Gold World News Flash |
- The Smell of Collapse is in the Air
- Fed Disaster To Destabilize Markets & Send Gold Soaring
- Spain Will No Longer Index Pensions to Inflation
- Collapse Is In Hindsight – It Is A Matter Of Time
- Central bank balance sheets
- Historic Fed Decision’s Impact On Gold & Major Markets
- Why Obama Allowed Bailouts Without Indictments
- The Gold Price Closed at $1,307.60
- The Gold Price Closed at $1,307.60
- GOLD Elliott Wave Technical Analysis
- US Dollar Very Long Term Chart
- US Dollar Very Long Term Chart
- Asian (Positive) Contagion - EM FX, Bonds, Stocks Surging
- Gold And Silver On Fire As Fed Keeps Q.E. On Cruise Control
- The Silver Lining: At Least Americans Are Walking More
- Reasons To Sell Your Gold
- Sept. 18 morning update
- Marc Faber Warns "The Endgame Is A Total Collapse - But From A Higher Diving Board Now"
- Is Bernanke About To Destroy The Gold Investment Market?
- More Warnings: "This Time Is Different"
- 63 High Government Debt Episodes And What They Tell Us About Our Options Today
- Gold in India: Strong Support Zone Reached. What's Next?
- Goldman Flip-Flops: Sees Near-Term Upside In Gold
- Today’s Fed Meeting – Stocks, Bonds & Gold Loved It. Dollar Hated It.
- Fed will lose control of bond market, Fleckenstein tells KWN
- New York Sun: Mr. Bernanke gets the jones
- Gold up around 3 pct as Fed sticks to stimulus
- Ambrose Evans-Pritchard: Fed recoils from 1937 tightening error as jobs evaporate
- Gold Daily and Silver Weekly Charts - You Have To Be In To Win
- Gold Daily and Silver Weekly Charts - You Have To Be In To Win
- The Gold Price and the Fed’s “No Taper”
- With a sling and a stone
- GOLDEN PYRAMID
- There Is Now A Danger That “All Hell Is Going To Break Loose”
- Gold and Silver Soar As Fed Rejects Tapering and Revs Up The Printing Presses
- New Chinese Exchange-Traded Products Poised to Further Boost Gold Demand
- Got Gold Report's gold and silver charts posted
- Danger! Exploding Wealth Gap!
- Gold Jumps Most in Eight Weeks as Fed Maintains Stimulus
- Cazenove's Robin Griffiths: Central banks lost their gold trying to suppress it
- How Exactly Will Tapering Affect Gold Bullion Investment?
- GOLD EXPLODES HIGHER AFTER FED BOMBSHELL
- Gold surges after Fed decides to maintain asset purchases at $85 bln a month.
- New Chinese Exchange-Traded Products Poised to Boost Gold Demand
- Time to Buy Base Metals
- Time to Buy Base Metals
- Hateful Gold Investing Hated
- Hateful Gold Investing Hated
- Dollar, Meet the Peso
- Dollar, Meet the Peso
| The Smell of Collapse is in the Air Posted: 18 Sep 2013 11:05 PM PDT Read the Latest News About: Gold Silver Economy Central Banking The U.S. stock market is near all-time highs, while politicians... {This is a content summary only. Click on the blog title to continue reading this post, share your comments, browse the website, and more!} |
| Fed Disaster To Destabilize Markets & Send Gold Soaring Posted: 18 Sep 2013 10:05 PM PDT  On the heels of the historic Fed decision not to taper QE, today 42-year market veteran John Hathaway warned King World News this would destabilize financial markets and continue to send gold soaring. Hathaway also discussed the dire situation the Fed and Western central planners face, as well as how this will impact the gold market in the long-run. Hathaway, of Tocqueville Asset Management L.P., is one of the most respected institutional minds in the world today regarding gold, and his fund was awarded a coveted 5-star rating. This posting includes an audio/video/photo media file: Download Now |
| Spain Will No Longer Index Pensions to Inflation Posted: 18 Sep 2013 10:00 PM PDT from Armstrong Economics:
Politicians make promises all the time, then they break them. If a fund manager took your money said they will pay you 25%, then reduce it to 20%, then 15%, then 5%, then say it is theirs, isn't that FRAUD? Not in politics. |
| Collapse Is In Hindsight – It Is A Matter Of Time Posted: 18 Sep 2013 09:40 PM PDT by Gary Christenson, Gold Silver Worlds:
Several observers have commented recently about the near-term / mid-term outlook. The observations are quite unanimous: although the alleged economic experts and mainstream financial media pretend that things are "contained" in reality (under the hood) a mega crisis is boiling and is coming closer. Below "testimonials" confirm our view which we detailed in our piece Sorry, we the people are no machines. The main thesis in there was that our debt based economic and monetary system is reaching its natural limits. Read why and how. |
| Posted: 18 Sep 2013 09:20 PM PDT by Alasdair Macleod, Gold Money:
Since the banking crisis the Fed has acquired substantial quantities of securities as a result of the assistance it gave to too-big-to-fail banks and subsequently through quantitative easing, most of the assistance to the banks, the Maiden Lane and TALF securitisations, has been repaid. But since then, QE has swelled the Fed's balance sheet to $3.6 trillion. The financing of this expansion is reflected mainly in excess reserves, which are deposits in favour of depository institutions, in excess of their required reserves. As bond yields rise, it is obvious that the Fed will have to absorb portfolio losses, currently amounting to about $20bn for each one per cent fall in the value of its US Treasuries and $13bn on its mortgage securities (though these are likely to be more stable in price due to their self-liquidating nature). |
| Historic Fed Decision’s Impact On Gold & Major Markets Posted: 18 Sep 2013 08:40 PM PDT from KingWorldNews:
It is an abuse of the English language to describe what has occurred in the west over the past three years as growth. |
| Why Obama Allowed Bailouts Without Indictments Posted: 18 Sep 2013 08:11 PM PDT Submitted by Michael Krieger of Liberty Blitzkrieg blog, The following article by Janet Tavakoli is an excellent reminder of the extraordinarily destructive coup pulled off by financial oligarchs in fall of 2008, when the rule of law was suspended and total theft institutionalized. I have written many times about my experience on Wall Street when the bailouts happened. How I ranted and raved on the trading desk about how TARP marked the end of any semblance of free markets and that there was no turning back. How I was told to “take a walk around the block” to cool off. All of the suffering and hardships the majority of Americans are experiencing today are directly related to the coup pulled off by the crony financial oligarchs in the fall of 2008, and all of the media and political minions that helped them do it. People realize we have become a Banana Republic and they have now lost all hope. That said, there should always be hope and we can certainly restore society to better days, but not until we have remove our domestic cancers from their positions in the highest offices of government, finance and corporate America. That is what we must peacefully achieve. Now here’s Janet Tavakoli:
The most amusing thing about all of this is that people wanted President elect Obama to stick it to the financial oligarchs. Instead, he gave them trillions and offered immunity. More from Janet:
Her full article is here. |
| The Gold Price Closed at $1,307.60 Posted: 18 Sep 2013 08:09 PM PDT Gold Price Close Today : 1,307.60 Change : -1.80 or -0.14% Silver Price Close Today : 21.56 Change : -0.17 or -0.79% Gold Silver Ratio Today : 60.64 Change : 0.39 or 0.65% Franklin Sanders didn't publish commentary today, if he publishes later it will be available here. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com 1-888-218-9226 10:00am-5:00pm CST, Monday-Friday © 2013, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. No, I don't. |
| The Gold Price Closed at $1,307.60 Posted: 18 Sep 2013 08:09 PM PDT Gold Price Close Today : 1,307.60 Change : -1.80 or -0.14% Silver Price Close Today : 21.56 Change : -0.17 or -0.79% Gold Silver Ratio Today : 60.64 Change : 0.39 or 0.65% Franklin Sanders didn't publish commentary today, if he publishes later it will be available here. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com 1-888-218-9226 10:00am-5:00pm CST, Monday-Friday © 2013, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. No, I don't. |
| GOLD Elliott Wave Technical Analysis Posted: 18 Sep 2013 07:59 PM PDT Yesterday's alternate wave count was confirmed with movement above 1,324.09. At that stage the wave count expected more upwards movement towards a most likely target at 1,338.16. Price moved substantially higher than the target, but ... Read More... |
| US Dollar Very Long Term Chart Posted: 18 Sep 2013 07:57 PM PDT |
| US Dollar Very Long Term Chart Posted: 18 Sep 2013 07:57 PM PDT |
| Asian (Positive) Contagion - EM FX, Bonds, Stocks Surging Posted: 18 Sep 2013 07:34 PM PDT First, the bad news; the un-Taper-inspired collapse in the USD is not helping the JPY weakness that Abe desires and the NKY is now 200 points off its US day-session highs (though still green from yesterday) and the JASDAQ is red. But everywhere else there is much rejoicing... EM FX is back at 5 to 6 week highs with MYR, INR (fwds), and IDR all having major surges. Equity markets are green in general but the Philippines PSEi (+3%) and Indonesia's JCI (+4% but was +7.7% at one point) are an illiquid mess of over-exuberance. Gold, US Treasuries, and US equity futures are all holding gains or inching slightly better. While the moves are large, they are not unprecedented and certainly don't signal a wholesale charge back in of new hot-money since volumes remain on the low side for now. The Nikkei is not all that happy... trading below the US close still...
but EM FX is on fire... with Rupee forwards surging (lower is striong Rupee)...
and the other big winner - Jakarta stocks... (for now)...
