Gold World News Flash |
- Stoeferle - Superb Book of 50 Charts
- Stoeferle - Superb Book of 50 Charts
- When Gold Will Really Start to Glitter
- Gold Price Closed at $1,396.10
- TDV Week in Review
- The CURRENT Monetary System WILL CRASH — Got Gold?
- Homeschooler Pays School Property Taxes in Dollar Bills
- Glenn Beck – We Are Helping Animals And Savages In Syria ! SHARE WITH EVERYONE! [warning: graphic]
- Gold Former Resistance Serves as Support
- Gold Price Closed at $1,396.10
- AsiaPac Stocks Test 3-Month Highs As China Services PMI Droops To 11-Month Low
- What does war mean for the gold price?
- Fiction, Fact... Or Scandal?
- Ron Paul Asks "Will Congress Endorse Obama's War Plans? And, Does It Matter?"
- Marc Faber: Money Trading by Central Banks Is The Issue While Gold Is Safe
- Faux Gold Arbitrage
- Faux Gold Arbitrage
- Choices for Tomorrow's Gold Standard
- Choices for Tomorrow's Gold Standard
- Who Says Gold Is Money? (Part Two)
- Drums Of War Spark Rally In Gold, Silver and Energy
- Gold Bull & Debt Bear Market In 50 Amazing Charts by Incrementum
- In The News Today
- Cataclysmic Collapse in Housing on the Horizon-Fabian Calvo
- What Next for Gold and Silver?
- Massive Debt Levels Will Push Silver To $150 And Beyond
- Solid reasons why gold is good buy now
- Drums Of War Spark Rally In Gold, Silver and Energy Prices
- India in Serious Trouble (and Gold at the Heart of It)
- Thin Gold Trading Whips Price on Labor Day, Speculators "Shy of Being Short" on Syria & US Tensions
- Gold Slips in Thin Holiday Trade, But Hedge Funds "Wary of Being Short"
- U.S. Dollar Index Strength Suggests Lower Euro and GBP Ahead
- Gold price in a range of currencies since December 1978 XLS version
- Massive Debt Levels Will Push Silver Price To Beyond $150
| Stoeferle - Superb Book of 50 Charts Posted: 03 Sep 2013 12:01 AM PDT Being somewhat of a chart wonk, I appreciate good charts. Charts tell stories visually, distilling lots of information into pictures we humans can understand in an instant. Good charts are therefore valuable. Today we have an opportunity to devour two score and ten excellent charts that must have taken tons of work to produce, sent to us by the author via email in PDF format. Our good friend Ronald-Peter Stöferle, CMT, of Incrementum Liechtenstein AG writes: "A picture is worth a thousand words and therefore I want to share my 50 most interesting charts with you. Attached please find our first Chartbook "Gold Bull, Debt Bear" including the following charts for example: · Gold during various currency crises · Gold Is One of The Most Liquid Currencies · Stocks are Cheap? Not really.. · The Coefficient of Coincidence · No Bang for the Buck: Increase in Real GDP per Dollar of Incremental Debt · Housing Bubble in China? · A Bull Market in Bureaucracy · …and the world famous: Gold/Oktoberfest Beer Ratio Enjoy!" GGR readers will know Ronni as the author of the annual report "In Gold We Trust," a very comprehensive look at the gold market from a savvy advisor we look forward to each year. This new chartbook is certainly a worthy addition to that work and is definitely worthy of sharing. Download the entire chartbook at the link just below: (Allow time to load.) Download ChartbookIncrementum-TheGoldBullandDebtBear A few examples of the charts to be found in Ronni's new offering are shown below. Thanks for sharing, Ronni! |
| Stoeferle - Superb Book of 50 Charts Posted: 03 Sep 2013 12:01 AM PDT Being somewhat of a chart wonk, I appreciate good charts. Charts tell stories visually, distilling lots of information into pictures we humans can understand in an instant. Good charts are therefore valuable. Today we have an opportunity to devour two score and ten excellent charts that must have taken tons of work to produce, sent to us by the author via email in PDF format. Our good friend Ronald-Peter Stöferle, CMT, of Incrementum Liechtenstein AG writes: "A picture is worth a thousand words and therefore I want to share my 50 most interesting charts with you. Attached please find our first Chartbook "Gold Bull, Debt Bear" including the following charts for example: · Gold during various currency crises · Gold Is One of The Most Liquid Currencies · Stocks are Cheap? Not really.. · The Coefficient of Coincidence · No Bang for the Buck: Increase in Real GDP per Dollar of Incremental Debt · Housing Bubble in China? · A Bull Market in Bureaucracy · …and the world famous: Gold/Oktoberfest Beer Ratio Enjoy!" GGR readers will know Ronni as the author of the annual report "In Gold We Trust," a very comprehensive look at the gold market from a savvy advisor we look forward to each year. This new chartbook is certainly a worthy addition to that work and is definitely worthy of sharing. Download the entire chartbook at the link just below: (Allow time to load.) Download ChartbookIncrementum-TheGoldBullandDebtBear A few examples of the charts to be found in Ronni's new offering are shown below. Thanks for sharing, Ronni! |
| When Gold Will Really Start to Glitter Posted: 03 Sep 2013 12:00 AM PDT by Bill Bonner, Acting-Man.com:
The Dow inched higher yesterday. This morning, gold is down about $19 to $1,394 an ounce – about where it traded on Monday. After telling readers how awful it was, now the mainstream press is back to neutral on gold. Barron's recently ran an article titled "Gold Regains Its Glitter." Markets make opinions. Gold is up about 17% from its June low. Opinions on it are becoming more favorable. But you ain't seen nothin' yet. The central banks of the major developed economies are engaged in massive debt monetization (aka "QE"). If they all start to taper their bond buying, they risk resurrecting the calamity they're trying to avoid – a deflationary depression. (At least in their minds.) So, they've got to keep going. The markets… and the economy… depend on it. You wanna see something really glitter? Just wait! |
