saveyourassetsfirst3

Oil Prices Vs. The U.S. Dollar - Correlated Or Manipulated?
GLD Losing To SLV In A QE3 World
“How High Can Gold Go?” "There Is No Telling" James Grant Tells CNBC
Sept 21, 1931 : The End of the Gold Standard
Gold: Hedge Fund Titan Ray Dalio
Video Series: Ray Dalio and QE3, What Worries Hedge Fund Titan Ray Dalio?, Possible Downturn in US Economy, Sharpening America's Competitive Edge
Winged Migration of Funds to Yellow Metal?
Not all that glitters is gold
Booster Rocket has ignited
'Uptrend Intact' on Sentiment 'Buoyed by Inflation Fears'
'No Telling' How High Bullion Goes: James Grant
Open-Ended Stimulus Prompts Higher Gold Forecasts
Links 9/21/12
Gold and Silver Market morning, September 21 2012
Jim Grant: "We Are All Living in a Land of Speculation and Manipulation"
Deutsche Bank: Western Economies Are Screwed, And Investors Face A 'Disturbing Paradox'
Jim Grant: We are all living in a land of speculation and manipulation
Gold was not selected arbitrarily by governments to be the monetary standard
Scotiabank Analyst Uncovers Mining Opportunities in Unusual Places
A Golden Buying Opportunity in Goldcorp
Empty Letter
The Sharks Amongst the School
Crisis Replay… Soon Argentina Will Be on Sale Again
Fed to Debase Dollar?
Euro-Gold Just 1% Off Record High as Jim Cramer & Deutsche Bank Agree "Gold Is Money"
Sept 21, 1933 : Britain goes off the Gold Standard

Oil Prices Vs. The U.S. Dollar - Correlated Or Manipulated?

Posted: 21 Sep 2012 12:38 PM PDT

By Jack Rabuck:

There is always talk of market manipulation when it comes to oil prices. Indeed, yesterday there was an article in the Financial Times about Saudis offering up extra supply to put a lid on prices (thanks to Abnormal Returns for the pointer).

I am more inclined to believe that market forces control the price of energy. This seems like a difficult position to hold at first glance because the majority of the oil produced in the world is controlled by what is ostensibly a cartel, OPEC. However, the pressure by non-OPEC oil suppliers is increased when prices go up and oil does not have a monopoly on energy prices, despite how it might feel when filling up your car.

So today I have prepared an analysis of oil prices versus the dollar. Because a barrel of oil is denominated in dollars, we expect an inverse relationship to exist. I'll be

Complete Story »

GLD Losing To SLV In A QE3 World

Posted: 21 Sep 2012 12:12 PM PDT

By Christian Magoon:

SPDR Gold Trust (GLD) investors have been happy with gold's run upward recently. The rally, based off the hope for and realization of QE3, has pushed gold ETFs upward into double-digit territory for the year. Here's a snapshot of the physical gold ETF performance grid at GoldETFs.biz.

(click to enlarge)

However, investors with a broader perspective on precious metals have found even better returns in silver over the last month. The largest silver ETF is the iShares Silver Trust (SLV) and it has handily outpaced its gold ETF counterpart, GLD, over the last month. Here's the chart from Google Finance.

(click to enlarge)

As the chart shows, GLD gains of 9% pale in comparison SLV's 20% return over the last month. While silver will now receive a lot more attention from investors due to this recent out-performance, many won't bother to review the performance of silver year to date and

Complete Story »

“How High Can Gold Go?” "There Is No Telling" James Grant Tells CNBC

Posted: 21 Sep 2012 08:01 AM PDT

gold.ie

Sept 21, 1931 : The End of the Gold Standard

Posted: 21 Sep 2012 08:00 AM PDT

econ.iastate

Gold: Hedge Fund Titan Ray Dalio

Posted: 21 Sep 2012 07:52 AM PDT

It appears CNBC has found this intriguing too and the largest hedge fund manager in the world has been espousing his views all morning.

from zerohedge.com:

Most notably he very concerned at the possibility for social unrest (just as we have pointed out again and again) highlighting the rise of Hitler in 1933 and its parallels to the current social disruptions around the world as global economies sufffer painful deleveragings.

His suggestion is that gold "should be part of everybody's portfolio" as he explains the reality of the endgame of fiat monetary systems. As far as Warren Buffett's distaste for the yellow metal, he opines "I think he is making a big mistake."

Video Series: Ray Dalio and QE3, What Worries Hedge Fund Titan Ray Dalio?, Possible Downturn in US Economy, Sharpening America's Competitive Edge

Posted: 21 Sep 2012 07:29 AM PDT

We think these CNBC interview segments with Ray Dalio were worthy of sharing. Ray Dalio is the worlds largest hedge fund manager, founder and chief investment officer of Bridgewater Associates, currently 130 billion under management. Certainly a welcome investment of our time.

