Gold World News Flash |
- Gold Prices Could Peak at $5,000: Bank of America
- Autumn Gold Tour
- ECONOMIC COLLAPSE, World War 3, & More
- Silver Update 9/21/12 Debtor's Prison
- A Barack Obama Win – Good for Gold?
- Gold Seeker Weekly Wrap-Up: Gold and Silver End Near Unchanged on the Week
- By the Numbers for the Week Ending September 21
- Big changes in trader positions in gold and silver: Got Gold Report
- Now China has the claim on Venezuela's Las Cristinas gold mine
- Silver market investigation statement coming soon, Chilton tells Kitco
- Euro Gold on Track for all Time High Monthly Close
- Not all that glitters is gold
- Spain is headed off a cliff
- QE3 To Infinity–The Final End Game
- The Zero Hedge Daily Round Up #131 - 09/21/2012
- Tim Wood, Executive Director of Denver Gold Group – 2012 Denver Gold Forum
- It’s Not A Bug… It’s A Feature
- We're Entering Another Economic Collapse... Right As Inflation Hits LIft Off!
- How to Measure Strains Created by the New Financial Architecture
- Bitcoin vs. Gold
- ILLINOIS LOVES YOUR TAX MONEY
- Drill Baby Drill—the Secret to Prospect Generation: Duane and Morgan Poliquin
- Guest Post: QE3 And Bernanke's Folly - Part II
- Gold Price Closed Higher any Close Above $1,776 Next Week will Send Gold to $1,800 Buy with Both Hands if Metals Correct
- QE3 To Infinity-The Final End Game
- Gold-Silver Ratio Declining As U.S. Dollar Collapses
- Take the Test to See If You Might Be Considered a “Potential Terrorist” By Government Officials
- Gold and Silver Disaggregated COT Report (DCOT) for September 21
- Gold To Advance Another $700 - $1,200 Within Months
- Gold hits 2012 high on Spanish bailout fears
| Gold Prices Could Peak at $5,000: Bank of America Posted: 21 Sep 2012 11:05 PM PDT by Katy Barnato, CNBC:
"We will be focusing in on gold. Ultimately we think gold can trade between $3,000 and $5,000 an ounce going forward," MacNeil Curry, head of foreign-exchange and rates technical strategy at BAML, told CNBC's "Worldwide Exchange." "Certainly not within the next few months, but on a long-term basis we are on a well-defined uptrend, and we have got more to run before that runs its course."
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| Posted: 21 Sep 2012 10:35 PM PDT In mid September, the fallfoliage season begins. This is when Colorado's famous aspen leaves change to a brilliantyellow-gold. Hundreds of groves of slender white barked aspen trees cover theslopes in Rocky Mountain National Parkamid a majestic evergreen forest. Their luminescent leaves shimmer or quake tothe slightest breeze and their golden colors are a beautiful introduction tothe autumn season. [CENTER] Blue Gold [/CENTER] During this travel, I was struck by thesevere drought conditions while dodging numerous forest fires in the travelareas. In particular, at Blue Mesa Reservoir in Colorado, the water level was down 75%. The most important resource on the planetis water or "blue gold". [B]The competition forblue gold can only get worse unless there is relief from [COLOR=#e06666]El Nino (currently neutral but with prospects improving). Inthis connection, a water ETF PHOand its components certainly merits further investigation.[/COLOR][/B] [CENTER]MonthlyGold & the XAU[/C...
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| ECONOMIC COLLAPSE, World War 3, & More Posted: 21 Sep 2012 10:30 PM PDT from Fabian4Liberty: This is the premier of the Fabian4Liberty radio program. Listen to the Fabian4Liberty program every Monday and Friday on American Freedom Radio from 8pm EST to 10pm EST here.
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| Silver Update 9/21/12 Debtor's Prison Posted: 21 Sep 2012 10:10 PM PDT |
| A Barack Obama Win – Good for Gold? Posted: 21 Sep 2012 10:00 PM PDT from KitcoNews: Donald G. M. Coxe, a strategy advisor at BMO Financial Group and Chairman of Coxe Advisors says an Obama win would be positive and bullish for gold (& silver). What say you?
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| Gold Seeker Weekly Wrap-Up: Gold and Silver End Near Unchanged on the Week Posted: 21 Sep 2012 10:00 PM PDT Gold climbed to $1787.25 by a little after 9AM EST before it fell back to almost unchanged at $1769.35 by a little after 11AM EST, but it then bounced back higher midday and ended with a gain of 0.27%. Silver surged to as high as $35.16 in early New York trade before it fell back to $34.318 and then also bounced back higher, but it still ended with a loss of 0.29%.
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| By the Numbers for the Week Ending September 21 Posted: 21 Sep 2012 09:59 PM PDT This week's closing table is just below.
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| Big changes in trader positions in gold and silver: Got Gold Report Posted: 21 Sep 2012 09:20 PM PDT 11:18p ET Friday, September 21, 2012 Dear Friend of GATA and Gold: Gene Arensberg of the Got Gold Report writes today that there are big changes in trader positions in the gold and silver futures markets. What do they mean? He expects to elaborate shortly. In the meantime the GGR's latest dispatch is posted here: http://www.gotgoldreport.com/2012/09/gold-and-silver-disaggregated-cot-r... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Special Offer for GATA Supporters from The Calandra Report Financial journalist Thom Calandra, co-founder of MarketWatch.com and a longtime GATA supporter, has revived his weekly market letter, The Calandra Report, which is aimed at believers in natural resources and metals equities. His three recommended stocks so far -- prospectors in Nevada, Portugal, and Colombia looking for gold, silver, copper, and tungsten -- have risen since his recommendation, and he is traveling throughout the world to research more recommendations. Through Sept. 22 the TCR's subscription price is $48 per year and during that time Calandra will donate to GATA $5 for every GATA supporter who subscribes. After that the TCR's subscription price will rise to $54. Calandra will join GATA's Bill Murphy and Chris Powell at the Toronto Resource Investment Conference on Thursday and Friday, Sept. 27 and 28 -- http://cambridgehouse.com/event/toronto-resource-investment-conference-2... -- and at the New Orleans Investment Conference from Wednesday through Saturday, Oct. 24-27: https://jeffersoncompanies.com/new-orleans-investment-conference/home For a sample of a recent edition of The Calandra Report and to subscribe, please visit: http://www.babybulls.com/index.cfm/page/THE-CALANDRA-REPORT:-AUGUST-26,-... 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 Fred Goldstein and Tim Murphy open All Pro Gold Longtime GATA supporters Fred Goldstein and Tim Murphy have brought their many years of experience in the precious metals and numismatic coins to All Pro Gold as metals brokers who specialize in the delivery of gold and silver bullion bars and coins as well as numismatic gold and silver coins. Fred and Tim follow these markets closely and are assisted by a team of consultants in monitoring market trends. All Pro Gold offers GATA supporters competitive pricing on all bullion products and welcomes inquiries. Tim can be reached at 602-299-2585 and Tim@allprogold.com, Fred at 602-799-8378 and Fred@allprogold.com. Ask about their ratio strategy and the relationship of generic $20 dollar gold pieces to 1-ounce gold bullion coins. Visit their Internet site at http://www.allprogold.com/.
