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Monday, October 1, 2012

Gold World News Flash

Gold World News Flash

Socialist Global Central Bank Crime Syndicate QE-4-Ever Inflation Theft

Posted: 30 Sep 2012 11:40 PM PDT

It is barely four weeks since the European arm of the global central bank crime syndicate (ECB) announced its policy of wanting to print unlimited euro's to monetize bankrupting PIIGS debts that was welcomed by the markets who's participants would be lining up to offload PIIGS bonds bought at far higher interest rates (lower prices) onto predominantly German tax payers because it is Germany that backs the Euro as a sound currency rather than the Greek or Spanish versions of the Zimbabwean Dollar.


Two-Week Low "Just What Gold Needed", Long-Term Uptrend Seen Safe Above $1712

Posted: 30 Sep 2012 11:26 PM PDT

Bullion Vault


Rob Gray: WHAT IS MONEY and Where Do We Go From Here?

Posted: 30 Sep 2012 11:16 PM PDT

Rob Gray of The American Open Currency Standard joins me to talk about what solutions we the PEOPLE have to combat the FED's criminal printing press. Ron Paul correctly argues that COMPETING CURRENCIES are the answer to the monetary mischief of the powers that be. And some communities are doing just that – embracing alternative currencies to compete with the FED's fiat Dollars. Rob is the mind behind the beautiful Lakota rounds and the new Silver Bullet Silver Shield rounds, which are available here. Rob & I also talk about the risks of returning to a gold standard when the world's wealthiest families own most of the gold!

WHAT IS MONEY and Where Do We Go From Here?


Royal Gold - What Now?

Posted: 30 Sep 2012 10:24 PM PDT

Jim Sinclair's Mineset My Dear Extended Family, Jim, You told the community about Royal Gold and we got involved. That was in 2004 in the $14-$15 region. It hit triple digits today for the first time. Thank you! Regards, CIGA Dave Dear Dave, The royalty companies who are truly gold banks, such as RGLD, have done extremely well. What has supported their success beyond the qualified people running them is that we have been in a world of progressively lower interest rates and progressively more entities seeking investment in gold that is not responsible for actually mining. It is important to remember no stock is forever. Everything right now is positive for RGLD seeking higher prices. Should interest rates begin to rise, an important part of the RGLD formula will be challenged. Since I anticipate much higher prices for gold, gold will continue to support RGLD's business formula. I advised my readers to own RGLD when Barrons did a h...


Great Interview With Charles Goyette – Bernanke is a Hardcore Keynesian

Posted: 30 Sep 2012 09:51 PM PDT

from AltInvestorsHangout:

Charles Goyette is the author of Red and Blue, and Broke All Over. Charles discusses:

(1) How Bernanke is out of his mind and how he's a hardcore Keynesian.

(2) How Europe will collapse

(3) How both parties are taking away our liberties.

Too Much Money And Credit (TMMAC)

Posted: 30 Sep 2012 09:22 PM PDT



September 28, 2012

Mogambo Guru

 

I put it off as long as I could, and as distasteful as it was, I finally broke it to the family that I was, alas, being forced to cut expenses, mostly because I don't have a job anymore, and will almost surely never get another one. 

 

"Never get a job," I think, silently chortling to myself, "until they start advertising for 'Lazy old man to work, when he is in the mood, for premium pay and generous benefits for doing practically nothing, if anything, a couple of days per week or month."

 

Immediately, the members of the family unit were, as expected, hostile and defensive, obviously remembering the last time when I "cut expenses" so that I could, as they never tire of pointing out, buy something expensive and act really stupidly.  

 

And they no doubt remember, too, that they got exactly nothing from me that time, keeping all the money for myself, and I how I rudely laughed at their pleas for money, telling them, in a snide, snotty and sarcastic tone of voice, "Get a job, loser!", and they were, as I remember, really grumpy about it.

 

Naturally, the first thing out of each of their mouths was (distilling the essence of their lengthy, and loud, remarks) was "No!  Don't stop giving me money! Stop giving money to those other family-unit losers, but not me!"

 

The "family meeting," such as it was, immediately devolved into a weird, ugly fight about who could make my life more miserable, and thus, apparently, deserving of more money than the others.

 

Finally, as if at a signal, they turned to me and asked "So how much money AM I going to get from now on?"

 

I could see the fear and panic in their faces.  Being the considerate, loving father and darling husband that I am ("He's a real peach!"), I gently replied "None, you morons! You get nothing! Nothing! There is no more money! Exactly what part of 'bankruptcy' don't you understand, you lowlife Earthling halfwits who now get what they deserve because they would not buy gold, silver and oil with their miserable few pennies?"

 

Well, at the instant their deafening howls of protest rattled off the ceiling, I realized that this was the wrong way to say what was, actually, correct, and I should have said "I am so sorry, but I fear that you will get almost nothing, and it breaks my heart because I love you so much and I feel your pain." 