First: Dalio on QE3 and the US Dollar

http://video.cnbc.com/gallery/?video=3000116792&lay=1

Second: What Worries Hedge Fund Titan Ray Dalio

http://video.cnbc.com/gallery/?video=3000117515&lay=1

Third: Possible Downturn in US Economy

http://video.cnbc.com/gallery/?video=3000117516&lay=1

Fourth: Sharpening America's Competitive Edge

http://video.cnbc.com/gallery/?video=3000117518&lay=1

Source: CNBC News

Winged Migration of Funds to Yellow Metal?

Posted: 21 Sep 2012 07:13 AM PDT

The opening of the final trading session of the week saw the metals' complex move higher once again after a few sessions marked by indecision and tande-trading with the euro. Spot gold was bid near $1777 early on Friday while spot silver hovered near $34.90

Not all that glitters is gold

Posted: 21 Sep 2012 07:00 AM PDT

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 ...

Booster Rocket has ignited

Posted: 21 Sep 2012 06:01 AM PDT

'Uptrend Intact' on Sentiment 'Buoyed by Inflation Fears'

Posted: 21 Sep 2012 05:39 AM PDT

Wholesale gold bullion prices held above $1,770 an ounce Friday morning in London, a few dollars below six-month highs hit earlier in the week, while stocks and commodities were also broadly flat.

'No Telling' How High Bullion Goes: James Grant

Posted: 21 Sep 2012 05:07 AM PDT

Gold is slightly higher today and is being supported by investor concerns not just about 'stimulus' but about "open ended" QE or 'QE to infinity'. Gold and silver have this week consolidated on their recent sharp gains which is a healthy development.

Open-Ended Stimulus Prompts Higher Gold Forecasts

Posted: 21 Sep 2012 04:43 AM PDT

Analysts have been revising up their gold price forecasts given the "open-ended" monetary stimulus from the major central banks which would likely benefit gold price over other types of commodities.

Links 9/21/12

Posted: 21 Sep 2012 03:22 AM PDT

How the Sub-Saharan Cheetah Got Its Stripes: Californian Feral Cats Help Unlock Biological Secret Science Daily. John M highlighted the discussion at the end of Abyssinians.

Today, the Emoticon Turns 30 :-) Atlantic (furzy mouse)

People Can Be Tricked into Reversing Their Opinions on Morality Scientific American (Carol B)

Paris Apple staff may strike for iPhone 5 launch France24 (Swedish Lex)

EU in talks over Spanish rescue plan Financial Times

Obama officials' spin on Benghazi attack mirrors Bin Laden raid untruths Glenn Greenwald

S.C. working poor share anger over Romney's 47% remarks McClatchy

Why Do People Hate Teachers Unions? Because They Hate Teachers. Corey Robin (Carol B). This appears to be a generational change. My parents' cohort respected teachers.

The New York Times bans quote approval Poynter. As Lambert stresses here, hype exceeds reality. See the last line of the post.

Reversing Trend, Life Span Shrinks for Some Whites New York Times (Swedish Lex). Lookin' more and more like Russia….

A CONSERVATIVE HISTORY OF THE UNITED STATES New Yorker (furzy mouse)

The microscopic eye Stop Me Before I Vote Again (Carol B)

Rethinking Robert Rubin William Cohan, Businessweek (Barry Ritholtz). It's taken this long to "rethink" him?

Nearing end of term, Obama's snared no big Wall Street fish McClatchy

Behind the Scenes, Lawmakers Lobby to Curb Bank Rules New York Times

Beware the costs and psychology of QE3 Gillian Tett, Financial Times. Be sure to at least click over to read the first two paragraphs.

'The Great American Tax Debate' Misses the Point US News & World Report

One year on, what has been achieved? Economist. Better than damning with faint praise, but not by much. And it does plug the card deck.

JPMorgan Power-Trading Business Faces Suspension, FERC Says Bloomberg

Libor-Like Manipulation Possible in Benchmarks Around the World Bloomberg. Quelle surprise!

Sheila Bair and the bailout bank titans Fortune (Lisa Epstein)

The radical right-wing roots of Occupy Wall Street Maureen Tkacik, Reuters. A great piece.

The Waning of the Modern Ages Counterpunch (Carol B). Today's must read.

* * *

lambert here:

Mission elapsed time: T + 14 and counting*

"The bigger the lie, the more they believe." –The Wire, "More with Less"

Occupy. Police state: "Davis police officers who doused students and alumni with pepper spray during a campus protest last November won't face criminal charges, prosecutors said Wednesday. [O]fficers perceived they were dealing with a hostile mob and needed to spray the protesters to clear a path to safety." Anybody who's watched the tape knows "clear a path to safety" pins the bogumeter. … Americans for Prosperity: "For an anti-Occupy Wall Street rally, the rhetoric was short on criticisms of the movement, save for AFP member Irene VanHattem. 'They're stupid, so stupid. They don't understand that the power isn't on Wall Street but in D.C.'" … Boring banks: "The Occupy Bank Working Group still hopes to create an alternative provider of financial services for people disaffected with, or neglected by, the existing banking system."

