Gold World News Flash

Gold is at a cross road: What I am looking for
Asian Metals Market Update
Gold Linked Wages
Author James Wesley Rawles: America Will Experience Weimar-Style Hyperinflation – People Have No Idea What COLLAPSE Might Look Like
21 Signs That The Global Economic Crisis Is About To Go To A Whole New Level
Why you DON'T want ripped abs if you hope to survive the coming economic collapse
Silver Update 10/14/12 Monopoly Money
Expectations
ECB's Weidmann On Gold: "Money Is A Social Convention"
I will never forget the name "Gavyn Davies!"
WORLD ECONOMY CONTRACTS – WORLD WIDE QE – WORLD BANK – IMF – S&P – MOODY'S – IT'S BANK'S X-MAS BONUS TIME AGAIN – CHIPS & VIDEO GAMES – OIL – GOLD : YOURI CARMA
Is Crude Oil Overbought Short-Term?
Fiat Currency and the Emerging Police State
The Top 15 Economic 'Truth' Documentaries
London's Bankster Parasites Paradise
Gold Price $12,000
Gartman on Gold: Bullish, Not a Bug
Clean Money Mayhem in Myanmar
Current Long Wave Kondratieff Winter Snow Storm to End in an Economic Avalanche ? Here?s Why
Weekly GodMoney article: Money printing keeping system afloat
Gold at a Cross Road: What to look For
Market Report: All Eyes on the Dollar
New York Post: Ben's gold touch -- 148% rise on QE
Money printing is the only thing keeping the system afloat
MASSIVE COMEX SILVER WITHDRAWAL ON FRIDAY- 3.6 MILLION OUNCES WITHDRAWN FROM BRINKS!
More Stunning Developments In The Gold & Silver Markets

Gold is at a cross road: What I am looking for

Posted: 15 Oct 2012 08:00 AM PDT

I have been looking to put on a swing or position trade to the long side in Gold for the past five weeks but have been unable to do so. There hasn't been a pattern that I felt offered me a favorable trade location in regards to risk and reward in order to justify that entry. The bottom line is preservation of capital is speculating.

Asian Metals Market Update

Posted: 15 Oct 2012 12:10 AM PDT

US economic numbers released so far in October show a bright future prospect and have beaten street expectations. Traders and investors are cautious and have not yet jumped into the positive bandwagon. Chinese export and import September numbers are not as bad as has been factored in by the markets. This can result in more losses for gold and silver in the short term.

Gold Linked Wages

Posted: 15 Oct 2012 12:01 AM PDT

The general US markets had a tough week as corrections are sitting in hard now, but they may need to consolidate recent moves lower before they head any lower further. As we know, the US dollar is inversely correlated to US equities as well as gold and silver. Once it begins to fall again, we should see a rally in the markets but until then we have to expect more weakness.

Author James Wesley Rawles: America Will Experience Weimar-Style Hyperinflation – People Have No Idea What COLLAPSE Might Look Like

Posted: 14 Oct 2012 11:42 PM PDT

Author & founder of The SurvivalBlog.com James Wesley Rawles joins us to talk about the financial issues we face, and the inevitable inflation which James says will be "Weimar-style", which means HYPERINFLATION. Where it gets really scary is that precious few people are prepared and in James own words, "People have no idea what the collapse of Western civilization might look like."

Part 1:
America Will Experience Weimar-Style Hyperinflation

Part 2:
People have no idea what COLLAPSE might look like

21 Signs That The Global Economic Crisis Is About To Go To A Whole New Level

Posted: 14 Oct 2012 11:01 PM PDT

from The Economic Collapse Blog:

The global debt crisis has reached a dangerous new phase. Unfortunately, most Americans are not taking notice of it yet because most of the action is taking place overseas, and because U.S. financial markets are riding high. But just because the global economic crisis is unfolding at the pace of a "slow-motion train wreck" right now does not mean that it isn't incredibly dangerous. As I have written about previously, the economic collapse is not going to be a single event. Yes, there will be days when the Dow drops by more than 500 points. Yes, there will be days when the reporters on CNBC appear to be hyperventilating. But mostly there will be days of quiet despair as the global economic system slides even further toward oblivion. And right now things are clearly getting worse. Things in Greece are much worse than they were six months ago. Things in Spain are much worse than they were six months ago. The same thing could be said for Italy, France, Japan, Argentina and a whole bunch of other nations. The entire global economy is slowing down, and we are entering a time period that is going to be incredibly painful for everyone. At the moment, the U.S. is still experiencing a "sugar high" from unprecedented fiscal and monetary stimulus, but when that "sugar high" wears off the hangover will be excruciating. Reckless borrowing, spending and money printing has bought us a brief period of "economic stability", but our foolish financial decisions will also make our eventual collapse far worse than it might have been. So don't think for a second that the U.S. will somehow escape the coming global economic crisis. The truth is that before this is all over we will be seen as one of the primary causes of the crisis.

Why you DON'T want ripped abs if you hope to survive the coming economic collapse

Posted: 14 Oct 2012 09:30 PM PDT

Having very low body fat is dangerous to your survival

by Mike Adams, Natural News:

You show me a guy with ripped abs, and I'll show you a guy very unlikely to survive the coming economic collapse. There are three scientific reasons for this:

#1) Having "ripped abs" is only achieved by shedding excess body fat and achieving a dangerously low body fat level (such as 5% for men).

#2) People with ripped abs (i.e. very low body fat) have virtually no excess calories to keep them alive if access to food is suddenly limited.

#3) People with ripped abs have no built-in insulation from the cold.

Read More @ NaturalNews.com

Silver Update 10/14/12 Monopoly Money

Posted: 14 Oct 2012 09:13 PM PDT

from BrotherJohnf:

Expectations

Posted: 14 Oct 2012 08:44 PM PDT

The daily time frame TDI trends for Gold, Silver and the XAU are now clearly negative. The weekly trend continues to be positive and the monthly time frame is still work in progress, as noted earlier. Sound confusing? Let's clarify, but first a brief history on the critical monthly trend. To reiterate from the [FONT=Arial][COLOR=#3d85c6][B][FONT=Arial][COLOR=#3d85c6][B]9/22/12 [/B][/COLOR][/FONT][/B][/COLOR][/FONT]article "Autumn Gold" [COLOR=#3d85c6][B][FONT=Arial][B]here[/B]....[/B][/COLOR][/FONT] [B][B][B]"A [/B][/B][/B][B][B][B][B][COLOR=#3d85c6][B][FONT=Arial][COLOR=#3d85c6][B][FONT=Arial][COLOR=black][B][/B][/COLOR][/FONT][/B][/COLOR][COLOR=#3d85c6][B][FONT=Arial][COLOR=black][B]monthly[/B][/COLOR][/FONT][/B][/COLOR][/B][/B][/B][/B][/B][B][B][B] trend change is still work in progress and in October, will require some patience. [/B][/B][/B]In particular, note that the XAU has gained 32% since its last double bottom low, gold 16% and silver 32%. Not a good place for new position...

ECB's Weidmann On Gold: "Money Is A Social Convention"

Posted: 14 Oct 2012 08:18 PM PDT

A few weeks ago we noted Bundesbank president and ECB governing council member Jens Weidmann's analogy between the Faustian bargain offered by a money-printing Mephistopheles in Goethe's classic prose and today's ubiquitous oh-so-tempting short-term solution to everyone's pain. His full speech (below), while a little dramatic, should indeed strike fear into many with its clarity. The financial power of a central bank is unlimited in principle; it does not have to acquire beforehand the money it lends or uses for payments. Many believe Goethe was portraying the modern economy with its creation of paper money as a continuation of alchemy by other means. While traditional alchemists attempted to turn lead into gold, in the modern economy, paper was made into money. Indeed, the fact that central banks can create money out of thin air, so to speak, is something that many observers are likely to find surprising and strange, perhaps mystical and dreamlike, too – or even nightmarish. Of course, Weidmann concludes, it is important that central bankers, who are in charge of a public good – in this case, stable money – bolster public confidence by explaining their policies. The best protection against temptation in monetary policy is an enlightened and stability-oriented society [and Gold!].

