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Sunday, October 28, 2012

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Memo to Central Banks: You’re debasing more than our currency

Posted: 28 Oct 2012 10:53 AM PDT

John Mauldin shares a brief from Dylan Grice, which looks at how debasing the currency has far more implications that mere inflation. Note the timely quote of John Maynard Keynes which Americans ought to see as a klaxon sounding a dire warning.

I can only pass on Societe Generale's work to you once in a while, but the piece for today's Outside the Box is important enough that its author, Dylan Grice, worked hard to convince his bosses to let me share it with you. Dylan is one of my favorite investments analysts, as well as just an all-around nice guy.

In a change from his usual fun-loving demeanor, Dylan issues a serious warning here.

I am more worried than I have ever been about the clouds gathering today (which may be the most wonderful contrary indicator you could hope for...). I hope they pass without breaking, but I fear the defining feature of coming decades will be a Great Disorder of the sort which has defined past epochs and scarred whole generations….

So I keep wondering to myself, do our money-printing central banks and their cheerleaders understand the full consequences of the monetary debasement they continue to engineer?

He runs through some of the Great Debasements of the past, starting with third-century Rome, running through Europe's medieval inflations and the French Revolution, to the monetary horror story of Weimar Germany in the 1920s.

His key point is that inflations and hyperinflations don't just hurt money, they hurt people and the societies they live in. Inflating money is less trustworthy money, and so people doing business trust each other less. Plus, those who are farthest from the source of artificially created money suffer the most (the "Cantillon effect").

And now the social debasement is clear for all to see. The 99% blame the 1%, the 1% blame the 47%, the private sector blames the public sector, the public sector returns the sentiment … the young blame the old, everyone blame the rich … yet few question the ideas behind government or central banks ...

I'd feel a whole lot better if central banks stopped playing games with money….

All I see is more of the same – more money debasement, more unintended consequences and more social disorder. Since I worry that it will be Great Disorder, I remain very bullish on safe havens.

In just 10 days we will see how the US elections turn out. Depending on what happens after, the US will either remain as one of those safe havens (and perhaps become even more of one) or those of us who reside here will need to start thinking more globally. I know a lot of thoughtful people who are already contemplating (if not acting on) plans to make sure their life savings maintain their buying power through the coming decade. I remain optimistic that we will set ourselves on a course that ends in a safe harbor, although the sailing will be quite volatile. What Dylan describes are the unintended consequences of people who think they understand macroeconomics and who are well-intentioned but whose policies can be most disruptive.

Sunday night I head for South America. I always enjoy traveling there, and I am interested to see what I can learn, both about how Brazil, Uruguay, and Argentina are doing and what they are thinking when they look north. I really do find that I learn much more than I impart on these trips.

Election night will find me in a bar drinking non-alcoholic beer in Cafayete in the far north of Argentina, where the California polls won't close till almost midnight. It might be a long night. Maybe I can set up a twitter account from there. Might be fun. There will be lots of friends on hand to share the times and commentary. I will be back in Texas that Sunday to write my letter, and I'll be thinking about how the results will impact all of us everywhere.

Have a great weekend. And I am off to cast my absentee ballot! You make sure to vote too!

Your wishing I was in Illinois so I could vote several times analyst,


John Mauldin, Editor
Outside the Box
JohnMauldin@2000wave.com

Popular Delusions
Memo to Central Banks: You're debasing more than our currency

By Dylan Grice, Societe Generale

At its most fundamental level, economic activity is no more than an exchange between strangers. It depends, therefore, on a degree of trust between strangers. Since money is the agent of exchange, it is the agent of trust. Debasing money therefore debases trust. History is replete with Great Disorders in which social cohesion has been undermined by currency debasements. The multi-decade credit inflation can now be seen to have had similarly corrosive effects. Yet central banks continue down the same route. The writing is on the wall. Further debasement of money will cause further debasement of society. I fear a Great Disorder.

I am more worried than I have ever been about the clouds gathering today (which may be the most wonderful contrary indicator you could hope for...). I hope they pass without breaking, but I fear the defining feature of coming decades will be a Great Disorder of the sort which has defined past epochs and scarred whole generations.

"Next to language, money is the most important medium through which modern societies communicate" writes Bernd Widdig in his masterful analysis of Germany's inflation crisis "Culture and Inflation in Weimar Germany." His may be an abstract observation, but it has the commendable merit of being true … all economic activity requires the cooperation of strangers and therefore, a degree of trust between cooperating strangers. Since money is the agent of such mutual trust, debasing money implies debasing the trust upon which social cohesion rests.

So I keep wondering to myself, do our money-printing central banks and their cheerleaders understand the full consequences of the monetary debasement they continue to engineer? Inflation of the CPI might be a consequence both seen and measurable. A broad inflation of asset prices might be a consequence seen, though not measurable. But what about the consequences that are unseen but unmeasurable – and are all the more destructive for it? I feel queasy about the enthusiasm with which our wise economists play games with something about which we have such a poor understanding.

  20121028-1

If you take a look around you, any artefact you see will only be there thanks to the cooperative behaviour of lots of people you don't know. You will probably never know them, nor they you. The screen you watch on your terminal, the content you read, the orders which make the prices flicker … the coffee you drink, the cup you hold, the bin you throw it in afterwards  … all your clothes, all your accessories, all the buildings you've been in, all the cars … you get the idea. Without exception everything you own, everything you want to own, everything you need, and everything you think you need embodies the different skills and talents of a mind-boggling number of complete strangers. In a very real sense we constantly trust in strangers to a degree, as strangers trust us. Such cooperative activity is to everyone's great benefit and I find it is a marvellous thing to behold.

The value strangers put on each other's contributions manifests itself in prices, and prices require money. So it is through money that we express the extent of our appreciation for the many different talents embedded in each thing we consume, and through money that our skills are in turn valued by others. Money, in other words, is the agent of this anonymous exchange, and therefore money is also the agent of the hidden trust on which it depends. Thus, as Bernd Widdig reflects in his book (which I urge you all to read), money …

"… is more than simply a tool for economic exchange; its different qualities shape the way modern people think, how they make sense of their reality, how they communicate, and ultimately how they find their place and identity in a modern environment."

Debasing money might be expected to have effects beyond the merely financial domain. Of course, there are many ways to debase money. Coin can be clipped, paper money can be printed, credit can be created on the basis of demand deposits which aren't there ... the effects are ultimately the same though: the implied trust that money communicates through society is eroded.