Chicago teacher's strike. The day after: "We see public schools across our city drained of resources, set up to fail and eventually closed, with all of the teachers — good and bad — laid off. Some of the closed schools become charter schools: private schools financed with public money, churning out private profit. Others become "turn-around" schools, reorganized around the latest educational fad."

AK. Transparency: "[NOAA's] proposed [fisheries] rule would improperly restrict public access to many types of fishery data central to the public's ability to understand the management and performance of fisheries, including information generated from tax payer-funded science. "

CA. Poverty: "Fresno, Modesto and Bakersfield-Delano areas are among the top five U.S. regions with the highest percentage of residents living below the poverty line."

FL. Charters: "'We should have had way more time to look for other schools for our kids,' said Nicole Williams, whose son [attended] Eagle Charter Academy in Lauderdale Lakes, one of the three schools now closed. Also closing this week were the nearby SMART Charter School (run by the same company as Eagle Charter), and Touchdowns4life Charter School in Tamarac, which was founded by former Miami Dolphins running back Terry Kirby." … Corruption: "The Broward County Commission, with only a single dissenting vote, decided last week to channel some $600,000 in unspent office funds into their own sweet individual discretionary funds to spread around their districts. That won't quite amount to unfettered buckets of slush but it's a start."

IL. Jesse Jackson, Jr.: "Rep. Jesse Jackson Jr. (D-Ill.) confirmed through a spokesman on Wednesday that he is selling his home here–the reason– to help pay for his health care. The home, a row house in the DuPont Circle neighborhood, is listed for $2.5 million." If we had single payer–

MO. Dought: "[B]ig problems [for houses can be] caused by the drought: damage to foundations, basements and walls. "Basically what happens is the ground shrinks under the foundation," [foreman Vern] Ganzer says. Settlement of foundations is normal over time, but the drought has turned soil into powdery crumbles." …. Akin: "'God has spoken: Todd is running,' said one MO R strategist, granted anonymity to speak candidly. 'Our loins are girded.'"

NC. Fracking: "'More than half of Chatham County residents rely on private wells for their drinking water,' said Sally Kost, Chatham County Commissioner. 'As a county commissioner, I am concerned that as the drillers take their profits and leave NC, the cost of the cleanup will be passed on to the Chatham County taxpayer.'"

NH. Ballot access: "On September 20, the NH Ballot Law Commission put Virgil Goode on the ballot."

NY. NYPL: "Last year fans of the New York Public Library's main branch by Bryant Park (the Schwarzman Building, if you must) had a collective freakout when it was announced that NYPL president Anthony Marx wanted to move the stacks out of the glorious temple to books and ship them to New Jersey. Deep breath everybody, that isn't going to happen anymore!" … Fracking: "DEC Commissioner Joe Martens has rejected the call by many environmentalists to hand off the review of the possible health impacts of hydrofracking to an outside group. Instead, DEC's health impact analysis will be reviewed in-house, by the state Department of Health."

OH. Unheard message: "The 52-foot statue of Christ returned to its familiar place overlooking Interstate 75 at Solid Rock Church with a different look. This one is a full-figure of Jesus with arms outstretched in front, unlike the former icon that burned to the ground after being struck by lightning in June 2010."

OR. Coal: "In the Greater Portland area at least, the trains will run almost exclusively through low-income communities of color in North and Northeast Portland."

PA. Mass incarceration: "At one point, protesters interrupted the program for seven minutes. Several groups unfurled banners and chanted against expanding the state prison system: 'Fund education, not incarceration."

TN. Undeserving poor: "Recipients of EBT cards in Chattanooga and Knoxville used their benefits at a strip club, a bar, a tobacco shop, malls, high-end clothing stores, hotels and other places where non-essential items are sold." Right, because strip joints are only for convention delegates.

WA. Disemployment: "Washington state unexpectedly lost jobs last month for the first time this year, but economists disagreed over whether the slump represents a temporary blip or a stall in the recovery that could last until at least Election Day." State figures are more volatile. But still.

Outside baseball. McKelvey's theorem: A lemma: "Voting alone does not give the people any power! Just by voting, you can't control anything. You also have to have a public discussion about political topics and this is what protest is about." … Media critique: "[T]he right move here [on the 47% story] was to scrutinize Romney's rhetoric. The Denver Post earns a laurel for doing just that. It's a notable–and welcome–development to see a policy explainer dominate the front page of a metro newspaper." More than 140 characters! … Parent triggers: "One of ALEC's model laws is a 'parent trigger' bill." … Aristotle: "David Simon shows, from The Wire to Treme and even Homicide, have at their essential heart the realization that politics is simply humanity writ large and noisy, and that every interaction between members of the human herd is essentially a political one. And, not for nothing, but that notion has a certain intellectual provenance in that Aristotle thought of it first" (Charles Pierce). Why we wade through the garbage.

