Gold World News Flash |
- Double Down: Vladimir’s Putin Billions Into Gold In Anticipation of Global Upheaval
- As The Euro Tumbles, Spaniards Look to Gold
- Gold & Silver To Overrun Central Planners
- Gold & Silver Will Smash Through All-Time Highs
- Are LBMA and gold and silver ETFs next in line for inventory verification?
- New innovations boost silver demand, but could price be taken down again?
- Silver Update 9/17/12 More Financial Repression
- Jim's Mailbox
- Casey Summit: How Investors Can Protect Themselves in a Politicized Economy
- It's Just Getting Stupid!
- QE and the new Fed plan: what are its dynamics?
- September is the Best month for Gold regardless of QE3
- Gold Support Begins below 1750
- All Signs Pointing to Gold
- Guest Post: Dagan vs Netanyahu
- The Long Gold Price Correction Lies in the Past Buy if Metals Break Above $1,825 and $37.50
- Gary Wagner–Markets Have Changed-Gold $2200 Soon 17.Sept.12
- Round Table With Gata’s Bill Murphy & RoadToRoota’s Bix Weir — 17.Sept.12
- Jan Skoyles–Shocking TransAtlantic Trends Mean More Euro QE 17.Sept.12
- Gold Market Update
- On The Hypocrisy Of Central Banks Removing Tail-Risk
- Silver Market Update
- Stormy Monday
- A Crumbling Ledge on the Fiscal Cliff
- How China's Rehypothecated "Ghost" Steel Just Vaporized, And What This Means For The World Economy
- Where Will QE3 Take Us?
- Brock Salier Unlocks the Secrets of Gold Miner Valuations
- Gold Market Update - September 17, 2012
- Silver Market Update - September 17, 2012
- Trannies Tumble Even As Oil Stumbles
| Double Down: Vladimir’s Putin Billions Into Gold In Anticipation of Global Upheaval Posted: 18 Sep 2012 12:00 AM PDT Shtfplan
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| As The Euro Tumbles, Spaniards Look to Gold Posted: 17 Sep 2012 11:18 PM PDT Charleston Voice
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| Gold & Silver To Overrun Central Planners Posted: 17 Sep 2012 11:00 PM PDT from KingWorldNews:
Today James Turk told King World News that this move in gold and silver may be the start of the "big one." Turk also warned if that is the case, then we are nearing the point where gold and silver buyers will, "… totally overrun the central planners." Here is what Turk had to say: "The precious metals have been exhibiting exceptional strength, Eric, and I am not just talking about their big gains in price. I am referring to the way they have been trading. Their extraordinary strength is clearly visible on an intraday chart. Both precious metals have been forming the same pattern going back to the lows in August when gold was under $1600 and silver was under $30." Turk continues @ KingWorldNews.com
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| Gold & Silver Will Smash Through All-Time Highs Posted: 17 Sep 2012 10:01 PM PDT  Today Tom Fitzpatrick spoke with King World News about the recent move in both gold and silver. Fitzpatrick expects the price of gold and silver to smash through their all-time highs as gold surges to $3,400, and silver heads to $100.
This posting includes an audio/video/photo media file: Download Now |
| Are LBMA and gold and silver ETFs next in line for inventory verification? Posted: 17 Sep 2012 09:12 PM PDT Ghost Warehouse Stocks Haunt China's Steel Sector By Ruby Lian and Fayen Wong http://www.reuters.com/article/2012/09/16/us-china-steel-warehouse-idUSB... SHANGHAI -- Chinese banks and companies looking to seize steel pledged as collateral by firms that have defaulted on loans are making an uncomfortable discovery: The metal was never in the warehouses in the first place. China's demand has faltered with the slowing economy, pushing steel prices to a three-year low and making it tough for mills and traders to keep up with payments on the $400 billion of debt they racked up during years of double-digit growth. As defaults have risen in the world's largest steel consumer, lenders have found that warehouse receipts for metal pledged as collateral do not always lead them to stacks of stored metal. Chinese authorities are investigating a number of cases in which steel documented in receipts was either not there, belonged to another company, or had been pledged as collateral to multiple lenders, industry sources said. ... Dispatch continues below ... ADVERTISEMENT GoldMoney adds Toronto vaulting option In addition to its precious metals storage facilities in Hong Kong, Switzerland, and the United Kingdom, GoldMoney customers now can store their gold and silver in a high-security vault operated by Brink's in Toronto, Ontario, Canada. GoldMoney also has recently partnered with Rhenus Freight Logistics to offer another gold storage option in Switzerland. The Rhenus vault is in the secured zone of Zurich Airport and offers customers superb security as well as the ability to inspect their gold. Storage at the new vaults in Canada and Switzerland is available at GoldMoney's lowest fees. Customers can select their storage location when placing their buy order. GoldMoney customers can take delivery of any number of gold, silver, platinum, and palladium bars from any GoldMoney vault, as well as personally collect their bars stored in the Hong Kong, Switzerland, and U.K. vaults. It's easy to open an account, add funds, and liquidate your investment. For more information, visit: http://www.goldmoney.com/?gmrefcode=gata Ghost inventories are exacerbating the wider ailments of the sector in China, which produces around 45 percent of the world's steel and has over 200 million metric tons (220.5 million tons) of excess production capacity. Steel is another drag on a financial system struggling with bad loans from the property sector and local governments. "What we have seen so far is just the tip of the iceberg," said a trader from a steel firm in Shanghai who declined to be identified as he was not authorized to speak to the media. "The situation will get worse as poor demand, slumping prices, and tight credit from banks create a domino effect on the industry." The Shanghai government's asset regulator said that it had sent a note to state-owned firms in August asking them to verify receipts for stored metal on financing deals they had with steel traders. Police have arrested an employee from Baoyang Warehouse in Shanghai and are investigating documentation for steel stocks that the employee issued to a trading firm, said an official with the surname Ou at Baoyang. Baoyang is owned by China Railway Materials Shanghai Co. Ltd. Reuters was unable to contact a member of the police force that could comment on the investigation. The trade firm used the stocks more than once as collateral to obtain loans, said an executive at Shanghai Minlurin, another trading firm that had steel stocks in the warehouse. The receipts used were for steel worth around 380 million yuan ($59.96 million), the executive said. Similar cases have prompted some trading houses to temporarily halt transactions related to warehouse receipts, disrupting China's steel business, traders said. "We have suspended business for days as we are afraid we won't be able to get any stocks from the warehouses if we get a fake receipt," said one Shanghai-based trader. Banks too are giving less credit against warehouse receipts. "Fake warehouse receipts have become a problem for some banks and because of this, many banks have boosted monitoring of existing stocks at warehouses and temporarily stopped accepting steel stocks as collateral for loans," said a Shanghai-based branch manager from a Chinese bank who declined to be identified as he was not authorized to speak to the media. Steel mills and end users rely heavily on trading firms to keep steel flowing from producers to consumers. Steel traders often buy consignments with full payment, ensuring cash flow to the mills. End users can buy small volumes from the traders, more convenient for them than the big volumes the mills sell. Industry sources estimated cases that have already come to light account for about 5 billion yuan ($787.50 million) of bad debt in Shanghai, one of China's biggest steel trading centers. At another warehouse, a logistics unit of giant steelmaker Baosteel rented a small office to a company called Shanghai Yiye Steel Trade Market Management Co. Ltd. Documents were forged stating Yiye was the owner of some of the steel stored in