Gold World News Flash

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• Yet More Mischief from Cheap Money, Part 379
• What Western Supply and Asian Demand Mean for Gold
• Supply and Demand Analysis of Gold and Silver
• Gold & Silver Needs A Breakout On The Technical Price Charts
• Fact or Just My Opinion?
• The Energy Factor to Push Gold to New Highs
• Richard Russell - JP Morgan, Gold & The Future Of The Dollar
• Comex dealer gold falls again to 669,609 oz or 20.827 tonnes/GLD falls again to 917.13 tonnes
• Remarkably 3 Sources Now Buying Entire World Gold Production
• Is The New York Fed Blaming "Beers" For The Tulip-Mania Bubble?
• The Gold Price Closed Slightly Higher at $1,386.70
• The Gold Price Closed Slightly Higher at $1,386.70
• Deliverable Gold Bullion on the COMEX Continues Its Decline - Claims Per Ounce Top 56
• Deliverable Gold Bullion on the COMEX Continues Its Decline - Claims Per Ounce Top 56
• Yet More Mischief from Cheap Money, Part 379
• 3 sources buying equivalent of annual gold mine production, Agnico CEO Boyd says
• Gold Seeker Closing Report: Gold and Silver End Slightly Lower
• Gold Daily and Silver Weekly Charts - Gold and Silver Are No Longer Safe Havens So Buy Stocks In Blue Skies
• Gold Daily and Silver Weekly Charts - Gold and Silver Are No Longer Safe Havens So Buy Stocks In Blue Skies
• World Police, World's Money Printer
• World Police, World's Money Printer
• World Police, World's Money Printer
• Remarkably 3 Sources Now Buying Entire World Gold Production
• How to Invent a Crisis
• The Daily Market Report
• Oil's Relationship with Oil Stocks and Gold
• What we're told
• Crude Oil’s Relationship with Oil Stocks and Gold
• Gold "Dull & Thin" as Spec's Cut Shorts But Analysts Expect Post-Fed Losses
• Doug Casey: 3 Stocks to Own When Gold Recovers
• Louise Yamada - 3 Fantastic Gold, Silver & Mining Share Charts
• Gold and Silver
• What we're told
• Syria and the Fed to Drive Gold Short-Term
• Oil’s Relationship with Oil Stocks and Gold
• The U.S. Is Getting “Played” In Syria
• Peripheral Central Banks Go In Reverse
• Precious Metals Market Report with Franklin Sanders
• Gold prices ease as Fed tapering talk resumes
• Gold Falls in London on Speculation Fed to Curb Stimulus
• Gold lower at 1387.10 (-3.70). Silver 23.56 (-0.26). Dollar down. Euro higher. Stocks called better. US 10yr 2.90% (-3 bps).
• Gold Prices: All Eyes Back on Fed's QE Tapering After Non-Farm Jobs Data
• Gold price in a range of currencies since December 1978 XLS version
• The High-Tech "Gold Rush" Officially Begins
• Happy Centenary to the US Fed
• Happy Centenary to the US Fed
• Inflation? Gold Prices Point to Chronic Slowdown
• Inflation? Gold Prices Point to Chronic Slowdown
• Love, Fear & Asia's Desire to Buy Gold
• Love, Fear & Asia's Desire to Buy Gold

Yet More Mischief from Cheap Money, Part 379 Posted: 10 Sep 2013 07:05 AM PDT But were August's non-farm payrolls really so meaningless? Cutting the jobless rate is one-half of the US Federal Reserve's mandate (the other is beating inflation – or whisking it, perhaps, after folding in egg whites). And whatever he does (or doesn't do) to quantitative easing at next week's much-awaited policy meeting, Fed chairman Bernanke has made a 7.0% jobless rate a key condition for any talk of raising Dollar interest rates from zero.

What Western Supply and Asian Demand Mean for Gold Posted: 10 Sep 2013 07:00 AM PDT The global rally for gold underway since late June will soon translate to juniors, says Brien Lundin, CEO of Jefferson Financial and the publisher/editor of Gold Newsletter. With so many undervalued companies in safe North American jurisdictions, he sees no reason to add sovereign risk to a portfolio. In this interview with The Gold Report, Lundin highlights one area where major discoveries are "lined up like pearls on a string."

Supply and Demand Analysis of Gold and Silver Posted: 10 Sep 2013 12:08 AM PDT There is a tradable approach to analyzing the fundamentals of supply and demand in the monetary metals markets. This article is a brief summary of the approach we take at Monetary Metals (and we also released a video that presents some of the ideas in a more engaging format). Gold and silver are money because, unlike all other commodities, people accumulate them without limit. Virtually all of the gold ever mined in human history is still in human hands. The "stocks to flows" ratio (inventories divided by annual production) for gold is 80 years. For silver it is also measured in decades. For other commodities, it is measured in months. Think about this. It means that there is no such thing as a "glut" in gold or silver. If the wheat harvest comes in a few percent higher than expected, the price can crash. If oil consumption rises a little, the price can spike. But in the case of gold and silver, the value has nothing to do with either mine production or jewelry or electronics consumption. Stability is exactly what we want and expect from money. The prices of gold and silver, as expressed in dollars, are unstable, not because of gold and silver, but because of the dollar itself. This means that you cannot analyze the fundamentals of gold and silver with conventional techniques. It is not possible to predict changes in the prices by looking at "supply" (i.e. mining and recycling) and "demand" (i.e. jewelry and electronics). All of those huge inventories are potential "supply", at the right price. Everyone on the planet is potential "demand", at the right price. Some analysts point to the same fundamental story in every article. Central banks are issuing money and other big problems are occurring in the world's financial system. It's true. But it was true before the big price crash on April 15, 2013 and it is true today. While this is a good reason to own gold, this isn't good information to trade gold. Another approach is to try to assess whether gold is being bought or sold by central banks, sovereign wealth funds, or other high profile market participants. This is often based on the assumption that the buyer represents the "smart money" and the seller is "dumb money". People often study the open interest in the futures market, ETF inventories, COMEX inventories, etc. Other analysts prefer to look at price charts and perform technical analysis. This is based on using past price movements to predict future price moves. It works sometimes, though it gives a limited picture. The price of something can also move for other reasons. These reasons are sometimes obvious at the time, though it is often not clear until afterwards, if ever. Monetary Metals was founded on a different approach. We do not look at the price per se. We look at the fundamentals of supply and demand. We do this by studying the spread between two prices: the spot market and the futures market, called the basis. It is helpful to use the example of a non-monetary commodity to understand how the basis shows the fundamentals of supply and demand. Imagine driving a grain truck to a town with grain silos right before the harvest. Workers are cleaning off the equipment and washing the interiors of the empty storage bins. You ask how much money to fill up your truck. They will laugh until you take out a stack of money. Someone may quote you a price: $25 per bushel is the price to get wheat today. If you take it, they will have to pay a bakery to sit idle for a week until the harvest, and pull wheat out of the supply chain. But if you can sign a contract for delivery next month, the price is $7. This case, where the price in the spot market is greater than the price in the futures market, indicates scarcity. Of course, this makes sense that wheat would be scarce a few days prior to the harvest. It is perishable, which means every bushel produced is consumed. There are no permanent hoards. This case has a technical term, which is backwardation. Here is the proof that backwardation means scarcity. Suppose someone had wheat in a warehouse. How could he profit from the situation? He could sell you the wheat at $25 and immediately buy a contract to get the same amount of wheat delivered in one month. This is an arbitrage called decarrying the wheat. Decarrying is pulling the commodity out of the warehouse, buying an equivalent amount in the futures market, and keeping the profit (in this case 25 – 7 = $18). Obviously, if anyone had wheat, he would take the free $18 offered by the market. In doing this, he would reduce the backwardation. If others had wheat, they would do it and reduce the backwardation further, and so on. The opposite example occurs a month later. When the harvest comes in, the market is overflowing in wheat. But if a bakery wants to contract to guarantee its wheat supply for delivery in 8 months, the price is higher on the 8-month future than in the spot market. The technical name for this condition is called contango. Contango implies that there is plenty of the good, or at least that there is no scarcity. In contango, one can make a profit by buying the commodity and selling a futures contract against it. This is called carrying it. In the meantime, one pays interest on the money one borrowed to buy the wheat and one has costs to store and insure it in the meantime. In brief, the basis is a measure of availability of a commodity to the market. When the basis is well above zero (i.e. well into contango territory) and rising, then the good is abundant. When the basis falls below zero, then the commodity may be in backwardation. Just as backwardation is the opposite of contango, there is a spread which is opposite of the basis. It is called the cobasis. When the cobasis is above zero, that is the precise definition of backwardation. When you hear backwardation, you should think scarcity or shortage.  Gold and silver are different than wheat. As we said earlier, there is no such thing as a "glut" and for the same reason there is never a shortage either. Backwardation in gold means there is a shortage of gold to the market. There is no lack of gold available to decarry, unlike the case of wheat. But for whatever reason, owners of gold are reluctant to entrust it to the market, even to make a profit. Gold backwardation should never happen. It did not happen until December 2008. Since then, it has been occurring intermittently. Backwardation in gold is a sign that the regime of irredeemable paper money based on the dollar is coming to an end. When it becomes permanent, then gold will no longer be offered in exchange for dollars (or yuan, pounds, euro, etc.) There will be no gold "price". In other words, paper money will be worthless. This is not merely academic. In general, the positive basis (i.e. contango) is disappearing. This is a process of gold withdrawing its bid on the dollar. One cannot understand this if one lives in the dollar bubble, looking at the gold "price" as if it were comparable to the price of Apple shares or crude oil. It would be better and more accurate to think of the dollar price, measured in milligrams of gold or grams of silver. In the meantime, we have temporary backwardation. Each futures contract drops into backwardation as it approaches expiration. In temporary backwardation, when each futures contract approaches expiration, it is pulled into backwardation. The bid drops, which causes the basis to drop significantly. One explanation is that this could be due to the contract roll. Most traders who buy futures use leverage. They do not wish to take delivery of the gold, and cannot take delivery because they don't have the cash in their account. So they must sell before First Notice Day. This selling presses down the bid on the future. The basis, therefore, drops. But the mechanics of the contract roll does not fully explain the phenomenon of temporary backwardation. While it may not herald the end of the dollar just yet, it is a sign of cancer in the brain of the system. The reason is simple. Increasingly post-2008, when people buy gold they prefer metal that they can hold in their hand to a futures contract. The consequence is that the price on the futures contract has a tendency to sag below the price of the metal itself. Buying of futures has become relatively soft relative to buying of gold metal. This does not mean that the price cannot drop. Recently, the price did in fact drop by hundreds of dollars. The way to think about this is that demand fell, which is why the price fell. But at the same time, what demand that there was concentrated increasingly in the spot metal market. The result was falling price combined with rising cobasis and backwardation at one point had crept into three successive contracts for gold (August, October, and December) simultaneously. The above discussion makes a powerful case for buying gold. This leads to the question: why does the price fall? Why does the dollar rise? One short answer is that most people—even gold bugs—think of the dollar as money and gold as a volatile commodity. They buy when the gold price is going up. They sell to take profits, or to avoid losses when the price is falling. The longer answer is that the dollar is the currency needed by debtors worldwide to service their debts. At times when they are squeezed under pressure, they scramble to get dollars. The dollar strengthens and that is reflected in a lower gold price. There is one other benefit to looking at the basis. It helps understand the various conspiracy theories. What would happen if someone sold a huge amount of gold short in the futures market? It would drive down the price of the futures relative to the price of metal in the spot market. It would instantly cause a very great backwardation. For example, this was alleged on April 15, 2013 so I wrote an article to look at it. Let's look at the actual basis calculation. Conceptually, we're interested in carry and decarry. If the price in the futures market is higher, then anyone can carry the good at a profit. On the other hand, a positive cobasis means that it is profitable to decarry it. Let's start with an oversimplified definition. Carry = Future – Spot Decarry = Spot – Future To carry, one buys spot and sells future, if this spread is positive. To decarry, one sells spot and buys future. To be more precise, we must define these terms that would be experienced by anyone who tries to carry or decarry. When one buys, one must pay the ask (also called the offer). To sell, one must accept the bid. With that in mind, here are the proper definitions: Carry = Future(bid) – Spot(ask) Decarry = Spot(bid) – Future(ask) Basis and cobasis are the annualized returns for carry and decarry. Quoting them as annualized returns helps put them in perspective. You can compare the basis to the rate of interest, or the rate of return of any other investment with the same duration. Note that both can be negative. There are times when there is no profit to be made in carrying or in decarrying. This is typically a sign of poor liquidity and hence wide bid-ask spreads. But at most one of them can be positive. Either the market is offering a profit to carry something, or to decarry it. It makes no sense for it to be possible to carry profitably and decarry profitably, because if so then one could make unlimited money by carrying and decarrying over and over. You can simply look at the graphs of the basis and cobasis and get a clear picture at a glance. Or you can delve as deeply into the theory as you wish, to understand the nuances of the market and the mechanics of how, precisely, it works and why certain things are occurring when they do. We provide the data and analysis for any level of interest.