The trail. Lesser evil: "If Ted Bundy were the Demolican candidate, and John Wayne Gacy the Republicrat– Well, a Gacy administration would certainly be better for women." … Control of the Senate: "The Ds' chances of controlling the Senate have increased to 79 percent in the forecast, up from 70 percent on Tuesday. The velocity of the change is unusual. But if the trend continues, the question may no longer be whether Rs can win the Senate — but how vulnerable they are to losing the House [(!!)]" (Nate Silver). … Swing state Keynsianism: "Obama and his team have been pulling every lever of the federal government, announcing initiatives aimed at critical constituenciesd, dispatching cabinet secretaries to competitive areas [etc.]" Is that the "President of all the people" part? Or some other part? … Swing state enthusiasm: "Voters in the 12 states USA Today and Gallup consider the key swing states that could decide the 2012 presidential election are now significantly more enthusiastic about voting this fall than they were in June. Six in 10 (59%) are either "extremely" or "very" enthusiastic, up from 46%. Voter enthusiasm in these states has grown among members of both political parties; however, Democrats' level has increased more." …. Youth: "Matt Ely, 25, who works two restaurant jobs as a server and a cook in Green Bay, WI., laments that even after a 53-hour workweek, he still lives 'paycheck to paycheck.' He is opposed to the R plan for tax cuts for upper income earners, but does not think D have good ideas, either. 'They're all a bunch of rich people that I really don't feel like care about me anyway.'" … Polling: "Although there are exceptions on either side, like the Gallup national tracking poll, for the most part Obama seems to be getting stronger results in polls that use live interviewers and that include cellphones in their samples — enough to suggest that he has a clear advantage in the race."

Grand Bargain™-brand Cat Food watch. "Fiscal cliff": "The fiscal cliff is really the only legislative issue that's even registering a blip on the radar of the government and corporate Washington right now. [S]erious legislating has completely stopped. Nothing substantive will happen before the election." … Social Security: "Senate Majority Leader Harry Reid (D-Nev.) and 28 other members of the 53-member Senate Democratic caucus have signed a letter opposing any cuts to Social Security as part of a deficit reduction package." So lower the eligibility age, and not one penny of cuts to Medicare.

The Romney. Rats leaving ship: "Tim Pawlenty was named Thursday as president and CEO of the Financial Services Roundtable [and] will step down as a national co-chairman of Romney's presidential campaign to assume the new role, which will formally begin November 1." … Because it's a circus! "The John and Mable Ringling Museum of Art has been accused of violating its rental policy by allowing Republican presidential candidate Mitt Romney to hold a campaign rally on the museum's grounds today." … That secret video: "Off to the side, behind a serving table, was a video camera. The white-gloved waitstaff didn't know the camera was there – or didn't care – because waiters stopped in front of it to put down a decanter of red wine, or pick up what appeared to be champagne" (PT). … Air war: "Citizens United has struck a deal with a dozen television stations to run its hour-long film [The Hope and the Change] featuring voters disaffected with President Barack Obama. The movie will run in its 60-minute entirety in an agreement with six cable networks, along with local stations in LA, CO, IN, and HI. It will reach 130 million homes, according to Citizens United, coupled with advertising dollars about the movie on cable networks." Also too royalties! … Losing the political class: "[ROMNEY:] The president today threw in [#1] the white flag of surrender again, His slogan was [#2] 'Yes, we can.' His slogan now is 'No, I can't.'" Except for the WSJ, I'm seeing more quotes of the wooden and tone-deaf #1 than of the deft and snarky #2, which also has the merit of being in the same hemisphere as the truth. … Percentages: "My campaign is about the 100 percent of America." Only 100%? Why not 110%?

The Obama. Hold his feet to the fire: "And even if Obama is reelected, more hard work begins after Inauguration Day — when we must push him to be tougher on the Rs than he was in his first term, and do what the nation needs" (Robert Reich). … The new normal: "Ds in Washington and beyond said Obama was simply telling the truth [at last!]. Mr. Hope and Change hasn't changed Washington, they agreed, but explaining why not and urging Americans to work together to finally make change happen is a way to inspire voters to take ownership of this election. Stop pining for John F. Kennedy, for Nelson Mandela. Just grind out a win and get ready for four more years of the same." Hope and change was bait and switch, then? … The Arab Spring: "[OBAMA: ] "We cannot replace the tyranny of a dictator with the tyranny of a mob." … "I've learned": I love the way Obama keeps saying "I've learned" ("I've learned some lessons"; "one of the things I've learned as President"; "one of the things I've learned is you can't do that." So all the suffering has been our investment in Obama's on-the-job training. Good to know. Life has meaning at last! … Authoritarian followership: Godwin's Law creepy (VastLeft).

* Slogan of the day: A plow makes the furrow but The Romney will defend it!

