Gold World News Flash |
- What Changes in the Gold Market? Who is Buying?
- Border Patrol Murders US Citizen, Mother of 5 in San Diego, & Embarks On Major Cover-Up While Eyewitnesses Speak Out
- Asian Metals Market Update
- Religious Leaders Slam Bankers
- 2013 Gold Price Projection: $2250-$2550 By Q2
- Can I Invest in Physical Gold & Silver in My IRA?
- PIMCO On Gold – The Simple Facts
- KWN Exclusive - Today The Fed Unofficially Announced QE4
- Look Out Silver, Here Comes Solar Demand
- Silver Update 10/1/12 Silver Questions
- Gold Seeker Closing Report: Gold and Silver Gain With Oil
- Weekend Report ... Gold Testing Critical Resistance at 1800
- Max Keiser: World Gov't, World Tax is Here!
- Expect Aggressive Stimulus As Gold To Smash Through $2,000
- Gold Set to Break $1,800 Barrier On Endless QE Inflation Fears
- Guest Post: Two Unlikely Patron Saints: Seve and Obama
- Bubbles, Bubbles Everywhere
- Gold is Good Money
- PIMCO On Gold - The Simple Facts
- Guest Post: On Risk Convergence, Over-Determined Systems, And Hyperinflation
- Across Latin America, the quest for gold brings both riches and conflict
- New York Sun: Bernanke warns his creator
- Everything You Wanted To Know About Tri-Party Repo Markets But Were Afraid To Ask
- The Gold Price Rose $9.40 After a new Intraday High Closing at $1,780.50
- Guest Post: The Global Spring
- Pento sees QE4 in place already; Sinclair says gold will soar when you sell
- The Zero Hedge Daily Round Up #136 – 10/01/2012
- Gold Trades to 2012 High and Reverses
- Will The Collapse Of Spain Put Romney In The White House?
- The New Oil-Food Link
| What Changes in the Gold Market? Who is Buying? Posted: 02 Oct 2012 02:00 PM PDT A look at the gold market over the last few months shows that the pattern of price movements has changed from the traditional patterns. If you take the time factor out of charts on the gold price, the pattern of behavior becomes simple. It is a strong rise followed by a narrow, short consolidation pattern before a further move forward. This is unlike the saw tooth pattern we are used to as buyers and sellers reassess price prospects constantly, giving rise to more extended consolidation patterns over longer periods.
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| Posted: 01 Oct 2012 11:30 PM PDT by Justin O'Connell, Dollar Vigilante:
DHS thugs and local police say that gunfire in Chula Vista was reported about 1 p.m. this past Friday. The woman, identified by family as Valeria Monique Alvarado, died at the scene. Department of Homeland Security Border Patrol Deputy Chief Rodney Scott claims that Alvarado intentionally rammed the plain-clothes agent with her car. "He was hit with the vehicle and got lodged on the windshield," Scott said without any evidence. "I do not have a current update on his medical condition, but he was impacted by a vehicle pretty hard." But witnesses saw something much, much different, something much more befitting of the 21st century USSA Police State narrative that is unfolding. Witnesses told local San Diego media that the officer took out his weapon and shot the driver while approaching the car on foot. Read More @ DollarVigilante.com
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| Posted: 01 Oct 2012 11:01 PM PDT The Federal Reserve chairman dismissed accusations that September monetary easing will increase inflation and justified the same. This resulted in gold and silver falling first and then rising. The rise in gold and silver was further aided by a weaker US dollar. The slow and steady rise in gold and silver (after QE3) has reduced short term hot money flows and probably the opportunists are just waiting on the sidelines. Gold and silver are now being supported by long term investors.
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| Religious Leaders Slam Bankers Posted: 01 Oct 2012 10:40 PM PDT
Church of England: Bankers Should RepentWe’ve extensively documented that Jesus, his apostles, and ancient Jewish leaders would all be furious with modern bankers. We’ve also noted that the first Christians and Jews insisted on debt forgiveness as one of their core tenants. Indeed, the founders of all of the great religions taught that forgiveness of debt is the core of spirituality. Usury was condemned by virtually all of the world’s religions. And Dante’s Inferno is populated largely with usurers, misers and other “financial sinners”. It’s not just the ancients … The Church of England recently submitted comments to the British parliamentary commission investigating the Libor rate-fixing scandal and other recent banking misdeeds, saying that bankers should repent:
The Wall Street Journal notes:
The former Archbishop of Canterbury agrees:
And it’s not just naive clergymen saying this. The fourth most powerful bishop in the Church of England – a former derivatives trader – is singing from the same hymn sheet. Religious Leaders Worldwide Condemn Banking PracticesGerman Protestant and Catholic leaders slammed big banks for their “culture of greed”, in which “money has become akin to God”, and said:
The Pope noted:
He also wrote:
Rabbis have called for banks to help homeowners hold onto their homes:
To this day, Islamic leaders prohibit the buying and selling of debt, and forbid usury. Indeed, religious and spiritual traditions worldwide demand a reform to the banking system … so that it stops serving the handful of banking executives and starts to serve the community and the well-being of all people.
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| 2013 Gold Price Projection: $2250-$2550 By Q2 Posted: 01 Oct 2012 10:40 PM PDT An objective and reasonable estimate for the price of gold at the next intermediate peak (estimating 2013 – Quarter 2) is $2250 to $2550 per ounce… This is not a prediction based on wishful thinking and hope, but a best estimate based on rational analysis of data back to 1975. The actual price for gold at its next peak could be higher or lower, and the peak might be earlier or later, but this price range and approximate time is, by this analysis, the most probable. Words: 1682 So says GE Christenson ([url]www.deviantinvestor.com[/url]) in edited excerpts from his original article*. [INDENT]Lorimer Wilson, editor of [B][COLOR=#0000ff]www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) has edited the article below for length and clarity – see Editor's Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.[/COLOR][/B] [/INDENT]Christe...
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| Can I Invest in Physical Gold & Silver in My IRA? Posted: 01 Oct 2012 10:40 PM PDT I have an IRA. How can I invest in gold and silver? It is quite easy! Yes, I am talking about actual physical gold and silver, not "paper" gold, or certificates, or paper promises. This article presents the answers to the most frequently asked questions. Words: 621 So says GE Christenson ([url]www.deviantinvestor.com[/url]) in edited excerpts from his original article*. [INDENT]Lorimer Wilson, editor of [B][COLOR=#0000ff]www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) has edited the article below for length and clarity – see Editor's Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.[/COLOR][/B] [/INDENT]Christenson*goes on to say, in part: Question: Why gold and silver in an IRA? Answer: The simplest explanation is that gold and silver will protect your purchasing power. There are many other reasons including safety in the even...
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| PIMCO On Gold – The Simple Facts Posted: 01 Oct 2012 10:16 PM PDT from Zero Hedge:
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| KWN Exclusive - Today The Fed Unofficially Announced QE4 Posted: 01 Oct 2012 10:01 PM PDT  Today Michael Pento stunned King World when he said, "... the Fed doubled down on QE3 this morning and unofficially announced QE4." Pento believes the mainstream media does not understand what just happened today, but he said it will have massive implications for the markets, including gold and silver.Pento has been incredibly accurate regarding his predictions of central bank moves. Pento noted, "... he (Charles Evans) did not indicate that these new and additional purchases, which will start in January, would be sterilized." Here is what Pento had to say: "The mainstream media has it all wrong once again. I noticed that gold and energy, commodities in general, turned around right after Charles Evans, who is the Chicago Fed President, spoke (earlier today). The media pretty much ignored it."
This posting includes an audio/video/photo media file: Download Now |
| Look Out Silver, Here Comes Solar Demand Posted: 01 Oct 2012 10:00 PM PDT by Alena Bialevich and Jeff Clark, Casey Research:
In early July, Japan set a premium price for solar energy that was three times the rate of conventional power. This meant utility companies would be paid three times more for electricity sourced from solar. It's widely expected that the premium will ignite the use of solar power – and solar uses a lot of silver. Silver Demand from PV Panels As you may know, silver is used in photovoltaic (PV) technology to generate solar power. A typical solar panel uses a fair amount of the metal – roughly two-thirds of an ounce (20 grams). To put that in perspective, a cellphone contains around 200 to 300 milligrams (a milligram weighs about as much as a grain of sand). A laptop contains 750 milligrams to 1.25 grams. Photovoltaic technology is relatively young, but each year its use is growing rapidly. Just since 2000, the amount of silver consumed by solar-panel makers has risen an average of 50% per year. Demand grew from one million ounces in 2002 to 60 million ounces in 2011. Last year demand from the PV industry represented almost 11% of total industrial demand for the metal (excluding jewelry). According to statistics from CPM Group, demand grew by 11.2 million ounces, the strongest volume growth of all major sources (jewelry and electronics). And this was before the Japanese announcement was made.