| Gold Price Closed at $1,396.10 Posted: 02 Sep 2013 10:24 PM PDT Gold Price Close Today : 1396.10 Change : 0.00 or 0.00% Silver Price Close Today : 23.46 Change : 0.00 or 0.00% Gold Silver Ratio Today : 59.00 Change : 0.00 or 0.00% Franklin 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. |
| Posted: 02 Sep 2013 10:02 PM PDT by Gary Gibson, Dollar Vigilante:
I arrived at the airport last weekend in Santiago and had to go through customs. Every one of the Chilean officials was laid back and pleasant, but having to deal with the state in any form at these ridiculous political borders always fills me with equal parts sadness and fury. After international travel I always need a couple of hours to let these emotions drain away enough to enjoy anything. It was just as well because I didn’t get to see much of Santiago on the first day. Instead GGC associate Ken Carpenter spent a little over an hour driving me to meet up with managing partner Ken Johnson at the GGC beach house in Reñaca just north of the coastal twin cities of Valparaiso and Viña del Mar. The coastal towns seemed to me as Mediterranean as they did Latin American. |
| The CURRENT Monetary System WILL CRASH — Got Gold? Posted: 02 Sep 2013 09:52 PM PDT
Claudio Grass the managing director of GlobalGold.ch joins us to discuss the fact that our current monetary system WILL collapse, it’s just a matter of time. The question Claudio asks is when it happens “will the crash lead us to more Totalitarian structures, or will the people start thinking about their individual liberty?” Claudio, who lives in Switzerland, believes in the Austrian school of economics, personal responsibility and liberty. Oh, and plenty of PHYSICAL gold (and PHYSICAL silver) to protect your assets. |
| Homeschooler Pays School Property Taxes in Dollar Bills Posted: 02 Sep 2013 09:00 PM PDT from Activist Post: Pennsylvania man tries to pay the school portion of his property taxes, $7143, in dollars bills to show a visualization of how much money is being forcibly stolen from him against his will. The Easton, PA municipality doesn’t have the capacity to count that much money, another indicator of how obscene the amount is. It’s too much work. So they escort him to the bank to get a receipt. This homeschooling family effectively rents their own property from the government for $595 per month to contribute to service that they disagree with and do not participate in. |
| Glenn Beck – We Are Helping Animals And Savages In Syria ! SHARE WITH EVERYONE! [warning: graphic] Posted: 02 Sep 2013 08:45 PM PDT from Gold, Silver & Economy News: Democrats AND Republicans are LYING you into war. Obama & US, We Are Helping Animals And Savages In Syria ! |
| Gold Former Resistance Serves as Support Posted: 02 Sep 2013 08:04 PM PDT courtesy of DailyFX.com September 01, 2013 04:53 PM Daily Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0 Interested in automated trading with Mirror Trader? Commodity Analysis: “Gold has broken through the zone of consolidation that took place in mid-June and a confluence of trendlines. Focus now shifts to the June high at 1424.” 1424 has been reached as has channel resistance and gold pulled back after a long wick Thursday. These are signs of a top. Commodity Trading Strategy: Flat LEVELS: 1318 1352 1373 1417 1424 1440 original source... |
| Gold Price Closed at $1,396.10 Posted: 02 Sep 2013 07:03 PM PDT Gold Price Close Today : 1396.10 Change : 0.00 or 0.00% Silver Price Close Today : 23.46 Change : 0.00 or 0.00% Gold Silver Ratio Today : 59.00 Change : 0.00 or 0.00% Franklin 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. |
| AsiaPac Stocks Test 3-Month Highs As China Services PMI Droops To 11-Month Low Posted: 02 Sep 2013 06:33 PM PDT China's Manufacturing PMI printed in line with its Flash estimate last night and the Services PMI just printed at a disappointing 11-month low as the 2 segments of the economy diverge by their most on record. The 'good' news that Obama backed away from the big red button for 5 minutes (and improving European PMIs) is spurring some more catch up in Asia tonight and while critical nations like India (whose PMI was dismal) and Indonesia are still languishing, the bounce back in the last few days has pushed MSCI's AsiaPac (ex-Japan) index up to 3-month highs... Well, it's a hot-money current-account-deficit vicious cycle dip to be bought, of course. Treasuries re-opened in line with futures expectations (around 5bps higher in yield) and S&P futures are leaking very gently off this morning's exuberant heights (but remain up over 1% from Friday's close). WTI is hovering around $107 (down from Friday) but Brent is at $114.50 (slightly higher than Friday's close). Silver is holding its strong gains and gold is flat. China's Services and Manufacturing segments are diverging significantly...
And global stocks are bouncing once again...
Though notably Japan has been underperforming until the last 2 days 600 point liftathon stop-hunt...
and while India and Indonesia have bounced in the last few days, they remain under signficant pressure...