 

But the shrieking, cacophonous, angry, panicked result would be the same, no matter how I said it, as I am reminded by riots in Europe. This is also by angry mobs of panicky, busted-out people who are displeased about getting what they deserve for spending themselves, decade after decade, steadily into total bankruptcy, which every other idiot in history knows is a Very Bad Idea (VBI).

 

So it must be a kind of a karma thing, I guess.

 

Anyway, since "what goes around comes around," it will happen here, and everywhere else, too.  And all for the same reasons, too:  Imminent bankruptcy and utter ruination of a ridiculous, bloated, mal-invested, government-centric economy, financed by the evil Federal Reserve creating excess money and debt to finance it all.

 

To gauge how bad it will be in America, an article by Michael Tanner of the Cato Institute will perhaps prove instructive.  He writes "The federal government runs 126 separate anti-poverty programs. Altogether, seven different Cabinet departments and six independent agencies each administer at least one anti-poverty program."

 

Together, these federal anti-poverty programs "cost taxpayers more than $668 billion last year," but that "if one includes state and local welfare spending, government at all levels will spend more than $952 billion this year," or, if you prefer, a whopping 6% of GDP. Yikes!

 

That breaks down to the dismal statistic that "combined with state and local spending, government spends $20,610 for every poor person in America - or $61,830 per poor family of three."  Wow!

 

He continues without even a hint of the irony or the angry, screaming outrage that it deserves, and would have gotten in a scornful, screaming, spittle-spewing Mogambo Howl Of Complete Outrage (MHOCO) if I had written the article, which I did not, both because I don't have Mr. Tanner's talent writing or obvious intellect, and also because it looks like it took a lot of work, which doesn't interest me that much. At all.

 

In fact, I am actually repelled by the idea of work.

 

So, irony-less, angry-less, screaming-less and outrage-less, we are left to ourselves to calculate that this government giveaway of $61,830 per poor family of three is a Lot Of Money (LOM), especially "given that the poverty line for that family is just $18,530, we should have theoretically wiped out poverty in America many times over."

 

Hahaha! I laughed at the sheer, monumental incredulity of such a thing!  I am dumbfounded! Hahaha!

 

But there are a lot of weird things in a huge federal budget that includes a deficit that is already an unbelievable $1.4 trillion, which alone is an astounding, unbelievable, incredible 9% of the entire economy of the Whole Freaking Country (WFC)!  We're doomed!

 

And it's a deficit which will be - hold onto your hats!  -- higher next year, and the year after that, and then, apparently, forever after that ! Double doomed!

 

If your eyes are bugging out and you think to yourself "We're freaking doomed!", then you will be happy to know that you understand the situation perfectly. This explains why your gut is twisted into a knot, and why your primitive brainstem is itself sending the loud message to buy gold, silver and oil stocks continuously (dollar-cost averaging), and with a feverish tenacity.

 

As their prices rise through the years, this will allow you to laugh merrily and heartily -- Hahahaha! -- as you watch in rapt fascination at the weird, unbelievable things that the government, and the Federal Reserve, will do in  raw desperation and suicidal panic as the economy is destroyed by the inflation, deflation and misery caused by irresponsibly creating Too Much Money And Credit (TMMAC) on top of TMMAC on top of TMMAC of top of TMMAC.

 

If you do NOT buy gold, silver and oil, however, you won't have anything to laugh about.

 

And speaking, as I do, for all the stupid people in this world who prefer to watch TV, eat, drink, have fun, or simply stare off into space like some kind of brain-damaged mental-case rather than have to deal with boring investing stuff, we are very thankful that simply buying gold, silver and oil stocks is the smartest investment anyone can make when the money supply is being increased by so much, for so long.

 

That may explain why those who buy gold bullion, silver bullion and oil stocks, in a desperate, fearful response to the Federal Reserve creating so much excess money, are known to say "Whee! This investing thing is easy!"

Got Gold Report - September 30, 2012

Posted: 30 Sep 2012 09:15 PM PDT

Vultures (Got Gold Report Subscribers) please log in to the Subscriber pages and navigate to the Got Gold Report Video Section to view a new video offering released Sunday, September 30, 2012.

To continue reading, please log in or click here to subscribe to a Got Gold Report Membership

Guest Post: Is China's Communist Party Doomed?

Posted: 30 Sep 2012 09:02 PM PDT

Via Minxin Pei of The Diplomat,

Last Friday's announcement in Beijing that the ruling Chinese Communist Party (CCP) will convene its 18th congress on November 8 has brought much relief to those concerned that political scandals and power struggle at the very top of the Chinese government have derailed the once-in-a-decade leadership transition.  Finally, the party's top leaders seemed to have agreed on what to do with the disgraced former Chongqing party boss Bo Xilai (likely off to jail) and on whom to promote to the Politburo and its more powerful standing committee.