Charts: Bloomberg |
| Gold And Silver On Fire As Fed Keeps Q.E. On Cruise Control Posted: 18 Sep 2013 07:29 PM PDT Silver, gold’s more rambunctious cousin, shot 8.7% higher from its intraday low to trade above $23 per ounce. The iShares Silver Trust (SLV), which tracks the metal, was up 6.44% on the day. The SPDR Gold Trust (GLD) gained 4.47%. The Silver miners are riding high. Up nearly 10% on the day are Vancouver-based Pan American Silver (PAAS), which sports a beefy 4.5% dividend yield |
| The Silver Lining: At Least Americans Are Walking More Posted: 18 Sep 2013 06:59 PM PDT With incomes stagnating (real household incomes at 15 year lows) and gas prices hovering awkwardly near record highs (especially for this time of year), we thought a reflection on the inflationary impact of an always-activist Fed were nowhere clearer indicated than by the collapse in the amount of gas that the average US citizen can afford. Of course, there is a silver lining... the affordability of gas dropping means fewer miles driven, fewer miles driven means more walking, and more walking means less obesity... so the Fed's inflationary leakage into energy prices and implicit enabling of lower living standards of most Americans is good for a nation of fatties - always the optimists.
(h/t @Not_Jim_Cramer) |
| Posted: 18 Sep 2013 04:54 PM PDT My Dear Extended Family, "QE to Infinity." Infinity defined as the low .7000 on the USDX. Every reason for gold’s decline from $1900 so accepted by the talking heads has gone SPLAT! 1. Sell gold because the dollar is strong. Yeah, on the downside. 2. Sell gold because the Euro is weak. It looks like... Read more » The post Reasons To Sell Your Gold appeared first on Jim Sinclair's Mineset. |
| Posted: 18 Sep 2013 04:44 PM PDT The following is what I sent out to subscribers this morning. "The miners have refused to follow gold to new lows this morning. In my opinion this is a pretty good indication that the daily cycle low is imminent. Either on the FOMC announcement this afternoon or maybe tomorrow. If gold were to deliver a $40-$50 rally today that would be a strong sign that the bull is going to overwhelm the manipulation. We will have to wait and see what happens, but if it does surge hard on the FOMC statement back up to the $1350 resistance zone that would be an incredibly bullish start on day one of a new cycle. If that were to happen the odds would be good that gold would break through resistance and break the manipulation. Brave traders could re-enter LEAP's if this occurs this afternoon. I think this scenario requires gold to rally immediately upon the statement. No sell off and reversal. This needs to be a rocket launch right after the announcement. There needs to be no doubt the market is reversing 180 degrees." Gary       |
| Marc Faber Warns "The Endgame Is A Total Collapse - But From A Higher Diving Board Now" Posted: 18 Sep 2013 04:31 PM PDT With rumors this evening of the White House calling around for support for Yellen, Marc Faber's comments today during a Bloomberg TV interview are even more prescient. Fearing that Janet Yellen "would make Bernanke look like a hawk," Faber explains that he is not entirely surprised by today's no-taper news since he believes we are now in QE-unlimited and the people at the Fed "never worked a single-day in the business of ordinary people," adding that "they don't understand that if you print money, it benefits basically a handful of people." Following today's action, Faber is waiting to seeing if there is any follow-through but notes that "Feds have already lost control of the bond market. The question is when will it lose control of the stock market." The Fed, he warns, has boxed themselves in and "the endgame is a total collapse, but from a higher diving board."
Faber on the reaction that there's going to be no taper for now:
On whether interest rates are held down when the Fed continues this type of policy:
On what the endgame is:
On Janet Yellen:
On where he sees gold heading:
On whether the 10-year yield will float back up to where it was before 2pm today:
On gold prices:
|
| Is Bernanke About To Destroy The Gold Investment Market? Posted: 18 Sep 2013 04:07 PM PDT Later this afternoon the Federal Reserve's FOMC are widely expected to announce the tapering of QE. This month's meeting has long been eyed as the one where Bernanke will make such an announcement. With this in mind gold's recent ... Read More... |
| More Warnings: "This Time Is Different" Posted: 18 Sep 2013 04:01 PM PDT The equity market's reactions to monetary policy inflection points, when (or if) the Fed takes the first step to normalize monetary policy following easing in response to recession, have been reasonably similar. As Barclays' Barry Knapp notes, irrespective of the pace of policy accommodation removal – the average policy normalization-related correction during the prior six business cycles is 8.9%. While our memories of an extremely volatile September – five years ago – remain fresh, the last four have been exceptionally tame. However, while another period of fiscal uncertainty seems likely, Knapp fears there is a key difference between this September and the surprisingly low volatility Septembers in 2009-12. In those periods, the Fed was either buying assets or had pre-announced a new program; this year, it is preparing to weaken the portfolio balance effect.
Here is Barry on CNBC this morning explaining the problem (and putting the President straight on a few facts)...
Via Barclays, While our memories of an extremely volatile September – five years ago – remain fresh, the last four have been exceptionally tame. It is not as if there weren't plenty of potential sources of volatility, most of which were related to public policy uncertainty: two fiscal cliffs, two highly emotional elections, a sovereign debt downgrade and the collapse of a Congressional Joint Select Committee to fix the budget. Based on the President's speech on Monday and the recent collapse of a GOP continuing resolution plan, another period of fiscal uncertainty seems likely. But there is a key difference from the surprisingly low volatility Septembers in 2009-12. In that period, the Fed was either buying assets or had pre-announced a new program; this year, it is preparing to weaken the portfolio balance effect. In our view, for equities to overcome unfavorable seasonality and another round of fiscal concerns, fundamentals, which have been mediocre for over a year, due primarily to weakening global and soft domestic growth, will have to improve considerably. The equity market's reactions to the monetary policy inflection point, when the Fed takes the first step to normalize monetary policy following easing in response to recession, have been reasonably similar, irrespective of the pace of policy accommodation removal – the average policy normalization-related correction during the prior six business cycles is 8.9%. It is after those periods when key fundamentals, such as earnings and valuation, play a greater role in determining equity market returns.
The last three cycles (1983, 1994 and 2004) are instructive. In 1983, valuation was exceptionally attractive; however, a volatile earnings recovery, similar to this business cycle, left earnings growth at a comparatively slow rate of 5% when the Fed began normalizing policy. The correction was mild compared with the average, and it was five quarters before the advance resumed when earnings growth accelerated in 1985. In sharp contrast, when the 'measured removal of policy accommodation' began in 2004, the S&P 500 was still exceptionally expensive, but robust earnings growth shortened the post-correction range to two quarters. The correction in 1994 was steeper than in 1983 and 2004, yet the duration of the subsequent trading range was between those two at three quarters, with relatively strong earnings growth of 15% and low valuations helping equities withstand an aggressive tightening cycle. Valuation appeared to be a larger driver of share prices after the advance resumed. Returns in 1995 were the strongest at 37%, followed by 1985's 27%, while 2005 returns were in the mid-single digits as rich valuations constrained returns. Before we move on to the current environment, it is notable that in addition to a seemingly poor mix of earnings growth and valuation in this cycle relative to the previous three, the average advance from the recession low, prior to Fed policy normalization, from 1971-2004 was 53%; this cycle, it is nearly 160%. Earnings volatility this business cycle is similar to that in the early 1980s: a robust early-cycle rebound followed by a mid-cycle slowdown to nearly zero before reaccelerating. The source of the volatility this cycle is foreign sales: the strong recovery of emerging market economies in 2009-10 deteriorated, with foreign sales growth falling below domestic revenues, which have been growing steadily, albeit at a slow rate close to nominal GDP, which has, of course, been weaker than prior in business cycles. There are some encouraging signs: domestic revenues are turning higher, foreign sales appear to have rebounded slowly from zero growth in 3Q12, and global PMIs, which typically correlate well with leading indicators for earnings such as analyst revisions, have improved considerably. However, our global growth forecasts do not suggest foreign-sourced earnings growth will return to prior-cycle levels. Our domestic forecast will not help much in the near term either, as 3Q13 GDP is tracking slightly below trend for the recovery, which is likely why analyst revision momentum is flat and lagging ISM new orders. So while for the moment falling geopolitical and Fed Chair succession risks triggered a rally back to the highs, if Wednesday marks the first step in the exit from the second period of FOMC financial repression, as we expect, the equity market will likely require some improvement in earnings growth to drive share prices higher. We believe an improved capital spending environment, a potential loosening of mortgage credit, a reduced drag from tax hikes on consumption, the end of the European recession and resulting pickup in global trade bode well for the 2014 outlook. However, autumn is volatility season; a budget battle, an unfavorable mix of valuation and earnings growth, and the Fed's weakening the portfolio balance channel imply a return to normalcy. |
| 63 High Government Debt Episodes And What They Tell Us About Our Options Today Posted: 18 Sep 2013 03:34 PM PDT Submitted by F.F. Wiley of Cyniconomics blog, Do you wonder what to make of America’s soaring government debt and what it means for the future? Or, if you already have it figured out, are you interested in research that might challenge your position? Either way, you might like to see the results of this exercise:
In other words, let’s see what history tells us about today’s debt levels and what comes next. You may find the answer surprising. I’ll start with 63 episodes of debt reaching the 105% threshold, as shown in the table below. These are drawn from Carmen Reinhart’s and Kenneth Rogoff’s widely used debt database, with just a few eliminations that are explained in the notes at the bottom. You’ll see that in addition to screening for breaches of 105%, I needed to establish the end of each episode as well. For this, I used a 90% threshold to make sure that I’d identified periods of genuine debt ratio reduction. With each episode beginning at 105% and ending after debt falls below 90%, there’s a reasonable improvement from start to finish. Recent struggles with high debt in which debt-to-GDP remains above 90% (and there are many of them) are excluded from the analysis. I also recorded the peak debt ratio on every path from 105% to 90% and used this figure to sort the rows in the table. After narrowing the data set as I’ll describe below, I’ll focus mostly on time periods of debt ratio reduction – from the peaks to the end of each episode.
