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Thursday, September 12, 2013

Gold World News Flash

Gold World News Flash

Gold Daily and Silver Weekly Charts - Psychopathy Means Never Having to Say You're Sorry

Posted: 11 Sep 2013 02:22 PM PDT

Gold Daily and Silver Weekly Charts - Psychopathy Means Never Having to Say You're Sorry

Posted: 11 Sep 2013 02:22 PM PDT

The Problem With The Knowing The Truth

Posted: 11 Sep 2013 01:46 PM PDT

by Bix Weir, Road to Roota:

My Fellow Americans –

As we relive the sights and sounds of the horrible events on September 11, 2001 I have been reflecting on the TRUTH and what it means to us as Americans. 9-11 filled our nation’s hearts with tragic loss. Loss of friends and family members, loss of those sworn to protect us and loss of the innocence of our Nation. In the years that have followed 9-11 many of us have seen through the fog of cover-up to understand the true events that transpired that day but many have not. Even to this day. It doesn’t matter how many times I post this report from the US Office of Naval Intelligence there will be those who deny the truth:

Collateral Damage: U.S. Covert Operations and the Terrorist Attacks on September 11 2001

Those who have read this report and have fully understood how all the pieces fit together are either so overwhelmed by their shattered view of the world that try to forget it all or they find a CALL TO ACTION and scream “Conspiracy” from the rooftops. (You Crazy Bastards…welcome to my world ;-)

But what those of us “in the know” rarely think about is what would happen if suddenly the TRUTH was revealed? The real and full Truth. The Truth about 9-11. The Truth about our rigged markets. The Truth about Gold and Silver. The Truth about the Shadow Banking system. The Truth about the Good Guys and Bad Guys. The Truth about our corrupt government. The Truth about starting wars. The truth about our rigged legal system. The Truth about hidden energy devices. The Truth about phoney religions. The truth about other life in the universe. The Truth about our past.

…even the Truth about God.

Could we handle all this Truth? Would we be angry about being kept in the dark for so long? Would we want revenge against those who lied to us? How in the world could we ever move forward with any trust in any of our future “leaders” ever again?

I don’t know the answers to these questions…but isn’t that why we are here?!

To experience life and find all these answers ourselves.

Our world is about to get a sudden onslaught of TRUTH.

Are you ready for it?

May the Road you choose be the Right Road.

Bix Weir

The US Debt Ceiling Debate In The Light Of Monetary Fundamentals

Posted: 11 Sep 2013 01:20 PM PDT

from Gold Silver Worlds:

By mid-October, the US will have reached its debt limit again. Most have lost count of the exact debt limit. Give or take a trillion, it is something close to 17 trillion US dollar.

The following two quotes are from a recent Wall Street Journal article:

"As that [the recent bond market turmoil] settles down, the next major political hurdle is the debt-ceiling debate."

"President Barack Obama has said he won't negotiate over the debt ceiling, but Republicans want new spending cuts. House Speaker John Boehner said in late August that he'll only vote to increase the limit if there are major cuts and other budget changes."

Read More @ GoldSilverWorlds.com

Despite AAPLooza, Stocks Rally For 7th Day In A Row

Posted: 11 Sep 2013 01:16 PM PDT

AAPL's demise was shrugged off by a broader market as VIX was slammed lower once again to 14.00% stirring the S&P to its 7th green day in a row and best run in 2 months. The Dow outperformed on the day (absent the AAPL drag) but stocks tyraded amid very low volumes once again and weakened into the close. Treasuries were well bid (along with stocks) as a very healthy 10Y auction and some negative chatter over Syria saw a modest safety bid. The USD was monkey-hammered against all the majors - EUR most notably but JPY strength was entirely ignored by stocks (as we point out once again - it was VIX that drove us). So bonds bid, stocks bid, USD offered, oil and gold modestly bid, and VIX offered - smells a lot like a market that is absolutely not pricing in a Taper.

 

7 days in a row and counting...

 

So Bonds bid, USD offered, stocks bid...

 

and gold and oil also bid...

 

USDJPY broke back below 100.00

 

and the ammo for the ramp is clear - unwind of war-hedges...

 

and a close up of the close in VIX and stocks...

 

Though the shorts keep getting squeezed...

 

Charts: Bloomberg

 

Bonus Chart: The correlation remains...

Ned W. Schmidt – Gold And Silver Have Bottomed And So Have The Stocks

Posted: 11 Sep 2013 01:00 PM PDT

from FinancialSurvivalNetwork.com:

Ned W. Schmidt joined us for a review of gold and silver. He's convinced that the precious metals markets have bottomed. In addition, he believes that the gold miners have bottomed as well and that their performance will be helped by the extremely generous write-off's they have recently taken. This will help to turbo-charge their earnings once metal prices being their ascent. Ned's not expecting parabolic price metal price rises but thinks that gold could be in the $1400-1500 range by year end. Which would be perfectly acceptable.

Click Here to Listen

Laurence Kotlikoff: "The US Fiscal Gap Is $200 Trillion... Our Country Is broke"

Posted: 11 Sep 2013 12:28 PM PDT

While it is easy and often enjoyable to distract oneself with daily drudgery such as who will bomb whom (if not so enjoyable for those on the receiving end of said bombs), the key word in the sentence is just one: "distract" and as Kyle Bass pointed out correctly, the best, and most "economy-boosting" of all distractions ends up with the proverbial red button being pushed. Sadly, with an economy which Boston University's Larry Kotlikoff defines as "arguably in worst fiscal shape than any other developed country", there is much to be distrated by and is why we correctly predicted in July that the Syrian false flag event is only weeks or months away (turned out to be precisely one month). So for those who have no desire to prove the axiom that ignorance is bliss, or to have their heads stuck in the sand, here is a must read interview between Goldman's Hugo Scott-Gall and the iconoclast economist who, in a vast minority, calls it like it is.

The highlights:

  • I estimate the US fiscal gap at US$200 tn, 17 times the reported US$12 tn in official debt in the hands of the public. And this incorporates this year's tax increases and spending sequestration. What would it take to come up with US$200 tn in present value? The answer is tax hikes or spending cuts, or a combination of the two, amounting to 10 percent of GDP, starting immediately and continuing indefinitely. To do so via spending cuts, alone, would require an immediate and permanent 36% cut in all non-interest spending. To do so via tax hikes, alone, would need an immediate and permanent 55% increase in all federal taxes. Hence, a description of the fiscal adjustments made over the last year could be "too little too late." In terms of generational accounting, were we to leave our kids and future descendants to cover the entire fiscal gap, they'd face tax rates over their lifetimes around twice as high as those we face.
  • The US is arguably in worst fiscal shape than any other developed country. But Greece, the UK, and Japan are close runner ups. As mentioned, our fiscal gap is 10% of the present value of our future GDP. In Germany it's around 5%, while Canada, Australia and New Zealand are close to zero. Even Italy's long-term fiscal gap is just half of the US's, yet Italian government bonds sell at a much lower price than US government bonds simply because people don't understand the pension reforms that Italy has rolled out or that Italy has much better control of its healthcare spending.
  • Our country is broke. It's not broke in 50 years or 30 years or 10 years. It's broke today. Six decades of take as you go has led us to a precipice. That's why almost the entire economics profession is talking as one at www.theinformact.org. Economists from all political persuasions are collectively sending our government a warning about what is, effectively, a nuclear economic bomb. I've been around economics for a long time. I've never seen such a strong response to a proposed Congressional bill. This is the profession sending a statement to the President and Congress that's not unlike the warning physicists sent via Einstein to Roosevelt about the bomb.

And with that, here is the full interview:

Laurence J. Kotlikoff is a William Fairfield Warren Professor at Boston University, a Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, a Research Associate of the National Bureau of Economic Research, and President of Economic Security Planning, Inc., a company specializing in financial planning software.

Hugo Scott-Gall: You argue that the official debts that countries report are economically meaningless numbers. Please explain this?

Larry Kotlikoff: Every dollar the government takes in or pays out can be labelled in economically arbitrary ways. For example, the government can call our social security contributions "taxes" or "official borrowing." And it can call our social security benefits "transfer payments" or "return of principal or principal plus interest." There is nothing in the math of economic theory that pins down the government's word choice and each labelling convention will produce a different reported time path of debt, deficits, taxes, and spending. At their heart, these measures are linguistic and convey nothing about a country's underlying fiscal policy – only about what the government decides to put on and keep off the books.

Uncle Sam is very powerful, but he has only one set of vocal cords. We are all free to label past, present, and projected future government receipts and outlays any way we want, as long as our labelling convention is internally consistent (e.g., if we label government receipts as borrowing, we need to label other outlays as debt service). Consequently, we can produce any past, current, and projected future measure of the government's debt and other fiscal quantities. With the right past labelling, we can say the current debt to GDP ratio is miles higher than Rogoff-Reinhart's critical 90 percent. Or, we can argue that the debt to GDP ratio is hugely negative. The Economics labelling problem tells us that what we measure as the size of standard fiscal variables is language- or frame of reference-dependent. This is fundamentally no different from physics. The measurement of time and distance is not uniquely pinned down by the math. What time you report and how you measure the size of physical objects depends on one's frame of reference (direction and rate of speed through space) or language, if you will.

Here's another way to see my point. My mother gets checks from the US Treasury all the time. They all look the same except for their amounts. Some are for social security and some are for holding Treasury bonds. But Uncle Sam is discounting the amounts coming on the Treasuries and including that in his official debt measure, while ignoring the amounts coming for social security benefits. Using economically meaningless fiscal indicators to guide fiscal policy is like driving in NY with a map of LA. If you aren't careful, you'll drive into the East River.

Hugo Scott-Gall: If conventional fiscal measures are, as you say, content free, what should we measure?

Larry Kotlikoff: Every dynamic mathematical model of the economy that economists write down (and thousands are being constructed each year) includes what's called the government's intertemporal budget constraint. This constraint simply requires that the present value of government outlays, no matter how labelled, equals the present value of government receipts, no matter how labelled. In this over-time government balance sheet, the outlays represent the liabilities and the receipts represent the assets. If the value in the present of the liabilities exceeds the value in the present of the receipts, the government's balance sheet isn't balanced, with the difference between the liabilities and assets call the fiscal gap. The fiscal gap doesn't suffer from an economics labelling problem for a simple reason - it puts everything on the books. The fiscal gap is the true measure of a government's debt. And once one determines its size, one can assess the impact on our children of paying it off if it's all dumped into their laps. This is part of a companion analysis, called Generational Accounting, which I initiated in the late 80s together with my co-author, UC Berkeley economist Alan Auerbach and my then student, Jagaadesh Gokhale (now at the Cato Institute).

Hugo Scott-Gall: How big is the US fiscal gap and what does US generational accounting show?

Larry Kotlikoff: The CBO will release its 2013 long-term fiscal projection, called the Alternative Fiscal Forecast (an alternative to the Extended Budget Forecast produced for Congress) this Fall. But I estimate the US fiscal gap at US$200 tn, 17 times the reported US$12 tn in official debt in the hands of the public. And this incorporates this year's tax increases and spending sequestration. What would it take to come up with US$200 tn in present value? The answer is tax hikes or spending cuts, or a combination of the two, amounting to 10 percent of GDP, starting immediately and continuing indefinitely. To do so via spending cuts, alone, would require an immediate and permanent 36% cut in all non-interest spending. To do so via tax hikes, alone, would need an immediate and permanent 55% increase in all federal taxes. Hence, a description of the fiscal adjustments made over the last year could be "too little too late." In terms of generational accounting, were we to leave our kids and future descendants to cover the entire fiscal gap, they'd face tax rates over their lifetimes around twice as high as those we face.

