "RoboCop," using its military power to impose its notions of what should be on other countries and peoples around the world. The results are almost invariably destructive and counterproductive on the ground where US force is projected. Just look at the happy outcomes in Iraq, Afghanistan, and Libya, for just three current, quick examples. Furthermore, it's unethical to force US taxpayers to bankroll foreign interventions many of them – perhaps even most of them – do not approve of. L: And it forces US troops who just want to defend their loved ones to go off and die in foreign lands for purposes that have nothing to do with why they signed up. Doug: True enough – although the military has always attracted a certain type of young male who wants to visit exotic foreign lands, meet interesting people, and kill them. Even if it were true that Syria has chemical weapons, and even if it were true that the government forces in Syria plan to use them against their opposition – and in today's world chemical weapons are mainly useful against civilian populations in cities – that does not create a moral obligation on the US to go off and try to stop it. It would be quite blackly comedic if the US decided to use its own huge stock of chemical weapons to prevent the Syrians from using theirs… Whenever I think of the US military, I'm forced to think of Dr. Strangelove, actually. L: So just leave those poor, innocent people in Syria to die? Doug: Well, those poor people tolerated their local despotism for years – and many of them surely participated in it or collaborated with it in various ways over the years, so it's arguable how innocent they all are. But no, that's not the only option. Those who find the actions of the Syrian state reprehensible and want to do something about it should be free to do so. The US government used to allow this with letters of marque and reprisal. Now of course, it's quite illegal for an American to even contemplate. In my ideal world, people everywhere would be perfectly free to arm themselves and hop on a plane to wherever tyranny flared up, and help put an end to it. Anyone who really believes that bad guys around the world should be stopped ought to stop trying to coerce others to take action via the state, and should volunteer themselves. If they are not willing to do that, it's just hypocrisy and cowardice to force others – taxpayers and soldiers – to do their bidding for them. If you want to talk the talk, then you should be willing to walk the walk. L: But we don't live in your ideal world… Doug: More's the pity. In any event, what the US is trying to do is completely insane. The Russians are very friendly with the Syrians, and even have a naval base in Syria. Direct US action against the government of Syria could provoke the Iranians as well. Becoming declared enemies of the Assad regime could have many negative consequences beyond what may happen in Syria – and will certainly hasten the insolvency of the US government. Besides, taking out the Assad regime may only make matters worse – who's to say that whoever seizes power after Assad is gone will be any better? Perhaps the result will be a full-blown civil war that lasts for years, laying most of the country to waste in the process. Just look at what's going on in Egypt and Libya – did the people there become suddenly better off? Libya, by the way, is another country that's on the ragged edge of splitting up into several smaller countries or tribes, fighting over Libya's resources. Things like this are terrible, but they've been going on since the dawn of history – it's arrogant and foolish in the extreme to imagine that outsiders can create lasting peace in places full of people who hate each other. There are dozens of places around the world that have imminent potential for genocide: Mali, Sudan, Congo, Nigeria, Uzbekistan, Tajikistan, and many others, not just Syria. At the end of the day, there's no way outsiders can make any of these places better. Outside volunteers might participate in the process, but the people in these places need to sort things out themselves, find solutions that work for them. One can only hope they're not typical political solutions. L: So you're not advocating turning a blind eye to the woes of the world, just keeping the state out of it and leaving it to individual conscience? Doug: Yes. But the question now is: which will be the next of these Arab despotisms to fall apart? Maybe Algeria? It could just as easily be Morocco or Mauritania. L: What about the big one: Saudi Arabia? The guys on top there don't seem like the sort to inspire great love among the people. Doug: Agreed. I don't know when, but I'd say Saudi is a slam-dunk candidate for blowing up. Something like half the population is under 25, and unemployment is huge. All the money is sucked off by the royal family; it's rather ridiculous that the country is named after the family that took it over after