Jens Weidmann; Speech at the 18th colloquium of the Institute for Bank-Historical Research (IBF) in Frankfurt

The caption for today's event is "Paper money – Public finances – Inflation. Did Goethe hit upon a core problem of monetary policy?"

Money and money creation

I wish to begin with a question which appears trivial at first glance but which, as experience has shown, is particularly difficult. What is money exactly? A succinct response from an economist would be: Money is what money does.

As money is defined by its functions, various instruments are fundamentally capable of acting as money, as long as they can be used as a medium of exchange, medium of payment and store of value.

Shells were previously used as money in some countries, for example, as were furs, salt or pearls. Livestock could also serve as money – the Latin word for cattle is "pecus" from which the word "pecunia", meaning money, is derived.

Concrete objects have served as money for most of human history; we may therefore speak of commodity money. A great deal of trust was placed in particular in precious and rare metals – gold first and foremost – due to their assumed intrinsic value.

In its function as a medium of exchange, medium of payment and store of value, gold is thus, in a sense, a timeless classic."To gold they tend, on gold depend, all things!", says Margaret in the First Part of Goethe's Faust.

However, the money that we carry around in the form of banknotes and coins no longer has anything to do with commodity money. Money has no longer been linked to gold reserves since the US dollar was removed from the gold standard in 1971.

In short: today's money is no longer backed by any real assets. Banknotes are printed paper – and the experts amongst you know that the euro is printed on paper made of cotton – coins are minted metal.

That banknotes and coins are accepted as a medium of payment in our daily lives also has to do with the fact that they are the only legal tender. However, ultimately the acceptance of banknotes is based on public confidence that it can use this paper money to make purchases.

In this sense, money is a social convention – it has no intrinsic value which comes before its use; instead, its value is created by its constant exchange and use as money. By the way, this recognition that trust is central, or even constitutive, for the properties of money is very old; it was already discussed in the 4th century BC by Aristotle in his Politics and Nicomachean Ethics.

In recent times, in particular, many citizens are asking about the origin of money: where do the central banks actually acquire the huge amounts of money that they need to give billions in loans to the banking system as part of monetary policy operations or to make other purchases? Why it is often repeated in this context that central banks have virtually unlimited firepower?

Central banks create money by granting commercial banks credit against collateral or by buying assets such as bonds. The financial power of a central bank is unlimited in principle; it does not have to acquire beforehand the money it lends or uses for payments, but can basically create it out of thin air.

The printing of money is an appropriate image here; from an economic perspective, the printing press is not necessary, as the creation of money primarily shows up on the central bank's balance sheet, on its accounts.

How does Johann Wolfgang von Goethe enter the equation when talking about the creation of money. Why have I widened the discussion further?

Money creation, Goethe, Faust and alchemy

Let me remind you briefly of the "money creation" scene in Act One of the Second Part of Faust. Mephistopheles, disguised as a fool, talks to the Emperor, who is in severe financial distress, and says

"In this world, what isn't lacking, somewhere, though? Sometimes it's this, or that: here's what's missing's gold""

The Emperor finally responds to Mephistopheles' subtle attempt to persuade him,

"I'm tired of the eternal 'if and when':

We're short of gold, well fine, so fetch some then"

To which Mephistopheles replies

"I'll fetch what you wish, and I'll fetch more"

In the commotion of the nocturnal masquerade ball, he persuades the Emperor to sign a document – a document which Mephistopheles has reproduced over night and then distributed as paper money.

Those involved are quite taken by the initial success of this measure. The Chancellor is delighted to announce

"See and hear the scroll, heavy with destiny, – (referring to the paper money that has been created) –

that's changed to happiness our misery"

He reads,

"To whom it concerns, may you all know,

This paper's worth a thousand crowns or so"

A little later, Mephistopheles stirs up the general elation even further by saying

"Such paper's convenient, for rather than a lot

Of gold and silver, you know what you've got.

You've no need of bartering and exchanging,

Just drown your needs in wine and love-making."

Those concerned are so overjoyed by this apparent blessing that they do not even suspect that things could get out of hand.