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| Silver Update 10/1/12 Silver Questions Posted: 01 Oct 2012 10:00 PM PDT |
| Gold Seeker Closing Report: Gold and Silver Gain With Oil Posted: 01 Oct 2012 10:00 PM PDT Gold saw notable losses in Asia before it rose to see an over 1% gain at $1791.20 by about 9AM EST, but it then fell back off midday and ended with a gain of just 0.2%. Silver surged to as high as $35.367 before it also fell back off at times, but it still ended with a gain of 0.58%.
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| Weekend Report ... Gold Testing Critical Resistance at 1800 Posted: 01 Oct 2012 09:40 PM PDT In this weekend report I want to show you the chartology of gold focusing in on the last year of trading that takes in the all time high made last year about this time at 1920. After the all time high was made it only took a little over a month ... Read More...
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| Max Keiser: World Gov't, World Tax is Here! Posted: 01 Oct 2012 09:40 PM PDT from TheAlexJonesChannel: Alex talks with broadcaster, film-maker, and television show host Max Keiser about endless QE and the fate of the dollar as the bankers move to consolidate wealth and power.
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| Expect Aggressive Stimulus As Gold To Smash Through $2,000 Posted: 01 Oct 2012 09:30 PM PDT from KingWorldNews:
Today a legend in the business surprised King World News by stating, "… at some point in the future, we may see an overnight devaluation of the dollar." Keith Barron, who consults with major gold companies around the world, and is responsible for one of the largest gold discoveries in the last quarter century, also said, "In this environment people are being forced to turn to gold and silver." Barron also made price projections for gold over the next 3 to six months. Here is what he had to say: "Gold hit a new high for the year today, although we had a little bit of a pull back in the afternoon. Gold got a boost when one of the Fed Governors made a remark this morning about QE, saying it was a step in the right direction." Barron continues @ KingWorldNews.com
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| Gold Set to Break $1,800 Barrier On Endless QE Inflation Fears Posted: 01 Oct 2012 09:00 PM PDT by Kurt Nimmo, InfoWars:
On Friday, gold hit $1,773.90 an ounce on the Comex, its strongest quarterly gain in over two years. It is expected to hold this position despite anticipated bad news on unemployment later this week. On Monday, it slipped slightly to $1,770.31 an ounce. In November 2011, gold briefly broke the $1,800 barrier on eurozone woes and fear that central banks would respond to the crisis with another round of inflationary money printing.
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| Guest Post: Two Unlikely Patron Saints: Seve and Obama Posted: 01 Oct 2012 08:54 PM PDT Submitted by Ben Tanosborn of Tanosborn Online blog, I am well aware that Calvinists consider patron saints a form of idolatry, but for the most part Christians and many non-Christians alike, some out of faith but most out of habit or circumstance see with favor having an advocate intercede on their behalf in the many problems that beset their lives. Yes, a patron saint! Team Europe (golf) had one in Seve (Ballesteros) this past Sunday in Medinah, Illinois, as the Europeans overcame a record insurmountable lead (away from home) to retain the Ryder Cup. Seve, the Myth, became Seve, the Patron Saint of European golf, just short of four months after his death. The miracle of Medinah was viewed by millions of golf faithful and unfaithful alike, but even pagans had their deist doubts after looking at teary-eyed Captain "Chema" Olazábal, Seve's best friend and protégée. Watching this epic afternoon of golf, I couldn't help but think of President Obama… and, although he doesn't "metaphysically" qualify as a patron saint, his election four years ago to occupy the White House is as close as one might come to crossing to the great beyond. And I started to think of him as the patron saint of "gentler capitalism." Four years ago, progressives fooled themselves into believing that having a lesser evil occupying the White House would help transform our rampant imperial eagle into a friendlier bird of prey, not just in matters of war, but in moderating the ugly face of predatory capitalism as well. At least such was the hope – mine was. It didn't occur to us that electing Barack Obama to the presidency might yield quite the opposite result. Which it did… and it did in a major way! Had John McCain been the victor in 2008, one can rest assured that his administration would not have done any better in defusing the financial crisis, changing the politics of war, or creating any more jobs. If anything, conditions for the bottom 80 percent of Americans would likely have deteriorated at a faster pace, and in a larger scale. And, as a result, people throughout the nation would be up in arms and instead of a milquetoast Occupy movement, we might be out in the streets in these pre-election days with a modern version of Julius Caesar's Veni Vidi Vici… "Occupy Obviate Obliterate" being the cry to arms, the cry to justice this time around. And we would be asking for the heads of Wall Street banksters, politicians and others, who combined to perpetrate a multi-trillion-dollar, world-wide, financial assault. No, we have no need for jurists to tell us whether this holocaustic defalcation is or is not a crime; and just as the French stormed the Bastille to declare their freedom, Americans would be assailing the Wall Street fortress and its capitalist prison. By chance or circumstance, Obama was the perfect man to have at the White House… perfect for this band of thugs that had raped the nation. They were safe from prosecution knowing that neither the president nor his chosen attorney general, Eric Holden, had the stomach to conduct a criminal investigation against the very people who had provided major help in getting Obama elected to the high office. Elected Obama became the perfect shield/defender for past criminality in acts of war (Bush-son, Cheney and their lackeys) and in acts of financial defalcation (Wall Street blue-bloods)… he seemed believable when he claimed that apparent business misconduct, or misuse of US bullying power, could not make it in a court of criminal law. A "President McCain," without a lily-white personal and business background, would not have held the same credibility throughout the nation. We could say that Obama, by not having the Justice Department bring to trial key members of the Thug-elite, became the patron saint of "gentler capitalism"; that's probably what he will prefer to be known, using the pretext of further endangering an already divided nation. But that is precisely where he is wrong. It isn't "gentler capitalism" that he has helped. By his lack of courageous action, he has interceded on behalf of the Thug-elite… and, although we are sure such was not his intention, he has become, de facto, St. Barack Obama, Patron Saint of Predatory Capitalism.
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| Posted: 01 Oct 2012 08:51 PM PDT Gold is moving almost vertically now, the pent up energy of a year worth of consolidating is finally starting to lift this asset out of its trading range. The clear realization that the world's central banks are going to attack their ... Read More...
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| Posted: 01 Oct 2012 08:40 PM PDT Last year the Chairman of the Federal Reserve told me that gold is not money, a position which central banks, governments, and mainstream economists have claimed is the consensus for decades. But lately there have been some high-profile defections from that consensus. As Forbes recently reported, the president of the Bundesbank (Germany's central bank) and two highly-respected analysts at Deutsche Bank have praised gold as good money. Why is gold good money? Because it possesses all the monetary properties that the market demands: it is divisible, portable, recognizable and, most importantly, scarce - making it a stable store of value. It is all things the market needs good money to be and has been recognized as such throughout history. Gold rose to nearly $1800 an ounce after the Fed's most recent round of quantitative easing because the people know that gold is money when fiat money fails. Central bankers recognize this too, even if they officially d...