To see how, consider the example of money printing by authorities. We know that such an exercise raises revenues since the authorities now have a very real increase in purchasing power. But we also know that revenue cannot be raised by one party without another party paying. So who pays?

If the authorities raise taxes explicitly and openly, voters know exactly why they have less spending power. They also know how much less spending power they have. But if the authorities instead raise money by simply printing it, they raise the revenue by stealth. No one knows upon whom the burden falls. People notice only that they can't afford the things they used to be able to afford, or they can't afford the things which everyone else can afford. They know that something is wrong, but they just don't know what, why, or who is to blame. So inevitably they look for someone to blame.

The dynamic is similar to that found in the well-worn plot line in which a group of strangers are initially brought together in happier circumstances, such as a cruise, a long train journey or a weekend away. In the beginning, spirits are high. The strangers exchange jokes and get to know one another as the journey begins. Then some crime is committed. They know it must be one of them, but they don't know who. A great suspicion ensues. All trust between them is broken down and the infighting begins....

So it is with monetary debasement, as Keynes understood deeply (so deeply, in fact, that it's ironic so many of today's crude Keynesians support QE so enthusiastically). In 1921 he said:

"By a continuing process of inflation, Governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some …. Those to whom the system brings windfalls …. become "profiteers" who are the object of the hatred … the process of wealth-getting degenerates into a gamble and a lottery .. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

(editors comment: hear the klaxon sounding the dire warning??????)

History is replete with Great Disorders in which currency debasement has coincided with social infighting and scapegoating. I have written in the past about the Roman inflation of the Third Century AD. The following chart shows the rapid turnover of emperors during what is known as the Third Century Crisis. As trade declined, crops failed and the military suffered what must have seemed like constant defeat, it wasn't difficult for a successful or even popular general to convince the rest of the empire that he'd make a better fist of governing.

  20121028-2

But this political turnover was accompanied by what may be history's first recorded instance of systematic currency debasement. With the empire no longer expanding and barbarians being forced westwards by the migrations of the Steppe peoples, Rome's borders were under threat. But the money required to fund defence wasn't there. Successive emperors therefore reached the same conclusions that kings, princes, tyrants and democratically elected governments would later reach down the ages when faced with a perceived "shortage of money": they created more by debasing the existing stock. In the second half of the third century, the silver content of a denarius had shrunk to zero. Copper coins disappeared altogether.

This debasement of currency also coincided with a debasement of society. Factions grew more suspicious of one another. Communities fragmented. And one part of the community bore the brunt of the fears: Christians. While Rome had always welcomed new religions and Gods, incorporating new foreign deities as their empire grew, Christians were altogether different. They rejected Rome's gods. They refused to pray to them. They said that only their God was deserving of worship. The rest of the Romans concluded that this obstinacy must be a source of great anger for their own ancient Roman gods, and supposed that those gods must now be exacting their own great punishment in return.

  20121028-3

So the Romans turned on their Christians with a great violence which lasted throughout the period of the currency debasement but peaked with Diocletian's edict of 303 AD. The edict decreed, among other things, that Christian meeting places be destroyed, Christians holding office be stripped of that office, Christian freedmen be made slaves once more and all scriptures be destroyed. Diocletian's earlier edict, of 301 AD, sought to regulate prices and set out punishments for 'profiteers' whose prices deviated from those set out in the edict.

A similar dynamic seems evident during Europe's medieval inflations, only now, the confused and vain effort to make sense of the enveloping turmoil saw the blame focus on suspected witches. The following chart shows the UK price index over the period with the incidence of witchcraft trials. Note the peak in trials coinciding with the peak of the price revolution.

  20121028-4

Were the same dynamics at work during the French Revolution of 1789? The narrative of Madame Guillotine and her bloody role is well known. However, the execution of royalty by the Paris Commune didn't begin until 1792, and the Reign of Terror in which Robespierre's Orwellian sounding "Committee of Public Safety" slaughtered 17,000 nobles and counter-revolutionaries didn't start until well into 1793. In the words of guillotined revolutionary Georges Danton, this is when the French revolution "ate itself". But the coincidence of these events to the monetary debasement is striking.

The political violence was justified in part by blaming nobles and counter-revolutionaries for galloping inflation in food prices. It saw 'speculators' banned from trading gold, and prices for firewood, coal and grain became subject to strict controls. According to Andrew Dickson White, author of "Fiat Money Inflation in France", (echoing Keynes' remark that "wealth-getting degenerates into a gamble and a lottery") "economic calculation gave way to feverish speculation across the country."

  20121028-5

However, the most tragic of all the inflations in my opinion, and certainly the starkest example of a society turning on itself was the German hyperinflation. Its causes are well known. Morally and financially bankrupt by the First World War, the reparation demands of the Allies (which Keynes argued vociferously against) followed by the French occupation of the Ruhr served to humiliate a once-mighty nation, already on its knees.

And it really was on its knees. Germany simply had no way to pay. The revolution following the flight of the Kaiser was incomplete. Concern was widespread that Germany would follow the path blazed by Moscow's Bolsheviks only a year earlier. A de facto civil war was being fought on the streets of major cities between extremist mobs of the left and right. Six million veterans newly demobilized, demoralized, dazed and without work were unable to support their families ... the great political need was to pay off the "internal debts" of pensions, life insurance and welfare support in any way possible. The risk of printing whatever was required was well understood. Bernhard Dernberg, vice chancellor in 1919, found himself overwhelmed with promises to pay for the war disabled, food subsidies, unemployment insurance, etc., but everyone knew where the money was coming from:

"A decision of the National Assembly is made. On its basis, Reich Treasury bills are printed and on the basis of the Reich Treasury bills, notes are printed. That is our money. The result is that we have a pure assignat economy."

But print they did. Prices would rise by a factor of one trillion. At the end of the war, Germany owed 154bn Reichmarks to its creditors. By November 1923, that sum measured in 1914 purchasing power was worth only 15 pfennigs.

  20121028-6

It is difficult to comprehend the psychological trauma inflicted by this episode. Inflation inverted the efficacy of correct behaviour. It turned the ethics of thrift, frugality and notions such as working hard today to bring benefit tomorrow completely on their heads. Why work today when your rewards would mean nothing tomorrow? What use thrift and saving? Why not just borrow in depreciating currency? Those who had worked and saved all their lives, done everything correctly and invested what they had been told was safe, were mercilessly punished for their trust in established principles, and their inability to see the danger coming. Those with no such faith who had seen the danger coming had benefited handsomely.