My next step is to remove the episodes that included a credit event, which could be a default, bond conversion, service moratorium or debt cancellation. These are listed in a separate “technical notes” post. In a large majority of cases, the credit event was needed to bring debt-to-GDP under control. Once they’re removed from the initial data set, I’m left with 11 episodes, all of them showing a reduction in the debt ratio without any recognized creditor haircuts. But then I add three episodes back in – the Netherlands from 1814 to 1873, the U.K. from 1918 to 1965 and Egypt from 2003 to 2007. These stand out because there was significant debt reduction well after the respective credit events, although I also considered the global importance of each of their debt battles. With the three additional episodes, I have 14 instances of relatively successful debt reduction. Note that 12 of them occurred in economies considered today to be developed, with only one (Egypt) occurring in an emerging economy and one (South Africa) being something of a hybrid. My last step is to consider how the debt ratios were reduced. I’ll look at large and small countries separately, using a rule that’s sure to anger the Walloons but seems reasonable: Any country with an economy equal to or bigger than the Netherlands is large, while small means that a country’s output is similar to or less than Belgium’s. The large countries tell us to stop running deficits There are nine episodes in the large country group, as shown in the chart below.
I discussed five of these in a post earlier this year, where I set the debt threshold considerably higher at 150% of GDP. I argued then that we should be wary of claims that massive debt ratios are no big deal because some countries have been there before. In all the cases I considered, countries that recovered from huge debt totals enjoyed advantages that no longer exist. In the 19th century, circumstances included resource-rich colonies that the British and Dutch exploited to ease budget pressures. And then after World War II, debt proved temporary largely because the combatants ran large non-defense surpluses and only needed to bring their soldiers home to restore budgetary discipline. I also argued in my earlier article that inflation isn’t the solution that many make it out to be. Without fiscal measures and financial repression, inflation only takes you so far in resolving a serious debt problem. In extreme cases, it can make the problem worse. It turns out that these findings are only slightly weaker when I lower the threshold to 105%. But the particular results that stand out this time are from the last three columns of the table below. The third-to-last column shows the average budget balance from the year after debt-to-GDP peaked to the year it was reduced below 90%. The last two columns show the number and percentage of years in which there was a surplus. Together, the figures tell us that every one of the large countries that reduced debt without a credit event did so by balancing its budget.
Put differently, the large country history suggests that the only reliable way to solve a debt problem is to stop running deficits. Long ago, policymakers would have regarded this finding as common sense. But current perspectives are distorted by years of bad ideas in economics. Keynesian economists, in particular, often preach that deficits are nothing to be concerned about. The U.S. has run deficits in all but two years since Keynesians began to dominate policymaking in the 1960s. And not surprisingly, every one of the episodes listed above predates our 63-years-and-counting of chronic budget shortfalls. Needless to say, history doesn’t reflect kindly on present attitudes about budgeting. It shows that the pre-1960s belief in fiscal discipline may have had some value after all. Without it, we may have never witnessed a large country recovering from today’s debt levels without first slamming its creditors. The small countries reduced debt in a variety of ways But what about the small country history? Do the little guys offer a different solution? There are five episodes in this group, as shown in the chart below. I’ll address them in chronological order.
South Africa, 1932-1935 (peaking in 1932) Debt ratios in 1930s South Africa were reduced not by balancing the budget but through rampant growth. Nominal GDP jumped over 13% annually between 1932 and 1936, while inflation was close to zero. And the trigger for the boom was the U.K.’s September 1931 decision to abandon the gold standard and devalue its currency. The South African pound devalued at the same time because it was legally tied to the British currency. Why was the GDP boost so large at a time of depression in most of the world, including other countries that severed their links to gold? The answer is that the devaluation provided not just a gain in global competitiveness but a revaluation in South Africa’s most valuable assets – its wealth of underground resources and particularly gold. As a small country producing half of the world’s gold, there was nothing more important to its economy than the price of its gold reserves. And once those reserves were revalued upwards, it was off to races. Multiplier effects from the gold mining boom rippled through the economy, pushing GDP higher and debt-to-GDP lower. Belgium, 1946-1948 (peaking in 1946) Like 1930s South Africa, Belgium didn’t attempt to balance its budget after World War II. Rather, the Belgian debt ratio was reduced in two ways:
From post-war lows in 1946, GDP bounced back in the next two years at an annual rate of 13% in real terms and 24% in nominal terms. Fiscal challenges were also mitigated by Marshall Plan assistance from the U.S., beginning in 1948, and some war debt forgiveness before that. And with debt growing much more slowly than the economy, debt-to-GDP was cut from 118% to 75% in just two years. Ireland, 1986-1990 (peaking in 1987) and Belgium, 1987-2006 (peaking in 1993) Here are a few data points describing each of these European debt battles, dividing the Belgian experience into two sub-periods with slightly different characteristics:
And here are my observations:
The Ireland and Belgium experiences seem to validate the idea that it’s okay to run a deficit as long as the primary balance shows a large surplus. We know this approach to be valid mathematically and it worked in these instances. The challenge is that it’s extremely difficult to maintain such a delicate balance through cycles of business, politics and war. Moreover, both Ireland and Belgium exploited unique advantages: Ireland’s generous support from the EU via structural funds, which averaged nearly 2% of Irish GDP in the latter half of the 1980s, and Belgium’s status as Europe’s Washington D.C., with much of the Brussels economy driven by the EU and, to a lesser extent, NATO. Before extrapolating their debt battles to the U.S., there are three points to consider. First, America’s highest decade-average primary surplus in the six decades since World War II is 0.9% in the 1950s (as shown here). That’s nearly 4% lower than the Ireland and Belgium figures above. Second, at current interest rates, the U.S. would need to fully balance the budget in order to match the Irish and Belgian primary surpluses. In other words, a large primary surplus is basically the same thing as a balanced budget in the U.S. today. Third, over a more complete credit cycle, Irish and Belgian debt reduction appears to have been temporary. As of early 2013, IMF estimates placed general government debt at 117% of GDP for Ireland and 100% for Belgium. Egypt, 2003-2007 (peaking in 2005) Egypt’s high debt episode in the period just before the global financial crisis was mitigated by three IMF programs in the 1990s and a 1991 restructuring, which eased repayment terms while creating “blocked accounts” earmarked for lenders. I’ll set these advantages aside, though, and share figures for budget balances, growth and inflation:
The good news is that Egypt offers another example of debt ratio improvement without balanced budgets, and without even a primary surplus. What’s more, the path from 105% to 90% didn’t require the double digit real growth rates of 1930s South Africa or 1940s Belgium. Growth was certainly strong, but inflation was even higher and outpaced interest rates on government debt (not shown). Therefore, Egypt reduced its debt ratio largely through a combination of high real growth and low real interest rates. And now for the bad news: We all know what happened in the years after 2007, and it had at least something to do with the very inflation that helped to erode government debt. Conclusions Getting back to the question of whether the small country group tells us anything we didn’t learn from the large countries, here are the four approaches that succeeded without a credit event:
So maybe the smaller countries don’t really show us the way? Which brings us back to the approach followed by the large countries in the database: Balance the budget. These countries weren’t satisfied with marginal improvements that still leave gaping deficits. (Think about the celebratory “all clears” that were declared this past May after the CBO dropped its deficit forecast to “only” 4.2% of GDP.) They didn’t claim victory after reaching the standard EU target of a 3% deficit. More importantly, their debt battles predate the use of Keynesian economics as an excuse for profligacy. I’ll say it once more: Balancing the budget is the only way that a large country has ever wound down a 105% debt-to-GDP without haircutting its creditors. Not for the first time, the common sense solution is the only approach that’s worked. (Click here for credit event detail and the calculation of today’s 105% debt-to-GDP.) |
| Gold in India: Strong Support Zone Reached. What's Next? Posted: 18 Sep 2013 03:08 PM PDT Today, gold in the global market extended losses into a third session and dropped below $1,300 an ounce, with investors expecting the U.S. Federal Reserve to announce a reduction in its bullion-friendly stimulus measures. Read More... |
| Goldman Flip-Flops: Sees Near-Term Upside In Gold Posted: 18 Sep 2013 02:56 PM PDT It was only Monday that Goldman's Damien Couravlin was pounding the table and gold right under it. A quick, and historic, $70 move higher in gold in one day following Bernanke's most recent confirmation he really has no clue what he is doing in terms of monetary policy (if knowing quite well what he is doing for the S&P and its 1950 year end price target), was all that it took for Goldman to flip flop and now suggest that there is "risk to gold prices as skewed to the upside in the near-term, in our view." Frankly, we hope Goldman is wrong and gold plunges to triple, double or single digit territory, allowing those who are not blinded by the absolute and sheer idiocy of what is glaringly an attempt to reflate the largest asset bubble at all costs. If anything, today the Fed finally confirmed that the only way out is to inflate away the debt, which eventually will involve unanchoring inflation expectations, proceeding with "NGDP targeting" (a fancy way of saying printing a lot and then also paradropping some cash from the sky), and leading to the sequestering of all hard assets not nailed to the ground. Via Goldman Sachs,
Of course, as we have pointed out perviously, the last time that Goldman told clients to be epically short the precious metal, they were - in fact - buying it in record amounts... which perhaps explains their cover-your-ass moment later in today's report that things will end badly... Via Goldman Sachs, However, with gold prices already back near their pre-June FOMC level, COMEX net speculative positioning already back at its April level as well as growing pressures on EM gold demand, we believe that this upside will ultimately prove limited. We believe this is well illustrated by today's more muted rally in gold prices when compared to the significant rally in 10-year TIPS yields, helping close the significant valuation gap that had occurred between both assets over the past month.