the warehouse, said Wang Xueying, the spokeswoman for the unit called Shanghai Baosteel Logistics Co Ltd. Yiye used the documents in dealings with two companies, China Railway Harbin Logistics and Wuhan Iron Yitong, the spokeswoman said. The two companies came to the warehouse to collect the stocks only to find that Yiye did not own the materials, she said. The case is still under investigation, she added. Nobody answered telephone calls to Yiye made by Reuters to request comment for this story. Both China Railway Harbin Logistics and Wuhan Iron Yitong declined to comment when contacted. Join GATA here: Toronto Resource Investment Conference New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy Platinum Intercepts Best Pt+Pd+Au Grades Yet Company Press Release VANCOUVER, British Columbia -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) announces more results of its 2012 drill program on the company's fully-owned Wellgreen platinum group metals, nickel, and copper project in southwestern Yukon Territory, Canada. Four surface holes and four underground holes all intercepted significant mineralized widths, ranging from 28.5 meters (WS12-201) and up to 459.5 metres (WS12-193). Highlights include WU12-540, which returned 8.9 metres of 5.36 grams per tonne platinum, palladium, and gold; 1.73 percent copper; and 1.01 percent nickel within 304.5 meters of 0.66 g/t platinum-palladium-gold, 0.20 percent copper, and 0.27 percent nickel. The surface drill program started in June and has completed 16 holes (assays pending for 12 holes) with two rigs now on site. The surface program continues to progress at a steady pace. Prophecy Chairman John Lee commented: "Wellgreen is a very large nickel, copper, and platinum group metals project with near-surface high-grade zones. High-grade intercepts will be incorporated into resource modeling and mine planning in the pre-feasibility study. We expect further positive drill results from Wellgreen shortly." Wellgreen features a low 2.59-to-1 strip ratio, is situated at an altitude of 1,300 meters, and is only 15 kilometers from the two-lane paved Alaska Highway. Those factors significantly minimize the project's indirect costs. For the complete company statement with full tabulation of the drilling results, please visit: http://prophecyplat.com/news_2012_sep11_prophecy_platinum_drill_results....
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| New innovations boost silver demand, but could price be taken down again? Posted: 17 Sep 2012 09:00 PM PDT Ongoing advances in the usage of silver could boost industrial demand. But, while pricing looks strong there are warnings of a possible short-seller price take-down again. by Lawrence Williams, MineWeb.com
At last week's Denver Gold Forum, Hecla's CEO, Phil Baker, took time in his presentation on his company to point out some parallels between silver today and the huge change in demand structure which took place at the close of the 19th and the start of the 20th Centuries as technological advance (the use of silver in photography) dramatically changed the structure of the silver market. At that time, silver's usage had primarily been in silverware, jewellery and in monetary usage, but photographic demand eventually rose to account for around 50% of the market. Baker's view is that now, although photographic usage has dived dramatically with the onset of digital photography, we are now entering a new era of technological change affecting silver's industrial consumption growth which is happening before our eyes. But this time it is not any single industrial sector which is creating the demand, but a slew of new uses which have grown up over the past ten years or so, and will continue to grow at a rapid rate as some of silver's unique properties in the electronics and medical fields in particular continue to boost industrial consumption of the metal.
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| Silver Update 9/17/12 More Financial Repression Posted: 17 Sep 2012 08:55 PM PDT |
| Posted: 17 Sep 2012 08:35 PM PDT Dear Jim, Oil was 'banged at the close' today. Gold and Silver were paper-raided in the access market after COMEX close. Between low/no volume, the action has the fingerprints all over it of 'spoof' trading in an attempt to cap the rise of hard commodities and apply field dressings to the wounded US Dollar. Continue reading Jim's Mailbox
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| Casey Summit: How Investors Can Protect Themselves in a Politicized Economy Posted: 17 Sep 2012 07:40 PM PDT The Gold Report: Before we get into some of the nitty-gritty from the summit, could you give us a big picture of the troubled economic waters we'll have to navigate if we want to stay afloat? Louis James: When we said "Navigating the Politicized Economy," we weren't just talking about regulatory burdens but also about the overall response of governments around the world to the crisis that we've been calling for many years. That's the context. It's about how the world is responding to crisis. The response is political and very feelings-driven. It's not a rational or scientific way of optimizing outcomes. It's political, which means pandering to voters, which means doing whatever the larger number of usually less-informed people want as opposed to whatever science or engineering may determine is an ideal way to approach the issue. That's scary. How you deal with that is more of a philosophical than an engineering question: how do you personally plan your life, given a world in which eve...
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| It's Just Getting Stupid! Posted: 17 Sep 2012 05:56 PM PDT As Cantor's Peter Cecchini notes today
His view is to be long vol and as the disconnect between the economic cycle and stocks continues to grow, we present three mind-numbing charts of the exuberant hopefulness that is now priced in (oh yeah, aside from AAPL actually selling some iPhones in pre-order). Whether it is earnings hockey-sticks, global growth ramps, or fiscal cliff resolutions, it seems the market can only see the silver-lining. We temper that extreme bullish view with the fact that all the monetary policy good news has to be out now - for Ben hath made it so with QEternity. These three factors - weak economic growth, powerful monetary policy and elevated public policy uncertainty - remain the critical drivers of performance and with weakening data, the market is all the more dependent on central bank life support - and following the rally through the Fed signalling period to 1460, much of the monetary policy related rally seems to be priced in, with the market already discounting considerable data improvement. With already high oil, gasoline and food prices, the Fed's balance sheet expansion risks driving down the dollar, boosting commodities and dampening consumption and thus growth. As this chart comparing P/E multiples to the ISM New Orders index, we need to see some serious unicorn-conjuring for these valuations to be sustained...
One tool often utilized to assess the attractiveness of equities relative to other assets is the equity risk premium (ERP), also known as the Fed model or the difference between the forward earnings yield and the yield on the 10 year U.S. Treasury. We have argued, based in part on the prior period of extreme financial repression in the U.S. following WWII, that a sustained contraction in the ERP and expansion of the PE multiple was unlikely until the Fed began the policy normalization process. Integrating inflation and a ratio of stock to bond market volatility paints a far less compelling picture for equity market valuation. We are at least 3 years from any normalization of Fed policy (according to them) and thus... the following chart (or real rates vs P/E multiples) suggests current valuations are unsustainable at best, or down-right crash-worthy as you simply can't fight the cash-flow forever...
The reach for yield and safety has led investors to push into mega caps - defensive ingredients including lower betas, lower earnings volatility, and lower P/E multiples as well as higher dividend yields. This has pushed the relative median P/E of the mega caps notably above smaller (and higher beta) stocks - as the somewhat odd beta-defying rally of the last few weeks took hold...