Hugo Scott-Gall: How do we get better fiscal book keeping?

Larry Kotlikoff: At my encouragement and that of The Can Kicks Back – a non-profit in DC run by twenty-somethings fighting for generational equity, Senators Kaine and Coons – two Democrats – and Senators Thune and Portman – two Republicans – have just co-introduced THE INFORM ACT. The Bill, which I largely drafted in consultation with Alan Auerbach, will require three agencies in the US government (the CBO, the OMB and the GAO) to do fiscal gap analysis as well as generational accounting on an ongoing basis. To date, 12 Nobel Laureates in economics, over 500 of the nation's other leading economists, George Shultz, the Former Secretary of the Treasury, State and Labor and the OMB Director, and other prominent government officials, and thousands of non-economists have endorsed the bill at www.theinformact.org. I'm hoping everyone in the country will go to the site, endorse the bill, and spread the word.

Hugo Scott-Gall: How do you recommend solving this issue?

Larry Kotlikoff: Measuring our fiscal gap and disclosing its implications for ourselves and our children is just step one in addressing our fiscal issues. What's really needed is the adoption of radical, but generationally fair reforms to our tax, social security, and healthcare system. Maintaining the status quo is not an option. When a patient needs heart surgery, radical surgery is often the safe option. America needs radical policy surgery. I lay out postcard length reforms of out tax, social security, healthcare, and banking systems at www.thepurpleplans.org. Many of these plans have been endorsed by the economics' profession's top economists.

Let me lay out just one of these plans - the Purple Health Plan. The costs of Medicare, Medicaid, the new health exchanges, and employer-paid healthcare (here the costs entail loss of revenue because premiums are exempt from taxes) constitute 60% of the fiscal gap. The Purple Health Plan would eliminate these four systems and start with a clean slate. Under the plan, each US citizen gets a voucher each year, the size of which is determined by his pre-existing medical condition. The voucher is used to purchase, in full, the Basic Health Plan from an insurance provider. The Basic Health Plan's coverages are established by a panel of doctors subject to the constraint that the costs of all the vouchers never exceeds 10% of GDP. Those who could afford it would be free to buy supplemental policies. No insurer could turn anyone away, but since each voucher is individually rated, insurers would have no incentive to cheery pick. This simple reform, in essence, the healthcare system of Germany, Israel, Holland, Switzerland, and Japan, retains private provision, turns the Basic Health Plan into a commodity with insurance providers competing to attract and retain participants. A very large share – roughly 60% – of America's fiscal gap can be eliminated via this reform alone. Adopting the other purple plans would eliminate the rest of the fiscal gap without visiting untoward hardship on anyone.

Hugo Scott-Gall: Will society be able to hold current demographic fiscal systems together where young people are heavily taxed...

Larry Kotlikoff: Our country is broke. It's not broke in 50 years or 30 years or 10 years. It's broke today. Six decades of take as you go has led us to a precipice. That's why almost the entire economics profession is talking as one at www.theinformact.org. Economists from all political persuasions are collectively sending our government a warning about what is, effectively, a nuclear economic bomb. I've been around economics for a long time. I've never seen such a strong response to a proposed Congressional bill. This is the profession sending a statement to the President and Congress that's not unlike the warning physicists sent via Einstein to Roosevelt about the bomb.

Hugo Scott-Gall: What does all of this mean for overall consumption and savings in the US?

Larry Kotlikoff: Our huge off-the-books fiscal problems were created as a result of the take-as-you-go policies of the post war periods that passed on benefits to older people at the expense of younger people. This systematic intergenerational redistribution produced a massive increase in the absolute and relative consumption of the elderly and a massive decline in our net national saving rate, from 15% in 1950 to 1% now. The ratio of the consumption of a 70-year-old compared to a 35-year-old is about 2.5 times larger today than it was back in 1950. And the reason they're consuming so much more is that they get the entire set of benefits, from healthcare and social security to tax cuts. National saving finances most domestic investment, so as we're saving next to nothing means we're also investing next to nothing. Last year's net domestic investment rate was 5%, only a third of the 1950 level. And less domestic investment means slower real wage growth, as workers have less capital with which to operate. Finally, since we Americans aren't saving, we can't invest in our country. So $4 out of every $5 of investment in the US is now by foreigners. In the late 1970s, Alan Auerbach and I pioneered the development of large-scale computable general equilibrium life-cycle models that we could simulate on a computer. In this and subsequent research, we were able to simulate the impact of take-as-you-go fiscal policy. What we see from these increasingly sophisticated computer models matches exactly what you see in the country, less saving, less investment, less growth, and stagnant wages. While generational policy is not the sole driver of post-war secular economic trends, it's likely the biggest.

Hugo Scott-Gall: How do other countries compare to the US when you look at their fiscal gaps?

Larry Kotlikoff: The US is arguably in worst fiscal shape than any other developed country. But Greece, the UK, and Japan are close runner ups. As mentioned, our fiscal gap is 10% of the present value of our future GDP. In Germany it's around 5%, while Canada, Australia and New Zealand are close to zero. Even Italy's long-term fiscal gap is just half of the US's, yet Italian government bonds sell at a much lower price than US government bonds simply because people don't understand the pension reforms that Italy has rolled out or that Italy has much better control of its healthcare spending.

The case of Norway is also very interesting. I conducted generational accounting with a Norwegian economist named Erling Steigum back in the mid-90s, which proved that while Norway was reporting a huge surplus because of how it was labelling its transactions, in reality the country was spending at far too high a rate. To its credit, the government went ahead and continued carrying out this analysis on a regular basis, and as a result, created a generational trust fund, where some of the North Sea oil revenue is set aside for future generations. This has left them in a much better position today. Chile, another resource-dominated economy, has also got a similar trust fund in effect. The Canadians have also been very careful about their long-term liabilities. So, some countries are acting more responsibly.

Hugo Scott-Gall: Have you considered the impact of fewer jobs, driven by rising automation, in your analysis?

Larry Kotlikoff: Automation and the structural loss of jobs is a very important issue. In fact, Jeff Sachs and I have together written about the implications of smart machines, machines that today can substitute almost perfectly, if not more than perfectly for people, and constitute, effectively, competing robots. We're not far from the day when machines will drive cars too. While that sounds great, the other side of the coin is that younger people are earning less and saving less, and so, they bring much less wealth into old age than previous generations did. Owing to this vicious cycle, these youngsters, who as a group are not the prime owners of capital, aren't going to reap the benefits from this new technology. The beneficiaries are instead going to be a small number of people who are either the inventors, or older people who have the capital to help get the invented technology in place. So, we're going to see wealth redistributed further, from young workers to older people, with yet direr implications for national saving, domestic investment and growth. Indeed, technological change can, through these general equilibrium feedback effects, end up making all of society worse off in the long run, unless one is careful to redistribute to the young losers from the old winners.

Gold Price in India: Stronger Rupee Pushed Gold Lower

Posted: 11 Sep 2013 12:26 PM PDT

Yesterday, the Indian rupee rose to a two-week high as expectations for a narrower trade deficit and receding concerns about Syria helped the currency continue its recent recovery from record lows hit last month. Read More...

Despite Pullback, Gold & Silver To See Spectacular Surges

Posted: 11 Sep 2013 12:20 PM PDT

from KingWorldNews:

Eric King: "Tom, we will move on to gold in just a minute, but first I wanted to ask you about silver specifically. We had the up-move which took silver above $24, and now we are seeing this pullback. It looks very healthy within the context of the charts that you've been publishing on KWN."

Fitzpatrick: "Yes. Overall, Eric, we are still very much of the view that we have put in a base here in silver and we are going to move higher. In the short-term, silver came up off the lows a bit quicker than people had expected, and while some attributed this to what was taking place in the Middle East, that really wasn't part of our overview of what is happening.

Tom Fitzpatrick continues @ KingWorldNews.com

India's Gold Currency Controls

Posted: 11 Sep 2013 12:10 PM PDT

Currency controls like India's block on gold imports is a symptom, not a cure...
 
WHAT'S GOING on in India is nothing new, writes Miguel Perez-Santalla at BullionVault.
 
We've seen it over and over again throughout struggling economies. It's called currency control.  These attempts to control movement of currency are very common when a government is faced with problems like India's. They actually create a more crippling environment than the one they are put in place to improve. And make no mistake, controls on the movement of gold is a control on the movement of currency.
 
Gold has always been and will always be the safe haven of choice when people lack confidence in their government. Lacking confidence doesn't only mean that they're not certain they'll perform well, but it also may mean that they don't trust their government to operate in their best interest. Starting with allowing economic freedom, and defending the value of the currency.
 
What are these currency controls recently put on gold in India?
  • They've prohibited and restricted loans to customers on gold bullion;
  • They've raised the import tax on both gold and silver to 10%;
  • The sale of gold may only be made to jewelers or bullion dealers to supply the jewelry industry;
  • Gold importers must ensure that 20% of all gold imported is to be exported as product.
Oddly enough, the Royal Bank of India and the government are so concerned with the balance of payments that they miss the most important responsibility they have. It is not to control the outflow of capital, but increasing the inflow of capital. Free trade, when enabled both ways, will find an equilibrium that will benefit all parties.
 
India's finance minister Palaniappan Chidambaram is attempting to do just that, but in the interim the laws that they put in place are hurting one of their key industries, the Indian gold jewelry trade. Estimates vary, but one puts the jobs at risk of being lost if the controls stay in place at half-a-million. This will force the people in that industry to search out other solutions.
 
Trying to interpret the government's regulatory actions has caused foreign investment in India to plunge over the past year, while capital expenditure at home may fall further in the future. Because as usual, when a country attempts to control business, then business goes elsewhere.
 
The chairman of Cipla (a large pharmaceutical company), Yusuf Hamied, in a recent interview with the Indian business newspaper The Business Standard, said that thanks to India's unpredictable tax regime, "All big Indian companies are going abroad. The time has now come for us to say goodbye to India."
 
Why not blame gold? From 2011 to 2012 India's gold imports increased nearly 50% to an estimated $57.5 billion. Of course, this does hurt their account deficit and it is something they should be concerned with. But their attempts to close the gap by controlling gold flows are again the wrong tack to take.
 
What happens when governments impose restrictions is that they also increase crime. With a 10% duty on gold, the profit to smuggle gold bullion into India has increased. Though some of the smuggling will be caught, much will make it into the country representing a loss of revenue to the government. Ten percent is just too high of a spread to be borne by the Indian public and market for which the gold is intended.
 
A recent article by Bloomberg details how gold-smuggling gangs from the Middle East are now entering this business. Some Indian jewelers are willing to buy from anyone that can bring them lower cost gold, because it enables them to keep their business running. Otherwise they can only live off the scrap metal they receive from the marketplace.
 
Banks and traders halted imports of gold bullion during August, after the central bank linked inbound shipments to re-exports. So gold supplies have become difficult to come by. But the recent collapse of the Rupee by 18% has increased the amount of gold being turned in for cash by Indian households, who are also faced with a "credit crunch" caused by the rising financial crisis. And so once again, gold – which their government informs them is not a proper investment – has saved the individual by providing liquid funds just when they're needed.
 
How does this affect the external gold market? The answer so far is very little. The market in China is constantly growing and China's gold demand may overtake India as the largest consumer in the near future. Physical demand for gold coins has been strong globally. But India's traditionally strong period of festival and wedding demand now running to Diwali in November will likely see much lower gold imports through official channels.
 