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| PIMCO On Gold - The Simple Facts Posted: 01 Oct 2012 08:10 PM PDT Via Nicholas Johnson and Mihir Worah of PIMCO, GOLD – The Simple Facts When it comes to investing in gold, investors often see the world in black and white. Some people have a deep, almost religious conviction that gold is a useless, barbarous relic with no yield; it's an asset no rational investor would ever want. Others love it, seeing it as the only asset that can offer protection from the coming financial catastrophe, which is always just around the corner. Our views are more nuanced and, we believe, provide a balanced framework for assessing value. Our bottom line: given current valuations and central bank policies, we see gold as a compelling inflation hedge and store of value that is potentially superior to fiat currencies. We believe investors should consider allocating gold and other precious metals to a diversified investment portfolio. The supply of gold is constrained, and we see demand increasing consistent with global economic growth on a per capita basis. Regarding inflation in particular, we feel that the Federal Reserve's decision to begin a third round of quantitative easing makes gold even more attractive. We see the Fed's actions in the wake of the financial crisis as a paradigm shift whereby the Fed is attempting to ease financial conditions and encourage risk-taking by increasing inflation expectations. Its policies will likely result in continuous negative real interest rates because nominal rates will be fixed at close to 0% for the foreseeable future. To be sure, gold isn't the only asset with the potential to hold its value in inflationary times. For U.S. investors, at least, Treasury Inflation-Protected Securities (TIPS) offer an explicit inflation hedge. What's more, TIPS tend to be less volatile than gold and, if held to maturity, are guaranteed to receive their principal back – barring a U.S. government default (which we see as incredibly improbable). Still, history shows that gold is highly correlated to inflation and has unique supply and demand characteristics that potentially lead to attractive valuations. A unique store of value For more than a millennium, gold has served as a store of value and a medium of exchange. It has broadly managed to maintain its real value, even as various currency regimes have come and gone. The reason is that the supply of gold is not at the whim of any governmental power; it is fundamentally supply constrained. Total outstanding above-ground gold stocks – the amount that has been extracted over the past few millennia – are roughly 155,000 metric tons. Each year mines supply roughly 2,600 additional metric tons, or 1.7% of the outstanding total. This is why gold can be thought of as the currency without a printing press. Instead, gold should be thought of as a currency, one which pays no interest. Dollars, euro, yen and other currencies can be deposited to receive interest, and this rate of interest is meant to compensate for the decline in the value of paper currencies via inflation. Gold, in contrast, maintains its real value over time so no interest is necessary. Today, the forward-looking return on holding U.S. dollars, and most other major currencies, has been artificially lowered by the Fed's commitment to keep interest rates pegged at near zero for the next few years; real yields on U.S. government bonds are negative out to 20 years. In such a world, we believe the desire and willingness of investors to hold gold relative to other currencies increases dramatically, creating the potential for continued price appreciation. The real price of gold Of course, investors must also consider valuation, especially since some believe gold is overpriced. Figure 1 shows the inflation-adjusted value of gold since 1970. There is no doubt that gold prices, which averaged $1,630 in August, are high. However, in inflation-adjusted terms, gold is 12% below its 1980 peak. Inflation in 1980 hit 15% year-over-year, and inflation today is running much lower so some may question the validity of comparisons to 1980. While we believe that inflation over the next several years is likely to be higher, on average, than it has been over the past 20 years and that the tail risks are for much higher inflation, this speaks more to the outlook for the nominal price of gold. The price of gold in real or inflation-adjusted terms is less affected by the rate of inflation and more impacted by the level of real interest rates because as discussed previously, it is the real interest rate that drives the relative attractiveness of holding gold relative to other currencies. With real interest rates negative on average for the next 20 years, it is of little surprise that gold is trading near its all-time inflation-adjusted high.
Even the inflation-adjusted value of gold doesn't tell the whole story, however. Thanks to productivity gains and economic growth, per capita GDP is significantly higher today than 30 years ago. Thus, the average person today has more wealth and, all else being equal, can afford to pay relatively more for gold. To Chinese, gold has never seemed less expensive Figure 2 shows the ratio of gold prices to per capita GDP in the U.S. and China. In dollar terms, gold is still 34% below its 1980 peak, as U.S. per capita GDP is higher today. Furthermore, this is a relatively U.S. centric view, and considering that China represents the largest source of global gold demand, we believe investors take an overly myopic view at their peril. Chinese per capita GDP has grown at an 18% annualized rate for the past 10 years, compared with just 3% per year in the U.S. Thus, while gold might seem quite expensive to those of us in developed economies, its price seems much less expensive to those in faster-growing emerging economies like China.
Another way to think about the relative value of gold is to consider what a return to the gold standard might look like. In other words, what if the entire world's gold were used to back the global supply of fiat currency? Globally there are roughly $12.5 trillion in physical and electronic currency reserves. Given that there are 155,000 metric tons of gold above ground, this equals an approximate price of $2,500 per ounce if all of the world's reserves were to be backed by the entire stock of above-ground physical gold. Not really so pricey These points lead us to believe that gold valuations are not as stretched as a naïve look at its nominal price might suggest. Central banks globally are seeking to depreciate their currencies in a beggar-thy-neighbor attempt to stimulate their domestic economies (the Swiss National Bank is a prime example). Therefore, we believe investors should consider owning gold, precious metals and other assets that store value as long as central banks continue to print and maintain negative real interest rates.
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| Guest Post: On Risk Convergence, Over-Determined Systems, And Hyperinflation Posted: 01 Oct 2012 07:32 PM PDT Submitted by Martin Sibileau of A View From The Trenches, This week, we want to follow up on some thoughts from our last two letters, where we deduce the impact of the policies undertaken by both the Fed and the European Central Bank (ECB). As well, we provide a few comments on an ongoing debate: Will we ever experience hyperinflation? Last week, we came up with three important conclusions: -Conclusion No.1: The ECB backstop generates capital gains for the banks of the Euro zone and transforms risky sovereign debt into a carry product (i.e. an asset whose price is mostly driven by the interest it pays, rather than its risk of default, because this risk has been removed by the central bank) This is what we wrote on Sept. 10th: "… Until now, selling distressed sovereign bonds to the ECB to avoid losses was a positive thing for the EU banks. However, going forward, as the backstop of the ECB is in place and the expectation of default is removed from the front end (i.e. 1 to 3 years), exchanging carry (i.e. interest income) for cash will be a losing proposition. The EU banks will demand that the euros be sterilized, to receive ECB debt in exchange at an acceptable interest rate…" Where do we stand? Everyone expects Spainto request a bailout and accept the conditions that would allow the ECB to buy their bonds. In the meantime, someone took the time to measure the impact of the ECB backstops over the past year and came up with a number: EUR9BN in capital gains. On Sep. 20th, the European Banks research team from Barclays published a note titled "Liability management-understanding the rationale". Barclays estimates that in their liability management transactions on EUR200BN of unsecured debt, European Banks have gained EUR9BN, from lower interest expenses. This of course, came courtesy of the Fed first (remember the EURUSD swaps put in place at the end of 2011?) and the ECB later, with 3-year long-term refinancing operations. The chart below (source: Bloomberg) shows the iShares MSCI Europe Financial Sector Index Fund (ticker: EUFN). The rally that began at the end of July with the speculation on the future actions of the ECB has peaked, awaiting further news.
If we are correct with this conclusion, removing (i.e. buying) the assets backstopped by the ECB (i.e. sovereign debt) from the banks in the secondary market via the OMT (Outright Monetary Transactions), will be expensive to the banks. Why? Because these banks, which after so much misery, end up finding out that the assets they were holding are no longer in risk of default and provide a nice interest, will now have to hand these assets over to the ECB. It would be ok to do this every once in a while. However, the fiscal deficits of the EU countries do not happen every once in a while, but every minute and they keep on growing! Should the ECB seek to make the OMT sustainable as the fiscal deficits of the Euro zone periphery continue, the banks will have to be appropriately compensated. The risk remains then, that at a future, much later date, the ECB faces a net interest loss (between the interest it receives for their sovereign debt holdings and the one it pays to the banks). Under this scenario, the only alternative left will be to monetize that deficit all the way to hyperinflation. But in the meantime, let's move to…
-Conclusion No.2: The ECB backstop will set a floor to yields This is what we wrote: "…As the ECB backstops short-term sovereign debt, two results will emerge in the sovereign risk space: First, the market will discover the implicit yield cap and through rational expectations, that yield cap –having been validated by the ECB- will become the floor for sovereign risk within the Euro zone. The key assumption here is that primary fiscal deficits persist across the Euro zone…" Where do we stand? It is too early to say anything, as the ECB has not purchased anything yet and the potential secession ofCataloniaand recent protests have delayed (if we are correct) the establishment of a floor.