* * *

Antidote du jour (martha r from Facebook (gasp) "rivers in the ocean"):

Gold and Silver Market morning, September 21 2012

Posted: 21 Sep 2012 03:00 AM PDT

Jim Grant: "We Are All Living in a Land of Speculation and Manipulation"

Posted: 21 Sep 2012 02:35 AM PDT

¤ Yesterday in Gold and Silver

It was a pretty quiet trading day on Thursday as well. After trading flat up until just after 11:00 a.m. Hong Kong time on Thursday morning, gold got sold down to its low of the day [around $1,755 spot] about eight hours later at 11:15 a.m. in London.

Gold rallied from there...except for the slight dip going into the London p.m. gold fix. The rally ended just before noon in New York...and gold traded sideways from there into the 5:15 p.m Eastern electronic close.

When all was said and done, gold closed at $1,768.50...down $1.20 from Wednesday's close. Net volume was in the area of 150,000 contracts.

Silver's price path was identical to gold's...with the low, high and London p.m. fix prices occurring at precisely the same moments as gold. The Kitco gold and silver charts for yesterday look virtually identical. From its early morning Far East high to its late morning London low, silver traded in a 2 percent price range yesterday.

The silver price closed at $34.64 spot...up 7 cents from Wednesday. Volume was a very high 49,000 contracts.

The dollar index opened at 79.11 on Thursday morning in the Far East...and traded pretty flat until minutes after 10:00 a.m. Hong Kong time. From that point, a rally of some substance got under way...and its zenith [79.66] came just a few minutes before 10:00 a.m. in New York.

From that high, the index went into a slow decline...and by the close of trading in New York late Thursday afternoon, the dollar index had shaved about 24 basis points off that gain...and the index closed at 79.39...up 28 basis points from the open.

The gold stocks gapped down about 2 percent at the open, with the absolute low tick coming at precisely 10:00 a.m. Eastern time...which was the precise moment of the London p.m. gold fix yesterday...and the exact New York low price ticks for both gold and silver.

The subsequent rally lacked enthusiasm but, by the end of the trading day, the gold stocks had gained back a bit more than half their losses. The HUI closed down 0.71%.

It was very much a mixed bag for the silver stocks yesterday, but the ones that mattered did somewhat better for themselves...and Nick Laird's Silver Sentiment Index closed up 0.43%.

(Click on image to enlarge)

The CME's Daily Delivery Report was unexciting yesterday...and that's being kind, as only 2 gold contracts were posted for delivery on Monday. We're starting to run out of delivery month...and there are still 495 silver contracts open in September. One has to wonder what the short/issuers are waiting for. Maybe physical silver to deliver, perhaps?

The GLD ETF reported that an authorized participant[s] added another 96,949 troy ounces of gold yesterday...more than three tonnes. That's quite a bit.

Yesterday I reported that there was no addition to SLV on Wednesday. That, in fact, was not correct, as they didn't update their website with Wednesday's data until almost midnight Eastern time...and I missed it, as they always update it during normal business hours...before 5:00 p.m. Eastern time.

As it turns out, authorized participants added 1,356,384 troy ounces of silver to SLV on Wednesday...and then added another 1,840,792 troy ounce on Thursday. Over the two days, they added 3.20 million ounces to SLV. That's a pretty decent amount, but there's still much more owed than that.

There was no sales report from the U.S. Mint.

Over at the Comex-approved depositories on Wednesday, they reported receiving 1,400,928 troy ounces of silver...and shipped 941,679 ounces of the stuff out the door. The link to that activity is here.

Here's a new chart that Nick Laird sent me yesterday. This is the average intraday price moves for gold for the entire trading month of August 2012.

(Click on image to enlarge)

Here's how it compares to the trading pattern for all of 2010. As you can see, there's quite a bit of difference in the pattern of how gold traded in August 2012 compared to how it traded during 2010.

(Click on image to enlarge)

Since yesterday was the 20th of the month, The Central Bank of the Russian Federation updated their website with August's numbers...and they reported that their gold reserves actually declined 100,000 troy ounces during the month. Their reported gold reserves now sit at 30.0 million ounces. Here's Nick Laird's most excellent chart updated with that data.

(Click on image to enlarge)

I have the usual number of stories...and I hope you can find the time to read the ones that interest you the most.

I was somewhat surprised to see that Russia's gold reserves actually declined last month.

AngloGold Ashanti workers go on illegal strike. Faustian precedent bodes ill and leaves gold and silver in prime position. Deutsche Bank: Western Economies are Screwed. SLV adds 3.20 million ounces of silver.

¤ Critical Reads

Matt Taibbi: Wall Street Rolling Back Another Key Piece of Financial Reform

Wall Street lobbyists are awesome. I'm beginning to develop a begrudging respect not just for their body of work as a whole, but also for their sense of humor. They always go right to the edge of outrageous, and then wittily take one baby-step beyond it. And they did so again last night, with the passage of a new House bill (HR 2827), which rolls back a portion of Dodd-Frank designed to protect cities and towns from the next Jefferson County disaster.