Everything, in other words, was dependent on one's ability to speculate, recalling what Dickson White observed of the French Revolution and Keynes reflections more generally. Erich Remarque is best known for his anti-war novel "All Quiet on the Western Front" but perhaps his best work was the "The Black Obelisk" set in the early Weimar period, and a penetrating meditation on the upside-down world of inflation. The protagonist Georg poignantly captures this speculative imperative when he sits down and lets out a long sigh:

"Thank God that it's Sunday tomorrow … there are no rates of exchange for the dollar. Inflation stops for one day of the week. That was surely not God's intention when he created Sunday."

Perhaps the most eloquent chronicler of the Weimar hyperinflation was Elias Canetti, whose mother moved him from the security of Zurich to Frankfurt in 1921 to take advantage of cheaper living. Canetti never forgave her, and his life's work shows what a lasting impression the move from heaven to hell made:

"A man who has been accustomed to rely on (the monetary value of the mark) cannot help feeling its degradation as his own. He has identified himself with it for too long, and his confidence in it has been like his confidence in himself … Whatever he is or was, like the million he always wanted, he becomes nothing"

More tragic still was what German society became during the inflation. Like other Axis countries on the wrong side of the War and now in the grip of hyperinflation, Germany turned viciously on its Jews. It blamed them for the surrounding evil as Romans had blamed Christians, medieval Europeans had suspected witches, and French revolutionaries had blamed the nobility during previous inflations. In his classic "Crowds and Power", Canetti attributed the horror of National Socialism directly to a "morbid re-enaction impulse".

"No one ever forgets a sudden depreciation of himself, for it is too painful … The natural tendency afterwards is to find something which is worth even less than oneself, which one can despise as one was despised oneself. It is not enough to take over an old contempt and to maintain it at the same level. What is wanted is a dynamic process of humiliation Something must be treated in such a way that it becomes worth less and less, as the unit of money did during the inflation. And this process must be continued until its object is reduced to a state of utter worthlessness. … In its treatment of the Jews, National Socialism repeated the process of inflation with great precision. First they were attacked as wicked and dangerous., as enemies; then, there not being enough in Germany itself, those in the conquered territories were gathered in; and finally they were treated literally as vermin, to be destroyed with impunity by the million.

All this is very disturbing stuff, but testament to a relationship between currency devaluation and social devaluation. Mine is not a complete or in any way rigorous analysis, I know. I emphasize that it's not in any way meant as some sort of crude mapping on to today's environment. My point is to show that money operates in many social domains beyond the financial, and that tying currency devaluation to social devaluation might have some merit.

Consider some recent and less extreme currency inflations. The 1970s bear market in equities saw relatively mild inflation which was also characterized by relatively mild but nevertheless real factionalization of society. An ideological left vs right battle played out between labour and capital, unions and non-unions and perhaps most bizarrely, between rock and disco. As already stated, money implies a trust in the future. It implies that today's money can be used in the future. So in the era of punk, did the Sex Pistols provide the most concise commentary of the malaise?

  20121028-7

Which brings us to today. Despite the CPI inflation of the 1970s receding, our central banks have continued to play games with money. We've since lived through what might be the largest credit inflation in financial history, a credit hyperinflation. Where has it left us? Median US household incomes have been stagnant for the best part of twenty years (chart below)

  20121028-8

Yet inequality has surged. While a record number of Americans are on food stamps, the top 1% of income earners are taking a larger share of total income than since the peak of the 1920s credit inflation. Moreover, the growth in that share has coincided almost exactly with the more recent credit inflation.

These phenomena are inflation's hallmarks. In the Keynes quote above, he alludes to the "artificial and iniquitous redistribution of wealth" inflation imposes on society without being specific. What actually happens is that artificially created money redistributes wealth towards those closest to it, to the detriment of those furthest away.

  20121028-9

Richard Cantillon (writing decades before Adam Smith) was the first to observe this effect (hence "Cantillon effect"). He showed how those closest to the money source benefited unfairly at the expense of others, by thinking through the effects in Spain and Portugal of the influx of gold from the new world as follows:

"If the increase of actual money comes from mines of gold or silver …  the owner of these mines, the adventurers, the smelters, refiners, and all the other workers will increase their expenditures in proportion to their gains. . . . All this increase of expenditures in meat, wine, wool, etc. diminishes of necessity the share of the other inhabitants of the state who do not participate at first in the wealth of the mines in question. The altercations of the market, or the demand for meat, wine, wool, etc. being more intense than usual, will not fail to raise their prices … Those then who will suffer from this dearness … will be first of all the landowners, during the term of their leases, then their domestic servants and all the workmen or fixed wage-earners ... All these must diminish their expenditure in proportion to the new consumption …

(Quoted in Mark Thornton, "Cantillon on the Cause of the Business Cycle" Quarterly Journal of Austrian Economics Vol 9, No 3 [Fall 2006])

In other words, the beneficiaries of newly created money spend that money and bid u

Don’t Fear a Normal Gold Correction

Posted: 28 Oct 2012 10:19 AM PDT

Our friend Frank Holmes, U. S. Global Investors writes:

I've spent the latter half of the week at the New Orleans Investment Conference, talking with investors, mining companies and analysts about the state of the gold industry. The annual conference falls at an interesting time of the year, as the price of gold typically corrects in October. In fact, going back 30 years, the historical seasonality of gold has been to rise during September, with a subsequent correction in October.

Gold seasonality

This fall, gold has followed this historical trend, with the metal climbing throughout the month of September to reach a high of $1,790 an ounce on October 4, only to have a normal correction to $1,701 by October 24. This decline typically comes ahead of the Love Trade fueling demand prior to the Hindu festival of lights, Diwali, which begins in November.

Miners, Show Me the Money!
At the conference, I've been discussing the multiple forces squeezing the profits and earnings out of gold miners, causing equity investors to become the Rod Tidwells of the gold world, getting miners energized to "Show me the money!" In my opinion, this phenomenon highlights the importance of selectively choosing among those gold companies that exhibit the best relative growth and momentum characteristics to help obtain outstanding investment results.

My workshop presentation in "The Big Easy" integrated preeminent thinking from multiple gold experts, including research firm CIBC, Gold Fields and the World Gold Council, about how gold companies' performance has been neither "big" nor "easy." There's been a decline in production per share, an 80 percent increase in the average cost per ton of gold over the past six years, and a 21 percent decline in global average grades of gold since 2005. Cash taxes per ounce of production have increased dramatically, and, according to CIBC World Markets, the replacement cost for an ounce of gold is now $1,500, with $1,700 as a sustainable number. Cash operating costs eat away the most, at $700 an ounce, while sustaining capital, construction capital, discovery costs, overhead and taxes eat up $800. At the October 24 gold price of $1,700 an ounce, only $200 is left over as profit, says CIBC.