In the Second Part of Faust, the state can get rid of its debt to begin with. At the same time, private consumer demand rises sharply, fuelling an upswing. In due course, however, all this activity degenerates into inflation, destroying the monetary system because the money rapidly loses it value.

It is very striking that Goethe throws light in this way on the potentially hazardous connection between paper money creation, public finances and inflation – and thus on one core problem of uncovered monetary systems. This is all the more remarkable given that Faust and Goethe are not generally immediately associated with economics, especially not with such central areas of conflicting monetary policy priorities.

The fact that Faust can indeed be interpreted in economic terms has been demonstrated, not least, by Professor Adolf Hüttl, who used to be Vice-President of the former Land Central Bank in Hesse. I am delighted that he is in attendance here today. Back in 1965, he wrote a very insightful article in the Bundesbank's staff magazine about "Money in the Second Part of Goethe's Faust".

In the mid-1980s, while teaching in Sankt Gallen, Professor Hans Christoph Binswanger – who I am pleased to say is also here today – took a similar line and brought out a book entitled "Money and Magic: a Critique of the Modern Economy in the Light of Goethe's Faust".

Binswanger's thesis is that Goethe was portraying the modern economy with its creation of paper money as a continuation of alchemy by other means. While traditional alchemists attempted to turn lead into gold, in the modern economy, paper was made into money.

Indeed, the fact that central banks can create money out of thin air, so to speak, is something that many observers are likely to find surprising and strange, perhaps mystical and dreamlike, too – or even nightmarish.

The responsibilities of an independent central bank

If central banks can potentially create an unlimited amount of money out of thin air, how can we ensure that money remains sufficiently scarce to preserve its value? Does this ability to create money more or less at will not create the temptation to take advantage of this instrument to create additional leeway short term, even at the risk of highly probable long-term damage?

Yes, this temptation certainly does exist, and many in monetary history have succumbed to it. Taking a look back in time, this was often the reason for establishing a central bank: to provide those in power with free access to seemingly unlimited financial resources.

However, such government interference in central banking, combined with the government's large demand for funding, often led to a strong expansion in the volume of money in circulation, causing it to lose value through inflation.

In light of this experience, central banks were subsequently established as independent institutions, with the mandate to safeguard the value of money, in order to explicitly keep the government from co-opting monetary policy.

The independence of central banks is an extraordinary privilege – it is, however, not an end in itself. Instead, its primary purpose is to use its credibility to ensure that monetary policy can focus unhindered on preserving the value of money.

Independent monetary policy combined with policymakers with a well-functioning, stability-oriented compass are a necessary – but not a sufficient - condition for preserving the purchasing power of money as well as public confidence in it.

Of course, it is important that central bankers, who are in charge of a public good – in this case, stable money – bolster public confidence by explaining their policies.

The best protection against temptation in monetary policy is an enlightened and stability-oriented society.

I will never forget the name "Gavyn Davies!"

Posted: 14 Oct 2012 05:37 PM PDT

Today, at LemetropoleCafe.com, I was honored to post an article titled "Will central banks cancel government debt?" by Gavin Davies .

Goldman "Hannibal Lecter" Sachs used to be the visible ringleader of The Gold Cartel. They have since disappeared from the gold price suppression scheme totally, at least as far as this eye can see.

But, from my perspective back way back when, referring to Goldman Sachs as "Hannibal Lecter" was being kind. They were relentless in their manipulation of the gold price encouraging the foolhardy, politically connected gold companies such as Barrick and AngloGold to hedge their forward gold sales.

How did that work out? Don McConvey, their hedging director, took a bullet for the team and was fired.

Barrick and AngloGold ended up taking something like $18 billion in futures losses when they decided to cover their Gold Cartel induced hedges. Nice, eh? Back then, not long after GATA was formed, we fumed at the stupidity and Gold Cartel complicity of these donkey brained hedges. GATA was mocked by the gold establishment forces for challenging the elites and their motives. BUT WE WERE SO RIGHT AND CONTINUE TO BE THAT RIGHT, even though The Gold Cartel and the US Government, have conspired to hire different hit men to carry out their nefarious operations as time goes by.

Back to England's Gavyn Davies and what I wrote in July of 1999 about Goldman Sachs and him...