World War I. The place is a gigantic accident waiting to happen. So of course, the US will stick its nose into that mess as well, at great cost. Saudi being the sacred homeland of The Prophet – "peace be upon him," as they like to say – putting US troops there to keep the oil flowing would lead to all sorts of trouble. The long war between believers in Jesus and believers in Allah has been going on since the 7th century and shows signs of seriously heating up. L: So, in this world full of nation-states, what should be done? Doug: I hate to put myself in the place of Thomas Friedman, busybody to the world, but if you ask me, I'd say the US should withdraw its troops from all foreign bases, cut military spending on the order of 90%, abolish the CIA, and stop intervening in foreign countries. That would be a good start, anyway. L: Some people would say that's acknowledging defeat – admitting to the world that the US doesn't have the power to boss everyone around – and that could invite attack. Doug: I would argue to the contrary: cutting our losses now will slow the US descent into insolvency, which is the absolute worst thing for "national security" – although that's a dangerous and grossly overrated concept. It might even give the US time to rebuild its economic and social strength, which is the real power that defeated the US's opponents in WW II. Most important of all, instead of meddling and making enemies, the US could again become the shining example it should be, the beacon of hope to people all around the world that the Statue of Liberty is supposed to represent. L: I note that it's a statue of liberty, not a statue of some thug with a sword or club, like those that adorn gates and castles all around Europe. Right, not might, was the symbol of the America that Was. But okay – investment implications? The trend towards more disintegration in North Africa and the Middle East can't be good for oil production… Doug: No, chaos isn't good for oil production – but it's bullish for energy prices. Fighting over control of oil fields is never good for output. But not only can we avoid being hurt by higher prices, we can profit mightily from them. I'll leave it to your bro, Marin, to lay out the best ways to play investing in energy trends in the Casey Energy Report. However, rising energy costs are not good for industry as a whole. That has implications for the whole global economy, which will have to absorb the higher costs. On the most fundamental level, this trend – in Syria and the rest of that part of the world – is not good for either the global economy or world stock markets. That's because stock markets gain – or should gain – over the long term, based on growth in capital, and war destroys capital. L: I was taught in school that WW II ended the Great Depression. Doug: Any economist who looks at the data knows that's not true. But most of those who masquerade as economists today are really just political apologists, like Paul Krugman. War is an ill wind that blows no good. It is a purely destructive force that can only create a net loss for the world as a whole. I don't see any good at all that could come from US meddling in Syria or other such countries. It's not just asking for trouble – it's begging for a catastrophe. L: But it's going to happen – so bet on higher energy prices… What else? Doug: I may sound like a broken record, but I'd be remiss if I didn't remind people to diversify against political instability in the world by internationalizing their assets and lives, and to buy gold. I suspect very, very few have done so, however. L: That brings up a question we've had from readers: could gold have peaked already? If you look at a long-term chart, say, a ten-year chart for gold, you'll see that the steady upward march has been broken. The top of the curve has definitely turned downwards, since last year. But you're as bullish as ever? Doug: Yes. For starters, unlike what happened back in 1980, when gold last peaked, interest rates are extremely low, kept there artificially by the Fed. Back in 1980, interest rates had risen to extremely high levels, which encouraged people to switch to saving in dollars. In the 1970s – the period that led to the last peak – governments were afraid of inflation and were working to reduce inflation of the currencies. Now, governments are racing to debase their currencies at truly phenomenal rates. Even as we speak gold is heading up again. I'd say the chances of gold having peaked for this cycle are slim to none. L: And Slim's out of town? Doug: [Chuckles] Yes, exactly. But we'll be discussing how to survive and profit in a politicized economy at our upcoming Carlsbad seminar. I invite our current readers to join us there, although the number of attendees is quite limited, as always. It's going to be a worthwhile and enjoyable event. L: All right then – thanks for another interesting conversation. Doug: My pleasure, as always.