Charts: Bloomberg |
| What does war mean for the gold price? Posted: 02 Sep 2013 06:00 PM PDT The Real Asset Co |
| Posted: 02 Sep 2013 05:40 PM PDT * * * We make no claims that any of the presented is in any way accurate or representative of the truth. It is sourced from a "hack" by €Wagn3r of what the hacker purports to be numerous emails of one Colonel Anthony James MacDonald, his wife, and various other "Pentagon officers." However, if accurate, the exposed data sheds some critical, if circumstantial, light on the true events that transpired in the days ahead of the Wednesday, August 22 "nerve gas" chemical attack alleged to have been executed by Syria's president al-Assad, and presented "beyond a doubt" as such, and as the basis for full-scale military operations and "surgical strikes" targeting Syrian assets, which in the coming days will involve a Congressional vote to determine the fate of the Syrian government and ostensibly of ten of thousands of innocent civilians caught in the crossfire. While we doubt the Pentagon, the US Military, or any person in the administration will officially address these "hacked" emails, the world has a right to be aware of the existence of this information, and to come their own conclusions about the veracity of the official "case" for Syrian involvement * * * The following is the message that hacker €Wagn3r posted on a Pastebin data dump (located here) on August 30:
While hacks traditionally have little credibility in the media sphere, absent extensive outside corroboration, what drew our attention to his particular breach of email security is that whether due to this publicly announced hacking (or some other reason) the LinkedIn profile of Colonel MacDonald, which he lists on his also hacked resume as residing at www.linkedin.com/pub/anthony-j-macdonald/31/615/a2, has been removed. The hack, with supporting documentation, was made publicly available for the first time on August 30, 2013. His resume can still be traced using an archived version of the website, and can be found here (full screen grab provided below). The source data provided by the hacker can be traced in the following three files:
Cutting to the chase, the hacker focuses on the following key exchange between Colonal MacDonald, found in an excerpt from an email thread dating to August 22. It is as follows - bold, underlined highlights ours :
The full contents of the email exchange can be found in the archived email located in the "best" mail folder, under the title: "Follow-up, 20130820 (UNCLASSIFIED)" If factual, Mr. Furst's (CIV) email's congratulates Col. MacDonald for his "latest success" referencing the Washington Post article in which the Syrian government is accused of the chemical attack near Damascus. The Colonel's response is: "As you see I'm far from this now, but I know our guys did their best." At this point, and for the sake of clarity and transparency, perhaps it would be beneficial for Congress to hear our Colonel MacDonald about just what it is "his guys" did their best in, and why he is acknowledging their performance when referencing a chemical attack that allegedly was launched by Syria's Assad. * * * The other referenced excerpt between one Marh Shapiro and one Jennifer MacDonald, allegedly the wife of the abovementioned Colonel. It is as follows. Once again, excerpt highlights ours:
If factual, the implications of this second follow up email are self-explanatory: the wife of Colonel MacDonald responds to a sincere query by what appears to be a friend or acquaintance, about the tragic fate of the Syrian children that perished in the chemical attack, to which the response is: "I saw it either and got afraid very much. But Tony comforted me. He said the kids weren't hurt, it was done for cameras. So you don't worry, my dear." Perhaps if and when Col. MacDonald provides his explanation for his response to the first email, he can also share some insight into why he told his wife that the entire Syrian massacre has been staged "for the cameras." This kind type of prevarication will hardly be without pretext: recall the video clip presented 4 weeks ago showing Muslim Brotherhood supporters staging for the camera in what appears to be an act designed to feign injury and death. The full contents of the email exchange can be found in the archived email located in the "best" mail folder, under the title 7a231bc6-1490-4fe1-98ef-6bdf8e9b4a265. * * * Going back to the hacker's original message: he alleges to have hacked the emails of the following "other Pentagon officers' mail boxes:"
The hacker's parting words:
* * * Those curious about the credentials of Colonel MacDonald, can find more in what appears to be his resume which can be found in the email titled "Resume" located in assorted "MacDonalds" folder. It is in the headers to this resume that Col. MacDonald allegedly lists the LinkedIn profile URL which appears to have been taken down as of this writing.
There is much more in the full resume. His full screencaptured LinkedIn profile is shown below:
Ron Paul Asks "Will Congress Endorse Obama's War Plans? And, Does It Matter?" Posted: 02 Sep 2013 04:57 PM PDT Submitted by Ron Paul via The Ron Paul Institute, President Obama announced this weekend that he has decided to use military force against Syria and would seek authorization from Congress when it returned from its August break. Every Member ought to vote against this reckless and immoral use of the US military. But even if every single Member and Senator votes for another war, it will not make this terrible idea any better because some sort of nod is given to the Constitution along the way. Besides, the president made it clear that Congressional authorization is superfluous, asserting falsely that he has the authority to act on his own with or without Congress. That Congress allows itself to be treated as window dressing by the imperial president is just astonishing. The President on Saturday claimed that the alleged chemical attack in Syria on August 21 presented "a serious danger to our national security." I disagree with the idea that every conflict, every dictator, and every insurgency everywhere in the world is somehow critical to our national security. That is the thinking of an empire, not a republic. It is the kind of thinking that this president shares with his predecessor and it is bankrupting us and destroying our liberties here at home. According to recent media reports, the military does not have enough money to attack Syria and would have to go to Congress for a supplemental appropriation to carry out the strikes. It seems our empire is at the end of its financial rope. The limited strikes that the president has called for in Syria would cost the US in the hundreds of millions of dollars. Joint Chiefs Chairman Gen. Martin Dempsey wrote to Congress last month that just the training of Syrian rebels and "limited" missile and air strikes would cost "in the billions" of dollars. We should clearly understand what another war will do to the US economy, not to mention the effects of additional unknown costs such as a spike in fuel costs as oil skyrockets. I agree that any chemical attack, particularly one that kills civilians, is horrible and horrendous. All deaths in war and violence are terrible and should be condemned. But why are a few hundred killed by chemical attack any worse or more deserving of US bombs than the 100,000 already killed in the conflict? Why do these few hundred allegedly killed by Assad count any more than the estimated 1,000 Christians in Syria killed by US allies on the other side? Why is it any