Our point here is that 1) the spread between LTM and NTM PE is gaping (something that we saw in the run-up to the peak in 2008), and 2) that the mega-caps which dominate the indices (which everyone watches including Ben) are 'over-valued' rightly or wrongly relative to less-defensive stocks... leaving plenty of room for rotational risk-off as well as reality disconnects
On balance, Barclays are less bullish than they were at this time in either of the last 2 years. Investors seem to mis-remember history; monetary policy was not the only driver of the rallies following QE2 and Operation Twist. In the signalling period prior to QE2's launch, and in the immediate aftermath of its commencement, both the economic and public policy outlooks were improving. [They] remain relatively cautious given a weaker economic outlook and no clear trend in the polls to provide confidence that the U.S. can avoid the potential massive tax hike scheduled for January 1, 2013 Source: Barclays
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| QE and the new Fed plan: what are its dynamics? Posted: 17 Sep 2012 05:38 PM PDT Paul Krugman writes, The idea here is that by indicating its willingness to let the economy rip for a while, the Fed can encourage more private-sector spending right away. Potential home buyers will be encouraged by the prospect of moderately higher inflation that will make their debt easier to repay; corporations will be encouraged by the prospect of higher future sales; stocks will rise, increasing wealth, and the dollar will fall, making U.S. exports more competitive. It sounds so easy. Is there any sense that the third round of QE layered on top of an extend operation twist will really do all of these things? In addition to extending QE the Fed has used more aggressive language, extended the period for which zero rates are likely and has assured us that once growth starts up it will not be quick to raise rates Krugman calls this letting the economy rip. I was not aware that the Fed was trying to prevent the economy from 'ripping.' I don't see the magic. This is the third round of QE. The other changes being made by the Fed may be significant but they are still relatively minor and conjectural, and distant in their potential impact or so it seems to me. Will strong Fed language be so important? Does another six months of ZIRP really matter? Is the assurance on raising rates so crucial (or even believable)? What Krugman does in this column Click here is to assume that this plan will create inflation. This is one of the first questions Bernanke dodged at his press conference. But is that how it works? What is also so very interesting is that before Bernanke both Volcker and Greenspan had taken a completely different view, that the dual mandate could be collapsed into one policy objective. Under Volcker the Fed began to argue that the Fed does what it can to boost long term sustainable growth when it produces price stability. Under Bernanke these two objectives (roughly, growth and inflation) have been separated and now they come into conflict. Not only that but now price stability has become the enemy of growth, as inflation below the Fed's preferred 2% mark is considered 'too low.' Under Greenspan a number of testimonies were given by the Fed Chairman arguing that true zero inflation should be the goal of monetary policy. Volcker was a 'low inflation guy' too. If you did not realize it, we are now in a complexly different land under Bernanke that we were under with Volcker and Greenspan. Suddenly there seem to be a Phillips curve. Suddenly a strong form of Keynesianism is being endorsed that stimulus is safe with a large GDP gap (do we really have one of those?). But since nothing is really specified we really don't know the model that is etched in the Fed's brain as it heads down this path…Does Bernanke think that the GDP gap will prevent inflation but does Krugman believe in the Phillips curve and in the 'saving grace' of inflation? Are they on the same page? It's really too confusing to make sense of since the Fed won't tell us what its real plan is or how it works. So much for transparency… The first order of business should be to look at what the Fed is doing to discern the impact. So far QE has been marginal despite the Fed's estimates of its impact. It takes a lot of securities buying to have any economic impact. So far two separate QE programs have not boosted the economy to stronger growth and the Fed's balance sheet has grown enormously. What makes this one different? Extending the period for rates to be zero has not does any wonders and some argue it is counter-productive so what should another six months of 'guarantee' make any difference? Here it is not the extension of the language but the pledge to not raise rates quickly when growth picks up that may matter most. Still, the Fed does not see appreciably strong growth until 2014 or 2015. So this pledge is for the future. And any attempt to pin Bernanke down on what this pledge really means met with frustration at the press conference. It is hard for me to see how such a pledge can effectively boost markets. Assume that this vague pledge is believed and the day comes when growth picks up and the Fed does nothing. Does anyone think market rates will stand pat with a near zero Fed funds rate and 3.4% GDP growth? What is the Fed's pledge really worth? Is the Fed promising to get behind the curve? Will that be healthy? In its forecast it is behind the 'excessive growth curve' for two years in arrow at 3.4% and inflation does not even budge. This does not seem like Krugman's world. If the idea is to boost home prices and to increase future sales and to reduce the burden of debt how much inflation are we talking about and for how long? The fly in this ointment is that the degree to which inflation has these boosting influences is directly proportional to how much inflation we create and for how long we tolerate it. Is the Chairman hoping for 2.5% inflation? 3% inflation? 4% inflation? What is he aiming at? We really don't know. And I'll remind you that he dodged the question on letting inflation go higher and it is NOT represented in the FOMC's own just offered 'projections.' The Fed appeard to live in a GDP-gap world. For now it's Krugman that is embracing the Phillips curve world. What gets the ball rolling? Do we really think this QE will boost the mortgage markets by cutting interest rates significantly further? Is possible to do that? An article in the FT today asserts that the mortgage pipeline is so full that there can be no rate impact because the process is already jammed with transactors. Will this QE finally work by getting investors to buy those riskier assets they have been shunning? While both Krugman and the Fed Chairman mentioned the positive impact sought on stocks and on housing the mechanism for this is unclear. Possibly it's just the stronger message from the Fed that will elicit a response in markets? Will that be enough to get people over their fear of a crumbling Europe, of a fiscal cliff and of a stuck economy? How does any of this boost housing prices without the proper microeconomic foundations (a fiscal fix)? There is a huge stock of foreclosures still waiting to happen and with banks still so careful about making loans and requiring such high credit scores how does housing get this boost? How does the housing market punch through that barrier and how does house price inflation get started? What are the mechanics of Krugman's inflation assumption? Can the Fed get to this result on $40bln per month of mortgage backed bond buying? Is there enough spark here to light Krugman's fire? And isn't it dangerous to try inciting the stock market on low interest rates instead of exciting investors through improved earnings? Isn't this backwards and dangerous? Of course, another objective will be to raise wages but wages are constrained by competition overseas. So to get any wage inflation going the dollar would have to fall significantly. We have seen some dollar weakness but China pegs to the dollar and Europe has so many of its own problems it's hard to see the dollar getting very strong Vs the euro! The last problem is that the kind of inflation QE inspired last time around was not the stimulative sort that Mr. Krugman wants. It boosted oil prices and commodity prices and the dollar did weaken a bit, giving rise to protests from abroad that the US was targeting a weaker dollar. Higher oil prices cut into and undermined consumer spending. And, of course Bernanke has not even admitted that he is actually seeking higher inflation. Maybe he does think he can't say it. But if he does not have a specific plan in front of the public then when/if inflation percolates it will look like a policy mistake and markets will not react to it very well. Moreover if inflation is in the plan why isn't it in the Fed's 'projections?' We know firemen sometimes set back-fires to create a burn barrier that they hope the main conflagration cannot cross. But if you did not know the strategy, wouldn't you think that it sounds crazy for firefighters to set a fire to limit a fire? Similarly a Fed Chairman who is supposed to protect against inflation had better have a very clear plan if he is going to use higher inflation as part of his monetary plan. I don't think Bernanke is there yet; by 'there' I mean ready for public disclosure, true transparency. I fear that Krugman's scenario is what the Chairman has in mind. And if so, exactly HOW MUCH inflation for HOW LONG is the Chairman 'targeting? Is the whole FOMC on board for this or is this part of a secret plan or one that features some denial as its keystone? And is THAT why the future inflation outlook is so nice and stable despite stronger growth? For these reason I am skeptical of the new plan. I am not a Bernanke hater as Krugman seems to suggest of anyone that disagrees with the Chairman. I just don't see why we should add stagflation to our list of problems. What we need is fiscal medicine and arguably making people think that the Fed can solve our problems without the right fiscal fix may even be counter-productive. END
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| September is the Best month for Gold regardless of QE3 Posted: 17 Sep 2012 05:34 PM PDT September is the Best month for Gold regardless... [[ This is a content summary only. Visit my website http://goldbasics.blogspot.com for full Content ]] 
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| Gold Support Begins below 1750 Posted: 17 Sep 2012 05:30 PM PDT courtesy of DailyFX.com September 17, 2012 01:28 PM Daily Bars Prepared by Jamie Saettele, CMT Gold has reached the long cited 1755 objective and may be in for several sessions of much needed consolidation. A return to the Fed low at 1715 could (depending on what path price takes to get there) present an opportunity to buy the dip against 1645. As mentioned last week, “the huge volume and large range is consistent with the beginning of some consolidation before the continuation of the advance.” LEVELS: 1715 1737 1747 1791 1800 1825...