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| Now China has the claim on Venezuela's Las Cristinas gold mine Posted: 21 Sep 2012 09:16 PM PDT Venezuela and China Agree to Team Up to Develop Large Gold Mine By The Associated Press http://www.washingtonpost.com/business/venezuela-and-china-agree-to-team... CARACAS, Venezuela -- Chinese and Venezuelan officials signed an agreement Friday to jointly develop one of the world's largest gold mines. The agreement to develop the Las Cristinas gold mine was signed by officials of the Venezuelan government and the Chinese company China International Trust and Investment Corp., or Citic. The mine in southern Bolivar state has been estimated to hold about 17 million ounces of gold. President Hugo Chavez called it an agreement to begin exploiting both gold and copper deposits at the mine. He called Las Cristinas "one of the biggest reservoirs of gold that exists -- not only in Venezuela, not only in Latin America, but in the world." ... Dispatch continues below ... ADVERTISEMENT Fred Goldstein and Tim Murphy open All Pro Gold Longtime GATA supporters Fred Goldstein and Tim Murphy have brought their many years of experience in the precious metals and numismatic coins to All Pro Gold as metals brokers who specialize in the delivery of gold and silver bullion bars and coins as well as numismatic gold and silver coins. Fred and Tim follow these markets closely and are assisted by a team of consultants in monitoring market trends. All Pro Gold offers GATA supporters competitive pricing on all bullion products and welcomes inquiries. Tim can be reached at 602-299-2585 and Tim@allprogold.com, Fred at 602-799-8378 and Fred@allprogold.com. Ask about their ratio strategy and the relationship of generic $20 dollar gold pieces to 1-ounce gold bullion coins. Visit their Internet site at http://www.allprogold.com/. Officials didn't discuss financial details of the agreement but said it specifies engineering, construction, and processing of the gold and copper. Chavez said officials also signed an agreement to produce a map of mineral deposits in the South American country. He announced the deals after a meeting with Chinese officials at the presidential palace. Chavez said they also agreed to deepen cooperation in Venezuela's oil industry. China's ties with Venezuela have grown rapidly in recent years. China also has become the country's biggest creditor, offering Chavez's government more than $36 billion in loans, which are being paid off largely with increasing oil shipments. Last year Toronto-based Crystallex International Corp. said it sought international arbitration after Venezuela rescinded its contract to develop the Las Cristinas mine. The company said it had appealed to a World Bank arbitration body, claiming it was due $3.8 billion in compensation. 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 Special Offer for GATA Supporters from The Calandra Report Financial journalist Thom Calandra, co-founder of MarketWatch.com and a longtime GATA supporter, has revived his weekly market letter, The Calandra Report, which is aimed at believers in natural resources and metals equities. His three recommended stocks so far -- prospectors in Nevada, Portugal, and Colombia looking for gold, silver, copper, and tungsten -- have risen since his recommendation, and he is traveling throughout the world to research more recommendations. Through Sept. 22 the TCR's subscription price is $48 per year and during that time Calandra will donate to GATA $5 for every GATA supporter who subscribes. After that the TCR's subscription price will rise to $54. Calandra will join GATA's Bill Murphy and Chris Powell at the Toronto Resource Investment Conference on Thursday and Friday, Sept. 27 and 28 -- http://cambridgehouse.com/event/toronto-resource-investment-conference-2... -- and at the New Orleans Investment Conference from Wednesday through Saturday, Oct. 24-27: https://jeffersoncompanies.com/new-orleans-investment-conference/home For a sample of a recent edition of The Calandra Report and to subscribe, please visit: http://www.babybulls.com/index.cfm/page/THE-CALANDRA-REPORT:-AUGUST-26,-...
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| Silver market investigation statement coming soon, Chilton tells Kitco Posted: 21 Sep 2012 08:59 PM PDT 10:58p ET Friday, September 21, 2012 Dear Friend of GATA and Gold: Kitco News' Debbie Carlson reports that U.S. Commodity Futures Trading Commission member Bart Chilton said today at the Hard Assets Conference in Chicago that the commission's investigation of the silver market continues, he expects to say something about it soon, and he continues to believe that the market has been subject to illegal activity. Carlson's report is posted at Kitco here: http://www.kitco.com/reports/KitcoNews20120921DeC_CFTC_update.html CHRIS POWELL, Secretary/Treasurer 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.... Join GATA here: Toronto Resource Investment Conference New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT GoldMoney adds Toronto vaulting option In addition to its precious metals storage facilities in Hong Kong, Switzerland, and the United Kingdom, GoldMoney customers now can store their gold and silver in a high-security vault operated by Brink's in Toronto, Ontario, Canada. GoldMoney also has recently partnered with Rhenus Freight Logistics to offer another gold storage option in Switzerland. The Rhenus vault is in the secured zone of Zurich Airport and offers customers superb security as well as the ability to inspect their gold. Storage at the new vaults in Canada and Switzerland is available at GoldMoney's lowest fees. Customers can select their storage location when placing their buy order. 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
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| Euro Gold on Track for all Time High Monthly Close Posted: 21 Sep 2012 08:32 PM PDT [url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] Gold priced in terms of the Euro notched a brand new all time high today at the London PM Fix and came within a mere Euro of matching its all time high based on the futures charts. It is on track, provided it has a decent week next week, to finish out the month at an all time high monthly closing price. It will be extremely difficult for the bears to mount a SUSTAINED sell off in gold as long as this chart stays firm. ...
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| Posted: 21 Sep 2012 08:00 PM PDT from Gold Money:
This week we saw another gold counterfeit scandal, this time out of New York, with tungsten-filled gold bars being discovered by a highly reputable dealer. It is very hard to detect tungsten fakes by traditional measures, since tungsten (atomic number 74) has a high density, which is 19.3 times that of water, and comparable to that of gold (atomic number 79). In other words, its weight is very similar to that of gold. However GoldMoney's ultrasound testing of gold bars is the perfect solution, as it can easily detect impurities of this sort and ensures that the bars meet the stringent GoldMoney Standard of quality. This latest technology guarantees that there is not a single gram of tungsten in the GoldMoney vaults.
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| Posted: 21 Sep 2012 07:30 PM PDT from Gold Money News: GoldMoney's James Turk interviews Félix Moreno de la Cova, who is a studied economist, trader and GoldMoney contributor. They talk about the dire economic outlook for Spain and the country's fiscal difficulties.
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| QE3 To Infinity–The Final End Game Posted: 21 Sep 2012 06:52 PM PDT by Jim Sinclair, JS Mineset:
The final end game of QE3 to infinity, with a month or two off from time to time, will be a product of the long term viability of the Federal Reserve Balance sheet and the impact on the dollar there from. Let's review what has transpired and begin to look at what will happen: 1. OTC derivative manufacturers and distributors sold fraudulent paper to almost every entity as clients of the Western world financial system. Inherently the OTC derivatives manufacturers and distributors had part of the transaction on their books. No problem as long as the entire scam was a "Daisy Chain," a connected set of transactions that has the appearance of risk but when all netted out equals almost zero.
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| The Zero Hedge Daily Round Up #131 - 09/21/2012 Posted: 21 Sep 2012 06:50 PM PDT I've got all these great ideas for insightful pieces, but I just can't bring myself to write them. Young people have a mind of their own, albeit obscured by internet pornography and the music of Katy Perry and Pitbull. Bring on virtual reality! I'm still trying to figure out what might even be vaguely viable. I'm going to make a bold statement of Zero Hedge, and claim that a majority of the content on this website is merely a regurgitation or manifestation of a previous article or Zero Hedge idea. To all the new people, this may seem insightful and radically different to anything else they've experienced in their life. But after a couple of months, you kinda realise that it's all the same shit repackaged into a 'whole new revelation.' Listen Mr. ZH! I get it, the government is trying to take away my rights. No really, I get it. But do I really need to read about it every day, just in some other slight variation? Once you understand the basic premise of collapse, you realise how pointless this website is. A chart depicting America's demise is great and all, but it's to be expected, thus redundant. Thus, the issue of Zero Hedge lies not within it's content as a news outlet, rather it's biased angle. Get rid of the analytical bias and you fix the problem. The issue with this, is that Zero Hedge would no longer be Zero Hedge and people wouldn't read it. Of course, this website caters to a specific reader. Clearly not myself, despite the fact that I do I podcast on it. I'd argue I do it for the comedy and the media, my two other passions. It's great to bicker over how much you hate and feel over a current reigme through this outlet, but informing and influence aside, serves very little purpose to the average reader. Insight is only relevant if you're ignorant. If you don't get it by now from all these uncanny guest posts from people who write the same crap every week, then you're effectively a moron. Interesting, none-the-less. Our burning desire to learn. My two cents. This is the Zero Hedge Daily Round Up. http://www.youtube.com/watch?v=20qkSZb0V_Q
Alternatively, you can download the show as a podcast on iTunes or any RSS capable device. RSS Feed: http://thefinancialreality.podomatic.com/rss2.xml Julius Reade P.S. For those paranoid about the government: http://thefinancialreality.podomatic.com/enclosure/2012-09-21T17_47_46-0...