worse to be killed by poison gas than to have your head chopped off by the US allied radical Islamists, as has happened to a number of Christian priests and bishops in Syria? For that matter, why are the few hundred civilians killed in Syria by a chemical weapon any worse than the 2000-3000 who have been killed by Obama's drone strikes in Pakistan? Does it really make a difference whether a civilian is killed by poison gas or by drone missile or dull knife? In "The Sociology of Imperialism," Joseph Schumpeter wrote of the Roman Empire's suicidal interventionism: "There was no corner of the known world where some interest was not alleged to be in danger or under actual attack. If the interests were not Roman, they were those of Rome's allies; and if Rome had no allies, then allies would be invented. When it was utterly impossible to contrive an interest - why, then it was the national honour that had been insulted." Sadly, this sounds like a summary of Obama's speech over the weekend. We are rapidly headed for the same collapse as the Roman Empire if we continue down the president's war path. What we desperately need is an overwhelming Congressional rejection of the president's war authorization. Even a favorable vote, however, cannot change the fact that this is a self-destructive and immoral policy. |
| Marc Faber: Money Trading by Central Banks Is The Issue While Gold Is Safe Posted: 02 Sep 2013 02:59 PM PDT In this interview with Marc Faber, financial journalist Lars Schall covers both broad topics related to the economic, central planning, and gold. The interview appeared on GoldSwitzerland. We are highlighting 6 specific questions and answers in this article. Price of gold: cheap, expensive or bubble?Question: What things have to be in place before you talk about a bubble in gold? Marc Faber: Well, I lived through the bubble in gold in the 1970′s and by 1979, November, the gold price was around 450 Dollars and within three months it went up to 850 Dollars, so within three months, actually two months, November, December and early January, we made it big. It went up almost 50 percent. So a bubble usually characterized by a terminal upwards move in these real estate or gold or stocks or collectables that is almost vertical. In other words, an acceleration on the upside. And that hasn't happened yet. Moreover, one of the symptoms of a bubble is widespread public market invasion, in other words most people are one way or the other involved in the market, in real estate, like in the U.S. in 2007 or in NASDAQ stocks in 2000 or on other … Or in the 70′s, in the 70′s, when I was running Drexel Burnham at that time, our office was like a casino; people came in to trade gold 24 hours a day. That doesn't happen today. Okay, we have now better communication so we have the internet on which you can place orders through the internet and through phones and others but if I go to conferences and I talk about investments, I frequently ask the audience, how many of you own gold and how many have, say more than five percent of your assets in gold? Most, I mean, if at most three to five percent of the audience owns any gold, that's about it. So where, say 12 years ago, if I had asked, who of you owns NASDAQ stocks, maybe 80 percent would have said, yes. So based on the ownership of gold from financial institutions and also based on the public participation, I don't think we're in a bubble. Question: In turn would you say that gold is still cheap? Marc Faber: Well, the problem with zero interest rate policies and money printing is that it distorts all evaluation models, it's very difficult to value something. I could say, okay, this house in Mayfair or on Park Avenue or Madison Avenue in New York is expensive if I compare it to, say a quantity of money that's been floating around the world, but maybe it isn't. Is a Warhol painting expensive or cheap? Well it's up, say 12 times over the last ten years, so it's gone up a lot but the quantity of money has also gone up a lot and the number of billionaires around the world has also expanded and so forth and so on. So I can say, maybe gold relative to a Warhol painting or relative to the U.S. stock market is not that expensive or relative to Hampton property. Obviously those are up from 250 Dollars in 1999 to now over 1.300, so, expensive or cheap is a very difficult concept in the present environment. I think all the investors should consider, what is actually the downside. Say you have a billion Dollars; under normal conditions maybe the safest is to keep everything in cash. Now because under normal conditions, say little inflation and the purchasing power of money is maintained, the banking system is down. So you keep it in cash. But under the present condition, cash could be very dangerous, say if banks had another bailout, I think that the public opinion would shift to penalizing large depositors. In other words, if you have 100.000 Dollars on deposit with Deutsche Bank, maybe you get your money back but if you have a billion Dollars, maybe they take the haircut of 50 percent. So in this environment you can ask yourself if you have a billion Dollars. Well, what is relatively safe? So I would imagine that real estate is relatively safe because it's widely owned by a large portion of the population. It may go down in value and it may be taxed away but it's feasibly safe. If you look at Germany in 1928, the large and the more stable companies from Siemens to whatever it is, say, BASF, they survived. And so you were better off in stocks in the long run to wars and hyperinflation than in cash and bonds. When you look at gold, well, gold is very safe. It often has a high return in the long run, per se based provided and this is the proviso, the governments don't take it away. That is a big issue. Central planningQuestion: Who are the main beneficiaries of the current monetary policies undertaken by central banks around the globe? Marc Faber: Very clearly – and this was already observed by Copernicus and later by David Hume and Adam Smith and also Irving Fisher – when you change money, when you have essentially an increase in the balance sheet of central banks and an increase in the quantity of money, the problem is that the money doesn't flow evenly into the system but it flows into some sectors at different times and it creates booms in some sectors of the economy. The major beneficiaries of the most recent monetary inflation based in 2008 have been people closest to the source of the liquidity. In other words the financial sector, hedge fund and bond managers, private equity firms and large asset holders; because if you look at, say, who owns shares in the U.S.; the majority of people have no shareholding to speak of. It's the minority, maybe five percent of the population, that holds the majority of shares. So the money printing has actually been very beneficial to well-to-do people. Question: What could be done to solve a systemic crisis? Marc Faber: Recently, there was a professor in Germany who argued that the problem are the well-to-do people and that they should be taxed, very heavily penalized and that part of their assets should be taken away. I don't think that the well-to-do people per se are the problem. I think the money trading by central banks is the problem and the expected debt growth, credit growth by governments and also on the household sector level and the unfunded liability. So, essentially, one of the solutions to the problem – and there is not going to be a solution that is not very painful – there will be pain and people will have to cut back on their