-Conclusion No.3: The ECB backstop will first push rates within the Euro zone to a convergence (periphery will have lower rates, core will see higher rates). And secondly, will force US rates to converge to the Euro zone rate, if the Euro zone survives the first convergence. This is what we wrote: "…within that maturity range selected by the ECB for its secondary market purchases (up to three years), the market will arbitrage between the rates of core Europe and its periphery, converging into a single Euro zone yield target…." and "…If the () trend proves true, there would be no reason to believe that the short-term US sovereign yield should keep as low as it is vs. the equivalent EU sovereign yield. For all practical purposes, in the segment of up-to-3 years, the European Central Bank would set the value of the world's risk-free rate! The big assumption here is of course, that the first trend, above, holds true. Only then, the arbitrage between the US sovereign yield and the EU sovereign yield could be triggered…" Where do we stand? Again, with the political struggle between the periphery and coreEuropeand (within the periphery) between the people and their appointed leaders, this convergence has been temporarily interrupted The charts below (source: Bloomberg) show the convergence that started at the end of July, in 2-yr rates (but can also be observed in 10-yrs, not shown here). In the second chart, we show theUS30-yr yield, which suggests that a bearish trend is building (i.e. higher yields), consistent with our conclusion. Time will decide….
All this would indicate that the key to what's coming next is simply political, which brings us back to one of the first letters of the year, titled "An analytic framework for 2012", where we precisely showed the tragic (and spiraling) circularity of enhanced deficits, adjustments programs and coercion by the EU council, backstopped by the actions of the ECB. We reproduce a chart from that letter, below. As the problem spirals, the actions of the ECB must strengthen: If at the beginning of the year, 3-yr lines of secured lending bought time, by September, "conditional" but unlimited bond purchases were now required. A few months from now, that conditionality will surely be merely a simple protocol. In every turn of this circularity, as unemployment, prices and fiscal deficits grow, so does social unrest. Social unrest therefore is the determinant in this overdetermined system.
To those familiar with Algebra, we suggest that the Ponzi scheme we live in is actually an overdetermined system, because there is no solution that will simultaneously cover all the financial and non-financial imbalances of practically any currency zone on the planet. Precisely this limitation is the driver of the many growing confrontations we see: In the Middle East, in the South China Sea, in Europe and soon too, in North America. That these tensions further develop into full-fledged war is not a tail risk. The tail risk is indeed the reverse: The tail risk is that these confrontations do not further develop into wars, given the overdetermination of the system!
Some final comments on hyperinflation We have noticed of late that there's a debate on whether or not the US dollar zone will end in hyperinflation and whether or not the world can again embrace the gold standard. We will not discuss the latter today. With the regards to the former, we think it is still early to talk about hyperinflation. We don't know when it will take place. All we can guarantee is that there are certain conditions necessary to see inflation spike up and morph into hyperinflation, and such conditions have not crystallized yet. However, there is a high risk at this stage in the game that they do, and we briefly examined that risk for the Euro zone, on September 10th. Money has two purposes: to store value and to transact. There is however another use of money, which is a derivative of the storage-of-value use. The use of money to repay debt. Those who demand money to repay debts do not do so to store value or to transact. But as long as there are debts outstanding, there will be a demand for currency to repay that credit. This means that, in order to see such demand diminish, we need to see defaults first, which will along eliminate credit extended in fiat, debased currency. As this process unfolds, the banking system goes bankrupt, is nationalized, and credit is directed towards and centrally managed by the government. This may easily takes years, but it is taking place in the Euro zone right now. The repo market and futures markets die along and central banks end up becoming counterparties in cross currency and interest rate swaps. Once this stage is reached, the private sector is out of the system and fiat money is only demanded to transact. Here's when the velocity of circulation of money starts to rise exponentially. As these successive steps are passed, slowly, central banks suffer structural changes in their balance sheets. For instance, let's take the example of Argentina. At one point, after many devaluations of the peso, the central bank by 1982 had become the main USD swap counterparty for corporate credit. However, to avoid a wave of bankruptcies after the June 1982 devaluation (after the Falklands War), it refinanced USD denominated debt at a 23% lower exchange rate, and in the process sold FX insurance at a cost (for the corporations entering the transaction) of 5%/month, when the inflation rate was 7.9%/month. This was going to be a huge burden that accelerated the deficit of the central bank, which of course was monetized (refer here), unleashing the first high inflation of 1985. The parallel with the situation in the Euro zone is self-evident: If the ECB starts buying sovereign bonds as fiscal deficits continue, the recent transitory appreciation of the Euro (to $1.3150 was mainly driven by short covering and the capital gains in financials, mentioned above) is not sustainable. In the long run, the intervention of the ECB would only devalue the Euro, creating a currency mismatch for those companies in the Euro zone that issued USD denominated debt. Thanks to the FX swaps by the Fed and the crowding out of the ECB in favour printing Euros for government debt, these companies are more numerous than they would have been. Therefore, the ingredient for an hyperinflationary process is already present, but we're not quite there yet… In the end, by the time the use of fiat money is reduced to its transactional role, central banks run huge deficits, called quasi-fiscal. They have backstopped government debt, money markets, repo markets, future markets and derivatives markets. The interest they pay on their liabilities to sterilize their actions always ends being higher than the one they receive for their assets. And it makes perfect sense: Otherwise, nobody would have asked these central banks to be their backstop! An additional source of fuel for this fire is the so called Olivera effect (after Julio H. Olivera). This is another ingredient to turn a mild inflationary process into hyperinflation. This effect refers to the fact that when inflation reaches a relevant number, it becomes profitable for taxpayers to delay their tax filings, which reduces the tax burden. Governments are thus forced print more money to cover the loss in real revenue they suffer. The fact that we are still in the early chapters of the story just narrated does not allow us to state that hyperinflation is only a tail risk. The tail risk is (again) the reverse: That all the steps central banks took since 2008 won't lead to spiraling quasi-fiscal deficits.
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| Across Latin America, the quest for gold brings both riches and conflict Posted: 01 Oct 2012 07:30 PM PDT By Tim Johnson http://www.kansascity.com/2012/10/01/3843039/across-latin-america-quest-... MEXICO CITY -- Steadily high prices for gold are having a dramatic impact on parts of Latin America, bringing a flood of foreign investment and stirring a gold bug among wildcat miners in the jungles. Some of Latin America's poorest nations -- Bolivia, Honduras, and Nicaragua -- have seen their balance sheets strengthened by gold production, while major producers Peru and Mexico reap billions in foreign exports. But even as miners unearth deposits of gold, they also open up veins of social discontent. Protests over gold mining have become the coin of the day in areas where villagers complain of water pollution, a lack of jobs, and environmental devastation. ... Dispatch continues below ... ADVERTISEMENT Prophecy Platinum Intercepts Best Pt+Pd+Au Grades Yet Company Press Release VANCOUVER, British Columbia -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) announces more results of its 2012 drill program on the company's fully-owned Wellgreen platinum group metals, nickel, and copper project in southwestern Yukon Territory, Canada. Four surface holes and four underground holes all intercepted significant mineralized widths, ranging from 28.5 meters (WS12-201) and up to 459.5 metres (WS12-193). Highlights include WU12-540, which returned 8.9 metres of 5.36 grams per tonne platinum, palladium, and gold; 1.73 percent copper; and 1.01 percent nickel within 304.5 meters of 0.66 g/t platinum-palladium-gold, 0.20 percent copper, and 0.27 percent nickel. The surface drill program started in June and has completed 16 holes (assays pending for 12 holes) with two rigs now on site. The surface program continues to progress at a steady pace. Prophecy Chairman John Lee commented: "Wellgreen is a very large nickel, copper, and platinum group metals project with near-surface high-grade zones. High-grade intercepts will be incorporated into resource modeling and mine planning in the pre-feasibility study. We expect further positive drill results from Wellgreen shortly." Wellgreen features a low 2.59-to-1 strip ratio, is situated at an altitude of 1,300 meters, and is only 15 kilometers from the two-lane paved Alaska Highway. Those factors significantly minimize the project's indirect costs. For the complete company statement with full tabulation of the drilling results, please visit: http://prophecyplat.com/news_2012_sep11_prophecy_platinum_drill_results.... U.S. and Canadian mining companies can be lightning rods for the discontent. But watchdog groups say global mining companies have grown more responsible in their dealings abroad. As often as not, it is small companies, and even independent miners, who generate the frictions and pollution. The average price of gold has risen more than