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| Tim Wood, Executive Director of Denver Gold Group – 2012 Denver Gold Forum Posted: 21 Sep 2012 06:50 PM PDT |
| It’s Not A Bug… It’s A Feature Posted: 21 Sep 2012 06:47 PM PDT September 21, 2012
As you may be aware, we've been battling an overwhelming sense of unease about the state of the markets, economy and geopolitics this week. Fortunately, Patrick Cox and Byron King, our tech and resource analysts respectively, have responded in kind. If nothing else, today's episode will prove, contrary to popular opinion, not all your 5 contributors agree… Mr. Cox begins by setting the stage from the podium:
Al Gore's Condo: Maybe He's Banking on a "Lakefront" Premium? Yesterday, we realized we got a little carried away with the doom and gloomery we have all become so accustomed to these days. So today, we've decided to give you something to perk up your weekend with today's leitmotif: a future worth looking forward to. To do so, we've invited two optimistic editors along to share why the future is much sunnier than the public thought is led to believe, and how you can profit from this light at the end of the tunnel.
"A lot of us at Netscape knew we were bringing down the dominant paradigm. We knew we were providing an alternative to the old monopoly of information we have seen crumble before us, as The New York Times and other of the old media die.
Patrick Cox in Vancouver. [Ed note: If you don't have access to the hi-def videos of this year's Innovate or Die symposium, you can grab them here.] "There was a term we used in Silicon Valley when we talked about that sort of thing. It's not a bug, it's a feature. Things that look like they're bad can actually be very positive, and can be really important trends."
"The boomers, who have always had an outsized influence on societal mood, are projecting their own looming mortality and decrepitude onto the economy. Despite the fact that our current challenges pale in comparison to those faced by our parents during and after the Second World War, investors suffering from actual and metaphorical myopia are absorbed in their own psychodramas of doom and gloom. "Yes, war in the Middle East is increasingly likely," Patrick goes on, "but it won't compare to the destruction of World War II. Israel's neighbors have tried on multiple occasions to rid their neighborhood of Jews, and I'm betting they fail again. This time, if Israel goes to war, it will be against the Shia and their proxies only, so Israel will have significant Sunni assistance."
"These advances will not only have enormous macroeconomic impacts, they will produce the greatest explosion in wealth ever witnessed for investors who understand the utter primacy of the adage 'Buy low, sell high.' Prices today are so depressed by irrational despair, even moderately informed long-term investments in emerging technologies are going to produce fortunes. "One example is the hydrofracturing, or 'fracking,'" revolution," Patrick says. "Enabled by advances in computer technologies, fracking has made mockery of Peak Oil prophecies. America now has more hydrocarbon reserves than the Middle East. Already, the U.S. has the lowest commodity chemical prices in the world, thanks to a glut of natural gas." (Ed. note. That's exactly what Byron's been saying for a while now. He explains America's energy rebirth in this presentation you don't want to miss. More from Byron below.)
"I wish my old friend Isaac Asimov were alive to see it," Patrick yearns. "The biggest beneficiary of this development will be biotech, which will adapt robotics to automate previously impossible biological procedures, accelerating therapies that involve genetic engineering and regenerative medicine. "Biotech is, in fact, the most important sector in the coming transformation. This year, we've seen so many world-changing advances, it's difficult to keep up. The true doom on the horizon is aimed at cancer, heart disease, Alzheimer's, liver disease and, ultimately, aging as we know it. Over and over, I'm astonished by what I didn't see coming."
"Today, I'm starting a new training regimen with a simple inexpensive device," Patrick says, "clinically proven and used by just a few top world-class athletes for aerobic conditioning as well as strength training, with benefits as great as steroids, but with no side effects. "I'm tired of the whining and, in fact, I don't listen to it," Patrick makes clear. "I don't have time, as there's so much great news that I can barely keep track. Doubt me? Let's talk in 10 years when disruptive technology 'investors' are rich, but 'traders' are still being exploited by cynical brokerages." Indeed, if you want to get in on these disruptive technologies before they change the world as we have known it… and explode in value… you have until midnight tonight TO ACT.
"The moon-bound spacecraft just had an explosion. Power systems are draining fast, while the astronauts hurtle away from Earth toward the icy cold of space. The engineering team assembles at Mission Control, in Houston. Flight director Chris Kraft asks for ideas. "'Can we use the LEM [the Lunar Lander]?' he asks. "The guy from Grumman Corp., which built the lander, looks sheepish and starts to say, 'We designed the LEM to land on the moon…' "And Chris Kraft shouts back, 'Well, unfortunately, we're not landing on the moon. I don't care about what anything was designed to do. I care about what it CAN do!'"
"Yes," says Mr. King, "a lot of things are totally screwed up. It's depressing even to start counting the ways. "The short version is that our economics, politics, culture, the international scene… they're a mess. It's all quite depressing. Indeed, that spacecraft tumbling toward the moon is starting to seem more appealing. "Then again," Byron goes on, "I don't care what the U.S. system was designed to do. I care about what it CAN do! The main thing is that the U.S. system was designed to identify problems, and eventually to adapt. "OK, so perhaps Winston Churchill was correct when he said that Americans can always be counted on to do the right thing… after they have exhausted all other possibilities."
"One key U.S. strength is high-tech, and thinking in terms of systems," Byron says "And I mean high-tech in a broad sense, not just video games. "The U.S. has a deep magazine of scientific and engineering capabilities," Byron says, "as well as the ability to apply astonishing novelty to solving the hardest problems. "I've certainly seen these capabilities on my visits over the past couple years to the U.S. national laboratories at Livermore, Oak Ridge and Sandia," Byron lets us in on. "I've seen them in trips to corporate labs as well, and production sites. And I've seen them in the innovation resident in many small startup and development companies."
"Or look at other stunning applications that are coming down the line in the world of material sciences, where new techniques of chemistry are unlocking compounds with incredible strength — 200 times stronger than steel. The carbon-hulled Boeing 787 Dreamliner is just the start. "Or consider innovations in robotics and nanotechnology," Byron continues, "that are on the cusp of transforming entire industries. The traditional mining industry, for example, is substituting robots for people as holes go deeper. Thus does a dangerous occupation remove more and more human risk from the equation, while raising productivity. And then, when the ore comes up, we're seeing new forms of nanoparticles literally tear minerals into pieces, to separate valuable elements to super-high levels of purity. "These are just a few hints of revolutions to come, which will occur within the U.S. economy. We're going to see entirely new industries, based on technology that's already in the labs, and it'll spur demand for jobs that are barely conceivable just now. Looking ahead, I foresee new forms of wealth that enrich our nation and the world for the next century. "And remember the point of Apollo 13," Byron concludes. "They tore up the old flight plan. Then they took what they had and made the new plan work. They brought the astronauts home."
"Chatter that Spain is working with European Union officials on the terms of a bailout also helped lift markets." The Nasdaq gained half a percentage point, brushing its highest level since November 2000. It has since made its way down a couple rungs, to 3,179. The Dow is down 17 points, to 13,579, and the S&P is down a tenth of a point, to 1,460. Down, up, no matter. The delusion continues. Gold sits at $1,775, up $5 since yesterday's close. Silver, down 6 cents, to $34.68.
Want more mind-blowing statistics? Click the image. Also:
Bummer, man.
According to Harvard Business Services Inc.,"Entrepreneurship among college graduates of all ages is at a 15-year high, they are going into business for themselves." And not just that, but "26% of new businesses are created by people 20-34 years of age." According to the global information services company Experian, the number of young entrepreneurs with their own businesses has increased 22% since 2008. "The cost is quite low," head of strategy and research, Adam Swash says, "and can be done from back bedrooms." With the Internet's help, it's easier than ever for anyone to start a business on a shoestring. And all you have to do is Google "helping young entrepreneurs" to see the vast amount of assistance that exists. Lesson for the youngsters? Don't take a job: Make one.
Yet as dismal as things seem to be, out of the ashes of what doesn't work, something great is born. Again, as Patrick said in Vancouver, "It's not a bug, it's a feature. Things that look like they're bad can actually be very positive, and can be really important trends." "Coursera," AP goes on, "a for-profit company started by two computer science professors at Stanford University, will now offer more than 200 courses from 33 institutions that are open to anyone with Internet access. Officials said the website has registered 1.3 million students around the world.
