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Saturday, August 25, 2012

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Gold World News Flash 2

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3 Reasons Why China Wants Its Citizens To Own Precious Metals

Posted: 25 Aug 2012 08:26 AM PDT

By Jeffrey Lewis:

Due to China's huge size, its developing economy is having a growing influence on the global economic system. One commodity that has been particularly strongly affected by Chinese popular demand is silver, as well as other precious metals like gold.

Not only has the Chinese government been moving toward holding precious metals in reserve as an alternative to paper currencies like the U.S. Dollar, it has also recently encouraged its citizens to own precious metals as a way to store their wealth in a valuable physical asset.

The following sections will discuss at least three reasons which come to mind that may be behind this official Chinese policy switch.

Reason #1: Controlling Inflation as the Chinese Economy Lands

Monetary policy is often aimed at keeping the population at ease, 'as they ease'. To help ensure a soft landing for the Chinese economy means assuming an inflationary monetary policy.

Contrary to


Complete Story »

Small Caps Ready to Surge?

Posted: 25 Aug 2012 07:17 AM PDT

Weekend Report- Small Caps ready to Surge?

David Banister Aug 25, 2012 www.markettrendforecast.com

The SP 500 has been in a quiet choppy climb since the early June lows, and seemingly on path for another rally as recently outlined in our updates.  The small cap growth stock index has lagged the large cap stocks since January of this year, but may soon re-take the reins to the upside. In addition to that, the NYSE short Interest ratio is attacking 5 year highs, which means alot of investors are betting against this market. The market continues to climb the wall of worry however, and a record number of dollars have been flowing out of stocks and into Bonds and Bond funds.  This may smell trouble for the Bond investors and opportunity for the small cap investor at least over the coming weeks at a minimum.

To wit, if you review the chart below you will see that we have formed a potentially bullish pattern since April. A wide and deep base, often referred to as a "Reverse Head and Shoulder" pattern seems to be forming.  The right side of the shoulder has been forming over the past 7-8 weeks and at the same time creating the classic "Cup with Handle" formation.

The current pullback or "Handle" pattern over the last 4 or so trading days is what often leads to another surge upwards in prices.  Near term investors can look for the IWM ETF as outlined in our chart this weekend to potentially rally upwards and challenge the 84 area from the 80-81 ranges.  Given the two bullish base building patterns and the relative under-performance this calendar year  vs. the big cap stocks, it may be time to take a swing at the small caps with appropriate stops in place.

Consider taking advantage of our 33% coupon offer by going to www.markettrendforecast.com and/or signing up for our occasional free reports and follow the SP 500, GOLD and more updated daily!

Republican party platform discussing gold standard/Mary Schapiro defeated at SEC with respect to Money Markets/Hilsenrath saves the day by stating the Fed as "Further scope for action" and thus a possible QEIII is forthcoming/German finance ministry discu

Posted: 25 Aug 2012 06:29 AM PDT

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Top 5 Insider Sells Filed On August 24

Posted: 25 Aug 2012 05:58 AM PDT

By Markus Aarnio:

A study titled "Predictive and Statistical Properties of Insider Trading" by James H. Lorie and Victor Niederhoffer reached the following conclusion:

This study indicates that proper and prompt analysis of data on insider trading can be profitable, although almost all previously published studies have reached the contrary conclusion. When insiders accumulate a stock intensively, the stock can be expected to outperform the market during the next six months. Insiders tend to buy more often than usual before large price increases and to sell more than usual before price decreases.

Based on the findings of this encouraging insider trading study, I screened for companies where at least one insider made a sell transaction filed on August 24. I chose the top five companies with insider selling in dollar terms. Here is a look at the five stocks:

1. Kohl's (KSS) is a family-focused, value-oriented specialty department store offering moderately priced, exclusive


Complete Story »

Top 5 Insider Buys Filed On August 24

Posted: 25 Aug 2012 05:41 AM PDT

By Markus Aarnio:

Insider buying is often a sign of potential positive developments within a company, particularly if the insiders who are buying have a good track record with respect to their own buying. This is, however, only a secondary indicator and should not be relied upon solely when making the decision on whether to purchase a security. Insider buying in and by itself will not make a stock move higher, but can provide a further clue if all the other pieces of the puzzle - e.g., earnings, sales, return on equity, profit margins, etc. - are in place.

I screened for companies where at least one insider made a buy filed on August 24. I chose the top five companies with insider buying in dollar terms. Here are the five stocks:

1. Forest Laboratories' (FRX) longstanding global partnerships and track record developing and marketing pharmaceutical products in the United States have yielded


Complete Story »

Lawrence [Lawrie] Williams: Does China Have a Hidden Agenda on Gold?

Posted: 25 Aug 2012 05:30 AM PDT

¤ Yesterday in Gold and Silver

Well, it was a nothing sort of day in the gold market yesterday...and with little volume to go with it, I wouldn't read much of anything into Friday's price action.  The high of the day...$1,674.90 spot...occurred about fifteen minutes before the close of the Comex trading session and, of course, it got sold off a bit from there.

The gold price closed at $1,670.70 spot...down forty cents from Thursday's close.  Volume was around 109,000 contracts, down substantially from Thursday.

Pretty much the same can be said about silver...as both it and gold followed a very similar price path from Thursday's trading session. The only other difference was that silver closed on its absolute high tick of the day...and that's a phenomena that I haven't witnessed too many times over the years.

Silver closed at $30.82 spot...up 24 cents on the day.  Net volume, once the September roll-overs were subtracted, was only 25,000 contracts.

The dollar index opened around 81.37...and then traded sideways until shortly before 3:00 p.m. Hong Kong time.  It rallied to its high of the day...81.68...which came around 8:45 a.m. in New York...and by 11:15 a.m. Eastern time, had given back all that gain.  But it rallied once again...and closed the Friday trading session up about 26 basis points.

The gold stocks followed the gold price around like a shadow yesterday...and the HUI finished up 0.25%.

The silver stocks did mostly OK...but the ones that make up Nick Laird's Silver Sentiment Index did not do as well...and the SSI only finished up 0.05%, despite the strong finish in the silver price.