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| Posted: 17 Sep 2012 05:14 PM PDT With another syringe of quantitative easing being injected into the U.S. economy's bloodstream, Ben Bernanke is giving the markets their liquidity fix. The Federal Reserve's action reaffirmed my stance ... Read More...
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| Guest Post: Dagan vs Netanyahu Posted: 17 Sep 2012 05:03 PM PDT Submitted by John Aziz of Azizonomics Dagan vs Netanyahu Binyamin Netanyahu recently slammed critics of a pre-emptive strike on Iran as "having set a new standard for human stupidity". Yet Netanyahu's view is not shared by all Israelis. In fact, there are some very prominent Israeli critics of Netanyahu's view. Meir Dagan, the former head of the Israeli intelligence service Mossad, says that an attack on Iran would be the "stupidest idea I've ever heard."
Speaking to '60 Minutes' Dagan noted: "An attack on Iran now before exploring all other approaches is not the right way to do it." Dagan should be congratulated for his rationality. It is my belief that the greater threat to Israel and the West is not the potential for an Iranian nuclear weapon — the truth remains that mutually assured destruction remains the most potent peacemaking force in history, even for supposedly irrational regimes like Pakistan, North Korea and Soviet Russia — but the dangers of blowback from a unilateral strike on Iran. Oil and resource supplies through the Persian Gulf could be interrupted, sending energy prices soaring, and damaging the already-fragile global economy. A regional war in the Middle East could result, potentially sucking in the United States and Eurasian powers like China, Pakistan and Russia. China and Pakistan have both hinted that they could defend Iran if Iran were attacked — and for good reason, as Iran supplies significant quantities of energy. And with the American government deep in debt to foreign powers like China who are broadly supportive of Iran's regime, America's ability to get involved in a war on Israel's behalf is highly questionable. And even without a war, further hostility and tension between America and her creditors would surely result in an even faster rush toward more bilateral and multilateral agreements to ditch the dollar for trade, something that America will almost certainly seek to avoid. So even with a President in the White House significantly more sympathetic to Netanyahu than Obama, America may find herself constrained by the realities of global economics, and unable to assist Israel. Most discouragingly, such a high risk operation seems to offer very little reward — a successful Israeli strike on Iran is estimated to set back Iran's program by only one to three years. And such an operation would likely require bombings over many days and in many locations. If Netanyahu wishes to go ahead with such a scheme then that is his prerogative. But if he will not listen to Dagan's wise counsel, why should the West rush to his aid if his scheme backfires?
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| The Long Gold Price Correction Lies in the Past Buy if Metals Break Above $1,825 and $37.50 Posted: 17 Sep 2012 04:56 PM PDT Gold Price Close Today : 1767.70 Change : (2.10) or -0.12% Silver Price Close Today : 34.298 Change : (0.305) or -0.88% Gold Silver Ratio Today : 51.539 Change : 0.394 or 0.77% Silver Gold Ratio Today : 0.01940 Change : -0.000149 or -0.76% Platinum Price Close Today : 1671.60 Change : 10.80 or 0.65% Palladium Price Close Today : 688.60 Change : 0.85 or 0.12% S&P 500 : 1,461.19 Change : -4.58 or -0.31% Dow In GOLD$ : $158.49 Change : $ (0.27) or -0.17% Dow in GOLD oz : 7.667 Change : -0.013 or -0.17% Dow in SILVER oz : 395.16 Change : 2.32 or 0.59% Dow Industrial : 13,553.10 Change : -40.27 or -0.30% US Dollar Index : 79.02 Change : 0.220 or 0.28% The GOLD PRICE today fell $2.10 to $1,767.70. Silver gave up 30.5c to end at 3429.8c. Remember that my targets for these were $1,740 and 3445c. Having reached those goals, I would expect silver and gold to back off for a correction. However, if the GOLD PRICE shot substantially through $1,800 resistance, say, to $1,825 and above, I would stop waiting for a correction. If that correction comes, it could take gold to $1,640 and silver to 3000c. Markets will make clear this week their plans. The GOLD PRICE peaked last September at an intraday high of $1,927 and went into a nearly year long correction. After thrice testing support at $1,525, gold began slowly climbing in May, forming an even-sided triangle (blue dashed lines). In August it broke out of that, kissed goodbye and dashed straight up from $1,616 to $1,773.50 (intraday high last week). Climbing that mountain gold crossed its 50, 150, and 200 day moving averages and left them far behind. Then it broke through the downtrend line from September 2011's high. Ahh, but now the GOLD PRICE hits overhead resistance at $1,800, fierce resistance. That hints that gold will slip back for a final kiss good-bye to that downtrend line before it blasts moonward in earnest. This will NOT last long, and gold should be much higher by year end. I still expect to see gold cost more than $2,300 by next June. But what do I know, a natural born fool from Tennessee? More'n any central banker, but that ain't saying much. The SILVER PRICE topped in April 2011. Since then it has built a long declining triangle with a firm bottom at 2615c (thrice tested). Beginning in August silver rocketed through its 200 DMA and, more importantly, its 300 DMA (3248c). That 300 DMA acts as the most reliable gauge of silver recoveries; once it climbs above that, it's out of recovery mode. To prove that, silver had to break out above the downtrend line from the April 2011 top. But SILVER is now approaching an area from 3500c to 3750c loaded with hostility. Most likely it will take a break, touch its feet back to 3000c or so, and then take off skyward. BOTTOM LINE: The long correction in silver and gold lies in the past. Buy if metals break above $1,825 and 3750c, or look sharply for a correction soon and buy that. Put everything you have into that wagon. I'm rusty from vacation, but I've scoured the office and found my central banker stick, so I'm going to lay on with a will anyway. Central banking criminals were busy while I was at the beach, but then, evil never sleeps. Both the ECB and the Fed announced the selfsame program: Bail Out The Banks. European banks are gagging on rotten sovereign debt (bonds), so the Eurocrats are building a Garbage Can (the European Stability Mechanism or ESM) where they can compost all that bad debt when they buy it from the banks. Germany, France, Italy, and Spain will kick in 77.3% of the 700 billion euro fund. Spain and Italy will contribute about 30% or 209 bn euros, more than Germany's 190 bn euros. Wait, wait. Aren't Spain and Italy the countries who are so broke they can't sell their own debt without paying rates north of 6%? Right, but they will pitch in to beef up the fund that will bail them out. What am I, a natural born fool from Tennessee, missing in this wondrous scheme of deep minds? Why, this sound to me like that famous Magic Tub that yankee peddlers used to try to sell in East Tennessee. They said all you had to do was climb in that tub, grab the handles, and pull yourself right up to