Gold World News Flash

The Great Gold/Oil Price Flip
California’s Largest Refinery Explodes
Silver Update 8/06/12 Debtclock Delusion
This Is Why Gold & Oil May Explode Higher In August
If hyperinflation ahead gold to $10,000 – if deflation, $2,000
What Happens to the Gold World when Greece Exits the Eurozone
Europe's Beggars: Bluffing Their Way To Unity And Propserity Via Hijacking And Extortion
Another Market Breaks - Tokyo Stock Exchange Halts Derivative Trades
Silver Prices: When Schrödinger's Cat Jumps Out of Pandora's Box
Silver Price History: Helicopter Ben and the Silver COT
More support for CFTC Commissioner Chilton's work against market manipulation
Is a Strong Dollar Trouble for Gold?
Currency Wars: Move to Make Treasury's Geithner a Permanent Member of US National Security Council
CFTC Commissioner Bart Chilton Comments on the Silver Investigation
Rule - We’re At Risk Of A Spectacular Collapse Of Confidence
No Shame... Or Fear
Ignoring the Effects of 40 Years of Money Printing
The Silver and Gold Price have both Confirmed Their Breakouts Next Stop for Gold is $1,630
No Shame… Or Fear
Gold Still Confined to Triangle
Latest video
Premiums at low levels now for pre-1933 gold coins
Trading Program
News, Commentary & Analysis
Small Order Desk
Gold Seeker Closing Report: Gold and Silver Gain With Stocks
No Need to Feed the Gold Bull
Gold Daily and Silver Weekly Charts - More Confusion and Concerns at the Comex
Silver Prices: When SchrÃ¶dinger's Cat Jumps Out of Pandora's Box
Helicopter Ben and the Silver COT Report

The Great Gold/Oil Price Flip

Posted: 06 Aug 2012 11:44 PM PDT

Silverstockreport

California’s Largest Refinery Explodes

Posted: 06 Aug 2012 11:36 PM PDT

from Silver Doctors:

Chevron's Richmond refinery – the largest oil refinery in California at 244,000 barrels/day exploded tonight.

Officials are calling the disaster an immediate-extreme-health-hazard.

Beyond the obvious immediate human safety concerns, this is clearly an unexpected Black Swan that will have immediate major implications on the price of gasoline across the West Coast.

Gasoline will likely skyrocket across the (now ash colored) Golden State.

See Video @ Silver Doctors

Silver Update 8/06/12 Debtclock Delusion

Posted: 06 Aug 2012 10:48 PM PDT

from BrotherJohnf:

This Is Why Gold & Oil May Explode Higher In August

Posted: 06 Aug 2012 10:01 PM PDT

Today acclaimed commodity trader Dan Norcini told KWN, "One spark for gold may be at some point in August we begin to have rumors about what is going to happen at the Jackson Hole meeting. The first round of QE was announced during that Jackson Hole Summit in late 2008. So the upcoming meeting may wind up being very significant when it comes to which direction central planners are going to take."

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

If hyperinflation ahead gold to $10,000 – if deflation, $2,000

Posted: 06 Aug 2012 10:00 PM PDT

by Lawrence Williams, MineWeb.com

Jay Taylor feels we are in the gold bull market of a lifetime – but found himself gagged by BNN in a recent videoed interview in not being allowed to make any mention of GATA..

Jay Taylor, well-respected publisher of the miningstocks.com website and associated newsletter, makes some excellent points on the likely performance of what he calls the real price of gold (as opposed to the nominal price) and on gold stocks – on both of which he is extremely bullish. In part his premise relates to gold's history as a store of wealth which helps those who invest in it maintain their wealth in times of inflation or deflation, not necessarily to increase it hugely, except perhaps relative to those who put their faith in other investment options or just hold their wealth in cash.

What Taylor points out is that it is the maintenance of, or appreciation in, gold's purchasing power when all about it is descending into the abyss which is most important – particularly in these times of global financial turmoil from which the exit may yet be many years ahead – which is the key, rather than the ultimate price of gold itself.

Read More @ MineWeb.com

What Happens to the Gold World when Greece Exits the Eurozone

Posted: 06 Aug 2012 09:30 PM PDT

by Julian D. W. Phillips, Gold Seek:

Impact on the Eurozone and the Rest of the World

Should nations like Spain and Italy depart from the Eurozone we would see not a nation responsible for only 2% of the GDP of the Eurozone, but ones with a significant contribution [over 20%] to the GDP of the Eurozone. This would immediately force a Eurozone-wide appraisal of the value of the Eurozone itself. Two issues would be highlighted:

1. The Eurozone accounts for 40% of Germany's exports. These would suffer hurting Germany's export levels.

2. With the weak nations leaving the Eurozone, the value of the euro would rise tremendously as the overall Eurozone balance of payments would show a much stronger picture. This would hurt the export competitiveness of the Eurozone in international trade. A weak euro was perhaps the greatest benefit to Germany in particular that had to constantly wrestle with a strong Deutschmark before.