consumption and also review their future benefits from pension funds and from social security, health care and so forth and so on. We've lived beyond our means in most countries and to solve that problem is not going to be without significant pain. But effecting the right direction would be to take the depression away from central bankers to increase and cut the money supply and to intervene into the free market essentially with monetary measures. I think that would be the first step in the right direction because if you look at what has happened in the economy, one of the safest goals of central banks is price stability. Well where has there been price stability over the last 15 years? We had a colossal NASDAQ problem and then a collapse and then a colossal credit bubble and housing bubble and then a collapse and then we had a colossal bubble in commodities in 2008 when the oil price went to 147 Dollars, and so if the goal is price stability, basically the fiscal and in particular the monetary interventions have actually led to more instability rather than stability. Paper goldQuestion: Yes. Do you think so that the dominant factor in the West regarding gold is the paper gold market? Marc Faber: Well, I don't know. There are lots of theories about manipulation in the gold market. I always say, this doesn't concern me, and I hope that the central banks manipulate the price down because if that is the case – don't forget that every manipulation eventually leads to a move in the opposite direction that is very violent – so in other words, if someone manipulates the price down, in my view eventually the price will shoot up very dramatically. It's like if you have wage control, eventually the wage control falls apart and wages go through the roof. Similarly if you have in the commodities market price support like coffee or oil or what not, eventually the price falls through the price support and so forth and so on. Market force is always more powerful, so I hope the gold price was manipulated down because then it will go through the roof eventually. Gold mining sharesQuestion: While you're bearish when it comes to the stock market in general, you seem to be optimistic with regards to gold mining shares. Why so? Marc Faber: Well, basically the U.S. market is in the sky, we have a very strong outperformance of U.S. stock vis-à-vis Europe until a year ago and vis-à-vis emerging markets until now. But the European economies are a large portion of the U.S. corporate earnings, but they're not growing. The U.S. is hardly growing. Growth came from emerging markets and these emerging economies are essentially today in a no-growth environment. I live in Asia, so I am quite familiar on my observations on the ground. We have no recession that is visible. It is often seen like a pain. But we're just at the high level of economic activity; no longer growing. So in my view, the earnings of multinationals will disappoint, and don't forget, we had this huge increase, it integrates on a percentage rise. The 10-year Treasury note has now gone up from July 2012, from 1.43% to now 2.88. So we have essentially doubled in yield. This is remarkable, especially in view of the fact that in September 2012 Mr. Bernanke said, the purpose of QE 3, which then became QE 4, is to lower interest rates. So the safest goal of the Fed has badly expired in the sense that interest rates are up essentially, and not down. That is for the first time in many years that the market forces are more powerful than the central bank action. And so the U.S. market is high, relative to other markets. There's no earning growth to speak of at the present time. There has been a lot of speculation and evaluations are relatively stretched. So, I don't think that U.S. stocks offer great value and that they could easily drop. 20, 30 percent wouldn't surprise me at all. Gold shares are in a different position because they've been correcting essentially since 2011 and many gold shares are down 50 percent from those highs. So like emerging stock markets they have grossly underperformed the overall indices in the U.S. and with all the money printing – and I have to point out, I don't believe in any tapering – maybe they reduce asset purchases somewhat, but I think it's actually quite likely that they will increase asset purchases. For the simple reason that the economy doesn't recover, stock market goes down, the bond market goes down, and then the people at the Fed will say, we didn't do enough. And then they will go and increase their asset purchase. Including the Fed in theory would buy you off the stock markets. So I think that in this environment of money printing you want to own some physical gold held outside the U.S. I don't understand why it would take eight years for the U.S. to deliver the gold. The German Bundesbank would be possible to do it in one week, but maybe the gold is not there. All I want to say, I would hold physical gold. Preferably probably in Singapore, Hong Kong or other Asian countries. And gold shares are a trading opportunity because they're so oversold and along with the performance of gold prices they should re-bounce quite strongly. Germany’s goldQuestion: Besides the repatriation of some of the German Gold from the New York Fed and the Banque de France, the Bundesbank will leave a huge amount of its gold in New York City and London to have in the event of a currency crisis the ability to exchange gold for foreign currency within a short space of time – does this argument convince you? Marc Faber: No, because that's complete nonsense, because if the gold would be held in Germany, in a vault, and if there was a financial panic and they really needed to draw loans against the gold that they hold in Germany, they could obtain loans at any time from a bank or from another central bank or whatever it is. So they could have the gold in Germany and if they wish to obtain a large loan against those gold reserves and they wouldn't be that much anyway, but if they wanted to obtain a loan, they could have an auditor come and check the gold and then a bank or a central bank would essentially lend them money against that gold. All I want to say is, something is fishy about the gold market in the sense that if the Germans demand to have a part of the gold received in Germany, I think it would take eight years, we should put gold on three Boeings 747′s and you ship it to Germany and that's it. Gold moving towards the monetary systemQuestion: Do you think that gold will become a prime form of money in international trade for example in exchange for energy and natural resources? Is it possible for example, that where foreign creditors unwilling to accept Dollars or Euros for their exports, but rather began demanding the balance of payments be settled in gold, that this would force the Fed and ECB to reform accordingly? Would this perhaps lead the world back onto some form of gold standard? And if so, would this be desirable at all in your view? Marc Faber: Well, I don't think that this will happen in the near future, but say, if we continue printing money and we go into kind of a hyperinflation environment, then obviously people will prize their goods not in paper money because, you know, in a hyperinflation environment, paper money looses value by the day, so nobody wants to hold cash. So in that environment it will make index things gold. That is a possibility. But I rather think, what will eventually happen is that the market forces will destroy central banks. It's actually interesting, based on the losses that the Federal Reserve already has, they have now negative equity. Of course they don't go bankrupt because they can basically print money – but it is where the commercial enterprises would be bankrupt. I believe one day the financial system including derivatives, whole leverage and so forth, will go up in the air and then voices will come up and say, well who actually created this whole mess and at that point the central bankers and Mr. Bernanke say well, he is the John Law of the 21st century. And then I think we will go back, probably to some kind of an agreement between countries whereby gold plays a role. We never had a fewer gold standard in the sense that there was only gold used to transact. You always had gold, but also the paper money, in 19th century also. But paper money had the linkage to gold. And I think we will go back to that system eventually. |