the sky! They didn't sell many of those tubs, and I ain't buying this ESM tub. When somebody tries to sell nonsense like this, it offers a measure of their contempt for the public. Fellow mushrooms, they believe we don't know "sic 'em" from "come here." Bogus Ben surprised some by announcing he will buy up to $40 bn in mortgage backed securities (MBS) monthly until further notice, and until the unemployment figures make him feel warm and fuzzy. MBSs, y'all will no doubt recall, are the rotten securities that US banks are stuffed plumb full of. Bottom line: both the ECB and the Fed have demonstrated beyond doubt or cavil that THEY WILL INFLATE. They will meet every crisis by INFLATING. They understand nothing, they learn nothing, they will INFLATE. And since their inflation drives monetary demand for silver and gold, Bogus Ben and Super Mario are the best friends silver and gold have! How much will inflation help? Well, just the SNIFF of coming inflation since 17 August has boosted silver from 2799.5 cents to 3471.6c (+24%) and gold from $1,616.30 to $1,769.10 (+9.4%) on 13 September. Enough of this fun. Throw down that central banker stick and get to work. A picture is worth 1,000 words, so I'll give y'all below links to several charts and summarize what they show, and what's happened in the last week. US DOLLAR INDEX, see http://tinyurl.com/9xggxvt From end-2010 the dollar index has been trading in an uptrending channel. Late in 2011 it climbed into the top half of that channel, and rose to 84. Since that July high, the dollar has fallen off a cliff, and in the past few days has fallen through the mid-line. That alone suggests the dollar will plunge all the way to the channel's bottom at 76. Since central bankers manipulate currency exchange rates, what you see happening to the dollar, euro, and yen is happening because central banks want it. Oddly enough, the present rates leave the US dollar valued at around 77.5 yen and 77 euro/cents. The balance of those numbers suggests the buck may have reached the central bankers' target, but it might also get loose and plunge if panicky investors dump dollars on their own. Ben the Bogus is trying to square the circle, on one hand promising to keep interest rates low, on the other hand promising to inflate more (whenever a central bank buys assets, it creates money.) Well, Ben, which is it? Cause I mean if'n you pump out that money then them interest rates are gonna rise, and if'n you want them rates low, you can't be buying composted bank assets. Dollar index today closed 79.018, up 22 basis points EURO, see http://tinyurl.com/8sydxul Today the euro closed at $1.3104, down 0.17%. The euro has finally broken out of its year long downtrend by climbing above its 200 dma (128.50) and above the downtrend line. Last Friday it gapped up over that line. Going higher, say, $1.3400. ESM will NOT fix this mess. YEN fell 0.45% today to 127.01c (78.73). See http://tinyurl.com/9j4cs4p Since it topped with a megaphone or jaws of death formation in 2011, the yen has been dropping. After a February-March cascade from 131.52c to 118.93, it has worked its way back up. Yen is now challenging that downtrend line at 130. Chart suggests it will move higher, but how will the export-driven Japanese stand for that? They won't, not for long. STOCKS, see http://tinyurl.com/8vtxea9 for the Dow Jones Industrial Average. The Dow last week bumped into overhead resistance stretching back to highs earlier this year. It might reach higher still, but the flag formation it broke out of suggests that it will rest awhile before it does that. S&P500 looks about the same. Dow closed today at 13,553.10, down 40.27 (0.30%). S&P500 lost 4.58 (0.31%) and ended at $1,461.19. This will end in pain for stock owners, and here's why. This performance would make stocks look pretty zippy if you never looked at the Dow in Gold. Eeeuuuw. That changes things. After a diamond top formation from January through August, the Dow in Gold fell like your standing with your mama-in-law when you show up for Thanksgiving dinner drunk as Cooter Brown. The Dow in Gold has fallen below its 200 DMA, resuming its bearish relation and leaving lots of air beneath it and the ground several miles below. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com 1-888-218-9226 10:00am-5:00pm CST, Monday-Friday © 2012, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. No, I don't. 
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| Gary Wagner–Markets Have Changed-Gold $2200 Soon 17.Sept.12 Posted: 17 Sep 2012 04:33 PM PDT www.FinancialSurvivalNetwork.com presents Predicting future precious metals prices is as risky as Russian Roulette with an automatic weapon. However, Gary Wagner has a knack for doing the impossible. And now he's calling for a long sustained price increase for gold and silver. Whether he's right again or not will soon be known. Go to www.FinancialSurvivalNetwork.com for the latest info on the economy and precious metals markets.
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| Round Table With Gata’s Bill Murphy & RoadToRoota’s Bix Weir — 17.Sept.12 Posted: 17 Sep 2012 04:27 PM PDT www.FinancialSurvivalNetwork.com presents The Cartel is dead, long live the Cartel! Bix Weir thinks the Fed is deliberately trying to kill the dollar to stamp out the corrupt economic system that's sucking out the world's life force. Bill Murphy's not so sure, but believes that the Fed has run out of options and that this might be the only way they can prevent an all out collapse. Both admit to not knowing when the bottom will drop out of the financial markets, but both are equally sure that it's going to happen and that we're getting closer and closer to that eventuality. Interestingly, while they both have their own take on exactly what's happening, they agree that it's not going to be pleasant for the average American and that living standards are bound to decline markedly. Go to www.FinancialSurvivalNetwork.com for the latest info on the economy and precious metals markets.
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| Jan Skoyles–Shocking TransAtlantic Trends Mean More Euro QE 17.Sept.12 Posted: 17 Sep 2012 04:23 PM PDT www.FinancialSurvivalNetwork.com presents Jan Skoyles reviewed the latest version of Transatlantic Trends by a shadowy group known as The German Marshal Fund of The United States. http://trends.gmfus.org/transatlantic-trends-2012-released/. Evidently Germans are happy with the Euro and believe their leaders are handling the economic crisis well. Brits on the other hand are unhappy with the Euro and the governmental response to the collapse. You be the judge. It's argued that many people in the US don't even know that there's an on-going collapse taking place. They believe that the bailouts fixed everything and that happy days are here again. QE to infinity is okay with them. Of course nothing could be further from the truth. Go to www.FinancialSurvivalNetwork.com for the latest info on the economy and precious metals markets.
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| Posted: 17 Sep 2012 04:17 PM PDT Last week was a momentous one when the financial world passed the point of no return. Right after a German court cleared the way for massive European QE to get underway, steamrollering opposition from German politicians and ... Read More...