Read More @ GoldSeek.com

Europe's Beggars: Bluffing Their Way To Unity And Propserity Via Hijacking And Extortion

Posted: 06 Aug 2012 08:32 PM PDT

Ten days ago, when predicting what may and likely will be the outcome of the August ECB announcement, we said that it is virtually certain that it will follow in the trailblazing footsteps of what Mario Monti did at the June 29th meeting. To wit: "The bottom line here is that Draghi most likely pulled a Mario Monti (and his hanger on Mariano Rajoy), and spoke up before pre-clearing with Buba's Weidmann. Draghi thinks that, like Monti with Merkel at the June 29 summit, he can bluff the Bundesbank into submission, and Germany will agree to monetization, especially if markets have risen enough where nothing out of the ECB next week leads to a market plunge. The problem is that as we patiently explained, Monti got absolutely no concessions our of Merkel, as was seen in the bond yields of Spain after the June 29 summit." Sure enough, the market soared in the days after June 29 as well, giddy with optimism that Germany would never settle for being bullied publicly and had implicitly agreed with the Monti and Rajoy. Euphoria promptly turned to despair as it became quickly clear that Monti had bluffed without preclearing with Merkel and Buba. Fast forward one month, and what we expected to happen is precisely what did happen.

The WSJ explains.

During an all-night European summit in June, Mario Monti, the Italian Prime Minister, gave German Chancellor Angela Merkel an unexpected ultimatum: He would block all deals until she agreed to take action against Italy's and Spain's rising borrowing costs.

Ms. Merkel, who has held most of the euro's cards for the past two years, wasn't used to being put on the defensive.

"This is not helpful, Mario," Ms. Merkel warned, according to people present. Europe's leaders were gathered on the fifth-floor of the European Union's boxy glass headquarters in Brussels, about to break for dinner.

"I know," Italy's premier replied.

The nine-hour confrontation between Italy and Germany that night led to a compromise that wasn't the sweeping action Mr. Monti wanted. But it has helped pave the way for a possible intervention by the European Central Bank to stabilize the teetering bond markets of Italy and Spain—a high-risk step that could be Europe's last chance to save the euro.

The Italian-German conflict has also exposed a deep philosophical fissure at the heart of the euro zone: Are painful reforms and austerity in countries such as Italy and Spain enough to restore confidence in the common currency, as Germany has insisted? Or do they need Europe's collective financial support while they fix their economies, as Mr. Monti argues?

And therein lies the rub: Germany, which arguably got the long end of the Eurozone stick for a decade and now has the best economy (albeit rapidly deteriorating, which as we explained before is why the periphery's leverage is collapsing with every passing day), got the best deal of all European nations. As such, it is relatively easy for it to preach fiscal responsibility, reform and austerity: after all it itself does not have to succumb to what it preaches.

The periphery on the other hand, realizes that it is unable to engage in painful bouts of fiscal reform: by the time any one cycle is complete, the electorate will be so furious, the politicians in power will have been long swept away, replaced by socialists and other anti-austerians, who will undo everything that has been done (see France). Thus, for them the motivation of game theory is vastly different: short-term stop gap measures at all costs, while praying a Deus Ex Machina appears on the doorstep and fixes all problems. Naturally such a thing will never happen, but when it comes to the mechanism to provide short-term bridging, it is precisely the one that Germany is disinclined to pursue: the ECB's, and the threat of runaway inflation.

After all, recall that it was 4 short months ago that Europe saw all time record Brent high priced in EURs. All it will take for a continent-wide spike in inflation will be another LTRO, or some other ECB intervention.

Germany knows this, and it knows very well that from the periphery's point of view this form of Apres Moi, Le Deluge makes perfect sense, even if it means destroying the quiet, cozy lifestyle of 80 million Germans. It also knows that stopgap measures will achieve nothing, will not resolve Europe's fiscal problems, and that all such interim steps are for nothing.

What it also knows is that it is best to give the impression that the periphery has "won" if it means delaying the inevitable day of Eurozone unwind, even if it means losing face in the court of popular opinion if only for a week or two.

Because as we will not tire of saying, for Germany the only upside from now until the inevitable unwind, funded via Bundesbank's sunk TARGET2 liabilities to the tune of €1-2 billion/day, is to keep pressure on the EUR and see the European currency get weaker at any cost: after all boosting its private, export-driven sector is the only trade off Germany has to funding Europe's unrepayable current account deficits via public funds. Even if it means appearing to be bluffed out month after month by Europe's beggars who are now consistently choosers.

Neither Monti, nor Draghi grasp, that even in a game of Mutually Assured Destruction, ultimately he who has the gold, and the best prospects for survival at Day T+1 is who orders the music.

Sure enough:

Last week, ECB President Mario Draghi disappointed markets' hopes that the bank would act right away. But he said the ECB "may" soon buy bonds of crisis-hit countries that meet certain conditions established by European authorities.

"If I were Draghi, I would feel morally and politically protected in making bold moves at the right moment," thanks to the June 28 summit outcome, Mr. Monti said in an interview soon after the summit. In a conversation on Monday, Mr. Monti described Mr. Draghi's comments last week as a "bold move" that is starting to define the "operational terms" of the late-June summit.

Mr. Monti didn't comment on Mr. Draghi's condition for ECB aid—that Italy and Spain first apply for bond-market support from Europe's bailout fund and sign a list of economic-policy promises. Such a move could be politically risky for Rome and Madrid, since it would likely be construed as tantamount to a loss of national sovereignty.