GATA harbors no personal ill will towards Goldman Sachs, but the firm's name has surfaced not only in London but also everywhere GATA turns in our own investigation about the manipulation of the gold market. So consider this about Goldman Sachs:

*Former Treasury Secretary Robert Rubin, is a former Goldman Sachs CEO.

*Former N.Y. Fed Governor, Ed Corrigan is a senior partner at Goldman Sachs

*London based senior partner, Gavyn Davies, is Goldman Sach's international economist and has close ties to Tony Blair. Davies wife, Susan Nye, is chancellor of the exchequer's office manager.

*Dr Sushil Wadhwani, former Director of Equity Strategy at Goldman Sachs International (1991-95), sits on the Bank of England's Monetary Policy Committee. The committee's duties include determining the Bank's objectives and strategy, ensuring the effective discharge of the Bank's functions and ensuring the most efficient use of the Bank's resources.

*Jon Corzine former Goldman Sachs, CEO, has close ties to John Meriwether, chairman of Long Term Capital Management.

Former Fed vice chairman, David Mullins, was a partner in Long Term Capital Management, which, of course, was bailed out in part by Goldman Sachs.

*** Speaking of Goldman Sachs and Hannibal Lecter, something I referred to 13 years ago... can be there be too many others in the financial world that represent the most nauseating "Hannibal Lecter" than the above-mentioned Jon Corzine? He ruined and demoralized so many people's lives, not only while at Goldman Sachs (think African miners), but continued his voracious "Hannibal Lecter" appetite by ruining the lives of so many decent farmers in the Midwest as he stole their futures allocated money at MF Global.

This is so egregious! The pitiful thing is Jon Corzine is only one of a herd of a number of "Hannibal Lecters" out there, like JP Morgan. It is GATA's intention to make them known publicly before more innocents get devoured.

Unfortunately, you will see many more unnecessary decimation of those innocents if we are not successful!

Bill Murphy
LeMetropoleCafe.com
Chairman - Gold Anti-Trust Action Committee

WORLD ECONOMY CONTRACTS – WORLD WIDE QE – WORLD BANK – IMF – S&P – MOODY'S – IT'S BANK'S X-MAS BONUS TIME AGAIN – CHIPS & VIDEO GAMES – OIL – GOLD : YOURI CARMA

Posted: 14 Oct 2012 04:47 PM PDT

WORLD ECONOMY CONTRACTS: - Japan cuts economic assessment for third month - Singapore GDP contraction - Australia's September jobless rate rises to 5.4% - OPEC lowers 2012 world oil demand forecast - World Bank cuts India growth view, high risks … Continue reading →

Is Crude Oil Overbought Short-Term?

Posted: 14 Oct 2012 04:20 PM PDT

Decisions taken in the US and in Europe are forcing other central banks to ease their monetary policies in order to keep their currencies competitive against the US dollar and the Euro currency. Inflationary trends will maintain commodity ... Read More...

Fiat Currency and the Emerging Police State

Posted: 14 Oct 2012 03:40 PM PDT

Our transition from more-or-less free country to police state is accelerating. The NSA's Utah data mining facility, ever-tighter restrictions on offshore accounts, the Internet "kill switch", the Patriot Act's many assaults on the Bill of Rights, the militarization of local police, the spread of drones for domestic surveillance; each has a role in the high-tech updating of a very old idea: that the state is paramount and the individual a slave to public order and national power.

But why is this happening now, rather than in 1950 or 2050? The answer is that we're reaping the whirlwind that always accompanies fiat currency. We created a central bank in 1913 and freed it from the constraint of gold in 1971. Give the government or the big banks the power to create money out of thin air and you eventually get a dictatorship. "Eventually" just happens to be now.

Laissez Faire Books' Wendy McElroy covers some of the theory behind this idea in a recent review:

Paper Money = Despotism
"Fiat" is money with no intrinsic value beyond whatever an issuing government is able to enforce. When it enjoys a monopoly as currency, fiat inevitably turns the free market functions of money inside out. Instead of being a store of value, the currency becomes a point of plunder through monetary policies such as quantitative easing. Instead of greasing society as a medium of exchange, the currency acts as a powerful tool of social control. The second harm is far less frequently discussed than inflation, but it is devastating. The personal freedoms that we know as "civil liberties" rest upon sound money.