Jefferson County, Alabama was the most famous case – the city of Birmingham went bankrupt after being bribed and goaded into taking on billions of dollars of toxic swap deals – but in fact it was just one of hundreds of similar examples of localities being duped into suicidal financial deals by rapacious banks and financial companies. The Denver school system, for instance, got clobbered when it opted for an exotic swap deal pushed by J.P. Morgan Chase (the same villain in Jefferson County, incidentally) and then-school superintendent/future U.S. Senator Michael Bennet, that ended up costing the school system tens of millions of dollars. As was the case in Jefferson County, the only way out of the deal involved a massive termination fee that might have been even more destructive than the deal itself.

To deal with this problem, the Dodd-Frank Act among other things included a simple reform. It required the financial advisors of municipalities to do two things: register with the SEC, and accept a fiduciary duty to respect the best interests of the taxpayers they are advising.

Sounds simple, right? But Wall Street couldn't have that. After all, if companies are required to have a fiduciary responsibility to cities and towns, how in the world can they screw cities and towns? The idea was a veritable axe-blow to the banks' municipal advisory businesses.

The rest of this must read Matt Taibbi tirade was posted on the Rolling Stone magazine Internet site yesterday. I thank Ulrike Marx for providing the first story in today's column...and the link is here......along with the usual 'pithy prose' advisory.

View full GSD edition

JPMorgan Power-Trading Business Faces Suspension, FERC Says

The Federal Energy Regulatory Commission has accused J.P. Morgan Ventures Energy Corp. of misleading regulators and said its authority to sell electricity might be suspended.

FERC issued an order today that directs the unit of New York-based JPMorgan Chase & Co. (JPM) to show that it didn't violate FERC regulations and explain why its authorization to sell electric energy and related services at market-based rates should not be suspended.

"That can be more serious than a penalty, that could be more serious than disgorging profits," said Susan Court, principal at SJC Energy Consultants LLC in Arlington, Virginia, and a former FERC enforcement director. "That could entail a lot more money than just paying a penalty."

The order is part of FERC's effort to increase transparency and eliminate manipulation of the electricity market. The agency is investigating JPMorgan's power trading in California and the Midwest. That investigation came to light when FERC went to court seeking internal e-mails from JPMorgan, saying the bids from the company might have resulted in at least $73 million in improper payments to generators.

This Bloomberg story from yesterday was picked up by the finance.yahoo.com website yesterday...and I thank Scott Pluschau for sending it our way. The link is here.

View full GSD edition

What Mitt Romney Also Said: A Glimpse Of The Endgame?

By now everyone has heard the infamous Mitt Romney speech discussing the "47%" if primarily in the context of how this impacts his political chances, and how it is possible that a president "of the people" can really be a president "of the 53%." Alas, there has been very little discussion of the actual underlying facts behind this statement, which ironically underestimates the sad reality of America's transition to a welfare state.

What we did want to bring attention to, is something else that Mitt Romney said, which has received no prominence in the mainstream media from either side. The import of the Romney statement is critical as it reveals just what the endgame may well looks like.

In response to an audience question, Romney had this to say..."[The] former head of Goldman Sachs, John Whitehead, was also the former head of the New York Federal Reserve. And I met with him, and he said as soon as the Fed stops buying all the debt that we're issuing—which they've been doing, the Fed's buying like three-quarters of the debt that America issues. He said, once that's over, he said we're going to have a failed Treasury auction, interest rates are going to have to go up. We're living in this borrowed fantasy world, where the government keeps on borrowing money. You know, we borrow this extra trillion a year, we wonder who's loaning us the trillion? The Chinese aren't loaning us anymore. The Russians aren't loaning it to us anymore. So who's giving us the trillion? And the answer is we're just making it up. The Federal Reserve is just taking it and saying, "Here, we're giving it." It's just made up money, and this does not augur well for our economic future. You know, some of these things are complex enough it's not easy for people to understand, but your point of saying, bankruptcy usually concentrates the mind.

The rest of this story is posted over at the zerohedge.com website...and I thank reader Michael Cheverton for sending it along. The link is here.

View full GSD edition

Fed's Fisher Says U.S. Inflation Expectations Rising

Federal Reserve Bank of Dallas President Richard Fisher said the central bank's third round of bond purchases will probably fail to create jobs while risking higher inflation.

"I do not see an overall argument for letting inflation rise to levels where we might scare the market," Fisher said yesterday on Bloomberg Radio's "The Hays Advantage" with Kathleen Hays and Vonnie Quinn. "We have seen a sharp rise in inflation expectations. If you let this get out of hand, then I think we will have a market reaction."

Fisher, who doesn't vote on monetary policy this year, opposed the Federal Open Market Committee decision last week to expand its holdings of long-term bonds with open-ended purchases of $40 billion of mortgage debt every month in a new round of quantitative easing. The Fed, led by Chairman Ben S. Bernanke, is seeking to boost growth and reduce 8.1 percent unemployment.