Replacement Cost Ounce Gold

Gold companies have had their share of challenges in the past. Prior to the huge run-up in gold prices in the late 1970s, forward price-to-cash flow ratios crashed from a high of about 22 times to just under 9 times. Eventually, as gold climbed to its high, multiples spiked back up to 21 times.

CIBC-CashFlow

Miners also didn't increase the supply of the precious metal in the 1970s. Back then, there were only a few major players in the gold game. South Africa was a significant gold-producing country, as well as Russia and North America.

However, following years of a gold bull market in the 1970s, production climbed. In fact, Pierre Lassonde, chairman of Franco-Nevada and a living legend in the mining and resource world, says it took seven years for the gold industry to respond after the rise in the price of gold. Ironically, as the price kept falling over the next 20 years, production doubled, says Lassonde.

Mine Supply Gold

Beginning in 2000, gold companies have experienced a similar phenomenon, with production remaining flat, even declining in some years. In 2008, mine supply of gold fell to levels not seen since the early 1990s.

Now, after a seven-year lag, the industry has responded as we're beginning to see some growth in supply.

From 2006 through 2011, production throughout the entire gold industry has increased about 3 percent, says CEO Nick Holland of Gold Fields. During his keynote presentation at the Melbourne Mining Club in July, he indicated that most of the growth was not coming from the major producers. In more mature markets, such as South Africa, Australia, Peru and the U.S., annual production decreased by about 5 million ounces since 2006. Emerging markets on the other hand—China, Colombia, Mexico and Russia—added about 7.6 million ounces over the last six years, Holland says.

Of gold finds that contain at least 2 million ounces of gold, research from the Metals Economics Group (MEG) finds that there have been 99 significant discoveries between 1997 and 2011. Only 14 of the 26 major gold producers made these major gold discoveries. "Today, the major producers and their majority-owned subsidiaries hold 39 percent of the reserves and resources in the 99 significant discoveries made in the past 15 years." This amounts to less than half of the yellow metal needed to replace the gold companies' production from 2002 to 2011, says MEG.

According to Lassonde, this is the "elephant in the room," as new finds have become elusive. The chart below from CIBC shows that there was only one major discovery that was more than 3 million ounces in 2011. Over the past seven years, there have been only nine major discoveries of gold.

3 Million Discoveries Scarce

Lassonde doesn't think we have hit "peak gold," but believes the gold industry needs a "3D seismic" event similar to what occurred in the oil industry before we see considerable finds.

For as many challenges as gold companies face today, they have rarely experienced such a well-diversified consumer base and diversified demand for their product: It's "the best we could ask for," says Lassonde.

A newer trend that I've discussed is the reemergence of emerging markets central banks as buyers of gold, as they have been "relearning that all paper currencies are suspect," says Lassonde. Today, he says "cash is trash," with the value of euro, dollar and yen in question.

He believes this source of demand could be long-lasting and quite significant if you look at emerging market countries' gold holdings as a percent of total reserves. In 2000, the European Central Bank decided that the right proportion of gold to own should be 15 percent. Pierre says if you apply that figure to the potential gold holdings of the emerging market central banks, they would need to accumulate 17,000 tons of gold. At a purchase of 1,000 tons a year (or about 40 percent of today's production), these central banks would have to buy gold for the next 17 years!

Central Bank Gold Holdings

Another growing source of demand has been from the Fear Trade's scooping up of gold exchange-traded funds (ETFs). Eight years after the products were launched, 12 gold ETFs and eight other similar investments are valued at around $120 billion and hold 2,500 tons of gold, says Nick Holland.

I believe the Fear Trade will continue buying not only gold but also gold stocks, as the group is driven by Helicopter Ben's quantitative easing program. In the latest Weldon's Money Monitor, Greg Weldon discusses the consequences of the Federal Reserve's debt monetization and liquidity provisions, showing the "somewhat frightening pace" of expansion in money supply.

Weldon says that over the last four years since August 2008, the U.S. Narrow Money Supply, or M1, which is physical money such as coins, currency and deposits, has increased 73 percent, or more than one trillion dollars. This is about as much as it expanded in the previous forty years!

Narrow Money Supply

Don't let the short-term correction fool you into selling your gold and gold stocks. The dramatic increase in money suggests that monetary debasement will continue, and in addition to all the above drivers, I believe these are the positive dynamics driving higher prices for gold and gold stocks.

October 26, 2012 (Source: U. S. Global Investors)

http://www.usfunds.com/investor-resources/investor-alert/#.UI1nW2cw-So

A Myth Concerning Gold Confiscation

Posted: 28 Oct 2012 05:30 AM PDT

Craig Rowland and J. M. Lawson's 'The Permanent Portfolio'

Posted: 28 Oct 2012 05:18 AM PDT

By Brenda Jubin:

Talk about simple. Investing doesn't get much simpler than The Permanent Portfolio: Harry Browne's Long-Term Investment Strategy (Wiley, 2012). Craig Rowland and J. M. Lawson explain how to implement the 25%-25%-25%-25% (stocks, bonds, cash, gold) asset allocation strategy that Harry Browne recommended in his 1987 book Why the Best Laid Investment Plans Usually Go Wrong.

Browne assumed that financial markets are uncertain, which to him meant that no can predict what the market is going to do next and, as a corollary, that no one can time the market. He also admonished investors not to depend on any one investment, institution, or person for their financial safety. He even urged investors to keep some of their assets outside the country in which they live as protection against natural or man-made disasters and "against a government that may try to solve its financial problems by confiscating citizens' private property." (p. 11)


Complete Story »

Top 5 Stocks With Insider Buys Filed During The Week Ending October 26

Posted: 28 Oct 2012 04:33 AM PDT

By Markus Aarnio:

I screened with Open Insider for insider buy transactions filed during the week ending October 26. From this list, I chose the top five stocks with insider buying in dollar terms. Here is a look at these five stocks:

1. Navistar International Corporation (NAV) is a holding company whose subsidiaries and affiliates produce International brand commercial and military trucks, MaxxForce brand diesel engines, IC Bus brand school and commercial buses, Monaco RV brands of recreational vehicles, and Workhorse brand chassis for motor homes and step vans. The company is also a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. It also provides truck and diesel engine service parts, another affiliate offers financing services.