In his classic book The Theory of Money and Credit (1912), the Austrian economist Ludwig von Mises argues, "It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically, it belongs in the same class with political constitutions and bills of rights."

A key reason Mises viewed sound money as a necessary protection of civil liberties is that it reins in the growth of government. When a government prints money without the restraint of competing currencies — even if the restraining "competition" is a gold standard — runaway bureaucracy results. Wars are financed; indeed, it is difficult to imagine the extended horrors of World War II without governments' monopoly on currency. A white-hot printing press can finance the soaring numbers of prisons and law enforcement officers required to impose a police state.

Floods of currency can prop up unpopular policies like Obamacare or the War on Drugs. That is why government holds onto its monopoly with a death grip. In The Theory of Money and Credit, Mises observes, "The gold standard did not collapse. Governments abolished it in order to pave the way for inflation. The whole grim apparatus of oppression and coercion, policemen, customs guards, penal courts, prisons, in some countries even executioners, had to be put into action in order to destroy the gold standard."

Another way a currency monopoly threatens civil liberties is by permitting government to monitor virtually all transactions through the financial institutions with whom it maintains an intimate partnership. Total surveillance is a prerequisite to total control, which is what the government wants to establish as quickly as possible. For example, prior to establishing the Suspicious Activity Report (SAR) in 1996 — a form that financial institutions submit to the U.S. Treasury — banks were required to automatically report any transaction over $10,000. Now any activity deemed "suspicious" is vulnerable.

The monopoly facilitates a vicious attack on privacy and has become a main building block of the American surveillance state. As libertarian Mark Hubbard stated, "Civilization is a movement toward privacy, a police state the opposite, and tax legislation has become the legislation of our new Big Brother states."

Much of the tracking is a pure money grab, but it is also an attempt to ferret out and punish "unacceptable" behavior, like dealing in drugs or politically dissenting. Indeed, it is criminally naive to believe the government will not use these massive and valuable data to target its critics. Thus, people can be discouraged from speaking out. Controlling the information, however, means controlling the currency. Otherwise, anyone could mint gold coins in the middle of the night and release them covertly into the wild.

Some thoughts
I was going to start this article with a sentence like "Every time you turn on the news there's another story about the growing intrusiveness of the US surveillance state." But that's not actually true. When you "turn on" the news, which is to say watch it on TV, you see little or nothing about this. It seems that all those "corporate media" complaints are accurate. America's evolving police state infrastructure is one of the biggest stories of this lifetime, yet the mainstream news organizations seem to be ignoring it.

Now that we've created the infrastructure, all that remains is for some desperate/corrupt future leader to flip the switch. From that moment on, every communication in and out of the US will be captured, logged and mined, and each citizen will have a growing file that details their social, professional and financial activities. The state will set about silencing all emerging threats through intimidation, financial pressure (our hyper-complex tax code will be weaponized and turned on anyone who speaks out), and, when all else fails, the designation of dissenters as terrorists and their imprisonment without trial. All the tools are there, just waiting to be used.

In this scenario, social media will be useless as a counterweight to Big Brother. When every communication is monitored, an attempt to organize a protest via Facebook will just create a list of people to be rounded up.

Can dystopia be avoided? Short of electing Ron Paul on a platform of tearing it out by the roots, it's hard to see how. But McElroy does have one suggestion that's aimed at the heart of the fiat currency dictatorship: end the state money monopoly and let other currencies circulate:

Yet the best solution to the harms caused by fiat is often dismissed even by staunch free market advocates; namely, allow the private issuance of money that freely competes with fiat as currency. This would involve removing all prohibitions, other than fraud, abandoning monetary controls such as legal tender laws and all reporting requirements. In turn, this might well eliminate the Federal Reserve, although people would be free to accept whatever money they wished.

The currency monopoly is vital to both the rise of a police state and the targeting of individual civil liberties. In arguing for a free market in currencies, it is important to claim the moral high ground by stating and restating what should be obvious: Civil liberties require sound money. And nothing ensures the quality of a commodity as surely as competition.