For all the obvious reasons, China's ruling elites will do their best in the next few months to project an image of unity and self-confidence, and to convince the rest of the world that the next generation of leaders is capable of maintaining the party's political monopoly.

That is, unfortunately, a tough sell.  Confidence in the party's internal cohesion and leadership has already been shaken by the Bo affair, endemic corruption, stagnation of reform in the last decade, a slowing economy, deteriorating relations with neighbors and the United States, and growing social unrest.  The questions on many people's minds these days are how long the party can hold on to its power and whether the party can manage a democratic transition to save itself.

These questions are by no means the products of idle minds.  By many measures, the party's rule is about to enter a decade of systemic crisis.  Having governed China for 63 years, the party is approaching, within a decade, the recorded longevity of the world's most durable one-party regimes — the former Communist Party of the Soviet Union (74 years), the Kuomintang - KMT (73), and the Revolutionary Institutional Party of Mexico - PRI (71).   Like a human being, an organization such as the CCP also ages.

In addition, China's rapid economic development has thrust the country past what is commonly known as the "democratic transition zone" — a range of per capita income between $1000 and $6000 (in purchasing power parity, PPP).  Political scientists have observed that autocratic regimes face increasing odds of regime change as income rises.  Chances of maintaining autocracy decrease further once a country's per capita income exceeds $6000 (PPP).  China's has already reached $8500 (PPP).  And nearly all the autocracies in the world with a higher per capita income are petro-states.  So China is in a socioeconomic environment in which autocratic governance becomes increasingly illegitimate and untenable.  Anyone who is unconvinced of this point should take a look at Chinese Weibo (or microblogs) to get a sense of what ordinary Chinese think of their government.

Thus, the answer to the question of the durability of one-party rule in China is clear: its prospects are doomed.

The answer to the question of how a one-party regime can manage its own political transformation to save itself is more interesting and complicated.

Essentially, there are two paths for such regimes: the Soviet route to certain self-destruction, and the Taiwan-Mexican route to self-renewal and transformation.

Since the fall of the Soviet Union, top CCP leaders have resolved not to repeat the Soviet tragedy.  Their policy has been, therefore, resisting all forms of political reform.  The result is, unfortunately, an increasingly sclerotic party, captured by special interests, and corrupt and decadent opportunists like Bo.  It may have over 80 million members, but most of them join the party to exploit the pecuniary benefits it provides.  They themselves have become a special interest group disconnected with Chinese society.  If the fall of the Soviet Communist Party (CPSU) offered any real lessons, they are definitely not the official Chinese narrative that Gorbachev's political reforms brought down the party.  The sad truth is: the Soviet regime was too sick to be revived by the mid-1980s because it had resisted reforms for two decades during the rule of Brezhnev.  More importantly, the CCP should know that, like the millions of the members of the CPSU, its rank and file are almost certain to defect in times of a regime crisis.  When the CPSU fell, there was not a single instance of loyal party members coming to the defense of the regime.  Such a fate awaits the CCP.

That leaves the CCP with only one viable option: the Taiwan-Mexican path of self-renewal and transformation.  The one-party regimes in Taiwan and Mexico are, without doubt, the most successful ones in transforming themselves into multi-party democracies in the last quarter century.  Although the stories of their transition to democracy are different and complex, we can glean four key insights into their successes.

  • First, leaders in Taiwan and Mexico confronted a legitimacy crisis in the 1980s and realized that one-party regimes were doomed.  They did not deceive themselves with illusions or lies.
  • Second, both acted while their regimes were stronger than the opposition and before they were thoroughly discredited, thus giving them the ability to manage a gradual transition.
  • Third, their leaders centralized power and practiced inner-party dictatorship, not inner-party democracy, in order to overcome the opposition of the conservatives within the regime.  In one-party regimes, inner-party democracy will surely lead to an open split among the ruling elites, thus fatally weakening the a reformist regime's ability to manage the transition.  Additionally, making the entire political system more democratic, mainly through competitive elections in cities and states, will provide the ruling elites an opportunity to learn a critical skill: seeking support from voters and winning elections.  Such skills cannot be learned through the dubious exercise of inner-party democracy, which is simply another name for elite bargaining and manipulation.
  • Fourth, a moderate democratic opposition is the best friend and greatest asset a reformist one-party regime has.  Such an opposition is a negotiating partner and can help the regime maintain transitional stability.  It can also offer much better terms protecting the interests of the ruling elites and even helping them avoid jail.

When we look at the rewards reaped by the KMT and the PRI, they included not only favorable terms for exiting power (except for President Salinas, who was forced into exile because of corruption), none of the senior leaders faced criminal prosecution.  Most importantly, both the KMT and PRI managed to recapture the presidency, the seat of political power in both countries, after spending two terms in opposition.