Monti's assessment of the situation is precisely what we said would happen back in May of 2010 with the first Greek bailout: soon everyone would realize that they can push Germany until the breaking point, but not any further.

"What we ask is that European authorities certify Italy's good conduct by translating that into interventions to keep spreads within reasonable limits. I have often told Merkel that, if this isn't done, she risks finding herself before an Italian parliament that repudiates Europe, monetary stability and the euro and is not friendly toward Germany," he said.

And as we showed over the weekend that breaking point may be arriving faster than anyone expected:

Ms. Merkel, through her spokesman, declined to comment for this article. Yet senior German officials admit Mr. Monti has a point. Investors are fleeing Italian and Spanish debt, even though Rome and Madrid are shaking up their economies. That means Europe needs to do more to help its two large Southern members. But the cautious chancellor fears massive bond-market intervention could trigger a political backlash in Germany—and might not work, according to people familiar with her thinking.

The cognitive bias got so bad even Obama got involved:

Contrary to the bailout fund's present rules, Mr. Monti didn't want Rome and Madrid to suffer the stigma of applying formally for aid or signing a list of policy demands written in Brussels, fearing this would undermine his public standing at home, as well that of his ally, Spain's premier Mariano Rajoy.

At a late-night discussion in Mexico with key European leaders, U.S. President Barack Obama supported Mr. Monti's plan, according to people present. But Ms. Merkel dismissed the idea. Over the past two years, she had justified financial help for other euro nations to skeptical German voters by promising there would be a quid pro quo of tough, internationally supervised reforms. Now Italy wanted Germany's money with no strings attached.

Mr. Obama couldn't talk the euro-zone leaders into agreeing.

Mr. Monti didn't give up.

Here, as we showed over the weekend, is where the weakest link of the ECB plan is: it will mandate that Spain and Italy throw in the towel sooner or alter, and demand a bailout. Because the central planners' attempts to make discounting future events irrelevant and offset purely by loud speeches and even louder promises is doomed to failure.

Yet the events of the evening of June 29 is precisely why not only the ECB, but the entire European experiment will fail:

The evening before the meeting, Mr. Monti hatched a plan to hijack the summit. Unless Ms. Merkel accepted his proposal on bond-market intervention by Europe's bailout fund, Mr. Monti would veto the growth pact—stymieing Ms. Merkel in her parliament.

Italy had previously lobbied for the growth pact, so Mr. Monti's threatened veto—announced just before Europe's leaders were due to sit down for dinner—was a bombshell.

"But we need this result this evening," Danish Prime Minister Helle Thorning-Schmidt said about the growth pact. "This is a dark moment," EU Commission President José Manuel Barroso said.

The summit was at an impasse. French President François Hollande briefed reporters on the closed-door events, adding that he sympathized with Mr. Monti's stance.

Mr. Monti's blockade lasted until 4 a.m., when leaders finally agreed to a text hashed out by their aides. It promised that Europe's bailout funds would be used "in a flexible and efficient matter" to stabilize the bond markets of vulnerable euro members.

It didn't go as far as Mr. Monti had originally wanted: Italy and Spain would still have to apply for any aid and sign a policy memorandum. But by planting the need to stabilize bond markets in the declaration, Italy had convinced Germany to recognize Italian reform efforts and pushed its approach for tackling the crisis into the spotlight.

We have bolded the key word above: "hijack." That word makes total mockery and sheer irony out what is now the biggest oxymoron in existence: European Union. Because one can not hijack a union. One can not force, bluff or otherwise intimidate borderline willing partners who rightfully believe they are being taken advantage of into submission. It just doesn't work : it certainly didn't work then...

Markets weren't fooled for long. Italy's borrowing costs rose to as high as 6.6% in late July, in new signs that investor demand for Italian debt was shriveling. Skeptical investors know the euro zone's bailout funds aren't big enough to prop up Italy's huge bond market on their own.

...And it won't work this time. Only it will be Monti's this time oddly prescient words that will finally release Europe from the shackles of an experiment that is becoming hated everywhere, both at the core and the periphery:

"I have no doubt that the night before the disintegration of the euro, the ECB will do whatever is necessary to save it," Mr. Monti says. "The question is: Do we need to get to the night before?"

Goldman's alumni Mario Draghi and Mario Monti certainly feel the answer is no. After all there are bonuses for Goldman partners that can be paid only if there is visibility into the future. For Germany, the answer was, is, and will be a resounding yes as explained. The only problem is that, just like Hank Paulson showed, when the time to actually commit and act, the ECB's action of "whatever is necessary" will be proven completely and utterly hollow and futile.

It will also be the moment of Europe's salvation through fire: because after several years of acute pain, an entire continent full of "Icelands" will be reborn, even as America continues to stick its head ever deeper into the sand of denial.