The Top 15 Economic 'Truth' Documentaries

Posted: 14 Oct 2012 02:55 PM PDT

On a regular basis we are placated by commercials to satisfy our craving to know which bathroom tissue is the most absorbent; debates 'infomercials' assuaging our fears over which vice-presidential candidate has the best dentist; and reality-shows that comfort our 'at least I am not as bad as...' need; there is an inescapable reality occurring right under our propagandized nose (as we noted here). Economic Reason has gathered together the Top 15 'reality' economic documentaries - so turn-on, tune-in, and drop-out of the mainstream for a few hours...

Originally posted at Economic Reason blog,

Money printing is the only thing keeping the system afloat

2012-OCT-14

Last Monday GoldMoney published my article showing the frightening growth in money-quantities for the US dollar. In that article I stated that the hyperbolic rate of increase, if the established trend is maintained, is now running at over $300bn monthly, while the Federal Reserve is officially expanding money at only $85bn.

The first thing to note is that the Fed issues money because it deems it necessary. The hyperbolic trend increase in the quantity of money is a reflection of this necessity, implying that if the Fed’s money issuance is at a slower rate than required, then strains will appear in the financial system. There are a number of reasons behind this monetary acceleration, not least the need to perpetuate bubbles in securities markets, but there are three major underlying problems.

Government spending

Federal government spending is accelerating, due to rapidly escalating welfare commitments, not all of which are reflected in the budget. Demographics, particularly the retirement of baby-boomers, government-sponsored healthcare, and unemployment benefits are increasing all the time; yet the tax base is contracting because of poor economic performance and tax avoidance. Furthermore, state and municipal finances are dire.

Economy

The US economy is overloaded with debt to the point that it no longer reacts positively to monetary stimulus, and successive government interventions have led misallocation of economic resources to accumulate towards crisis levels. The private sector is now teetering on the edge of an abyss overloaded by both debt and government intervention.

Commercial banks

The banks are cautious about lending to indebted borrowers, and they have failed to adequately devalue collateral against existing loans. The result is that with no bank credit being made available to support renewed buying of assets, asset valuations are constantly on the verge of collapse. Put another way, banks have backed off from creating ever-increasing levels of debt to perpetuate the pre-crisis asset bubble.

One should not take comfort in attempts to improve asset ratios. According to the Federal Deposit Insurance Corporation, the ratio of total assets to risk-adjusted Tier 1 level capital is currently 11.25; but this does not adequately reflect off-balance sheet activities and non-banking business such as derivatives. The inclusion of derivatives on US bank balance sheets as a net as opposed to gross exposure, seriously misstates actual risk.

Banks therefore face two different problems. An on-paper write-down of collateral assets of less than 9% wipes out the entire banking system, with a far lower threshold for many banks. Changes in GAAP accounting rules over asset valuations in the wake of the Lehman crisis have allowed them to hide losses, a situation that is still unresolved and suggests the banking system is already close to the edge. Furthermore, any failure in the derivative counterparty-chain threatens to trigger a collapse of the larger banks where derivative exposure is concentrated.

Conclusion

We are in the eye of a financial storm, for which the only solution – other than mass default – is an accelerating supply of money. Deteriorating financial conditions in either government, banks, private sector or securities markets are almost certain to trigger a run on the others. And that is why a far larger figure than QE3’s $85bn per month may be required to keep the system afloat.

Alasdair Macleod

Head of research, GoldMoney

Mob: 07790 419403

Alasdair.Macleod@GoldMoney.com

Twitter @MacleodFinance

Gold at a Cross Road: What to look For

Posted: 14 Oct 2012 10:54 AM PDT

Scott Pluschau writes: I have been looking to put on a swing or position trade to the long side in Gold for the past five weeks but have been unable to do so. There hasn’t been a pattern that I felt offered me a favorable trade location in regards to risk and reward in order to justify that entry. The bottom line is preservation of capital in speculating.

Market Report: All Eyes on the Dollar

Posted: 14 Oct 2012 10:31 AM PDT

The NDX and DAX have pushed lower to our targets, in fact the NDX has pushed lower than I thought but still fine, as looking as the DAX and SPX, they appear to be inside their respective targets. Read More...