(Click on image to enlarge)

For whatever reason, the CME did not update their Daily Delivery Report yesterday, so I have no idea what was posted for delivery on Tuesday.  But considering the time of month, it couldn't have been a lot.

But while I was editing today's column at 6:47 a.m. Eastern time, I just checked the CME's website...and they finally got around to updating it.  They showed that 7 gold and 16 silver contracts were posted for delivery on Tuesday.  As I said above, it wouldn't be much.

There were no changes reported in either GLD or SLV.

Late yesterday evening the updated short positions for GLD and SLV were posted on the shortsqueeze.com Internet site.  The short position in SLV declined by 7.34%...or 1,084,700 shares/ounces.  There are still 13.7 million troy ounces...426.1 tonnes...required to be deposited in SLV to cover all the outstanding shares that don't have physical metal backing them.

The short position in GLD shares declined by 15.08%...or 3,279,000 shares, which equals 327,900 ounces.  GLD is still owed about 1.85 million ounces of gold...57.45 tonnes...to cover all its outstanding shares sold short.

There was a smallish sales report from the U.S. Mint yesterday.  They sold another 2,000 ounces of gold eagles, along with another 100,000 silver eagles.  Month-to-date the mint has sold 23,500 ounces of gold eagles...6,500 one-ounce 24K gold buffaloes...and 2,121,000 silver eagles.  The ratio of silver ounces to gold ounces sold for the month so far, is just under 71:1.

Over at the Comex-approved depositories on Thursday, they reported receiving 598,359 troy ounces of silver...and shipped 653,697 ounces of the stuff out the door. The link to that action is here.

I knew that yesterday's Commitment of Traders Report wasn't going to make for happy reading...and that proved to be an understatement.  The 5-day reporting period only covered the first two days of this week's 4-day rally, as the cut-off was at the 1:30 p.m. Comex close on Tuesday.

In silver, the Commercial net short position blew out by an eye-watering 9,075 contracts, or 45.4 million ounces...the biggest one week increase that I can remember.  The new Commercial net short position now sits at 162.4 million ounces.

But after spending considerable time on the phone with Ted Butler, what appeared on the surface was totally different than what was going on "under the hood", as about 6,600 contracts of that increase was the raptors selling long positions and taking profits.  The '5 through 8' largest traders sat on their hands, as they showed little change.  But with the '1 through 4' traders [read JPMorgan] it was a different matter.  Ted said that JPMorgan went short around 2,500 additional contracts during the reporting week...and he estimates that JPM's short position in silver is around the 21,500 contract mark.  When you do the math, they are short just over 20% of the entire Comex futures market [on a net basis] all by themselves.

The '1 through 4' largest short holders in silver are short 184.0 million ounce ounces...and the '5 through 8' largest traders are short an additional 37.1 million ounces.  Adding those two numbers up, you can see that the eight largest traders are short 221.1 million ounces of silver against a Commercial net short position of 162.4 million ounces.  The 'Big 8' are short 136.1% of the Commercial net short position.

On a 'net' basis, once all the market-neutral spread trades are subtracted from the Non-Commercial category, the '1 through 4' largest traders are short 35.6% of the entire Comex futures market in silver...and the '5 through 8' largest traders add another 7.2 percentage points to that.  On a 'net' basis the 'Big 8' are short 42.8% of the entire Comex futures market in silver...and that's a minimum number...and almost half of that is held by JPMorgan.  This short position is held against literally hundreds of other traders that are long the market.

And since JPMorgan et al act together...collusively, as Ted Butler rightly puts it...they have a stranglehold on the silver price.

The Commercial net short position in gold also increased by a huge number as well...27,282 contracts, or 2.73 million ounces.  The Commercial net short position now stands at 17.12 million ounces.

The four largest traders in gold are short 8.41 million ounces...and the '5 through 8' largest traders are short 5.06 million ounces of gold.  Together these eight large traders are short 13.47 million ounces of gold...and that represents 78.7% of the Commercial net short position.

On a 'net' basis, the '1-4' biggest short holders are short 22.6% of the Comex futures market in gold...and '5-8' biggest short holders are short an additional 13.6 percentage points.  In total, the eight largest short holder are short 36.2% of the entire Comex futures market in gold.

Ted Butler's calculations from the Disaggregated COT Report showed that the '1 through 4' largest traders in gold only went short about 3,500 contracts...and the '5 through 8' largest traders added about 3,000 short contracts to their positions.  But it was the raptors going massively short around 20,000 contracts that caused the Commercial net short position to blow out as much as it did...and at this point, the raptors are very close to holding a record short position in gold.

Reader E.W.F...who sends me the COT charts every week...had this to say..."The last time the gold raptors held such a large net short position was February 28th...the day before LTRO-2 and the Leap Day Massacre."  Let's see how it turns out this time.

The other important thing that Ted mentioned was that despite the horrific numbers in Friday's COT Report, the 'Big 4' Commercial traders hardly did a thing...and are still sitting close to holding record low short positions in both silver and gold.  It was the activity of the raptors that made things look as bad as they were.

Here is the chart of the four and eight largest short holder in all physical commodities traded on the Comex using this week's COT data.  It's shown in days of world production, not contracts, so you can compare apples to apples.

(Click on image to enlarge)

Note how silver dominates this chart...especially when compared to gold.  Gold is a monstrous market in dollar terms compared to silver...and the platinum and palladium markets [compared to gold] are rounding errors.  Don't forget that almost 50% of that red bar in silver is JPMorgan's short position...about 45 days of world silver production.

Here are a couple of interesting photos that reader Richard Craggs sent my way in the wee hours of Friday morning.  It's from the Duty-Free News International magazine...and they're reporting on what sells the most in the duty-free shops in the Middle East...in this case, Dubai.

(Click on image to enlarge)

(Click on image to enlarge)

Since it's Saturday, I have more than the usual number of stories, including quite a few that I've been saving for today, so I hope you can find the time over the weekend to read the ones that interest you the most.