Another Market Breaks - Tokyo Stock Exchange Halts Derivative Trades

Posted: 06 Aug 2012 06:46 PM PDT

Earlier today the Spanish stock exchange was down for nearly 5 hours - the reason is unclear: perhaps as a form of precrime punishment to all those felons who would even consider selling stocks in the future. Now, the SkyNet self-awareness wave goes East just as Japan opens and takes down all Tokyo derivative trading:

Tokyo Stock Exchange Stops Derivative Trades, Cites System Error - BBG
Tokyo Stock Exchange Group stopped trading of Topix futures, JGB futures and options from around
9:20 a.m. because of a systems error.
Co. spokesman Naoya Takahashi spoke in phone interview

In the aftermath a series of events such as the FaceBook IPO collapse, Knight, IBEX, this was only logical and expected. Tomorrow, any stock market that even thinks of a red candle will be halted indefinitely.

Silver Prices: When Schrödinger's Cat Jumps Out of Pandora's Box

Posted: 06 Aug 2012 05:01 PM PDT

Although silver is traded as a commodity, it is also a form of money. You only have to go back less than a hundred years in the long span of human history to discover that silver once circulated widely as currency, typically in the form of silver coins. In fact, the UK's paper currency the Pound Sterling originally obtained its name from the British currency that once represented the value of one pound of sterling silver, which is a mixed metal that consists of more than 92.5 percent pure silver. Furthermore, as you look closely at the supply and demand profile for silver, the issue of its monetary status seems increasingly important. Silver's Supply and Demand Profile Make it an Attractive Store of Wealth All the silver ever mined that is currently available for use is known as the stock of silver, while the yearly amount of silver mined is known as its flow. Silver has a relatively high stock to flow ratio compared to other commodities, as does gold. This means t...

Silver Price History: Helicopter Ben and the Silver COT

Posted: 06 Aug 2012 05:01 PM PDT

Sadly, when it comes to precious metals investing, no entity seems as important as the Federal Reserve. The Federal Reserve sets U.S. monetary policy, which has a direct impact on the purchasing power of the U.S. Dollar. This central bank has virtually complete control over inflation in the United States, and hence it can strongly influence the future price of your metals. Ben's Great Depression Philosophy: To Print or Not to Print? Of all the big-government Keynesians who have chaired the Federal Reserve, none seem as trigger-happy with monetary policy as the current Fed Chairman Ben Bernanke. Despite the relatively stable interest rate outcome of this week's FOMC meeting, at some point the Fed will need to do something to keep the debt ridden U.S. financial system going. The central bank literally needs to entice money to flow towards Treasury bonds. Furthermore, if the market and its investors are kept happy, then the price of all commodities will te...

More support for CFTC Commissioner Chilton's work against market manipulation

Posted: 06 Aug 2012 05:00 PM PDT

6:51p ET Monday, August 6, 2012

Dear Friend of GATA and Gold:

More support for U.S. Commodity Futures Trading Commission member Bart Chilton comes tonight from financial writer Christopher Barker, who observes that suspicion of U.S. government manipulation of the gold and silver markets is growing throughout the world. Barker's commentary is headlined "CFTC Commissioner Bart Chilton Comments on the Silver Investigation" and it's posted at the Motley Fool here:

http://www.fool.com/investing/general/2012/08/06/cftc-commissioner-bart-...

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

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Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment:
38% Pre-Tax IRR, $3.0 Billion NPV, and a 37-Year Mine Life

Company Press Release

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory.

The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57.

The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows:

Payback period: 3.55 years
Initial capital investment: $863 million
IRR pre-tax (100% equity): 38 percent
NPV pre-tax (8% discount): $3 billion
Mine life: 37 years
Total mill feed: 405.3 million tonnes
Mill throughput: 32,000 tonnes per day

Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics."

For the complete press release, please visit:

http://prophecyplat.com/news_2012_june18_prophecy_platinum_announces_res...

Join GATA here:

Toronto Resource Investment Conference
Thursday-Friday, September 27-28, 2012
Toronto Sheraton Centre Hotel
Toronto, Ontario, Canada
http://www.cambridgehouse.com/event/toronto-resource-investment-conferen...

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Wednesday-Saturday, October 24-27, 2012
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http://www.neworleansconference.com/

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Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters

From a Company Press Release
November 22, 2011

VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.

"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."

Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.

For the company's complete press release, please visit:

http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf

Is a Strong Dollar Trouble for Gold?

Posted: 06 Aug 2012 04:57 PM PDT

By Vedran Vuk | Casey Research You've probably heard that a strong dollar means weaker gold prices. Yet anyone who has been watching the markets closely knows that "strong dollar = weak gold" isn't exactly true. Sometimes, when the dollar strengthens, gold will fall. Other times it will stay flat or can even rise. So [...]

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

Currency Wars: Move to Make Treasury's Geithner a Permanent Member of US National Security Council

Posted: 06 Aug 2012 04:49 PM PDT

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

CFTC Commissioner Bart Chilton Comments on the Silver Investigation

Posted: 06 Aug 2012 04:10 PM PDT

"The Financial Times report related to silver is not only premature, but inaccurate in several respects." - Bart Chilton, CFTC Commissioner.

Christopher Barker for the Motley Fool writes: "Over the weekend, London's Financial Times dispatched some stunning news to silver investors awaiting the conclusion of a four-year investigation into allegations of silver price manipulation.