(click to enlarge)

Insider buys


Complete Story »

How Much Money Do Your Favorite Commodity ETFs Make?

Posted: 28 Oct 2012 04:13 AM PDT

By CommodityHQ:

By Jared Cummans

ETF investing turned the commodity world from a difficult-to-reach asset class to exposure that any retail investor could quickly add to their portfolio. The years have seen a number of innovative products come and go, but through thick and thin, a select group of funds have broken away from the rest, as they have maintained their popularity. And just like any other business, these funds need to make money to stay open (and to hopefully make you money), as they have plenty of operating costs to take care of.

Below, we outline the ten largest commodity ETFs and how much money they make on an average year, and some of the results may surprise you.

Fund AUM (MM) Fees Annual Revenues
SPDR Gold Trust (GLD) $73,329 0.40% $293,316,000
COMEX Gold Trust (IAU) $11,434 0.35% $40,190,000
iShares Silver Trust (SLV) $10,106 0.50% $50,530,000
DB Commodity Index Tracking Fund

Complete Story »

Michael M. Thomas: Naked Capitalism – An Insider’s Guide

Posted: 28 Oct 2012 03:50 AM PDT

By Michael M. Thomas, who figured out Wall Street was not all it was cracked up to be before most of you were born

I can't recall which divine agency wafted me to the shores of Naked Capitalism, or when it was (I'm guessing late 2008, when I was writing occasional pieces for Forbes.com on aspects of the financial crisis that struck me as distinctly odd), but once ashore I stayed. Every morning now, the first thing I read is Yves Smith's absolutely indispensable website. Without it, the way things have gone in the realms of postmodern, oligarchic fiancé capitalism, together with the noxious exhaust fumes produced by the caravansaries rumbling along the gold-paved highway to Hell that runs between Wall Street and Washington and back again, would have reduced me to a blithering idiot, seeing much, comprehending little, blinded by fury and deafened by cant.

I went to work on Wall Street in 1961, was a partner and co-head of corporate finance at Lehman at the turn of the 1970s, did the same at pre-Milken Burnham & Co. in the mid-1970s, consulted for a while and then started writing about Wall Street in 1980, a process that has produced eight published novels (Hanover Place was deemed by Louis Auchincloss to be one of the ten best American novels about finance) and God knows how much journalism. I'm now working on a ninth novel, titled Fixers, about Washington, Wall Street and the financial crisis. In aid of this effort, I have perhaps 5000 items in my Evernote clippings file. Of these, I can confidently say that a good 20% come directly or indirectly from Naked Capitalism.

Why should this be so? Well, more than any other forum, Naked Capitalism consistently suggests and proposes new ways to bridge what I consider the abyss that will one day sink us all if Koch brothers-style politics and capitalism have their way: the chasm that lies between what we need to know and what we have been (and will be) allowed to know. This is largely because Yves Smith's posts and links are, unlike those on offer on roughly 90% of financial websites, rooted in a process that combines scientific and procedural rigor with moral conviction. If she "talks her book," and she does, her "book" isn't a portfolio or an investment strategy, but certain ideas about right and wrong, words both Wall Street and Washington long ago forgot how to spell, let alone live by. This is all very well provided one understands and gets the arithmetic right, but many if not most don't, in which case their adjurations are worthless. Not only can Yves do the math, she brings to the website other posters who do as well. Yet her site conspicuously lacks the philosophical and technical self-congratulation, the egregious algorithmic bullying and, above all, the nasty "insiderness," that mars better-known and statistically more widely viewed financial blogs and websites. You can take this as gospel, because it comes from someone who's been "inside" places these creeps, with their pathetic fantasies of fifteen minutes in the Charlie Rose spotlight, can only dream of.

I have often complained that the trouble with the Internet is that it has given literally tens of thousands of people with nothing to say a place to say it. Naked Capitalism invaluably shoves common sense, technical knowledge and moral passion down the throats of that twittering rabble and silences their nonsense. When I read Naked Capitalism, I am reminded of one of my favorite quotations, one of those apothegms that, once read, sticks barnacle-like to one's awareness. It goes like this:

In around 1912, a professor of Moral Philosophy at Oxford addressed the students in his course to the effect that what they were about to study would have little utilitarian application to the works-and-days, getting-and-spending lives they would lead once they went down from the university. "Save only this," he told them, "that if you work hard and diligently, at the end of this course you will have a good idea of when another man is speaking rot, and that, in my opinion, is the main if not the sole purpose of education."

It pleases me to think that were he living at this hour, Professor John Alexander Smith would have become as devoted and (in every sense) as constant a reader of Naked Capitalism as yours truly. And I hope you'll join its devoted readers in supporting this beacon of sanity.

****

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Time To Buy Gold And Silver

Posted: 28 Oct 2012 02:28 AM PDT

By Patrick MontesDeOca:

On September 23, 2012 we published an article on Seeking Alpha called Have We Seen A Short Term Top In Silver And Gold? Taking a look back, the gold market was trading near the 1775 to 1800 levels at the time we posted the article and it has come down to the low 1700s as of October 26, 2012. This was an anticipated cyclical top our proprietary models were able to anticipate months in advance.

As mentioned in the previous article, the reaction to the FOMC was somewhat mixed. Prior to the report, the gold market had been anticipating a more robust package than Mr. Bernanke's announcement and details of the long awaited QE3 monetary policy by the Fed.

According to the market reaction with the price coming down to the low 1700 levels, it appears that the monetary policy announced was somewhat discounted with " Buy The Rumor And


Complete Story »

Links for 2012-10-27 [del.icio.us]

Posted: 28 Oct 2012 12:00 AM PDT

Can you say " Approaching face value"?

Posted: 27 Oct 2012 11:05 AM PDT

This is a graph based off of U.S. Mint production numbers of gold and silver bullion layered over market price ratio of gold and silver since 1986.

Note: U.S. mint face values are as follows.

1 oz gold = $50.00
1 oz silver = $1.00

The end is near.

ratio.JPG
Attached Images

Obama vs Romney Yard Sign (Politics)

Posted: 27 Oct 2012 07:55 AM PDT

As much as we would like to cast our own vote for the Libertarian candidate in the election just ahead, there is no question that would be a wasted effort.  With that in mind, this yard sign spotted in Glenview IL captures a part of the essence of our own view of the two major party candidates. 

20121027obamaYardSiign

Stay informed and vote. 