I certainly don't have a crystal ball as to what might happen in the very short term...but the long term is not...and never has been in doubt.
Indian household savings used to buy gold: RBI. Brink's to Open One of Largest Bullion Vaults. Doug Casey Predicts Day of Economic Reckoning Is Near. Doug Noland: Do Whatever It Takes!

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Bernanke Sees More Scope for Easing to Spur U.S. Economy

Federal Reserve Chairman Ben S. Bernanke said the central bank has the ability to take additional steps to boost the economy.

"There is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery," Bernanke said in a letter dated Aug. 22 to California Republican Darrell Issa, the chairman of the House Oversight and Government Reform Committee.

Bernanke repeated the statement from the Federal Open Market Committee's Aug. 1 meeting that the Fed will provide "additional accommodation as needed." He has an opportunity to expand on his views in an Aug. 31 speech at the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming.

This story was posted on the Bloomberg website yesterday morning...and I thank Manitoba reader Ulrike Marx for sending it.  The link is here.

View full GSD edition

Dennis Gartman Just Dumped All Of His Stocks

Gartman, publisher of the Gartman Letter, who cut his long position by half earlier this week, has exited stocks entirely.

In his investor note he writes: "Stock prices are weak as our proprietary International Index has fallen 62 "points" or 0.8% in the past twenty four hours. Having traded to 7805 earlier this week, this index is now down sharply from its highs... yet; but we are more and more fearful that it shall be, and having cut our long position in half earlier this week, and further having noted how rather badly the market responded to the belief that QE III was on the way, and noting that far too many individual stocks and one or two important international broad indices posted "reversals" earlier this week, we are exiting the other half of our long positions this morning upon receipt of this commentary."

He didn't mention a thing about gold, but one has to assume that he's out of that as well.  This story was posted on the businessinsider.com website yesterday morning Eastern time...and I thank Roy Stephens for sending it.  The link is here.

View full GSD edition

Citi pulls funds from '$5bn man' John Paulson

He is credited with earning the fastest $5bn (£3bn) ever made, but John Paulson, the American financier, now appears to be losing money from his famous hedge fund even faster.

Citigroup Private Bank is set to withdraw $410m from Paulson & Co amid heavy losses at the New York-based hedge fund group.

The redemption, which Citi reportedly informed its clients about yesterday, will further erode the total asset base at Paulson & Co which has reportedly shrunk to $19.5bn from $36bn last year.

The private bank, which invests around $2bn in 60 hedge funds on behalf of high-net worth clients, is said to have put Paulson on its "watch list" after the group sustained heavy losses last year.

This story appeared on the telegraph.co.uk Internet site yesterday afternoon BST...and I thank Donald Sinclair for finding it.  The link is here.

View full GSD edition

Opinion: The National Security Agency's Domestic Spying Program

It took me a few days to work up the nerve to phone William Binney. As someone already a "target" of the United States government, I found it difficult not to worry about the chain of unintended consequences I might unleash by calling Mr. Binney, a 32-year veteran of the National Security Agency turned whistle-blower. He picked up. I nervously explained I was a documentary filmmaker and wanted to speak to him. To my surprise he replied: "I'm tired of my government harassing me and violating the Constitution. Yes, I'll talk to you."

"The decision must have been made in September 2001," Mr. Binney told me and the cinematographer Kirsten Johnson. "That's when the equipment started coming in." In this Op-Doc, Mr. Binney explains how the program he created for foreign intelligence gathering was turned inward on this country. He resigned over this in 2001 and began speaking out publicly in the last year. He is among a group of N.S.A. whistle-blowers, including Thomas A. Drake, who have each risked everything — their freedom, livelihoods and personal relationships — to warn Americans about the dangers of N.S.A. domestic spying.

This piece was posted over on The New York Times website on Wednesday.  The story is worth the read...and the 8:27 minute imbedded video is worth watching.  I thank Donald Sinclair for his second story in a row...and the link is here.

View full GSD edition

Doug Casey Predicts Day of Economic Reckoning Is Near

The Gold Report: There will be a Casey Research Summit on "Navigating the Politicized Economy" in Carlsbad, Calif., in September. The thesis behind the summit is that governments have made a Faustian bargain, a pact with the devil, that saves the empire with overspending, but drives it to the brink of collapse by creating fiat currencies. Doug, where in that story is the economy currently?

Doug Casey: It's extremely late in the day. Since World War II, and especially since 1971 when the link between the dollar and gold was broken, governments around the world have accepted the Keynesian theory of economics, which boils down to a belief that printing money can stimulate the economy and create prosperity. The result has been to create huge amounts of individual and government debt. It's become insupportable. All it has done is purchase a few extra years of artificial prosperity, and we're heading deeper into a very real depression as a result.

Let me define the word depression. It's a period of time when most peoples' standard of living declines significantly. It can also be defined as a time when distortions and misallocations of capital—things usually caused by government intervention—are liquidated.

We have been consuming more than we have been producing and living above our means. This has been made possible by 1) borrowing against projected future revenues and 2) using the savings of other people. The whole thing is going to fall apart. A new monetary system of some type is going to have to necessarily rise from the ashes. That's a major theme in the conference that's coming up.

This longish interview with Doug was posted over at The Gold Report website yesterday...and it's well worth reading.  The link is here.

View full GSD edition

Doug Noland: Do Whatever It Takes!

Does China have a hidden agenda on gold?

Posted: 25 Aug 2012 05:30 AM PDT

Does China have a hidden agenda on gold?

In the past we have seen Chinese companies begin to make inroads into securing future supplies through investing in and taking over resource companies around the globe, but while  the emphasis has so far been in respect of industrial metals to feed the manufacturing behemoth, we are now seeing similar moves into the western gold mining sector - of which the most recent example is China National Gold Corporation's interest in taking over control of African Barrick Gold.

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Indian household savings used to buy gold: RBI

Posted: 25 Aug 2012 05:30 AM PDT

Indian household savings used to buy gold: RBI

India's apex bank, the Reserve Bank of India, has once again turned the spotlight on the citizens craze for gold and, in its inimitable style, has dealt a back-handed compliment to the earning potential of gold. The bank has said there is a need to contain risks in gold prices and housing as they seem to be running way ahead of inflation.