Gold & Silver Needs A Breakout On The Technical Price Charts Posted: 09 Sep 2013 11:14 PM PDT It is interesting to watch the day to day shifts in sentiment among traders/investors as the news headlines change in regards to Syria. President Putin just made a master stroke of genius in taking our Keystone Cops bumbling leaders to school, i. e., Obama and Secretary of State Kerry, ( you know that fierce warrior who intimated that any punitive stroke of Syria inflicted by the US would be itty, bitty, teeny, tiny.) I am reminded of Alan Jackson’s classic C&W hit, “It’s all Right to be Little Bitty”. Seems as if no one in the Administration expected Putin to seize upon their hapless confusion and suggest that Assad should put his chemical weapons under international supervision. Whoops! there goes the imperative to punish Assad swiftly! The markets sure seem to take it that way because it was off to the races in the equity world again today with the DOW pushing past 15,000 and the S&P closing on its session high. The S&P 500 chart has pushed right back up to the 50 day moving average once again after plunging below it on Syria fears. Gold, after looking like it was going to try to push through $1400, swiftly succumbed to selling pressure in spite of the strength in the Euro. It sure does seem as if that “14″ handle is proving to be difficult for the metal to hold right now. Same goes for silver in the sense that maintaining itself above the $24 level for any length of time is also elusive. As mentioned in the KWN Metals Wrap over the weekend, both of these markets need a steady influx of brand new, eager, speculative buyers to sustain their upward path and right now they are NOT getting that. They will not unless they can first clear those overhead chart resistance levels mentioned in that interview. As we were reminded by last week’s horrific payrolls number, the US economy is limping along with many Americans suffering and unable to secure viable FULL TIME employment. That does not apparently matter to Wall Street however. I have been relatively quiet of late in regards to commenting on market action merely because I simply do not seem to have any clear sense of where some of these markets are heading from day to day. Reactions to various economic data releases, many which conflict the previous day’s release, are unpredictable at best and bizarre at worst. To watch a market move higher on rotten economic news merely because it would argue for a delay in any Federal Reserve Tapering activity is clear evidence to this long-time trader that our financial market system no longer has much, if any, connection to anything real. Still one cannot argue with the tape if they hope to be profitable as a trader and that means you either have to hold your nose and take your positions accordingly or do nothing and sit on the sidelines. Doing nothing however as a trader means no income so you have little if any choice but to roll with the tide. Personally, America’s nakedness is being exposed for the entire world to see. We are naked politically with a buffoon and his crew for our leaders, a man who has become a laughingstock outside of his adoring sycophants here in the US media. We are naked financially with a debt the size of which boggles ones mind if they are honest and clear-thinking. We are naked ethically which can be seen in the degeneracy our entertainment industry with the trash that it regularly spews out. We are naked intellectually, because we are to damned ignorant to learn from the lessons of history and lastly we are naked spiritually, because we have become gods unto ourselves. So much for my soapbox for today. Watching the farce that this nation is becoming is too much for me to take without hoping that there are millions of my fellow citizens who feel the same way. As far as gold goes, it needs a breakout on the technical price charts to get anything exciting going and to clear it from the range trade it is currently in. (original source: Dan Norcini’s personal blog)

Fact or Just My Opinion? Posted: 09 Sep 2013 09:40 PM PDT by Bill Holter, MilesFranklin.com: A few months ago I made the statement that "long term, gold must and will go up in terms of U.S. dollars, this is not my opinion it is fact!" This statement sparked a firestorm and I immediately took a rash of verbal abuse (as I may again for writing this but please read it all before screaming at me) for what I said. Before I go any further, I want to preface everything I write and the following logic with the premise that modern day alchemists do not figure out how to turn lead into gold, or create gold in laboratories as they now can make diamonds, or a 1 million ton meteor of solid gold doesn't somehow strike Earth. In other words, as long as the "supply" situation doesn't dramatically change (which I cannot foresee happening), I stand by what I am about to write. Read more @ MilesFranklin.com

The Energy Factor to Push Gold to New Highs Posted: 09 Sep 2013 09:20 PM PDT by Steven St. Angelo, SRS Rocco: One of the most misunderstood factors that will impact the price of gold is energy. Many analysts forecast the future value of gold relative to the amount of fiat money circulating in the system as well as total government treasury and bond debt. However, the world may not have the available energy supply in the future to satisfy these massive debts. Gold and silver are monetary metals because they function as a store of "Economic Energy", a term coined my Mike Maloney. Basically, the precious metals are batteries that store this trade-able energy value. Read More @ SRSroccoReport.com

Richard Russell - JP Morgan, Gold & The Future Of The Dollar Posted: 09 Sep 2013 09:01 PM PDT On the heels of continued volatility in key global markets, the Godfather of newsletter writers, Richard Russell, discussed JP Morgan involvement in the gold market and the future of the US dollar. Russell also warned about the massive worldwide debt, covered stocks, and also included two charts of gold and the US dollar. This posting includes an audio/video/photo media file: Download Now

Comex dealer gold falls again to 669,609 oz or 20.827 tonnes/GLD falls again to 917.13 tonnes Posted: 09 Sep 2013 08:40 PM PDT by Harvey Organ, HarveyOrgan.Blogspot.ca: Good evening Ladies and Gentlemen: Gold closed up 10 cents to $1386.80. (comex closing time ). Silver was down 17 cents to $23.67 In the access market today at 5:15 pm tonight here are the final prices: gold: $1386.20 silver: $23.65 At the Comex, the open interest in silver rose by 24 contracts to 113,968. The open interest on the entire gold comex contracts rose by 2698 contracts to 385,606 as the bankers threw everything but the kitchen sink today trying to contain gold’s (and silver’s) advance. The bankers do not like to see gold advance on two consecutive days. Read More @ HarveyOrgan.Blogspot.ca

Remarkably 3 Sources Now Buying Entire World Gold Production Posted: 09 Sep 2013 08:20 PM PDT from KingWorldNews: From a gold price perspective, we still see higher prices. What we are looking at is strong Chinese demand, and we firmly believe that demand will continue to stay strong. Indian demand has also been strong, despite the higher taxes and duties that have been put on gold. We also expect Indian demand to remain quite robust. Central bank buying will continue to remain firm in our view as well. When you add up just those three components, astonishingly, it's almost equivalent to the annualized gold production of the entire world. Sean Boyd continues @ KingWorldNews.com

Is The New York Fed Blaming "Beers" For The Tulip-Mania Bubble? Posted: 09 Sep 2013 07:16 PM PDT In yet another in our series of taxpayer-funded Federal Reserve research that has achieved so much over the years, the New York Fed blog has released its perspectives on the Tulip-mania bubble of 1633-37. Hot on the heels of SF Fed's Williams comments that bubbles can only be seen in rear view mirror and then of course - and that there's always an exogenous factor to blame' - in the case of tulips, the New York Fed cites "beers" as the catalyst since 'shares' were exchanged in pubs... Ironically then, it seems even 380 years ago, the only thing that mattered was liquidity.   Via Liberty Street Economics blog, Crisis Chronicles: Tuilp Mania, 1633-37 As Mike Dash notes in his well-researched and gripping Tulipomania, tulips are native to central Asia and arrived in the 1570s in what's now Holland, primarily through the efforts of botanist Charles de L'Escluse, who classified and spread tulip bulbs among horticulturalists in the late 1500s and early 1600s. By the early 1630s, the tulip was a fixture in Dutch gardens. But Tulip Mania didn't begin until the summer of 1633, when a house in Hoorn was exchanged for three rare tulips and a Frisian farmhouse was traded for a number of tulip bulbs. The lure of profit enticed novice florists to enter the tulip trade with minimal investment and small parcels of land, harkening back to the days of farmers taking up coin clipping during the Kipper und Wipperzeit. In this edition of Crisis Chronicles, we exchange the trading floors of today for the alcohol-fueled exchanges of the past as we dig up Tulip Mania.   The Plague and Tulip Mania A number of factors contributed to the conditions that caused Tulip Mania. To start, the coin debasement crisis of the 1620s was followed by a period of prosperity in the 1630s. This prosperity coincided with an outbreak of the plague, which caused a labor shortage and increased real wages and surplus income. At the same time, there was a strong belief that social mobility was a Dutch birthright and that there was money to be made in every profession.         Prior to the 1630s, tulip bulbs were only physically traded among growers in the summer, when they could be safely pulled from the ground, in what evolved to be an informal spot market for individual commodities where cash and real assets traded hands. By the 1630s, the market for tulips began to grow as florists started buying and selling tulip bulbs still in the ground using promissory notes. The notes provided welcome credit and liquidity to help finance planting and limited credit risk to a known borrower with the borrower's bulbs as collateral. However, the notes created a limited opportunity to inspect bulbs or to see them flower, provided no guarantee of quality, nor proof that the bulbs actually belonged to the seller, or even existed. Because delivery of the bulb was often months away, this financial innovation ultimately encouraged speculation as florists bought and sold promissory notes, which were in turn resold, creating a futures market. A legitimate need for financing real assets led to a financial market in which people with no stake in the actual underlying bulbs could participate. As Dash points out, it was "normal for florists to sell tulips they could not deliver, to buyers who did not have the cash to pay for them and who had no desire to plant them." Such a financial market served the liquidity and credit needs of growers and florists, but it also led to highly leveraged speculation by those who could borrow to finance their investments with little of their own capital at stake. Promissory notes quickly transformed from a credit and liquidity mechanism to an instrument of speculation. Beers Instead of Beurs Fuel the Market Bulbs were traded not at the exchange buildings in Amsterdam, the beurs, but rather in local pubs where each trade was celebrated with a toast. The in het ootje method of trade required the seller to pay a commission independent of the seller's acceptance or refusal of the bid (typically the equivalent of a round or two of drinks), which placed a premium on accepting a decent bid, further fueling the market.         The mania climaxed in January 1637, which marked the greatest influx of new florists. Many of these novices leveraged savings and mortgaged their goods or tools to take part in the bulb trade, just as we saw farmers turn to coin clipping during the Kipper und Wipperzeit. The absolute speculative peak is believed to be an auction on February 5, 1637, which raised 90,000 guilders. To put this in perspective, the wealthiest merchants of the day might've accumulated wealth of half a million guilders. Some Florists Pull Back With no predictability or stability in the bulb market, the market was unsustainable. By late January 1637, isolated florists sold their holdings and failed to reinvest. Other florists took notice. By the first week of February 1637, the boom ended with a crash that began at an auction in Haarlem. The first offer of bulbs at auction didn't receive bids. The price was lowered, still with no bids, then lowered again. The once-plentiful liquidity provided by outside speculators dried up nearly instantaneously. With the auctioneer unable to find a price at which bulbs would sell, the panicked withdrawal of purchasing speculators spread to panicked "fire sales" by leveraged speculators who had bought bulbs on margin and needed to sell. "The market for tulip bulbs simply ceased to exist," as Tulipomania reports. When bulbs could be sold, it was for 1 to 5 percent of the previous value. Collapse Leads to Grudging Compromise The spontaneous development of an extremely leveraged futures market certainly wasn't new—futures markets date back to Mesopotamia, but it was the fertilizer that grew the tulip bulb trade from market, to bubble, to bust. When the bubble burst, some highly leveraged florists who had paid only small deposits still owed bulb owners huge sums of money. With the collapsed market, florists hoped to pay nothing. On February 23, growers proposed to the courts of the United Provinces that florists buy the bulbs at 10 percent of the agreed-upon selling price. After a lengthy deliberation, the courts banned tulip cases and asked that all disputes be handled at the local level. With no collective bankruptcy protections or procedures to guide resolution, growers and florists were forced to settle their disagreements individually.         This futures market for tulip bulbs was volatile and poorly regulated—more weed than flower. Rights of ownership were unclear, as growers and florists sought resolution from the tangle of transactions. And if just one florist in the chain was insolvent, the entire chain collapsed. Since the enormous interconnected claims were handled outside the courts, there was little legal protection for creditors or debtors and no clear legal status to settle the claims. That's why even fire-sale prices of 1 to 5 percent of initial prices, driven down by desperate sellers (debtors) fearing bankruptcy, didn't stick. Nor did the buyers get stuck with paying 10 percent of the agreed-upon prices, as had been proposed to the courts. Without enforceable debt claims or sales prices, the tulip bulb crisis ended in grudging compromise between individual growers and florists with massive write-downs of debt. However, the disruption and losses to growers, florists, and speculators were largely contained among market participants. The tulip market and the players in it weren't interlocked with the banking sector or other credit providers. There was no lasting spillover to the real economy and no real market or legal reforms emanating from the crisis. Lessons for Regulators It's interesting to compare Tulip Mania with more modern debt crises, where asset classes have strong legal protections for creditors with interconnected claims. Take securitized mortgage-backed assets, for example. In a typical crisis, market seizure initially leads to potential fire-sale prices that may wipe out debtor financial institutions. Official sector support steps in to curtail full financial contagion and systemic collapse, thus limiting spillover to the real economy. Individual debtholders (households), however, typically aren't considered contagious or systemic to the financial system. But with no efficient private sector debt write-down mechanism at households' disposal, there's a greater chance for household debt to trigger a large negative spillover to the real economy.       Post-crisis, regulators and lawmakers have indeed focused much needed attention on enhancing consumer protections, including introducing a private sector debt write-down mechanism via the recently extended Home Affordable Refinance Program and providing opportunities for improved access to refinancing opportunities for underwater mortgages, as described in a recent Liberty Street Economics post. One of the most talked-about methods of tempering speculation in the housing market, where by nature purchases are highly leveraged, is to promote strong lending practices by seeking risk retention on the books of the mortgage originator. Regulators have recently sought to "crowd in" private capital according to the "originate-to-distribute" securitization model by raising government-sponsored-enterprise (GSE) guarantee fees. As Congress prepares to enact further GSE reforms, tell us which mortgage market improvements you think would be most impactful.         In a future post on the British credit crisis of 1772, we'll touch on another example of how a credit crisis can lead to a debt crisis—this time with a spillover to the real economy.   ....ZH: and because we couldn't resist "What's better than roses on your piano?" ... "Tulips on your organ"

The Gold Price Closed Slightly Higher at $1,386.70 Posted: 09 Sep 2013 06:53 PM PDT Gold Price Close Today : 1,386.70 Change : 0.20 or 0.01% Silver Price Close Today : 23.67 Change : -0.17 or -0.73% Gold Silver Ratio Today : 58.59 Change : 0.44 or 0.75% Franklin Sanders will be on vacation from the 6th through to 15th of September and will not be publishing any commentaries during this time. Daily gold and silver price closes will be published during this time. 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 © 2013, 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.