| Posted: 02 Sep 2013 12:40 PM PDT Why backwardation in gold does not imply arbitrage... IN THE PAST, writes Dr.Tom Fischer, professor of Financial Mathematics at the University of Wuerzburg, Germany, several gold market commentators have argued that backwardation in gold forwards or, equivalently, negative GOFO rates, should theoretically be impossible as this constituted an arbitrage opportunity. With the London bullion market recently having experienced slight backwardation in some maturities, this claim has resurfaced again. In this article, it is explained why the statement is a fallacy that can be attributed to a misunderstanding of basic arbitrage concepts, which will be reviewed in due course. The argument of the arbitrage proponents goes as follows: Assume that someone owns gold today and that there is backwardation in the gold market, present in the sense that the spot price of gold today is higher than the forward price in, say, one year's time. Then, this person can sell gold today and simultaneously enter a forward contract, earn interest over one year, and buy back the gold at the end of that year at a cheaper price. The result is the same amount of gold, plus a cash profit consisting of the earned interest and the price differential between the sale and the purchase price. As this profit was risk-free, so the argument goes, this constituted an arbitrage, something which should not exist as it should be "arbitraged away". In the following, it will be shown that this supposed arbitrage is none, and hence, jumping to any conclusions about alleged market dysfunctionalities, manipulations, or failures based on the observation of backwardation could be erroneous and misleading gold investors who read such commentaries. Backwardation in gold The London Bullion Market Association (LBMA) states in their "Guide to the London Precious Metals Markets" the following about backwardation:
And:
So, not only does the LBMA guide offer a definition, but it also offers an explanation for backwardation. However, there is no mentioning of this constituting an arbitrage opportunity. An example: Let us assume that someone owns 1,000 ounces (oz) of gold today at a spot price of $1500/oz, a total wealth of $1500,000. Further, assume that gold is in backwardation in the sense that the 1-year forward price is $1470/oz. This means that the 1-year Gold Forward Offer Rate (GOFO) is at negative 2%, since the difference between the forward and the spot price, of minus $30, equals negative 2% of $1500. For the sake of this example, we generally ignore counterparty risk and any bid-offer spreads. We assume that 1-year LIBOR, as the risk-free rate of interest, is at 1%. Selling now gold at spot, one receives $1,500,000 and can enter the 1-year forward contract for 1,000 oz. For the sake of the example, we ignore any margin or trading costs that might occur. One invests the $1,500,000 at 1-year LIBOR. Fast-forward one year. One receives $1,515,000 from the money market investment. The gold forward has to be honoured and $1,470,000 have to be paid to receive 1,000 oz of gold. Result: One owns $45,000 and 1,000 oz of gold. Therefore, so the argument goes, this was arbitrage.  Even someone with minimum financial knowledge can spot a mistake in this supposed "arbitrage": In the example, at the end of the year, the new spot price of gold might have fallen to $1400/oz, while our investor had to honour the forward contract at $1470/oz. Therefore, in this scenario, a starting capital of $1500,000 was turned into $45,000 plus $1400,000, a total of $1445,000, and a whopping loss of $55,000! Arbitrage, however, is a risk-free profit, and there, quite obviously, was risk that lead to a considerable loss. "Wait", will the arbitrage proponents now say, "you count your wealth in Dollars, but we count ours in gold ounces. We are still better off than at the start of this year, because we have the same number of ounces plus $45,000 in cash!" This seems to be a valid point. However, does it indeed mean arbitrage? What is arbitrage? A commonly used definition is that arbitrage in any currency is an investment that outperforms the risk-free rate of return in that currency. Assuming that we can borrow and invest currency at the risk-free rate, this also translates into "making money out of nothing", or a "free lunch", as we could borrow money if we do not have any, then outperform the loan's interest (the risk-free rate) by ways of the arbitrage strategy, and finally pay back the loan while keeping the profits over the risk-free return. Now that we have a preciser definition of arbitrage, what answer should we give to our "backwardation implies arbitrage"-proponents? Change of the numeraire: counting wealth in gold ounces One fascinating property of arbitrage, as it is defined in mathematical finance, is that it is independent of personal preferences and the numeraire. Hence, if an arbitrage was not possible when counting our wealth in Dollars, it also will not be present if we count our wealth in ounces of gold. Let us now check back with the example: The would-be arbitrageur made $45,000 in profit over ounces. This stemmed from 1% LIBOR interest on the original wealth plus 2% from the sale to purchase price differential. Expressed differently, LIBOR minus GOFO, which amounts to 3% (recall that double minus is plus), was made on the original amount. People familiar with the workings of the London bullion market know what LIBOR minus GOFO is: the (implied) gold lease rate – hereafter known for short as GLR. At this (approximate) rate, gold can be borrowed without posting any collateral. In other words, GLR is gold's risk-free rate of interest, and LIBOR = GOFO + GLR holds true. What our would-be arbitrageur hence achieved is just the risk-free rate of return of the currency that he prefers to count his wealth in: ounces of gold. He did not outperform that rate, so he did not achieve an arbitrage. In a sense, he achieved just as much as someone who makes LIBOR on a Dollar deposit, and that is nothing special. This fact becomes even more clear if we ask ourselves whether he could have achieved a "free lunch" without any starting capital. The answer is no, as he would have had to first borrow 1,000 oz of gold to run the "faux arbitrage", as we can call it now. At the end, he would have had to return that gold plus interest, but the interest would be exactly the $45,000 he made, as GLR runs at 3% (of originally $1500,000). This argument, by the way, works similarly if GLR is not denoted in Dollars, but ounces of gold. So, there is no way out: The arbitrage proponents have made the mistake of not properly changing the numeraire – they have fallen into the "change of numeraire trap." Backwardation: omnipresent in currency markets