Over the last two years, housing prices have climbed between 16% to 25%, while gold has risen at a faster pace between 14% to 40%. In its Annual Report for 2011-12, released Thursday evening, the bank has said, ``These two markets (housing and gold) have not only provided effective inflation hedges, but also enabled savers to earn good real returns amidst high inflation.''

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Brink’s to Open One of Largest Bullion Vaults as ETPs Climb

Posted: 25 Aug 2012 05:30 AM PDT

Brink's to Open One of Largest Bullion Vaults as ETPs Climb

The Brink's Co., which stores and transports bullion, is set to open one of the world's largest precious metals vaults in the London area within the next month, at a time when investors' gold holdings are at a record.

The firm plans to open the facility with a major London clearing company and is considering opening another vault next year, Orit Eyal-Fibeesh, managing director for Brink's in the U.K., said in an e-mail yesterday. The vault will be able to hold a "very substantial" amount of metal, she said, without being more specific.

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Three King World News Blogs/Audio Interviews

Posted: 25 Aug 2012 05:30 AM PDT

Three King World News Blogs/Audio Interviews

The first blog is with Eric Sprott...and it bears the headline "We Are Staring At Chaos and Collapse In Front Of Us".  The second blog is with Jean-Marie Eveillard.  It's entitled "We Will Be Destroyed By Inflation That Paralyzes The Economy".  And lastly is this audio interview with

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To Own Gold Or Silver? That Is The Question. May I Suggest...Both?

Posted: 25 Aug 2012 05:04 AM PDT

ByChristopher F. Davis:

As most of us know by now, a third round of quantitative easing from the Federal Reserve is likely in the cards. A great way to position your portfolio ahead of central bank action is with gold and silver, either in physical form as I have previously recommended or in the form of an ETF that tracks the price of these precious metals such as (SLV), (GLD) or (IAU). In the last month, these ETFs have gains of 13.4%, 5.52% and 5.50%, respectively. The gold and silver companies tracked by the ETFs (GDX) and (SIL) have outperformed the aforementioned ETFs in the last month with returns of 16.75% and 23.76%, respectively. For those investors seeking possible returns in the precious metals sector that outperforms the returns from owning physical metals or the GDX and the SIL, I have recommended

Links 8/25/12

Posted: 25 Aug 2012 03:55 AM PDT

By lambert strether

Why wood pulp is world's new wonder material New Scientist (RM)

Happiness gene that affects the level of feel good chemicals in the brain has been discovered — but it only works for women Daily Mail

Most Mutations Come from Dad: New Insights Into Age, Height and Sex Reshape Views of Human Evolution Science Daily

Empire State Building shooting: Workplace dispute leaves 2 dead, 9 bystanders injured (VIDEO) Newark Star Ledger

Footage shows gunman Jeffrey Johnson's last moments after fatally shooting ex-colleague Steve Ercolino; nine others injured by police gunfire in shootout near Empire State building amid Midtown Manhattan morning rush New York Daily News. Trigger warning: Graphic content.

Key voice urges China to gird for tough times Vancouver Sun. People's Daily, front page.

China's Slowdown May Be Worse Than Official Data Suggest Federal Reserve Bank of Dallas

Fed Chief Makes Diplomatic Visit To Econopolis America's Finest News Source

Looking for a Good Job? Don't Get Your Hopes Up In These Times (CB)

Household income fell more in recovery than during recession WaPo

Big Income Losses for Those Near Retirement Times

Payday Lenders Using Courts to Create Modern-Day Debtors' Prisons in Missouri, Critics Say ABA Journal

"Mother" of All Bank Frauds Shocks and Awes Regulators, As LIBOR Victims Seek Justice Angry Bear

HSBC in Settlement Talks With U.S. Over Money Laundering Bloomberg

Fed Sends Taxpayer and Business Money to Banks Via Interest Rate Swaps Masocchio, FDL (CB)

Empire State Building IPO challenged by tangle of legacy holders Stamford Advocate

The Downsizing of the American Butler CNBC

TV station pays up after using journalist's video without permission Romenesko. Digital sharecroppers take note.

Jury awards $1bn patent victory to Apple FT

Samsung Has Several Avenues of Appeal WSJ

Apple vs. Samsung: the jury's final verdict form shows the breadth of Apple's win The Verge. Gallery of verdict or PDF.

What the Apple v. Samsung Verdict Means for the Rest of Us Wired

Apple-Samsung Jury May Have Leaned on Engineer, Patent Holder Bloomberg

Apple v Samsung jury validates American patent system, raises new questions for the future of tech Apple Insider. Design patents were Apple's big win.

Apple, Samsung Both Violated Patents: South Korean Court Information Week. Back at ya.

Top 10 Lies Told by Monsanto on GMO Labeling in California EcoWatch

Tootsie's Secret Empire Wall Street Journal

The New Statesman must correct its error over Assange and extradition Greenwald, Guardian

Julian Assange arrest plan revealed accidentally Guardian. If you believe in accidents.

"clearly we definitely could be clearer if there is so much confusion" (How Twitter backed away from a platform strategy) Digitopoly. Important.

An American in Barcelona: Walkability, Streets, Squares, Public Art. Eschaton's beat.

Is Harry Reid's Bain-Investor Friend the Gawker Leaker? Angry Bear

The Monkeywrench Wars Archdruid Report. Like torture, drones aren't a war-fighting technology but a war-losing technology.

* * *

D — 16 and counting*

"Philosophy is a battle against the bewitchment of our intelligence by means of language." –Ludwig Wittgenstein

Montreal. Strike: "The student movement's focus will be on the [UQAM] on Monday, after two of its largest faculties decided to continue their boycotts and teachers voted Thursday to cancel classes in cases where they deem conditions won't allow them to teach."