This Bloomberg story was posted on their website yesterday morning...and I thank West Virginia reader Elliot Simon for bringing it to our attention. The link is here.

View full GSD edition

Bernanke briefs lawmakers on fiscal cliff

Federal Reserve Chairman Ben Bernanke trekked to Capitol Hill on Wednesday to caution Senate lawmakers on the economic dangers of the looming "fiscal cliff," the nearly $600 billion in planned spending cuts and tax hikes that will bite at the start of next year unless lawmakers act.

Bernanke, who has publicly warned that dawdling by lawmakers was putting the U.S. economy in peril, spoke to members of the Senate Finance Committee for about an hour behind closed doors in a meeting requested by the panel chairman, Democrat Max Baucus.

"I believe strongly that nothing of consequence is ever solved when somebody tries to do something alone. You got to work together. My whole goal here is to get senators working together and it is happening," Baucus said after the meeting.

Bernanke declined to comment.

This Reuters story was posted on their website early Wednesday evening...and was subsequently picked up by finance.yahoo.com. I thank Donald Sinclair for digging it up on our behalf...and the link is here.

View full GSD edition

Jim Grant: We are all living in a land of speculation and manipulation

You put Jim Grant on TV and someone mentions the Fed and the result every single time is the equivalent of waving a red curtain in front of a rabid bull.

The above headline is Grant's summary of the current predicament of anyone who wishes to trade these "markets"...and it may as well be the best synopsis of the New (ab)normal.

And aside from an odd detour into Government Motors, Grant once again hones in on the only true antidote to central planner idiocy, gold: "the best thing about gold is that it's got no P/E multiple. Gold is a speculation on an anticipated macroeconomic outcome, the systematic debasement of currencies by central banks. Why wouldn't they do QE4? What intellectual argument do they have against doing it again, and again, and again."

This must read Zero Hedge posting has a must watch CNBC video interview between Grant and Bartiromo embedded in it. And if you scroll down a bit more, you'll find a 32-minute video interview with ex-Federal Reserve Chairman Paul Volcker. I thank reader U.D. for bringing this excellent story to our attention. It's entitled "Jim Grant: We Are Now All Lab Rats of Bernanke...and the Fourth Branch of Government"...and the link is here.

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Deutsche Bank: Western Economies Are Screwed, And Investors Face A 'Disturbing Paradox'

Posted: 21 Sep 2012 02:35 AM PDT

Deutsche Bank: Western Economies Are Screwed, And Investors Face A 'Disturbing Paradox'

In a new report entitled Gold: Adjusting For Zero, Deutsche Bank analysts Daniel Brebner and Xiao Fu paint an incredibly dark picture of the bind the global economy is in right now.

Brebner and Xiao are pretty frank about how levered up the financial system is at the moment, and they warn that the next shock will be totally involuntary and unexpected.

This short businessinsider.com story was posted on their website during the New York lunch hour yesterday...and I thank Roy Stephens for his second contribution in today's column. The link is here.

Jim Grant: We are all living in a land of speculation and manipulation

Posted: 21 Sep 2012 02:35 AM PDT

Jim Grant: We are all living in a land of speculation and manipulation

You put Jim Grant on TV and someone mentions the Fed and the result every single time is the equivalent of waving a red curtain in front of a rabid bull.

The above headline is Grant's summary of the current predicament of anyone who wishes to trade these "markets"...and it may as well be the best synopsis of the New (ab)normal.

Gold was not selected arbitrarily by governments to be the monetary standard

Posted: 21 Sep 2012 01:00 AM PDT

Food for thought

Scotiabank Analyst Uncovers Mining Opportunities in Unusual Places

Posted: 21 Sep 2012 01:00 AM PDT

When Leily Omoumi, a gold analyst with Scotiabank in Toronto, turns her engineer's eye on a mining company, she can translate insight into profits for investors. The Gold Report caught up with Omoumi...

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A Golden Buying Opportunity in Goldcorp

Posted: 21 Sep 2012 12:05 AM PDT

Goldcorp has the three key value investing qualities I look for in a senior gold producer: strong production growth potential through near-term mine projects, a low cash production cost per ounce and focus on mining jurisdictions with below-average political risk.

Empty Letter

Posted: 20 Sep 2012 11:47 PM PDT

Received a letter from the US yesterday addressed - GCORP ATT: Bron Sucheki - and sent air mail with four First Class Forever 2009 dated stamps on it.

Funny thing is, it was empty. Don't know if this was meant as some symbolic message (I'm an empty person) or USA goons have intercepted it and removed the offending letter.

Very weird.

While on the topic of unusual letters, in December 2008 we received a series of four letters addressed to "The Director" just signed Michael. Some samples (I kept them, of course) from the letters:

"Gold is going into the stratosphere once the Central Bank controlled, fractional reserve, fiat paper, thin-air monetary and banking system collapses very soon."