The article, entitled "Four-Year Silver Probe Set to be Dropped," reported that the investigation "looks increasingly likely to be dropped after US regulators failed to find enough evidence to support a legal case." If the report were to prove correct, this would represent a crushing blow to commodity investors like myself that have become quite convinced after a thorough review of the facts that the markets for silver and gold have been subjected to highly effective campaigns of deliberate price manipulation.

On Monday morning, I reached out to Commissioner Bart Chilton of the U.S. Commodity Futures Trading Commission for comment. Addressing the report that his agency will likely drop the investigation with no charges filed, Chilton countered: "The Financial Times report related to silver is not only premature, but inaccurate in several respects." – Barker's piece continues at the link below.

Source: Motley Fool via Daily Finance
http://www.dailyfinance.com/2012/08/06/cftc-commissioner-bart-chilton-comments-on-the-sil/

Rule - We’re At Risk Of A Spectacular Collapse Of Confidence

Posted: 06 Aug 2012 03:57 PM PDT

With virtually all markets trading higher today, King World News interviewed one of the wealthiest and most street-smart pros in the business, Rick Rule. Rule told KWN we are now at risk of, "... a spectacular collapse of confidence, circa 2008."

Rule, who is now part of Sprott Asset Management, discussed the enormous problems the West faces. He also spoke about what investors should be doing with their money in this environment, but first, here is what he had to say about the problems the West faces: "We have a serious issue in the United States. At the federal level, the shortfall in the US is $85 trillion and that doesn't include state and local debt. They are trying to deal with this issue by pumping money into the system."

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

No Shame... Or Fear

Posted: 06 Aug 2012 03:39 PM PDT

[LIST] [*]A "palpable lack of elite fear": Why powerful interest groups are unafraid as they "extract" wealth from the citizenry... and what you can still do about it [*]"Worthless and likely misleading": Why the latest unemployment numbers are even more gamed than before [*]Gold keeps a floor at $1,600: The buyer who keeps showing up as the metal touches key level [*]Reader wonders what's so "absurd" about income tax on Olympic winnings... the bald contingent takes umbrage at our characterization of corruption... Jeffrey Tucker's frustrations with The Dark Knight... and more! [/LIST] "We've got a real problem! This is a mathematical fact! Tens of trillions of dollars are being extracted from the United States of America." One year ago this week, [I]The 5[/I] gave space to an epic rant/meltdown by MSNBC host Dylan Ratigan. He described the "extraction" process thus: "An entire integrated system -- financial system, trading system, t...

Ignoring the Effects of 40 Years of Money Printing

Posted: 06 Aug 2012 03:10 PM PDT

Here's some great news for all of our pot-smoking Daily Reckoning readers! A recently-concluded study by researchers at the University of Alabama at Birmingham determined that one marijuana joint per week for 49 years does no harm to lungs!

But even though five decades of pot-smoking causes no meaningful lung damage; it can cause plenty of damage to one's potato chip budget. What's more, a large percentage of the folks participating in this study could no longer recall what a lung was. "It's that marijuana-inhaling thing, right?" one participant responded when pressed to describe a lung's purpose.

Kidding.

The important take-away here is that 50 years of cannabis inhalation is not necessarily healthy, just because a five-decade pothead is still able to draw smoke through a bong. For the sake of metaphor, we'll call 50 years of pot-smoking a "bad habit." Like most long-term bad habits, the consequences unfold unevenly and sporadically. And often the consequences unfold so slowly that you barely notice them at all.

The US Treasury has been printing paper dollars, backed by nothing but paper and ink, for more than 40 years. That's a bad habit. And yet, the greenback is still with us and it is still the reserve currency. So it looks like this particular bad habit has produced no harm. And that is absolutely true, provided you don't mind paying $4.33 for the same Big Mac that cost 50 cents in 1971.

That's right, the price of a Big Mac has soared 866% since the year President Nixon severed the dollar's convertibility into gold. Your California editor ate a Big Mac yesterday and it was very good, but not 866% better than the Big Mac he used to eat after his Little League games in 1971.

"We live in a technological golden age," asserts Jim Grant, editor of Grant's Interest Rate Observer, "but in a monetary and fiscal Dark Age…Science and technology may hurtle forward, but money and banking race backward."

The proof of Grant's assertion: A 1971-vintage dollar has lost an astonishing 88.5% of its value. That's a bad habit. Revoking Constitutional rights is also a bad habit. So is fanning class warfare. So is militarizing local police departments. So is expanding the role of government in the private sector. So is manipulating interest rates in the name of "monetary policy."

Incredibly, all of these bad habits are unfolding at the same time. Right now. Right before our eyes. And yet, our national "lung function" feels entirely normal. So does our eyesight and our hearing and every other vital sign. We feel completely healthy…even as we are becoming terminally ill.

But these bad habits — these incremental changes for the worse — produce their bad consequences so slowly that almost no one will notice them…until it is too late to prevent them. No one knows, of course, the exact date that "too late" might arrive. But according to the research of Peter Turchin, the US is drawing near to an ominous timeframe.

Specifically, Turchin says the United States is approaching a period of violent upheaval. He bases his prediction on a field of study called, "cliodynamics," which identifies significant behavioral patterns in a nation's history. US behavior, according to Turchin, operates on a 50-year pattern.

Turchin did not pull the 50-year number out of the air. He compiled copious historical data about major violent incidents in US history between 1780 and 2010 and concluded that a cycle of violence repeats itself every 50 years in America.