Of course, gold will still flow where it is needed. The controls that the Indian government has established have done little to stay the hands of investors.
 
It's almost too simple to believe that the government cannot recognize where their focus should be. India's gross domestic product growth rate has been on decline since 2011 from a high of 9.3% to currently 4.4%. Capital outflows, distrust of government regulations, and the inability to get businesses active in India are the primary causes of this government's troubles. If the business environment were to be improved then the economy would grow as well. The people themselves would reinvest into their country.
 
In the current environment, in which industry is stifled and unable to grow within India, then we can expect to see, sadly, a decline in confidence and GDP. Continuing down this path will inevitably lead to another economic disaster such as Argentina is suffering, along with many other countries with closed markets.
 
In a country like India, where they must import their energy alongside their gold, it may appear difficult to keep their balance of payments in the black. Yet their human capital is strong enough at this juncture to supersede this difficulty, if only the business environment were improved so that companies such as Cipla would not move out and instead expand their operations. Foreign investment also looks unlikely to reverse without a change of policy, as Goldman Sachs downgraded India to underweight and recommended investors stay selective in that market.
 
It is better to have a reasonable import tax, and let business work, so the government can earn income from it rather than attempting to stop the flow of gold via exorbitant duties and currency controls. Blocking the free inflow of gold is a bad symptom of India's economic problems. It can't be a cure.
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India's Gold Currency Controls

Posted: 11 Sep 2013 12:10 PM PDT

Currency controls like India's block on gold imports is a symptom, not a cure...
 
WHAT'S GOING on in India is nothing new, writes Miguel Perez-Santalla at BullionVault.
 
We've seen it over and over again throughout struggling economies. It's called currency control.  These attempts to control movement of currency are very common when a government is faced with problems like India's. They actually create a more crippling environment than the one they are put in place to improve. And make no mistake, controls on the movement of gold is a control on the movement of currency.
 
Gold has always been and will always be the safe haven of choice when people lack confidence in their government. Lacking confidence doesn't only mean that they're not certain they'll perform well, but it also may mean that they don't trust their government to operate in their best interest. Starting with allowing economic freedom, and defending the value of the currency.
 
What are these currency controls recently put on gold in India?
  • They've prohibited and restricted loans to customers on gold bullion;
  • They've raised the import tax on both gold and silver to 10%;
  • The sale of gold may only be made to jewelers or bullion dealers to supply the jewelry industry;
  • Gold importers must ensure that 20% of all gold imported is to be exported as product.
Oddly enough, the Royal Bank of India and the government are so concerned with the balance of payments that they miss the most important responsibility they have. It is not to control the outflow of capital, but increasing the inflow of capital. Free trade, when enabled both ways, will find an equilibrium that will benefit all parties.
 
India's finance minister Palaniappan Chidambaram is attempting to do just that, but in the interim the laws that they put in place are hurting one of their key industries, the Indian gold jewelry trade. Estimates vary, but one puts the jobs at risk of being lost if the controls stay in place at half-a-million. This will force the people in that industry to search out other solutions.
 
Trying to interpret the government's regulatory actions has caused foreign investment in India to plunge over the past year, while capital expenditure at home may fall further in the future. Because as usual, when a country attempts to control business, then business goes elsewhere.
 
The chairman of Cipla (a large pharmaceutical company), Yusuf Hamied, in a recent interview with the Indian business newspaper The Business Standard, said that thanks to India's unpredictable tax regime, "All big Indian companies are going abroad. The time has now come for us to say goodbye to India."
 
Why not blame gold? From 2011 to 2012 India's gold imports increased nearly 50% to an estimated $57.5 billion. Of course, this does hurt their account deficit and it is something they should be concerned with. But their attempts to close the gap by controlling gold flows are again the wrong tack to take.
 
What happens when governments impose restrictions is that they also increase crime. With a 10% duty on gold, the profit to smuggle gold bullion into India has increased. Though some of the smuggling will be caught, much will make it into the country representing a loss of revenue to the government. Ten percent is just too high of a spread to be borne by the Indian public and market for which the gold is intended.
 
A recent article by Bloomberg details how gold-smuggling gangs from the Middle East are now entering this business. Some Indian jewelers are willing to buy from anyone that can bring them lower cost gold, because it enables them to keep their business running. Otherwise they can only live off the scrap metal they receive from the marketplace.
 
Banks and traders halted imports of gold bullion during August, after the central bank linked inbound shipments to re-exports. So gold supplies have become difficult to come by. But the recent collapse of the Rupee by 18% has increased the amount of gold being turned in for cash by Indian households, who are also faced with a "credit crunch" caused by the rising financial crisis. And so once again, gold – which their government informs them is not a proper investment – has saved the individual by providing liquid funds just when they're needed.
 
How does this affect the external gold market? The answer so far is very little. The market in China is constantly growing and China's gold demand may overtake India as the largest consumer in the near future. Physical demand for gold coins has been strong globally. But India's traditionally strong period of festival and wedding demand now running to Diwali in November will likely see much lower gold imports through official channels.
 
Of course, gold will still flow where it is needed. The controls that the Indian government has established have done little to stay the hands of investors.
 
It's almost too simple to believe that the government cannot recognize where their focus should be. India's gross domestic product growth rate has been on decline since 2011 from a high of 9.3% to currently 4.4%. Capital outflows, distrust of government regulations, and the inability to get businesses active in India are the primary causes of this government's troubles. If the business environment were to be improved then the economy would grow as well. The people themselves would reinvest into their country.
 
In the current environment, in which industry is stifled and unable to grow within India, then we can expect to see, sadly, a decline in confidence and GDP. Continuing down this path will inevitably lead to another economic disaster such as Argentina is suffering, along with many other countries with closed markets.
 
In a country like India, where they must import their energy alongside their gold, it may appear difficult to keep their balance of payments in the black. Yet their human capital is strong enough at this juncture to supersede this difficulty, if only the business environment were improved so that companies such as Cipla would not move out and instead expand their operations. Foreign investment also looks unlikely to reverse without a change of policy, as Goldman Sachs downgraded India to underweight and recommended investors stay selective in that market.
 
It is better to have a reasonable import tax, and let business work, so the government can earn income from it rather than attempting to stop the flow of gold via exorbitant duties and currency controls. Blocking the free inflow of gold is a bad symptom of India's economic problems. It can't be a cure.

India's Gold Currency Controls

Posted: 11 Sep 2013 12:10 PM PDT

Currency controls like India's block on gold imports is a symptom, not a cure...
 
WHAT'S GOING on in India is nothing new, writes Miguel Perez-Santalla at BullionVault.
 
We've seen it over and over again throughout struggling economies. It's called currency control.  These attempts to control movement of currency are very common when a government is faced with problems like India's. They actually create a more crippling environment than the one they are put in place to improve. And make no mistake, controls on the movement of gold is a control on the movement of currency.
 
Gold has always been and will always be the safe haven of choice when people lack confidence in their government. Lacking confidence doesn't only mean that they're not certain they'll perform well, but it also may mean that they don't trust their government to operate in their best interest. Starting with allowing economic freedom, and defending the value of the currency.
 
What are these currency controls recently put on gold in India?
  • They've prohibited and restricted loans to customers on gold bullion;
  • They've raised the import tax on both gold and silver to 10%;
  • The sale of gold may only be made to jewelers or bullion dealers to supply the jewelry industry;
  • Gold importers must ensure that 20% of all gold imported is to be exported as product.
Oddly enough, the Royal Bank of India and the government are so concerned with the balance of payments that they miss the most important responsibility they have. It is not to control the outflow of capital, but increasing the inflow of capital. Free trade, when enabled both ways, will find an equilibrium that will benefit all parties.
 
India's finance minister Palaniappan Chidambaram is attempting to do just that, but in the interim the laws that they put in place are hurting one of their key industries, the Indian gold jewelry trade. Estimates vary, but one puts the jobs at risk of being lost if the controls stay in place at half-a-million. This will force the people in that industry to search out other solutions.
 
Trying to interpret the government's regulatory actions has caused foreign investment in India to plunge over the past year, while capital expenditure at home may fall further in the future. Because as usual, when a country attempts to control business, then business goes elsewhere.
 
The chairman of Cipla (a large pharmaceutical company), Yusuf Hamied, in a recent interview with the Indian business newspaper The Business Standard, said that thanks to India's unpredictable tax regime, "All big Indian companies are going abroad. The time has now come for us to say goodbye to India."
 
Why not blame gold? From 2011 to 2012 India's gold imports increased nearly 50% to an estimated $57.5 billion. Of course, this does hurt their account deficit and it is something they should be concerned with. But their attempts to close the gap by controlling gold flows are again the wrong tack to take.
 
What happens when governments impose restrictions is that they also increase crime. With a 10% duty on gold, the profit to smuggle gold bullion into India has increased. Though some of the smuggling will be caught, much will make it into the country representing a loss of revenue to the government. Ten percent is just too high of a spread to be borne by the Indian public and market for which the gold is intended.
 
A recent article by Bloomberg details how gold-smuggling gangs from the Middle East are now entering this business. Some Indian jewelers are willing to buy from anyone that can bring them lower cost gold, because it enables them to keep their business running. Otherwise they can only live off the scrap metal they receive from the marketplace.
 
Banks and traders halted imports of gold bullion during August, after the central bank linked inbound shipments to re-exports. So gold supplies have become difficult to come by. But the recent collapse of the Rupee by 18% has increased the amount of gold being turned in for cash by Indian households, who are also faced with a "credit crunch" caused by the rising financial crisis. And so once again, gold – which their government informs them is not a proper investment – has saved the individual by providing liquid funds just when they're needed.
 
How does this affect the external gold market? The answer so far is very little. The market in China is constantly growing and China's gold demand may overtake India as the largest consumer in the near future. Physical demand for gold coins has been strong globally. But India's traditionally strong period of festival and wedding demand now running to Diwali in November will likely see much lower gold imports through official channels.
 
Of course, gold will still flow where it is needed. The controls that the Indian government has established have done little to stay the hands of investors.
 
It's almost too simple to believe that the government cannot recognize where their focus should be. India's gross domestic product growth rate has been on decline since 2011 from a high of 9.3% to currently 4.4%. Capital outflows, distrust of government regulations, and the inability to get businesses active in India are the primary causes of this government's troubles. If the business environment were to be improved then the economy would grow as well. The people themselves would reinvest into their country.
 
In the current environment, in which industry is stifled and unable to grow within India, then we can expect to see, sadly, a decline in confidence and GDP. Continuing down this path will inevitably lead to another economic disaster such as Argentina is suffering, along with many other countries with closed markets.
 
In a country like India, where they must import their energy alongside their gold, it may appear difficult to keep their balance of payments in the black. Yet their human capital is strong enough at this juncture to supersede this difficulty, if only the business environment were improved so that companies such as Cipla would not move out and instead expand their operations. Foreign investment also looks unlikely to reverse without a change of policy, as Goldman Sachs downgraded India to underweight and recommended investors stay selective in that market.
 
It is better to have a reasonable import tax, and let business work, so the government can earn income from it rather than attempting to stop the flow of gold via exorbitant duties and currency controls. Blocking the free inflow of gold is a bad symptom of India's economic problems. It can't be a cure.
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Looking for Stocks in All the Wrong Places

Posted: 11 Sep 2013 11:47 AM PDT

September 11, 2013

  • Investors pile into one sector… at the very moment another is set to outperform
  • More caterwauling about “the 1%”: The 5 unpacks the “income inequality” story neither side wants to tell
  • Crude stabilizes, but what about the situation in Syria? A forecast for the rest of Obama’s term
  • “Love trade” season almost underway: Frank Holmes on what’s next for gold
  • Obamacare, too much for even the most worker-friendly businesses… Goldman turns up its nose at its own employees… a beginner’s plea for help… and more!