"Are you happy as Director of the Perth Mint to be parting with gold (and silver) at a price that bears no resemblance to the underlying demand? A price that is doctored by the Illuminati banking shysters to prop up their iniquitous fiat paper money extortion racket against the human race?"

The Sharks Amongst the School

Posted: 20 Sep 2012 11:15 PM PDT

We live in one of those houses that shares a wall with its neighbour. When it's quiet at night, you can hear them walking down the hallway. It's a bit weird, but not life threatening. A few weeks ago we had a visit from a property valuer. Apparently our landlord wanted to refinance a loan. To do so, the bank requires a valuer to snoop around and guess what the property might be worth.

Clearly, the income derived from the property wasn't a major factor in determining its value. It was only 'out of interest' that the valuer wanted to know how much rent we were paying. When we asked how much he thought it was worth, he responded by saying the landlord 'thinks it's worth a million dollars, but it's probably less than that.'

In our opinion, it's much less than that.

And today we'd knock another $50,000 off the asking price. That's because our neighbours alarm woke us at precisely 4.30am this morning, blaring horrendous avant garde piano jazz. If it was Miles Davis' 'Kind of Blue' or something similarly chilled out, it would've been rather pleasant...still weird, but pleasant.

After banging on the neighbours door, it turns out the person responsible wasn't there, and the alarm had gone off by mistake.

Moral of the story, sort of, is don't overpay for a house with a shared wall. Or better still, rent.

We raise the point about house prices because we've spent all week investigating where phase two of the China bust will hit the Aussie economy. It's old news now that commodity producers, and the companies that service them, will suffer heavily as China endures a structural change in its economic growth patterns.

The question is, what's next? Does it stop at the commodity sector or roll through into other parts of the economy...like housing? We're just putting the finishing touches on a report for subscribers of Sound Money. Sound Investments that investigates the issue. We'll have it published this afternoon.

Housing and house prices are at the top of our mind this week for another reason. We have our mother-in-law visiting from Adelaide. She wants to know why we're 'wasting' our money renting. Why don't we buy something? Over the long term, house prices always go up.

'Like in Japan?' we responded. 'Or the US?'

Or any other number of countries, to be honest. But we are forgetting one thing...it's different in Australia!

Having been up since before dawn even cracked, we're feeling a bit mellow and philosophical today.

Why do we care about markets, politicians and central bankers? What's complaining about their idiocy going to do? It won't change anything. They'll just stumble from one disaster to another, telling us they're doing a great job and it would be so much worse if they hadn't acted at all.

As my wife likes to say, people are just going around doing whatever the hell they want, with no regard for anyone else. It's the age of the narcissist, the psychopath...or the narcissistic psychopath.

When did it all get like this?

Hmmm, could it be the result of an inordinately large amount of central bank induced credit flowing throughout the global economy? Credit money is really just a financial innovation away from being 'real' money that you can spend and buy social status with.

Financial innovation turned mortgage debt (a very long term, illiquid asset) into 'money' through the magic of securitisation. Easy money attracts all sorts of crazies in a suit. It's just hard to tell who's who. It's why out of all occupations, it is nearly always bankers (and politicians for that matter) that don a conservative coloured suit before going about their 'business'. A suit creates a disarming façade. It allows the shark to swim amongst the school, undetected.

If money is the root of all evil (apparently mentioned somewhere in the New Testament, so it must be true) then central banks are responsible for growing a forest of evil trees. And they've certainly got the watering can out. The strategy is to keep printing. Whatever we say is just screaming into the wind.

Our old, long-dead mate, Ludwig von Mises used to say something to the effect that 'it doesn't matter what you do after the boom, there is no way to avoid the final bust. The bust comes either via inflation and a currency system breakdown or via deflation.'

The world got a dose of the deflationary resolution in 2008/09 and didn't like it one little bit. So it decided on taking the inflationary path. It will eventually lead to a broken currency system, and a reordering of the existing financial architecture. That is almost certain.

What's not is the timing. The West is happy to take such a crazy path because most of those calling the shots will be out of power in a few years' time. As long as they can prop the system up they're happy. 'Not on my watch' is their motto. Narcissists.

So if you enjoy our whinging and finger pointing, please keep reading. But don't expect it to change anything. As Mises noted, the bust is already a forgone conclusion. And after the Fed showed its true colours last week, that it will happen via a currency system breakdown is almost certain.

So sit back and enjoy the ride. Buy some shares in the hope the inflation will send some credit money your way before taking it all back in the collapse. If you've lent any of your savings to the government, get it back, quick smart.

And buy some gold; if you own a decent amount, it should look after you through the bust, and ensure you live to fight another day.

On that front, Diggers and Drillers editor Dr Alex Cowie included a nice looking chart in his update to subscribers last night. It points out that gold is about to enjoy a 'golden cross'. That's when the 50-day moving average crosses the 200-day moving average to the upside. Alex points out that the last time this happened, gold had a short correction followed by a 3 year bull market move.

Judging from the recent surge in the gold price, a correction is in order. But we think it's a dip to buy.