RNCon. Hurricane, Weather Underground watch: "I put the odds of a mass evacuation being ordered for Tampa during the convention at 1%." (Yesterday: 3%.) … Hurricanes, snark watch: "So if Obama's FEMA arrives, politely say, 'No, I am waiting for a free-enterprise market solution to my gaping head wound.'" … Biden: "Due to disaster preparedness and local security concerns, Biden's trip to Tampa on Monday has been postponed." … Drones: "This will mark the first time unmanned aerial vehicles will patrol the skies over a national convention, according to [Curt Winter, an engineer with United Drones in Naples] that builds and will operate the drones. United Drones will operate several unmanned ground vehicles, called Wraiths, [which] can travel up to 65 mph 'and climb just about anything.'" Anything? ("All RNC Delegates Get In Free!") … Drones: "Seventy-five protesters gathered outside the local production plant of Raytheon on Thursday, denouncing the defense contractor for its role in drone warfare." … Surveillance: "I'd really hate if any of you war-mongers subsequently had your careers ruined because of out-of-control surveillance capturing you while you're partying." (just me) Might I suggest masking? … Ron Paul: "Using a mix of charm and procedural hardball, Romney and the RNC have ensured that the TX congressman will neither speak nor be formally nominated at next week's convention." …. Ron Paul: Paul will, however, get a non-prime time video tribute. … Marching: "In 2010, Forbes ranked Tampa dead last out of 60 metro areas for commuting. Transportation for America declared it the second most-dangerous city for pedestrians. And a 2007 survey of 30 metropolitan areas found exactly one with no walkable destinations: Tampa, FL." … Protests: "The demonstrations constitute one of the largest protest actions FL has seen in years."

DNCcon. Police state: "Hundreds of NC National Guardsmen will be sent to Charlotte to provide security at several 'critical infrastructure' sites around venues for the Democratic National Convention."

CO. Extractive economy: "The Bureau of Land Management (BLM) moved for a 'voluntary remand' of three oil and gas drilling projects in Garfield County CO. The three projects represent only a few examples of a broader practice in which BLM has approved at least 33 drilling projects–involving thousands of wells–with no air pollution analysis."

FL. Legacy parties: "Rivera [R] still hasn't answered, in any language, how he got access to Sternad's [D] amended financial reports before they became public record. Nor has he said why his lady friend Ana Alliegro, a self-described 'R political guru' just happened to be the campaign manager for Sternad the D. "

GA. Drought: "Gov. Nathan Deal is asking the EPA to suspend the federal requirement to add ethanol to gasoline, joining livestock and poultry farmers and several other governors who've made similar requests because of the price of corn."

LA. Corruption: "Businessman Aaron Bennett pleaded guilty last fall to bribery and is helping the government in the case against the former mayor. But just a week before he was charged he took $600,000 from his construction company — money that came from the Corps of Engineers to pay for storm-proofing work on three New Orleans pump stations — and gave it to his fourth wife's film production company."

MD. Mass incarceration: "We have a school-to-prison pipeline operating in Baltimore and other cities across the nation where young people believe, with some good reason, that their destiny lies behind bars and they too will become members of the under caste."

ME. Public goods: "New federal data show more ME parents are choosing not to vaccinate their children. [As] students prepare to go back to school, ME has recorded 411 cases of whooping cough this year, nearly five times the number of cases reported at this time in 2011."

MI. Occupy Detroit: "Occupy protesters from across the Midwest are in Detroit this weekend for a regional conference aimed at thinking of practical ways to help urban areas. Workshops include sessions on urban farming, solar panels, housing, political protests, and banks. Today, Occupy members protested against Fannie Mae over housing issues and against the state's emergency manager law."

MN. Police state: "After breaking down doors and shooting the family dog, a drug task force forced handcuffed children 'to sit next to the carcass of their dead and bloody pet for more than an hour,' and kept searching even after they knew they were raiding the wrong house, the family claims in Federal Court."

MT. Land: "What [Montana Fish, Wildlife and Parks biologist Jay Kolbe] and others find so alarming isn't that Plum Creek is selling its land. It's that the latest crop of sales appear larger than anything the company has executed in the past, and they worry that such sales could open the way to subdivisions that may not be compatible with wildlife."

NC. Money: "NC — one of nine states won by President George W. Bush in 2004 that shifted to Obama four years later — is home to one of [Koch-funded Americans for Prosperity's] busiest state chapters with nearly 140,000 activists."

NY. Corruption: "Brooklyn Assemblyman and county D power broker Vito Lopez is being roundly punished by Assembly Majority Speaker Sheldon Silver over some blatant instances of sexual harassment." … Homelessness: "Rats are coming through the walls and worms infest the bathrooms at city's homeless shelters. But Mayor Bloomberg says they're so pleasurable that no one wants to leave" (that's a Daily News headine). … Homelessness: "The city requires newly homeless people to solicit at least three bids from storage companies, which can be an onerous process for someone in crisis."

PA. Charters, Will Bunch: "But activists said that last Friday's surprise announcement that Gov. Corbett had named the Rev. Joe Watkins – an MSNBC pundit who headed the Students First PAC, the pro-voucher group that's dumped millions of campaign dollars on Corbett and other pols – as chief recovery officer to run the Chester Upland schools in Delaware County marks a tipping point." … Fracking: "In late July, hoping to keep drillers at bay, Fujiko Miller placed bags filled with her ancestor's ashes on fence posts [where Chevron needed to come through]. The Millers were given 48 hours. The bags came down and they were compensated for giving access." … Fracking: "State shale gas production during the first six months of 2012 more than doubled compared to the same period last year despite drillers' efforts to curtail the rapid growth because the abundance of gas has depressed prices." … Fracking: "From July 2009 to June 2012, over $8 billion worth of natural gas was extracted from PA's share of the Marcellus Shale. The Commonwealth would have collected more than $500 million had we had WV's natural gas tax in place. Instead, we got $0."

TX. Corruption: "Close observers of how powerful interests control policy in TX will perhaps not be surprised by the [Texas Public Policy Foundation's inadvertantly published] funding sources."