The Gold Price Closed Slightly Higher at $1,386.70 Posted: 09 Sep 2013 06:53 PM PDT Gold Price Close Today : 1,386.70 Change : 0.20 or 0.01% Silver Price Close Today : 23.67 Change : -0.17 or -0.73% Gold Silver Ratio Today : 58.59 Change : 0.44 or 0.75% Franklin Sanders will be on vacation from the 6th through to 15th of September and will not be publishing any commentaries during this time. Daily gold and silver price closes will be published during this time. 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 © 2013, 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.

Deliverable Gold Bullion on the COMEX Continues Its Decline - Claims Per Ounce Top 56 Posted: 09 Sep 2013 04:34 PM PDT

Deliverable Gold Bullion on the COMEX Continues Its Decline - Claims Per Ounce Top 56 Posted: 09 Sep 2013 04:34 PM PDT

Yet More Mischief from Cheap Money, Part 379 Posted: 09 Sep 2013 03:35 PM PDT Nothing is safe - not student loans, emerging markets, or London flats. Did you enjoy your monthly dose of non-farms nonsense last Friday? Gold and silver both erased Thursday's drop when the latest US jobs figures were released. Read More...

3 sources buying equivalent of annual gold mine production, Agnico CEO Boyd says Posted: 09 Sep 2013 01:35 PM PDT 4:35p ET Monday, September 9, 2013 Dear Friend of GATA and Gold: Agnico-Eagle CEO Sean Boyd today tells King World News that just three sources appear to be acquiring the equivalent of the world's entire annual gold mine production. An excerpt from the interview is posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/9/9_Rem... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Don't Let Cyprus Happen to You Depositors at the Bank of Cyprus lost 47.5 percent of their savings. So to preserve your wealth, get some of it outside the banking system into physical gold and silver. Worldwide Precious Metals (Canada) Ltd., established in 2001, specializes in physical gold, silver, platinum, and palladium. We offer delivery or secure and fully insured storage outside the banking system in Brinks vaults. We have access to gold and silver from trusted worldwide refineries and suppliers. And when you have an account with us you have immediate access to it for buying and selling your stored bullion. For information on owning physical precious metals in your portfolio, visit us at: www.wwpmc.com. Join GATA here: Gold Investment Symposium 2013 Luna Park Conference Center, Sydney, Australia Wednesday-Thursday, October 16-17, 2013 http://gold.symposium.net.au/ Mines and Money Australia Melbourne Conference and Exhibition Centre Tuesday, October 29-Friday, November 1, 2013 http://www.minesandmoney.com/ New Orleans Investment Conference Sunday-Wednesday, November 10-13, 2013 Hilton New Orleans Riverside Hotel New Orleans, Louisiana https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080... * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

Gold Seeker Closing Report: Gold and Silver End Slightly Lower Posted: 09 Sep 2013 01:15 PM PDT Gold fell $6.50 to $1382.00 by a little after 8AM EST before it climbed back to $1390.72 in the next couple of hours of trade, but it then drifted back lower into the close and ended with a loss of 0.14%. Silver slipped to as low as $23.396 and ended with a loss of 0.59%.

Gold Daily and Silver Weekly Charts - Gold and Silver Are No Longer Safe Havens So Buy Stocks In Blue Skies Posted: 09 Sep 2013 01:13 PM PDT

Gold Daily and Silver Weekly Charts - Gold and Silver Are No Longer Safe Havens So Buy Stocks In Blue Skies Posted: 09 Sep 2013 01:13 PM PDT

World Police, World's Money Printer Posted: 09 Sep 2013 12:06 PM PDT Yet more mischief from cheap US money – at college, in emerging markets, everywhere...   ENJOY your monthly dose of non-farms nonsense on Friday? asks Adrian Ash at BullionVault.   Gold and silver both erased Thursday's drop when the latest US jobs figures were released. Set your gold or silver chart to one-week (1w) to see the silliness.   But were August's non-farm payrolls really so meaningless? Cutting the jobless rate is one-half of the US Federal Reserve's mandate (the other is beating inflation – or whisking it, perhaps, after folding in egg whites). And whatever he does (or doesn't do) to quantitative easing at next week's much-awaited policy meeting, Fed chairman Bernanke has made a 7.0% jobless rate a key condition for any talk of raising Dollar interest rates from zero.   Last month's tick down to 7.3% in the unemployment rate, however, showed that other things are happening to US jobs beyond hiring and firing. Most notably, people are quitting the jobs market altogether. More notably still, men and women under the age of 35. Those under 24 have gone AWOL. Losing young earners to welfare is bad; losing them to college is good, or so everyone thinks. No one's quite sure which of paths Generation Why has chosen just yet. But even education, sadly, is another dead end. At least as we account it today, in Dollars and cents, rather than merely for the good of knowing more stuff. Because now government has made college education a social goal, more equals better – and so all equals best – and it's just one more thing government can't help but screw up.   Student loans are a scandal, as Rolling Stone showed last month. They're also adding to America's personal debt burden (horribly so for the individuals trapped by the scam). At the same time, extending education long into the start of middle-age income capacity only worsens the dependency ratio of earning workers to idlers.   Even economics graduates are meantime figuring out that, if you keep pumping money into a market, its prices will keep rising. That goes double when the money is borrowed, as the subprime bubble showed. Data show the annual cost of attending college – in real, inflation-adjusted terms – rising two to three-fold in the last 30 years. Has the fun, education or benefit really grown three times greater as well?   Make cash available to would-be students, would-be homeowners, or would-be retirees, and they'll take it. Especially if they buy the shtick about "investing" in the future. Their sellers, agents, colleges and brokers will then take that cash back off them. The cost of an education, mortgage or retirement will of course have risen faster than any "return" the degree, home or pension product might pay. "Many finance-sector analysts," wrote Matt Taibbi in that Rolling Stone story last month, "see the problem as being founded in ill-considered social engineering, an unrealistic desire to put as many kids into college as possible that mirrors the state's home-ownership goals that many conservatives still believe fueled the mortgage crisis.   "Others...view the easy money [made available by state-subsidized student loans] as the massive subsidy for an education industry which spent between $88 million and $110 million lobbying government in each of the past six years, and historically has spent recklessly no matter who happened to be footing the bill – parents, states, the federal government, young people, whomever."   Back at the fount of all easy money, however, next week's Fed decision on cutting the US central bank's money printing is no longer a domestic question. QE tapering has plainly hurt emerging markets, because QE so plainly poured hot money in. Yes, the G20 summit in St.Petersburg managed to avoid too much unpleasantness on the subject – just like it avoided sparking WWIII between the US and Russia over Syria. But now the IMF's Christine Lagarde has joined Asian and Latin American leaders in saying Washington should also embrace its role as the world's No.1 liquidity pump too.   The US takes its role of "world's policeman" very seriously. The world's poor also need more money to flow out of the Fed, or so says Lagarde. No wonder so many of them choose to buy gold the moment they gather some disposable savings.   US college students might well wonder when the cheap-money spigots will shut off. The first to go thirsty would no doubt feel left out at first. But might their losses really outweigh those of the last to get drowned?   Half-a-decade after the Lehmans' collapse and AIG bail-out, "The Dollar-centric nature of the global monetary system has not been fixed," writes Steven Barrow, currency strategist at Standard Bank in London. "In fact, it's probably far worse given the Fed's monetary tactics these past five years."   A policeman who pushes cheap loans. Shall we never be free?

World Police, World's Money Printer Posted: 09 Sep 2013 12:06 PM PDT Yet more mischief from cheap US money – at college, in emerging markets, everywhere...   ENJOY your monthly dose of non-farms nonsense on Friday? asks Adrian Ash at BullionVault.   Gold and silver both erased Thursday's drop when the latest US jobs figures were released. Set your gold or silver chart to one-week (1w) to see the silliness.   But were August's non-farm payrolls really so meaningless? Cutting the jobless rate is one-half of the US Federal Reserve's mandate (the other is beating inflation – or whisking it, perhaps, after folding in egg whites). And whatever he does (or doesn't do) to quantitative easing at next week's much-awaited policy meeting, Fed chairman Bernanke has made a 7.0% jobless rate a key condition for any talk of raising Dollar interest rates from zero.   Last month's tick down to 7.3% in the unemployment rate, however, showed that other things are happening to US jobs beyond hiring and firing. Most notably, people are quitting the jobs market altogether. More notably still, men and women under the age of 35. Those under 24 have gone AWOL. Losing young earners to welfare is bad; losing them to college is good, or so everyone thinks. No one's quite sure which of paths Generation Why has chosen just yet. But even education, sadly, is another dead end. At least as we account it today, in Dollars and cents, rather than merely for the good of knowing more stuff. Because now government has made college education a social goal, more equals better – and so all equals best – and it's just one more thing government can't help but screw up.   Student loans are a scandal, as Rolling Stone showed last month. They're also adding to America's personal debt burden (horribly so for the individuals trapped by the scam). At the same time, extending education long into the start of middle-age income capacity only worsens the dependency ratio of earning workers to idlers.   Even economics graduates are meantime figuring out that, if you keep pumping money into a market, its prices will keep rising. That goes double when the money is borrowed, as the subprime bubble showed. Data show the annual cost of attending college – in real, inflation-adjusted terms – rising two to three-fold in the last 30 years. Has the fun, education or benefit really grown three times greater as well?   Make cash available to would-be students, would-be homeowners, or would-be retirees, and they'll take it. Especially if they buy the shtick about "investing" in the future. Their sellers, agents, colleges and brokers will then take that cash back off them. The cost of an education, mortgage or retirement will of course have risen faster than any "return" the degree, home or pension product might pay. "Many finance-sector analysts," wrote Matt Taibbi in that Rolling Stone story last month, "see the problem as being founded in ill-considered social engineering, an unrealistic desire to put as many kids into college as possible that mirrors the state's home-ownership goals that many conservatives still believe fueled the mortgage crisis.   "Others...view the easy money [made available by state-subsidized student loans] as the massive subsidy for an education industry which spent between $88 million and $110 million lobbying government in each of the past six years, and historically has spent recklessly no matter who happened to be footing the bill – parents, states, the federal government, young people, whomever."   Back at the fount of all easy money, however, next week's Fed decision on cutting the US central bank's money printing is no longer a domestic question. QE tapering has plainly hurt emerging markets, because QE so plainly poured hot money in. Yes, the G20 summit in St.Petersburg managed to avoid too much unpleasantness on the subject – just like it avoided sparking WWIII between the US and Russia over Syria. But now the IMF's Christine Lagarde has joined Asian and Latin American leaders in saying Washington should also embrace its role as the world's No.1 liquidity pump too.   The US takes its role of "world's policeman" very seriously. The world's poor also need more money to flow out of the Fed, or so says Lagarde. No wonder so many of them choose to buy gold the moment they gather some disposable savings.   US college students might well wonder when the cheap-money spigots will shut off. The first to go thirsty would no doubt feel left out at first. But might their losses really outweigh those of the last to get drowned?   Half-a-decade after the Lehmans' collapse and AIG bail-out, "The Dollar-centric nature of the global monetary system has not been fixed," writes Steven Barrow, currency strategist at Standard Bank in London. "In fact, it's probably far worse given the Fed's monetary tactics these past five years."   A policeman who pushes cheap loans. Shall we never be free?

World Police, World's Money Printer Posted: 09 Sep 2013 12:06 PM PDT Yet more mischief from cheap US money – at college, in emerging markets, everywhere...   ENJOY your monthly dose of non-farms nonsense on Friday? asks Adrian Ash at BullionVault.   Gold and silver both erased Thursday's drop when the latest US jobs figures were released. Set your gold or silver chart to one-week (1w) to see the silliness.   But were August's non-farm payrolls really so meaningless? Cutting the jobless rate is one-half of the US Federal Reserve's mandate (the other is beating inflation – or whisking it, perhaps, after folding in egg whites). And whatever he does (or doesn't do) to quantitative easing at next week's much-awaited policy meeting, Fed chairman Bernanke has made a 7.0% jobless rate a key condition for any talk of raising Dollar interest rates from zero.   Last month's tick down to 7.3% in the unemployment rate, however, showed that other things are happening to US jobs beyond hiring and firing. Most notably, people are quitting the jobs market altogether. More notably still, men and women under the age of 35. Those under 24 have gone AWOL. Losing young earners to welfare is bad; losing them to college is good, or so everyone thinks. No one's quite sure which of paths Generation Why has chosen just yet. But even education, sadly, is another dead end. At least as we account it today, in Dollars and cents, rather than merely for the good of knowing more stuff. Because now government has made college education a social goal, more equals better – and so all equals best – and it's just one more thing government can't help but screw up.   Student loans are a scandal, as Rolling Stone showed last month. They're also adding to America's personal debt burden (horribly so for the individuals trapped by the scam). At the same time, extending education long into the start of middle-age income capacity only worsens the dependency ratio of earning workers to idlers.   Even economics graduates are meantime figuring out that, if you keep pumping money into a market, its prices will keep rising. That goes double when the money is borrowed, as the subprime bubble showed. Data show the annual cost of attending college – in real, inflation-adjusted terms – rising two to three-fold in the last 30 years. Has the fun, education or benefit really grown three times greater as well?   Make cash available to would-be students, would-be homeowners, or would-be retirees, and they'll take it. Especially if they buy the shtick about "investing" in the future. Their sellers, agents, colleges and brokers will then take that cash back off them. The cost of an education, mortgage or retirement will of course have risen faster than any "return" the degree, home or pension product might pay. "Many finance-sector analysts," wrote Matt Taibbi in that Rolling Stone story last month, "see the problem as being founded in ill-considered social engineering, an unrealistic desire to put as many kids into college as possible that mirrors the state's home-ownership goals that many conservatives still believe fueled the mortgage crisis.   "Others...view the easy money [made available by state-subsidized student loans] as the massive subsidy for an education industry which spent between $88 million and $110 million lobbying government in each of the past six years, and historically has spent recklessly no matter who happened to be footing the bill – parents, states, the federal government, young people, whomever."   Back at the fount of all easy money, however, next week's Fed decision on cutting the US central bank's money printing is no longer a domestic question. QE tapering has plainly hurt emerging markets, because QE so plainly poured hot money in. Yes, the G20 summit in St.Petersburg managed to avoid too much unpleasantness on the subject – just like it avoided sparking WWIII between the US and Russia over Syria. But now the IMF's Christine Lagarde has joined Asian and Latin American leaders in saying Washington should also embrace its role as the world's No.1 liquidity pump too.   The US takes its role of "world's policeman" very seriously. The world's poor also need more money to flow out of the Fed, or so says Lagarde. No wonder so many of them choose to buy gold the moment they gather some disposable savings.   US college students might well wonder when the cheap-money spigots will shut off. The first to go thirsty would no doubt feel left out at first. But might their losses really outweigh those of the last to get drowned?   Half-a-decade after the Lehmans' collapse and AIG bail-out, "The Dollar-centric nature of the global monetary system has not been fixed," writes Steven Barrow, currency strategist at Standard Bank in London. "In fact, it's probably far worse given the Fed's monetary tactics these past five years."   A policeman who pushes cheap loans. Shall we never be free?