As a result, we re-iterate our neutral stance on gold prices and continue to expect that gold prices will resume their decline heading into 2014 when we expect economic data to solidly confirm a reacceleration in US growth and warrant a less accommodative monetary policy stance. |
| Today’s Fed Meeting – Stocks, Bonds & Gold Loved It. Dollar Hated It. Posted: 18 Sep 2013 02:48 PM PDT That is basically what we got from the Fed today instead of the $10 billion cut in bond buying that the market had priced in. I mentioned yesterday that based on the very benign inflation environment, the Fed might just stand pat due to the recent lousy economic data. They did just that. Personally I think it was two factors which swayed them in this decision – more on that later. Stocks loved it, bonds loved it and gold loved it. The Dollar hated it. What else is new? It is perverse in the sense that interest rates on the long end of the curve had been steadily moving higher for about 3 months now based on the increasing expectations of a tapering move by the Fed. We have been paying close attention to the yield on the Ten Year Treasury and have noted that it just missed hitting the 3% level at the beginning of this month. Here is what I consider perverse about this… consider this… the Fed starts some hawkish talk and begins to prepare the markets for a slowdown in the rate of its bond buying program. The market reacts to this apparent change in policy by bidding up interest rates. This then results in mortgage rates moving higher. The Fed, obviously alarmed at what they believe will negatively impact the very fragile real estate market then backs away from any tapering plans whatsoever sending interest rates on the Ten Year back down to the 2.75% level where they are currently sitting as I type these comments. Where does this leave us? Quite frankly, in an enormous mess the way I see it. The Fed does not have the luxury of doing a surprise sneak-attack on the markets without preparing them for a tapering of the bond buying program. For the Fed to announce out of the clear blue sky, without the least bit of warning, that it was going to scale back its bond buying program, would send the stock market into convulsions and rattle the entire interest rate market as well as the currency markets. They therefore must prep the markets, plowing the ground and giving the markets time to come to terms with any change in monetary policy in order to avoid chaotic market reactions. Here is the catch however – in giving the markets time to prepare, the market response is to sell bonds along the long end of the yield curve thus resulting in rising long term rates. This negatively impacts the real estate market and borrowing in general as the rotten employment picture prevents many people from otherwise qualifying for loans that they might have previously been able to had rates remained at lower levels. Then the times comes for the Fed to make the actual announcement that they have spent so much effort prepping the markets for only to realize that these same markets have pre-empted any need for the Fed to act. The result? – the Fed does nothing whatsoever! In short, I can easily envision a scenario in which the Fed is completely trapped unable to do anything at all well into the foreseeable future. It is going to take STRUCTURAL REFORMS to improve the job market and as long as the current Administration is in power, I do not see that happening any time soon. Thus the status quo continues and goes on and on and on… In regards to gold, it is scooting higher as a large number of shorts were forced out with today’s surprise move by the Fed. It did take out that overhead resistance at $1330 which is a positive and is also now trading above $1350, another resistance level. There is $1360 which I am watching right above where it is currently trading to see how it handles that. Beyond that $1380 is the next target. The key to gold will be whether or not the speculative world believes that the continuation of the Fed’s QE4 policy unabated will generate any long-anticipated inflation. Obviously the bond market does not expect any or bonds would not be moving sharply higher. Thus far inflation has been tame. It is going to take a change in perceptions in that regard to bring in a brand new wave of hot fund money into gold as well as the rest of the commodity complex. The ironic thing about seeing crude oil and especially gasoline rallying sharply higher today is that rising energy prices, while inflationary in their own right, also have recently tended to be seen more as a brake or drag on economic activity and consumer spending and thus are seen as factors leading to a slowdown in growth rather than a catalyst for higher inflation. If specs begin piling into the energy markets based solely on the lack of tightening from the Fed, then these specs may short-circuit any hopes that the Fed has that its latest NON-MOVE will be stimulatory in nature. Herding cats will prove easier than herding these destructive hedge funds. Oh what a tangled web the Fed has created! (original source: Dan Norcini’s personal blog) |
| Fed will lose control of bond market, Fleckenstein tells KWN Posted: 18 Sep 2013 02:28 PM PDT 5:25p ET Wednesday, September 18, 2013 Dear Friend of GATA and Gold: Fund manager Bill Fleckenstein, interviewed by King World News, heaps contempt on the Federal Reserve and says he expects the Fed to lose control of the bond market even without any "tapering" of its purchases, causing "all hell to break loose." An excerpt from the interview is posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/9/18_Th... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Don't Let Cyprus Happen to You Depositors at the Bank of Cyprus lost 47.5 percent of their savings. So to preserve your wealth, get some of it outside the banking system into physical gold and silver. Worldwide Precious Metals (Canada) Ltd., established in 2001, specializes in physical gold, silver, platinum, and palladium. We offer delivery or secure and fully insured storage outside the banking system in Brinks vaults. We have access to gold and silver from trusted worldwide refineries and suppliers. And when you have an account with us you have immediate access to it for buying and selling your stored bullion. For information on owning physical precious metals in your portfolio, visit us at: www.wwpmc.com. Join GATA here: Gold Investment Symposium 2013 Mines and Money Australia New Orleans Investment Conference https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080... * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: |
| New York Sun: Mr. Bernanke gets the jones Posted: 18 Sep 2013 02:19 PM PDT 5:17p ET Wednesday, September 18, 2013 Dear Friend of GATA and Gold: As commentary on today's retreat by the Federal Reserve pours in, the New York Sun notes the Fed's peculiar combination of arrogance and ineffectuality in an editorial headlined "Mr. Bernanke Gets the Jones": http://www.nysun.com/editorials/mr-bernanke-gets-the-jones/88418/ CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Don't Let Cyprus Happen to You Depositors at the Bank of Cyprus lost 47.5 percent of their savings. So to preserve your wealth, get some of it outside the banking system into physical gold and silver. Worldwide Precious Metals (Canada) Ltd., established in 2001, specializes in physical gold, silver, platinum, and palladium. We offer delivery or secure and fully insured storage outside the banking system in Brinks vaults. We have access to gold and silver from trusted worldwide refineries and suppliers. And when you have an account with us you have immediate access to it for buying and selling your stored bullion. For information on owning physical precious metals in your portfolio, visit us at: www.wwpmc.com. Join GATA here: Gold Investment Symposium 2013 Mines and Money Australia New Orleans Investment Conference https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080... * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: |
| Gold up around 3 pct as Fed sticks to stimulus Posted: 18 Sep 2013 02:17 PM PDT 18-Sep (Reuters) — Gold surged more than 4 percent to above $1,360 an ounce on Wednesday after the U.S. Federal Reserve’s unexpected decision to continue buying bonds unleashed bullion’s biggest one-day buying spree since June 2012. The move by the U.S. central bank to continue its $85 billion monthly buying pace due to worries about rising borrowing costs surprised financial markets that were broadly braced for a reduction in the central bank’s monetary stimulus. Silver rallied around 6.5 percent, its biggest one-day gain since November 2008. Citing strains in the economy from tight fiscal policy and higher mortgage rates, the Fed decided against the tapering of asset purchases that investors had all but priced into asset markets across the board. “There is no immediate visibility as to how much tapering will be done and when, so devaluation of currencies marches on,” said Jeffrey Sica, chief investment officer at New Jersey-based Sica Wealth Management, which has over $1 billion in client assets. “And as long as that happens, gold looks attractive.” [source] |
| Ambrose Evans-Pritchard: Fed recoils from 1937 tightening error as jobs evaporate Posted: 18 Sep 2013 01:59 PM PDT By Ambrose Evans-Pritchard The American economy has shed 347,000 jobs over the past two months, roughly comparable with the rate of loss seen during the Great Recession. It is remarkable that the US Federal Reserve should even have been thinking of phasing out life-support in such circumstances. The Fed's tough talk has already led to a 140 basis point rise in US 10-year Treasury yields, the benchmark price money for US mortgages and for the world (ex-China). It might as well have raised rates six times. The shock decision on Wednesday night to put off tapering bond purchases is a recognition of what should have been obvious. Rising mortgage costs and the "tightening of financial conditions" could slow growth, it said. Indeed. The net loss of jobs over the summer months has been entirely among men, mostly aged 25 to 54 and university educated. The cohort aged over 55 has been growing, so this is not happening because baby boomers are retiring early and happy to grow cantaloupes in Arkansas, or to play golf at Torrey Pines. ... For the complete commentary: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/103191... ADVERTISEMENT Precious Metals Round Table: On Tuesday, September 24, Sprott Asset Management will assemble four experts for a live Internet broadcast about the prospects for the precious metals. Participating will be Sprott's CEO, Eric Sprott; financial letter writer and internationally renowned conference speaker Marc Faber; Sprott's chief investment strategist, John Embry; and Sprott Asset Management President Rick Rule. To participate, please visit: https://event.on24.com/eventRegistration/EventLobbyServlet?target=regist... Join GATA here: Gold Investment Symposium 2013 Mines and Money Australia New Orleans Investment Conference https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080... * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: |
| Gold Daily and Silver Weekly Charts - You Have To Be In To Win Posted: 18 Sep 2013 01:32 PM PDT |
| Gold Daily and Silver Weekly Charts - You Have To Be In To Win Posted: 18 Sep 2013 01:32 PM PDT |
| The Gold Price and the Fed’s “No Taper” Posted: 18 Sep 2013 01:29 PM PDT This is about all you need to know about how precious metals markets are reacting to word that the Federal Reserve will not reduce its $85 billion per month money printing effort, likely waiting until December or perhaps even sometime in 2014, 2015, or later to take that very first step toward reining in their [...] |