"Circa 1870, the North fought the South in the Civil War," livescience.com explains. "Half a century later, around 1920, worker unrest, racial tensions and anti-Communist sentiment caused another nationwide upsurge of violence. Then, 50 years later, the Vietnam War and Civil Rights Movement triggered a third peak in violent political, social and racial conflict.

"Why 50-year cycles?" livescience.com asks. "After a period of sustained violence, [Turchin explains], citizens begin to 'yearn for the return of stability and an end to fighting.'…The prevailing social mood swings toward stifling the violence at all costs, and those who directly experienced the civil violence maintain the peace for about a human generation — 20 or 30 years. But the stability doesn't last. Eventually, 'the conflict-scarred generation dies off or retires, and a new cohort arises.'…As a result, periods of intense conflict tend to recur with a period of roughly two generations (40-60 years)."

"My model suggests," says Turchin, "that the next [peak in violence] will be worse than the one in 1970 because demographic variables such as wages, standards of living and a number of measures of intra-elite confrontation are all much worse this time…After the last eight years or so, notice how the discourse in our political class has become fragmented. It's really unprecedented for the last 100 years. So basically by all measures, there are social pressures for instability that are much worse than 50 years ago."

But there's a silver lining to all this: After the next worse-then-ever peak in civil upheaval, we are supposed to get a 50-year break until the next one. For some folks, that'll mean 50 years of hassle-free pot-smoking.

Eric Fry
for The Daily Reckoning

Ignoring the Effects of 40 Years of Money Printing originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".

The Silver and Gold Price have both Confirmed Their Breakouts Next Stop for Gold is $1,630

Posted: 06 Aug 2012 03:10 PM PDT

Gold Price Close Today : 1612.90
Change : 6.90 or 0.43%

Silver Price Close Today : 2785.2
Change : 6.2 or 0.22%

Gold Silver Ratio Today : 57.910
Change : 0.119 or 0.21%

Silver Gold Ratio Today : 0.01727
Change : -0.000036 or -0.21%

Platinum Price Close Today : 1400.40
Change : 3.50 or 0.25%

Palladium Price Close Today : 578.85
Change : 5.55 or 0.97%

S&P 500 : 1,394.28
Change : 3.29 or 0.24%

Dow In GOLD$ : $168.14
Change : $ (0.41) or -0.24%

Dow in GOLD oz : 8.134
Change : -0.020 or -0.24%

Dow in SILVER oz : 471.02
Change : -0.23 or -0.05%

Dow Industrial : 13,118.87
Change : 22.70 or 0.17%

US Dollar Index : 82.24
Change : -0.140 or -0.17%

The GOLD PRICE made good its escape once again from its even-sided triangle prison and distanced itself from the 20 and 50 day moving averages ($1,593.53 and $1,594.82). High only reached $1,615.20, but no shame or fret in that. The GOLD PRICE will next tap on $1,625 - $1,630 gate, and bull its way through. Maybe this week, although expect no great speed of advance during the rest of August. Probably will unfold slowly, but 'tis advancing.

The SILVER PRICE also closed above its triangle, confirming that the declines last week were merely silver (and gold) turning for the final kiss good buy, confirming their breakouts.

Nobody is interested in the SILVER and GOLD PRICE right now, which offers canny buyers the chance to accumulate before the power rally begins. Do it now.

Clearly, stocks are aiming to move higher, and will surely test the May highs. None of this changes the bearish outlook -- 'twill only increase the eventual mourning, wailing, and tooth gnashing.

Dow today clambered up a tiny but symbolically potent 22.7 (0.17%) to close at 13,118.87. S&P500 snatched back a little change, 3.29 (0.24%) to reach 1,394.28.

Precisely now dawns the day when you must steel yourself and stuff your ears with cotton against the siren song coming out of Wall Street. Rope yourself to the mast like Ulysses, if you must, but heed not their song, or woe untold awaits you!

Dollar index retreated again today, 14 basis points or 0.18% to lodge with its back against the wall at 82.235. Euro gained 0.13% to $1.2404, exactly as the central bankers might wish.

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.

No Shame… Or Fear

Posted: 06 Aug 2012 03:08 PM PDT

August 6, 2012

A "palpable lack of elite fear": Why powerful interest groups are unafraid as they "extract" wealth from the citizenry… and what you can still do about it
"Worthless and likely misleading": Why the latest unemployment numbers are even more gamed than before
Gold keeps a floor at $1,600: The buyer who keeps showing up as the metal touches key level
Reader wonders what's so "absurd" about income tax on Olympic winnings… the bald contingent takes umbrage at our characterization of corruption… Jeffrey Tucker's frustrations with The Dark Knight… and more!

"We've got a real problem! This is a mathematical fact! Tens of trillions of dollars are being extracted from the United States of America."

One year ago this week, The 5 gave space to an epic rant/meltdown by MSNBC host Dylan Ratigan. He described the "extraction" process thus: "An entire integrated system — financial system, trading system, taxing system — that was created by both parties over a period of two decades is at work on our entire country right now."

We weren't sure exactly what he meant. "From the context," Addison suggested, "we believe he means a class of financial engineers intentionally stripping the productive classes of their remaining assets." That's you.