  Talk about bad timing.

Investors spent much of the summer loading up on blue chips… at the very moment small caps began to outperform.

“A lot of investors have been buying large-cap stocks to take advantage of multinational companies’ broader reach into emerging markets and their ability to raise capital in slower economic times,” Richard Bernstein told The Wall Street Journal last spring. His eponymous firm oversees $1.2 billion in assets.

The Journal story was published on May 17. Here’s what’s happened since to the Dow Jones industrials, EEM (the big emerging-markets ETF) and IWM (the ETF that tracks the small-cap Russell 2000)…

Yeah, how’s that international exposure working out for you?

Like it or not, the U.S. has the proverbial least-dirty shirt in the laundry basket. So small caps will be the biggest beneficiary. The smallest of the small caps have even more explosive potential.

“Oftentimes, microcap stocks derive their revenue from a few sources,” explains our microcap specialist Thompson Clark. It could either be from one part of the world, or from one or two large customers. With a little bit of research, it’s easy to identify these revenue sources.

“Contrast this to the large blue chips, who have a global presence. Diversifying away from certain parts of the world is significantly harder, if not impossible, by investing solely in large-cap companies.”

[Ed. Note: We'd be remiss if we failed to mention that Thompson's microcap research can still be had for the lowest available price -- but only through midnight tomorrow.]

  As irony would have it, the Dow is the only index in the green as we write.

It’s pushed past 15,200 this morning. The Russell is down about a third of a percent, but still holding onto the 1,050 level.

“Markets remain neither cheap nor expensive,” blogged Fusion IQ chief and Vancouver veteran Barry Ritholtz during a delay on his commuter train. “At these levels, future growth of equities is dependent upon 1) Earnings growth; 2) Psychology 3) Random events.

“Overall, this remains the least loved cyclical equity rally in my lifetime. So long as so many people continue to fight it, hate it, disbelieve it, blame/credit the Fed for it, upside remains.”

The big corporate news this morning is Verizon’s plan to float a staggering $49 billion in bonds to buy the portion of Verizon Wireless it doesn’t already own. Take advantage of low interest rates while they’re still low, eh?

Verizon’s issue will smash the previous record set last spring by Apple — a now paltry $17 billion.

 “Income inequality” in America is now at its highest since its previous peak 85 years ago.

“The very wealthiest Americans earned more than 19% of the country’s household income last year — their biggest share since 1928,” says The Associated Press of the so-called one-percenters. “And the top 10% captured a record 48.2% of total earnings last year.” So concludes a study by researchers at Berkeley, Oxford and the Paris School of Economics.

We squirm every time we see numbers like this. First, and most obviously, because they fuel an “eat the rich” mentality, to borrow a phrase from P.J. O’Rourke. And second, because almost no one pays heed to cause and effect.

  Except Lewis Lehrman, that tireless champion of the classical gold standard, interviewed earlier this year by our fearless leader, Addison Wiggin.

“Whether you’re on the right or you’re on the left,” said Lehrman, “the rise in inequality between a privileged few and a vast middle class which is losing purchasing power is caused by the fact the Federal Reserve System has unlimited discretion to issue money to the banks and the clients of banks.

“The primary argument upon which I would rest my case for a gold standard is that it preserves the purchasing power, the wages, the salaries of all those who are unable to defend themselves in the halls of Congress in Washington or elsewhere, in citadels of power like Wall Street.”

Indeed, the Berkeley-Oxford-Paris study buttresses Lehrman’s case, although we doubt that was the researchers’ intent. Income inequality began relentlessly rising from multigenerational lows only three years after President Nixon cut the dollar’s last tie to gold in 1971…

And the previous peak in 1928 came as the phony gold-exchange standard hammered out after World War I began to fall apart. It would have been interesting if the researchers had gone further back in time to the classical gold standard that most of the world followed between 1879-1914.

“Good monetary policies,” said Lehrman, “lead to a stable purchasing power of the currency over a long period of time so that the middle-class working people… can be assured that 30 years from now or 40 years from when they retire the purchasing power of their savings is approximately the same as when they earned it.”

What a concept…

  Crude is stabilizing this morning at $107.44 — up a bit from 24 hours ago, seeing as the president kept airstrikes against Syria “on the table” during his speech last night.

Crisis averted, kinda sorta, now that the Syrian government has agreed to forfeit its chemical weapons.

“Now for the fine print,” cautions Asia Times correspondent Pepe Escobar, sharing our suspicion yesterday that the story isn’t over, but only beginning.

“Everybody knows what happened to Saddam Hussein and Col. Gaddafi after they gave up their deterrence. Assuming both Washington and Damascus accept [the Russians' disarmament] proposal, this could easily be derailed into an Iraqi-style ultra-harsh inspection regime.”

Which the president can use literally for the rest of his term to generate crises on demand, distracting the mooing masses from any gathering economic/social discontent. “Assad is thumbing his nose at the international community! We can’t stand by in the face of this constantly looming threat to our security!” Just watch…

  Gold sits where it did 24 hours ago, at $1,362. Silver is looking a little more perky, at $23.13.

  “Historically, September has been gold’s best month of the year,” says U.S. Global Investors chief and Vancouver stalwart Frank Holmes.

“Looking at more than four decades of monthly returns, the precious metal has seen its biggest increase this month, averaging 2.3%.”

The “love trade” Frank speaks of so often — the cultural affinity many Asians have for gold — is approaching its seasonal peak.

“Indians will be getting ready for their wedding season that begins in October, followed by the five-day Hindu festival of lights, Diwali, which 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.”

India’s monsoon season has been good — boosting farmers’ incomes and the likelihood they’ll buy gold. “In 2010, the last year that rains were heavily above average, demand soared 37% in the fourth quarter after harvests,” according to a Reuters story Frank cites.

Frank is unconcerned about the high price of gold in Indian rupees — a “possible short-term threat,” he says. “Keep in mind the East’s long-term sentiment toward the metal, as 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.”

  Et tu, TJ’s?

It was one thing to read a few days ago that a faceless corporate giant like IBM is dropping 110,000 retirees from its company-sponsored health plan thanks to Obamacare costs.

But now one of the most worker-friendly retailers out there is dropping health insurance for its part-time workers. The grocery chain Trader Joe’s has told workers who log fewer than 30 hours a week they’ll have to turn to the online “marketplaces” for insurance next year. The company will give each part-timer a $500 check to help them get started.

“Trader Joe’s,” reports The Huffington Post, “has won kudos for offering its health care, dental and vision plans to part-time workers at a reasonable price — a rarity in an industry known for low pay and scant benefits.”

Back in May, CEO Dan Bane was more optimistic, writing to workers that the firm “made a decision to make minimal and only necessary changes to your costs.” Something clearly has changed… but for now, TJ’s corporate won’t say what.

Meanwhile, Obamacare regulations now total 10,516 pages in the Federal Register. So far.

If you haven’t started preparing for the changes Obamacare will mean in your own life — or you’re too overwhelmed to think about it — the Laissez Faire Club can help you navigate the loopholes while getting better health care and saving money. Here’s where to get started.

  Also from the “corporate memos workers don’t want to see” department, it’s come to this: Goldman Sachs is too good for its own employees.

The vampire squid has long furnished employees with brokerage accounts. But now the word has gone out: If the account has less than $1 million, it will be moved elsewhere by year-end 2014.

From a CNN story passed along by an alert reader: “In addition to providing a perk for employees, the old arrangement allowed Goldman to monitor their investments for compliance purposes. But the firm recently concluded that it could hire an outside brokerage to handle these accounts and still meet its compliance requirements.”

Former employees will have a choice of brokerage; current workers will be moved to Fidelity. As a Goldman memo puts it, they “will now have access to all those services that our platform doesn’t always provide because it’s geared to high-net-worth individuals.”

What’s next? A separate entrance for employees so the clients won’t have to see them?

  “You’re one of the only newsletters I read to the bottom,” writes a satisfied-but-not-satisfied reader. “Well done.

“Would Agora consider it too ‘kindergarten’ to offer a beginner’s help desk? You probably don’t know how much you know. I am such a beginner. I need to know about online brokers and overseas brokerages and would appreciate a Q&A service for quick-fire practical assistance.

“Why? Well, if I am interested in , say, options… but do not know diddly squat about how to handle brokers, then your services are tantalizing, but beyond me. I can hear the laughter… but just because I am not a financial expert does not mean I do not have time and money to get on board your train.

“The service that can train me will have my attention.”

The 5: We’re keenly aware that not everyone has the same level of experience. That’s why we go out of our way to offer hand-holding introductions to help new subscribers to our services feel as comfortable as possible.

Penny Stock Fortunes readers, for instance, get a rundown of the best discount brokers available. At Options Hotline, Steve Sarnoff has a package of special reports that walk you through the mechanics and terminology of options.

We’d never laugh at anyone’s level of experience. We’re here to help.

Cheers,

Dave Gonigam
The 5 Min. Forecast

P.S. Another way we aim to serve you better, no matter your experience level, is with a new-and-improved AgoraFinancal.com website. We’ve made wholesale changes with input from thousands of readers like you.

In only a few more days, you’ll be able to track all your portfolio recommendations in one spot — no matter how many subscriptions you have with us. You’ll also be able to keep up with your services whether you’re using a computer, tablet or mobile phone.

The transition from the old site to the new will entail taking down our site starting Friday afternoon after the close. The new site will be up and running by Tuesday morning. Stay tuned…

TANSTAAFL, Butter and Silver

Posted: 11 Sep 2013 11:42 AM PDT

from Deviant Investor:

TANSTAAFL is the acronym for "There ain't no such thing as a free lunch." The saying has been used for years, even prior to Robert Heinlein's use of it in "The Moon Is A Harsh Mistress." It is another way of saying there is always a price that must be paid.

Regarding butter: "If you subsidize butter, you get more butter." Substitute whatever you wish in the place of "butter," such as, welfare, stupidity, food stamps, drugs, student loans, mortgages, political contributions, bad policy, lazy thinking, too-big-to-fail banks, deficit spending, and so forth.

Read More @ DeviantInvestor.com

NAV Premiums Of Certain Precious Metal Trusts and Funds - Physical Gold Demand Provokes Another Bullion Redemption - A Murder of Black Swans

Posted: 11 Sep 2013 11:40 AM PDT

NAV Premiums Of Certain Precious Metal Trusts and Funds - Physical Gold Demand Provokes Another Bullion Redemption - A Murder of Black Swans

Posted: 11 Sep 2013 11:40 AM PDT

Silver, Butter and TANSTAAFL

Posted: 11 Sep 2013 11:38 AM PDT

TANSTAAFL is the acronym for “There ain’t no such thing as a free lunch.” The saying has been used for years, even prior to Robert Heinlein’s use of it in “The Moon Is A Harsh Mistress.” It is another way of saying there is always a price that must be paid.

Get A Free Copy Of Sound Money Magazine

Posted: 11 Sep 2013 11:31 AM PDT

Sound money – many talk about it, what exactly is behind it? What is the link with gold?

These questions are directed in the Sound Money Magazine, an electronic magazine that reveals the facts on sound money economics with respect to the global market conditions. Sound Money Magazine has put together a free issue for all its readers who are interested in attaining information about the price manipulation in the gold market. The free issue is a compiled set of evidences with regard to the intervention by the Government and Central bank in relation to the gold prices.