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| THAR SHE BLOWS! … Silver Remains Super EXPLOSIVE! Posted: 22 Aug 2012 03:55 PM PDT Hello zerohedge followers, Don't know who started this web site, but it is first class with what they put out. About a month ago I first appeared here saying my best sources told me gold and silver would explode in August. Well here we go. NEXT I also said that the JP Morgan MASSIVE short silver position, and their anipulation of that market, was going to be exposed. STAY TUNED!!! August 22 – Gold $1637.40 down $2.50 - Silver $29.55 up 13 cents THAR SHE BLOWS! . Silver Remains Super EXPLOSIVE! "Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great." Mark Twain GO GATA! It's 1:20 Dallas time and I am starting this part of the MIDAS from scratch, saving the first sentence only. After a couple of exciting up days, today was a quiet one, but perhaps just as exciting in a different way as far as silver is concerned. *** It WAS quiet with silver acting like a "ten" and gold steady . and holding yesterday's gains when I went off to my "Cheers" hangout, the local Chili's Restaurant a block away from me to have a quick bite to eat and to say goodbye to a server whom I have known for ten years. Had CNBC turned on to watch the closing Comex action. All of a sudden, going into the close and beyond, gold dropped $5. Silver followed gold down. What the heck? I then figured I lost this bet I made right before I left with a veteran, savvy Café member. Want to make a bet? Good morning Bill, I recently picked up my Merlin the magician hat at Wal-Mart. It was very reasonable. Want to make a bet that gold and silver take some type of hit in the near future possibly starting at 1 PM Chicago time? Only Merlin the magician could figure this out. I responded to Paul that I thought silver was going to go "ballistic" soon. But then, just as I was finishing up my lunch, I saw CNBC's Steve Liesman on the tube talking about the Fed Minutes report. All of "another sudden," gold made an abrupt U-turn and was going straight up. The quiet day, then a disappointing one, turned into a fun one for our camp. First on the Fed Minutes that has created a gold/silver stampede. 4:01 FOMC Minutes indicate many members say additional accommodation likely warranted unless economy improves Minutes can be viewed at the link below. 4:01 FOMC Minutes indicate many members say additional accommodation likely warranted unless economy improves Minutes can be viewed at the attached link http://www.federalreserve.gov/monetarypolicy/fomcminutes20120801.htm Jeepers Creepers! Gold and silver are on fire. This is what I had HOURS ago to conclude this commentary. "As we have discussed the key price points for gold and silver to begin their launches to their all-time highs and beyond were $1630 and $29 respectively. Mission accomplished so far. The next levels to conquer will probably be even more significant. They are $1650 and $30, which have been key levels in the past. Once taken out, the prices of both precious metals should accelerate very quickly." Gold just blew through $1650 and silver is $30 offered. Yeah baby, here we go! OK, will put last Access Market closes at the conclusion of this commentary. Back to the original commentary. The specs finally showed up in the gold pit on the Comex. The gold open interest rose 12,028 contracts to 398,747, still a low number. There was some minor shortcovering in silver. Its OI went down 600 contracts to 127,776. Speaking of silver, yesterday my STALKER source reported rumors of two very large silver transactions. Ned Naylor-Leyland, who presented at GATA's Gold Rush 2011 in London a year ago, reported on the The Keiser Report that there are massive physical strains in the silver market due to two large silver purchases in London in the 5 to 10 million ounce range . and that the LBMA is refusing to deliver them outside of the LBMA system. It should be duly noted that Ned is very sharp and very well connected. From the man, James Mc, in late Consecutive limit-ups High tick Dec. $1,658.80, or +1%. Second consecutive limit up day, cartel style. Funny too this was roughly the +2% figure I circled yesterday. Rare lately for them to need to stop 2 advances in a row. So, the dust has cleared. It was our kind of day and one we have all been predicting and expecting. The HUI, after trading like the wimp of wimps, exploded after the Fed thing and finished up 9.85 to 454.44, and has cleared MEGA technical resistance. This is HIGH FIVES stuff. The XAU performed well too, up 3.69 to 168.05. To conclude, and I know this will elicit some groans from the GATA peanut gallery, but these shots have worked the last two times I put them up. We shall see. With many smiles from me tonight.
The last Kitco quote on gold is $1654.90 and silver is $29.85. GATA BE IN IT TO WIN IT! MIDAS
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| Eric Sprott: The Financial System’s Death Knell? Posted: 22 Aug 2012 03:49 PM PDT From Eric Sprott And David Baker (previously more on the topic from Zero Hedge: Europe's "Monetary Twilight Zone" Neutron Bomb: NIRP)
NIRP: The Financial System's Death Knell? On July 18th, 2012, the German government sold US$5.13 billion worth of 2-year bonds at an average yield of -0.06%. Please note the negative symbol in front of that yield number. What this means is that the German government was able to borrow money for less than nothing. When those specific bonds expire in two years' time, the German government will pay back the original $5.13 billion minus 0.06%. Expressed another way, investors knowingly and willingly bid the German government $5.13 billion in exchange for bonds that will pay no interest and are guaranteed to lose them money on expiration.1 Welcome to the new status quo. Germany is not alone. Over the past six months, the countries of Netherlands, Switzerland and France have also issued short-term government debt at negative yields. Like Germany, they've been able to do this because European bond investors are so shell shocked that they'd rather park money in a bond that's guaranteed to only lose a miniscule amount rather