VA. UVa: "[Houston beer distributor John L. Nau III] of the University of Virginia board of visitors paid [Hill+Knowlton Strategies's] bill [for handling] the backlash from the board's attempt to fire the president." … UVa: "The UVa has declined a request from Obama's re-election campaign to hold an event on Grounds next week due to the 'extraordinary disruption' it would present early in the school year, UVa announced Friday." On the second day of class? What was Team Obama thinking? … Power: "[T]his new enthusiasm [for renewables] has run headlong into the immovable force known as Dominion Power. Dominion blocked a [Power Purchase Agreement] at Washington & Lee University last fall, and its threat of legal action has kept other non-profits from moving forward with plans for solar installations."

Outside baseball. Roediger's Wages of Whiteness: "The Communists subsequently gained a wide degree of acceptance and indeed cooptation within the New Deal coalition, Roosevelt's famous 'troika,' — big city political machines, the labor movement, and the avowedly white-supremacists in the 'Solid South.' The price paid, unfortunately, was the abandonment of the centrality of the struggle against white supremacism within the working class." … Legacy parties: "The two parties, at least in VA, literally swapped philosophies when it came to the issue of race. And if pandering to racists was the path — after all, Ds had done it for years — then, by golly, why not? Winning is, after all, the most important thing." … Legacy parties: "[Politify (here) has] produced a killer site which actually 'visualizes' [via 'Net Change to Income] how both [sic] candidates would affect American voters – individually, by region and by state — using what they say is 'one of the most advanced models of the U.S. economy ever made public.'" There's an app for "you've got no place to go." … Legacy parties: "[USA Today/Gallup:] For the first time at this point in at least six elections, voters are inclined to see both the Republican and Democratic parties unfavorably." … Charters: "If unions were 'the problem,' we would expect to find high performance in right to work states. But we don't." … Provenance: "A very popular and well known porn star was able to escape under the radar by being allowed to show a director a copy of their test scores on their cell and not on paper or through digital copy." Like e-voting, eh? … Normalizing disemployment: "[CBO: ] Unemployment would stand at an unhealthy 8% or so when 2013 comes to a close."

The trail. Swing states, First Draft: "1. NC 2. IA 3. FL 4. CO 5. VA 6. NV 7. OH 8. WI 9. NH." Nice knowin' ya, PA. … Tea party: "Though the Akin controversy shows experience is no guarantee of success, the fact that more elected officials are running under the Tea Party banner is evidence of the movement's growing influence. The Tea Party is quickly moving toward the power center of the Republican Party." … Charlie Cook: "[T]his race shouldn't be as tight as it is. Incumbents generally don't get reelected with numbers like we are seeing today. Romney may still win this election. It's awfully close. But if he doesn't, the knives will be long, sharp, and unforgiving."

Romney. Nooners: "Obama can't stand to be made fun of [but see this essential post from Stoller]. His pride won't allow it, his amour propre cannot countenance a joke at his own expense. If Mr. Romney lands a few very funny lines about the president's leadership, Mr. Obama will freak out. That would be fun, wouldn't it?" … Birtherism: "Romney made a joke that relies on a debunked conspiracy theory about the president–a theory especially popular with people who don't like blacks and foreigners. Romney's crowd cheered." … Birtherism: "Somewhere, Orly Taitz is smiling." … Birtherirsm: "Ironic post-birtherism." … Birtherism: Romney walks it back. Shorter: "Hey, where's your sense of humor?" … Stenography: "It's the sort of statement that leaves journalists slack-jawed: 'The one stipulation to the interview was that I not ask him about abortion or Todd Akin.'" …. Ryan: Brown-noser? That's not the half of it (Monkey Cage). … Data: "[Romney's Buxton project] combines marketing data with psychographic data analysis. An early test analyzed details of more than 2 million households near San Francisco and elsewhere on the West Coast and identified thousands of people who would be comfortably able and inclined to give Romney at least $2,500 or more."

Obama. Razor-thin margin: "[Obama's] pointillist approach has been on sharp display in recent weeks, as he has alternately tailored his campaign speeches and his ad campaigns to women, older voters and, most recently, new young voters who may not have been old enough to cast a ballot four years ago." Visionary minimalism.

Akin flap. "Backward": "[Via Nicholas Culpeper's 17th century midwife manual:] If both husband and wife were not properly in love and enjoying sex, conception would fail because 'the woman, being averse, does not produce sufficient quantities of the spirits with which her genitals should normally swell.'" Shades of Dr. Slop, the man-midwife…

* 16 days until the Democratic National Convention ends with shark fin soup for everyone on the floor of the Bank of America Panther Stadium, Charlotte, NC. Louis XVI

Sprott guys on ZIRP and NIRP and the gold supply crunch

Posted: 25 Aug 2012 03:00 AM PDT

A Look At Rio Tinto's Iron Ore Exposure

Posted: 25 Aug 2012 02:00 AM PDT

By Paulo Santos:

This article will cover the exposure of Rio Tinto plc (RIO) to the present iron ore pricing collapse, in the same manner as my previous article on BHP Billiton Limited (BHP).

Exposure

Although Rio Tinto also has some mineral diversification, much like BHP Billiton, iron ore is a much more important part of its business. Using 2011 full-year results, iron ore represents 49% of RIO's revenues and 83% of its underlying earnings. Worse still, using the most recent H1 2012 data, iron ore represents a full 92% of RIO's underlying earnings (sources: 2011 annual report, H1 2012 presentation).

Click to enlarge

Average selling price and breakeven

RIO had $29.9 billion in 2011 iron ore revenues and $12.9 billion in iron ore underlying earnings. For an overall production of 245 million tons, this gives us an average selling price of $122.1 per ton. Taking into account that the underlying earnings represent


Complete Story »

John Henry: A Conservative Defense of a Jobs Guarantee Program

Posted: 25 Aug 2012 01:50 AM PDT

By John Henry, Professor of Economics at UMKC. Originally published at New Economic Perspectives.

John Locke is the "father" of property rights theory, and continues to be referenced in defense of private property. In the second volume of his Two Treatises of Government, Locke specified the conditions that must be satisfied in order for property to be deemed legitimate. Initially, any property taken from "the commons" (public or collective property) had to be based on one's labor that was expended to improve that property. (While Locke focused on landed property, his argument applies more generally.)