But can the CCP actually learn from the KMT or the PRI?

Its willingness aside, the CCP faces an additional hurdle.  It is still a totalitarian party, not an authoritarian party.  The difference between a totalitarian party and an authoritarian party is that the former is far more deeply and extensively embedded in the state and the economy.  The CCP controls the military, the judiciary, the bureaucracy, and the economy to a far greater extent that the KMT or the PRI.  Extricating a totalitarian party from a state is far more difficult.  In fact, such a feat has never been tried successfully.  In the former Soviet Union, it led to regime collapse.  In Eastern Europe, democratic revolutions did not give such regimes a chance to try.

So the task for China's new rulers is truly daunting.  Their first order of business is actually not to plunge into a Gorbachev-style political perestroika, but the de-totalitarianization of the Chinese state and the transformation of the CCP into another KMT or PRI.  Without taking this intermediate step immediately, the CCP may find that a Soviet-style collapse is its only future.

Living Through A Currency Devaluation

Posted: 30 Sep 2012 08:30 PM PDT

from Silver Doctors:

With The Fed now two weeks into it's official QE∞ policy, and with calls this week by Fed Presidents Evans and Plosser for even further easing-bringing a devaluation/hyperinflation of the dollar one step closer by the day, we thought it apropos to republish StackerX's account and experiences recognizing, surviving, and even profiting from a fiat currency devaluation.

Those who recall the account may benefit from re-examining the lesson, and for those unfamiliar with the account of the 1976 Mexican Peso devaluation, this is an ABSOLUTE MUST READ as the US is rapidly descending into full-blown Banana Republic status.

In 1976 I was managing an American subsidiary of a successful large US Company in Mexico. It had been a financial turnaround for our team. Cash flow had accumulated in our bank in Mexico and corporate didn't want the money repatriated to the US. Although we had already paid a 35% income tax to the Mexican government, we would have to pay an additional 30% exit tax to repatriate the money. In addition, we would have to pay high fees for the peso/dollar exchange, in order to make the transfer. The company wanted to expand our successful business and so we decided to keep the money in Mexican pesos to be used for further expansion.

Read More @ Silver Doctors

Defeat of Position Limits, A Direct Threat to Precious Metals Potential

Posted: 30 Sep 2012 07:51 PM PDT

The message has been sent to the primary manipulative forces in the markets for commodities: "You may continue to influence prices contrary to the interest of the global economy at will.

by James West, Gold Seek:

I can't say as I'm surprised by the announcement late Friday that lobbyists representing JP Morgan, Goldman Sachs, and Morgan Stanley, among others, had successfully obtained a judgement quashing the proposed position limits on speculative traders in commodities.

According to Bloomberg: "U.S. District Judge Robert Wilkins in Washington today ruled that the 2010 Dodd-Frank Act is unclear as to whether the agency was ordered by Congress to cap the number of contracts a trader can have in oil, natural gas and other commodities without first assessing whether the rule was necessary and appropriate.

Read More @ GoldSeek.com

QE3 – Pay Attention If You Are in the Real Estate Market

Posted: 30 Sep 2012 07:30 PM PDT

With QE3, we are essentially being bought out with our own money…and unemployment is being used to facilitate this process in a very clever manner. Monetary inflation is currently being offset by labor deflation. The way you avoid collapse is by printing money and stealing assets. The way you avoid inflation is with labor deflation.

France Unveils A 'Growth-Killer' Budget For 2013

Posted: 30 Sep 2012 05:49 PM PDT

Following closely on the heels of Spain's budget and banking audit debacle, France prepares to unveil its budget (taxing business, bankers, and beer). The positive spin will be deafening as politicians are already proclaiming 'realistic and ambitious' growth targets as getting the country 'back on the rails'. UnMondeLibre's Emmanuel Martin comments "How ironic? The French Presidential candidate who once campaigned with the slogan of 'growth vs. austerity' is now, as President, preparing to give the French the biggest taxation shock ever – a growth killer that is." What matters is the type of path to fiscal responsibility, and, unfortunately, Mr Hollande chose 'austerity with more taxes and no reform'. With France being a crucial player in the Euro-game, one wonders whether this might actually not mean the end of the Euro sooner.

 

Via Emmanuel Martin of Un Monde Libre,

France: A Growth-Killer Budget for 2013

How ironic. The French Presidential candidate who once campaigned with the slogan of "growth vs. austerity" is now, as President, preparing to give the French the biggest taxation shock ever – a growth killer that is.

 

France's 2013 budget has been unveiled Friday and it is the "most important rigor effort in 30 years" according to… Mr. Hollande himself. Following his predecessor's defense of the "golden rule", the socialist President intends to reduce the deficit at 3% next year (vs. 4,5% in 2012) in order not to be "in the hand of markets".