"Politics" is from the Latin root "poly," meaning many, and the English "ticks," meaning blood sucking insects."  -  Rick Rule   

 

Bundesbank Says New York Fed Will Help Meet Gold Audit Request

Posted: 27 Oct 2012 06:00 AM PDT

Author: 
Ed Steer

Yesterday in Gold and Silver

Ed_GSD
October 27, 2012 1:00pm GMT

The gold price traded a few dollars higher up until 10:00 a.m. Hong Kong time...and then got sold down for the next four hours.  From there it traded more or less sideways through the London open.

Then around 1:00 p.m. BST...about twenty minutes before the Comex open...a rally of some substance developed.  That got hammered flat an hour later...about 9:01 a.m. in New York...and from that point, the gold price slowly declined right into the 1:30 p.m. Eastern Comex close, before trading quietly into the 5:15 p.m. electronic close.  The New York high tick...$1,720.40 spot...came at 10:15 a.m.

Gold finished the trading day in New York at $1,711.10 spot...up 80 cents from Thursday.  Volume wasn't overly heavy at 139,000 contracts.

Silver's price path was virtually identical to gold's.  The only notable difference was that JPMorgan Chase et al showed up at 9:30 a.m. in New York...whereas gold got hit a half hour sooner.  Silver's high tick was also at 10:15 a.m. Eastern...and after that the silver price pattern followed gold's price path pattern, right to the tick.

Silver closed at $32.02 spot...up 2 whole cents.  Volume was only 36,500 contracts.

It should be obvious to anyone with more than a room temperature I.Q. in degrees Fahrenheit that both metals would have finished the Friday trading session materially higher if a willing not-for-profit seller hadn't shown up.  And it wasn't just gold and silver the got hammered flat, the charts for platinum and palladium show that these two white metals got hit even harder...especially platinum.

The dollar index opened at 80.04 in Tokyo on their Friday morning...and spent most of the day above the 80.00 mark, with the high tick of 80.25 coming about 11:40 a.m. BST in London.  From there, the index rolled over a bit...and hit its nadir [79.94] about 10:15 a.m. in New York.  It recovered back above the 80.00 mark during the East Coast lunch hour...and then slid slowly back below it to close at 79.997.

The precious metals began to rally strongly shortly after the dollar index hit its high...but the rallies in all four were so powerful, that the "da boyz" had to step in long before the dollar index hit its low tick...but it's worth noting that the high ticks for both gold and silver came at the dollar index nadir at 10:15 a.m. in New York.

The gold stocks opened mixed...and only began to head south shortly after 11:30 a.m. Eastern time.  The low for the stocks came just minutes before the 1:30 p.m. Comex close...and then they rallied a bit from there until the equity markets closed at 4:00 p.m.  The HUI finished down 0.85%.

The silver stocks finished mixed as well...and Nick Laird's Silver Sentiment Index closed down 0.62%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 115 gold and 12 silver contracts were posted for delivery within the Comex-approved depositories this coming Tuesday.  The Issuers and Stoppers Report showed that it was 'all the usual suspects'...and the link to that activity is here.

That should pretty much do it for the October delivery month, although there may be a handful of contracts in each metal left to deliver before November first notice day on Wednesday.

There was a small 19,385 troy ounces of gold withdrawn from GLD yesterday...and it looked like it could have been a fee payment of some kind.  There were no reported changes in SLV.

The U.S. Mint had no sales report.

Over at the Comex-approved depositories, they reported receiving 253,457 troy ounces of silver on Thursday...and shipped 801,417 ounces of the stuff out the door.  The link to that activity is here.

Well, yesterday's Commitment of Traders Report was another surprise.  Yes, there was the expected improvement in the Commercial net short position in gold...but not as much as I was hoping.  In silver, there was a tiny improvement...but that was all.  Both Ted and I were amazed...and we were both scratching our heads.

In silver, the Commercial net short position declined by only a tiny 1,595 contracts.  The Commercial net short position is still a whopping 277.5 million ounces...and the 'Big 4' short holders are short 246.1 million ounces of that amount...and 44.5% of the entire Comex futures market in silver.  The '5 through 8' traders are short an additional 8.6 percentage points.  So the 'Big 8' are short 53.1% of the entire futures market in silver on a net basis...and these percentages are minimum numbers.

I would also guess that JPMorgan Chase, along with one non-U.S. bank...the Bank of Nova Scotia?...are short almost 40% of the entire Comex silver market [on a net basis] between the two of them.

In gold, the Commercial net short position declined by a pretty decent 14,718 contracts, or 1.47 million ounces.  This net short position is now down to 23.27 million ounces...still light years away from its low several months back...and the 'Big 8' are short 20.97 million ounces of that amount.

The 'Big 4' traders, on a net basis, are short 35.4% of the entire Comex gold market...and the '5 through 8' traders are short an additional 13.9 percentage points.  The 'Big 8' in total are short 49.3% of the Comex futures market on a net basis...and these are minimum percentages.

The 'Big 8' traders are short 20.97 million ounces of the 23.27 million ounce Commercial net short position...or 90.1%.  In silver, the 'Big 8' traders are short 293.9 million ounces of the 277.5 million ounce Commercial net short...or 105.9%.

Here are the links to the historical COT Report charts so you can get an idea of how things have changed over the weeks, months and years.  Gold is here...and silver is here.

Here's the current "Days of World Production to Cover Short Positions" chart for all the physical commodities traded on the Comex.  This is for the week that was...and nothing has changed, as the short positions held by the '4 or less' traders are still egregious.  It's my guess that JPMorgan Chase, the Bank of Nova Scotia[?], HSBC USA and Citigroup make up the entire red bar on the silver chart.  I'll have more on the COT Report in 'The Wrap'.

(Click on image to enlarge)

From the Too-Cute-For-Words file folder this week comes this photo of an ocelot kitten having a power nap.  I thank my daughter Kathleen for sharing it with us.

Since it's Saturday, all the stories that I've been saving all week are posted below...and I hope you have the time to at least read the parts I've cut and paste from each one.

The long holders in the Non-Commercial category appear to be hanging tough...and meeting all margin calls.
It's not just Germany's gold that's missing: Gerald Celente. Vietnam May Allow Banks to Buy 20 Tonnes of Gold in Next Two Months. Vietnamese Banks Who Paid Dividend on Stored Gold, Were Quietly Selling it to Appear Solvent.

Critical Reads

Was Syrian weapons shipment factor in ambassador's Benghazi visit?

Ed_GSD
October 27, 2012 1:00pm GMT

A mysterious Libyan ship -- reportedly carrying weapons and bound for Syrian rebels -- may have some link to the Sept. 11 terror attack on the U.S. Consulate in Benghazi, Fox News has learned. 