Mr. Ratigan has left the ranks of TV punditry to tour the country and meet with people he says are solving their problems on the local level. "I'm done with the fighting," he said in an interview two months ago. "As long as we engage in a fight with the central government over who the king is going to be, then the status quo corrupt operational machine retains all the power."

An intriguing thought, one that no doubt will be better for his mental and cardiac health… but it leaves us still wrestling with this "extraction" theme — which has grown and grown in the year since Ratigan became a brief YouTube sensation.

"Great empires, such as the Roman and British, were extractive," the economist Paul Craig Roberts observed last spring. "The empires succeeded, because the value of the resources and wealth extracted from conquered lands exceeded the value of conquest and governance."

In contrast, "Washington's empire extracts resources from the American people for the benefit of the few powerful interest groups that rule America… The U.S. Constitution has been extracted in the interests of the Security State, and Americans' incomes have been redirected to the pockets of the 1%."

"To grow, the American Empire is always looking to inflate the next bubble," wrote Addison in a recent issue of Apogee Advisory, expanding on the theme.

"These serial bubbles each have the effect of 'extracting' wealth from the citizens — in the form of bigger mortgages, heftier credit card statements and stuffed stock portfolios. The 'extracted' money is, over time, passed from the wallets of citizens to the pockets of the well connected."

You'd think the "powerful interest groups" would be afraid — whether of the Tea Party, the Occupy movement, whatever.

But no: The civil liberties blogger and former constitutional litigator Glenn Greenwald speaks of a "palpable lack of elite fear."

"Even in the wake of the oligarch-caused 2008 financial crisis that has spawned extreme levels of sustained suffering around the globe," he writes, "and even as social unrest emerges in several places in the Western world as a result of this insecurity and sense of outrage and betrayal, the American elite class still seems remarkably free of any such fear.

"Their ability to rope themselves off from the society they are degrading, combined with the paramilitarization of domestic police forces… and the rapidly increasing domestic powers of surveillance and detention… have convinced them, I think, that they need not fear any protest movements or social unrest, that America can and will become more and more of a police state to suppress it."

This leaves you in quite the bind. We heard many "extraction" concerns when carrying out our Project X survey last fall.

"I am worried," wrote one reader, "about another bank holiday that might just last more than we could care for, along also with the seizing (confiscation) of any physical gold citizens might hold."

"I fear inevitable inflation as a result of printing money will erode the value of my retirement plans," said another. "And I also worry about the government confiscating my 401(k) and IRAs and setting up 'guaranteed government annuities.'"

In three recent Apogee issues, Addison has gone beyond the usual stock-pick-of-the-month format to explore ways you can steer clear of Washington's extraction culture…

Two warning signs to watch for if you worry about government confiscating your retirement account…
Health care alternatives that operate outside the government-hospital-insurance cartel at much lower prices…
Companies to avoid as the bubble in higher education gets closer and closer to collapse.

As you can see, the archive of back issues is a terrific value by itself. Meanwhile, future issues — as well as a package of special reports that go to new subscribers as soon as they sign up — can help protect you against what Bill Bonner calls "the fattest, juiciest financial bubble that's ever existed." It is also the ultimate scheme to extract the wealth you still have in your hands.

Bill and Addison lay out the dangers… and the opportunities… in this video presentation.

Stocks are adding to Friday's gains. The S&P is within three points of 1,400.

The greenback begins a new week sinking toward a one-month low. At last check, the dollar index sits at 82.4.

It takes $1.239 to equal one euro this morning, and 1.0009 Canadian dollars to equal one U.S. dollar.

"The USDCAD reflects two main fundamental forces," says Abe Cofnas, introducing this week's "mock trade."

"First is expected global growth. More growth expectations lead to higher oil prices, and this benefits the USDCAD. Also expectations on the U.S. economy. Since Canada exports about 80% to the U.S., what happens in the U.S. is important to Canada.

"The recent price patterns show a strengthening Canadian dollar against the U.S. dollar. This pattern has had a bit of zigzag , which is expected. But the play this week is to bet that nothing much really changes and we can make money from both sides."

demonstartion

So… Abe's counting on the USDCAD to end the week higher than 0.9875… but lower than 1.0125. The first leg of this two-leg trade has the potential to deliver more than 11% by Friday. The other leg has more than 8% potential. "We can't be wrong in both trades," Abe explains, "and we have a great chance of getting income from both sides!" Stay tuned…

"The July employment and unemployment," writes John Williams at ShadowStats.com, "were worthless and likely misleading."

The 163,000 new jobs and unemployment rate of 8.3%? "Reporting of month-to-month changes in both payroll employment and the unemployment series is of such poor quality that the headline labor data have become worthless as indicators of current economic activity."

The Bureau of Labor Statistics applied new standards to the July numbers, but didn't bother to explain how those standards would have changed the previous months' numbers. The BLS said it took this course "to avoid confusing data users," thereby insulting the intelligence of — well, everyone who looks at the agency's figures.

So the increase in the U-3 unemployment rate from 8.2% to 8.3% "was not necessarily so," Mr. Williams writes. "Against the June unemployment rate that had been revised internally by the BLS, so as to be consistent with the July reporting, headline July unemployment could have shown an actual 0.2 percentage point, or more, increase; it could have been unchanged; or it could have declined.