 

Of course market investors may be happy with the apparent "seriousness" of the socialist President. Of course Germany may be pleased to see that "Flamby" has finally come back to "reality" after his electoral pledges.

 

Except that reducing deficits is not the key to France's problem per se: it depends on how the government performs it. Hence, behind the rhetoric of a "courageous, responsible" budget, or even a "budget of conquest", the reality is that this budget is essentially based on tax increases (€24bn) – not spending cuts (€10bn). In a country with more than 56% of GDP in public spending and a public debt exploding at now nearly 90% of GDP,  a "responsible" government was expected to initiate a serious effort in terms of reforms to reduce the level of public spending first.

 

Yet, total tax pressure will rise from 44,9 to 46,3% of GDP whilst government spending will be "stabilized" at 56,3% of GDP. The revenues from income tax should rise by 25% (from €59bn to €73bn). A new income tax bracket is created above €150,000 with a 45% marginal taxation rate, with of course the famous 75% rate for incomes (from work only) above €1Mn. This steeper progressivity is not a good recipe for incentives to invest and create. A group of entrepreneurs called "the pigeon" (the pigeon means someone who pays for everyone - but that bird can also fly) has already planned demonstrations on October 7. Corporate tax revenues should increase by 30% at €52bn (especially from reductions in tax deductions in big companies). One hardly sees how France's issues of high unemployment (that recently reached 10%) and lack of competitiveness due to high labor – social – costs will be helped by such policy (especially after the government last summer chose to reduce the retirement age to 60 for those who started to work at 18 – which is costly, and increased the national minimum wage).

 

Today the government maintains that most of the tax effort will be borne by rich households and big companies. This sounds like a "class struggle" vision, even if one now knows that to hit the rich is, in the end, to hit the poor - either because the rich will invest less or elsewhere. But, in fact, it turns out that, according to a Tax Administration Union, 16 million tax households (out of 36 million) will be hurt by income tax increase, given the freezing of the tax schedule. The cap of the tax reduction share per child is reduced from €2,300 to €2,000, which will hurt middle class families who pay income tax. The new taxation of capital gains and savings will penalize poor and middle class savers. Moreover, one measure taken this summer by the government has already reduced the purchasing power of the "workers": the suppression of the non-taxation of overtime hours.

 

Government payroll is "frozen" at €80bn – not reduced. Even the budget cut of the "non-essential" Ministry of Culture is small (from €2,54bn to 2,43bn - a mere €110M… difference). Yes, 12,300 jobs will be suppressed in the various government departments. But 11,000 new public jobs will be created, and that's on top of the nearly 6,800 already created this summer. The rule of non-replacement of retiring civil servants introduced by Mr Sarkozy was suppressed. Even when it is claimed that the government programs will be cut back (but the Prime Minister Jean-Marc Ayrault did not mention any during a TV show Thursday night), it's hard to see where the €10bn will be found.

 

A recent NBER study by Alberto Alesina, Carlo Favero and Francesco Giavazzi finds that fiscal adjustments focused on spending are "associated with mild and short-lived recessions, in many cases with no recession at all" whilst "tax-based adjustments" are associated with "prolonged and deep recessions." It's high time that France seriously rationalizes its administration (by suppressing layers in its decentralized system, for eg. the D̩partement Рa layer of local government) and reduces its public spending. Mr Sarkozy was no doubt a big spender, and under his government debt increased by about 30% (which weakens the criticisms of the opposition today) but the effort to rationalize public spending was launched five years ago with the Revue g̩n̩rale des politiques publiques (a sort of cost-benefit analysis of France's public policies to reform the government) and it was a good start. This new government seems to have dumped it.

 

Finally, let's mention the – usual – optimistic assumption about growth next year. The government started with a 1.2% forecast, and then chose 0.8% for this 2013 budget. But economists predict 0.3%. The difference is not minor as 0,1% equals €1bn. As it's obvious that such taxation shock will shrink the economy, one can only be stunned by the government growth forecasts for the next years : 2% !

 

After nearly forty years of budgets in deficit, France's finally turning towards fiscal responsibility could have sounded like good news. But what matters is the type of path to fiscal responsibility, and, unfortunately, Mr Hollande chose "austerity with more taxes and no reform". With France being a crucial player in the Euro-game, one wonders whether this might actually not mean the end of the Euro soon.

 

And Deutsche Bank's Summary of the State of France:

France: Exhausted model

 

France has been defying gravity with three quarters in a row of stagnating GDP. However, we expect outright recession in H2 2012, with two quarters of GDP contraction, followed by only subdued recovery. Indeed, domestic demand is faced with two headwinds: wage austerity and fiscal retrenchment, while exports are hit by the slowdown in external demand. France's economic model since the beginning of monetary union, where productivity gains are channeled to real wages growth and consumer spending, has touched its limits.