than risk losing more in a PIIGS bond that actually pays some interest. In addition, many investors view German, French and Dutch bonds to be cheap options on the break-up of the Eurozone. If the EU currency union collapses, euro-denominated bonds issued by those specific countries may be paid back in re-issued deutschmarks, francs or guilders, which will be far more valuable than the euros that were spent to buy the bonds in the first place… or at least that's the idea. As a result of this thinking, the bond market auctions for these select countries have seen overwhelming demand, making NIRP (Negative Interest Rate Policy) the new ZIRP (Zero Interest Rate Policy). The NIRP acronym is misleading, however, because unlike ZIRP, NIRP isn't actually an official "policy" per se, but rather a symptom of a broken financial system increasingly starved for good 'collateral'. Aside from those speculating on a Eurozone currency collapse, a large portion of the bond investors participating in NIRP bond auctions are the banks. As the euro crisis has dragged on, banks in perceived "strong" countries like Germany and Switzerland have seen record inflows of deposits from banks in peripheral EU countries, like Spain. As most of these "strong country" banks have been hesitant to lend those deposits out (for obvious reasons), they are forced to park them in short-term government bonds. Moreover, new rules imposed by various regulators such as Basel III have forced all banks to hold a larger percentage of their balance sheet in government bonds, regardless of their country of domicile. The result has been a mad dash into the bond auctions of select "safe" countries just as the pool of available AAA-bonds has been drastically reduced. Banks are piling into NIRP bond auctions today because they have nowhere else to go. This is why nobody seems to be alarmed by the recent ubiquity of NIRP bond auctions – they are merely thought to be a short term phenomenon that will pass in time… just like zero-percent interest rates were supposed to be when they were widely introduced four years ago (sigh). NIRP is different than ZIRP, however. NIRP causes outright financial destruction. Economies can hardly survive extended periods of ZIRP rates, let alone survive a long-term NIRP environment. It just doesn't work. Institutional investors like pension plans and life insurance companies cannot earn enough "spread" to function properly. And many aren't allowed to buy different asset classes that might produce a better "spread", even if they wanted to. They are stuck holding the AAA government debt issuers – positive-yield, or not. Negative rates also punish the individual investor. Try going online and using one of the banks' retirement savings simulators and plugging in a negative expected return – you'll break the program. The same also goes for the investment advisory business. When so-called safe-haven bonds start to consistently produce a negative return, try charging advisory fees to clients while recommending a 50% allocation to negative-yielding government debt. Advisors can try it for a while, but investors won't put up with it for long. The recent emergence of NIRP auctions are a signal that the relationship between governments, banks and investors has broken down. While the market still presumes that NIRP is a short-term phenomenon confined primarily to Europe, the dearth of AAA-assets coupled with banks' captive bond purchasing suggests it may be structurally enforced for a long time to come. There's even the potential for NIRP to emerge in the US bond market. As Bloomberg reports, the gap between US bank deposits and loans hit a record $1.77 trillion at the end of July 2012, representing an expansion of 15% since May.2 "Banks have already bought $136.4 billion in Treasury and government agency debt this year, more than double the $62.6 billion purchased in all of 2011, pushing their holdings to an all-time high of $1.84 trillion."3 The current 2-year US Treasury bill is yielding a paltry 0.29%. If something exciting happens in Europe, what's to stop the bond market's typical knee-jerk move into US Treasuries from pushing that yield down past zero? Not much. We could be there before the end of the year, especially if the banks continue to gorge on ongoing US Treasury auctions in the meantime. The question now is how well the financial system can cope in a relentless low-to-no yield environment for bonds. The last four years of low rates have already wreaked much damage to 'spread'-dependent industries. One need only look at the insurers: In its latest Q2 report, after reporting an 88% drop in Q2 year-over-year earnings, Sun Life Financial stated that if current interest rates persist its profits for the period from 2013 to 2015 could be hurt by up to CAD$500 million.4 Manulife recently reported a Q2 loss of CAD$300 million, which was mainly attributed to a CAD$677 million charge it took to revalue long-term investment assumptions to account for falling bond yields.5 The pension plans are also deteriorating: According to recent reports from BNY Mellon and Mercer, the funded status of US corporate pension plans hit a record low in July 2012. Benefits Canada writes, "The average funded status dropped 2.9 percentage points to 68.7%… while the latest figures from Mercer show that the aggregate deficit in pension plans sponsored by S&P 1500 companies grew US$146 billion during July, to a record high of US$689 billion."6 That's a one-month increase of 27%.7 In the pension business, lower yields on long-term AAA bonds results in higher plan liabilities, plain and simple. As Reuters reporter Jim Saft writes, "To give an idea of exactly how powerful the effect of falling rates is on pension liabilities, consider that, according to Mercer, though US shares rose 1.4 percent in July, the 30-55 basis point fall in discount rates drove an increase in liability of between 3 and 11 percent. In a single month."8 It's even worse for the public pensions. According to the Washington Post, new pension accounting rules imposed by bond-rating firm Moody's are expected to "triple the gap between what states and