"The new Coursera partners include Brown, Columbia, Emory, Vanderbilt and Wesleyan universities, as well as Berklee College of Music and Mount Sinai School of Medicine. "The foreign universities added are Hebrew University of Jerusalem, University of British Columbia, University of London, University of Melbourne and Hong Kong University of Science and Technology, Coursera said. "The new additions include five public institutions: Ohio State University, the University of Florida, University of Pittsburgh, University of Maryland and University of California, Irvine. "EdX, a competing online platform founded by Harvard University and the Massachusetts Institute of Technology, announced this month that it will start giving students the option of taking proctored final exams, which will allow them to earn independently validated certificates to show potential employers or educational institutions. "'As boundaries and limitations begin to disappear in the world of higher education, Coursera is clearly an up-and-coming player on the global stage and we look forward to partnering with them,' University of Florida President Bernie Machen said in a statement."
"But seriously, your whining about your own superiority in overcoming the old times is somehow superior to the loud complaints of a vocal minority of whiners complaining about the difficulties of this time? How? [Clarification: A young guy is chastising an old guy for making it sound like humping his way through college in the old days is somehow better than trying hump your way through college today.] "Almost everyone I know who carries a legal SSN is working for $9 per hour or less, unless they work for government or got started well before the dot-com bubble. There are just enough exceptions to cherry-pick. "I'm not offering any excuses for the new whiners; I am sure they will grow up to whine about the whiners in their grandchildren's generation. "I am just wondering when the whiners will grow up."
"I enjoy reading your comments."
"One thing I know for certain, the SEALs have a code of honor that I've found to be true and honest both past and present… "Secondly, they are not concerned about rumors, idle chatter or opinions. They deal in facts and have a great overview and take on situations. "If anyone reads this, they should take it seriously and not look to our news agencies to tell the truth to us. We are well connected in many overseas areas, and the ideas stated in this letter have been reiterated from other sources, both in Israel as well as other military sources. This should concern all Americans, and our military is moving ships, forces, troops, etc., into the region. "The smell of war is in the air." The 5: As if we didn't have enough to whine about.
"The email itself could be a ploy in the overall psychological war ongoing between Israel and Iran. I also suggest there is excellent reason to think it is a hoax — any military man in Israel is not likely to be the one to provide the alert of an impending attack. "Even in Israel… loose lips sink ships." The 5: Aye yi yi. Hoax or no hoax. The email is just annoying. "
The 5: Sure. It's called the Hard Assets Alliance. Cheers, Addison Wiggin The 5 Min. Forecast P.S. URGENT: Expires at Midnight "It's often said you pay for your wealth with your health," Patrick writes, sticking around. Today, he says, "I'm offering you an opportunity to keep and greatly increase both." He proceeds to show you how to take advantage of a clinically tested 'nutraceutical' that could dramatically slow down the aging process… One little snag: it expires at midnight tonight… Want to see all of the reasons Patrick is such an optimist despite all the doom and gloom? Click here and he'll tell you himself. "By the way," Patrick says on his way out, "The Killers' new album, Battle Born, rocks."
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| We're Entering Another Economic Collapse... Right As Inflation Hits LIft Off! Posted: 21 Sep 2012 05:53 PM PDT
By all counts, the latest ISM (a measure of manufacturing in the US) was a complete and total disaster. In August the ISM hit 49. Anything below 50 is considered a recessionary rating.
However, things are even worse below the surface. The ISM is made up of several components. Its Production component is back to May 2009 levels. The New Orders component is back to April 2009 levels.
And worse of all, Prices Paid is up to 54, up from a reading of just 39 in July.
In simple terms this tells us that inflation is hitting “lift off” in the US at the very same time that we are entering a recession that could be on par with that of 2008. And with corn and soybean prices at or near record highs, we could be on the verge of a stagflationary disaster combined with a food crisis at the very same time.
We get additional confirmation of a major economic contraction from corporate earnings. Recently we’ve seen earnings forecast cuts from Fed Ex, Bed Bath and Beyond, Proctor and Gamble, Adobe, Starbucks, McDonald’s and more. Indeed, when you remove financials, S&P 500 earnings FELL year over year for 2Q12.
This is hardly indicative of a strong economy. The fact a record number of Americans are on food stamps doesn’t bode well either. And the Rasmussen Employment Index indicates worker confidence is at levels not seen since the FALL OF 2008!
What does this tell us? That the US Federal Reserve has failed miserably to generate an economic recovery, despite spending trillions of Dollars in bailouts and expanding its balance sheet to $2.8 trillion in size (it was just $800 billion before the Crisis):
I don’t see any of the above pointing towards a “recovery.”
To top it off, the ECRI (which is a much better predictor of recessions than the National Bureau of Economic Research or NBER) believes that the US re-entered a recession in June.
And this is happening at a time when inflation is soaring due to the Fed’s money printing/ loose monetary policies. Agricultural commodities have risen some 20% since the last recession supposedly “ended.” Over the same time, Oil has risen by nearly $30 per barrel.
There’s a word for an economic contraction marked by high inflation: it’s called stagflation, and the US is in it big time.
Folks, this is the reality we’re dealing with. The Fed has gone “all in” in its efforts to stop the debt implosion… and it’s failed. All it’s done is unleashed an even more serious inflationary storm than the one we were already facing.
The time to start preparing is now. The printers are running. The Great Currency Debasement has begun. Some folks will walk out of this mess winners. Most will walk out as losers.
At Phoenix Capital Research, we’re taking steps to insure our clients are among the winners. We have a host of FREE Special Reports devoted to helping readers prepare for the coming Debt Implosions in both the US and Europe.
We also feature a special report devoted to inflation as well as which investments will perform best during periods of high inflation (periods like the one we’re entering).
All of this is available 100% FREE at www.gainspainscapital.com
Best Regards,
Phoenix Capital Research
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| How to Measure Strains Created by the New Financial Architecture Posted: 21 Sep 2012 05:41 PM PDT Via Eric Fine of Van Eck Global, We believe an unsustainable new global financial architecture that arose in response to the US and European financial crises has replaced an older, more sustainable, architecture. The old architecture was crystallized in Washington- and IMF-inspired policy responses to the numerous sovereign defaults, banking system failures, and currency collapses. Most importantly, the previous architecture recognized limits on fiscal and central bank balance sheets. The new architecture attempts to 'back', perhaps unconsciously, the entire liability side of the global financial system. This framing is consistent with a purely political—institutional stylized—fact that it is nearly impossible to penetrate the US political parties if the message is that there are limits to their power…or that their power requires great effort and sacrifice. This is why Keynesians (at least US ones) who argue there are no limits to a fiscal balance sheet are so popular with Democrats, and why monetarists (at least US ones) who argue there are no limits to a central bank balance sheet are popular with (a decreasing number of) Republicans. Party on! Again, nobody chooses hard-currency regimes – they are forced on non-credible policymakers. Let me put it more positively. If politicians want the power of fiat money, let alone the global reserve currency, they need to behave differently than they have.