But, there were two further conditions that had to be met, labeled the "prejudice" and the "spoilage" constraints—and these were seen as moral constraints. Essentially, the prejudice constraint means that no one can be disadvantaged by another's appropriation of property; all must benefit, though some may benefit more than others. The spoilage constraint connotes that none can seize property beyond that which can be used by one's own labor. If either constraint is not satisfied, two options are proposed: the disadvantaged have the right to revolt and overturn a private property regime, or government has the obligation to step in to rectify the situation in the interests of the community at large.

Now, it is clear that any large property holdings—giant farms, the modern corporation, etc.—violate the spoilage constraint. Locke himself was aware that there was a problem in his formulation in that, if adhered to, the capitalist accumulation process could not proceed. (He tried to wiggle out of his self-imposed dilemma by arguing that the accumulation of money—gold for him—was morally permissible as it didn't violate either the prejudice or the spoilage constraints; anyone could accumulate money, and money (gold) didn't spoil. For a critical evaluation of Locke's proposed solution, see Bell, Henry, and Wray 2004.) The main issue addressed here is whether unemployment violates the prejudice constraint, thus calling the continued adherence to a private property regime into question. If so, from a purely Lockean standard, then government must undertake a program to guarantee full employment in the interests of society as a whole—and this is a moral obligation.

It must be noted that Locke was arguing from what is now a politically conservative position. In his day, Locke was considered something of a radical, but with the passage of time, private property has become ingrained in our institutions and our habits of thought that it might be said to have become sanctified as a necessary condition for our very existence—the essence of "freedom." So, from a modern conservative position, what follows should be seen as consistent with Locke's defense of property, and, again, Locke continues to be called on as a seminal reference point in current debates.

It is clear that in a modern capitalist society, most of the non-propertied segment of society—overwhelmingly the majority of the population—is dependent on the private (propertied) sector for employment, thus income, thus well-being. There is, however, nothing in the arrangements of a modern economy to guarantee that the private sector will offer enough jobs to satisfy the needs of the non-propertied for work. (Nor, for that matter, that the wages offered will satisfy the needs associated with well-being.) Indeed, the normal case is that there is always some amount of unemployment; "full" employment (however determined) is exceptional and conventionally attendant to large-scale wars—when a goodly part of the labor force is sent out to kill and be killed. As the non-propertied (workers) are dependent on the propertied to provide them with employment, and if that employment is not forthcoming, then workers are "prejudiced" by the existence of private property: the "social contract" between the propertied and non-propertied has been violated; not all are advantaged by the arrangement.

This also calls into question the issues surrounding the spoilage constraint. Should some acquire property that is more than they can use in exerting their own labor, if he ". . . took more than his share, and robb'd others" (Locke, p. 318), others were denied the use of the spoiled output resulting from privatization and were thus "prejudiced." Spoilage offends ". . . the common Law of nature," and the property owner "was liable to be punished" for "he had no Right, farther than his Use called for . . ." (Ibid, 313; emphasis in original). Locke, if consistent, would oppose large-scale holdings. A Lockean solution to this issue would be the imposition of a Jeffersonian-style democracy where all would be independent small farmers, artisans, etc. But this is not capitalism, in which a class of property owners hires a class of non-propertied workers. (Indeed, we seem to be moving in a direction quite the opposite of that which Locke would find legitimate. Recent rulings which permit private oil and gas companies to use eminent domain in their own interests and cause great "prejudice" to be heaped on the non-propertied as well as those with small property holdings—the environmental, health, and other forms of damage inflicted by "fracking," the construction of pipelines, etc.—represent an abrogation of the moral responsibility of government. See http://readersupportednews.org/news-section2/328-121/13067-oil-and-gas-companies-can-take-your-land.)

Now, while this raises the specter of revolt, let me focus on the more "reasonable" alternative—a jobs guarantee program. For Locke, should the two constraints be violated, government has the moral obligation to oversee the correction to the problem. One solution would be a very generous unemployment benefit that would at least equal the wage one could earn if employed. In addition to this payment, though, the benefit would have to include a sum that would compensate for the psychological costs of being unemployed, loss in skills as a consequence of not working, perhaps an additional amount to compensate for the social stigma usually attached to the inability to secure a job. All this would be necessary to override the Lockean "prejudice" caused by those with property who possess the ability to hire workers who do not do so in a sufficient amount. Clearly, this is unworkable as the compensation package would be considerably larger that the wages paid to the employed and many would find this a more satisfactory alternative to working. Wages would probably be driven up, causing costs in the private sector to rise and the propertied segment of the population would resist—mightily.

The other approach, and the only one that is feasible, is a jobs guarantee program. Governments have the ability to operate employment programs that do not compete with—indeed, may well complement—jobs in the private sector. Given their ability to spend without facing a profit constraint (one important aspect of so-called Modern Money Theory), governments can organize programs to employ all those who want a job, and, if properly structured, provide useful output for society. The rebuilding of infrastructure in the U.S. and elsewhere comes readily to mind. And such a program would clearly benefit the private sector. That is, it would not conflict with extant property rights. The list of projects is extensive: schools, hospitals, and so forth. And, one should not forget various service-sector possibilities including public arts projects. A short check of Works Progress Administration ventures of the 1930's will confirm that government can undertake and has undertaken useful activities that enhance personal and societal well-being. And it can to this efficiently (though efficiency in the cost-minimizing or revenue-enhancing sense should not be the objective).

Would John Locke approve? If one takes him at his word, the answer is an unequivocal "yes." When unemployment is seen as a "prejudice" resulting from the normal behavior of a propertied regime, government has the moral obligation to rectify the problem. And this is a politically conservative position.

References:

Bell, S., Henry, J, and Wray L. "A Chartalist Critique of John Locke's Theory of Property, Accumulation, and Money: Or, is it Moral to Trade Your Nuts for Gold?" Review of Social Economy, LXII, No. 1, March 2004.