sixfold since 2001, when it stood around $270 an ounce. Now, spot gold prices hover above $1,700 an ounce. Some analysts see prices heading higher amid global economic uncertainty. The result has been a flood of mining companies heading south of the border. "In Sonora you can't move without bumping into a Canadian miner," said Christopher Ecclestone, a strategist at Hallgarten & Co., a London consultancy focused on mining in Latin America. Mexico, known for centuries for its silver mines, recently saw gold surpass silver to become its No. 1 mineral export, partly because gold production has more than tripled since 2004 to more than 84 metric tons a year. And new mines are in the offing. "We've found an area that is extremely concentrated in gold. ... It's quite staggering," said Richard Whittall, chief executive of a Vancouver exploration company, Newstrike Capital Inc., which is hunting in the Guerrero Gold Belt, an area southwest of Mexico's capital. Whittall's enthusiasm for his company's Ana Paula deposit is understandable given prices these days. The deposit lies close to Los Filos, the largest gold mine in Mexico, which is the property of another Vancouver company, Goldcorp. Los Filos expects to yield 335,000 ounces this year at a production cost of $600 an ounce. "You do the math," Whittall says, referring to the more than $1,100 profit per ounce at current prices. Hundreds of thousands of individual miners across Latin America are totting their own sums. From Nicaragua's mining district to the goldfields in Colombia's northwest, and on to Peru's Madre de Dios jungles, wildcat miners are tearing up forests and dumping mercury in rivers in their quest for gold. In Guyana, a nation the size of Idaho on South America's northeastern shoulder, authorities in July suspended all further mine permits to halt devastation by some 14,500 independent miners, many of whom blast river banks with hoses to expose gold-laden sediment, then use mercury as an amalgam to pull gold from silt. In Colombia some 200,000 small-scale miners produce 50 percent of that nation's gold, while 20,000 miners now operate in the pristine Madre de Dios region of Peru, where they commonly filter mercury into the food chain. Mercury contamination by small-scale miners has prompted leaders of some countries, like Nicaragua's Daniel Ortega, to seek out experienced mining companies using less harmful methods involving cyanide that avoid the use of mercury. One of the beneficiaries is Hemco Nicaragua, a private company employing 900 people at its gold mines in the nation's so-called Golden Triangle, formed by the villages of Siuna, Bonanza and Rosita. "We're using traditional leaching methods," said Randall Martin, a U.S. mining engineer who is chairman of the company. "Cyanide has a very short lifespan. Mercury is a heavy metal and stays around forever." Like many foreign-owned mining companies, Hemco has put emphasis on investing in the communities where it operates, eager to foster good relations. "We built a kindergarten. We built a computer lab for the community," Martin said. "It's about the only place in Nicaragua where everybody who comes out of high school has taken a computer course." Relations between foreign mining companies and local communities have been far from smooth in El Salvador and Guatemala, where battles pitting villagers against companies are portrayed as David vs. Goliath struggles. The most notorious case involved Pacific Rim, a Canadian firm that later incorporated in Nevada. The company began exploring for gold in 2002, eventually filing a $77 million lawsuit in 2008 charging that El Salvador's failure to issue it an environmental permit violated its rights as a foreign investor. An activist against the Pacific Rim project was found slain with two gunshot wounds to the head in June 2011. He was the fourth mining activist murdered in the previous two years in El Salvador. Mam-speaking Mayans living near Guatemala's giant Marlin gold mine, one of the most productive in the hemisphere, say the Goldcorp mine has brought health, environmental, and human rights woes. Acting on behalf of 18 villages around the mine, the Inter-American Commission on Human Rights asked in 2010 for Guatemala to suspend mine operations. Neither the state nor Goldcorp complied. The profits splashing out of such mines have spurred some nonprofit activist groups to demand tougher terms for gold companies on long-term liability for environmental cleanup, community improvements, and royalty payments. "It is more complicated to open a restaurant than it is to get a gold mining concession," said Agustin Bravo Gaxiola, a mining specialist at the Mexican Center for Environmental Law, an advocacy group. "Mexican mining legislation is such that it would have been the envy of Queen Victoria under the British Empire." Under President Felipe Calderon, Mexico has more than doubled the area of mineral concessions, often granting rights prior to consulting with indigenous people dwelling on the lands. In February,federal courts suspended one concession granted in San Luis Potosi after lawyers for Huichol Indians said it would desecrate a sacred site. Whether social problems erupt near gold mines often depends on where they are. In Mexico's arid north, few problems have been reported. "Miners only move a few cacti," said Ecclestone, the mining consultant. "They are not ravaging jungles and killing monkeys." In contrast, mining companies going into countries that were once torn by civil war face different and more severe challenges. "In Guatemala you're working in post-conflict areas with indigenous communities. There's a strong suspicion of outsiders," said Keith Slack, an adviser on oil and mining for Oxfam America, a humanitarian relief and development agency. Whittall, the Newstrike chief, said his exploration company fosters good relations in communities where it works, viewing it as economic common sense. "If you're trying to sell a company ... one of the highest and most important assets to have is a tranquil community that is onside with potential development," he said. Mining companies, he said, should hold to the precept that "you're a guest in the country. It is not rocket science. It's just being respectful." Join GATA here: New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT GoldMoney adds Toronto vaulting option In addition to its precious metals storage facilities in Hong Kong, Switzerland, and the United Kingdom, GoldMoney customers now can store their gold and silver in a high-security vault operated by Brink's in Toronto, Ontario, Canada. GoldMoney also has recently partnered with Rhenus Freight Logistics to offer another gold storage option in Switzerland. The Rhenus vault is in the secured zone of Zurich Airport and offers customers superb security as well as the ability to inspect their gold. Storage at the new vaults in Canada and Switzerland is available at GoldMoney's lowest fees. Customers can select their storage location when placing their buy order. GoldMoney customers can take delivery of any number of gold, silver, platinum, and palladium bars from any GoldMoney vault, as well as personally collect their bars stored in the Hong Kong, Switzerland, and U.K. vaults. It's easy to open an account, add funds, and liquidate your investment. For more information, visit: http://www.goldmoney.com/?gmrefcode=gata
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| New York Sun: Bernanke warns his creator Posted: 01 Oct 2012 07:10 PM PDT 9p ET Monday, October 1, 2012 Dear Friend of GATA and Gold: "Transparency is not political interference," The New York Sun notes today in an editorial scolding Federal Reserve Chairman Ben Bernanke for seeming to warn Congress to stay out of what is actually Congress' proper business. "It is way past time for the Congress to open up the Fed's operations for a proper inspection. The audit-the-Fed bill, more formally known as HR 459 or the Federal Reserve Transparency Act, passed the House by vote of 327 to 98. Does one think the House could be trying to tell the chairman something? Where does the Federal Reserve chairman come off entering the political fray to campaign against such a measure by the Congress that created the Fed?" Of course transparency is a step toward political interference. But so what? As U.S. Rep. Ron Paul has noted, the Fed, unelected, in effect appropriates far more money than the elected branches of government. Besides, there is politics in everything; the only question is whether it is public, democratic politics or private, undemocratic politics, the latter being the Fed's kind. The Sun's editorial is headlined "Bernanke Warns His Creator" and it's posted here: http://www.nysun.com/editorials/bernanke-warns-his-creator/88010/ CHRIS POWELL, Secretary/Treasurer 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 Join GATA here: New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy Platinum Intercepts Best Pt+Pd+Au Grades Yet Company Press Release VANCOUVER, British Columbia -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) announces more results of its 2012 drill program on the company's fully-owned Wellgreen platinum group metals, nickel, and copper project in southwestern Yukon Territory, Canada. Four surface holes and four underground holes all intercepted significant mineralized widths, ranging from 28.5 meters (WS12-201) and up to 459.5 metres (WS12-193). Highlights include WU12-540, which returned 8.9 metres of 5.36 grams per tonne platinum, palladium, and gold; 1.73 percent copper; and 1.01 percent nickel within 304.5 meters of 0.66 g/t platinum-palladium-gold, 0.20 percent copper, and 0.27 percent nickel. The surface drill program started in June and has completed 16 holes (assays pending for 12 holes) with two rigs now on site. The surface program continues to progress at a steady pace. Prophecy Chairman John Lee commented: "Wellgreen is a very large nickel, copper, and platinum group metals project with near-surface high-grade zones. High-grade intercepts will be incorporated into resource modeling and mine planning in the pre-feasibility study. We expect further positive drill results from Wellgreen shortly." Wellgreen features a low 2.59-to-1 strip ratio, is situated at an altitude of 1,300 meters, and is only 15 kilometers from the two-lane paved Alaska Highway. Those factors significantly minimize the project's indirect costs. For the complete company statement with full tabulation of the drilling results, please visit: http://prophecyplat.com/news_2012_sep11_prophecy_platinum_drill_results....