Remarkably 3 Sources Now Buying Entire World Gold Production Posted: 09 Sep 2013 11:57 AM PDT Today one of the top CEO's in the world told King World News that big money and large fund managers are now positioning themselves aggressively in the gold market, and, astonishingly, just 3 sources are now buying the entire annualized world gold production. This interview is tremendous, and it will let KWN readers around the world see the gold market through the eyes of one of the greatest and well-respected veterans in the business. Below is what Sean Boyd, CEO of $5.2 billion Agnico Eagle, had to say. This posting includes an audio/video/photo media file: Download Now

How to Invent a Crisis Posted: 09 Sep 2013 11:12 AM PDT September 9, 2013 How the NSA just opened up a new vista of investing opportunity Cautious optimism: Elmerraji checks a chart of the S&P When investors get emotional: Our microcap specialist pinpoints opportunity in a hated sector Nice while it lasted: Chart reveals the housing recovery is cooked The, um, interesting priorities of certain air travelers… the bogus income tax sales tax trade-off, continued… an important public service announcement (this affects you)… and more!   “Washington,” writes the veteran D.C. reporter Sam Smith, is a place “where the powerful get to invent crises so they don’t have to solve real problems.” He wrote that this morning with Syria in mind. It applies equally well to the newest revelations about NSA snooping.   If you missed it, or you’re having trouble keeping up, here’s the deal: Documents spilled by Edward Snowden reveal the NSA has cracked most of the Internet encryption protocols you and I take for granted every day. In other words, that little padlock symbol in the corner of your Web browser that you see when you check your Yahoo mail? Or when you log into your bank’s website to balance your checkbook? Doesn’t really mean anything. The NSA can get in there. And nearly everywhere else on the Web that’s supposedly “secure.” That’s because as far back as 2000, the NSA “began collaborating with technology companies in the United States and abroad to build entry points into their products,” according to The New York Times. The NSA also collaborated with its sister agency in Britain, the GCHQ. A team there “has been working to develop ways into encrypted traffic on the ‘big four’ service providers, named as Hotmail, Google, Yahoo and Facebook,” says The Guardian. “Many users assume — or have been assured by Internet companies — that their data is safe from prying eyes, including those of the government, and the NSA wants to keep it that way,” the Times goes on. “The agency treats its recent successes in deciphering protected information as among its most closely guarded secrets.”  Of course, if it’s easier for the U.S. government to crack encryption codes, it’s also easier for foreign governments. Or terrorists. Or run-of-the-mill cybercriminals. That’s a fact not lost on cybersecurity experts — although they come off sounding rather naive in a Reuters story from over the weekend: “Leading technologists said they felt betrayed that the NSA, which has contributed to some important security standards, was trying to ensure they stayed weak enough that the agency could break them. “Some said they were stunned that the government would value its monitoring ability so much that it was willing to reduce everyone’s security.” Yes, and Capt. Renault was shocked — shocked! — to find that gambling was going on inside Rick’s Cafe Americain. “We thought they [the NSA] would never be crazy enough to shoot out the ground they were standing on,” adds Johns Hopkins cryptography professor Matthew Green, “and now we’re not so sure.” Columnist Jon Healey in the Los Angeles Times sounds more clearheaded: “Adding vulnerabilities to standard encryption techniques? That’s just making the job easier for hackers to make sense of the scrambled data they steal.” A statement from the Electronic Frontier Foundation agrees: “If the NSA is allowed to continue building backdoors into our communications infrastructure, as law enforcement agencies have lobbied for, then the communications of billions of people risk being perpetually insecure against a variety of adversaries, ranging from foreign governments to criminals to domestic spy agencies, which would have disastrous economic consequences.”   This much is certain: The government will spend still more money to try to fix a problem it created in the first place. A different batch of Snowden documents from late last month revealed the government’s “black budget” for spying. $52.6 billion per year is parceled out as follows… $14.7 billion for the CIA $10.8 billion for the NSA $10.3 billion for the National Reconnaissance Office — which oversees the spy satellites $4.9 billion for the National Geospatial-Intelligence Program — essentially, the world’s most sophisticated mapping system and $11.9 billion for the other dozen or so intelligence agencies. The cost of the NSA’s encryption-cracking efforts is a pittance within the black budget: $250 million. But now that the information is public, it’s not much of a stretch to think other agencies in the “intelligence community” will beef up their own cybersecurity spending… to overcome the weaknesses the NSA built in! “Every war is absurd,” said Holocaust survivor Elie Wiesel… and it seems the “fifth domain” of war is no exception. As you likely know, our Byron King identified a “fifth domain” of war only last month — the cyber realm beyond land, sea, air and space. The confirmation of the “black budget” came days later. And from the investing angle, events are now moving with great speed: “The time to profit is no longer some event far into the future,” says Byron. “The time for wealth building is here right now.” The last time the feds doled out cash on this sort of effort, early investors pulled in gains of 12,428%… or even four times as much. In light of the black budget numbers, Byron has revised his cyberwar forecast and identified a “wealth blueprint” within the black budget’s dreary line items. Check out the opportunity right here.   Stocks are climbing the Syria-taper wall of worry this morning. The Dow has crested 15,000. The S&P is up half a percent, to 1,664. The Nasdaq is its highest since November 2000, at 3,684. “Even if most investors didn’t realize it, last week was a pivotal one for stocks,” says STORM Signals editor Jonas Elmerraji. “The S&P was testing key trendline support, and markets were in make-or-break mode.” But the trendline held — that’s the thick blue line below — and the index bounced… “The S&P is still very close to its trendline,” Jonas hastens to add. “But seeing buyers step in at support is a good sign — and we’re starting to see some minor signs of strength again in the market this month.”   Not much movement this morning in the commodity complex. Crude has climbed down below $110, but not much. Gold sits almost exactly where it did when electronic trading closed on Friday afternoon — $1,388. Silver has slipped a dime, to $23.74.   “The overly emotional marketplace can provide great opportunities to savvy investors,” writes the newest member of our team, Thompson Clark. “Think of the dot-com boom,” he says. “Investors were so excited about the prospects for the Internet and technology that they bid stock prices to astronomical levels. In the late ’90s, dot-com stocks created great short selling opportunities. “The inverse is true, as well. Companies or sectors that see heavy declines in price create great buying opportunities. When sentiment is at its worst, a smart investor looks to buy. One indicator is a sector becoming loathed by investors. They don’t want to hear it mentioned. They become swayed by emotions.” The sector Thompson sees as beaten up, left for dead and thus ripe for the picking is REITs — real estate investment trusts. “REITs allow individual investors to own a basket of real estate assets. These assets can be anything from office space to apartment buildings.”   “U.S. REITs as a sector are at 52-week lows,” says Thompson. “The sharp decline began right around the middle of May.” Coincidentally, that’s when the Fed began its taper talk. “A rise in interest rates negatively affects various aspects of a REIT’s valuation.” Wall Street’s usual valuation metric for REITs is called funds from operations, or FFO. “This is more or less the amount of cash that the REIT generates from its rental properties. The Street will project this number out into the future and discount it back to the present.” In a rising-rate environment, those numbers don’t look so hot. “Another way to value a REIT,” Thompson explains, “is to look mainly at its balance sheet. What is the value of its assets? Or put another way, what is the value of this company if it were to be entirely replaced today?” Looked at that way, a few niche players in the REIT space look very attractive, indeed. [Ed. Note: The market cap of the REIT Thompson recommended to his readers yesterday is under $100 million, so it has truly explosive potential -- as do all the plays in his high-end advisory, Agora Financial's Microcap Millionaires. Because these plays are so small and at times thinly traded, we have a strict readership limit... and right now only 200 slots are left. Decide here whether these tiny plays fit into your investing strategy.]   “Peak affordability is over,” says our Dan Amoss as he surveys the housing market. “The U.S. housing market bounce was fueled by a low mortgage rate sugar rush, not the hearty fuel of household income growth. Higher mortgage rates have ended the sugar rush. Flat incomes, the result of growth in low-quality jobs, seem like a permanent fixture of this economy. “Before the housing rebound, bulls argued that affordability was near all-time highs.” They can’t argue that now. The National Association of Realtors Housing Affordability Index has fallen sharply. “This chart from the Sober Look blog projects the index assuming current mortgage rates,” Dan explains. “It also projects deeper declines in affordability by assuming further increases in mortgage rates and housing prices: “If the housing recovery has, in fact, hit a ceiling,” says Dan, “that should greatly concern shareholders of the popular, overvalued ‘housing recovery plays.’” PRO-level readers with a mindset to short a highflier in the sector can scroll down for one juicy possibility.   From the peculiar priorities department: 13% of Americans say when they fly they’d rather have access to Wi-Fi than a bathroom. Or so we learn from a survey conducted by the aerospace division of the tech giant Honeywell — which happens to manufacture gear that makes in-flight Wi-Fi possible. About 3,000 people were surveyed — mostly Americans, with a smattering of others from Britain and Singapore. “Nearly nine in 10 passengers,” according to a CNN summary, “would forgo at least one conventional airline amenity for a faster and more stable Wi-Fi connection.” Sixty percent would be willing to give up a reclining seat. One-quarter are willing to give up six inches of legroom. And then there’s the bathroom bunch. For their part, the non-Americans surveyed have a greater faith in their bladder capacity: While only 13% of Americans would give up bathroom access for Wi-Fi, 17% of Brits would make the trade-off… and 22% of Singaporeans.   “I also reside in Washington state,” writes a reader on the income tax sales tax trade-off that inspired some discussion last week. “To elaborate on one of your other readers’ comments regarding the repeated bills to add an income tax here, the justification is that it would even out the revenue stream because the sales tax model is so dependent on the state of the economy. “Our neighboring state, Oregon, has an income tax and no sales tax. Every couple of years, there are bills introduced there to add a sales tax, to even out the revenue stream because the income tax model is so dependent on the state of the economy. “See how it works out? All tax models are dependent on the state of the economy, so more are needed.” The 5: Exactly. Recall in our original item last week about North Carolina the rationale for eliminating the income tax and raising the sales tax is that people’s incomes fluctuate, making the revenue stream “lumpy” and unpredictable. Obviously, it works the other way around, too. The endgame to all these machinations was revealed in The New York Times last winter: “The results [of the state experiments] could resonate in other states and in Washington. Nearly all other wealthy countries have some version of a national consumption tax.” Don’t say we didn’t warn you… Cheers, Dave Gonigam The 5 Min. Forecast P.S. At the risk of repeating ourselves, the Agora Financial website will be down this coming weekend. But once we bring it back up, you’ll find it vastly improved. The search engine will be a breeze. In fact, you’ll be able to plug in a company name or ticker symbol and immediately bring up every article and alert that’s been written about it. Many other user-friendly changes are on the way. But it will entail a shutdown of the site starting Saturday the 14th. The new site will be ready by Tuesday the 17th. Stay tuned…

The Daily Market Report Posted: 09 Sep 2013 10:56 AM PDT Gold Consolidates as Uncertainty on Syria and Taper Prevails 09-Sep (USAGOLD) — Gold begins the week well contained below $1400, as the opposing forces of taper expectations and geopolitical risks keep the yellow metal narrowly confined. The range has been just $10.14 so far today. Friday’s jobs report was sufficiently disappointing to suggest the Fed will maintain it’s $85 bln per month in asset purchases when the FOMC meets next week. However, there are many that still think the central bank will make a symbolic small taper to show they are serious and to reinforce the notion that the U.S. recovery is gaining traction. A White House official reportedly told the LA Times last week that the Administration wanted to launch a response against Syria "just muscular enough not to get mocked." The official apparently went on to clarify by saying, “just enough to mean something, just enough to be more than symbolic.” I think the Fed faces a similar dilemma. If they opt to proceed with the taper this month, it will have to be just big enough to mean something, but not so big that it undermines the fragile recovery. Many seem to think a taper to $75 bln in monthly asset purchases would do the trick. As for Syria, the President will once again be making his case for military action early this week. It looks increasingly unlikely that he will be able to secure the necessary votes in the House to get approval to proceed. If that proves to be the case, the question then is: What next? Given the uncertainty, it’s not surprising that market are consolidating. The House may vote on the issue as soon as Wednesday. The FOMC begins its two-day meeting on 17-Sep.

Oil's Relationship with Oil Stocks and Gold Posted: 09 Sep 2013 10:46 AM PDT In our previous Oil Update we examined major factors, which previously fueled the price of light crude. Before we move on to the technical part of our Oil Update, let's take a closer look at the events of the previous week. Read More...