Through shipping records, Fox News has confirmed that the Libyan-flagged vessel Al Entisar, which means "The Victory," was received in the Turkish port of Iskenderun -- 35 miles from the Syrian border -- on Sept. 6, just five days before Ambassador Chris Stevens, information management officer Sean Smith and former Navy Seals Tyrone Woods and Glen Doherty were killed during an extended assault by more than 100 Islamist militants. 

On the night of Sept. 11, in what would become his last known public meeting, Stevens met with the Turkish Consul General Ali Sait Akin, and escorted him out of the consulate front gate one hour before the assault began at approximately 9:35 p.m. local time.

This story showed up on the foxnews.com Internet site on Thursday...and is one that I borrowed from yesterday's King Report.  The link is here.

In Amerika There Will Never be a Real Debate: Paul Craig Roberts

Ed_GSD
October 27, 2012 1:00pm GMT

God help them if Obama and Romney ever had to participate in a real debate about a real issue at the Oxford Union. They would be massacred.

The "debates" revealed that not only the candidates but also the entire country is completely tuned out to every real problem and dangerous development. For example, you would never know that US citizens can now be imprisoned and executed without due process. All that is required to terminate the liberty and life of an American citizen by his own government is an unaccountable decision somewhere in the executive branch.

No doubt that Americans, if they think of this at all, believe that it will only happen to terrorists who deserve it. But as no evidence or due process is required, how would we know that it only happens to terrorists? Can we really trust a government that has started wars in seven countries on the basis of falsehoods? If the US government will lie about Iraqi weapons of mass destruction in order to invade a country, why won't it lie about who is a terrorist?

America needs a debate about how we can be made more safe by removing the constitutional protection of due process. If the power of government is not limited by the Constitution, are we ruled by Caesar? The Founding Fathers did not think we could trust a caesar with our safety? What has changed that we can now trust a caesar?

Always controversial...but never far off the mark...Paul lets it all hang out in this longish essay that was posted over on thedailybell.com website on Wednesday.  I thank reader Carl Lindfors for bringing it to our attention...and the link is here.

Doug Noland: The Perils of Bubbles and Speculative Finance

Ed_GSD
October 27, 2012 1:00pm GMT

I am convinced – actually, at this point, it seems rather obvious - that global policymakers have made a very problematic situation worse.  The global system would be less vulnerable today had speculative markets not again fixated on aggressive policy measures.  I argued at the time that the ECB's Long-Term Refinancing Operations (LTRO) only exacerbated European fragilities.  In particular, the $1.3 TN of central bank liquidity ensured that Spanish, Italian and other European banks increased their exposure to suspect sovereign debt.  It was a policy roll of the dice.  The LTROs did incite big rallies in European debt and equities, along with global risk markets more generally.  Not unpredictably, within months Europe was succumbing to an ever deeper crisis.  Global markets and economies were hanging in the balance.

In desperation, ECB president Draghi fashioned his "big bazooka:" Outright Monetary Transactions (OMT) – the promise of open-ended support for Spain and other troubled issuers.  Importantly, Mr. Draghi made an extraordinary warning to those that had positioned bearishly against Europe.   And while the jury is very much out on whether Draghi has much of a bazooka, this somewhat misses the point.  The Draghi Plan incited a major short-covering rally in Spain, Italy and periphery bonds, in European equities, and global risk markets more generally.  Indeed, the Draghi Plan forced the sophisticated speculators to cover their European shorts and even go leveraged long.  Instead of a roll of the dice, it was betting the ranch.

Doug's weekly Credit Bubble Bulletin is always a must read for me...and this one is no exception to that rule.  It's posted on the prudentbear.com Internet site...and I thank reader U.D. for sending it our way.  The link is here.

CIA Look to Swamp Ecuador's Correa

Ed_GSD
October 27, 2012 1:00pm GMT

About a month ago I asked a former colleague in the British Foreign and Commonwealth Office what Hague saw as the endgame in the Julian Assange asylum standoff, and where the room for negotiation lay. My friend was dismissive – the policy was simply to wait for the Presidential election in Ecuador in February. The United States and allies were confident that Correa will lose, and my friend and I having both been senior diplomats for many years we understood what the United States would be doing to ensure that result. With Correa replaced by a pro-USA President, Assange's asylum will be withdrawn, the Metropolitan Police invited in to the Embassy of Ecuador to remove him, and Assange sent immediately to Sweden from where he could be extradited to the United States to face charges of espionage and aiding terrorism.

I have been struck by the naivety of those who ask why the United States could not simply request Assange's extradition from the United Kingdom. The answer is simple – the coalition government. Extradition agreements are government to government international treaties, and the decision on their implementation is ultimately political and governmental – that is why it was Teresa May and not a judge who took the final and very different political decisions on Babar Ahmad and Gary Mackinnon.

CIA supporters in the UK have argued vociferously that it would be impossible for Sweden to give Assange the assurance he would not be extradited to the United States, with which he would be prepared to return to Sweden to see off the rather pathetic attempted fit-up there. In fact, as extradition agreements are governmental not judicial instruments, it would be perfectly possible for the Swedish government to give that assurance. Those who argue otherwise, like Gavin Essler and Joan Smith, are not being truthful – I suspect their very vehemence indicates that they know that.

This very interesting article was written by Craig Murray, Former U.K. ambassador to Uzbekistan, about Julian Assange and Ecuador...and I thank U.K. reader Tariq Khan for sending it to me on Monday.  It's posted on the craigmurray.org.uk Internet site...and the link is here.

Argentina: Pesos Go Underground as Dollar Ban Backfires

Ed_GSD
October 27, 2012 1:00pm GMT

Argentine President Cristina Fernandez de Kirchner's foreign-exchange controls are driving pesos underground.

A quarter of Argentines are keeping their pesos at home, up from 19 percent a year ago, according to a survey conducted in September by the Catholic University of Argentina and TNS Gallup. The increase reflects how people are shifting money out of banks to trade dollars in a cash-dominated black market where the cost of the U.S. currency has surged 35 percent this year, according to Buenos Aires-based research company EconViews.

"Money's moving out of the banking system and out of the formal economy," Ritondale said in a telephone interview from Buenos Aires. "As much as the government wants to promote the use of pesos, the truth is they won't be able to achieve it. You can't get it done" with interest rates below inflation.

This longish Bloomberg story was posted on their website early yesterday afternoon Mountain Standard Time...and I thank Washington state reader S.A. for sending it along.  I consider it well worth reading...and the link is here.