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| On The Hypocrisy Of Central Banks Removing Tail-Risk Posted: 17 Sep 2012 04:00 PM PDT Via Martin Sibileau of "View from the Trenches",
...as if that was not clarifying enough, as an example of the chaos that the Fed and ECB's actions have engendered on the world via uncertainty over risk-free rates - and the stunning realization that the global risk-free rate curve is now split between Europe (ST) and US (LT)...
Having said this, the remaining question is what determines the value of the long-term risk-free rate of interest. The Fed, in our view, although not announced last Thursday, will eventually continue to purchase long-term US sovereign debt. Effectively in the beginning, the Fed would set the value of the risk-free yield curve, past the three-year point. When things get out of control and inflation expectations for the US dollar take the lead (in a few years), the fiscal deficit of the US should determine the dynamics of the long-end of the curve….Does that make sense? No! (At least not, if you are not Keynesian) Because if "things get out of control", we must say good bye to long-term interest rates altogether. That market will evaporate, and the US will only be able to sell short-term debt. At that point, if the Euro zone still exists as we know it, the battle for the ownership of the risk free rate will have been won by the European Central Bank, by definition. Why? Because by definition, if the Euro zone still exists, it is because they succeeded in stabilizing their fiscal problems. Otherwise, the shortening of the term horizon for the US sovereign yield should continue contracting, until hyperinflation completely wipes it out.
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| Posted: 17 Sep 2012 03:55 PM PDT The strong uptrend in silver of the past several weeks is believed to mark the start of a major uptrend that should take the price comfortably to new highs before it's done. On the 12-year log chart for silver below we can ... Read More...
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| Posted: 17 Sep 2012 03:49 PM PDT September 17, 2012
The calls were apparently inspired by Jeffrey's appearance on HuffPost Live last Friday, which he details here. In today's 5, we take a look the real-world impact of the Fed's latest announcement. Apart from being "stuck on stupid," there are far-reaching and serious consequences to the Fed's policy… "There are millions in this young man's position today," Tucker worries. "Millions. When we were this age, the world was all opportunity. We never worried. We did whatever the eff we wanted to do. Today, we have a generation of caged tigers. They have nowhere to go, no way to escape. "I'm bullish on suicide." Yikes. We assume he meant he believes the suicide rate is going to rise…
According to the National Suicide Prevention Lifeline, following the meltdown in 2008, calls to their helpline jumped 36%, and another 15% in 2009. In other words, Jeffrey's bullishness may hold merit. "Data compiled by The Wall Street Journal in late 2009 showed increases in several states," HuffPost continues. "Of the 19 states surveyed, 13 had seen marginal increases in the suicide rate. Tennessee had the highest rate of increase, with over 15% more suicides in 2008 than 2007. Across the 19 states, the average increase was 2.3%. "This trend was also seen during the Great Depression, when the suicide rate increased by 21% in the early 1930s (about 17 of every 100,000 people)."
"Bernanke is playing with the most-sensitive price signal there is, the interest rate, and that distorts the capital structure and prevents the necessary adjustment that would lead to sustainable investment. So long as that persists, and especially with the high costs of hiring, there will be no opportunities for young people. "My advice to the young when they do call," says Jeffrey, "lower your reservation wage, take any job you can find, commodify yourself and get on the market, work for free if you have to, just get your foot in the door somewhere. It won't pay the bills, but it does provide some light that prevents the onset of that great enemy despair…"
"It was lip-smacking, "At my right," Ashton continues, "to graphically display how she was debt-burdened, was a girl wearing a T-shirt emblazoned with the fine sum of $90,000, another with $65,000, a third with $20,000 and over there a really attractive $120,000 was printed on another shirt. Guys were shouldering their share, with T-shirts of $20,000, $15,000, $27,000, $33,000 and $75,000.
Student loan debt has now surpassed that of credit card debt. It reached astronomical levels last year when, according to officials at the Consumer Financial Protection Bureau (CFPB), it took out $1 trillion.
"Over the past few years, the number of college students using our site has exploded," says Brandon Wade, founder of SeekingArrangement.com, a website offering this innovative matchup: the "college tuition sugar daddy."
As the economy begins to sag, "rich guys well past their prime have been plunking down money for thousands of years in search of a tryst or something more with women half their age — and women, willingly or not, have made themselves available. "With the whole process going digital, women passing through a system of higher education that fosters indebtedness are using the anonymity of the Web to sell their wares and pay down their college loans." [Ed. note. Ooh la la. The initial theme running through today's 5 seems to have suggested itself: No matter how you look at it, in this era of low interest rates, you're going to get (expletive deleted). For continued insight on the student loan bubble and several ways to survive and prosper through it, please see the August issue of Apogee. If you're not already a subscriber, you can join us here.
Rather, today, he's adding jet fuel to a debate already heating up with Doug French… and many readers. "I've heard macroeconomists of various persuasions make these arguments," Mayer writes, trying to be clear. "But I look at these things as an investor. The best way to get a good price is to buy something someone else is forced to sell. The U.S. housing market has that in spades. "French's arguments are actually reasons for bullishness. The large number of people who are still underwater and the large number of mortgages still in distress are what create the opportunity today. The fact that so many people can't qualify for mortgages is another reason why the opportunity exists. By the time the issues French cites are cleared up, the best buying opportunity in more than a generation will have passed. "Also," he goes on, "the focus on prices is shortsighted. The fact is you can buy a house today and lock in 30-year money at about 3.5%. You don't have to be a slumlord to earn net yields of 8-12%. So you enjoy income and build equity in the property. Even if the price of the house goes nowhere for years, it doesn't matter. Over a 10-year time horizon, the odds are heavily stacked in your favor. Even minimal price increases yield big returns. "If you borrow 75% of your purchase price, then a mere 10% price increase means a 40% increase in your equity. I closed on a rental in January where this is already the case."
"As a landlord, you are practically rooting for the Fed to devalue the dollar. "I've been writing favorably about housing since January 2011. Since then," he details, "I've spoken with a number of professional investors buying houses and renting them. I've reported on these conversations to my readers and told them how to participate in the funds. All of this work has led me to believe more strongly than ever: Now is the best time — a once-in-a-generation opportunity, really — to buy and rent a home." More from your fellow readers, and their actual experiences, in the mailbag, below.
Topping $2 million in orders in its first 24 hours, "iPhone 5 fever" caused Apple's stock to jump up to a record high of $699. Apple now sits a hair above $697. The Nasdaq is squatting at 3,173 and the S&P rests at 1,461. Gold is holding onto its gains at $1,772. The new "devil's metal," AKA "gold on crack," as dubbed by HSBC managing director of metals John Levin, sits at $34.47.
According to one Reuters report, "Germany and China plan to conduct an increasing amount of their trade in euros and yuan, reported this weekend, the two nations said in a joint statement after talks between Chancellor Angela Merkel and Chinese Premier Wen Jiabao in Beijing on Thursday. "'Both sides intend to support financial institutions and companies of both countries in the use of the renminbi and euro in bilateral trade and investments,' said the text of the statement. "It also said," Reuters goes on, "that both parties welcomed investments in China's interbank bond market by German banks and supported the settlement of business in the yuan by German and Chinese banks and the issuance of yuan-denominated financial products in Germany."