What we're told Posted: 09 Sep 2013 10:38 AM PDT We're told that the War on Terrorism is a war against "militant Islamists, al-Qaeda, and other jihadi groups" and in the words of President George W. Bush will not end "until every terrorist group of global reach has been found, stopped and defeated."  We have no idea when this will be. We are told that the government has to treat many Americans as potential terrorists, especially those who support peace and liberty. We're told Obama does not "believe that people should own guns," yet he raises no objections to the DHS purchase of 1.6 billion rounds of hollow-point bullets, which would give the bureaucracy "the means to fight the equivalent of a 24-year Iraq War." We're told the DHS is acquiring these bullets for target practice, though they don't specify the nature of the targets. We're told that FEMA camps are disaster response facilities, not concentration camps. We were told the Iraq invasion would be a cakewalk, that it would pay for itself, that it was not about oil, that it would cost under $50 billion, that Americans would be greeted as liberators, etc., etc., etc. We were told to believe the claims of the Bush Administration regarding the need to invade Iraq, yet the Center for Public Integrity's War Card found that Bush officials lied about WMDs or Iraq ties to Al Qaeda on at least 532 separate occasions prior to the invasion in March, 2003. We are told that we live under the rule of law, but that the U.S. president can have anyone killed he wants to because of the terrorist-filled world we live in. We are told that John F. Kennedy was murdered by a lone nut, that 9/11 was the work of "19 Arabs, none of whom could fly planes with any proficiency, [who] pulled off the crime of the century under the direction of a guy on dialysis in a cave in Afghanistan," and that anyone who challenges these conclusions should be hit with the weaponized term, conspiracy theorist. We are told that the government does not spy on the personal affairs of Americans. We are told that a war killing close to 750,000 Americans was necessary to end slavery, while slavery elsewhere - including the Northern states in the U.S. - was ended without violent conflict; that a world war killing over 16 million people, 117,465 of whom were Americans, was necessary to save the world for democracy, and that yet another world war killing between 50-70 million people, most of whom were civilians, was needed because we were the victims of an unprovoked attack on a Hawaiian naval base. We are told that the presidents who took us into these wars are among the greatest presidents in American history. We're told that unprecedented amounts of fiat money injected into the economy has resulted in a fount of prosperity, and it may be time for the Fed to slow down the injections. We are told that some businesses are so big their failure would produce an economic catastrophe.  As failing enterprises are those that squander wealth rather than produce it, and that the larger the business, the larger the squandering, perhaps such firms are instead "too big to be kept alive." We are told that a free market gold coin monetary system is a threat to our well-being, and that gold money is a barbarous relic. We are told that a fiat monetary system controlled by a central bank provides macroeconomic and financial stability, notwithstanding such episodes as the recent financial crisis and the Great Depression. We are told that a massive public debt is nothing to worry about.  A Nobel Prize-winning Op-Ed columnist explains why: the debt we create is basically money we owe to ourselves, and the burden it imposes does not involve a real transfer of resources. . . .  Talking about leaving a burden to our children is especially nonsensical; what we are leaving behind is promises that some of our children will pay money to other children. In other words we borrow, they pay - or default.  An economist with a different perspective says this: [It is argued that] a public debt is no burden because we owe it to ourselves. If this were true, then the wholesale obliteration of the public debt would be an innocuous operation, a mere act of bookkeeping and accountancy. The fact is that the public debt embodies claims of people who have in the past entrusted funds to the government against all those who are daily producing new wealth. It burdens the producing strata for the benefit of another part of the people. It is possible to free the producers of new wealth from this burden by collecting the taxes required for the payments exclusively from the bondholders. But this means undisguised repudiation.  [p. 229] We are told by this same Nobel prize-winning commentator that fractional reserve banking is simply a way for bankers to "improve the tradeoff between returns and liquidity" and can be kept in check with proper government regulation, and the incurably ignorant who have a problem with this hold "Ron Paulish monetary ideas." We are told that the most important factor in generating the boom-bust cycle is human emotions, as if these emotions were unrelated to banks' practice of distorting prices through fractional reserve banking. We are told that the Great Depression was a failure of capitalism, and that economic fascism was needed to save capitalism. We are told that our government is of the people, by the people, and for the people, rather than run by the highest bidders.  We are told that progressive economic regulations and bureaucracies, such as the Federal Reserve, exist to protect the public weal rather than provide subsidies and privileges to special interests. We are told that sending children to schools that have no way of protecting them is fine, even though government has no solution other than anti-gun hysteria to the mass murders that occur from time to time.  Few people would consider closing the public schools. We are told that government will provide for us in our old age, that it will provide for us when we can't find work, that it will pay for our health care, that it will bestow many other blessings if only we are willing to make the damn one percent pay for it all. We read that the Syrian government engaged in chemical warfare against Syrian civilians, and that, even if the attack was ordered by someone other than President Assad, he alone is responsible.  Meanwhile, AIPAC and other war hawks are hammering Congress to vote for a strike, even though there is evidence the attack may have been launched by U.S.-backed rebels.  The Administration is hungry for a strike even with a majority of Americans surveyed strongly opposing U.S. intervention, and even though such action has the potential to ignite the World's Last War. We are told that we are endowed with certain unalienable rights, and that to secure these rights governments - monopolies of violence - are instituted among men. Because this is the one coercive monopoly that allegedly serves our welfare we are told government is a blessing, that anarchy would be death and chaos for all but the most ruthless - notwithstanding the brilliant insights of Stefan Molyneux, Robert P. Murphy, Murray Rothbard, and many others.

Crude Oil’s Relationship with Oil Stocks and Gold Posted: 09 Sep 2013 10:36 AM PDT In our previous Oil Update we examined major factors, which previously fueled the price of light crude. Before we move on to the technical part of our Oil Update, let’s take a closer look at the events of the previous week. At the beginning of the last week President Barack Obama won the backing of key figures in the U.S. Congress, including Republicans, in his call for limited strikes on Syria. Additionally, a missile test by Israeli forces training in the Mediterranean with the U.S. Navy set nerves on edge. These circumstances fueled the oil market and resulted in a sharp pullback to over $108 per barrel. In spite of this growth, in the following days, the price of light crude was trading in the narrow range between the Tuesday’s low and top.

Gold "Dull & Thin" as Spec's Cut Shorts But Analysts Expect Post-Fed Losses Posted: 09 Sep 2013 10:12 AM PDT The PRICE of GOLD edged $10 per ounce lower Monday morning in what dealers called "dull, thin" trade following Friday's sharp jump on US jobs data. A surge in Asian share prices – attributed to Tokyo winning the 2020 Olympics bid, plus official news of 7% annual growth in China's exports and imports in August – failed to lift European stock markets.

Doug Casey: 3 Stocks to Own When Gold Recovers Posted: 09 Sep 2013 09:51 AM PDT Dear Reader, We've written recently—and many times before—about the foolishness of trying to time a market. In hindsight, however, market peaks and troughs become increasingly obvious. In a recent conversation with Doug Casey, he told me that the general uptrend in gold since June is evidence that the general downtrend since September 2011 has ended. While Doug is not omniscient, I've seen him when his speculator's instinct kicks in—and over the years its accuracy has been nothing short of astounding. It seems that instinct is now telling him that gold and gold stocks have bottomed. Of course, if the Fed announces a tapering of its money printing this month, that would likely whack gold again. Depending on how drastic the language of the Fed announcement is, we could see a renewed sense of panic among gold investors, and the actual bottom for this correction could be just ahead of us rather than just behind us. Either way, prices are already low. Ben Bernanke said he would only turn down the government's printing presses if employment figures improved substantially. Since those remain rather weak, there may not be any tapering announcement at all this month, and if there is, it will likely be marginal—a toe in the water. It's also worth pointing out that if Doug is right about the US economy finally exiting the eye of the storm, there will likely come a "moment of truth" when people realize that the inevitable has become imminent and every asset class across the board gets hit, including gold. That downturn will be enduring for many assets—permanent for some, but very short-lived for gold. It may turn out to be the last great buying opportunity in this gold bull market, but it could well happen at prices much higher than today's, so we don't intend to keep our money on the sidelines waiting for it. In other words: yes; we are buyers today. Our article below describes the sort of opportunities we are seizing today. It is, I freely admit, something of a sales pitch for the Casey International Speculator—but if Doug is right about the gold market having bottomed, there's never been a better time to subscribe and find out what he himself is buying. Sincerely, Louis James Senior Metals Investment Strategist Casey Research Rock & Stock Stats Last One Month Ago One Year Ago Gold 1,388.80 1,282.60 1,703.20 Silver 23.84 19.52 32.62 Copper 3.23 3.17 3.52 Oil 110.53 105.30 95.53 Gold Producers (GDX) 28.01 24.03 49.13 Gold Junior Stocks (GDXJ) 47.42 37.12 91.12 Silver Stocks (SIL) 15.29 12.12 22.23 TSX (Toronto Stock Exchange) 12,820.92 12,469.32 12,139.73 TSX Venture 954.92 912.83 1,258.30   Doug Casey: 3 Stocks to Own When Gold Recovers Louis James, Chief Metals & Mining Investment Strategist Doug Casey believes the current gold correction has bottomed. Speaking to me a few days ago, he said: "With rare exceptions—that are mainly luck—only liars buy at the exact bottom and sell at the exact top. Purchase of precious metals remains the most prudent thing you can do to protect your wealth, and a very reasonable speculation at this point. Gold is not the giveaway it was at $250 back in 2001, but it's very reasonable near $1,400 now. "I think mining stocks have also bottomed at this point, and there are several great speculations available today. All the so-called quantitative easing—money printing—by governments around the world has created a glut of freshly printed money. This glut has yet to work its way through the global economic system. As it does, it will create a bubble in gold and a super-bubble in gold stocks. This remains in the future; what we've seen so far is just foreshadowing." Note that in Doug's view, it doesn't really matter whether gold has bottomed or not; what matters is that opportunities now exist to buy low in order to later sell high. Consider this chart of the price of gold and a junior gold miners ETF, over the last year: Several things are evident in this chart. The first is that—as has been well established over decades of observation—gold stocks are much more volatile than gold itself. Note that this is true on the upside as well as on the downside. It reinforces Doug's edict that while the reason to own gold is prudence, the way to speculate for profit on upward movements in gold is to buy stock in the right gold companies. This also highlights the second compelling thing about this chart: Gold stocks have lost much more ground than gold itself and now offer much more imminent upside, if Doug is right about where gold is going next. There's no need to reiterate all that we've said about the runaway global money printing and its inevitable consequences for gold. Please see previous Conversations with Casey and articles in this column for more on this. Assuming you're on board with the premise, the question is what to do if Doug is right about the market bottoming. The answer is obvious: It's time to buy. However, as Doug likes to say, speculation is not a synonym for gambling; you want a good speculation to be as safe a bet as possible. While we do expect gold to rise in the near term, it may dip again before jumping up to new highs and exploding into the Mania Phase of this bull cycle—so right now we're focusing on companies that have major deliverables in the near term. Imminent Push, as we call it, dictates where we place our chips today. In the current issue of the International Speculator we're summarizing Doug Casey's current top 3 junior gold stock picks, all of which have major news pending. #1: The Explorer-Turned-Producer Normally, we're skeptical when an explorer aspires to become a producer, as exploration and production are two completely different businesses requiring two completely different skill sets. However, this company was founded and is run by a mining engineer, and its two current projects have an unusually short path to production. The first project is relatively small but high grade, and required very little capital to build the mine and plant. Production is scheduled to start by the end of this month. The question at this point is not whether it can be done or will be done, but whether operations will be as profitable as projected. Those projections were exceptional: The company should be able to pay back the initial $6 million investment within two months, followed by another $40 million or so in free cash flow. Since publication of these projections, the company has drilled into more high-grade gold beside and below the current deposits being worked. This gives us two ways to win on this play in the near term: If the cash starts flowing next quarter (as we think it will), the shares should soar; and if the company keeps making this little project bigger, that can only add to the upside. However, the best part of this story is the company's second project, which is already much larger and high grade—this one is showing world-class potential. And with cash flowing from the first project, the value in the second one could be brought to market with little or no dilution for shareholders. That gives the stock what we call "ten-bagger" potential (meaning share prices could rise 1,000% or more), and it'll start happening in the weeks and months ahead. #2: The Takeover Candidate Doug Casey's second top pick for today is a company that is almost certainly on the verge of being bought out by a larger company, at a hefty premium for current shareholders. The story may not have ten-bagger potential, as larger companies rarely offer more than a 100% premium—that is to say, more than double the average of recent share prices. But such rapid gains overnight, combined with the very high probability of their occurring in the near term, make the stock an outstanding speculation. How can we be so sure this will happen? Pick #2 owns the mineral rights to a property that is completely surrounded by the property of another company that has made a multimillion-ounce gold discovery in one of Canada's best mining jurisdictions. It's not just a matter of location, either—our little company has already demonstrated that the gold mineralization continues onto its neighbor's land, including some exceptionally thick and high-grade intersections. The only reason this opportunity even exists is that many mining executives were nervous about making acquisitions during gold's recent downturn, so the larger neighbor's management probably thought that they had all the time in the world to take over our pick. And they were right; no one else has bought it yet. However, an intermediate producer has just bought our little company's neighbor, and there's no reason to believe that this larger buyer will leave our company's gold in the ground, just across the property line. There are no sure things in junior mining speculation, but this takeover is as close as it gets—and we expect it to happen before the end of this year. #3: The Holy Grail of Exploration Doug's third pick for today's market is a relatively straightforward value-adding proposition. One can make money mining gold, even on a small scale, if the grade is high enough. One can also make money mining low-grade gold, if its characteristics are amenable to low-cost production methods and the deposit is large enough to allow economies of scale. The best of both worlds, obviously, is to find a deposit that is both large and high grade. That's extremely rare, of course. Many of those discoveries are in basket-case countries that are either too dangerous to work in or where the government is likely to steal your mine if you build it. Large, high-grade discoveries with little political risk are the holy grail of mineral exploration. This company has just such a deposit in one of the more pro-business jurisdictions of Latin America, and its current drilling campaign will both upgrade the current resource estimate and make it larger—potentially much larger. The drilling now under way has already returned spectacular results of the sort that move share prices sharply upward, especially when the sector itself is up. So if Doug is right about where gold is headed, we should see these shares rise faster than gold in the months ahead—and a big leap is likely when the company issues a new resource estimate calculation. We're confident this one's getting bigger and better, and it has a short fuse. Bottom Line I apologize for the secrecy, but it simply wouldn't be fair to existing International Speculator subscribers to just give these companies' names away. Two of them have market caps in the $20-million range, and announcing their names in this space could drive up their share prices considerably. You'll find an article with the names and stories of all 3 of our "recovery picks" in our just-released September issue. Here's what I would suggest: Take full advantage of Casey's 100% satisfaction guarantee and try the International Speculator for three months, at no risk at all. You can see what we're recommending and if you're not fully satisfied, you cancel any time within those three months and get all your money back, promptly and no questions asked. If you're not happy with the newsletter, just cancel. If you're not making the kind of money you're expecting to make, just cancel. And even if you miss the three-month mark, you can still cancel later and get a prorated refund. It's really that simple. Just click here to get started. And don't wait; if we're right, these deals won’t be around for long. Gold and Silver HEADLINES South African Gold Miners' Union Offers Some Compromise as Strike Hits (Reuters) As anticipated, a strike for higher pay by South African miners started last Tuesday night and immediately impacted production at many of the country's gold mines. Output at 16 of the 23 gold mines involved was partially or severely affected. More surprisingly, most strikers went back to work a few days later, after accepting wage increases of between 7.5 and 8.0%. The stoppage was estimated to cost South Africa roughly $35 million a day in lost production. Fortunately, it was a peaceful event this year, in contrast to the violent illegal stoppages last year, when more than 50 people were killed. What will be the economic consequences of yet another increase in mining costs in South Africa? We'll see—but they won't be good. India to Try More Measures to Curb Gold Imports (Mineweb) India continues its policies that attempt to restrain gold demand. The government raised the tariff on gold imports again, and the Forward Markets Commission hiked margins on the precious metal in futures trading. Steps were also implemented to control inbound shipments. Effective September 2, the import tariff for gold was $461 per 10 grams (up from $432), and margins on gold futures rose to 5%. As a consequence, gold prices reached an all-time high that day of $522.54 (34,500 rupees) per 10 grams. After oil, gold is the second-largest contributor to India's current account deficit, so it's no surprise to see the government panicking, but price controls like these never work. We expect the consequences for India to be severe; watch this space. Gold Nanotech Patents Are Skyrocketing (Mining.com) The usefulness of gold in different industrial applications, especially in medicine, is increasingly impressing scientists around the world. Gold nanoparticles are already used in a number of areas, including rapid diagnostic tests (RDTs), targeted drug and radiation delivery, air and water purification, and even in solar-cell technology that generates electricity. As a result, nanogold-related patents have skyrocketed over the past decade. In just five years, the number of nanogold patents per year grew 300%, from 500 in 2008 to 2,000 in 2012. The effectiveness of nanogold for medical applications has been nothing short of amazing. Dr. Jim Denham, professor of radiation oncology at Newcastle University in Australia, said in a discussion about the role of nanogold in targeting prostate cancer via radiation treatment: "To me it's one of the best things that's happened in my medical practice. It's rare to see something that works so dramatically." Gold does not need to see increased industrial demand in order for us to be right about where the price of gold is going—but it sure doesn't hurt. This Week in International Speculator and BIG GOLD—Key Updates for Subscribers International Speculator One of our gold production companies announced unambiguously good news this week, increasing its output target for the year. This is one of the many reasons we like this producer. Our speculation on imminent gold production from this company is coming true. BIG GOLD The September issue of BIG GOLD focuses on silver and has two silver bullion offers just for subscribers. These are discounts you won't find elsewhere—ones that could pay for your subscription. Get our latest research on the silver market with a risk-free trial offer.