It is often overlooked that gold is a currency that even has its own three-letter symbol: XAU. To explain the arbitrage fallacy in terms of currencies, and to see that also in other markets backwardation cannot be hedged away in theory or practice, I am looking at the EURUSD currency cross at the time of writing, and see a spot price of 1.2936, as well as the June 2018 COMEX contract at 1.3857. This constitutes contango. But, obviously, that means that the inverted currency cross, namely USDEUR, has a spot price of 1/1.2936 = 0.77304 and a June 2018 forward price of of 1/1.3857 = 0.72166, a very nice backwardation. So, why is this backwardation not arbitraged away? The answer is simple: Contango in one currency cross implies backwardation in its mirrored counterpart. So, if backwardation implied arbitrage, then contango did as well, proving the absurdity of that claim as even the "backwardation implies arbitrage"-proponents would not go that far. In the absence of default risk, the observed contango and backwardation is, of course, simply down to interest rate differentials. If we now replace "Dollars" by "gold ounces" and "Euros" by "Dollars", the same argument applies, as gold has an own interest rate which is different from the Dollar's: the gold lease rate, GLR. At this point, I want to thank Bron Suchecki of the Perth Mint for first mentioning the currency aspects of this problem to me. On his personal blog, he remarked on backwardation in currencies in this context already back in 2008. It should also be noted that any economic theories, fears of potential currency debasement, or similar, play no role in the arbitrage arguments used here, as we do not discuss what causes the mentioned interest rate differentials. An arbitrageur does not need an economic theory or belief system. All she needs are prices that she can act on. Conclusion Backwardation in gold cannot be arbitraged away – neither in theory, nor in practice. Otherwise, the global currency markets would constitute one giant arbitrage opportunity that always stayed open, since, for any currency cross, a non-constant FX forward curve will always mean that, for at least one maturity, one of the two currencies is in backwardation. Backwardation in gold might have many causes and many potential meanings for the future price of this volatile metal. For one, it means that gold's interest rate is higher than that of the Dollar, which is an interesting observation in itself and open to interpretation and, maybe, speculation. Only, backwardation in gold certainly does not provide arbitrage opportunities. In the absence of those, other investment skills than spotting arbitrage will be needed to navigate the precious metals markets. Attachments: |
| Posted: 02 Sep 2013 12:40 PM PDT Why backwardation in gold does not imply arbitrage... IN THE PAST, writes Dr.Tom Fischer, professor of Financial Mathematics at the University of Wuerzburg, Germany, several gold market commentators have argued that backwardation in gold forwards or, equivalently, negative GOFO rates, should theoretically be impossible as this constituted an arbitrage opportunity. With the London bullion market recently having experienced slight backwardation in some maturities, this claim has resurfaced again. In this article, it is explained why the statement is a fallacy that can be attributed to a misunderstanding of basic arbitrage concepts, which will be reviewed in due course. The argument of the arbitrage proponents goes as follows: Assume that someone owns gold today and that there is backwardation in the gold market, present in the sense that the spot price of gold today is higher than the forward price in, say, one year's time. Then, this person can sell gold today and simultaneously enter a forward contract, earn interest over one year, and buy back the gold at the end of that year at a cheaper price. The result is the same amount of gold, plus a cash profit consisting of the earned interest and the price differential between the sale and the purchase price. As this profit was risk-free, so the argument goes, this constituted an arbitrage, something which should not exist as it should be "arbitraged away". In the following, it will be shown that this supposed arbitrage is none, and hence, jumping to any conclusions about alleged market dysfunctionalities, manipulations, or failures based on the observation of backwardation could be erroneous and misleading gold investors who read such commentaries. Backwardation in gold The London Bullion Market Association (LBMA) states in their "Guide to the London Precious Metals Markets" the following about backwardation:
And:
So, not only does the LBMA guide offer a definition, but it also offers an explanation for backwardation. However, there is no mentioning of this constituting an arbitrage opportunity. An example: Let us assume that someone owns 1,000 ounces (oz) of gold today at a spot price of $1500/oz, a total wealth of $1500,000. Further, assume that gold is in backwardation in the sense that the 1-year forward price is $1470/oz. This means that the 1-year Gold Forward Offer Rate (GOFO) is at negative 2%, since the difference between the forward and the spot price, of minus $30, equals negative 2% of $1500. For the sake of this example, we generally ignore counterparty risk and any bid-offer spreads. We assume that 1-year LIBOR, as the risk-free rate of interest, is at 1%. Selling now gold at spot, one receives $1,500,000 and can enter the 1-year forward contract for 1,000 oz. For the sake of the example, we ignore any margin or trading costs that might occur. One invests the $1,500,000 at 1-year LIBOR. Fast-forward one year. One receives $1,515,000 from the money market investment. The gold forward has to be honoured and $1,470,000 have to be paid to receive 1,000 oz of gold. Result: One owns $45,000 and 1,000 oz of gold. Therefore, so the argument goes, this was arbitrage. Even someone with minimum financial knowledge can spot a mistake in this supposed "arbitrage": In the example, at the end of the year, the new spot price of gold might have fallen to $1400/oz, while our investor had to honour the forward contract at $1470/oz. Therefore, in this scenario, a starting capital of $1500,000 was turned into $45,000 plus $1400,000, a total of $1445,000, and a whopping loss of $55,000! Arbitrage, however, is a risk-free profit, and there, quite obviously, was risk that lead to a considerable loss. "Wait", will the arbitrage proponents now say, "you count your wealth in Dollars, but we count ours in gold ounces. We are still better off than at the start of this year, because we have the same number of ounces plus $45,000 in cash!" This seems to be a valid point. However, does it indeed mean arbitrage? What is arbitrage? A commonly used definition is that arbitrage in any currency is an investment that outperforms the risk-free rate of return in that currency. Assuming that we can borrow and invest currency at the risk-free rate, this also translates into "making money out of nothing", or a "free lunch", as we could borrow money if we do not have any, then outperform the loan's interest (the risk-free rate) by ways of the arbitrage strategy, and finally pay back the loan while keeping the profits over the risk-free return. Now that we have a preciser definition of arbitrage, what answer should we give to our "backwardation implies arbitrage"-proponents? Change of the numeraire: counting wealth in gold ounces One fascinating property of arbitrage, as it is defined in mathematical finance, is that it is independent of personal preferences