The magazine provides details on the issues and documentation surrounding the manipulation of gold prices, courtesy of GATA. The work of GATA is worldwide known to reveal manipulations  in the gold market by central banks, along with their agents (the bullion banks). The manipulation is obviously due to the fact that gold and silver are the biggest adversary to fiat currency and, hence, an enemy to the Government. GATA was set up to uncover and impeach the collusion to control and manipulate the prices of precious metals. 

Dr. Jeffrey Lewis, publisher and editor of Sound Money Magazine: "We are proud to have been able to collaborate with GATA and bring to all our readers a sufficient compilation of the fine work documented by GATA specifying the core evidence of gold price manipulation. This special issue is rather a tribute to their brilliant work in order to recreate a living collection evidence – the outcome of the efforts of their vigorous investigation."

Sound Money Magazine is exclusively available on Apple's newsstand. The magazine was established last year and you can download the free issue from here Apple’s iTunes.

Contact: Dr. Jeffrey Lewis | jeff@soundmoneymag.com

It's Getting Interesting Out "There"

Posted: 11 Sep 2013 11:04 AM PDT

War was always here. Before man was, war waited for him. The ultimate trade awaiting its ultimate practitioner.  - Cormac McCarthy, "Blood Meridian:  Or The Evening Redness In The West"
It's funny, I bought a few of Cormac McCarthy's novels for a friend several years ago and I ended up reading them before she did.  As an English major in college, I can say definitely say that his works should be taught at the college level.  The problem is, the college would have to decide if they should be taught as part of the English, Government or Philosophy curriculum.

It looks like Obama finally put the finishing touches on his fade from attacking Syria without justified provocation.  Hell even AP has ripped to shreds any of the "evidence" that Obama has offered up as proof Syria even used chemical weapons at all:  LINK  What's most stunning about this whole ordeal to is the ineptness with which Obama and John Kerry handled the entire situation.   This whole stunt the Obama regime tried to pull off was pathetic from start to finish.

Again, as an English major, to me the worst adjective that anyone can label anything is "pathetic."  What's hilarious about the whole ordeal is that the Democrats and CNN are now assuming the role of the neocons and the Republicans in Congress are now largely the pacifists.  It pretty much leaves one speechless.  Certainly anyone who originally supported and loves Obama unequivocally CAN NOT support this tragically pathetic neocon now...

At any rate, I am starting to conclude that gold and silver are marking time for a big move to the upside.  My latest indicator?  Pan American Silver (PAAS) announced out of the blue yesterday that just THREE weeks after it announced that it had implemented hedges for a significant amount of its gold and silver production, it had decided to remove them.  This was a stunning and rapid reversal of a big financial decision and it must have cost them a lot of money to remove the hedges.  I'll know if the cost was big enough that have to disclose the details in their next 10-Q (it will be pigeon-holed in the footnotes for sure).

I have never cared for PAAS as an investment because I have found the management to be incompetent and full of crap.  More important, they have always been a hedger.  But probably the biggest red flag for me with regard to PAAS is that Bill Fleckenstein is on the board of directors.   Fleckenstein is probably one of the most disingenuous and incompetent market analysts out there.  For some reason he gets air-time on CNBC, but probably because he represents the "contrarian" investor viewpoint and CNBC has also figured out the he's an idiot.  We certainly know that CNBC features nothing but idiots.

At any rate, one of the primary Wall Street firms that "advises" PAAS is JP Morgan.  JP Morgan has spent the better part of the last 9 months eliminating its massive, manipulating short position in Comex gold and silver contracts and has actually amassed a considerably large long position in gold contracts.  My bet is that JP Morgan told PAAS that, based on what it knows as an insider to the precious metals market worldwide, putting on those hedges was not a good idea.

There are plenty of other signals being flashed loud and clear for anyone who is paying attention, but this latest move by PAAS further confirms my view that the metals are marking some time here - ostensibly until after the next FOMC meeting next Tues/Wed - before they being to make a move to the upside that will take everyone except the hardiest of precious metals investors by surprise.


It's Getting Interesting Out "There"

Posted: 11 Sep 2013 11:04 AM PDT

War was always here. Before man was, war waited for him. The ultimate trade awaiting its ultimate practitioner.  - Cormac McCarthy, "Blood Meridian:  Or The Evening Redness In The West"
It's funny, I bought a few of Cormac McCarthy's novels for a friend several years ago and I ended up reading them before she did.  As an English major in college, I can say definitely say that his works should be taught at the college level.  The problem is, the college would have to decide if they should be taught as part of the English, Government or Philosophy curriculum.

It looks like Obama finally put the finishing touches on his fade from attacking Syria without justified provocation.  Hell even AP has ripped to shreds any of the "evidence" that Obama has offered up as proof Syria even used chemical weapons at all:  LINK  What's most stunning about this whole ordeal to is the ineptness with which Obama and John Kerry handled the entire situation.   This whole stunt the Obama regime tried to pull off was pathetic from start to finish.

Again, as an English major, to me the worst adjective that anyone can label anything is "pathetic."  What's hilarious about the whole ordeal is that the Democrats and CNN are now assuming the role of the neocons and the Republicans in Congress are now largely the pacifists.  It pretty much leaves one speechless.  Certainly anyone who originally supported and loves Obama unequivocally CAN NOT support this tragically pathetic neocon now...

At any rate, I am starting to conclude that gold and silver are marking time for a big move to the upside.  My latest indicator?  Pan American Silver (PAAS) announced out of the blue yesterday that just THREE weeks after it announced that it had implemented hedges for a significant amount of its gold and silver production, it had decided to remove them.  This was a stunning and rapid reversal of a big financial decision and it must have cost them a lot of money to remove the hedges.  I'll know if the cost was big enough that have to disclose the details in their next 10-Q (it will be pigeon-holed in the footnotes for sure).

I have never cared for PAAS as an investment because I have found the management to be incompetent and full of crap.  More important, they have always been a hedger.  But probably the biggest red flag for me with regard to PAAS is that Bill Fleckenstein is on the board of directors.   Fleckenstein is probably one of the most disingenuous and incompetent market analysts out there.  For some reason he gets air-time on CNBC, but probably because he represents the "contrarian" investor viewpoint and CNBC has also figured out the he's an idiot.  We certainly know that CNBC features nothing but idiots.

At any rate, one of the primary Wall Street firms that "advises" PAAS is JP Morgan.  JP Morgan has spent the better part of the last 9 months eliminating its massive, manipulating short position in Comex gold and silver contracts and has actually amassed a considerably large long position in gold contracts.  My bet is that JP Morgan told PAAS that, based on what it knows as an insider to the precious metals market worldwide, putting on those hedges was not a good idea.

There are plenty of other signals being flashed loud and clear for anyone who is paying attention, but this latest move by PAAS further confirms my view that the metals are marking some time here - ostensibly until after the next FOMC meeting next Tues/Wed - before they being to make a move to the upside that will take everyone except the hardiest of precious metals investors by surprise.


Daily Nugget – will gold climb with tapering?

Posted: 11 Sep 2013 10:45 AM PDT

by Jan Skoyles, TheRealAsset.co.uk

In yesterday's Social Gold Mine we featured a couple of tweets regarding India's ongoing currency wars; the rupee versus gold. Despite the rupee sitting at an all-time low against the dollar, for the time being it is officially winning the war. Thanks to the weak currency the price of gold bullion is at a record high and August's gold imports fell by 90% from the previous year.

Now that tensions over Syria appear to have calmed, gold appears almost entirely focussed on the FOMC meeting next week and the subsequent decision. Consensus remains that the 17-18 September meeting will result in an announcement that the Fed will reduce the $85billion monthly purchases by around $10-$15 billion.

Goldman Sachs, not really known for their record gold price predictions, said this morning that gold's drop will extend into 2014 when the Fed taper asset purchases.

Read More @ TheRealAsset.co.uk

Gold Price Will Double the Dow-Mike Maloney

Posted: 11 Sep 2013 10:41 AM PDT

By Greg Hunter's USAWatchdog.com Dear CIGAs, Precious metals expert Mike Maloney says, "According to dividend yields, we've never been in a bubble as big as we are today.  So, I wouldn't get involved in stocks at these levels.  I think they're insane."  Maloney wrote the best-selling book, "Guide to Investing in Gold and Silver."  Maloney... Read more »

The post Gold Price Will Double the Dow-Mike Maloney appeared first on Jim Sinclair's Mineset.

Grant Williams: Comex paper-to-gold ratio up to 55-1, GLD redemptions refused

Posted: 11 Sep 2013 10:40 AM PDT

1:35p ET Tuesday, September 10, 2013

Dear Friend of GATA and Gold:

Singapore-based fund manager and newsletter writer Grant Williams tells King World News today that the ratio of Comex gold claims to Comex gold warehouse ounces has risen to 55 to 1 and that shareholders of the GLD exchange-traded fund who are qualified to exchange their shares for real metal have been denied it. An excerpt from the interview is posted at the King World News blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/9/11_Am...

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


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Join GATA here:

Gold Investment Symposium 2013
Luna Park Conference Center, Sydney, Australia
Wednesday-Thursday, October 16-17, 2013

http://gold.symposium.net.au/

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http://www.minesandmoney.com/

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Stalling Growth of International Reserves

Posted: 11 Sep 2013 10:30 AM PDT

Hugo Salinas Price writes:  I have kept track of International Reserves (excluding gold) for many years, with data helpfully provided every week by Doug Noland, at prudentbear.com, who obtained the information from Bloomberg. Here is the graph I have elaborated with data since 1948, when there was still a modicum of reason operating in the financial world. Lately, I worked out a graph showing in more detail the growth of these reserves in the period from August 2005 to August 30, 2013. I draw your attention to the slump in reserves which took place during the year 2008-2009. It was an ugly period, financially. Then, notice the slowdown in growth of reserves during the past two years (24 months). Finally, notice that growth in reserves has stalled in the last few months of this year. Growth appears to be topping-out. Since April 13, when reserves passed the $11 Trillion mark at $11.082 Trillion, in the four months to August 30, they have only increased by $86 billion – 0.78% If the growth in reserves registered from August 2009 to August 2011, which averaged $1.5 Trillion yearly, had continued from August 2011 to August 2013, international reserves would now be over $13 Trillion; as it is, they are stalled at just over $11 Trillion. $2 Trillion are missing! International reserves have two sources of growth: Accumulation of Bonds (mainly Euro and Dollar Bonds) in central banks of the exporting nations, which come about due to export surpluses with which the exporters purchase bonds issued by the importing countries. Accumulation of interest earned on the bonds, re-invested in bonds.   The international reserves are thus a measure of the credit which the exporters are willing and able to grant the purchasers of their exports. If international reserves are not growing, but stalling out, this means that the exporting countries are not extending further credit, for whatever reasons, to the importing countries, mainly the US and the Euro Zone. Born of the liberation of the world's money from the shackles which tied it to gold under Bretton Woods, the world's great credit-expanding machine is slowing down. $2 Trillion in international reserves have not been generated in the last 24 months. The cause must be a decline in international trade, through which enormous export surpluses of the East were sold to the West on credit, and the East received bonds for the extended credit. The market for government bonds of the West has been the eastern exporting countries, which have used their vast export surpluses to invest in western bonds. If the exporting countries – the East – are slowing down on bond purchases, it most likely means they have less surplus left with which to purchase the bonds. Of course, they might have generated surpluses and used them to invest in the "Emerging Markets" – another name for what used to be called the Third World. Perhaps they are buying up the underdeveloped and chronically deficit-ridden Third World? That may be, but such a policy could hardly account for a $2 Trillion slow-down in growth of international reserves. A $2 Trillion market for bonds has not materialized in the last two years; it is no wonder that the Fed has stepped in with QE to purchase the bonds which must be sold to keep the US Government in operation, not to mention to stave off utter collapse if the word were to spread that "There is no market for US and Euro Bonds at the volumes that the sellers require!" The US and the Euro Zone are finding that they cannot float further credit in the exporting countries. This is a serious condition; the West depends on a market which will accommodate its expansion of credit – a market for its government bonds – for without that continual expansion the whole house of financial cards comes crashing down. There appears to be no further market where the US and the Euro Zone can float their bonds. The only recourse is to monetize their government debt (QE) and that means monetary inflation. The consequence of monetizing debt will have to be rising interest rates. If the government debt were not monetized, US and Euro Zone bonds would have to be thrown on the world market, but – who would purchase them? Interest rates would skyrocket, even if there were possible buyers, which is doubtful. As it is, the US can only continue to monetize government debt. Higher dollar interest rates are inevitable and will cause further government deficits; the debt overhang in both the US and Euro Zone is so great that a rise of a few points in interest rates will explode the deficits, and so on and so forth. Bottom line: Stalling growth in International Reserves tells me that a world financial collapse is in the offing. Please draw your own conclusions. Source:  Moneda De Plata Para Mexico  http://plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=220   Thanks to Ed Steer for the link.