"Only the BLS knows what the actual change was, and it will not publish a hard number, on a consistent basis, until after the election." Ugh.

Consistent with Mr. Williams' findings, The 5's future coverage of unemployment numbers will focus less on the month-to-month change and more on the longer-term trend…

Gold is inching up as a new week begins. At last check, the bid was $1,610. Silver's moving up too, to $27.87.

Once again, no end in sight to China's epic gold-buying binge.

Gold imports via Hong Kong totaled 67.7 metric tons in June — down 10% from May, but up sixfold from a year earlier…

6 fold

Thus, in the first half of 2012, China imported 380 metric tons of gold from Hong Kong compared with a mere 62 in the same period a year ago. "The gold story is still intact in China," says Nick Trevethan, senior commodity strategist at Singapore-based ANZ.

"I don't see what is 'absurd' about taxing Olympic prizes," a reader writes after our absurdity episode Friday. "Such prizes are without question the equivalent of prize money awarded in a game of chance or earnings from physical and intellectual effort, both of which have always been taxable as ordinary income.

"But we don't need to shed any tears for the well-deserving athletes. I doubt there is a single winner who hasn't spent more than the amount of their winnings in preparation and training costs over the years leading up to their victory. As all those costs are deductions, there is probably not a single athlete who will ever pay a dime in tax for their prize money or their medals.

"But hey, why spoil another opportunity to disparage our system of tax collection? Even though it is the only mechanism we have of forcing today's citizens to pay for the government services they demand, it seems that your philosophy is to kick it whenever you get a chance. After all, it is only my children who will have to pay for the government benefits you receive today."

The 5: "You might have a point," Addison quips via IM, "if we actually had a say in what, if any, government benefits we receive."

"I just immediately assumed Goldman Sachs' investing in jails was a new intern program," writes another reader about a different absurdity.

"After all, what better place to find those with an aptitude for their line of work? No recidivism, because they'll have a job at BS when the get out. And it pays so much better."

time "On behalf of all the bald-headed men who read The 5, I object to the phrase 'the bald corruption of Wall Street' in Friday's missive.

"I am 99 44/100% sure that Wall Street corruption is not restricted to those who are follicly challenged; in fact, like most hierarchies, including most major corporations, I'm sure Wall Street firms seek out tall guys with great hair, confusing altitude with aptitude. Or perhaps they like people with air between the ears and hair above them."

The 5: Judging by the two most visible CEOs in the sector, we'd say the proposition cancels out…

CEOs

time "OK, I know I write a lot," writes one of our regulars, "but you guys just gotta publish this one.

"Another hilarious take on the police state from The Onion. Dislike privacy? Want the world to know about your hemorrhoids — or the fact that you can't spell the word? Have an enlarged prostate and the TSA missed it? Did your local drone miss you picking your nose the other day? Well, it's all solved here!"

The 5: OK, we'll bite today… but only because we're aware that some people who don't recognize it's from The Onion are passing it around as if it's for real.

In the present age, that's the most reliable yardstick of effective satire, no?

time "Just wanted to let you know I appreciate The 5," writes a complimentary reader. "I especially think that Abe Cofnas' weekly predictions are fascinating, especially how they dovetail nicely with all the rest of your informational tidbits.

"It has made me more aware of events and educated me on perhaps why markets do what they do. I hope to see Abe's predictions going forward."

The 5: Abe's "mock trades" are a weekly feature; we'll always introduce a new one on Monday and tell you how it worked out on Friday.

Last week's was a textbook trade — a bet that Dow futures would end the week above 12,775. It was good for a 12.9% payoff… and, as always in the market Abe follows, in four days. To learn more about this one-of-a-kind market and how to use it for fast one-week gains, give this a look.

Cheers,

Dave Gonigam

The 5 Min. Forecast

P.S. "It's not a stretch," reads a recent piece in New York magazine, "to say many residents of Park Avenue harbor vivid fears of a populist revolt like the one seen in The Dark Knight Rises, in which they cower miserably under their sideboards while ragged hordes plunder the silver."

As we saw above, the elites aren't nearly as afraid of the rabble as the movie depicts… and the movie has other issues, says Laissez Faire Books' Jeffrey Tucker. "The film gives Gotham (and us) a choice between two forms of despotism, one 'left wing' and one 'right wing,' and asks us to choose the lesser of two evils."

Jeffrey links one of the film's most arresting images to our own real-life quandary in this thought-provoking review.

Gold Still Confined to Triangle

Posted: 06 Aug 2012 03:05 PM PDT

courtesy of DailyFX.com August 06, 2012 12:59 PM Daily Bars Prepared by Jamie Saettele, CMT After breaking the triangle pattern, gold has dropped well into its former range. Other than calling this a range, there really is no reason to waste time trying to figure out where this market is headed next. In fact, one can make the argument that the triangle remains underway (latest top composing wave C), in which case this market will get even more frustrating to follow over the next few months. LEVELS: 1569 1578 1584 1596 1610 1618...

Save Your ASSets First

Tuesday, August 7, 2012

Gold World News Flash

Gold World News Flash

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