Louise Yamada - 3 Fantastic Gold, Silver & Mining Share Charts Posted: 09 Sep 2013 09:38 AM PDT With continued volatility in key global markets, today King World News is pleased to share a piece of legendary technical analyst Louise Yamada's "Technical Perspectives" report. Yamada is without question one of the greatest technical analysts Wall Street has ever seen. This information is not available to the public and we are grateful to Louise for sharing her incredible work with KWN readers globally. This posting includes an audio/video/photo media file: Download Now

Gold and Silver Posted: 09 Sep 2013 08:02 AM PDT Precious Metals bull market continues and is moving step by step closer to the final parabolic phase (could start in summer 2014 and last for 2-3 years or maybe later). Price target DowJones/Gold Ratio ca. 1:1 Read More...

What we're told Posted: 09 Sep 2013 08:00 AM PDT We are told that a free market gold coin monetary system is a threat to our well-being, though not so mysteriously "the international gold standard from 1815 until the outbreak of World War I 1914 [was] the greatest period of economic growth in recorded history." Nevertheless, we're told gold money is a barbarous relic.

Syria and the Fed to Drive Gold Short-Term Posted: 09 Sep 2013 07:14 AM PDT After heavy selling at mid-week that was prompted by a series of upbeat economic reports, precious metals rebounded on Friday after a very disappointing U.S. labor report that made a continuation of massive Federal Reserve stimulus more likely. In the off-chance that anyone needs to be reminded, in just ten days the [...]

Oil’s Relationship with Oil Stocks and Gold Posted: 09 Sep 2013 07:02 AM PDT Meanwhile, gold was trading significantly below the Tuesday peak, which is a bearish sign. Taking this into account and combining it with the current situation in the yellow metal, it seems that the acceleration of the downtrend in gold is still ahead of us. Connecting the dots, the short-term link between the yellow metal and crude oil may wane in the coming weeks.

The U.S. Is Getting “Played” In Syria Posted: 09 Sep 2013 07:01 AM PDT There’s nothing quite like a looming war in the Middle East to turn conventional energy and resource investment wisdom on its head. On that, there’s a famous story about American publisher William Randolph Hearst, from 1898 or so. I don’t know if it’s true, but if not, it ought to be… Back then, Hearst wanted to inflame public opinion against the Spanish. It was, in historical context, the lead-up to the Spanish-American War. Hearst wanted “proof” of Spanish mistreatment of the poor, oppressed people of Cuba. The problem was Hearst’s reporters in Cuba couldn’t find anything too far amiss. Cuba was a colonial outpost full of misery and squalor. But then, much of the world was a miserable, squalid place. Spanish Cuba was no big deal, as these things go. So at one point, Hearst is supposed to have said to one of his Cuban correspondents, “You give me the pictures, and I’ll give you the war.” I’ll get to the “investment” angle on this in a moment. But for now, bear with me. I’m thinking about Hearst and his brand of fake, inflammatory journalism as I read headlines about so-called “chemical attacks” in Syria, supposedly by the dictatorial, oppressive government against its oppressed, revolutionary population. Now we have photos in newspapers showing dead people wrapped in sheets, supposedly killed by chemical warfare (CW). But the same photos also show mourning relatives weeping over the bodies, and nobody is dressed up in CW-protective clothing. Huh? Excuse me, but if you told me to approach the body of somebody who died from CW, I wouldn’t go near it unless I was dolled up in a rubber suit, heavy gloves, gas mask, etc. I’d look like Walter White cooking meth in Breaking Bad. Excuse me again, but it seems like the U.S. is getting “played” here — by whom, I can only speculate among a host of awful players who collectively wish us ill. The usual suspects, and then some. Somehow, after two years of civil war in Syria, with over 100,000 dead in an internal conflict that does NOT affect vital U.S. national interests, the alleged use of CW — not truly proven — has become a casus belli (Latin, again). Huh? This is nuts. This is utterly bizarre. Really… we don’t have enough money to spend on domestic programs, but the U.S. is now the world’s policeman again? According to news accounts, U.S. ships and airplanes are moving into position to bomb Syria. Oh, wait. I mean “NATO” ships and airplanes — not that, say, Britain and France can do much after cutting their respective military forces to the bone. Still, it’s the thought that counts, right? And there’s more. According to Obama administration officials, the impending war on Syria isn’t scheduled to start for another day or two. And it’ll last three days or so, just like clockwork. And we’ll hit only a few targets, which we have conveniently pre-identified for the Syrians. How punitive. How tidy. How totally fake! Even if the U.S./NATO is going to wage war, is this how you do it? Do you telegraph your moves days ahead of time? I must have missed that class when I studied at the Naval War College. By comparison, little E-1 Pvt. Bradley Manning (or is it Chelsea?) will rot for many decades in prison (the women’s wing?) after being convicted of releasing a pile of classified emails. And young Ed Snowden is a hunted man because he told the world that the National Security Agency sucks signals out of the ether. I’m shocked to know that! But Obama administration officials are holding press conferences — Press! Conferences! — to offer up the tactical details of any attack that’s set to hit Syria. You’ve gotta be kidding me! This world is going nuts. Who is making policy? The Big Economic Hit Think this through investmentwise. Let’s just look at the economic hit from oil. There’s a war scare out there, driving oil prices up by, say, $20 per barrel. Apply that to the 100 million or so barrels of oil that the world uses every day. That’s $2 billion “extra” that the global economy is paying every day out of consumers’ pockets to oil producers — including U.S. oil pumpers, I should add. That’s about $14 billion “extra” per week. It’s about $60 billion per month tacked onto the world economy in the form of higher energy costs. That’s not all. Last week, Canada’s Financial Post discussed even higher oil prices. One smart forecasting shop — the French group Societe Generale — believes that Brent crude could rise to $150 a barrel if the conflict in Syria spreads to other parts of the Middle East, causing supply cuts. Just to remind you, Brent traded over $147 in July 2008 — right before the big market crash in the fall. So this war scare is costing the world a lot of money, even before the first “NATO” bomb falls on Syria (or the first Syrian or Iranian rocket falls on Israel). If all of this spikes energy prices to $150 per barrel or so, the result could be a replay of the 2008 market crash, if you like historical comparisons. Just what we need. And all of these strange goings-on are based on flimsy evidence of CW in Syria — not that we outsiders need to care about how the Syrian government massacres more of its own people. I mean… Syria is tragic in its own way, but not “our problem” — not more than it’s a problem for neighboring Turkey or Iraq; let ‘em deal with it if it’s so important. And now, with all of this in mind, let’s return to energy and other resource investing. Prices for oil, gold, silver, etc. are moving because of… this kind of news? A Month of Rising Prices Tempus fugit, as some Roman guy once wrote — in Latin, no less. (“Time flies,” if you’re too lazy to look it up.) It seems like only yesterday, in early summer we collectively lamented then-low prices for energy, gold, silver and more. That, and we discussed how big-name share prices and major indexes were “priced for perfection.” But what a difference a month makes! Beware perfection, eh? Sticking with crude, oil is now $15-20 per barrel more expensive than in June. The price rise includes worrisome supply issues (see below) coupled with the new “Middle East war premium,” mostly made in the USA, if I may offer such a scandalous opinion. Pricewise, just last week West Texas Intermediate (WTI) crude traded above $110 per barrel. Overseas, Brent crude oil was moving at $115 and more. These are nosebleed levels, by recent comparison. Again and again, I’ve mentioned how fortunate we are in the U.S. to be living with the fracking revolution of recent years — the past five years or so. I can only imagine how hosed up the global energy scene would be absent that extra couple million barrels per day coming out of U.S. and Canadian wells. Whew! But things are not going smooth elsewhere. The rest of the world has issues. For example, Libyan oil output has been reduced to a near trickle after an armed group shut down a major pipeline linking that country’s largest western oil fields to the export terminals. You didn’t read about the Libyan mess in the mainstream press, I suspect. Our Western media were too busy gawking at the new and improved Hannah Montana, or whatever her name is. The fact is as of last week, total Libyan oil output amounts to just under 200,000 barrels per day (bpd) as compared with prewar (i.e., pre-2011) levels of around 1.6 million bpd, according to a Reuters estimate. That’s the daily equivalent of world markets losing about three Alaska Pipelines. Anybody have any spare Alaska Pipelines? No, I didn’t think so. According to Olivier Jakob of the Swiss energy consulting firm PetroMatrix GmbH, “While the headlines are currently on Syria and the speculative extrapolations about the Suez Canal, the Gulf of Iskenderun or the Strait of Hormuz, there is currently a supply disruption in Libya as real as in 2011.” This situation will not rectify quickly, I suspect. Investmentwise, this will add more cash to the balance sheets of well-run American oil players. The fracking revolution is a game changer, to the benefit of U.S. companies. Whether it’s chemicals in Syria or supply disruptions in Lybia, the higher price of oil is benefiting U.S. producers. That’s all for now. I’ll be back with you soon, after the bombs fall in Syria… or not. Thank you for reading. Best wishes… Byron W. King Original article posted on Daily Resource Hunter

Peripheral Central Banks Go In Reverse Posted: 09 Sep 2013 07:00 AM PDT Until quite recently, the central banks of many emerging markets have fought a losing battle against rapidly appreciating currencies. It wasn't so much that their currencies were appreciating because of fundamentals—instead, too many US Dollar were being printed and they were searching for a home that provided returns.

Precious Metals Market Report with Franklin Sanders Posted: 09 Sep 2013 06:00 AM PDT By Catherine Austin Fitts This week on The Solari Report, we will post my interview with Franklin Sanders of  the The Moneychanger about events in the precious metals market. Precious metals investors are weary from a long consolidation in gold and silver prices from 2011 highs. Even as pawn shops work overtime [...]