| Posted: 18 Sep 2013 01:08 PM PDT 4:22p ET Wednesday, September 18, 2013 Dear Friend of GATA and Gold: Congratulations to those in the GATA, King World News, and GoldMoney communities who have contended that the pounding done to the monetary metals in recent months was engineered to allow the bullion banks to escape their short positions, to support the Federal Reserve's repudiation of its plan to reduce its bond buying, and to support money printing by central banks generally. Special recognition in this respect may go to Sprott Asset Management's Eric Sprott and John Embry, GoldMoney's James Turk and Alasdair Macleod, market analyst Ted Butler, Andrew Maguire, and Hong Kong fund manager Bill Kaye, among others. Today's retreat from "tapering" by the Fed may have exposed the whole U.S. government as a big bluff in regard to the economy. Despite the government's propaganda, the economy never was improving and the markets have been responding only to that bluff and to direct government intervention. This has made a few favored people rich and has impoverished the rest, and it now essentially has been acknowledged to have largely failed to do much for the greater good. ... Dispatch continues below ... ADVERTISEMENT Buy metals at GoldMoney and enjoy international storage GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit: http://www.goldmoney.com/?gmrefcode=gata Reality, markets, and even democracy now may reassert themselves -- too slowly, of course, but definitely. The emperor is naked and people increasingly see it, as Robin Griffiths of Cazenove Capital Management did at King World News today: http://www.gata.org/node/13024 At least the lesson of history is that the bad guys fail because they always go too far. Yes, far enough to cause terrible suffering and sometimes even great horror, but not far enough to wipe out humanity or every decent human instinct -- at least not yet. Of course the bad guys still have enormous power and will do anything to preserve it, and their opposition remains only lightly armed, but these days even 1st Samuel may worry them a little: And David put his hand in his bag, and took thence a stone, and slung it, and smote the Philistine in his forehead, that the stone sunk into his forehead; and he fell upon his face to the earth. So David prevailed over the Philistine with a sling and a stone, and smote the Philistine, and slew him; but there was no sword in the hand of David. CHRIS POWELL, Secretary/Treasurer Join GATA here: Gold Investment Symposium 2013 Mines and Money Australia New Orleans Investment Conference https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080... * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT How to profit with silver -- Future Money Trends is offering a special 16-page silver report with our forecast for 2013 that includes profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million. Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets. To learn about this report, please visit: http://www.futuremoneytrends.com/index.php?option=com_content&id=376&tmp... |
| Posted: 18 Sep 2013 01:00 PM PDT Bennie has waved the white flag. The economy is so bad, that he MUST continue to buy $85 billion of debt from Wall Street every month or the economic system will collapse. He will monetize the debt until the very end. The rush for safety began at 2:00 pm on September 18, 2013. Got gold? "The […] |
| There Is Now A Danger That “All Hell Is Going To Break Loose” Posted: 18 Sep 2013 12:55 PM PDT  In the aftermath of today's historic Fed decision, the man who correctly predicted last week, "as the fantasy dies," panic will ensue and gold will soar, warned King World News that in the wake of this Fed disaster there is now a great danger that "all hell is going to break loose." Below is what Bill Fleckenstein, who is President of Fleckenstein Capital, had to say in this powerful interview. This posting includes an audio/video/photo media file: Download Now |
| Gold and Silver Soar As Fed Rejects Tapering and Revs Up The Printing Presses Posted: 18 Sep 2013 12:39 PM PDT The months long guessing game on whether or not the Fed would start tapering its $85 billion per month of treasuries and mortgage securities came to a conclusion today as the Fed promised to keep the printing presses going full blast. Many analysts had come to the conclusion that the economy had strengthened enough for [...] |
| New Chinese Exchange-Traded Products Poised to Further Boost Gold Demand Posted: 18 Sep 2013 12:39 PM PDT New Chinese Exchange-Traded Products Poised to Further Boost Gold Demand By Hard Assets Alliance Team By Justin Spittler, Hard Assets Alliance Analyst After speculation that the US Federal Reserve would rein in its asset-purchasing program earlier than anticipated, Western investors began exiting gold-back exchanged-traded funds (ETFs) in record numbers, highlighted by $8.7 billion in net […] |
| Got Gold Report's gold and silver charts posted Posted: 18 Sep 2013 12:31 PM PDT 3:30p ET Wednesday, September 18, 2013 Dear Friend of GATA and Gold: Gene Arensberg of the Got Gold Report has posted in the clear four of the 15 gold and silver price charts usually reserved for his subscribers. They're very detailed and can be found here: http://www.gotgoldreport.com/2013/09/got-gold-report-charts-from-septemb... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT You Don't Have to Wait for Your Monetary Metal: Many investors lately report having to wait weeks and even months for delivery of their precious metal orders. All Pro Gold works with the largest wholesalers that have inventory "live" -- ready to go. All Pro Gold can ship these "live" gold and silver products as soon as payment funds clear. All Pro Gold can provide immediate delivery of 100-ounce Johnson Matthey silver bars, bags of 90 percent junk silver coins, and 1-ounce silver Austrian Philharmonics. All Pro Gold can deliver silver Canadian maple leafs with a two-day delay and 1-ounce U.S. silver eagles with a 15-day delay. Traditional 1-ounce gold bullion coins and mint-state generic gold double eagles are also available for immediate delivery. All Pro Gold has competitive pricing, and its proprietors, longtime GATA supporters Fred Goldstein and Tim Murphy, are glad to answer any questions or concerns of buyers about the acquisition of precious metals and numismatic coins. Learn more at www.allprogold.com or email info@allprogold.com or telephone All Pro Gold toll-free at 1-855-377-4653. Join GATA here: Gold Investment Symposium 2013 Mines and Money Australia New Orleans Investment Conference https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080... * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: |
| Posted: 18 Sep 2013 12:22 PM PDT How can the Fed taper when the real U.S. economy is in a terrible state.? Add to that the massive problems in the Eeurozone. And Japan, the world's third -largest economy, is a guaranteed basket case. In the U.S., the job participation rate is the lowest since the 1970s, real unemployment (calculated on a consistent basis) is 23%, workers' real wages have not gone up for decades, 50 million people are on food stamps, government deficit runs at $ 1 trillion per .year. and government debt including unfunded liabilities is $220 trillion and growing exponentially. The world is bankrupt, and all of the economic figures that are being published are just a mirage of a castle built on a foundation of worthless paper money. Does this sound like an improving economy? Well not to me. Also, the banking system has the same toxic debt and derivatives as in 2008. The banks are just fortunate that they don't have to value their assets at market. If they did, very few banks would be standing today. In the G-7 countries, total debt is exploding, and it now takes $7 of debt to produce $1 of additional GDP. Talk about the law of diminishing returns. The G-7 are the top industrialized countries in the world: The U.S., the U.K., France, Italy, Canada, Germany and Japan. Since neither China norand Russia isare included, you can question the validity of this group, especially since most of the G-7 countries are bankrupt. Nevertheless, the G-7 represent around 50% of world GDP and total $35 trillion. But these countries have a total debt of $140 trillion, which is a remarkable 400% of their GDP. If you look back to 1998, the total debt of the G-7 was $70 trillion and their GDP was $30 trillion. So debt has doubled between 1998 and 2012, and GDP has gone up by only $5 trillion. What this means is that it takes $70 trillion of additional debt to produce $5 trillion of additional GDP. So the world's so-called richest nations need $7 of debt to produce 50 cents of GDP. The world is bankrupt, and all of the economic figures that are being published are just a mirage of a castle built on a foundation of worthless paper money. The world can, of course, never pay back the debt with real money, and the world can't even pay the interest with real money. Every 1% increase in the interest rate means an additional cost for the G-7 of a staggering $1.4 trillion. That is absolutely massive. $1.4 trillion is only slightly less than the entire GDP of Canada. If interest rates increase by 10%, then we are looking at an increase in interest expense for the G-7 nations which equals the entire GDP of the United States. Anyone with a sane mind would realize that this whole situation is untenable, and, sadly, this will end very, very badly for the world. We don't just have an economic bankruptcy, but we also have a moral and ethical bankruptcy taking place on top of the threat of war, and the fact that most governments are taking away freedoms and personal initiatives by making them people dependent on state handouts. We also have the very dangerous situation where the rich are getting richer and the poor are getting poorer. Since 2009, the wealthiest 7% have seen their wealth increase by 28%, while the other 93% have seen their wealth decline by 4%. If you take the wealthiest 300 in the world, they have more wealth than the poorest 3 billion. This is very dangerous for a world which that will have more and more people going hungry. If we turn to the situation in gold, there is a major shortage of physical gold, and Western governments and central planners are doing what they can to sell or lease their gold into the market. This has the Fed greatly concerned ahead of their decision. At the same time, the manipulation in the paper market continues. I am convinced that the relatively small correction we have just seen was simply manipulation prior to the Fed announcement. I have said for some time that there will not be tapering. So, they had to get gold down because it's likely to go up substantially after the Fed has surprised the market tomorrow. Remarkably, only one half of 1% of world assets are invested in gold. Considering what will happen to the world in the next few years, that percentage will go up dramatically, but that will only happen at much higher prices, since there is virtually no physical gold available at these prices. Regards, Egon Von Greyerz Ed. Note: Take note of that last sentence… it will come in handy in the near future. Because the excessive debt obligations of the developed world could cause a dynamic shift in the global financial system… and we’d like to help you prepare. Sign up for your FREE subscription to The Daily Reckoning, and you’ll start receiving regular offers for specific profit opportunities. By taking advantage now, your ensuring that you’ll be financially secure later. Best to start right away. This essay was adapted from an interview with King World News. |
| Gold Jumps Most in Eight Weeks as Fed Maintains Stimulus Posted: 18 Sep 2013 12:13 PM PDT
"The Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases," the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington. Earlier, spot gold touched the lowest in almost six weeks, dropping beneath $1,300 an ounce, on speculation that the central bank would start to rein in quantitative easing., "This is a game changer, and some of the money that ran away because of tapering fears will be back," Michael Gayed, the chief investment strategist who helps oversee $270 million at New York-based Pension Partners LLC, said in a telephone interview. "We are seeing the bullish sentiment return." [source] |