Half of British workers can not afford to retire, pensions industry says

Ed_GSD
October 27, 2012 1:00pm GMT

According to the National Association of Pension Funds, 48 per cent of all workers are planning to work in paid or volunteer work beyond the state pension age.

Eight in ten of the people choosing to stay in paid work will do so because they will not have enough money to stop working, the group found.

The findings prove that Britain is facing a "pension time-bomb" as people have not saved enough for their retirement, experts said.

The NAPF found that over half of all workers are not members of a workplace pension scheme. Even among 55-64 year-olds, just 40 per cent of people have a workplace pension.

This story was posted on The Telegraph's website earlier this morning BST...and I thank Roy Stephens for his first offering in today's column.  The link is here.

Vietnamese Banks Who Paid Dividend On Stored Gold, Were Quietly Selling It To Appear Solvent

Posted: 27 Oct 2012 06:00 AM PDT

Vietnamese Banks Who Paid Dividend On Stored Gold, Were Quietly Selling It To Appear Solvent

Any time a bank, and especially an entire banking sector, is willing to pay you paper "dividends" for your gold, run, because all this kind of quid pro quo usually ends up as a confiscation ploy.

Sure enough, as Dow Jones reports today, the gold, which did not belong to the banks and was merely being warehoused there (or so the fine print said), was promptly sold by these same institutions to generate cash proceeds and to boost liquidity reserves using other people's gold, obtained under false pretenses.

read more

Two King World News Blogs

Posted: 27 Oct 2012 06:00 AM PDT

Two King World News Blogs

The first is with Gerald Celente...and it's headlined "It's Not Just Germany's Gold That's Missing".  The second blog features Egon von Greyerz...and it's entitled "Two Absolutely Incredible & Key Gold Charts".

Argentina: Pesos Go Underground as Dollar Ban Backfires

Posted: 27 Oct 2012 06:00 AM PDT

Argentina: Pesos Go Underground as Dollar Ban Backfires

Argentine President Cristina Fernandez de Kirchner's foreign-exchange controls are driving pesos underground.

A quarter of Argentines are keeping their pesos at home, up from 19 percent a year ago, according to a survey conducted in September by the Catholic University of Argentina and TNS Gallup. The increase reflects how people are shifting money out of banks to trade dollars in a cash-dominated black market where the cost of the U.S. currency has surged 35 percent this year, according to Buenos Aires-based research company EconViews.

read more

Spanish unemployment rises above 25%/Greece given until Sunday for an all party agreement on austerity/gold and silver hold/

Posted: 27 Oct 2012 05:43 AM PDT

Gold To Rally Strongly In November After Expected October Correction

Posted: 27 Oct 2012 12:10 AM PDT

gold.ie

Links for 2012-10-26 [del.icio.us]

Posted: 27 Oct 2012 12:00 AM PDT

SilverFuturist: GoldSilver Ratio: 10000 to 1

Posted: 26 Oct 2012 06:17 PM PDT

SilverFuturist: Gold-Silver Ratio: 10000 to 1

from silverfuturist:

~TVR

Jim Rogers: US Treasuries and Silver

Posted: 26 Oct 2012 06:13 PM PDT

US GDP rose by two percent in the third quarter, slightly above the 1.9 percent economists forecasted. According to the Bureau for Economic Analysis, the increase was driven by personal consumption and federal government spending.

from capitalaccount:

National defense spending, which contributed to the rise in federal expenditures, increased by thirteen percent in Q3 (as compared to a point-two percent defense spending decrease in the prior quarter). Is a recession no longer an immediate concern? We talk to Jim Rogers, author of the book "A Gift To My Children," about what he thinks of the latest economic growth numbers, and his outlook for a recession after the 2012 elections. If there is a recession, could it lead to more political prosecutions, as we have seen recently in Italy? Silvio Berlusconi, the former Italian prime minister, has been sentenced to four years in prison for tax fraud. Although he may never serve the time, we ask Jim Rogers if we are likely to see arrests of government leaders or private sector executives in the US.

Plus, Japan remains mired in deflation according to recently released price data, and pressure is mounting on the Bank of Japan to pursue monetary easing to keep the country from recession. The Japanese Economics Minister told a news conference that "central banks around the world are easing monetary policy. The BOJ itself set a one percent inflation goal in February but that hasn't been achieved." According to Reuters, the Bank of Japan is expected to ease policy next week to reach its goal of one percent inflation. Japan began Quantitative Easing in 2001 and has managed to keep its zombie banks in a state of 'suspended credit animation' since the early 1990′s. We ask our guest Jim Rogers, author and investor, about how Japan's experience fits in with forecasts of Western central bank induced inflation. We also ask him about his 2008 prediction for a "hyper-inflationary Holocaust" and the long term implications for investors and savers. Has he been surprised by the lack of severe inflation, and the performance of the US bond market? And what about emerging Asian economies? Chris Mayer was on our show recently talking about the virtues and potential of Myanmar (Burma), and it appears that Jim Rogers agrees! He says that if there were any country that he could invest in right now, it would be Myanmar, and maybe North Korea!

And what about the banking system? Jim Rogers is bearish on JP Morgan, and expresses doubt in the company's commodities division, specifically the head of Global Commodities at the firm. We know that the blogosphere has been buzzing with talk of a large JP Morgan short position in the silver market, so what gives?

Last but not least, we have "Loose Change," with Lauren and Demetri. Apple reported its earnings last night after the market closed: revenue was right in line with expectations but EPS was worse than expected. However if you watched our show you would have expected this; four weeks ago on our show Reggie Middleton warned about the pressure on Apple's margins and said "the expectations for Apple are highly unrealistic." Lauren and Demetri discuss Reggie Middleton's perceptive prediction in "Loose Change," with a snazzy graphic of Apple, Google and Microsoft in the Garden of Eden!

Plus our "Rumble in the Monetary Jungle" episode triggered much discussion, argument and discourse. During the show Mike Norman and Karl Denninger debated debts, deficits, government spending and QE. Demetri responds to Mike Norman's arguments as well as your comments about the show. Lauren also replies to some of your YouTube and Facebook comments in today's "Viewer Feedback."

~TVR

Silver Shortage: According to Brandi

Posted: 26 Oct 2012 06:09 PM PDT

No denying Big D loves him some silver. Question is "at ANY price?"
Instant messaging with a bullion dealer operator.

from daytradeshow:
I thought about it and decided to ask some questions.

~TVR
at

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