Locke, John. Two Treatises of Government, edited by Peter Laslett. Cambridge: Cambridge University Press, 1967.

Gold and the $600 Billion Question

Posted: 25 Aug 2012 12:57 AM PDT

GOP to Examine a Return to the Gold Standard?

Posted: 25 Aug 2012 12:43 AM PDT

The Republican Party is considering setting up a commission to examine the pros and cons of going back to the gold standard. Of course, these pros and cons are already well known and I suspect this move is nothing more than an attempt to appease Ron Paul supporters. I find it highly unlikely that either [...]

Precious Metals ‘Perfect Storm’ As MSGM Risks Align

Posted: 25 Aug 2012 12:27 AM PDT

gold.ie

Gold "Ignited" by "Important Shift" in US Fed Policy as…

Posted: 25 Aug 2012 12:17 AM PDT

Links for 2012-08-24 [del.icio.us]

Posted: 25 Aug 2012 12:00 AM PDT

In honor of stackers everywhere - Stacking Therapy

Posted: 24 Aug 2012 08:17 PM PDT

:beer1:

Stacking Therapy
by Ranting Andy - Miles Franklin
Published : August 23rd, 2012
http://www.24hgold.com/english/news-...r=Ranting+Andy

From 2002 through 2008, I held my ENTIRE NET WORTH in mining stocks. Until early 2007, they were the best investments I ever made; however, once the TSX-Venture (a/k/a Vancouver) Stock Exchange peaked in April 2007 – at 3,350 – my "well-being" was decidedly NOT well…

However, the stress was manageable until Global Meltdown I hit in mid-2008, decimating not only junior mining stocks – CARE OF THE Gold Cartel – but ALL markets, and the financial condition of my employer. Not only was I being hit on ALL FRONTS, but for the first time, I realized my long-forecast of FINANCIAL ARMAGEDDON was on the horizon. Thus, I started "stacking" PHYSICAL gold and silver – first slowly (a few silver rounds at a time); and then, significantly faster.

I've always said the most important hurdle in the road from fiat currency to REAL MONEY is holding a bullion coin in one hands. Not just to sense its immense weight, but the scarcity, value, and back-breaking work that went into mining, refining, and minting it – particularly for gold, as it seems difficult to believe a coin not much bigger than a $0.50 piece can be worth $1,700. In other words, feeling the coins give one a sense of security; that NO MATTER WHAT, it will ALWAYS be valuable.

As the GLOBAL implosion has expanded, my fears of inevitable – and possibly, imminent - collapse have grown exponentially; and with them, the pace of my "STACKING THERAPY." Moreover, I last summer sold my last mining share – exiting PAPER markets FOREVER – and thus, my only "investment activity" relates to additional PHYSICAL buying. Of course, I write "investment" in quotes, as PHYSICAL gold and silver are not investments, but savings.

In other words, STACKING EQUALS SAVINGS, and each coin I acquired, my ability to survive "future rainy days" grew stronger. In a world where assets are COLLAPSING left and right, one feels impregnable holding the ONLY substance on Earth guaranteed to maintain its value – and likely dramatically increase it as the Cartel's suppression scheme is permanently BROKEN.

In fact, one of my favorite "therapies" is to buy bullion on the largest DOWN DAYS – partly to get better prices, but partly to "give the finger" to TPTB. Such days are also perfect for "PREPPING 101," enabling one to PROTECT ONSESELF when the Cartel thinks they have accomplished the opposite result. Many a day has been well-spent, and hopefully readers will do the same – and spread this "secret" to millions of others. Trust me, you will NEVER sleep better.

Sadly, the time for such self-improving activities is running low; and when it's gone, the only "therapy" you will receive is knowing you have already PROTECTED yourself, when you had the chance.

Fake Silver Warning

Posted: 24 Aug 2012 07:06 PM PDT

I hadn't heard of fake Sunshine Mint bars and fake Scotsdale bars.... they look like the real deal....

Fake Silver Warning (4 min 38 sec):
http://www.youtube.com/watch?v=LgjGJtcgfuA




Uploaded by ozcopper on Jan 7, 2012

Check out: http://www.bullionvideos.com

There are currently many fake gold and silver ingots and coins being made and sold out of China. Many of these items are made to a high quality and are hard to tell from the original for those not familiar with the original items. Below is a list of some of the current fake types available.

1 ounce Sunshine Mint

1 ounce Scotsdale

1 ounce Pan American

American Prospector

Many generic 1 ounce ingots including the USA flag design, scales design and "worth its weight in silver design.

Find out more at http://www.ozcopper.com

Greg Hunter: Weekly Wrap Up

Posted: 24 Aug 2012 05:52 PM PDT

Farber said this week he thinks there is now a 100% chance of a global recession. How can Faber make this call and we have any meaningful recovery? We simply do not and what we have are bailouts and bottom bouncing. Faber has made many monster calls on the economy.

from usawatchdog:

In 2009, he told everyone to buy stock and the market more than doubled. Maybe that's why the Fed is signaling it will, once again, start quantitative easing or money printing. It meets at the end of the month at Jackson Hole, Wyoming. Expect a big announcement then. This may also be why gold and silver have been rising in price lately. It looks like some sort of gold standard and an audit of the Federal Reserve are going to be part of the Republican platform this November. If the Republicans are serious, they may have a chance of capturing Ron Paul supporters which are young voters. Join Greg Hunter from USAWatchdog.com as he gives his analysis of these stories and more in the weekly news Wrap-Up.

~TVR

AIH: Why GLD Could Go Bust

Posted: 24 Aug 2012 05:39 PM PDT

Here is my interview with Craig Smith (CEO of Swiss America).

In this podcast:
(1) Craig explains why the U.S. may experience hyperinflation.
(2) Mr. Smith discusses why some paper ETF's may fail
(3) Europe may have a breakup.

from altinvestorshangout:

~TVR

David Morgan: Silver 30 and Up

Posted: 24 Aug 2012 05:35 PM PDT

David Morgan: Silver 30 and Up

from opportunityshow:

~TVR
at

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