| Cazenove's Robin Griffiths: Central banks lost their gold trying to suppress it Posted: 18 Sep 2013 12:11 PM PDT 3:10p ET Tuesday, September 17, 2013 Dear Friend of GATA and Gold: Today we cordially welcome another member to the ranks of tin-foil hat wearers -- Robin Griffiths of Cazenove Capital Management in London, who, writing at King World News, acknowledges the Western central bank gold price suppression scheme. Griffiths writes of the gold market: "Central banks have been trying to disrupt the bull move but they have simply ended up with nothing in their vaults. They have lent out or sold so much of the precious metal that it would take seven years of production to rebuild their reserves to the levels they were at two years ago." Griffiths' commentary is posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/9/18_Hi... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Don't Let Cyprus Happen to You Depositors at the Bank of Cyprus lost 47.5 percent of their savings. So to preserve your wealth, get some of it outside the banking system into physical gold and silver. Worldwide Precious Metals (Canada) Ltd., established in 2001, specializes in physical gold, silver, platinum, and palladium. We offer delivery or secure and fully insured storage outside the banking system in Brinks vaults. We have access to gold and silver from trusted worldwide refineries and suppliers. And when you have an account with us you have immediate access to it for buying and selling your stored bullion. For information on owning physical precious metals in your portfolio, visit us at: www.wwpmc.com. Join GATA here: Gold Investment Symposium 2013 Mines and Money Australia New Orleans Investment Conference https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080... * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: |
| How Exactly Will Tapering Affect Gold Bullion Investment? Posted: 18 Sep 2013 11:44 AM PDT Next week the FOMC will meet for one their eight scheduled meetings. It is this particular meeting that has had traders, market commentators and investors almost in frenzy as they try to predict the outcome. Read More... |
| GOLD EXPLODES HIGHER AFTER FED BOMBSHELL Posted: 18 Sep 2013 11:13 AM PDT 18-Sep (BusinessInsider) — Boom. Gold is surging after the Fed declines to “Taper” The pace of Quantitative Easing. [source] |
| Gold surges after Fed decides to maintain asset purchases at $85 bln a month. Posted: 18 Sep 2013 11:03 AM PDT |
| New Chinese Exchange-Traded Products Poised to Boost Gold Demand Posted: 18 Sep 2013 10:20 AM PDT By Justin Spittler, Hard Assets Alliance Analyst After speculation that the US Federal Reserve would rein in its asset-purchasing program earlier than anticipated, Western investors began exiting gold-back exchanged-traded funds (ETFs) in record numbers, highlighted by $8.7 billion in net outflows during April. While the languishing paper-gold market has many declaring the gold trade dead, demand for bullion has never been greater, as buyers have focused on the big picture that includes endemic debt levels and unsustainable money-printing schemes. This long-term investment approach is most prevalent in the Eastern world, where India and China, the world’s two largest consumers of gold, are pouncing on the opportunity to accumulate gold at bargain prices. Endless ink has been written on the disconnect between the paper and physical gold markets, yet it is a recently captured image courtesy of China Daily that conveys everything that needs to be said about this phenomenon.
In a scene reminiscent of frenzied shoppers on Black Friday, approximately 10,000 Chinese consumers gathered outside of a jewelry store in Jinan city for the opportunity to scoop up gold products at sharp discounts, after speculation in the West helped shave roughly a quarter off the price of gold. The numbers coming out of China tell a similar story. Chow Tai Fook—the world’s largest jeweler in terms of market capitalization—reported a 63% spike in sales during the second quarter. Chinese Investment Demand for Gold Taking OffWhile China’s love affair with gold jewelry burns as bright as ever, more and more Chinese are flocking to the yellow metal as a hedge against currency devaluation just as inflation begins to rear its ugly head after decades of artificially stimulated growth. According to the World Gold Council (WGC), Chinese coin and bar demand jumped 22% during the first three months of 2013 to a quarterly record of 109.5 tonnes, or more than twice the five-year quarterly average of 43.8 tonnes. Demand really skyrocketed following the massive sell-off of Western gold funds as China imported between 160 and 170 tonnes in April alone. By year-end, the WGC projects that net Chinese imports could eclipse 880 tonnes. Chinese Buying Frenzy Leads to Shortages and Sky-High PremiumsWith pent-up demand swelling, Chinese investors will soon have a new avenue to invest in gold, as the Chinese Securities Regulatory Commission recently approved China’s first two gold-backed exchange-traded products (ETPs), which will be introduced by HuaAn Asset Management Company and Guotai Asset Management Company. Both yuan-denominated gold funds will be listed on the Shanghai Stock Exchange (SHCOMP). However, due to stringent regulations, the products will not buy and store bullion on behalf of shareholders, as the SPDR Gold Trust (GLD) does; instead the funds will mirror the domestic spot price by purchasing futures contracts on the Shanghai Gold Exchange. Though merely paper investments, the funds will offer convenient exposure to gold as well as an affordable alternative to price-sensitive buyers facing hefty premiums on physical product. Investors with long-term horizons, however, will likely continue to own physical gold due to the superior security it affords. At this point, the particulars for each fund are still being sorted out, though it is reported that HuaAn is seeking to raise between 2 billion and 3 billion yuan ($326-$489 million) during its initial offering—pennies compared to the more than $60 billion of bullion held by GLD. Certainly, these new products will provide the Chinese investor with another option for adding gold to their portfolios, since restrictions limit Chinese investors from buying international gold ETFs. What remains to be seen is how many investors will sever their longstanding relationship with physical gold for paper instruments. In any case, the announcement of these two new gold funds represents the latest in a steady stream of bullish signals to emerge from China lately. Still, it is important to recognize that physical bullion will continue to drive the international gold market due to the fact that ETF holdings represent just 1% of the entire 175,000 tonnes of the above-ground gold stock. Though paper markets have demonstrated an ability to sway the gold price, the market for bullion will decide gold’s fate over the long term.
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| Posted: 18 Sep 2013 10:07 AM PDT Or so this long-time base metal analyst recommends... PAUL RENKEN has a broad range of experience in various aspects of the mining and minerals business. He began his career as a geologist for Canadian junior resource companies in the Western United States. Owning a stake in a private consulting firm as vice president of exploration, Renken searched for various base metals, precious metals and industrial minerals. In the UK, he worked in the equity market media outlets of Digitallook and Hemscott before joining VSA Capital as mining analyst in 2006. Now Paul Renken believes it's time for private investors to ride upside momentum in copper, zinc, tungsten and phosphate. Because when gold and silver took a plunge earlier this year, institutional investors went bargain shopping right away, as he says in this interview with The Gold Report's sister title, The Metals Report... The Metals Report: Paul, you're based in London and introduce European investors to small-cap resource equities, many of which are listed and domiciled in Canada. Do you think European investors have a stronger appetite for mining equities? Paul Renken: I don't think European investors have a stronger appetite than, say, the marketplace in Canada. However, European investors do have some interest in mining equities, particularly for those stories that are more advanced. TMR: It was a relatively good August for gold, silver and some of the base metals. Are you noticing an uptick in interest in resource equities from institutional and retail investors? Paul Renken: Our activity actually picked up within weeks after the gold and silver prices fell in April. Particularly in the private equity space, firms were sniffing around for good bargains, good projects with relatively good grades that no longer had decent outlets to get funded. This would include early-stage projects that aren't to the point where they can take a feasibility study to the bank for conventional financing. Some investors were interested in picking up a bargain in this space, investing in companies with extremely low valuations. TMR: One aspect of junior resource equities is that you pay particular attention to a company's narrative. What are the key aspects of a saleable narrative? Paul Renken: We see an awful lot of stories come through our doors, both on listed and unlisted corporate situations. What we find is most saleable, in terms of being able to find the equity financing that they're looking for, are high-grade deposits. That is what investors are looking for. They're also looking for a corporate story or business model that is quite simple. They're not looking for companies with many different types of commodity assets across a whole host of countries. Investors want simple, focused stories where it's easy to develop to the cash flow stage. Low development cost is another selling point. Investors have been looking for companies that aren't cash constrained at the moment – they don't want companies that are desperate for any kind of a deal at any kind of a price in order to get some cash. Finally, to a lesser extent, investors are looking for situations with minimal equity dilution and few if any warrants outstanding. TMR: What commodities is VSA interested in right now? Paul Renken: Anybody that is in mining equities of course is interested in gold and silver because the commodities are highly liquid once they're produced. We like gold and silver companies, but we're also interested in lead-zinc mineralization and nickel. Also, we're kind of specialists in tungsten and minor metals. TMR: Where are we at with base metals? Paul Renken: Base metals carry a mixed bag of possibilities. Copper, lead and zinc are looking very good, but nickel is not so strong at this point. That has a lot to do with where the demand lies in Asia, specifically in China, and whether there is a lot of inventory in warehouses at the moment. Nickel warehouse inventories are at five-year highs and are still climbing. Meanwhile, copper warehouse inventories are coming down, which means that copper is being delivered to the smelters and mills in order to be fabricated. TMR: What are some copper plays you're following? Paul Renken: We didn't think the major producers, the top-tier names, would do that well simply because we didn't quite see the strength in the marketplace for copper. At the same time, we saw the development of these new copper exchange-traded product instruments. We thought some of that copper was going to get taken up into inventory, and expected copper itself to perform better than the top-tier names. We thought second-tier producers might perform better in this situation, producing companies that aren't the first names that come to mind but that are