Implications for Gold:
M-?: How to Measure Strains Created by the New Financial Architecture The analysis below examines how one would look at reserve-currency balance sheets in a "scorched earth" scenario in which confidence in the reserve-currency country becomes questionable. Because it is the reserve currencies themselves being examined as "at-risk", we use gold prices. None of the prices mentioned herein are actual target prices for gold. The numbers generated are measure of the strains on central bank balance sheets, and of strains that could potentially be put on central bank balance sheets based on future policymaker decisions. Overview
I believe an unsustainable new global financial architecture that arose in response to the US and European financial crises has replaced an older, more sustainable, architecture. The old architecture was crystallized in Washington- and International Monetary Fund-inspired policy responses to the numerous sovereign defaults, banking system failures, and currency collapses that characterized Northern Europe and Latin America in the '80s, Eastern Europe in the '90s, and Asia in the late '90s, among others. The Chinese menu of policy responses insisted upon by the IMF (or, in some rare cases, by responsible national-level policymakers themselves) included the items outlined in the subsequent paragraphs. Most importantly, the old architecture put a sovereign default explicitly on the table if there was a "debt overhang" – it was considered senseless to provide liquidity if solvency could never reasonably be achieved. Second, deep structural reforms were required to ensure that growth would eventually arrive to maintain solvency and sustainability. Third, a plan for fiscal balance was required, for self-evident reasons (and by self-evident, I suppose I must exclude US-style Keynesians, for whom fiscal sustainability is not a self-evident requirement). Fourth, independent central banks that would never (and usually it was never again) become the endless lender to the fiscal authority were required, and they would often have to maintain high interest rates to prove their independence and firmly anchor inflation expectations. A final element was open capital markets to lubricate trade and growth and encourage a competitive banking and commercial system. This sounds fairly reasonable, especially since the countries that took advantage of this policy menu are now our creditors, have safer banking systems and more sustainable fiscal positions, and prevented or overcame social meltdown (generally speaking). They also outperformed us during the latest crises and some are experiencing inflows of flight capital and human capital. To the extent that there were deviations from a totally freemarket- determined architecture in which bad decisions were punished by markets and the new last resort liquidity providers, it involved guaranteeing bank deposits to prevent society-wide panic. This was a widely accepted (and perhaps subsequently over-extended) conclusion from Milton Friedman's study of the US Depression. If a bank had too many non-deposit liabilities to make a deposit guarantee credible, those liabilities would take a hit and equity could go to zero, and senior unsecured debt could take hits (in exchange for equity). After all, if there were no pain to reckless lenders, the reckless lending would return. Off-balance sheet liabilities?... don't even consider putting them in the way of depositor confidence. It helped that in many of these crisis-toughened countries, the respect for societal equity was such that protecting those wealthy enough to own bank equity or debt, and not a simple depositor, was a non-starter. In any case, all of these hits to bank capital structure were designed to strengthen deposit guarantees —depositors knew there were multiple financing sources available well before we got to the level of deposits. Before describing the biggest departure from this more sustainable orthodoxy, let us first acknowledge that when the US experienced its crisis in 2008, not only did the US not avail itself of a single item from the policy menu I just described, but we created a new entitlement program that was not financed (my point is not about the merits of healthcare, only on its lack of financing). We did nothing on structural reform, and neither party has a long-term fiscal plan comparable to those we insisted on in crisis-stricken countries that came to "us" (a definition in which I incorporate the IMF) for liquidity. Let us similarly acknowledge the fact that Fannie Mae and Freddie Mae's gross (granted, not net) liabilities are roughly equal to our entire national debt. This is noteworthy, as such off-balance sheet fiscal liabilities were common to crisis-torn countries, and we normally insisted that they be recognized as formal liabilities (and then often defaulted on), which we have not done in our crisis. But, my point is not about these more traditional fiscal issues, as they are ultimately not as big as the US central bank's potential liabilities, and in any case the superficial fiscal issues at least get discussed even by status-quo economists. The real problem with the untested and unacknowledged new architecture is that it has created a new Federal Reserve liability, that I will call M-?. In the US phase of the crisis, not only were deposit guarantees greatly expanded (by 2.5x), but bank debt was guaranteed by the fiscal authority (in theory, only temporarily). The idea, of course, was that new banking system rules and good fiscal policy would be implemented during the bought time, which has clearly not happened given the greater concentration of too-big-to-fail (TBTF) banks and lack of a fiscal plan. The US banking system (which, post-crisis, generously included speculative entities such as investment banks) has about $15 trillion in liabilities, the largest elements of which are deposits, and their entirety appears to be guaranteed. But wait, there's more…Bloomberg sued the Fed to clarify the precise amount of theretofore secret loans. Teams of economists are still deciphering the Fed's dump of thousands of pages (to comply with a Federal judge's order, after long resistance), and are arriving at numbers up to $16 trillion (roughly equal to US GDP). Huh, that's strange, secret Fed lending during the crisis might have exceeded the total on-balance sheet liabilities of the US financial system! These additional guarantees from the monetary authority were "flash money" designed to prevent a run on derivative exposures at US and other banks. Perhaps as a result of "over-learning" from the fallout from Lehman's collapse—that a default on bank debt and off-balance-sheet derivative liabilities means systemic collapse—the monetary and fiscal authorities ensured that any claim on a bank was met. The loans of up to $16 trillion, plus Fed purchases of risk assets such as mortgage-backed securities, and all the other "stuff" we have read about by now, were enough to prevent the run. I should emphasize that this might have been the right decision, if it were conditioned on the isolation of the speculative activities of a bank from these guarantees in the future, the establishment of moral hazard (at least via firing bank boards and managements, given that bond defaults were deemed unacceptable), a long-term fiscal plan, etc. This was not the case. As a 14-year veteran of a TBTF investment bank, I distinctly recall the day the Fed's data dump indicated that my former employer received about $2 trillion in loans (all of which occurred after I had left the firm). I, and many of my former colleagues, assumed that this was a typo. But no correction followed. Why, I asked, would the Fed lend my TBTF investment bank so much? At the firm, I ran emerging markets economics research and then the emerging markets proprietary trading desk. However much I respected my colleagues and our work (which is 'a lot'), I do not think anyone would have made the case that we were doing anything especially socially useful. Nothing evil, of course, but nothing worthy of taxpayer guarantees, and I certainly expected that the firm would be allowed to fail if it merited failure. It was not, and there were no conditions for such a privileged status. The result of all of this is if you think it is politically and practically sustainable for the Fed to back-stop a $700+ trillion derivatives market, everything is fine; if you think it is not sustainable, everything is not fine. M-? is that liability. What's worse is that recent moves to have the derivative liabilities of TBTF banks placed on their deposit-taking subsidiaries brings this very close to the fiscal authority. Instead of the Fed being on the hook, the FDIC and US Treasury will be. It is no surprise that the Fed supports such moves – who would want to be around the next time investors worry about counterparty risk and more than the previous up-to-$16 trillion in "flash money" required to prevent a run on liabilities? Who would want to explain to depositors that their guarantee is equal to a derivative counterparty's? Who would want to explain that food stamps are being curtailed due to infusions from the fiscal authority into these bank liability guarantees? Who would want to explain that national defense spending is superseded by bank debt, and that the dollar might not remain the global reserve currency? I pity the academics, policymakers and politicians who will take responsibility for this scenario, though I suppose none will. The refrain will be that policy didn't do enough borrowing and spending, and/or that the central bank didn't expand its balance sheet enough. As an aside, many will rightly argue that the net amount of these derivatives is by definition much lower. There is a counterparty on one side, and on the other, which can often be collapsed to zero, assuming the profit/loss is booked properly. The problem with this logic is that it assumes, in the daisy chain of counterparties, no counterparty will go down, and that the books are marked properly. We believe, and argue throughout this article, that the financial system is not sustainable. Even current market guides, as distorted as they are, show high credit spreads for TBTF financial institutions, and these discount rates are not(!) used to reduce the value of a derivative with that institution. As a result, we will have to discover the precise amount of the net liability via recognized insolvencies at financial institutions. By the way, this daisy chain crosses borders, and thus any one country's financial authority. We argued above that the Fed has so far taken on the job of guaranteeing this daisy chain, which is why so many foreign banks received Fed support, and why the ECB gets swap lines from the Fed despite the Euro being, or pretending to be, a reserve currency in the "new architecture" mold of the US. There is great hope from the preceding framework, namely, it points to how easily confidence could be restored if M-? is not allowed to become a formal liability of the central bank, and gold becomes the reserve asset. We have been talking about unsustainable liabilities…how are we talking about gold as the reserve asset? Let me explain. Gold standards are the functional equivalent of currency boards. Currency boards/hard-money standards come about when trust in the fiscal and monetary authorities has eroded. The most typical cause for the many currency boards/hard-money standards I have experienced is one of the following. Most