New York Post: Ben's gold touch -- 148% rise on QE

Posted: 14 Oct 2012 10:24 AM PDT

By John Aiden Byrne
New York Post
Sunday, October 14, 2012

http://www.nypost.com/p/news/business/ben_gold_touch_EnDR26qHo2LYyPshstj...

Ben Bernanke's move in early July to begin a third round of quantitative easing, or so-called QE3, has done little for economic growth, according to latest figures, but it has benefited gold, silver, and oil trading by cheapening the dollar, analysts say.

"The dollar is selling off compared to gold because of the market's belief that the recent round of QE3 is going to cause a weaker dollar with investors bidding up gold prices," Mark Martiak, senior wealth strategist at New York-based Premier Financial Advisors, told The Post.

And it's not just gold. Since the Fed chief announced the latest round, unleashing $40 billion a month to purchase mortgage bonds, the greenback has depreciated 10 percent against the euro.

... Dispatch continues below ...

ADVERTISEMENT

Prophecy Platinum Intercepts Best Pt+Pd+Au Grades Yet
at Wellgreen Project in Yukon Territory: 5.36 g/t

Company Press Release
Tuesday, September 11, 2012

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....

Gold has risen 13 percent and silver has soared 26 percent while crude oil rose 9.5 percent.

And if you expand your time horizon out to when the Fed began its easing operation in November 2008, gold has risen 148 percent, or more than $1,000 an ounce, as the Fed has added over $1.9 trillion to its balance sheet.

"Essentially, gold is a hedge against central-bank fiscal policy and against inflation," Martiak said. "The market always disciplines politicians."

According to Martiak, "Gold is a noncorrelated asset class and an inflation hedge for investors. The International Monetary Fund's growth forecast is for slower growth, so while there was a dip [in gold prices], it had more to do with some market sentiment overall and not because investors are lacking confidence in gold as an asset class."

Martiak thinks the Fed's latest actions could support gold. He said that by historical standards, gold has been the biggest beneficiary of low real interest rates.

Gold bugs are not complaining. They see a rising asset class that could fatten portfolios hammered by poor returns elsewhere. Bernie Petit, a financial planner with Beacon Financial, sees renewed interest among his clients for the precious metal.

But he's not buying into it. "When people call me to buy gold, I try to dissuade them from buying," said Petit. "Some people mistakenly feel as though it is a safe investment, it is secure, and it is only going to go up -- and I believe all of those things are wrong."

* * *

Join GATA here:

New Orleans Investment Conference
Wednesday-Saturday, October 24-27, 2012
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
http://www.neworleansconference.com/

* * *

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:

http://gata.org/tshirts

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:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

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

Money printing is the only thing keeping the system afloat

Posted: 14 Oct 2012 08:00 AM PDT

MASSIVE COMEX SILVER WITHDRAWAL ON FRIDAY- 3.6 MILLION OUNCES WITHDRAWN FROM BRINKS!

Posted: 13 Oct 2012 11:27 PM PDT

There was a massive silver withdrawal out of the Comex on Friday. Over the past week, there has been a steady increase in the total amount of silver in the Comex warehouses. However, in one huge withdrawal, 3.6 MILLION OUNCES, … Continue reading →

More Stunning Developments In The Gold & Silver Markets

Posted: 13 Oct 2012 10:01 PM PDT

Today King World News is reporting on incredibly important developments taking place in the gold and silver markets. Acclaimed commodity trader Dan Norcini told KWN, "... those big swap dealers we were talking about last week, which made the very rapid transition from being net long, to very large net shorts (in silver), they now have the largest net short position they have had since January 2008, Eric."

Norcini also warned, "This is a very big build by the swap dealers on the short side of silver, against a very big build on the long side by the hedge funds." Norcini has been stunningly accurate in his predictions of the movement of the gold and silver markets. Now the acclaimed trader discusses incredibly important developments in both gold and silver: "If you start with the gold Commitment of Traders Report, Eric, one thing we talked about last week was the overextended position of the speculative longs in this market. They are building a very sizable net long position."