Stalling Growth of International Reserves

Posted: 11 Sep 2013 10:30 AM PDT

Hugo Salinas Price writes:  I have kept track of International Reserves (excluding gold) for many years, with data helpfully provided every week by Doug Noland, at prudentbear.com, who obtained the information from Bloomberg. Here is the graph I have elaborated with data since 1948, when there was still a modicum of reason operating in the financial world. Lately, I worked out a graph showing in more detail the growth of these reserves in the period from August 2005 to August 30, 2013. I draw your attention to the slump in reserves which took place during the year 2008-2009. It was an ugly period, financially. Then, notice the slowdown in growth of reserves during the past two years (24 months). Finally, notice that growth in reserves has stalled in the last few months of this year. Growth appears to be topping-out. Since April 13, when reserves passed the $11 Trillion mark at $11.082 Trillion, in the four months to August 30, they have only increased by $86 billion – 0.78% If the growth in reserves registered from August 2009 to August 2011, which averaged $1.5 Trillion yearly, had continued from August 2011 to August 2013, international reserves would now be over $13 Trillion; as it is, they are stalled at just over $11 Trillion. $2 Trillion are missing! International reserves have two sources of growth: Accumulation of Bonds (mainly Euro and Dollar Bonds) in central banks of the exporting nations, which come about due to export surpluses with which the exporters purchase bonds issued by the importing countries. Accumulation of interest earned on the bonds, re-invested in bonds.   The international reserves are thus a measure of the credit which the exporters are willing and able to grant the purchasers of their exports. If international reserves are not growing, but stalling out, this means that the exporting countries are not extending further credit, for whatever reasons, to the importing countries, mainly the US and the Euro Zone. Born of the liberation of the world's money from the shackles which tied it to gold under Bretton Woods, the world's great credit-expanding machine is slowing down. $2 Trillion in international reserves have not been generated in the last 24 months. The cause must be a decline in international trade, through which enormous export surpluses of the East were sold to the West on credit, and the East received bonds for the extended credit. The market for government bonds of the West has been the eastern exporting countries, which have used their vast export surpluses to invest in western bonds. If the exporting countries – the East – are slowing down on bond purchases, it most likely means they have less surplus left with which to purchase the bonds. Of course, they might have generated surpluses and used them to invest in the "Emerging Markets" – another name for what used to be called the Third World. Perhaps they are buying up the underdeveloped and chronically deficit-ridden Third World? That may be, but such a policy could hardly account for a $2 Trillion slow-down in growth of international reserves. A $2 Trillion market for bonds has not materialized in the last two years; it is no wonder that the Fed has stepped in with QE to purchase the bonds which must be sold to keep the US Government in operation, not to mention to stave off utter collapse if the word were to spread that "There is no market for US and Euro Bonds at the volumes that the sellers require!" The US and the Euro Zone are finding that they cannot float further credit in the exporting countries. This is a serious condition; the West depends on a market which will accommodate its expansion of credit – a market for its government bonds – for without that continual expansion the whole house of financial cards comes crashing down. There appears to be no further market where the US and the Euro Zone can float their bonds. The only recourse is to monetize their government debt (QE) and that means monetary inflation. The consequence of monetizing debt will have to be rising interest rates. If the government debt were not monetized, US and Euro Zone bonds would have to be thrown on the world market, but – who would purchase them? Interest rates would skyrocket, even if there were possible buyers, which is doubtful. As it is, the US can only continue to monetize government debt. Higher dollar interest rates are inevitable and will cause further government deficits; the debt overhang in both the US and Euro Zone is so great that a rise of a few points in interest rates will explode the deficits, and so on and so forth. Bottom line: Stalling growth in International Reserves tells me that a world financial collapse is in the offing. Please draw your own conclusions. Source:  Moneda De Plata Para Mexico  http://plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=220   Thanks to Ed Steer for the link.

GOLD Elliott Wave Technical Analysis

Posted: 11 Sep 2013 10:15 AM PDT

Yesterday's analysis expected some downwards movement, but not as much as we got. The target was 1,394, but price fell through this and invalidated the hourly wave count. Price remains above the invalidation point on both daily wave counts. Read More...

Amazing - GLD ETF Tells Customers You Can’t Have The Gold

Posted: 11 Sep 2013 09:36 AM PDT

Today one of the most highly respected fund managers in Singapore shocked King World News when he said that custodians of the ETF GLD have refused to give people physical gold in exchange for the shares. Grant Williams, who is portfolio manager of the Vulpes Precious Metals Fund, also warned that the massive and escalating paper claims on physical gold at the COMEX warehouse are going to create an explosion in the price of gold. Below is what Williams had to say as KWN readers around the world take another trip down the rabbit hole.

This posting includes an audio/video/photo media file: Download Now

TANSTAAFL, Butter and Silver

Posted: 11 Sep 2013 09:13 AM PDT

TANSTAAFL is the acronym for "There ain't no such thing as a free lunch." The saying has been used for years, even prior to Robert Heinlein's use of it in "The Moon Is A Harsh Mistress." It is another way of saying there is always ... Read More...

The Daily Market Report

Posted: 11 Sep 2013 08:58 AM PDT

Gold Consolidates As Syria Gets Back-Burnered


11-Sep (USAGOLD) — Gold is modestly lower, but trading within the confines of yesterday’s range as the market digests the President’s speech on Syria. With the crisis in Syria seemingly on the back-burner, whether the Fed intends to taper or not is once again on the front-burner.

President Obama seems inclined to give diplomacy a little more time to work and asked Congress to delay any vote on authorizing military action against Syria. For now, the ball seems to be in the Russian/Syrian court and we’ll all have to wait and see how the deal to secure Syria’s chemical weapons plays out. However, the President also ordered the U.S. military to “be in a position to respond” if diplomacy fails.

U.S. wholesale sales missed expectations in July, rising a meager 0.1%. This is mildly supportive to the status quo on asset purchases, but consensus continues to suggest the Fed will indeed taper those purchases after next week’s FOMC meeting.

I remain unconvinced, particularly in light of the dismal August jobs report. If they do indeed announce a reduction in asset purchases, perhaps it is an acknowledgement of the realities of cost/benefit analysis. The Fed has thrown a lot of money at the moribund U.S. economy — as of last week the Fed’s balance sheet was in excess of $3.6 trillion — with precious little show for it. QE simply hasn’t lived up to expectations.

With a debate over spending and the debt ceiling looming, maybe the Fed is signalling to Congress that they need to take decisive action on the fiscal front. Yet Congress remains as divided as ever. It seems therefore that common ground will be elusive once again and a tapering of monetary support might just exacerbate the problem.

An potential diplomatic solution on Syria may have allowed Congress to avoid a difficult vote on the situation. If history is our guide, they will likely desperately seek to avoid difficult votes on the economy in October as well, choosing instead to kick that problem down the road yet again.

Paulson-backed Gabriel threatens $4bn of claims in Romania

Posted: 11 Sep 2013 08:53 AM PDT

Gabriel shares rise after CEO says case against Romanian state ‘very, very robust’ should lawmakers vote to oppose 10m oz gold project.

Read more….

SA gold wage hikes to add $150m a year in costs

Posted: 11 Sep 2013 08:53 AM PDT

The South African Chamber of Mines says the wage settlements in the gold sector will amount to $150 million in extra costs for companies over the next year.

Read more….

Rio Tinto’s giant Mongolian mine gets new CEO

Posted: 11 Sep 2013 08:53 AM PDT

A top copper marketing executive at Rio Tinto will take over as the head of Oyu Tolgoi, the giant copper/gold mine in Mongolia.

Read more….

Will gold follow its seasonal pattern this year?

Posted: 11 Sep 2013 08:53 AM PDT

Historically, September has been gold's best month of the year. The yellow metal has seen its biggest increase this month, averaging 2.3%, says Frank Holmes.

Read more….

African Barrick COO resigns weeks after CEO change

Posted: 11 Sep 2013 08:53 AM PDT

Marco Zolezzi had resigned with immediate effect from African Bariick Gold, less than a month after its former CEO also left.

Read more….

The U.S. Really Wants a War With Syria

Posted: 11 Sep 2013 08:44 AM PDT

Apparently, global markets rallied overnight on hopes that a conflict may be avoided if Syria gives up its chemical weapons. If that's the case, it's a rally that will fade later in the week.

That's because the ongoing Syrian conflict has nothing to do with chemical weapons. It's all about regime change, which is all about natural gas and pipelines.

But this is not just “another” Middle Eastern conflict. It's much deeper, subtler, and potentially far more dangerous than preceding conflicts. As we'll attempt to explain in today's issue, the situation in Syria is a direct result of the relative decline of U.S. imperial power.

There's little doubt that the U.S. want to see regime change in Syria. So it was a bit of a masterstroke that yesterday the Russians tried to diffuse the conflict by calling the U.S.’s bluff and playing the chemical weapons card. As reported by the Financial Times:

“Russia launched an unexpected diplomatic initiative to defuse the Syrian crisis on Monday when it called on the Assad regime to place its chemical weapons stockpile under international supervision, suggesting the move could head off a U.S. military strike.

“In a move that took Western diplomats by surprise, Sergei Lavrov, Russia's foreign minister, announced that Moscow has proposed to the Assad regime that it should ‘not only put its chemical weapons storages under international control, but also have them destroyed subsequently.’”

Russia doesn't want regime change, so it doesn't want war. And if Russia plays for peace, then it makes it that much harder for the West to justify its belligerent actions.

But yesterday morning, the U.S. hit back, calling Russia's bluff that called the U.S.'s bluff. That is, President Obama said that he'd call off any attack if Syria relinquished control of its chemical weapons. Or in Obama's words, “If in fact that happens.”

This is getting almost laughable. So all Syria has to do to avoid a carpet bombing is relinquish control of its chemical weapons. And all the U.S. has to do to effect regime change is to say that Syria won't give up all its weapons (it's still hiding some, and we've got “proof”).