municipalities report they have in their funds and what they have promised to pay out retirees."9 If implemented, that new public pension gap will balloon to $2.2 trillion. Michael Fletcher from the Washington Post writes, "Among other things, the new accounting rules from Moody's and the Governmental Accounting Standards Board (GASB) limit the rate of return on future investments that pension funds can assume for accounting purposes. Most government pension funds assume a 7 percent to 8 percent return, which critics say overstates future investment income."10 With the US 10-year bond now paying less than 2% a year, assuming a 7-8% return isn't an overstatement, it's a fantasy. Chart 1 shows how the last four years of low-to-no rates has impacted the average Canadian pension plan. Extend that trend another four years and we might as well redefine the entire purpose of pensions altogether. CHART 1: THE SOLVENCY POSITION OF DEFINED-BENEFIT PENSION FUNDS IN CANADA IS AT AN ALL-TIME LOW Indexes (December 1998 = 100) a. Solvency position is equal to assets divided by liabilities. Banks are also suffering from NIRP and ZIRP, as evidenced by the performance of Wall Street's five biggest banks thus far in 2012. Bloomberg writes, "JPMorgan Chase & Co. (JPM), Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley had combined first-half revenue of $161 billion, down 4.5 percent from 2011 and the lowest since $135 billion in 2008. The firms blamed the decline on low interest rates and a drop in trading and deal-making."11 (Emphasis ours.) Banks make money on the spread between the interest they charge on loans and the interest they pay on our deposits (this is called the net-interest margin). Chart 2 shows the impact low rates have had on the net-interest margin for the Big 6 Canadian banks, and how tightly correlated their profits are to bond yields themselves. The average net-interest margin for the Big 6 was 2.55% in fiscal Q2 2012, while the average yield on the Canadian 5-year Treasury bond was 1.54%. According to our calculations, for every 100 basis point decline in the 5-year Treasury yield, the Banks' net-interest margin will fall roughly 20 basis points. All else equal, a 1% drop in 5-year bond yields will result in a -15.6% impact on the banks' net income. Like the insurers, the persistence of low bond yields hurts their profit margins… and the more deposits the banks take on, the more they are inadvertently forced to participate in short-term bond auctions – thereby supporting the very market causing the margin compression in the first place. It's a vicious catch-22. CHART 2: CANADIAN BANKS' NET-INTEREST MARGINS TRENDING DOWN Correlation: 87% Source: Bloomberg, Big 6 Canadian Banks' Financial Reports. From a government perspective – especially governments like Germany who currently issue short-term debt for less than nothing, the current abundance of NIRP and ZIRP bond auctions represent a sweet irony. Here we are, on the interminable verge of collapse in Europe, and at a time when Western governments have never been more indebted, and bond investors are lining up to pay for the pleasure of owning their bond paper! It's actually quite ridiculous. But no matter how much pain the current low-to-no yield environment causes the rest of the financial industry, governments will not do anything to change their current set-up. No government is incentivized to proactively raise their bond auction yields for the sake of savers, and barring the surprise emergence of major inflation, no central bank would ever raise interest rates and risk curtailing their expensive efforts to foster growth through money-printing. The banks' continuing need for safe "collateral" means they'll buy government bonds at virtually any price, leaving the governments with a "captive" buyer for their bonds. It's almost perfect for the governments… and as it now stands, unless the banking system diversifies into different forms of AAA-collateral (like gold), or until we experience a default or major inflation – both clearly negative events, investors will be forced to survive with a AAA-bond market that pays absolutely nothing, just like Japanese investors have suffered through for the past twenty years. Under widespread NIRP, pensions, annuities, insurers, banks and ultimately all savers will suffer a slow but steady decline in real wealth over time. Just as ZIRP has stuck around since the early 2000's, NIRP may be here to stay for many years to come. Looking back at how much widespread damage ZIRP has caused since its introduction back in 2002, it's hard not to expect that negative interest rates will cause even more harm, and at a faster clip. In our view, NIRP represents the death knell for the financial system as we know it today. There are simply too many working parts of the financial industry that are directly impacted by negative rates, and as long as NIRP persists, they will be helplessly stuck suffering from its ill-effects. Although it's been a quiet summer for "hard assets" like gold and silver, this low-to-no rate environment should prove to be beneficial for them over time. The tide is definitely turning in their favour. Various bond commentators have recently come out in support of hard assets, including PIMCO's Bill Gross, who opined in his August month-end letter that, "Unfair as it may be, an investor should continue to expect an attempted inflationary solution in almost all developed economies over the next few years and even decades."12 NIRP and ZIRP are critical components of that solution, and are here to stay until something unpredictable disrupts the current relationship between the banks and government bond auctions. In our view, the factors that have led to the emergence of NIRP bond auctions are the same factors that will drive demand for physical gold in the coming months: savers have nowhere to go for a "safe" return. It's only a matter of time before they realize they've overlooked a unique financial asset that would perfectly suit their needs. When they do, we would strongly advise them to take delivery. a. Solvency position is equal to assets divided by liabilities.