either expanding their capacity or located in safe jurisdictions.. TMR: What about zinc? Paul Renken: Zinc we're pretty positive on actually, particularly for 2014-2015, for three particular reasons. First of all, we feel underinvestment in zinc is going to cause some supply constraints in 2014, particularly because some of the really large deposits are reaching the end of their life throughout the world, such as the Century deposit in Australia. The New Brunswick smelter is now being closed, so the availability is going to become more constrained as we head into 2014. TMR: Are you following any nickel plays despite your pessimism toward the commodity itself? Paul Renken: We actually follow quite a number of companies because we have some clientele in the space and we are interested in the direction of the metal itself. There are some junior nickel plays in the London market that have attracted interest over the years, particularly from retail investors. TMR: Tungsten is a very niche product, but it's increasingly in demand due to its ability to resist heat and its incredible hardness. Tell us about the market for tungsten. Paul Renken: The marketplace for tungsten was really hammered during the late 1980s and early 1990s because the Chinese low-production-cost scheelite mines have forced non-Asian players more or less out of the market. But now China has depleted its higher-grade deposits, and its manufacturing capacity is such that it wants to maintain what supply it has in-country from the mining aspect for its own use. This means that the rest of the world, which hasn't made any tungsten investment of any size in the recent 10–15 years, is looking for alternative supplies. There are some deposits out there, both relatively small, higher-grade shear zone and vein-hosted deposits that have reasonable possibility for being profitable, as well as larger deposits of the skarn or porphyry type that have more or less languished for some period of time. Now those projects are definitely getting a second look. TMR: What about vanadium? Would you say you're bullish on vanadium in general? Paul Renken: We're generally constructive on vanadium. Ferrovanadium makes up 90% of the market for vanadium, which means that it ends up competing against other materials of steel-blended products. It competes against moly-steel, nickel-steel or chrome-steel in various applications, depending upon specifications. A lot of press has been targeting vanadium, however, on the basis of its battery potential. Vanadium redox batteries are a small segment of overall vanadium usage, but if they prove to be a longer-term means of electricity storage for wind and solar energy, then it changes the whole demand picture for vanadium. TMR: Do you have any parting thoughts for the investors reading this article? Paul Renken: Institutions and private equity have already been jumping into bargain hunting, but now it's the retail market's turn as we go into the autumn. The marketplace overall has been oversold this summer and there is some significant upside in some corporate stories, even if the metals prices overall are not in a boom period. The stocks have a little bit of catch-up to do, so there's some good profits to be made. TMR: Thank you, Paul. |
| Posted: 18 Sep 2013 10:07 AM PDT Or so this long-time base metal analyst recommends... PAUL RENKEN has a broad range of experience in various aspects of the mining and minerals business. He began his career as a geologist for Canadian junior resource companies in the Western United States. Owning a stake in a private consulting firm as vice president of exploration, Renken searched for various base metals, precious metals and industrial minerals. In the UK, he worked in the equity market media outlets of Digitallook and Hemscott before joining VSA Capital as mining analyst in 2006. Now Paul Renken believes it's time for private investors to ride upside momentum in copper, zinc, tungsten and phosphate. Because when gold and silver took a plunge earlier this year, institutional investors went bargain shopping right away, as he says in this interview with The Gold Report's sister title, The Metals Report... The Metals Report: Paul, you're based in London and introduce European investors to small-cap resource equities, many of which are listed and domiciled in Canada. Do you think European investors have a stronger appetite for mining equities? Paul Renken: I don't think European investors have a stronger appetite than, say, the marketplace in Canada. However, European investors do have some interest in mining equities, particularly for those stories that are more advanced. TMR: It was a relatively good August for gold, silver and some of the base metals. Are you noticing an uptick in interest in resource equities from institutional and retail investors? Paul Renken: Our activity actually picked up within weeks after the gold and silver prices fell in April. Particularly in the private equity space, firms were sniffing around for good bargains, good projects with relatively good grades that no longer had decent outlets to get funded. This would include early-stage projects that aren't to the point where they can take a feasibility study to the bank for conventional financing. Some investors were interested in picking up a bargain in this space, investing in companies with extremely low valuations. TMR: One aspect of junior resource equities is that you pay particular attention to a company's narrative. What are the key aspects of a saleable narrative? Paul Renken: We see an awful lot of stories come through our doors, both on listed and unlisted corporate situations. What we find is most saleable, in terms of being able to find the equity financing that they're looking for, are high-grade deposits. That is what investors are looking for. They're also looking for a corporate story or business model that is quite simple. They're not looking for companies with many different types of commodity assets across a whole host of countries. Investors want simple, focused stories where it's easy to develop to the cash flow stage. Low development cost is another selling point. Investors have been looking for companies that aren't cash constrained at the moment – they don't want companies that are desperate for any kind of a deal at any kind of a price in order to get some cash. Finally, to a lesser extent, investors are looking for situations with minimal equity dilution and few if any warrants outstanding. TMR: What commodities is VSA interested in right now? Paul Renken: Anybody that is in mining equities of course is interested in gold and silver because the commodities are highly liquid once they're produced. We like gold and silver companies, but we're also interested in lead-zinc mineralization and nickel. Also, we're kind of specialists in tungsten and minor metals. TMR: Where are we at with base metals? Paul Renken: Base metals carry a mixed bag of possibilities. Copper, lead and zinc are looking very good, but nickel is not so strong at this point. That has a lot to do with where the demand lies in Asia, specifically in China, and whether there is a lot of inventory in warehouses at the moment. Nickel warehouse inventories are at five-year highs and are still climbing. Meanwhile, copper warehouse inventories are coming down, which means that copper is being delivered to the smelters and mills in order to be fabricated. TMR: What are some copper plays you're following? Paul Renken: We didn't think the major producers, the top-tier names, would do that well simply because we didn't quite see the strength in the marketplace for copper. At the same time, we saw the development of these new copper exchange-traded product instruments. We thought some of that copper was going to get taken up into inventory, and expected copper itself to perform better than the top-tier names. We thought second-tier producers might perform better in this situation, producing companies that aren't the first names that come to mind but that are either expanding their capacity or located in safe jurisdictions.. TMR: What about zinc? Paul Renken: Zinc we're pretty positive on actually, particularly for 2014-2015, for three particular reasons. First of all, we feel underinvestment in zinc is going to cause some supply constraints in 2014, particularly because some of the really large deposits are reaching the end of their life throughout the world, such as the Century deposit in Australia. The New Brunswick smelter is now being closed, so the availability is going to become more constrained as we head into 2014. TMR: Are you following any nickel plays despite your pessimism toward the commodity itself? Paul Renken: We actually follow quite a number of companies because we have some clientele in the space and we are interested in the direction of the metal itself. There are some junior nickel plays in the London market that have attracted interest over the years, particularly from retail investors. TMR: Tungsten is a very niche product, but it's increasingly in demand due to its ability to resist heat and its incredible hardness. Tell us about the market for tungsten. Paul Renken: The marketplace for tungsten was really hammered during the late 1980s and early 1990s because the Chinese low-production-cost scheelite mines have forced non-Asian players more or less out of the market. But now China has depleted its higher-grade deposits, and its manufacturing capacity is such that it wants to maintain what supply it has in-country from the mining aspect for its own use. This means that the rest of the world, which hasn't made any tungsten investment of any size in the recent 10–15 years, is looking for alternative supplies. There are some deposits out there, both relatively small, higher-grade shear zone and vein-hosted deposits that have reasonable possibility for being profitable, as well as larger deposits of the skarn or porphyry type that have more or less languished for some period of time. Now those projects are definitely getting a second look. TMR: What about vanadium? Would you say you're bullish on vanadium in general? Paul Renken: We're generally constructive on vanadium. Ferrovanadium makes up 90% of the market for vanadium, which means that it ends up competing against other materials of steel-blended products. It competes against moly-steel, nickel-steel or chrome-steel in various applications, depending upon specifications. A lot of press has been targeting vanadium, however, on the basis of its battery potential. Vanadium redox batteries are a small segment of overall vanadium usage, but if they prove to be a longer-term means of electricity storage for wind and solar energy, then it changes the whole demand picture for vanadium. TMR: Do you have any parting thoughts for the investors reading this article? Paul Renken: Institutions and private equity have already been jumping into bargain hunting, but now it's the retail market's turn as we go into the autumn. The marketplace overall has been oversold this summer and there is some significant upside in some corporate stories, even if the metals prices overall are not in a boom period. The stocks have a little bit of catch-up to do, so there's some good profits to be made. TMR: Thank you, Paul. |