So let's see how this diplomatic dance plays out. But in the meantime, all you have to do is understand that Russia wants peace because it doesn't want its energy interests threatened, and the U.S. wants Assad out because it (and Saudi Arabia) wants to keep its foot on the throat of Iran.

Here's the basic rundown:

On July 25, Iraq, Iran, and Syria signed a memorandum of understanding to build a pipeline running from the largest natural gas reservoir in the world (controlled by Iran and Qatar) through Iraq into Syria and Lebanon. The plan is to eventually extend the pipeline to Europe. The Wall Street Journal reported at the time:

“The oil ministers of Iraq, Iran and Syria Monday signed a preliminary agreement for a $10 billion natural-gas pipeline deal, the official Iranian News Agency IRNA and other Iranian media reported.

“The document was inked in the Assalouyeh industrial region, located in the southern province of Bushehr by Iranian oil minister Mohammad Aliabadi, Iraq’s oil minister Abdul Kareem Luaiby, and Syrian counterpart Sufian Alow, the agency said.”

Although bringing Middle Eastern gas into Europe is not in Russia's best interests, the next best thing for Russia would be to have its hands all over the distribution of the gas. We'd guess that Gazprom, Russia's state energy giant, would have a fair economic interest in any pipeline built through the region.

But monetizing Iran's gas reserves and having euros flow in the billions to Iran doesn't sit well with Saudi Arabia or the U.S. Neither wants a strengthening Persian force to reckon with in the future. Nor are they happy with Russia retaining dominance over the flow of gas into Europe.

In addition to the U.S. and Saudi Arabia having their noses out of joint, Turkey isn't impressed with the pipeline proposal either. It wants to play the role as the transit nation for Middle Eastern gas to flow to Europe and thus cement its strategic importance in the region.

And as we mentioned yesterday, China is on the Russian side. It wants stability in the region (to ensure its own energy supplies) and sees Assad as a much more stable force than the unknown alternative. Right now the anti-Assad forces are a hodge-podge of extremists/terrorists/medieval psychos with perhaps a few genuine freedom fighters thrown in.

Any new ruling force to assemble from such a group would make Assad look like the Dalai Lama. So bringing down the regime without sending in ground troops would ensure carnage for the poor Syrian people, who are innocently caught up in this global geopolitical chess game.

Not that ground troops would really achieve anything. The massive U.S. military presence in Iraq seems to have bought the U.S. little influence. If we're interpreting events correctly (and really, who knows when it comes to the Middle East) then it seems strange that the U.S. couldn't prevent the Iraqis from agreeing to the pipeline before it even got to Syria. Although the pipeline is apparently running through the Shiite (and thus, Iran-friendly) part of Iraq, it just goes to show the lack of overall American influence there.

So much for 10 years of occupation and hundreds of billions of dollars spent. At least the oil boys and contractors got a few concessions out of it.

So where does this leave us?

Well, no war and no regime change would signal that the long-held Saudi/U.S. balance of power in the region is waning. It would also reflect a relative step up in power for Russia and Iran.

The other question you have to ask is why is the U.S. so keen to risk another deeply unpopular war in the region? The answer is that's what "top dogs" do. When you're the global superpower, you don't let anyone threaten that position.

And this is where economics, the stock market and your wealth comes into it.

The U.S. as global superpower is made possible by the dollar being the world's reserve currency. And supporting the dollar's role as world's reserve currency is the fact that global energy transactions take place through the dollar. Energy is what gives the U.S. dollar and America their power.

Russia and Iran have no real intention of maintaining the status quo. Longer term, neither does China. Saudi Arabia long ago decided to support the dollar by selling its oil for depreciating greenbacks, which is why the two are such strong allies.

So what you're seeing in Syria is not another regional conflict. It's a fight by the U.S. to maintain its top-dog status. But when dogs get in trouble, they'll do anything to survive. They'll even gnaw off their leg if they get it trapped.

So our guess is that the U.S. will continue to pick a fight and go for regime change. It will end up as a three-legged dog as a result, but fight it will. If it doesn't, perhaps it's already lame.

Regards

Greg Canavan
for The Daily Reckoning

Ed. Note: So the U.S. is picking a fight with Syria. Big deal. What does that mean for you? Well, if you read today’s issue of Laissez Faire Today  you would’ve found out… and learned about a few actionable ways to protect your wealth in the process. Not a Laissez Faire Today reader? Sign up for free, right here.

This article originally appeared in Laissez Faire Today.

Take-Away From The Correlation Silver vs US Military Spending

Posted: 11 Sep 2013 08:44 AM PDT

TANSTAAFL is the acronym for "There ain't no such thing as a free lunch."  The saying has been used for years, even prior to Robert Heinlein's use of it in "The Moon Is A Harsh Mistress."  It is another way of saying there is always a price that must be paid.

Regarding butter:  "If you subsidize butter, you get more butter."  Substitute whatever you wish in the place of "butter," such as, welfare, stupidity, food stamps, drugs, student loans, mortgages, political contributions, bad policy, lazy thinking, too-big-to-fail banks, deficit spending, and so forth.

Military spending seems relevant as Congress prepares to vote on an attack on Syria.  Casey Research (link) published the following chart of military spending over the past 70 years.  Their analysis, based on White House OMB data, is consistent with more detailed data I found from www.data360.org which lists spending by year.  This is "big picture" analysis:

military spending 1940 2012 investing

 

military spending vs silver price 2010 investing

The exponential rate of increase for military spending from 1948 to 2010 (62 years) was about 6.4% per year.  The rate of increase from 1971 – 2010 (39 years) was about 6.1%.  For silver, the annual rate of increase from 1971 to 2010 was about 7.1%.

Military spending increased erratically and exponentially (1948 – 2010) at about 6.4 % per year.  Silver prices increased similarly at about 7.1% per year since 1971, the year that Nixon "temporarily closed the gold window."  Both silver and military spending increased very rapidly following 9/11/2001.  An analysis of increases in the total money in circulation, as measured by M2, and for the prices of gold and cigarettes produces similar results over long periods.  Increases in the money supply, deficit spending, and debt clearly drive increasing consumer prices and increases in gold and silver prices.

If we subsidize butter, we get more butter.  Our current system subsidizes many programs, from food stamps (SNAP), welfare programs, congressional importance, military contractors, mortgages, lobbyist compensation, student loans, medical costs, and on and on to eventual insolvency.  Congress will soon raise the debt ceiling in another circus of political "horse-trading" that will enrich those who made the largest donations to congress.  Military spending is destined to rise along with debt, denials, and prices.

Do you expect any of these massive expenditures or subsidies to stop, or even slow their rate of increase?  Of course not!

Unfortunately, there is no free lunch, there are consequences to bad decisions, and the costs of subsidized programs must be paid.  These consequences will be life-changing and quite drastic.  Consider some thoughtful preparation.

You can buy 30 year bonds (a very LONG commitment) and earn a bit less than 4% per year in a currency virtually guaranteed to decline in value, or you can put your savings into a Certificate of Deposit and earn 1% per year.  You could be "Cyprused" with a "bail-in" that converts your deposit in the bank, which is legally a liability of the bank and no longer your money, into equity in a failing bank.  We hope such "bail-ins" do not occur but the laws are in place and the precedents have been set.

Alternatively, you can purchase "insurance" in the form of gold and silver and watch it increase erratically in price, along with military spending, the national debt, many other programs, and the money supply.

I strongly discourage an investment in gold and silver if you believe that Congress will balance the budget and reduce the national debt to near zero before the next presidential election.

However, in the real world, "insurance," in the form of gold and silver, makes good financial sense.

Consider storing your gold and silver outside the banking system and in a country other than where you live.  

 

Read:        Back to Basics – Gold, Silver and the Economy
Read:        Gold, Silver, and the Sins of the Past

GE Christenson  |  The Deviant Investor

Private equity bidders rebuffed by Australia’s Emeco

Posted: 11 Sep 2013 08:35 AM PDT

Challenging conditions in Australia's thermal coal and gold sectors has left the country's largest earthmoving rental equipment company, Emeco, vulnerable to takeover bids.

Read more….

Me Again

Posted: 11 Sep 2013 08:00 AM PDT

It had been about a month since I last spoke with Cory over at the Korelin Economics Report and we had a nice chat yesterday about one of our favorite subjects – gold. The .mp3 file is again hosted here at the blog – just click on the image to the right – or you can [...]

This posting includes an audio/video/photo media file: Download Now

S.Africa gold wage hikes to add $150 mln a year in costs-industry says

Posted: 11 Sep 2013 07:57 AM PDT

11-Sep (Reuters) — South Africa’s Chamber of Mines said on Wednesday that wage settlements in the gold sector would amount to 1.5 billion rand ($150 million) in extra costs for companies over the next 12 months.

Companies and unions agreed to wage hikes of up to eight percent last week, ending a three-day strike.

Hardline union AMCU, which represents almost 20 percent of the gold workforce, has not signed up and said its members have given it a mandate to strike.

[source]

Gold demand improves as drop in price lures jewellers

Posted: 11 Sep 2013 07:45 AM PDT

11-Sep (Reuters) — Gold demand in India, the world’s top consumer of the precious metal, improved on Wednesday as prices were trading at their lowest in three weeks following losses in the world market and on a strong rupee.

…The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal. It rose more than 1 percent on Wednesday.

[source]

Precipitate Gold to Present on Kitco Gibson's "Discovery" Panel at Toronto Resource Investment Conference

Posted: 11 Sep 2013 07:37 AM PDT

Precipitate Gold's President & CEO, Jeffrey Wilson will be presenting as part of an hour-long presentation hosted by Kitco Gibson's Scott Gibson, and HRA Advisories' Eric Coffin, along with two of the junior market's most compelling recent discovery stories in Colorado Resources and GoldQuest Mining. Thursday, September 12, 2013 Workshop #3 11:00 - 11:20 11:20 - 11:30 11:30 - 11:40 11:40 - 11:50 11:50 - 12:00   Scott Gibson (Kitco Gibson) - Gold Stocks with Leverage to the Bottom in Gold Eric Coffin (HRA Advisories) - NEW Discoveries Can Drive a Renewed Market GoldQuest Mining Corp. - CORPORATE PRESENTATION Precipitate Gold Corp. - CORPORATE PRESENTATION Colorado Resources Ltd. - CORPORATE PRESENTATION Also Visit Precipitate Gold at Booth #915 The Toronto Resource Investment Conference September 12 - 13, 2013 Sheraton Centre Toronto Hotel 123 Queen Street W Toronto ON M5H 2M9 Canada Jeffrey R. Wilson President & CEO Precipitate Gold Corporation (PRG.V) 789 West Pender Street, Suite 860 Vancouver, BC V6C 1H2 T: 604-558-0335 C: 604-837-5440 E: jwilson@precipitategold.com LinkedIn ca.linkedin.com/in/jeffreyrwilson/

Precipitate Gold to Present on Kitco Gibson's "Discovery" Panel at Toronto Resource Investment Conference

Posted: 11 Sep 2013 07:37 AM PDT

Precipitate Gold's President & CEO, Jeffrey Wilson will be presenting as part of an hour-long presentation hosted by Kitco Gibson's Scott Gibson, and HRA Advisories' Eric Coffin, along with two of the junior market's most compelling recent discovery stories in Colorado Resources and GoldQuest Mining. Thursday, September 12, 2013 Workshop #3 11:00 - 11:20 11:20 - 11:30 11:30 - 11:40 11:40 - 11:50 11:50 - 12:00   Scott Gibson (Kitco Gibson) - Gold Stocks with Leverage to the Bottom in Gold Eric Coffin (HRA Advisories) - NEW Discoveries Can Drive a Renewed Market GoldQuest Mining Corp. - CORPORATE PRESENTATION Precipitate Gold Corp. - CORPORATE PRESENTATION Colorado Resources Ltd. - CORPORATE PRESENTATION Also Visit Precipitate Gold at Booth #915 The Toronto Resource Investment Conference September 12 - 13, 2013 Sheraton Centre Toronto Hotel 123 Queen Street W Toronto ON M5H 2M9 Canada Jeffrey R. Wilson President & CEO Precipitate Gold Corporation (PRG.V) 789 West Pender Street, Suite 860 Vancouver, BC V6C 1H2 T: 604-558-0335 C: 604-837-5440 E: jwilson@precipitategold.com LinkedIn ca.linkedin.com/in/jeffreyrwilson/

75th Birthday of Superman Celebrated With New Line of Collector Coins – Take a Look!