Gold prices ease as Fed tapering talk resumes Posted: 09 Sep 2013 05:53 AM PDT 09-Sep (Reuters) — Gold prices eased on Monday, surrendering some of the gains made in the previous session after disappointing U.S. jobs data, on expectations the Federal Reserve will press on with some tapering of monetary stimulus in the near future. Speculation that the U.S. central bank is set to trim its $85 billion monthly bond-buying programme, a key driver of higher bullion prices, has helped knock gold 17 percent lower this year after more than a decade of gains. Spot gold was down 0.3 percent at $1,386.91 an ounce at 0943 GMT, while U.S. gold futures for December delivery were up 80 cents an ounce at $1,387.30. Prices rose 1.7 percent on Friday after a report showing U.S. nonfarm payrolls grew less than expected last month cast doubt on the strength of the U.S. recovery. The unemployment rate, the Fed’s favoured measure of job market health, eased 0.1 point, however. Comments by two Fed officials that suggested stimulus unwinding remained on track helped the dollar recover to around levels seen before Friday’s U.S. jobs numbers. [source]

Gold Falls in London on Speculation Fed to Curb Stimulus Posted: 09 Sep 2013 05:39 AM PDT 09-Sep (Bloomberg) — Gold swung between gains and losses in New York as investors weighed signs the Federal Reserve will reduce monthly debt purchases this month. While gold futures rose 1 percent on Sept. 6 after data showed U.S. employers added fewer jobs than estimated in August, the report wasn't enough to derail economists' expectations that the Fed will pare stimulus. The central bank will taper monthly bond purchases to $75 billion from the current $85 billion pace at its Sept. 17-18 meeting, according to the median estimate of 34 economists surveyed by Bloomberg News on Sept. 6. Bullion reached a three-month high of $1,434 an ounce on Aug. 28 as demand surged since June in Asia and amid concern the U.S. will attack Syria for its alleged use of chemical weapons against civilians. Gold is down 17 percent this year as some investors lost faith in the metal as a store of value and on speculation the Fed will curb stimulus. "Heightened geopolitical tensions regarding Syria have contributed to gold's recent strength," Suki Cooper, an analyst at Barclays Plc in New York, wrote in a report e-mailed today. "Although the weaker-than-expected non-farm payrolls data provided a boost to prices, our economists believe the report was sufficient to greenlight a tapering of Fed asset purchases this month." [source]

Gold lower at 1387.10 (-3.70). Silver 23.56 (-0.26). Dollar down. Euro higher. Stocks called better. US 10yr 2.90% (-3 bps). Posted: 09 Sep 2013 05:32 AM PDT

Gold Prices: All Eyes Back on Fed's QE Tapering After Non-Farm Jobs Data Posted: 09 Sep 2013 05:31 AM PDT GOLD PRICES slipped $10 per ounce in what dealers called "dull, thin" trade Monday morning, dropping back to $1382 as commodities also fell with major European government bond prices.   A surge in Asian share prices – attributed to Tokyo winning the 2020 Olympics bid, plus official news of 7% annual growth in China's exports and imports in August – failed to lift European stock markets.   Silver lost 1.5% from Friday's finish, reached after weaker-than-expected US jobs data saw precious metals prices jump.   "Gold shot up over $30 as a result," notes Mitsubishi strategist Jonathan Butler, "as expectations of significant QE tapering were pushed out beyond September.    "If gold successfully clears the $1400 level, the next technical stop is around $1435."   But "with a lot of analysts calling for tapering to start in September," reckons broker Marex Spectron, "this will limit the upside [in silver and gold prices].   "If it wasn't for the Syrian situation, we would be lower."   Pointing to last week's peak of 3% in 10-year US Treasury yields, "Gold prices [had] felt some pressure from rising interest rates," says Edward Meir, writing for brokers INTL FC Stone.   Thanks to conflicting US data, "Confusion will likely prevent gold from weakening substantially over the course of this week," he add, "but we suspect that the selling should intensify after the Fed meeting is out of the way."   "Heightened geopolitical tensions regarding Syria contributed to gold's recent strength," agrees Barclays' analyst Suki Cooper, warning gold investors that "our economists believe [Friday's US non-farm payrolls] report was sufficient to greenlight a tapering of Fed asset purchases this month."   Fresh from the G20 summit of developed and emerging-market economies in St.Petersburg, IMF director Christine Lagarde asked the US Fed in comments at the weekend to consider the global impact of any tapering of its QE program.   Thanks to pressure on emerging-market currencies, "There is a lack of buyers in the Treasury market," Bloomberg today quotes a trader at Scotiabank, because emerging-market central banks are selling US bonds "to back up their currencies" on the FX market.   However, "as US yields continue to rise," notes Japanese trading house Mitsui's Singapore team, "so too do the servicing costs of the US debt. [Gold prices] will likely hold above $1350" in the near term.   Alongside a bullish bet on base metals, commodity analysts at US investment bank J.P.Morgan advised clients on Friday to close their "underweight [position] in precious metals" because of "positive momentum, cleaner positions and the impending start to the US debt ceiling negotiations."   Hedge funds and other professional speculators in the US derivatives market last week grew their bullishness on gold prices to the highest level since end-March.   The group's "net long" position of bullish minus bets rose 1.1% to equal 397 tonnes, according to the weekly commitment of traders data from US regulator, the CFTC.   That rise came primarily thanks to another drop in the number of bets that gold prices would fall – now cut below 40% of July's multi-decade peak.   Private investors trading gold futures and options meantime grew their net long as a group to the highest level since 16 April – the spring's first gold price crash, and the worst two-day drop in 33 years.   Compared to their 5-year average, traders with so-called "unreportable" positions now hold 7.6% more bearish bets on US gold derivatives. Larger speculators on the other hand now hold 37.6% more bearish contracts than their 5-year average.   Even so, "We believe the risks are still skewed to the downside" for gold prices, says a note from Swiss investment bank – and London market maker – UBS today, "especially given how much shorts have covered over the past two months.   "There is now ample room for fresh selling should QE-tapering be confirmed."

Gold price in a range of currencies since December 1978 XLS version Posted: 09 Sep 2013 03:06 AM PDT Excel file of gold price charts and data - Updated weekly in 19 curriences: US dollar, Euro, Japanese yen, Pound sterling, Canadian dollar, Swiss franc, Indian rupee, Chinese renmimbi, Turkish lira, Saudi riyal, Indonesian rupiah, UAE dirham, Thai baht, Vietnamese dong, Egyptian pound, Korean won, Russian ruble, South African rand, Australian dollar

The High-Tech "Gold Rush" Officially Begins Posted: 09 Sep 2013 01:23 AM PDT Michael A. Robinson writes: If you've blinked in the last 14 days, you might have missed this... ARM Holdings PLC (Nasdaq ADR: ARMH) - one of the world's dominant mobile-device chip companies - bought a small Finnish software startup called Sensinode Oy in a deal whose price wasn't reported. And most folks shrugged it off as just another of the thousands of below-the-radar deals that companies do every year.

Happy Centenary to the US Fed Posted: 09 Sep 2013 01:20 AM PDT The US Federal Reserve was born 100 years ago last month...   ONE HUNDRED years ago last month, on August 29th 1913, the Federal Reserve Act was introduced to the House of Representatives by Virginia Congressman Carter Glass, writes John Phelan at the Cobden Centre.   When President Woodrow Wilson signed it into law on December 23rd 1913 the Federal Reserve system was born.   The Fed was born out of the Panic of 1907. The collapse of the Knickerbocker Trust Company triggered a run on banks across the United States which was only stemmed by the deliberately high profile intervention of famed financier J.P.Morgan. He assembled and led a consortium of leading financiers to put their own money into the system.   The lesson widely drawn from the Panic was that institutions with long term assets but short term liabilities, the very business of banking, suffered inherent liquidity risk. Reasoning that next time there might not be a Morgan around to act as backstop, Congress called for an institutional lender of last resort which would tide over solvent but illiquid banks, following Walter Bagehot's advice to "lend freely at a high rate, on good collateral". Thus, the Federal Reserve Act sought to "provide for the establishment of Federal Reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes".   A century on, "for other purposes" means the Fed's modern mandate for macroeconomic management. With the discrediting of Keynesian fiscal policy in the late 1970s and its replacement by a belief in the efficacy of monetary policy in smoothing fluctuations in GDP, the chairman of the Federal Reserve and his lieutenants came to be hailed as 'Maestros' with the power to 'save the world'.   William McChesney Martin, Fed Chairman from 1951 to 1970, is quoted as saying that the Fed's job is "to take away the punch bowl just as the party gets going". His successor Alan Greenspan (1987-2006) took a rather different view. Greenspan didn't believe it possible to discern the punch induced drunkenness of unsustainable bubbles from the usual high spirits of sound economic growth. All you could do was watch the broader inflation figures and dig out the monetary mop and bucket to clean up the aftermath. The policy outcome was that no monetary action was taken to reign in asset price rises while every fall was combated with vast infusions of liquidity which inflated the next bubble. This one way bet became known as the 'Greenspan put'.   In a speech before the New York Chapter of the National Association for Business Economics in 2002 Greenspan's successor, Ben Bernanke, endorsed this stance. And, when the subprime mortgage market crashed and blew holes in banks' balance sheets in 2007-2009 the Fed pumped in liquidity. To paraphrase Bagehot, it certainly lent freely, but at token rates and against toilet paper.   At a stretch this could be seen as in keeping with the Fed's original mandate. Also, given Bernanke's academic work studying Milton Friedman's interpretation of the Great Depression, it had some theory behind it. But the heirs to the Committee to Save the World were expected not just to save financial institutions but boost the rest of the economy too. However, the Fed was not designed to do that and has little theoretical idea of how to accomplish it. So it went to work on the long end of the yield curve with Quantitative Easing which amounted to 'print and hope'.   As a result of this fresh infusion of liquidity, currently running at about $85 billion a month, stock markets, one of the new bubbles along with government bonds and emerging markets, have nearly doubled since 2009 while the 'real' economy has limped up by 2%. This situation is perverse. On August 15th, reports that British retail sales had risen unexpectedly sharply and that American unemployment had fallen to a six year low, which in the mainstream-macro discourse that dominates economic debate are considered positive indicators, sent the FTSE 100, the Dow Jones Industrial Average, the S&P 500, the DAX 30, and the CAC 40 tumbling. Markets, hooked on the punch of cheap liquidity, were terrified by the prospect that an improving economy might see the punch bowl removed, or 'tapered'. The Telegraph headline said it all; "Strong data sparks market sell-off on fears stimulus is over".   The reverse happened a day later. When the results of a US consumer confidence survey came in "far worse than expected" stock markets rallied and now the Telegraph headline read "Wall Street edges higher on disappointing data". Stock markets are supposed to be driven by the expectations of the profitability (or not) of the stocks being traded, not the pursuit of speculative gains caused by the monetary manipulations of central bankers. We now appear to be in a position where the interests of financial markets are precisely at odds with the interests of the rest of the economy; where the good news for us is bad news for them and bad news for us is good news for them.   The one way bet of the Greenspan Put maintained, so far, by Ben Bernanke, has created a market of monetary-punch-drunk liquidityholics. On its 100th birthday the Federal Reserve has the tricky task of sneaking the punch bowl out of the party, a task it seems they'll struggle to manage without starting a riot. They may have printed themselves into a corner.

Happy Centenary to the US Fed Posted: 09 Sep 2013 01:20 AM PDT The US Federal Reserve was born 100 years ago last month...   ONE HUNDRED years ago last month, on August 29th 1913, the Federal Reserve Act was introduced to the House of Representatives by Virginia Congressman Carter Glass, writes John Phelan at the Cobden Centre.   When President Woodrow Wilson signed it into law on December 23rd 1913 the Federal Reserve system was born.   The Fed was born out of the Panic of 1907. The collapse of the Knickerbocker Trust Company triggered a run on banks across the United States which was only stemmed by the deliberately high profile intervention of famed financier J.P.Morgan. He assembled and led a consortium of leading financiers to put their own money into the system.   The lesson widely drawn from the Panic was that institutions with long term assets but short term liabilities, the very business of banking, suffered inherent liquidity risk. Reasoning that next time there might not be a Morgan around to act as backstop, Congress called for an institutional lender of last resort which would tide over solvent but illiquid banks, following Walter Bagehot's advice to "lend freely at a high rate, on good collateral". Thus, the Federal Reserve Act sought to "provide for the establishment of Federal Reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes".   A century on, "for other purposes" means the Fed's modern mandate for macroeconomic management. With the discrediting of Keynesian fiscal policy in the late 1970s and its replacement by a belief in the efficacy of monetary policy in smoothing fluctuations in GDP, the chairman of the Federal Reserve and his lieutenants came to be hailed as 'Maestros' with the power to 'save the world'.   William McChesney Martin, Fed Chairman from 1951 to 1970, is quoted as saying that the Fed's job is "to take away the punch bowl just as the party gets going". His successor Alan Greenspan (1987-2006) took a rather different view. Greenspan didn't believe it possible to discern the punch induced drunkenness of unsustainable bubbles from the usual high spirits of sound economic growth. All you could do was watch the broader inflation figures and dig out the monetary mop and bucket to clean up the aftermath. The policy outcome was that no monetary action was taken to reign in asset price rises while every fall was combated with vast infusions of liquidity which inflated the next bubble. This one way bet became known as the 'Greenspan put'.   In a speech before the New York Chapter of the National Association for Business Economics in 2002 Greenspan's successor, Ben Bernanke, endorsed this stance. And, when the subprime mortgage market crashed and blew holes in banks' balance sheets in 2007-2009 the Fed pumped in liquidity. To paraphrase Bagehot, it certainly lent freely, but at token rates and against toilet paper.   At a stretch this could be seen as in keeping with the Fed's original mandate. Also, given Bernanke's academic work studying Milton Friedman's interpretation of the Great Depression, it had some theory behind it. But the heirs to the Committee to Save the World were expected not just to save financial institutions but boost the rest of the economy too. However, the Fed was not designed to do that and has little theoretical idea of how to accomplish it. So it went to work on the long end of the yield curve with Quantitative Easing which amounted to 'print and hope'.   As a result of this fresh infusion of liquidity, currently running at about $85 billion a month, stock markets, one of the new bubbles along with government bonds and emerging markets, have nearly doubled since 2009 while the 'real' economy has limped up by 2%. This situation is perverse. On August 15th, reports that British retail sales had risen unexpectedly sharply and that American unemployment had fallen to a six year low, which in the mainstream-macro discourse that dominates economic debate are considered positive indicators, sent the FTSE 100, the Dow Jones Industrial Average, the S&P 500, the DAX 30, and the CAC 40 tumbling. Markets, hooked on the punch of cheap liquidity, were terrified by the prospect that an improving economy might see the punch bowl removed, or 'tapered'. The Telegraph headline said it all; "Strong data sparks market sell-off on fears stimulus is over".   The reverse happened a day later. When the results of a US consumer confidence survey came in "far worse than expected" stock markets rallied and now the Telegraph headline read "Wall Street edges higher on disappointing data". Stock markets are supposed to be driven by the expectations of the profitability (or not) of the stocks being traded, not the pursuit of speculative gains caused by the monetary manipulations of central bankers. We now appear to be in a position where the interests of financial markets are precisely at odds with the interests of the rest of the economy; where the good news for us is bad news for them and bad news for us is good news for them.   The one way bet of the Greenspan Put maintained, so far, by Ben Bernanke, has created a market of monetary-punch-drunk liquidityholics. On its 100th birthday the Federal Reserve has the tricky task of sneaking the punch bowl out of the party, a task it seems they'll struggle to manage without starting a riot. They may have printed themselves into a corner.