 

In Q1 2012 the share of wages in corporate gross value added climbed to 68.5%, highest level since 1986. Symmetrically, aggregate corporate profitability has fallen back to 13.0%, second lowest since 1986. This suggests that the current bout of wage austerity – real wage growth has been negative since Q4 2010 needs to continue. While it did not collapse, as it did in the periphery, consumer spending no longer is a growth engine in France, where it now stands at only 1.6% above its pre-recession level in 2008, underperforming Germany (+3.8%). We do not expect any reversal of this trend over the forecasting horizon.

 

 

Two third of the discretionary fiscal adjustment for 2013 (1.5% of GDP in total) will come from higher taxes. While this is a textbook approach when consolidating amid adverse cyclical conditions, this won't boost potential GDP in a country where the tax burden stood at 43.7% in 2011 against 39.5% in the Euro area. A significant share of the tax hikes will affect corporations, in particular the removal of full deductibility of interest paid on debt, as well as the limits to the capacity to offset domestic profits with losses in foreign subsidiaries. This will add to the current deterioration in the corporate sector's financial position, which in turn will exacerbate wage austerity and depress capital expenditure, which so far held up relatively well (the investment ratio of the corporate sector in early 2012 was still nearly 2 points above its long term average).

 

We consider that the official growth forecast for 2013 (+0.8%) is optimistic. Consequently, in spite of a commendable discretionary effort, we think that France is unlikely to meet its target for the deficit in 2013 at 3.0% of GDP. Looking ahead, the speed of the recovery in 2014 will depend on the government's capacity to impose structural reforms, notably on the labour market. Official communication hints at such efforts, but very little has been spelt out so far.

Major 'Risk On' Rotation As Junior Miners Outperform Gold and Silver Bullion

Posted: 30 Sep 2012 05:19 PM PDT

The fundamentals for gold and silver appear to be making a positive turn as the US, ECB and Bank of Japan simultaneously signals Worldwide QE3. The charts are just beginning to make new uptrends and may have much more room to go. Read More...



WORLD IN DEPRESSION: U.S. – Fiscal Cliff – Fitch/Moody's/S&P – Housing – Fraud – QE – Spain – Austerity – Car Industry – China – Japan – Australia – Gold – Oil – Tech

Posted: 30 Sep 2012 03:43 PM PDT

WORLD IN DEPRESSION: - Second-quarter U.S. GDP revised down to 1.3% - Fiscal cliff biggest global economic threat: Fitch - Fiscal cliff holding back hiring, puts dollar's reserve currency status at risk - Gold gains 11% on the quarter - … Continue reading →


China Bails Out World's Largest Maker Of Solar Panels

Posted: 30 Sep 2012 03:40 PM PDT

Chinese local governments are facing the prospect of major unemployment problems should the swathe of solar panel makers, that have been subsidized from birth to now-near-death, continue to suffer from US and European tariffs (as well as simple gross mis-allocation of capital amid massive over-capacity). However, as is the way of the mal-investing world today, no barrier to rational economic theory is too low for government status-quo maintenance as it would appear that local banks have been strong-armed into extending loans to keep them alive. As Reuters reports, debt-laden (NYSE-traded) SunTech Power Holdings  - which is close to removal from the exchange due to its dismal equity price - has just received new 'bailout' loans. First, it was a race to debase. Now, we have the race to bailout the world's most worthless companies (especially in channel-stuffed industries) as the New Normal trade wars continue.

 

Via Reuters:

Banks in Wuxi, Jiangsu province, have extended new loans totalling 200 million yuan ($31.73 million) to locally headquartered solar power giant Suntech Power Holdings Co Ltd, the Shanghai government-owned China Business News reported on Friday, citing anonymous sources.

 

Suntech, the world's largest maker of solar panels, whose shares hit a high of $90 in early 2008, runs the risk of being removed from the New York Stock Exchange for failing to keep the average closing price of its shares higher than $1 over the last 30 trading days as of Sept. 10, Suntech said in a statement on Sept. 21.

 

Shares in Suntech, like rivals JA Solar Holdings Co , Trina Solar Ltd and Yingli Green Energy Holding Co, have fallen sharply in the past three years as sales prices have tumbled, squeezed by declining demand in export markets and overcapacity at home.

 

Debt-laden Suntech's shares have also been hit after it said in July that its partner in a solar development fund might have defrauded it with a bogus collateral pledge of hundreds of millions of euros of German bonds.

 

Local governments that invested heavily in supporting the development of solar power companies in their regions now face the likelihood of big local unemployment problems if those firms collapse. Last week Suntech announced it would lay off around 1,500 people from one of its plants in Wuxi.