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| Rule - Gold & Silver Spike & The Oil Quote May Skyrocket Posted: 22 Aug 2012 03:44 PM PDT  On the heels of the release of the Fed minutes and subsequent spike in gold and silver, today King World News interviewed one of the wealthiest and most street-smart pros in the business, Rick Rule. Rule told KWN that more stimulus is on the way and the oil quote may skyrocket.Rule, who is now part of Sprott Asset Management, also discussed the release of the Fed minutes: "Additional stimulus will be needed soon, according to many Federal Reserve policymakers, unless the economy shows signs of a durable pickup. I don't see any signs of a durable pickup, so I think they are signaling that there is going to be additional easing."
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| The Gold Price Dipped $2.50 Today Closing on the Comex at $1,637.40 Gold May Reach $1,680 by Friday Posted: 22 Aug 2012 03:22 PM PDT Gold Price Close Today : 1637.40 Change : -2.50 or -0.15% Silver Price Close Today : 29.549 Change : 0.128 or 0.44% Gold Silver Ratio Today : 55.413 Change : -0.326 or -0.58% Silver Gold Ratio Today : 0.01805 Change : 0.000106 or 0.59% Platinum Price Close Today : 1525.20 Change : 18.70 or 1.24% Palladium Price Close Today : 628.15 Change : 4.55 or 0.73% S&P 500 : 1,413.49 Change : 0.32 or 0.02% Dow In GOLD$ : $166.30 Change : $ (0.12) or -0.07% Dow in GOLD oz : 8.045 Change : -0.006 or -0.07% Dow in SILVER oz : 445.79 Change : -2.99 or -0.67% Dow Industrial : 13,172.76 Change : -30.82 or -0.23% US Dollar Index : 81.52 Change : -0.387 or -0.47% Wow. What is going on in the aftermarket? At Comex close the GOLD PRICE had dipped $2.50 to $1,637.40 and silver had risen only 12.8 cents to 2954.9c. But in the aftermarket gold is trading $1,654.60 and the SILVER PRICE 2982.5c. After rising $18.70 today, the PLATINUM PRICE has risen another $14. Ditto The PALLADIUM PRICE, It added $4.55 today and has floated up another $3.50. That little mouse-burp FOMC announcement isn't causing this. It's something else, I just can't see it yet. Never mind, there's a full head of steam in the gold and silver locomotives. Today's gold close looked cheesy, but I can allow for it backing off $1,640 resistance. That was a strong point, and so piercing that and running through $1,650, rising $17 in the aftermarket, carries a little whiff of buying panic. Add to that: the GOLD PRICE 200 DMA stands at $1,650.68, and the 150 DMA (which I watch closely) at $1,642.07. Gold's aftermarket surge has carried it through both those. Now the momentum traders and other vultures who chase every rising market will jump in, thanks to that 200 DMA crossover. Gold could easily reach $1,680 by Friday. I keep telling y'all, "Buy the breakouts!" I hope y'all are listening. Like I used to tell my children, "Don't make me go get a switch." Something about meditating on a switch VASTLY and suddenly improved their hearing acuity. Friends, y'all know what a "waterfall" looks like on a chart, when a market just falls and falls and falls day after day so that it looks like a cross section of Niagara? Well, play that video in reverse, suck that water up into the sky, and you'll get a near notion of what silver looks like the last six days. In three days it has hammered its way from below 2800c through all that thorny resistance at 2850, brushed that aside like Johnson grass, and punched through 2900 and now is challenging 3000c! It has risen from a 2748.8c low on 15 August to 2982.5c now, soaring 233.7 cents. If that constituteth not a breakout and rally, I plumb stumped what would. Buy silver. Not even the last FOMC meeting minutes hinting at a need for more inflation could boost stocks today. Indices were mixed, but all spent three-fourths of the day underwater, and the rises came after 2:30. Dow lost 30.82 (0.23%) to 13,172.76 while the S&P500 "rose" 0.32, if you can call that a rise, to 1,413.49. Stocks probably have one push up left before they hit the greased skids. US dollar index lost another 38.7 basis points today and is trading at 81.523. Dollar has fallen to the July low at 81.52, and stands below its 20 and 50 day moving averages (82.61 and 82.64). Momentum is dragging it like a junk yard magnet toward the 200 DMA (80.45). It has also breached the ascending fan line from the October 2011 low. If support kicketh not in here (at that July low), then the dollar index will drop to 81.16 at least, maybe 80.75. About 79.50, below the 200 DMA, lies some middling support at the grand trading channel's center. RSI and MACD point downward as well. 