commonly, a central bank becomes perceived as an endless lender to the fiscal authority. Given that the Fed has bought more than half of all US Treasuries issued in the past 12 months, I think it is safe to say that we can check that box. Another route to a hard-money standard is the discovery or creation of unsustainable guarantees for the financial system on the part of the fiscal and/or monetary authority. Check that box, too. In these scenarios, the fiscal and monetary authorities are conflated. This can be put many ways. In one narrative, citizens lose trust when a central bank asset (Treasuries, for example) becomes viewed as supported/purchased only by a central bank liability (money, deposits…and hopefully nothing else) whose primary purpose is simply to buy that asset. This is one way of describing quantitative easing—printing money to buy Treasuries—and keep the Treasuries paying interest rates that are not market-determined. It could be put another way. Trust is lost when the fiscal authority's liability (Treasuries) is viewed as unsustainable due to an excess of on- and off-balance sheet guarantees, and whose payment sustainability is only generated by suppressed interest rates on the part of a co-opted (i.e., not independent) monetary authority. The point is whether the Fed has the M-? liability or whether the Treasury eventually assumes it, it doesn't really matter, as by that stage the fiscal and monetary are conflated and confidence is lost in both government debt (the central bank's asset) and the country's money (the central bank's liability). How can confidence be restored if confidence declines to "scorched earth" levels? Do not 'back' anything other than money and maybe deposits and use a reserve asset—for example, gold—that can not be created by a fiscal authority that has lost trust and credibility. Let us get one thing out of the way: the gold standard is very problematic and easy to attack, but proponents usually frame it as less bad than other regimes given the decisions made across the political spectrum in the US and much of Europe, as well as given the decisions made by policymakers throughout history. They also point out that it has a thousands of years old history as a store of value and, intermittently, as a unit of measure and means of exchange. This framing is consistent with a purely political—institutional stylized—fact that it is nearly impossible to penetrate the US political parties if the message is that there are limits to their power…or that their power requires great effort and sacrifice. This is why Keynesians (at least US ones) who argue there are no limits to a fiscal balance sheet are so popular with Democrats, and why monetarists (at least US ones) who argue there are no limits to a central bank balance sheet are popular with (a decreasing number of) Republicans. Party on! Again, nobody chooses hard-currency regimes – they are forced on non-credible policymakers. Let me put it more positively. If politicians want the power of fiat money, let alone the global reserve currency, they need to behave differently than they have. I should emphasize that this is a "scorched earth" scenario in which confidence has been severely undermined. Policymakers in the US and Europe will presumably have many opportunities to respond and avoid such an outcome. Moreover, many reservecurrency status countries have achieved this with decades of credibility that has underlined the resultant confidence. As a result of this confidence, the central bank has never really had to "back" anything, other than with confidence-building measures and a very limited number of formal guarantees (such as those given by the fiscal authority on deposits). But, those promises proliferated during our recent crisis, as confidence declined, so it is important to measure this change. Policymaker decisions, moreover, should be made with an appreciation of the degree to which our new architecture is straining the central bank's and the sovereign's balance sheets. So far, this is, in fact, happening more transparently and courageously in Europe where at least defaults on sovereign and bank debt are contemplated as alternative financing methodologies, rather than the monetization path of the US. Europe's problems, we have argued, are more political and game-theoretic. In any case, these "scorched earth" scenarios in which we divide gold reserves by a monetary aggregate are only proxies to measure the stress created by the new architecture…these are not price targets. Let us start quantifying. If the old architecture is maintained, in which only money and demand deposits (M1) are "backed" by gold, the gold price which equates this US central bank liability to gold reserves is roughly $9,000 ($8,612); in Europe, $18,000 ($17,608). The exhibit below reflects a simple calculation. It divides the central bank liability one chooses to back (here, we're assuming only physical cash/coins and demand deposits, or M1), by the new "reserve asset" (ounces of gold), and arrives at a price per ounce of gold. The fact that this number is not being obtained in the market is either a sustainable reflection of great confidence in our monetary and fiscal authorities, or an unsustainable one. Also note the US' strong position relative to other countries. I will not belabor this, as most countries hold dollar-denominated securities as their reserve asset. The calculation for other countries is more complicated than this graph implies. Nonetheless, it highlights the US' strong position under the old architecture. It also gives policymakers a gauge for the strains on the central bank's balance sheet under the old architecture. If M2 is the monetary aggregate/liability which is 'backed' in the US, the dollar price of gold that equalizes this backing is $37,000, and for the EU, $32,000. This is a big increase in the strain on the US central bank's balance sheet resulting from just one element of the unrecognized new architecture. This is an important increase. M2 includes savings and money market accounts; the latter was explicitly guaranteed by US policy during our recent crisis. It has been assumed that this was a temporary one-off guarantee, but that does not seem realistic. In any case, one can judge for oneself whether another bout of systemic crisis will be met with a repeat of such guarantees. If the answer is "yes", then this new number shows a big increase in strain on the central bank's balance sheet. I should note that Europe so far is avoiding guaranteeing the entire left side of its financial system, so if their conservative policy choice resists international pressures for US-style expansion (the "new architecture"), the upside to gold prices via their policies are less dramatic. If the new architecture in which guarantees of off-balance sheet derivative liabilities are backed (our M-?), in addition to portions of M2, the gold price that equates this backing is multiples of the $37,000 price—a dangerous harbinger for inflation and/or systemic collapse. Remember that the up to $16 trillion in Fed loans was "flash money" designed to prevent a run on off-balance sheet liabilities. It is very unlikely that any future run (and runs are a feature, not a defect, of the way fractional-reserve and leveraged banking systems are designed) will be satisfied with such a small amount of "money in the bank window". As dollar holders (again, including cash in circulation, demand deposits, savings accounts, money market accounts, as well as derivative contract counterparties) start to doubt the currency's store of value function, and the financial system's sustainability, they will run on the central bank's assets. First, perhaps, claiming Treasuries, but soon selling any dollar-denominated paper for real assets from equities (an ownership claim) to tractors, land and precious metals. In fact, we have long argued that policymakers will be increasingly tempted to use capital controls to prevent an unwind of their status quo, further undermining the reserve-currency status of the reserve currencies. Accepting the framework described herein is very useful from a political-economy perspective, I believe, as it quantifies the so far unconscious choices of policymakers, quantifies potential damage done to savers, and takes partisanship out of a lot of economics. Let me conclude by listing the issues we will be able to transcend in our politics:
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| Posted: 21 Sep 2012 05:09 PM PDT James Turk and Félix Moreno de la Cova discuss... [[ This is a content summary only. Visit my website http://goldbasics.blogspot.com for full Content ]] 
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| Posted: 21 Sep 2012 05:08 PM PDT Who's going to bail out the socialist state of Illinois? You are. Who's going to pay those multi-million dollar teacher's pensions? You are. Who's going to pay to Illinois state employees to drive Mercedes and retire at 50? You are. If Illinois requests a Federal bailout, the socialist democrats that run this state will be [...]
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| Drill Baby Drill—the Secret to Prospect Generation: Duane and Morgan Poliquin Posted: 21 Sep 2012 04:51 PM PDT The Gold Report: Duane and Morgan, talking with you is a wonderful opportunity to introduce our readers to the prospect generator business model, which Almaden Minerals Ltd. (AMM:TSX; AAU:NYSE) pioneered. Can you tell us how that came about? Duane Poliquin: Early in my career as a geological engineer, I worked around the world for companies like Placer Development and Kaiser Steel. Along the way, I became a goldbug. In 1972, I quit my job and announced to my wife that I was going to start my own gold company. We found a nice prospect in Nevada, and two years later did an initial public offering (IPO) for what was called Westley Mines Ltd. The markets were terrible then, so the first people I hit up for the IPO were family and friends. They bought up 40% of it and I was having a hard time selling the balance. Necessity being the mother of invention, I went to a major company that wanted to option the property. Instead of a down payment on the option, the company took part of the IPO f...
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| Guest Post: QE3 And Bernanke's Folly - Part II Posted: 21 Sep 2012 03:52 PM PDT Submitted by Lance Roberts from StreetTalk Advisors, Click Here For "QE3 And Bernanke's Folly - Part I QE3 And Bernanke's Folly - Part II Mark Twain once wrote that "History doesn't repeat itself, but it does rhyme." While this is a statement that is often thrown around by the media, economists and analysts - few of them actually heed the warning. It has been even worse for investors. Over the past 800 years of history we have watched one bubble after the next develop, and bust, devastating lives, savings and, in some cases, entire countries. Whether it has been a bubble created in emerging market debt, rail roads or tulip bulbs - the end result has always been the inevitable collapse as excesses are drained from the system. On September 6th, 2008 I gave a presentation discussing the December 2007 recession call we had made (NBER officially stated the recession started in December 2007 a full year later) and the potential for a substantial crisis ahead (the market began its collapse one month later.) During the presentation I showed the following slide discussing history and why this time was "not going to be different."