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| Everything You Wanted To Know About Tri-Party Repo Markets But Were Afraid To Ask Posted: 01 Oct 2012 06:53 PM PDT The U.S. tri-party repo market is one of the most important components of the financial system - that noone has ever heard of (though not ZH readers: Tri-party repo has been a core topic of several of our 2009 posts exploring the nuances of the Lehman collapse - initially here and here and then multiple times since as we discuss the backbone of the shadow banking system). The 2007-09 financial crisis exposed weaknesses in the design of the U.S. tri-party repo market that could rapidly elevate and propagate systemic risk. We have long-discussed the importance of the collateral and hypothecation markets and a recent study of the market identifies the collateral allocation and unwind processes as two key mechanics contributing to the market's fragility. While the topic is relatively specialized, it is critical to understanding the reality behind the curtain and the paper below provides clarification of the bilateral and tri-party repo markets (The Fed, Bank of NY, and JPM - who in effect have first refusal on any collateral in the system), dealers' intervention, and its potential as a source of financial systemic risk.
The US Repo Market:
The $1.8tn Tri-Party Repo market:
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| The Gold Price Rose $9.40 After a new Intraday High Closing at $1,780.50 Posted: 01 Oct 2012 06:11 PM PDT Gold Price Close Today : 1780.50 Change : 9.40 or 0.53% Silver Price Close Today : 34.881 Change : 0.364 or 1.05% Gold Silver Ratio Today : 51.045 Change : -0.266 or -0.52% Silver Gold Ratio Today : 0.01959 Change : 0.000102 or 0.52% Platinum Price Close Today : 1681.50 Change : 16.20 or 0.97% Palladium Price Close Today : 644.45 Change : 4.80 or 0.75% S&P 500 : 1,444.49 Change : 3.82 or 0.27% Dow In GOLD$ : $156.91 Change : $ 0.09 or 0.06% Dow in GOLD oz : 7.591 Change : 0.005 or 0.06% Dow in SILVER oz : 387.46 Change : -1.83 or -0.47% Dow Industrial : 13,515.11 Change : 77.98 or 0.58% US Dollar Index : 79.81 Change : -0.241 or -0.30% I couldn't find any particular news item as a catalyst, but something hit the GOLD PRICE this morning about 8:30, shooting it from just below $1,770 to $1,790.70 quicker than a cat can cross a road. Well, a 30-minute road-crossing cat, anyway. Yet the GOLD PRICE couldn't hold on to those gains, and after a small double peak fell back to make a $1,770 - $1,780 range. After a new intraday high ($1,790.70) gold closed $9.40 richer, bless its heart. So gold hit a higher high for the move today, after it had hit a lower low than Friday ($1,764.63). This is not weak action, but the outcome will be influenced by all this silly banking/bailout announcements this week. Gold could be stopped cold by $1,805, or pass on through. I certainly would not want to be short gold right here. The SILVER PRICE gained 36.4c today to 3388.1c. Today's 3535c high surpassed the last intraday high (3526c). Silver's breakaway today came from 3440c, about that mysterious 8:30 a.m. witching hour. Shot straight up to 3535c, them came about as straight down, but to a higher range, 3450 - 3490. Many pessimists lurk above 3500c, awaiting every chance to sell silver up there. GOLD/SILVER RATIO dropped a little today, from 51.429 Friday to 51.045, so silver is moving up faster than gold, but one question nags: why can't it get through 3500c to close at a new high like gold? That's not a fatal question, just one of those out of place items that sends a little shiver over your brain trying to put it in its proper place. If those pessimists ever leave the gate open for silver, it'll sprint for 3750 in great leaps and bounds, as only silver can. So I'm sitting here sweating, because all it will take to kill my expectation of a correction is a gold close above $1,800 or silver above 3550c. Tomorrow ought to remove all my doubt. I am growing increasingly uneasy about expecting a large correction in silver and gold. I'll explain later. Central banks in Australia, England, and Europe will announce interest rate decisions this week. If they lower rates that ought to fuel gold's rise further. More, rumors say Spain will ask the EU for a bailout this week. Remember the Moneychanger's Political Economy Formula, BS = MI2, or, Bailout Spain = More Inflation Squared. Clearly the market anticipates more bad news for the dollar. After flattening its face on the ceiling at 80 Friday, the US dollar index lost another 24.1 basis points (0.31%) today to 79.812. That dollar index is as spry as a grasshopper after you drop a cinderblock on him. Boundaries for the dollar are a close above 80.10 to turn up, or a close below 79.40 to turn down. This remains the Best of All Possible Worlds as hand in hand central bankers take the global economy over the cliff, skipping along in step while they eviscerate their currencies. Never mind, above all, the Banks Must Be Fed. Euro closed at $1.2889 while the Yen closed 128.20c. (US$=Y78.00 = E 0.7758). Neither changes the technical picture at all, except the euro, scrofulous construct that it is, is bouncing along under its downtrend line. Stocks continue to tag along after gold and silver after the dollar. Sort of like one of those stupid things that you did when you learned that you could not pull a trailer with your pick-up truck when all they have is a chain. Need a trailer hitch, cause the trailer hath no brakes. Yet stock buyers will get a huge surprise when that dollar really keels over sick and gold races away. Today the Dow gained 77.98 (0.5%) to 13,515.11. S&P500 also gained 3.82 (0.27%) to 1,444.49. The Dow has trampolined off its 20 DMA (13,423) while the S&P500 hit the bottom boundary of its rising wedge. Both, I suspect, will rise further, defrauding more unwary of their hard earned savings. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com 1-888-218-9226 10:00am-5:00pm CST, Monday-Friday © 2012, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. No, I don't. 
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| Posted: 01 Oct 2012 06:09 PM PDT Submitted by Michael Krieger of Libery Blitzkrieg blog, My hands are tied D'you wear a black armband I don't need your civil war - Guns and Roses "Civil War" The Tipping Point Many people say to me, "but Mike, aren't things always corrupt, hasn't it always been this way?" To this I answer yes and no. Of course within any complex societal and political structure there will be elements of corruption. This is obvious. However, there are cycles of corruption and degrees. At some point, particularly toward the end of a cycle where globalization creates this "super corrupt class" of individuals roaming the planet doing as they please with us pawns, you reach a tipping point. That tipping point has already been reached. What we are witnessing now all over the world are merely the effects of that tipping point clashing with the corrupt global elite that refuses to budge an inch and reform even though it is in their best interest to do so. No, they are so arrogant and criminal after decades of doing what they please with zero consequences they would rather attempt to implement a global police state rather than deal with the nightmare of their actions and make the world a better place. Therefore, it is up to us, as a species, to reclaim what is our birthright. Freedom. As I wrote the other day on twitter, what we have today is not Socialism or Capitalism, it is Ponzism. I am talking on a global level. Basically every country and every region. The biggest pitfall we must avoid as a species is allowing the global power structure to pit us against one another. These guys don't fight wars, they send you to fight them. Don't fall for it. Their number one trick once things get bad within their own nations is to attempt to create a war. This checks two very important boxes for them. First, it creates a distraction for the general public and even makes them think that they are part of a team that needs to be cheered. It's like a big football game but with thousands or millions dying on the field. Second, it allows the government to do pretty much anything they want in the name of "winning the war" or "national security." This is exactly why the "war on terror" was the perfect war for a kleptocratic elite. It is a war with no end, so theoretically they can constantly claim war as an excuse for taking away civil liberties. The problem for them at the moment though is that the American people are waking up to this scam. Therefore, a larger and much deadlier war is in their best interests. If it is in their best interest you can be sure it is in our worse interests. Therefore, we must do everything we can to prevent it.
The Global Spring The number of events happening at the moment that provide evidence of the emerging Global Spring are almost too many to keep track of, but in the following paragraphs I will try. I assume that most everyone reading this piece is aware of these events, but what I am trying to do is explain my thesis that all of them are essentially related to the same theme. A massive global uprising against the current status quo and the economic and political systems that it has put in place. People are becoming increasingly aware that these systems are run by the few and for the few, and the boiling point is being reached. Community by community and nation by nation. Let's start with China.