'Tain't accidental. Nothing accidental happens in currencies. Probably the US Nice Government Men propping up the euro for the ECB's NGM meeting early in September. It's working, as the euro is on a tear. Gapped up Tuesday above the prevailing downtrend line and gained again today, up 0.4% at $1.2523. On track to scale higher, but meets resistance at $1.2600 and $1.2700, not to mention the BIG downtrend line at $1.2750 today. Ye-ouch! Japanese yen pole-vaulted an astounding 0.93% to 127.33c (US$1=Y78.54). Oddly, this comes on news of a Japanese monthly trade deficit, pure kryptonite to the export- driven Japanese economy. Yen jumped clean through the 200, 50, and 20 DMAs all the way up to the downtrend line. Clearly the Japanese NGM need to get busy selling yen. I've been working on a book for the last sixteen years. Well, I've written on it every month for 16 years, chronicling my family's move from suburban Memphis to sub-rural Middle Tennessee, from townies to farmers. It's called "At Home in Dogwood Mudhole," and if it won't make you laugh, cry, and gasp, your face and heart and head are made of chert-rock. I mention it because the genuine genius graphic artist who is setting the book, making it beautiful as well as useful, told me today he'll be done next week. We could have books in our hands in a month, and the digital version sooner than that. I also mention it to whet y'all's appetites. We'll have a website up shortly, www.dogwoodmudhole.com. While I'm at it, I remind y'all that you can see Dogwood Mudhole for yourself at our Bodacious Hoedown on 1 September, complete with field games, barbecue feast, Old Time band The Georgia Crackers, and dancing. Free, but you must make reservations with my son, Justin, at On 22 August 1639 Madras, India was founded by the British East India Company on a sliver of land brought from local rulers. As the Indians found out, give those British an inch and they'll take the whole country. Ask the Indians in North America. In fact, on 22 August 1770 English Captain James Cook landed on the east coast of Australia and claimed the whole continent for England. Proved to be a great idea, as on 22 August 1851 gold fields were discovered there. 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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| The History Of The World's FX Regimes In One Infographic Posted: 22 Aug 2012 03:06 PM PDT The evolution of currency systems over the past two centuries, as it turns out, is far more exciting than is usually let on (think political thriller as opposed to economic textbook!). GoldMoney presents, in all its glory, the quixotic history of exchange-rate regimes from 1821 to the present day.
Alternatively, the infographic can be seen in one screen here
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| Gold Up, Stocks Up, Bonds Up, VIX Up; That Is All Posted: 22 Aug 2012 02:30 PM PDT The market was not exactly ecstatic at the FOMC minutes but certainly squeezed up off its pre-minutes lows to end very fractionally green (S&P small up, Dow down, NASDAQ up - thanks to AAPL's 2% gain - it's 7th in 3 month). Post-FOMC the QE-on trade was very clear - Treasury yields tumbled, stocks popped, USD weakened, and Gold soared. These were quite significant moves relative to recent ranges: Gold broke above its 200DMA - back to early May highs; Treasury yields dropped 10bps - biggest plunge in rates since start of June (as it bounces off its 200DMA). On the week, the NASDAQ is the only major US index in the green (+0.1%) while the Dow is down 0.78%. VIX ended above 15% - very fractionally green - as credit (spreads) underperformed - not participating in the last 45 minute ramp in stocks. In general, equity's strength was not accompanied by risk-assets following suit today - but the QE-on correlation regime is likely dominating that divergence (though we do note that TSY 2s10s30s and FX carry were not playing along at all in the equity strength) and while volume was better than last week, it was concentrated around the FOMC minutes and also into the close (with blocks coming through into the close) - another narrow range (10 S&P points) day. Gold broke above its 200DMA and trades back to May 2nd levels...
as it disconnected in a QE-on manner after the FOMC minutes...
with Treasury yields plunging their most in over 2 months...
with today's AAPL action leaving NASDAQ the only green index on the week...
as credit was not impressed with the late day action...
and with volatility up, credit underperforming, treasury yields down, and FX carry unmoved (even though USD weakened), it is no surprise that our arb and CONTEXT (risk asset) models were not playing along with this equity hope...