Posted: 11 Sep 2013 07:01 AM PDT

Happy Birthday Superman! In honour of the 75th anniversary of the ultimate super hero, the Royal Canadian Mint has unveiled a brand new line of collector coins. Here's a look at the latest designs as well as nine other memorable creations produced by the Mint.

So says the introduction to a post* on theloop.ca entitled Coolest Canadian coins presented here by Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample here – register here). Please note that this paragraph must be included in any article reposting with a link to the article source to avoid copyright infringement.

The post goes on to say:

The iconic hero, Superman, was co-created by Canadian Joe Shuster in collaboration with American Jerry Siegel in 1938. To celebrate his 75th birthday, The Royal Canadian Mint has created a line of gold, silver and cupro-nickel coins carefully embellished with distinct and colourful artwork.  Prices range from $29.75 for the cupro-nickel coin all the way up to $750 for the one of a kind 14-carat gold coin featuring a coloured image of Superman.

superman

*http://www.theloop.ca/living/money/wallet-wise/photo-gallery/-/p/7275/Coolest-Canadian-coins © Bell Media 2013 All rights reserved

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The post 75th Birthday of Superman Celebrated With New Line of Collector Coins – Take a Look! appeared first on munKNEE dot.com.

Gold Trades Near Three-Week Low as Obama Seeks Syria Delay

Posted: 11 Sep 2013 06:45 AM PDT

11-Sep (Bloomberg) — Gold futures swung between gains and losses, reaching the lowest in almost three weeks, after U.S. President Barack Obama asked Congress to delay a vote on military action against Syria, diminishing demand for a haven.

Bullion futures dropped 5 percent from a three-month high at the end of August when the U.S. said Syria should be held accountable for its alleged use of chemical weapons. Obama said he would prefer a peaceful solution to the Syrian conflict and that he saw "encouraging signs" of diplomacy ending the confrontation. He said he's asked Congress to postpone a vote on a military strike.

…"For the time being at least, the Syrian crisis is averted," David Govett, head of precious metals at Marex Spectron Group in London, said today in an e-mail. "For now, it would seem that the 'war premium' has gone. Now we are left with the Federal Open Market Committee meeting next week, where it seems that most people are looking for some sort of quantitative-easing tapering."

[source]

26 Quotable Quips on Investing by Warren Buffett

Posted: 11 Sep 2013 06:21 AM PDT

“It's far better to buy a wonderful company at a fair price than a fair company at a investing-4wonderful price”, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful” and 24 other unforgettable and highly quotable quips on investing by Warren Buffett over the years.

The following post by Ivaylo Ivanhoff (stocktwits.com) under the title 26 Market Wisdoms from Warren Buffett needs no further introduction and is presented here by Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample here – register here). Please note that this paragraph must be included in any article reposting with a link to the article source to avoid copyright infringement.

1. It takes 20 years to build a reputation and 5 minutes to ruin it. If you think about that, you'll do things differently.

2. Chains of habit are too light to be felt until they are too heavy to be broken.

3. Risk comes from not knowing what you're doing.

4. Only when the tide goes out do you discover who's been swimming naked.

5. If past history was all there was to the game, the richest people would be librarians.

6. I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.

7. It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

8. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

9. Time is the friend of the wonderful business, the enemy of the mediocre.

10. The stock market is a no-called-strike game. You don't have to swing at everything–you can wait for your pitch. The problem when you're a money manager is that your fans keep yelling, 'Swing, you bum!

11. Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, "I can calculate the movement of the stars, but not the madness of men." If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.

12. The best thing that happens to us is when a great company gets into temporary trouble…We want to buy them when they're on the operating table.

13. I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.

14. If I ever write a book, it will be titled  'why smart people do stupid things'. My partner says it should be autobiographical. If you risk something that is important to you for something that is unimportant to you, it just does not make any sense. I don't care what the odds are for you to succeed.

15. You only have to get rich once. That seems pretty fundamental.

16. History does not tell you the probability of future financial events happening.  The beta of the stocks doesn't tell you about the risk of the stock.

17. I like businesses I can understand. It is not an easy business for competitors to enter. I look for a competitive advantage – cost, brand, share of mind is priceless (better than market share). How much could anyone hurt them if they had a billion or 10 billion dollars. If they can't make a dent, I am in.

18. I want to know What a business will look like 10 years from now. If I can't see them where they will be 10 years from now, I don't buy them. We are buying a piece of a business. You will do well if the business does well if you didn't pay too high of a price.

19. We don't have huge returns, but we don't lose our money either (they are already rich. They are not going to take the risk and go after outsize returns. They don't expect to get high returns from business that won't change for 10 years)

20. The best buys have been when the number almost tell you not to. Then you feel so strongly about the product. Almost every business we bought is takes 5 or 10 minutes in terms of analysis. If you don't know enough to understand the business instantly, a couple months of analysis won't change that too much.

21. People are going to get out of bed and work productively around the world to meet the needs of their family. People are going to spend and there will always be some companies that will sell something that people would love to trade their money against.

22. Coke Cola IPO-ed in 1919 for $40. A year later, it was $19. You can always find a few reasons why that was not a good time to buy it, but if you bought 1 share at $40 and re-invested the dividends, you would have $5 million today. This factor overrides everything – all macro concerns you could have. There is never a perfect time to buy a great business; there are always reason to worry, but you should also know when it is wise to worry at all. For things that are unimportant or unknown, you should not worry. If you are right about the business, you will make a lot of money over time.

23. My biggest mistakes have been buying an attractive security in an unattractive business, where I liked the terms, but didn't like the business.

24. We don't spend any time looking back at Berkshire. There's so much to look forward to that it just doesn't make sense to look behind. You can only live life forward. You can learn something from the mistakes (preferable other people's mistakes), but the big thing to do is to stick with the businesses you understand. You want your decision making to be by looking in the mirror – stay in your circle of competence. You should be able to explain why you are buying a stock: "I am buying 100 shares of XXX, because….it is your responsibility to know. There is got to be a reason you buy a business. There is got to be a reason you buy a stock.

25. I don't think about the macro stuff. Figure out what's important and knowable. We've never bought or not bought a business because of interest rates or any macro projections.

26. If you are on Wall street, you might get overstimulated. All you need is one good idea a year and then ride it. It is very hard to ride one idea when you get so much new information every day.

*http://stocktwits50.com/2013/09/09/26-market-wisdoms-from-warren-buffett/ (Ivaylo Ivanhoff, creator of the algorithm behind the ST50 list and co-author of the books 'The StockTwits Edge' (2011) and 'Finding The Next Apple (2013)'; © 2013 StockTwits 50™)

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Gold Bullion Continues to Slowly Bleed Out of COMEX

Posted: 11 Sep 2013 05:57 AM PDT

"Though justice often moves slowly, it seldom fails to overtake the unjust." - Horace, Odes There were no deposits into the COMEX warehouses yesterday. Apparently GLD was not able to squeeze out any bars for the banks.

Gold and Silver Bounce from 3-Week Lows as Syria "Averted"

Posted: 11 Sep 2013 05:48 AM PDT

WHOLESALE bullion prices bounced on Wednesday from new 3-week lows as the US cancelled a Congressional vote on Syria, and traders pointed to next week's expected "tapering" of quantitative easing by the Federal Reserve. Oil prices and other commodities also stemmed this week's drop. World stock markets rose sharply.

Gold & Silver Fall as Fed Tapering Replaces Syria as Traders' Focus

Posted: 11 Sep 2013 05:33 AM PDT

GOLD and SILVER prices bounced on Wednesday from new 3-week lows as the US cancelled a Congressional vote on Syria, and traders pointed to next week's expected "tapering" of quantitative easing by the Federal Reserve.
 
Oil prices and other commodities also stemmed this week's drop. World stock markets rose sharply.
 
Gold and silver trading volumes were "thin", dealers said, with one calling the markets "very quiet" but other reporting "some light physical interest" from Asian stockists as prices fell.
 
"Syria for now remains a lingering underlying bullish factor" for gold and silver," says a note from Swiss refining and finance group MKS.
 
"But with each passing day that will play a smaller component in propping the market up."
 
"For the time being at least," agrees David Govett at brokers Marex, "the Syrian crisis is averted, [so] the 'war premium' has gone" from gold and silver prices.
 
"Now...most people are looking for some sort of quantitative-easing tapering" at next week's US Fed meeting.
 
Noting that gold and silver "started to decline with the declining probability of a military intervention" in Syria, analysts at investment bank Goldman Sachs now say "The September FOMC meeting, where our economists expect a tapering of QE3, could prove the catalyst to push gold prices lower."
 
Over the next 12 months, precious metals including gold and silver could drop a further 15%, Goldman Sachs says, advising its clients to go "underweight" the entire commodities complex.
 
Fellow investment bank J.P.Morgan in contrast recommended going "overweight on commodities" last week, BusinessWeek notes, thanks to rising demand from China, plus better manufacturing data worldwide.
 
"There's ample room for fresh selling [of gold and silver] should Fed tapering of QE be confirmed," said Swiss investment bank UBS analyst Joni Teves earlier this week.
 
"Gold prices would probably fall to $1250 an ounce in the first move," Teves told CNBC Tuesday. "But I certainly wouldn't rule out another attempt below $1200 if...the Fed is more aggressive than the market is currently expecting."
 
Major government bonds bounced in price Wednesday morning, edging yields lower from recent multi-month highs.
 
Ten-year UK gilt yields held above 3.0% however, and Sterling briefly spiked to $1.58 – its highest level since February – after new data showed a surprise fall in the UK jobless rate to 7.7%.
 
The gold price in British Pounds touched a 4-week low of £860 per ounce, reversing almost half of gold's July-August rally.
 
Before raising UK interest rates from their all-time low of 0.5%, Bank of England governor Mark Carney has set "forward guidance" that unemployment must first fall to 7.0%.
 
Average UK wages last month rose 1.0% from a year earlier, data showed today. Consumer price inflation was last pegged at 2.8% per year.
 
Silver prices for UK investors today bounced from £14.49 per ounce, the lowest level in 3 weeks and more than 10% beneath end-August's peak.

Gold easier at 1362.20 (-3.20). Silver 23.06 (+0.01). Dollar higher. Euro steady. Stocks called lower. US 10yr 2.95% (-1 bps).

Posted: 11 Sep 2013 05:19 AM PDT

Poland Confiscates Private Pensions - Yours Are Next

Posted: 11 Sep 2013 04:26 AM PDT

We have been saying for the last four years that as Europe, the US and other Western and global nation-states continue their debt-fueled collapse the governments of these countries will continue to consider their citizens' wealth to be their own and seize more of their assets. We have, unfortunately, been vindicated already numerous times.  
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