China So with the economy back in steep decline, the authorities fear pumping massive stimulus in as they did four years prior due to their justifiable fears of sparking rampant inflation. Meanwhile, thanks to social networking, citizens have become more aware of the incredible corruption and theft of their leadership, whether in the political or business world. They are increasingly acting out about it and it is becoming so blatant that even China's legendary control of media is unable to direct the plot. The most recent outburst came from the Foxconn (a major supplier to Apple) factory in Taiyuan, China which employs 79,000 people. While details are sketchy, most accounts point to the riot, which reportedly involved 2,000 people, being sparked by a fight between security guards and workers. From the Washington Post:
Anyone think this is an isolated event? Didn't think so. While this is the most high profile riot as of late, the New York Times in its coverage of the incident wrote:
Of course, China's leadership was well aware of all of this before the Foxconn incident came onto the scene, so what is a good authoritarian regime to do? Well, you attempt to direct the rage and angst to an outside enemy. In this case Japan. Zerohedge has a great report on the anti-Japanese violence and hatred that burst onto the scene recently. The link to their piece Postcards from a Furious China really says it all.
Europe Let's start with Spain. While Greece is still on fire, Spain is where the real action is due to the size of its economy and the importance it has to the political EU hacks. Not only were there enormous protests this week in the capital Madrid in reaction to austerity measures, but there is also a very significant secession movement picking up steam in Catalonia. This isn't about leaving the euro, this is about leaving Spain! For those that aren't aware of Spanish geography, Catalonia is the wealthiest region in Spain and it is where Barcelona is located. First, we saw enormous protests in Catalonia about a month ago, which I covered here. Now we see that last night the regional parliament approved a referendum on independence that will apparently be voted on during regional elections on November 25. Reuters covers the story here. While this is hugely important, let's not overlook the massive demonstrations in Madrid this past week. I will let this powerful video below do the talking. Draghi says "the euro is irreversible." Don't make me laugh.
Now let's talk Greece. I think a lot of people brushed off this week's protests as "oh it's just the Greeks in the streets again." This is a mistake. These demonstrations were different and here is why. From the UK's Guardian:
Once the people that are being paid to defend the regime start opposing the regime it is game over. It appears we are there in Greece. Full article here.
The Middle East
The United States
Just Say No…to War
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| Pento sees QE4 in place already; Sinclair says gold will soar when you sell Posted: 01 Oct 2012 05:48 PM PDT 7:45p ET Tuesday, October 1, 2012 Dear Friend of GATA and Gold: Fund manager Michael Pento tonight tells King World News that the Federal Reserve today unofficially announced a fourth round of "quantitative easing." An excerpt from his interview is posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/10/2_KW... And Jim Sinclair writes tonight that the gold market manipulators will stop pushing gold down and start pushing gold up "as soon as the big boys have all your gold and all the gold shares you are willing to give them." Sinclair adds, "There is no way that the present giant shorts in the good gold shares can cover. The only reason they are not yet in panic is that their long period of winning has made even the smartest of them stupid." Sinclair's commentary is at JSMineSet.com here: http://www.jsmineset.com/2012/10/01/in-the-news-today-1324/ CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Fred Goldstein and Tim Murphy open All Pro Gold Longtime GATA supporters Fred Goldstein and Tim Murphy have brought their many years of experience in the precious metals and numismatic coins to All Pro Gold as metals brokers who specialize in the delivery of gold and silver bullion bars and coins as well as numismatic gold and silver coins. Fred and Tim follow these markets closely and are assisted by a team of consultants in monitoring market trends. All Pro Gold offers GATA supporters competitive pricing on all bullion products and welcomes inquiries. Tim can be reached at 602-299-2585 and Tim@allprogold.com, Fred at 602-799-8378 and Fred@allprogold.com. Ask about their ratio strategy and the relationship of generic $20 dollar gold pieces to 1-ounce gold bullion coins. Visit their Internet site at http://www.allprogold.com/. Join GATA here: New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
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| The Zero Hedge Daily Round Up #136 – 10/01/2012 Posted: 01 Oct 2012 05:26 PM PDT I've recently discovered that the podcast has collected some 50,000+ downloads over it's nine month life. I no longer need your trigger-happy fingers. I already have my satisfaction. This is the Zero Hedge Daily Round Up.
Alternatively, you can download the show as a podcast on iTunes or any RSS capable device. RSS Feed: http://thefinancialreality.podomatic.com/rss2.xml Julius Reade P.S. For those paranoid about the government: http://thefinancialreality.podomatic.com/enclosure/2012-10-01T16_25_02-0...
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| Gold Trades to 2012 High and Reverses Posted: 01 Oct 2012 04:33 PM PDT courtesy of DailyFX.com October 01, 2012 01:02 PM Daily Candles Prepared by Jamie Saettele, CMT After trading to a new high for 2012, gold reversed to close over $15 off of its high. Despite the action, trading from the short side is dangerous. The 1740 area was identified as a high risk area for bulls and that level was not only overcome, but also held as support on 9/26. The next high risk area isn’t until 1856/75. 1753 is now support. LEVELS: 1736.05 1750.90 1763.25 1791.49 1802.80 1819.05...
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| Will The Collapse Of Spain Put Romney In The White House? Posted: 01 Oct 2012 04:28 PM PDT Let's be clear about this: Mitt Romney can only win the election if the American economy numbers plummet – significantly – in the next 30 days. Mitt's op-eds about the Middle East are not going to cut it. That is, … Continue reading
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| Posted: 01 Oct 2012 03:37 PM PDT October 1, 2012
Makes sense: "Increased oil prices drive up costs for transportation, fertilizer, plastic packaging and inks used to print packaging," says Steve Odland. He should know. He cut his business teeth at Quaker Oats and Sara Lee before taking on CEO gigs at Office Depot and AutoZone.
"Here's a thought experiment," writes Vancouver veteran Stephen Johnston, chief of the farmland investing fund Agcapita. "Are we in a global environment where food prices can drive energy prices, rather than the more typical relationship where energy prices tend to drive food prices?" Mr. Johnston directs our attention to this table of two dozen countries around the world, and the percentage of income the typical household spends on food…
"Residents in such places are heavily exposed to price increases in basic foodstuffs." And when those prices reach a certain level, those people start to riot. It happened in 2008. It happened again with the "Arab Spring" in 2011. "True, much of this is backlash against corrupt and/or authoritarian regimes," we wrote at the time. "But it took empty bellies to finally bring the rage to the surface." You can almost plot it on a chart. Indeed, researchers at an outfit called the New England Complex Systems Institute did just that. "The timing of violent protests in North Africa and the Middle East in 2011," they write, "as well as earlier riots in 2008 coincides with large peaks in global food prices…. Specifically, food riots occur above a threshold of the FAO price index of 210." Readers with keen memories will recognize this monthly metric issued by the United Nations Food and Agriculture Organization. It presently stands at 213.
Blame it on the drought in the United States, South America and Russia. "Unlike the staple grain shortage seen in 2008," says Rabobank's report, "this year's scarcity will affect feed intensive crops with serious repercussions for animal protein and dairy industries." Thus, "it would appear that unrest in the Middle East is set to continue," getting back to Agcapita's Johnston.
That's how food prices — and food riots — could drive up oil prices. It gets back to Byron King's guidance in this space two weeks ago today: "Investmentwise, get the heck out of the Middle East. Go elsewhere, where the oil is." Byron has carefully constructed a portfolio of oil producers and service companies with little or no Middle East exposure. The best opportunities of all, he suggests, will be found surprisingly close to home. He shares the intriguing thesis — and how to act on it — at this link.
The most optimistic guess among dozens of economists surveyed by Bloomberg was 50.6. So much for the "expert consensus," again. Within the big number, new orders are back in expansion territory, and the pace of hiring is picking up.
Had the number come out before the Federal Reserve unleashed QEternity on Sept. 12, traders would have panicked because the news would have made a new round of easy money less likely. But now that the new round is a fait accompli, they can hit "buy" with confidence. At last check, the Dow is up 100 points, to 13,538. The S&P is at 1,446. Small caps are lagging, and the Nasdaq is slightly in the red.
China's official number inched up to 49.8. Europe's number also moved up to 46.1. Despite the improvement, both numbers still indicate a contracting factory sector.
Similar story for silver. The white metal popped above $35, but has now settled back at $34.75.