Charts: Bloomberg and Capital Context
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| Posted: 22 Aug 2012 02:28 PM PDT London Gold Market Report from Ben Traynor BullionVault Wednesday 22 August 2012, 07:15 EDT SPOT MARKET gold prices hit their highest level since early May Wednesday, rising to $1645 an ounce during this morning's London trading. Silver prices also gained, rising to $29.70 per ounce – their highest level since early June. By contrast, European stock markets ticked lower, while commodities were broadly flat and US Treasuries gained, ahead of the publication of Federal Reserve policy meeting minutes later today. A day earlier, gold prices jumped 1% in less than three hours Tuesday, hitting the top of the trading range that stretches back to May. "The break above resistance from $1624 to $1629 is bullish," say technical analysts at bullion bank Scotia Mocatta. "This area should now provide some support." "There is a stimulus premium built into gold of $30-$40, we believe," adds a note from ANZ. "If the Fed minutes prove more hawkish than market expectations, some of that prem...
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| Gold Seeker Closing Report: Gold and Silver Gain About 1% and 2% Posted: 22 Aug 2012 02:21 PM PDT Gold climbed to $1645.01 in Asia before it fell to see a slight loss at $1634.62 just before FOMC Minutes were released, but it then jumped to as high as $1655.70 in the last couple of hours of trade and ended with a gain of 1.04%. Silver rose to $29.638 in Asia before it fell back to about unchanged in London, but it then surged to as high as $29.91 in afternoon New York trade and ended with a gain of 1.91%.
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| "Rich White Guys With No Life" Posted: 22 Aug 2012 02:18 PM PDT August 22, 2012 [LIST] [*]From the government that brought you preventive war comes preventive custody... [*]How a gold dealer's Facebook posts have bought him (at least) 30 days in a psych ward: Jeffrey Tucker on why despite the chilling news you don't want to maintain a low digital profile [*]Iran rumors drive oil up $10 this month: How a different geopolitical crisis looming beneath the surface could steal the headlines soon [*]Waiting on the Fed (again)... Do-it-yourself pistols... A new bubble in the making (thanks to a government mandate, natch)... and more! [/LIST] "I'm currently in John Randolph in the psychiatric ward being held against my will," said Brandon Raub. "They were concerned about me calling for the arrest of government officials," the 26-year-old Marine veteran told the Richmond, Va., Times-Dispatch. Last Thursday, Raub was paid a visit by Chesterfield County police, the FBI and the Secret Service...
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| The Smart Money Can't Deny It Any Longer: Go Gold, Or Go Home. Posted: 22 Aug 2012 02:15 PM PDT Pimco Increases Gold Allocation From 10.5% To 11.5% In Commodity Fund Less than 1.5% of the globe's investable trillions of funds is parked in Gold and Silver. This is the opposite of what you could call a bubble. If that … Continue reading
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In the crazy times in which we live, it helps to expect the unexpected. Sometimes you can think that you have it all figured out and then this world can throw a real curveball at you. Very few people anticipated that we would see a massive outbreak of the West Nile Virus in Texas this year or that the Mississippi River would be in danger of drying up after experiencing historic flooding last year. Who would have thought that we would see the worst drought in more than 50 years or that horrific wildfires would burn nearly 7 million acres of land? This is why economic conditions are always so hard to predict. A single "black swan event" can come along and change everything almost overnight. Our world has become incredibly unstable, and so who really knows what the rest of 2012 will bring? Will we see a stock market crash? Will the hurricane season be unusually bad? Will war erupt in the Middle East? Will we see a major earthquake on the west coast or even a volcanic eruption? Will the upcoming election cause an eruption of anger and frustration in America? We don't know the answers to those questions yet, and the truth is that we will probably see some things happen that very few of us are anticipating at this point. 
Remember the last time you saw regular unleaded gasoline with a decimal before the numbers? You may likely have seen the last 15 handle on gold and 20 handle on silver.
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