| Posted: 18 Sep 2013 10:05 AM PDT After this spring's crash, gold investing is being spurned like never before... GOLD is more hated right now than it's been in years... and I love it, writes Steve Sjuggerud in his Daily Wealth email. We have the perfect setup for a great trade in gold. I believe your investing upside is 70%-plus in the next year. Your downside risk is just 9%. A risk-versus-reward setup just doesn't get much better than that! Let me explain... The last time gold investing was even close to this hated was back in 2008... And it soared 71% in the following 13 months. This time around, it could go even higher. You see, gold is even MORE hated than it was in 2008... The clearest measure of how hated gold has gotten is what real traders are doing with real money. And the real money has bailed on gold… A couple of months ago, the Commitment of Traders report showed that "large speculators" – hedge funds – were more bearish on gold than they have been in years. Take a look at the chart below. You can see how these large speculators bailed out:  Large speculators became extremely bearish on gold investing a few months ago... but in late June, the position started to reverse, around the same time gold bottomed. Gold bottomed at less than $1200 per ounce. Today, gold is up... but not dramatically – at around $1300 per ounce. This could be the start of a new uptrend. So gold investing is HATED. And it has a bit of an UPTREND in place. These are two of the three things I look for in an investment. (The third thing I look for in an investment is "cheap". But it's almost impossible to put a fair value on the price of gold investment.) This is about as good as it gets for placing a trade in gold. We have incredible upside potential here... Remember, gold soared 71% in 13 months the last time we saw a similar setup. And gold is even more hated today than it was back then. Look to exit this new gold position if the price drops 9% from here, back to the summer's low at $1180 per ounce. |
| Posted: 18 Sep 2013 10:05 AM PDT After this spring's crash, gold investing is being spurned like never before... GOLD is more hated right now than it's been in years... and I love it, writes Steve Sjuggerud in his Daily Wealth email. We have the perfect setup for a great trade in gold. I believe your investing upside is 70%-plus in the next year. Your downside risk is just 9%. A risk-versus-reward setup just doesn't get much better than that! Let me explain... The last time gold investing was even close to this hated was back in 2008... And it soared 71% in the following 13 months. This time around, it could go even higher. You see, gold is even MORE hated than it was in 2008... The clearest measure of how hated gold has gotten is what real traders are doing with real money. And the real money has bailed on gold… A couple of months ago, the Commitment of Traders report showed that "large speculators" – hedge funds – were more bearish on gold than they have been in years. Take a look at the chart below. You can see how these large speculators bailed out: Large speculators became extremely bearish on gold investing a few months ago... but in late June, the position started to reverse, around the same time gold bottomed. Gold bottomed at less than $1200 per ounce. Today, gold is up... but not dramatically – at around $1300 per ounce. This could be the start of a new uptrend. So gold investing is HATED. And it has a bit of an UPTREND in place. These are two of the three things I look for in an investment. (The third thing I look for in an investment is "cheap". But it's almost impossible to put a fair value on the price of gold investment.) This is about as good as it gets for placing a trade in gold. We have incredible upside potential here... Remember, gold soared 71% in 13 months the last time we saw a similar setup. And gold is even more hated today than it was back then. Look to exit this new gold position if the price drops 9% from here, back to the summer's low at $1180 per ounce. |
| Posted: 18 Sep 2013 10:02 AM PDT Argentines use the US Dollar to flee the Peso. What should US savers choose...? I WAS in Uruguay and then Buenos Aires, Argentina, last week, writes Chris Mayer in The Daily Reckoning. I met with a variety of interesting people on my trip. One of them is a guy who writes a blog from Buenos Aires, OfWealth.com, under the pen name 'Marco Polo'. He lives in Buenos Aires, but he is not Argentine. He's an experienced global financial investor and lived in Hong Kong for a time working for a large investment bank. I can't tell you much more about him than that, because he doesn't want me to. But I can share with you our conversation, which included some interesting bits about the US Dollar. I met Marco at La Cabrera, an excellent restaurant in the Palermo neighbourhood. (This barrio takes its name from an old abbey that dates from the 16th century.) At La Cabrera, of course, we ate great steaks and meats for which the country is justly famous. We started with chorizo and morcilla. (The latter is a Spanish blood sausage.) I have to say: I've had blood sausage all over the world, and at La Cabrera I had the best morcilla I've ever put in my mouth. Eating in Buenos Aires is very cheap for those of us who pay with US Dollars. There were four of us. We had appetizers, steaks, sides, two bottles of wine and coffee afterward. It cost $100. Total. For that kind of meal in America, it would've been $100 each. Which brings us to the Dollar... The Argentines live with super-high inflation. Officially, it's around 10%, but on the ground, it's closer to 25%. As Marco explained it, the Argentine government prints a lot of money – literally prints it. The physical volume of Peso notes, for example, is up by more than a third in the last year. The 100-Peso note, the largest denomination, has swollen in quantity by more than a quarter. The physical amount of currency is important, because people transact so much business in cash. It's easier to protect your anonymity in a country with a taste for authoritarian government. So guess what their favourite alternative currency is? The US Dollar. Marco told me that Argentines hold one out of every 15 printed US Dollars.
Plus, the official exchange rate is robbery. So what to do?
You get 60% more for your money at the 'blue' rate. And though it's a crazy thing, it shows how the Argentines have adapted. They are used to this stuff, after all. Argentines have suffered every imaginable monetary malaise. Hyperinflation, banking crises, debt defaults and more.
They've learned not to trust the colorful Peso. And they look to preserve their wealth by owning real stuff such as real estate, art, gold and, apparently, US Dollars.
Americans have yet to learn these lessons. Ours is a culture still much too trusting of central banks and paper money. Most Americans don't understand what the central bank really does. Or how the banking system functions. They don't get how they are being robbed. They are more likely to blame higher prices on the oil companies or foreigners. They don't see that the cause is the government's money printing. This reminds me of that old line from Henry Ford. If Americans really understood the banking system, they'd revolt. Or as Ford put it:
The thing is there is more similarity than you might guess between the two the countries. And in some of these comparisons, the US does not come out looking the best. Marco ran some numbers on the debt of both, for example.
Indeed, we wondered if the US Dollar might one day go the way of the Peso. From OfWealth.com:
Might the Argentina of today be a glimpse of some dystopian American future? A warning for us all...? |
| Posted: 18 Sep 2013 10:02 AM PDT Argentines use the US Dollar to flee the Peso. What should US savers choose...? I WAS in Uruguay and then Buenos Aires, Argentina, last week, writes Chris Mayer in The Daily Reckoning. I met with a variety of interesting people on my trip. One of them is a guy who writes a blog from Buenos Aires, OfWealth.com, under the pen name 'Marco Polo'. He lives in Buenos Aires, but he is not Argentine. He's an experienced global financial investor and lived in Hong Kong for a time working for a large investment bank. I can't tell you much more about him than that, because he doesn't want me to. But I can share with you our conversation, which included some interesting bits about the US Dollar. I met Marco at La Cabrera, an excellent restaurant in the Palermo neighbourhood. (This barrio takes its name from an old abbey that dates from the 16th century.) At La Cabrera, of course, we ate great steaks and meats for which the country is justly famous. We started with chorizo and morcilla. (The latter is a Spanish blood sausage.) I have to say: I've had blood sausage all over the world, and at La Cabrera I had the best morcilla I've ever put in my mouth. Eating in Buenos Aires is very cheap for those of us who pay with US Dollars. There were four of us. We had appetizers, steaks, sides, two bottles of wine and coffee afterward. It cost $100. Total. For that kind of meal in America, it would've been $100 each. Which brings us to the Dollar... The Argentines live with super-high inflation. Officially, it's around 10%, but on the ground, it's closer to 25%. As Marco explained it, the Argentine government prints a lot of money – literally prints it. The physical volume of Peso notes, for example, is up by more than a third in the last year. The 100-Peso note, the largest denomination, has swollen in quantity by more than a quarter. The physical amount of currency is important, because people transact so much business in cash. It's easier to protect your anonymity in a country with a taste for authoritarian government. So guess what their favourite alternative currency is? The US Dollar. Marco told me that Argentines hold one out of every 15 printed US Dollars.
Plus, the official exchange rate is robbery. So what to do?
You get 60% more for your money at the 'blue' rate. And though it's a crazy thing, it shows how the Argentines have adapted. They are used to this stuff, after all. Argentines have suffered every imaginable monetary malaise. Hyperinflation, banking crises, debt defaults and more.
They've learned not to trust the colorful Peso. And they look to preserve their wealth by owning real stuff such as real estate, art, gold and, apparently, US Dollars.
Americans have yet to learn these lessons. Ours is a culture still much too trusting of central banks and paper money. Most Americans don't understand what the central bank really does. Or how the banking system functions. They don't get how they are being robbed. They are more likely to blame higher prices on the oil companies or foreigners. They don't see that the cause is the government's money printing. This reminds me of that old line from Henry Ford. If Americans really understood the banking system, they'd revolt. Or as Ford put it:
The thing is there is more similarity than you might guess between the two the countries. And in some of these comparisons, the US does not come out looking the best. Marco ran some numbers on the debt of both, for example.
Indeed, we wondered if the US Dollar might one day go the way of the Peso. From OfWealth.com:
Might the Argentina of today be a glimpse of some dystopian American future? A warning for us all...? |
The collapse of Socialism is unfolding before everyone's eyes – they just ignore it. In the states they manipulate the CPI to render inflation irrelevant and impossible. In Spain, they now will stop indexing pensions altogether because they cannot create a fake CPI as the US does. There will no longer be any automatic link to inflation from 2014 onwards for Spanish Pensions. Thus, the Spanish government wants to save 33 billion euros in ten years. The retirement age for the time being remains at 65 years for now but there are discussions about raising that to 70 in the EU as a whole behind closed doors in Brussels.
As introduced over the summer, our research of 20 different cycle theories has indicated that as of 2013 
Now that there is growing evidence of GDP growth, we must consider a new topic: the likely effect on central bank balance sheets, using the US Fed as an example.
In the currency markets the most over-crowded trade was to be long the US dollar – but this has not been working. Against the euro, sterling and the yen, the dollar has been losing ground. The old market saying is that when everybody is thinking the same thing, then nobody is thinking at all. They often have a rude awakening and when this happens, cash is king.
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