Each previous bubble was predicated on expansion of credit, lax lending policies, inflation, speculation, unique investment opportunity (tulip bulbs), or leverage which ultimately led to speculative fervor. The speculative fervor occurs as the bubble becomes fully developed and sucks the last of the "buyers" into the market creating a vacuum when sellers emerge. Since that presentation in 2008 many of the predictions that we had made at the time came horrifically true. Today, we once again have to ask ourselves whether the markets are repeating history or if this time is "truly" different? Unfortunately, the answer is most likely "no." Over the past couple of months the markets have advanced sharply in anticipation of a third round of Large Scale Asset Purchases (LSAP) by the Fed which has become affectionately known as QE3. The Fed delivered not only the expected QE3 program but expanded it by making it an open-ended program that will last until "employment reaches an acceptable level." This is quite a departure from the previous two programs, which were finite in nature, and has a lofty goal of boosting the economy to boost employment. The problem is that an artificial intervention program of this magnitude leads us once again into the realm of "unintended consequences." History is replete with examples of interventions that go wrong. The chart below shows the actions by the Federal Reserve in the past and the subsequent "crisis" that those actions bring. What the media misunderstands is that it is the policy of artificially manipulating interest rates that creates the bubble. It is when interest rates rise that has historically been the "pin" that popped it which explains much about the Fed's stance on ensuring that rates do not rise - ever again.
Since the turn of the century the U.S. economy has been subjected to the bursting of the stock market "tech" bubble that was driven by investor fervor followed by the collapse of the real estate bubble created by excessive credit and leverage. Since the end of the last financial crisis the Federal Reserve has remained consistently engaged to try and stabilize the financial system. By injecting trillions of dollars of liquidity into the system the Fed has made a concerted effort to reduce the probability of another financial crisis caused by a freezing of the credit markets. However, in the endeavor to prevent one event they may unwittingly be creating another. The Federal Reserves goal has been clearly stated that by boosting asset prices consumer confidence will be lifted supporting economic growth. The chart below shows the balance of excess reserves at Federal Reserve banks as compared to the market, consumer confidence and GDP.
What is evident is that while QE programs have flooded the excess reserve accounts of Federal Reserve banks there is little evidence that it translates to anything other than higher asset prices and a boost to the profitability of the banks through trading activities. However, these increases in bank liquidity, which are ultimately transformed into proprietary trading activities, is something that we witnessed during the real estate bubble from 2004-2008.
As we stated in our weekly missive: "While no two markets are ever the same – in this case, however, the issuance and repackaging of mortgage debt previously supplied massive liquidity to banks. This liquidity was then funneled into proprietary trading operations which drove markets higher. Today, the Fed is buying the mortgage bonds from the major banks in turn providing excess liquidity which again is funneled to proprietary trading desks. The net result is same." The importance of this is that the Fed was blind to the asset bubble being built in late 2007-2008 just as they will most likely be blinded by a focus on employment to the exclusion of risks building elsewhere in the system. One of the signs of a potentially burgeoning asset bubble in stocks is valuations. As opposed to the previous QE programs where earnings were rising sharply - during the recent market advance leading up to QE3 valuations have risen by more than 2 points as prices advanced in the face of declining earnings. Recent manufacturing and corporate reports are citing the weakness of the continuing recession in the Eurozone now beginning to impact the U.S.
These rising valuations show a clear detachment between price and underlying fundamental and economic realities. The risk to investors is that a liquidity induced stock market rally creates a further disparity between fantasy and reality. It is the disillusionment, as the dream turns into the next nightmare, which devastates market participants. There has been much commentary about how the market can support higher valuations due to lower interest rates. This is a fallacy of the Greenspan era that has continued to be perpetuated (see full analysis here.) With interest rates artificially suppressed by the actions of the government the theory loses much of its integrity.
The risk that the Fed is running is the creation of another "unrecognized" asset bubble in stocks one again. The chart above shows the Shiller cyclically adjusted P/E based on trailing reported earnings. Historically when P/E's have reached a level of 23x earnings, or greater, it has normally been indicative of the end of a bull market cycle. The major exceptions were the 1929 and 2000 stock bubbles. With valuations currently at 22.5x earnings the stock market, even in a low interest rate environment, are no longer "cheap" by many measures. This puts investors at risk of a sharp decline in equity prices as valuations adjust to the underlying fundamentals. I am not saying that an asset bubble exists at this particular moment. What I am saying is that Bernanke's folly of thinking that asset purchases that flood Wall Street with liquidity will improve housing, employment or the economy. There is currently no evidence of that. However, there is clear evidence that the continued suppression of interest rates is forcing unwitting investors into chasing yield which can most dangerous to their financial future.
Most likely the markets will push higher in coming months as liquidity floods the system pushing commodity prices and interest rates higher while devaluing the U.S. dollar. This will be great for the major banks trading profits but will impose a harsh tax on the consumer which ultimately impacts aggregate end demand for businesses. It is this degradation of the consumer that will likely push the economy towards the next recessionary drag and is something that yield spreads are already warning of. While Bernanke has high hopes that QE3 will support the economy long enough for a grid-locked Congress to enact fiscal policy to support the ailing economy - the reality is that we already may be closer to the next asset bubble than we realize.
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| Posted: 21 Sep 2012 03:49 PM PDT Gold Price Close Today : 1,775.50 Gold Price Close 14-Sep : 1,769.80 Change : 5.70 or 0.3% Silver Price Close Today : 3456.7 Silver Price Close 14-Sep : 3460.3 Change : -3.60 or -0.1% Gold Silver Ratio Today : 51.364 Gold Silver Ratio 14-Sep : 51.146 Change : 0.22 or 0.4% Silver Gold Ratio : 0.01947 Silver Gold Ratio 14-Sep : 0.01955 Change : -0.00008 or -0.4% Dow in Gold Dollars : $ 158.10 Dow in Gold Dollars 14-Sep : $ 158.77 Change : $ (0.67) or -0.4% Dow in Gold Ounces : 7.648 Dow in Gold Ounces 14-Sep : 7.681 Change : -0.03 or -0.4% Dow in Silver Ounces : 392.84 Dow in Silver Ounces 14-Sep : 392.84 Change : 0.01 or 0.0% Dow Industrial : 13,579.47 Dow Industrial 14-Sep : 13,593.37 Change : -13.90 or -0.1% S&P 500 : 1,460.17 S&P 500 14-Sep : 1,465.77 Change : -5.60 or -0.4% US Dollar Index : 79.323 US Dollar Index 14-Sep : 78.851 Change : 0.472 or 0.6% Platinum Price Close Today : 1,637.10 Platinum Price Close 14-Sep : 1,712.70 Change : -75.60 or -4.4% Palladium Price Close Today : 670.05 Palladium Price Close 14-Sep : 698.80 Change : -28.75 or -4.1% The GOLD PRICE gained $7.80 to 1,775.50 while silver chiselled off 5.1 cents to 3456.7c. Very strange day. Just on the open silver and gold shot straight up, traded sidewise for almost two hours, then fell off the cliff. Rest of the day was fairly calm. Both went to new highs for the move, 3517c and $1,787.10. The whole move looks something like an island reversal, complete with the little gaps. The SILVER PRICE looks the same, but not quite. Gold, after all, closed HIGHER, but silver a little lower. Today might mark the break to a correction. Any close next week above $1,776 would immediately gainsay that and send gold running for $1,800 before it runs out of steam. Rest easy, y'all -- the world's best friends of GOLD, Bogus Ben Bernanke and Super Mario Draghi are carrying us to the Brave New World of unlimited inflation. They are guaranteeing you that your silver and gold will double, triple, or quintuple before all this ends. If silver and gold do correct, buy with both hands. Tragic news item today: The Energizer bunny has been arrested. Charged with battery. This week's scorecard is practically unchanged from last week's, save for platinum and palladium, which dropped more than 4%. This first week of the Brave New World of unlimited QE and infinite money printing was, well, not much. Certainly it tried to keep the stock market floating, and helped gold, but other than that it was just Corruption as Usual. But something outlandish did occur with silver and gold today. More below. The US dollar index fell a gnat's eyebrow, 6.5 basis points (0.08%) to 79.323. Dollar has done falling for a little while (note "little"). It can't climb much higher than 80. However, it may crab along sideways for a few days. Euro is busy gainsaying its breakout (above the downtrend line) last week, sliding down the line like a drunk on a lamppost. That line is about where it closed today, $1.2986 (US$1 = E0.7701), so if it closes below that next week it will drop back to 126.20 and fill in that breakaway gap. Japanese Yen looks raggeder than the euro, having fallen away from the downtrend line (about 130c) like a fat rock into a deep well. Now jiggling along above its 20 and 50 day moving averages, which are right next to each other. Fiat currencies -- they have all the attractions of a three day old roadkilled armadillo. STOCKS had a really bad day. They rose to a new high for the move, but closed lower. That's the first half of a key reversal, but to confirm must close lower on Monday. Dow lost 17.48 (0.13%) today after trading much higher in the morning then sliding through the day. Almost every other index closed down, too. S&P500 lost 0.09 to 1,460.17. This will end in wailing, sorrow, and gnashing of teeth. Technically this is the second touch off this point -- a double top? Stay away from stocks. On 21 September 1873 it was Black Friday, the first time the New York Stock Exchange had to close because of a banking crisis -- and not the last. On 21 September 1931 Great Britain went off the gold standard. So, explain to me how this differs from today? I've been making y'all a special pre-publication offer for my new book, At Home In Dogwood Mudhole. There's a story in there called "Pig Persuader" that will leave you laughing breathlessly, at my expense. Then there's the tale of the horses running away with the wagon -- terrifying, but I can't keep from laughing. Don't take my word for it. If you read AHIDM and it doesn't make you laugh, cry, and your heart soar, I'll refund your money and you can keep the book and use it to shim up your old rickety washing machine. Yesterday I made a Special-Special Offer of two copies for one for the first person to order from states or countries we had no orders from. Orders came in from: Alaska Iowa Kentucky Maryland Nebraska New Jersey South Dakota West Virginia Foreign countries (now 24): Bahrain China India Indonesia Japan Lebanon Malaysia Monaco The Netherlands Romania Solvenia, and Switzerland. Thanks to all of y'all for those orders yesterday. I honored and amazed by the universal interest in At Home in Dogwood Mudhole. But we still need orders from a few states, and of course lots of foreign countries. If you order from these states and you'll still get Two-For-One if you are first to order (same goes for foreign countries that haven't ordered yet). Delaware Louisiana Maine Rhode Island, and Wyoming. To order, go to http://bit.ly/ahidm-vol1 First come, first served. Whoa! And thanks, Australia. I've gotten more orders from Oz than any other foreign land. Y'all won't regret it. Y'all enjoy your weekend. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com 1-888-218-9226 10:00am-5:00pm CST, Monday-Friday © 2012, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. No, I don't. 