 

LDK Solar, which reported a second-quarter loss nearly three times bigger than a year earlier, has also recently received local government money. In July the government of Xinyu in Jiangxi province announced it would use taxpayer funds to pay off some of the company's loans.

 

Beijing has asked provinces to provide plans as to how they will increase solar energy in their power mix by 2015, and state media reported that China Development Bank is preparing plans to provide further credit support, but all of this help has caused complaints in the U.S. and Europe.

 

The U.S. imposed import duties on Chinese solar panels as of May, and an anti-dumping investigation against Chinese solar companies is underway in Europe. The erection of trade barriers against Chinese solar products would make it even more difficult for the industry to resolve its capacity and inventory gluts.

 

Local branches of Bank of China Ltd , Industrial and Commercial Bank of China Ltd , Agricultural Bank of China Ltd , China Construction Bank Ltd and policy lender China Development Bank joined together to make the loan, the report said.

Market Report: Elliott Wave Analysis of Silver

Posted: 30 Sep 2012 12:34 PM PDT

Using AGQ as a proxy for the price of Silver I suspect it's in a smaller 4th wave and looking for higher prices over the coming weeks and the decline on the US$ appears to setting up for more downside. Read More...



The current phase of development in Gold identified: What to look for

Posted: 30 Sep 2012 12:00 PM PDT

The daily timeframe is a picture of "Horizontal Development" in the Gold futures (see right hand side chart below zoomed in for six months). The highlighted blue "Rectangle" is a Mature Balance Area in Auction Market Theory. The balance area is a range of current value with the upper extreme being an "unfair high" and the lower extreme being an "unfair low" among market participants in a given timeframe. "Responsive" type traders fade this range. "Initiative" type traders are looking for the breakout into trend. The higher probability trade for either trade plan would be with the prior trend.


U.S. Counting Down to Hyperinflation

Posted: 30 Sep 2012 11:41 AM PDT

John Williams, who is the founder of ShadowStats.com, stated during a recent interview that the US is on track to become victim of hyperinflation the latest in 2014. He believes that “open ended QE” (which is nothing more than monetizing debt) is the key problem. He explains there is an annual deficit of 5 trillion dollar per year in the US, which includes the unfunded liabilities.  He declares the situation “beyond containment”. Central planners are responding to the current economic problems by simply increasing the amount of printed money. John Williams his expectations are that  we’ll soon see a heavy sell off in the dollar, quickly followed by a significant first spike in inflation. That will ultimately lead to  hyperinflation the latest somewhere in 2014. We are just before the kick off of inflation.


The Fed's Talisman for Gold Buyers

Posted: 30 Sep 2012 11:20 AM PDT

People used to Buy Gold on inflation fears. Today that means buying on fresh QE...

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The Fed's Talisman for Gold Buyers

Posted: 30 Sep 2012 11:20 AM PDT

People used to Buy Gold on inflation fears. Today that means buying on fresh QE...

read more

Crash Avoidance

Posted: 30 Sep 2012 10:59 AM PDT

This money manager says crisis will be averted. But he still advises Buying Gold...

read more

Alasdair Macleod: Helicopter Ben flies again

Posted: 30 Sep 2012 09:50 AM PDT

11:44a ET Sunday, September 30, 2012

Dear Friend of GATA and Gold:

The Federal Reserve's open-ended monetization of mortgage-backed securities is likely to prod money into agricultural commodities and gold, GoldMoney Research Director Alasdair Macleod writes today. Macleod adds that gold also "will catch the attention of bank treasury officers because of the impending changes in Basel III rules that upgrade gold to the equivalent of cash for balance sheet purposes. At the moment few banks other than the 40 or so bullion banks have any gold on their balance sheets, a situation that can only lead to a significant new source of buying for the metal."

Macleod's commentary is headlined "Helicopter Ben Flies Again" and it's posted at GoldMoney here:

http://www.goldmoney.com/gold-research/alasdair-macleod/helicopter-ben-f...

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


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Weekly GoldMoney article: Helicopter Ben flies again.

Posted: 30 Sep 2012 08:30 AM PDT

The following article has been posted at GoldMoney, here.

Helicopter Ben flies again

2012-SEP-30

Image002
Some of the dust from Ben Bernanke’s “QE3” announcement on 13 September has settled. The Federal Reserve is now committed to spending $40 billion a month on agency mortgage-backed securities – an open-ended plan. It is also extending extremely low interest rates (together zero interest rate policy and Operation Twist) until mid-2015 by buying an extra $45bn of longer-term securities (mostly government debt though this is not explicitly stated).

It appears there are two broad objectives: to support the housing market and therefore consumer confidence, and to finance the government deficit while locking in low long-term interest rates.