"In such cases," Barron's reports, taking a tone you might recognize from our own commentators, "the chatter inevitably turns to the Strategic Petroleum Reserve. But we have no credible reports of a release at this point. Heck, we don't even have a shady report to point to. CNBC's befuddled anchors are just now floating the idea that options expiry may be playing a role. "And CNBC has a White House spokesman saying there's no change to the strategic petroleum reserve. "'Fat finger' error? Probably not: Brent moved and a few other commodity markets weakened around the same time." According to the Dow Jones Newswires, the crude prices took a tumble due to "a huge spike in trading volume." Whatever the cause, it's not pointing in a happy direction: "We're as close to total calamity as I've ever seen," Byron Kings warns. "If things keep going downhill, your life will change forever, and you won't like it." As Byron mentioned last week, "We're looking at a Middle Eastern meltdown. "Right now, the hot spots are what you see on the television and read about in the newspapers and online — Egypt, Libya, Yemen and Pakistan.
"Of course," Mr. King writes, "we have another big question of the next few months, which is what will shake out between Israel and Iran? Nobody knows, although we'll all likely live to see it. "There's plenty of ripe and informed speculation about the Israel-Iran confrontation. According to the U.K. Telegraph, 'An armada of U.S. and British naval power is massing in the Persian Gulf in the belief that Israel is considering a pre-emptive strike against Iran's covert nuclear weapons program.' "Investmentwise," Byron concludes, "get the heck out of the Middle East. Go elsewhere, where the oil is. I cannot see how this ends well."
The 5: "Select markets" being the operative phrase, if we're to use today's reader experiences as a guide. "I have bought houses that pay a net 8% cash yield, and the renters could save 40% on their housing bill by buying the house they rent from me. Prices have not recovered, but that is a value floor if I ever saw one. Someday, renters' credit will be repaired and they can save money by buying the house from me at a premium. Meanwhile, I sit back and collect my 8%. "There is some overhead in time costs, but still… it represents safety in a zero-percent world."
"So in September of 2008, I stopped making payments and walked away. "The property was built new in 2004 and appraised at $204,000. In 2006, I refinanced for $150,000 and held it as a rental. The tax-appraised value is now shown as $78,000. To date, I have never received anything from the lender except 'reminders' that my account is overdue. I have not made any payments for over four years, yet the bank has not foreclosed. Think Bank of America doesn't want this 'reflected' on the their books or pay the maintenance and taxes? "If this indicates a 'recovery,' what will a 'bad market' look like? There are hundreds of homes just like this all over Florida."
Agreeing with Mr. Mayer, the reader suggests, yes, "Real estate is at the cheapest levels seen in years, so if you have a large unencumbered income, great credit, high liquid net worth and low debt ratio, then you might be able to qualify for a loan. "Otherwise, you can't play." The 5: And that could be just the rub for many would-be investors, as the next reader intones: "In addition to Mr. French's observation," another writes clearly siding with Doug's on the issue, "I will add another that Mr. Mayer is failing to consider. Americans' real incomes are declining and, with QE4Ever, will not only continue to decline, but the erosion is likely to accelerate. "His median income/median home price ratio is changing every day for the worse unless home prices continue to decline at a rate commensurate with income decline."
Amen, Addison Wiggin The 5 Min. Forecast P.S. Robert Mulligan, one of the leading monetary economists in the business, called Jeffrey Tucker's commentary "5 Deadly Effects Of QE3" "the best thing I have read on monetary policy in ages." Tomorrow, we're going to present a Live "Whiskey Bar" chat with Mr. Tucker on the Laissez Faire website. Subject: the Fed, why the political elite need to control money and our new Freedom Kit Initiative. If you want to join in, get details here.
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| A Crumbling Ledge on the Fiscal Cliff Posted: 17 Sep 2012 03:42 PM PDT By Kevin Brekke, Managing Editor, World Money Analyst Maybe it's just me, but I'm starting to see a greater than usual number of articles covering the rise in the number of Americans leaving the country. This seems in line with the figures released by the US Treasury that show those renouncing their US citizenship is growing. Just for kicks, I plotted the number of US renunciations since 1998 against the gold price. Except for the "everybody feels good about America" bubble that burst in 2008, the slope of both lines is strikingly similar. If one believes that gold is a crisis barometer, this makes sense. As the fiscal crises in the US persist, the higher taxes are likely to climb, adding more incentive for the wealth creators to leave... and take their wealth with them. The IRS appears to be losing one taxpayer for every dollar rise in the gold price. Taxation Cliff The omnipresence of warnings about the impending "fiscal cliff" will certainly not help to soothe ...
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| Posted: 17 Sep 2012 03:20 PM PDT
Naturally, among such assets are not only paper representations of securities, mostly stock and bond certificates held by the DTC's Cede & Co., but physical assets, such as bars of gold held by paper ETFs such as GLD and SLV. In fact, the speculation that the physical precious metals in circulation have been massively diluted has been a major topic of debate among the precious metal communities, and is the reason for the success of such physical-based gold and silver investment vehicles as those of Eric Sprott. Of course, the "other side" has been quite adamant that this is in no way realistic and every ounce of precious metals is accounted for. While that remains to be disproven in the next, and final, central-planner driven market crash, we now know that it is not only precious metals that are on the vaporization chopping block: when it comes to China, such simple assets as simple steel held in inventories, apparently do not exist. From Reuters:
This means that in an economy in which the creation of liabilities, and pledging of assets took place at a furious pace in the past 5 years, nobody really knows just what the real state of credit creation truly was. What is 100% certain is that as a result of this revelation, the GDP number of the country, which is and always has been a derivative of credit formation and expansion (and heaven forbid contraction), is massively overrepresenting what it is in reality, and that the Chinese economy has been expanding at a far slower pace if defined not only by the creation of liabilities, but by matched assets. Most importantly, it means that every single Renminbi in circulation is impaired as a country-wide liquidation event would see huge losses by every creditor class. It also would mean, naturally, zero residual value left for the equity. And just like that the Chinese growth "miracle" goes poof... as does its steel first, and soon all other commodities (coughcoppercough) that served as the basis of "secured" liability creation. Reuters continues, even if the punchline is already known:
Ultra-rehypothecation 101:
If the above makes readers queasy, it should: after all rehypothecation of questionable assets is precisely what serves as the backbone of that critical component of the shadow banking system: the repo market, where anything goes, and where those who want, can create money virtually out of thin air with impunity as long as nobody checks if the assets used for liability creation are actually in the system (and with JPM as the core private sector tri-party repo entity, secondary only to the Fed, one can see why this question has never actually arisen). In the meantime, the entire Chinese economy is unraveling:
In conclusion we can only add that we hope none of this comes as a surprise to our regular readers: we have been warning for years that i) the inventory of the world's credible assets is literally evaporating in absence of technological efficiency and CapEx spending (which is also the reason for the ECB's endless lowering of collateral requirements) and ii) illegal rehypothecation of assets, which infinitely dilutes claims on real assets, can and will lead to total losses even for investors who thought they had strong collateral backing. We now know that this has been happening in China with the most critical component of its economic growth miracle: steel. We will soon discover that all other assets: stocks, bonds, commodities (including gold and silver) and finally cash (think deposits) have been comparably rehypothecated and criminally commingled. The end result will be the most epic bank run in world history, which incidentally is precisely what the central banks are attempting desperately to delay as much as possible by generating excess inflation to "inflate" away the debt, leading to rematching of finite assets and virtually infinite liabilities. Alas, in a world in which credit-money liabilities are in the quadrillions, and in which the real assets are in the tens of trillions, only hyperinflation can seal the deal. Or, in other words, lose-lose.