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| QE3 To Infinity-The Final End Game Posted: 21 Sep 2012 03:36 PM PDT Jim Sinclair's Mineset My Dear Extended Family, The final end game of QE3 to infinity, with a month or two off from time to time, will be a product of the long term viability of the Federal Reserve Balance sheet and the impact on the dollar there from. Let's review what has transpired and begin to look at what will happen: [*]OTC derivative manufacturers and distributors sold fraudulent paper to almost every entity as clients of the Western world financial system. Inherently the OTC derivatives manufacturers and distributors had part of the transaction on their books. No problem as long as the entire scam was a "Daisy Chain," a connected set of transactions that has the appearance of risk but when all netted out equals almost zero. [*]Until Lehman was flushed, and flushed it was, most all OTC derivatives could have been netted to zero in a derivative resurrection bank. Losers would have rejoiced and winners would have declared war. However when Lehma...
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| Gold-Silver Ratio Declining As U.S. Dollar Collapses Posted: 21 Sep 2012 03:20 PM PDT Since July we have alerted our readers to a breakout in gold and silver prices as we expected a risk on rally in commodities with the catalyst being QE3 combined with worldwide stimulus moves from Central Bankers ... Read More...
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| Take the Test to See If You Might Be Considered a “Potential Terrorist” By Government Officials Posted: 21 Sep 2012 03:15 PM PDT There have been so many anti-terrorism laws passed since 9/11 that it is hard to keep up on what kinds of things might get one on a “list” of suspected bad guys. We’ve prepared this quick checklist so you can see if you might be doing something which might get hassled. The following actions may get an American citizen living on U.S. soil labeled as a “suspected terrorist” today:
Holding the following beliefs may also be considered grounds for suspected terrorism:
Many Americans assume that only “bad people” have to worry about draconian anti-terror laws. But as the above lists show, this isn’t true. When even Supreme Court Justices and congressmen worry that we are drifting into dictatorship, we should all be concerned.
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| Gold and Silver Disaggregated COT Report (DCOT) for September 21 Posted: 21 Sep 2012 02:54 PM PDT Table Totals Mask Stunning Changes in Commercial Trader Positioning HOUSTON -- This week's Commodity Futures Trading Commission (CFTC) disaggregated commitments of traders (DCOT) report was released at 15:30 ET Friday. Our recap of the changes in weekly positioning by the disaggregated trader classes, as compiled by the CFTC, is just below. The recap masks massive changes in positioning by the traders the CFTC classes as "commercial." Continued... In the DCOT table above a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting "longer" and red figures are traders getting less long or shorter. All of the trader's positions are calculated net of spreading contracts as of the Tuesday disaggregated COT report. Vultures, (Got Gold Report Subscribers) please note that updates to our linked technical charts, including our comments about the COT reports and the week's technical changes, should be completed by the usual time on Sunday (by 18:00 ET). If one was looking just at the legacy COT report, and only at the net positioning of commercial traders, they would have seen an increase of 12,542 contracts (5.3%) to the combined commercial net short positioning (LCNS), which is perhaps less of an increase in commercial hedging than we might expect for a $39.85 or 2.3% advance in the price of gold - with gold near potential technical resistance. They would have also missed the almost 30,000-lot evaporation of the Producer/Merchants from both the long and short sides of the battlefield. The graph below shows the legacy COT positioning of the combined commercial traders, which includes both the Producer Merchants and the Swap Delaers as a group. The combined commercial traders held a net short position of 249,633 lots on the COMEX as of September 18, the largest combined commercial net short position for gold futures since August 2, 2011 (287,634 lots net short then with $1,659 gold). Gold would peak five weeks and $266 later in September near $1,923, but not before the combined commercial traders had reduced their collective net short hedges by more than 59,000 contracts in a rare, but dramatic short covering retreat (to 227,714 contracts net short on September 6, 2011). While we are at it, there was similar activity in the COMEX futures for silver. Just below is the graph for the Producer/Merchants for silver futures short positions, showing a huge 12,618-lot (19.6%) reduction in PM short positions, to show 51,855 lots short. Meanwhile, traders the CFTC classes as Swap Dealers, the mercenary banks and firms that sell swaps in other markets and then hedge those derivatives using futures, reported a similarly large 11,681-lot (117%) increase in their pure short positions to show 21,650 contracts short - the highest number of Swap Dealer short bets since March 19, 2011 (21,914 then with $43.94 silver). Below is a chart of just the Swap Dealer short positioning for reference. Interestingly, just since June 26, the Swap Dealers have gone from being record net long to their largest net short positioning since February 22, 2011. On June 26 the SDs were net long 19,681 contracts. By Tuesday, September 18, they reported 7,875 lots net short. Below is a graph of the Swap Dealer net positioning in COMEX silver futures. In the words of Sammy Wright, "there's something funny going on." More later this weekend for subscribers.
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| Gold To Advance Another $700 - $1,200 Within Months Posted: 21 Sep 2012 02:39 PM PDT  Today 25 year veteran Caesar Bryan surprised King World News when he talked about gold advancing $700 to $1,200 in a matter of months. Bryan stated, "Just looking at gold relative to the supply of money, gold may advance to $2,500 to $3,000 in the first few months of next year." Bryan, from Gabelli & Company, also discussed the nature of the current gold advance, silver, and what to expect going forward. Here is what Caesar had to say: "Since we've had the news of further easing in the US and Europe, gold has moved up in a sort of 'step' fashion. It's quiet for a few days, and then another move higher takes place. Now we seem to be set for another 'step' move higher."
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| Gold hits 2012 high on Spanish bailout fears Posted: 21 Sep 2012 02:38 PM PDT Stimulus programmes also continue to boost gold prices, says broker. 
This posting includes an audio/video/photo media file: Download Now |
As gold prices hit a 2012 record of $1,787.40 per ounce on Friday, Bank of America Merrill Lynch analysts said the precious metal could soar to $3,000 or even $5,000 over the longer-term.
My Dear Extended Family,
"So here we are, 2012, the world ends, right?" Patrick Cox sardonically broke out his Shorting the Apocalypse speech with in 
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