Experience tells us that the only increase in money supply finding its way into the economy is by welfare spending. The banks and also their credit-worthy customers are simply risk-averse. They either leave this money with the Fed in the form of excess reserves, or they speculate with it in capital markets. It is no accident that derivatives have expanded dramatically in recent years, and large amounts of QE money have been recycled into other more dynamic economies offering higher returns. Banks think they do better by not lending money to cash-strapped Americans and their businesses.

The financial system is now going to have up to $2.3 trillion in cash added to it by mid-2015. If the economy is reluctant to absorb this extra money, where will it go? Derivatives are already a mature game, and the more dynamic economies are slowing down. And so long as capital asset prices continue to exceed their productive value, it won’t go into the economy except by way of government spending. It is not just the Fed printing money: all the other major central banks are similarly expanding their money quantities.

This extra money will be an embarrassment for banks everywhere: what will they do with it? The search for good non-cyclical returns is on, and two possibilities stand out: one for the traders, which is agricultural commodities and energy; and one for treasury departments, which is gold.

It will not have escaped the notice of bank traders that demand and prices for grains, and therefore the whole agricultural complex, is increasing, the result of growing populations in Asia and Latin America with rising life-style expectations. Similarly, energy demand is certain to increase during the northern hemisphere’s winter, leading to higher fuel prices. And if bank traders funnel just some of the Fed’s QE into these avenues, the price rises should be dramatic, the more so as the trend gathers pace.

Gold will catch the attention of bank treasury officers, because of the impending changes in Basel III rules that upgrade gold to the equivalent of cash for balance sheet purposes. At the moment few banks other than the 40 or so bullion banks have any gold on their balance sheets, a situation that can only lead to a significant new source of buying for the metal.

The effect on the price should be significant, coinciding with rising fuel and food prices. And remember that banks are trend-chasers, always pushing prices well beyond reasonable levels.

Alasdair Macleod

Head of research, GoldMoney

Mob: 07790 419403

Twitter @MacleodFinance

IT MAY BE TIME TO BOOK SOME PROFITS IN THE MINING STOCKS

Posted: 30 Sep 2012 07:16 AM PDT

It's been a great run over the last two months but it may be time to tighten stops on mining stocks. You can see in the chart below that at least during this stage of the new C-wave gold is still inversely tethered to the dollar index, as are miners.



During the period from September 2011 to July 2012 the dollar was moving generally higher out of its three year cycle low and that forced a 10 month correction in the precious metals sector. 

It's been my opinion that the three year cycle in the dollar topped at that point, and should drift generally lower until the next three year cycle low sometime in mid-2014 (with occasional counter trend rallies from time to time).

I've been expecting one more leg down in the dollar to test the February intermediate low before the first counter trend rally. 


However, this bounce is now on the 10th day and in jeopardy of generating a right translated daily cycle (a cycle that rallies longer than half its duration and tends to form higher highs and higher lows). 


If a right translated daily cycle occurs it will probably signal that an intermediate degree counter trend rally has already begun. As you can see in the chart above just as soon as the dollar started to rally gold stagnated, mining stocks started to correct, as did the stock market.

If this bounce in the dollar turns into a full-fledged intermediate degree rally then we can probably expect a 3-4 week correction in asset markets. 

I find it hard to believe that Bernanke is going to allow the dollar to rise and asset markets correct right in front of an election but the possibility definitely exists if the dollar doesn't turn down early next week.

Those of you not willing to hold through a 10-15% correction in miners should probably consider tightening stops, possibly right below Thursday's intraday low. If that stop level gets violated it would start a pattern of lower lows and lower highs which is generally the definition of a down trend.
 
If, on the other hand, Monday morning finds the dollar getting hit hard then I think we may see gold test $1900 before the next intermediate degree correction. In my opinion what happens Monday & Tuesday to the dollar index will probably set the stage for market direction over the next month and into the election.

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The Greater Depression Coming

Posted: 30 Sep 2012 05:50 AM PDT

Monty Pelerin writes: Probably the last thing regular readers of this website need is additional evidence supporting the coming governmental and economic collapse. I apologize for yet another article on this topic, but newer readers need to understand what is coming and do what they can to protect themselves. Government default is inevitable and with it another Depression. The Depression will be more painful than the so-called Great Depression which occurred seven decades ago.*There are several reasons why. *The primary one is our interdependence upon one another. In a functional economy, the division of labor is a good thing. This specialization and trade with each other has made our lives easier and wealthier than they otherwise would have been. When an economy becomes dysfunctional, everything changes. Trade declines, or in the case of an economic collapse, virtually ceases entirely. The interdependence and specialization which contributed to our high standard of living ceases ...


Bord Gais one of Ireland's most profitable state assets is to be sold for pennies on the dollar.

Posted: 30 Sep 2012 03:13 AM PDT

bord-gais-energy-under-the-hammer-next-year-


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