Inflation? Gold Prices Point to Chronic Slowdown Posted: 09 Sep 2013 01:14 AM PDT Gold prices vs. commodities deny the ISM's new-found inflation warning...   MANUFACTURING in the United States expanded again last month, writes Gary Tanashian in his Notes from the Rabbit Hole, as July's strong pace was maintained in August at 55%.   New orders increased at a healthy rate of nearly 5%, but right along with this, prices also increased by 5%.   This is the threat to the Goldilocks backdrop that has supported policy makers' ability to continue the inflation because there has been after all, little inflation by the measure most people look at, which is prices.   The balance of respondents to the Institute of Supply Management's August survey who reported higher rather than lower prices, however, rose to 8% from July's minus 2%. That was thanks to a sharp drop in the number of supply-chain managers seeing prices fall.    And yet the Broad CCI commodity index has thus far had a failure to launch in the face of a strong economy and rising manufacturer input costs. The daily view shows a potential 'W' bottom at critical support (500).     Here is the bigger picture weekly view showing why 500 is critical support. A lower low would likely signal a return of acute economic contraction and a deflationary backdrop. If however CCI uses the daily 'W' bottom and breaks the red trend line, we may be talking about an inflationary phase in the markets. Stay tuned.     With the gold price outperforming commodities on the big picture and in secular fashion we should consider the question about whether the inflation will take this time.     Yes, the manufacturing economy is growing (as we have been expecting since January when NFTRH alerted that the semiconductor equipment industry was ramping an up cycle) but this does little to change the fact that it is inflationary policy making that has been responsible for the upturn.   The chart above, from the most recent NFTRH, clearly shows that we are in an era of chronic economic contraction (as the metal negatively correlated to the economy stair-steps higher vs. positively correlated broad commodities).   The upturn in gold prices vs. commodities at a 'higher low' is not good news for a continuing economic upturn. NFTRH has often stated that if this ratio makes a lower low then the analysis would be proven wrong (it happens) and that I have no personal agenda other than to do what big picture macro charts like the above tell me to do.   The chart above tells me that gold has just turned up vs. commodities (signifying an end-stage economic up cycle) even as the Federal Reserve appears to have spent the majority of its bullets fighting the contraction. That bullet expenditure comes in the form of rising yields as America's main creditors appear to be rebelling against (or capitalizing upon) policy designed to keep yields low by selling Treasury bonds. Hmmmm.   Markets tend to turn when things look rosiest and legions of trend followers are touting. We continue to hold open the prospect of a final strong rally in the stock market if the S&P 500 gets down to the mid-1500′s in the near term. But on a bigger picture, the gold vs. commodities ratio says another contraction is coming.   Bottom line? The failure of commodities to reflect price increases and cause any sort of inflationary concerns is actually a negative divergence to the policy makers' wishes, which by their own statements is to promote a somewhat higher level of inflation, at which point they would try to put the genie back in the bottle. Greenspan's genie went back in the bottle alight, in the form of 2008′s liquidation.   But here we have a failure to launch (inflation) and a Goldilocks phase that could be ending with rising T bond yields. It is interesting to say the least and several potential outcomes are in play. But one thing is clear, gold has thus far found a 'higher low' bottom vs. commodities and so the ongoing big picture economic contraction continues. Manage accordingly.

Inflation? Gold Prices Point to Chronic Slowdown Posted: 09 Sep 2013 01:14 AM PDT Gold prices vs. commodities deny the ISM's new-found inflation warning...   MANUFACTURING in the United States expanded again last month, writes Gary Tanashian in his Notes from the Rabbit Hole, as July's strong pace was maintained in August at 55%.   New orders increased at a healthy rate of nearly 5%, but right along with this, prices also increased by 5%.   This is the threat to the Goldilocks backdrop that has supported policy makers' ability to continue the inflation because there has been after all, little inflation by the measure most people look at, which is prices.   The balance of respondents to the Institute of Supply Management's August survey who reported higher rather than lower prices, however, rose to 8% from July's minus 2%. That was thanks to a sharp drop in the number of supply-chain managers seeing prices fall.    And yet the Broad CCI commodity index has thus far had a failure to launch in the face of a strong economy and rising manufacturer input costs. The daily view shows a potential 'W' bottom at critical support (500).     Here is the bigger picture weekly view showing why 500 is critical support. A lower low would likely signal a return of acute economic contraction and a deflationary backdrop. If however CCI uses the daily 'W' bottom and breaks the red trend line, we may be talking about an inflationary phase in the markets. Stay tuned.     With the gold price outperforming commodities on the big picture and in secular fashion we should consider the question about whether the inflation will take this time.     Yes, the manufacturing economy is growing (as we have been expecting since January when NFTRH alerted that the semiconductor equipment industry was ramping an up cycle) but this does little to change the fact that it is inflationary policy making that has been responsible for the upturn.   The chart above, from the most recent NFTRH, clearly shows that we are in an era of chronic economic contraction (as the metal negatively correlated to the economy stair-steps higher vs. positively correlated broad commodities).   The upturn in gold prices vs. commodities at a 'higher low' is not good news for a continuing economic upturn. NFTRH has often stated that if this ratio makes a lower low then the analysis would be proven wrong (it happens) and that I have no personal agenda other than to do what big picture macro charts like the above tell me to do.   The chart above tells me that gold has just turned up vs. commodities (signifying an end-stage economic up cycle) even as the Federal Reserve appears to have spent the majority of its bullets fighting the contraction. That bullet expenditure comes in the form of rising yields as America's main creditors appear to be rebelling against (or capitalizing upon) policy designed to keep yields low by selling Treasury bonds. Hmmmm.   Markets tend to turn when things look rosiest and legions of trend followers are touting. We continue to hold open the prospect of a final strong rally in the stock market if the S&P 500 gets down to the mid-1500′s in the near term. But on a bigger picture, the gold vs. commodities ratio says another contraction is coming.   Bottom line? The failure of commodities to reflect price increases and cause any sort of inflationary concerns is actually a negative divergence to the policy makers' wishes, which by their own statements is to promote a somewhat higher level of inflation, at which point they would try to put the genie back in the bottle. Greenspan's genie went back in the bottle alight, in the form of 2008′s liquidation.   But here we have a failure to launch (inflation) and a Goldilocks phase that could be ending with rising T bond yields. It is interesting to say the least and several potential outcomes are in play. But one thing is clear, gold has thus far found a 'higher low' bottom vs. commodities and so the ongoing big picture economic contraction continues. Manage accordingly.

Love, Fear & Asia's Desire to Buy Gold Posted: 09 Sep 2013 01:04 AM PDT Demand to buy gold set to rise after good monsoon in India...   I OFTEN talk about how the gold trade is really two separate trades, writes Frank Holmes of US Global Investors.   There's the Fear Trade, where people buy gold out of fear of war or poor government policies. This crowd sees the precious metal as a safe haven during times of crisis, such as when gold rose over the fear of a war in Syria, but eased when a much more limited military action became likely.     However, there are other factors beyond Syria this week driving gold. That's the Love Trade. This group buys gold to give as gifts for loved ones during important holidays and festivals. This is the time of the year that we are in the midst of right now.   Historically, September has been gold's best month of the year. Looking at more than four decades of monthly returns, the precious metal has seen its biggest increase this month, averaging 2.3%.   Indians will be getting to buy gold for their wedding season, which begins in October, followed by the five-day Hindu festival of lights, Diwali. That is India's biggest and most important holiday of the year. In December, millions of people will be gathering with loved ones to exchange gifts as they observe Christmas. And finally, millions will celebrate Chinese New Year at the end of January 2014.   In India, there's also the harvest season to consider, as its crop production relies on rainfall for water. One positive driver for demand to buy gold this year is the fact that the country has had a heavy monsoon. The rains that started in June covered most of India at the fastest pace in more than 50 years. About 70% of the annual rainfall in India happens from June to September, and a strong monsoon season usually means a bumper crop, which boosts farmers' incomes.   That could increase gold buying as well, negating the government's efforts to quell India's gold-buying habit. Historically, good monsoon seasons have been associated with strong gold demand.   "In 2010, the last year that rains were heavily above average, demand soared 37% in the fourth quarter after harvests," says Reuters.   In the rural areas of India, there is little access to banking networks, so gold is used as a store of wealth, says Reuters. And with half the population in India employed in agriculture, it's no surprise that 60% of all the gold demand in the country comes from these rural areas.   India's rural community has seen a "hefty rise" in income this year, reports Mineweb today. But instead of buying gold, Mineweb says Indian farmers may purchase land due to gold in local currency reaching "dizzying heights".   Particularly over the past few weeks, as the currency faced increasing weakness, gold in Rupee spiked. Over the past three years, gold is now up 58% compared to gold in the US Dollar, which rose nearly 12%.     Despite this possible short-term threat to gold demand, keep in mind the East's long-term sentiment toward the metal. This area of the world has a different relationship related to both the Love Trade and the Fear Trade. And it's not easily broken.   You can see this encouraging sentiment in the chart below. People in China and India are well-known for buying gold. But they also have a "particular positivity around longer-term expectations for the gold price," according to market-development organization the World Gold Council.   In May and July, the World Gold Council asked 1,000 Indian and 1,000 Chinese consumers where they think the price of gold will be in five years. The two charts show the respondents' answers in May, when the average price of gold was about $1400, and again in July, when the average price of gold was $1200 an ounce.     Overwhelmingly, consumers in India and China believe the price of gold will increase over the long-term. What's interesting is when you compare the responses between May to July, there's an "extremely resilient sentiment around the future trajectory of gold," says the World Gold Council. In May, 62% assumed gold would rise in price; in July, the number increased to 66%.   The survey also shows that there are not too many gold bears in the East. Only 11% of those who responded in July think the price will decrease.

Love, Fear & Asia's Desire to Buy Gold Posted: 09 Sep 2013 01:04 AM PDT Demand to buy gold set to rise after good monsoon in India...   I OFTEN talk about how the gold trade is really two separate trades, writes Frank Holmes of US Global Investors.   There's the Fear Trade, where people buy gold out of fear of war or poor government policies. This crowd sees the precious metal as a safe haven during times of crisis, such as when gold rose over the fear of a war in Syria, but eased when a much more limited military action became likely.     However, there are other factors beyond Syria this week driving gold. That's the Love Trade. This group buys gold to give as gifts for loved ones during important holidays and festivals. This is the time of the year that we are in the midst of right now.   Historically, September has been gold's best month of the year. Looking at more than four decades of monthly returns, the precious metal has seen its biggest increase this month, averaging 2.3%.   Indians will be getting to buy gold for their wedding season, which begins in October, followed by the five-day Hindu festival of lights, Diwali. That is India's biggest and most important holiday of the year. In December, millions of people will be gathering with loved ones to exchange gifts as they observe Christmas. And finally, millions will celebrate Chinese New Year at the end of January 2014.   In India, there's also the harvest season to consider, as its crop production relies on rainfall for water. One positive driver for demand to buy gold this year is the fact that the country has had a heavy monsoon. The rains that started in June covered most of India at the fastest pace in more than 50 years. About 70% of the annual rainfall in India happens from June to September, and a strong monsoon season usually means a bumper crop, which boosts farmers' incomes.   That could increase gold buying as well, negating the government's efforts to quell India's gold-buying habit. Historically, good monsoon seasons have been associated with strong gold demand.   "In 2010, the last year that rains were heavily above average, demand soared 37% in the fourth quarter after harvests," says Reuters.   In the rural areas of India, there is little access to banking networks, so gold is used as a store of wealth, says Reuters. And with half the population in India employed in agriculture, it's no surprise that 60% of all the gold demand in the country comes from these rural areas.   India's rural community has seen a "hefty rise" in income this year, reports Mineweb today. But instead of buying gold, Mineweb says Indian farmers may purchase land due to gold in local currency reaching "dizzying heights".   Particularly over the past few weeks, as the currency faced increasing weakness, gold in Rupee spiked. Over the past three years, gold is now up 58% compared to gold in the US Dollar, which rose nearly 12%.     Despite this possible short-term threat to gold demand, keep in mind the East's long-term sentiment toward the metal. This area of the world has a different relationship related to both the Love Trade and the Fear Trade. And it's not easily broken.   You can see this encouraging sentiment in the chart below. People in China and India are well-known for buying gold. But they also have a "particular positivity around longer-term expectations for the gold price," according to market-development organization the World Gold Council.   In May and July, the World Gold Council asked 1,000 Indian and 1,000 Chinese consumers where they think the price of gold will be in five years. The two charts show the respondents' answers in May, when the average price of gold was about $1400, and again in July, when the average price of gold was $1200 an ounce.     Overwhelmingly, consumers in India and China believe the price of gold will increase over the long-term. What's interesting is when you compare the responses between May to July, there's an "extremely resilient sentiment around the future trajectory of gold," says the World Gold Council. In May, 62% assumed gold would rise in price; in July, the number increased to 66%.   The survey also shows that there are not too many gold bears in the East. Only 11% of those who responded in July think the price will decrease.

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