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| Posted: 17 Sep 2012 02:41 PM PDT Synopsis: Did the Fed panic by launching QE3? Dear Reader, The Fed's new money-printing scheme is one we expected and can now say is a market-moving fact for our sector. Gold is up sharply – which was highly predictable; but what happens next? Casey Research Chief Economist Bud Conrad has a look and tells us what he thinks. This is important reading for all investors in metals and mining – and for all investors in general. I urge you to pass this article along to friends, investors you know, and others who should see and understand what's happening and what it implies. Sincerely, Louis James Senior Metals Investment Strategist Casey Research Rock & Stock Stats[RIGHT]Last One Month Ago One Year Ago[/RIGHT] Gold1,775.501,597.751,818.50Silver34.7127.8441.23Copper3.733.363.89Oil98.3193.4388.91Gold Producers (GDX)53.8643.9363.17Gold Junior Stocks (GDXJ)24.6819.8435.91Silver Stocks (SIL)24.8519.0426.77TSX (Toronto Sto...
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| Brock Salier Unlocks the Secrets of Gold Miner Valuations Posted: 17 Sep 2012 02:41 PM PDT The Gold Report: Brock, your research suggests that the production margins of gold companies are near all-time highs. Why has that not translated to share price appreciation? Brock Salier: The weak equity markets play a role in the disconnect between gold prices and gold equities, but a lot has to do with maturing gold assets. A lot of gold mines were funded between 2007 and 2009 and commissioned between 2008 and 2010. Most companies typically mine above their reserve grade for the first one to three years to speed capital and debt repayments. But, if they have not found an expansion and completed a feasibility study, or if they lack a new mine to develop, that grade has to fall. As production falls, cost rises and share prices legitimately fall along with profits. TGR: Can you go into a bit more detail about that concept, which is known as "high grading?" BS: If a company plans to mine for 10 years at 2 grams per ton gold (g/t), in the first two years it will often mine...
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| Gold Market Update - September 17, 2012 Posted: 17 Sep 2012 02:37 PM PDT Clive Maund Last week was a momentous one when the financial world passed the point of no return. Right after a German court cleared the way for massive European QE to get underway, steamrollering opposition from German politicians and the German public in the process, the Fed announced not just QE3, which was expected, but open-ended and unlimited QE and suppression of interest rates over a longer timeframe. The Fed has declared open warfare not just against the dollar and savers in general, but against the entire American middle and lower classes, who will be progressively stripped of their assets and impoverished, the better to serve the interests of the banking class and the elites at large. It is interesting that the Fed fired its biggest guns right after the German courts cleared the way for Europe to do QE on a grand scale in a similar manner. This means that the dollar and euro are going to go down in value pretty much in lockstep, so we are going to have to tak...
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| Silver Market Update - September 17, 2012 Posted: 17 Sep 2012 02:35 PM PDT Clive Maund The strong uptrend in silver of the past several weeks is believed to mark the start of a major uptrend that should take the price comfortably to new highs before it’s done. On the 12-year log chart for silver below we can see that this uptrend is still in its infancy, as it has a target at the top channel return line shown, which means it should get to over $60 on this advance, a modest objective given the stunt pulled by the SPSC (Silver Price Supporters Club) over at the Fed last week. Silver is approaching an inner trendline that appears to still have some validity, the pale blue trendline shown on the chart, and given that this coincides with a resistance level shown on the 2-year chart below and that silver is now critically overbought short-term, and also that its COT readings are at extreme levels, and also that the good news is now on the street, a period of consolidation or a minor reaction here looks likely, which would set up the next upl...
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| Trannies Tumble Even As Oil Stumbles Posted: 17 Sep 2012 02:31 PM PDT Volume was extremely weak on a run-rate basis during the middle of the session, picked up once we started the oil-driven algo-correction, then faded as AAPL dragged equities up to their VWAPs leaving the Dow Transports notably underperforming, NASDAAPL just in the green and small drops in the Dow and the S&P. Notably the S&P reached back down to the day-session closing price from FOMC-day and reversed all the way back to its VWAP at the close - the machines were well and truly in charge today! Treasury yields were lower on the day with the long-end outperforming and so real pullback as stocks surged. Oil dominated the price action of the day as correlation monkeys pulled and pushed around the pit close and contract roll with un-priced-in SPR rumors blamed by some. USD strength on the day saw commodities in general leaking lower. Markets had a very illiquid EKG-like feeling to them today - more so than most in recent times - with post-Europe-close activity in equity, volatility, and credit appearing to almost stop entirely. The Trannies closed today below pre-FOMC statement levels.
Trannies are back below the pre-FOMC levels... as NASDAQ surges further...The Dow, The S&P, and The Russell 2000 are grouped up around 1.5%...
across asset classes - TSYs led the risk-off sense to which stocks and gold caught down into the mid-afternoon; but gold and stocks recovered higher into the close once AAPl started to move...
Credit markets tracked stocks all day with perhaps a small outperformance but heading into the roll this week we suspect last week saw losers exit and winners starting to cover into strength... with the roll perhaps some technical pressure on spreads will flop over to stocks but it doesn't seem like positioning was extreme either way.
Commodities more than most show the dramatic non-normal instantaneous dips and rips of recent days...
and today's regime shifts from total absence of volume to complete chaos - with an algo-pleasing end at VWAP coincidentally tells the tale of the tape...
AAPL rules the waves - or just a strange coincidence that AAPL is ripped right as ES touches Bernanke's QEterntity close level and lifts ES perfectly top VWAP - come on now!!! Post FOMC, the sectors have normalized a little with Energy reverting down and Healthcare up today - thou Utilities are still sold (and high beta Materials/Financials fell today)...
Charts: Bloomberg
Bonus Chart: AAPL Options prices imply an extremely complacent skew in the expected distribution of returns going forward... historically (small sample size) we have seen this extreme complacency play out and then as it rolls over so the stocks comes off - this time is different?
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"Gosh," our Monday began with a disturbing IM conversation with 
"Although not every NYU student debtor was there — past or current — to participate," Ashton writes, "it's been projected that some $659 million in NYU student debt is hanging out there. Yes, $659 MILLION! This is the largest student debt of any nonprofit university in the country. If nonprofits can rack up these numbers, you can imagine the dollars owed, collectively, by for-profit schools."
"Saddled with piles of student debt and a job-scarce, lackluster economy," reads an advertorial, also conveniently hosted on the Huffington Post site, "current college students and recent graduates are selling themselves to pursue a diploma or pay down their loans. An increasing number, according to the owners of websites that broker such hookups, have taken to the Web in search of online suitors or wealthy benefactors who, in exchange for sex, companionship or both, might help with the bills."
Hardee's and KFC get torched in Beruit: "At least they've got their dietary priorities right…" writes one reader
One of the key stories of 2011 was the 
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