"Deutsche Bank," advises Lifetime Income Report's Jim Nelson, "is preparing to bring back the catalyst for the 2008 financial collapse… collateralized debt obligations." Ah yes, the CDO. "In the first half of last decade," says Jim by way of refreshing the memory, "the 'too big to fail' banks were packaging mortgages in a way to hide the most risky of them with the seemingly safer ones… and the credit agencies looked the other way and stamped AAA on them." So along comes Deutsche in 2012, planning to package near-junk-rated commercial mortgage bonds with some higher-rated ones to disguise the risk and goose the yield. "The comeback of the CDO," says Jim, "is not a good thing. Less diligent investors will likely get burned… yet again. So it's even more important for you to make sure you are getting what you pay for these days. The vulture Wall Street culture might be on its way back. "In our business, which is all about yields, we know you can't just trust an investment to actually pay you what it promises. That's why we study every aspect of a company, down to its products and pipelines, before we ever recommend you grab its dividend." You can share in the fruits of Jim's due diligence here.
Ordinarily we'd pay no nevermind to a bit of Keynesian claptrap like this… except that Mr. Hu is the information minister for the Taiwanese government. Mr. Hu finds himself in very hot water today. Alas, it's not because he buys into the loopy notion of "aggregate demand," best summed up by the sentence, "If people would just buy more stuff, we'd solve all economic problems for all time." No, Hu is in trouble because his remark wasn't sufficiently protectionist enough. See, the comment was accompanied by a picture of that most iconic consumer device — an iPhone 5. Taiwan, as it happens, is home to its own smartphone maker — the struggling HTC. "As a government official," tut-tutted the United Daily News, "Hu should have done whatever he could to promote the domestic economy at a time when it is in trouble."
Bonus points for idiocy: It turns out many of the iPhone's components are "made in Taiwan"… Mr. Hu now finds himself — to borrow the hideous beltway euphemism — "walking back" his post. "I use HTC, and so do most Cabinet officials," Hu now says. "The accusation of my being not patriotic was a misunderstanding." Heaven forfend…
"By 2014, we will be slaves under Obama," the reader vented — a mere 12 minutes after Friday's episode arrived in readers' inboxes. "I'm amazed," says another, "that you would even consider another four years of someone violating your constitutional right, circumventing legislature and putting our country in debt that many generations will be strapped for years over another choice." "I see a very large war and an economic depression hit full tilt if President Obama wins. Romney will just be a few years later," a third suggests.
"It took them 70 years to correct their error," the reader goes on. "I don't think I want to wait that long, because things will have to get very much worse before most people will take any action. Worse might include doing without food, electricity and water. Martial law would almost certainly be declared in that case. If they shut down the telephones and Internet, how will any kind of opposition get organized? How far will you get with whatever fuel you have in your tank? If you are hungry and THEY offer you food, will you do what they tell you to get it?"
"I agree with the concept that Obama and his policies are pure poison for any kind of economicprosperity. In fact, to anyone with an IQ larger than their waist size — which is likely to get larger at first from government-encouraged and subsidized junk food, and then much smaller when financial reality kicks in — it should be painfully obvious that there is a train wreck in the future. "The other party, I admit, has a great host of problems as well. The issue, though, is that under a socialist-driven White House that takes itself all too seriously, it may crash harder and not as fast as you guys think, and it may stay crashed for far too long. At least with a semblance of support for real business, some of the smaller firms that actually can keep us from revisiting the joys of old Soviet Russia might have a chance to pull off enough small miracles to keep the majority of those who would like to earn their own way in the world off the freeway ramps. "Who knows? Maybe Romney actually learned something from those (admittedly short) Ron Paul speeches during the debates. I know Obama wasn't listening." The 5: As long as you bring up Ron Paul: "I refer to the Rothbardian strictures when weighing the pros and cons of presidential candidates, and Murray was very clear about this: Foreign policy was the main determinant," writes Justin Raimondo today at Antiwar.com. "The president, after all, has minimal control of what comes out of Congress, and his role in determining our course on the home front is very far from omnipotence: Bernanke has more actual clout than Obama does. When it comes to foreign policy, however, the president wields absolute control. He can take us to war on a whim." Awful as Obama is, Romney sure doesn't listen to Ron Paul when it comes to foreign policy. "Take a look at Romney's foreign policy team," Raimondo writes: It's the same old neocons who brought us eight years of bloody misery under George W. Bush. With Romney in the Oval Office, the neocons would return to Washington in triumph, empowered to unleash a new strings of wars that would make Iraq and Afghanistan look like child's play."
"If Romney were elected (and I'm not for Romney — in fact, your don't-vote message resonates with me) and in office when everything went south, the argument would then be that capitalism failed. And I truly believe most people would fall for that." The 5: Indeed, President George W. Bush was bad enough when it came to supporting a free market. For just two examples, you need only look into the steel tariffs he imposed arbitrarily and his cheerleading for the Medicare Part D benefit — which the GAO estimates show will alone add $8 trillion to the unfunded liabilities on the federal balance sheet. For "free market" ideas to get further tarred and feathered under Romney would just be salt in our wounds. Romney is a crony capitalist. Not a free market guy. His running mate is just as bad. He supported Medicare Part D because that was the party line in 2003… and then bills himself as a "fiscal conservative". Oy. Let Obama take the fall for failure of central planning… he's the candidate who openly supports it.
"Historically, this type of collapse leads not to more freedom, but to less, to establish order. I quote from Dan Amoss in the same issue of The 5: 'Do you think many investors will hold Spanish bonds while whole regions are threatening to secede, fighting a central government that might morph into a military dictatorship?' "Do you not understand that some fiscally sound states might band together to secede? If you sit back and wait for the crash, thinking we will come out with more freedom, you probably should do it from some other country, just in case."
"I have been trying to convince my adult children for years to vote and have not gotten their cooperation yet. It is our civic responsibility to choose one way or the other even though all the choices are not good — life is made up of such choices — commit, damn it! What's the worst thing can happen—at least you won't be alone in your decision — or your misery." The 5: "If you vote," said the late George Carlin, "and you elect dishonest, incompetent politicians, and they get into office and screw everything up, you are responsible for what they have done. You voted them in. You caused the problem. You have no right to complain. "I, on the other hand, who did not vote — who did not even leave the house on Election Day — am in no way responsible for what these politicians have done and have every right to complain about the mess that you created." Likewise, the only way politicians get elected these days is by promising to loot the public treasury… under what "civic duty" does that fall? Cheers, Addison Wiggin The 5 Min. Forecast P.S. A word from the wayward Dave Gonigam: "Overheard in a motel lobby along the Indiana Toll Road the morning after the Federal Reserve announced QEternity… "Guy holding a newspaper: 'So the Federal Reserve is going to spend $40 billion every month to buy mortgage-backed securities now…' "Other guy: 'Where are they going to get the money for that?' "Alas, that was all I heard of the conversation. But it was enough to give me a glimmer of hope…" More tales from the road when Dave returns on Thursday. The 5 goes on hiatus for two days starting tomorrow. As we near the end of Fed bailout and currency regime — not to mention the obvious folly of borrow-and-spend politics in Washington — we expect we'll need a whole new array of solutions to help keep you out of harm's way. As such, tomorrow morning, we begin gearing up for a big change in the way your daily e-letters arrive in your inbox. When the transition is over, you'll receive The 5, The Daily Reckoning and Laissez Faire Today on a much more reliable schedule… and you'll have the chance to customize the information you receive. Watch your inbox for important details tomorrow!
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"This is not right. My wife got killed for no reason right now. No reason…I want justice. Yes. Whoever shot my wife, that guy whoever that is, that guy needs to get shot," Gilbert Alvarado said, just hours after his wife was murdered by a US Border Patrol Agent in San Diego's suburban Southland, with Tijuana hills in the background to the south.
When it comes to investing in gold, investors often see the world in black and white. Some people have a deep, almost religious conviction that gold is a useless, barbarous relic with no yield; it's an asset no rational investor would ever want. Others love it, seeing it as the only asset that can offer protection from the coming financial catastrophe, which is always just around the corner. PIMCO's views are more nuanced and, we believe, provide a balanced framework for assessing value. Their bottom line: given current valuations and central bank policies, we see gold as a compelling inflation hedge and store of value that is potentially superior to fiat currencies.
The 
"Oil prices drive food prices," goes one of the old saws of Wall Street.
Mr. Johnston has helpfully highlighted several countries where oil production is essential to the local economy. Many of these governments subsidize gasoline for their citizens. In Iran, a gallon of premium costs $2.80.
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