and the numeraire. Hence, if an arbitrage was not possible when counting our wealth in Dollars, it also will not be present if we count our wealth in ounces of gold. Let us now check back with the example: The would-be arbitrageur made $45,000 in profit over ounces. This stemmed from 1% LIBOR interest on the original wealth plus 2% from the sale to purchase price differential. Expressed differently, LIBOR minus GOFO, which amounts to 3% (recall that double minus is plus), was made on the original amount. People familiar with the workings of the London bullion market know what LIBOR minus GOFO is: the (implied) gold lease rate – hereafter known for short as GLR. At this (approximate) rate, gold can be borrowed without posting any collateral. In other words, GLR is gold's risk-free rate of interest, and LIBOR = GOFO + GLR holds true. What our would-be arbitrageur hence achieved is just the risk-free rate of return of the currency that he prefers to count his wealth in: ounces of gold. He did not outperform that rate, so he did not achieve an arbitrage. In a sense, he achieved just as much as someone who makes LIBOR on a Dollar deposit, and that is nothing special. This fact becomes even more clear if we ask ourselves whether he could have achieved a "free lunch" without any starting capital. The answer is no, as he would have had to first borrow 1,000 oz of gold to run the "faux arbitrage", as we can call it now. At the end, he would have had to return that gold plus interest, but the interest would be exactly the $45,000 he made, as GLR runs at 3% (of originally $1500,000). This argument, by the way, works similarly if GLR is not denoted in Dollars, but ounces of gold. So, there is no way out: The arbitrage proponents have made the mistake of not properly changing the numeraire – they have fallen into the "change of numeraire trap." Backwardation: omnipresent in currency markets It is often overlooked that gold is a currency that even has its own three-letter symbol: XAU. To explain the arbitrage fallacy in terms of currencies, and to see that also in other markets backwardation cannot be hedged away in theory or practice, I am looking at the EURUSD currency cross at the time of writing, and see a spot price of 1.2936, as well as the June 2018 COMEX contract at 1.3857. This constitutes contango. But, obviously, that means that the inverted currency cross, namely USDEUR, has a spot price of 1/1.2936 = 0.77304 and a June 2018 forward price of of 1/1.3857 = 0.72166, a very nice backwardation. So, why is this backwardation not arbitraged away? The answer is simple: Contango in one currency cross implies backwardation in its mirrored counterpart. So, if backwardation implied arbitrage, then contango did as well, proving the absurdity of that claim as even the "backwardation implies arbitrage"-proponents would not go that far. In the absence of default risk, the observed contango and backwardation is, of course, simply down to interest rate differentials. If we now replace "Dollars" by "gold ounces" and "Euros" by "Dollars", the same argument applies, as gold has an own interest rate which is different from the Dollar's: the gold lease rate, GLR. At this point, I want to thank Bron Suchecki of the Perth Mint for first mentioning the currency aspects of this problem to me. On his personal blog, he remarked on backwardation in currencies in this context already back in 2008. It should also be noted that any economic theories, fears of potential currency debasement, or similar, play no role in the arbitrage arguments used here, as we do not discuss what causes the mentioned interest rate differentials. An arbitrageur does not need an economic theory or belief system. All she needs are prices that she can act on. Conclusion Backwardation in gold cannot be arbitraged away – neither in theory, nor in practice. Otherwise, the global currency markets would constitute one giant arbitrage opportunity that always stayed open, since, for any currency cross, a non-constant FX forward curve will always mean that, for at least one maturity, one of the two currencies is in backwardation. Backwardation in gold might have many causes and many potential meanings for the future price of this volatile metal. For one, it means that gold's interest rate is higher than that of the Dollar, which is an interesting observation in itself and open to interpretation and, maybe, speculation. Only, backwardation in gold certainly does not provide arbitrage opportunities. In the absence of those, other investment skills than spotting arbitrage will be needed to navigate the precious metals markets. Attachments: |
| Choices for Tomorrow's Gold Standard Posted: 02 Sep 2013 12:29 PM PDT Even Subaverage Joe knows money is broken without gold involved somewhere... My NEW BOOK, Gold: the Monetary Polaris, is now available at Amazon.com, says Nathan Lewis at New World Economics. I call it a sequel to Gold: the Once and Future Money, which was published in 2007 and is now available in five languages worldwide. I want to talk a little about what the new book is about, and what I want to achieve with it. Steve Forbes generously wrote the introduction to the book. He said:
John Tamny, editor of the Forbes.com opinion section and proprietor of RealClearMarkets.com, said of the book: "Nathan Lewis has written a masterpiece...It's the best book on money yet." Yes, I know I wrote it, but seriously: this is the good stuff. I wouldn't waste my time, or yours, with anything else. Even Subaverage Joe is probably becoming aware that the present world monetary system – the system that emerged out of the breakdown of Bretton Woods in 1971 – is becoming less and less tenable by the week. The next world monetary system should be a "stable money" system, which in practical terms means: a gold-based monetary system. This is not just my opinion. It is a continuation of a very long historical pattern: After floating fiat currencies crumble, people want something that is not a floating fiat currency. However, the process of building a world monetary system doesn't happen just by wishing. Some real work needs to be done. If you have ever seen a high-rise building being built, you know that a big building requires a big foundation. For months and months, workmen putter around a big hole in the ground. It seems like nothing is happening. Finally, the foundation is done. The building itself can rise surprisingly quickly, and is soon finished and open for business. You can build a little shack on a little foundation. But something big – like a world monetary system – requires a big foundation. It has to be strong and stable, to last for a hundred years or more. The "foundation" that is required for a world monetary system is not made of concrete and steel. It is made of ideas – the principles and practical operating procedures that allow stable currency systems to be created, and maintained indefinitely. This "foundation" of ideas has been sorely lacking in recent decades. I would even say it has been lacking since about 1900. The crumbling of the Bretton Woods world gold standard system in 1971 was the aftereffect of the crumbling of the intellectual "foundation" that occurred over several decades previous. The principles upon which the pre-1914 world gold standard was founded were clearly expressed by writers such as David Ricardo and John Stuart Mill – even Karl Marx. However, by the 1920s, people had already started to forget what the system was for, and how it worked. By the 1960s, the world gold standard (the Bretton Woods system) seemed like little more than an antiquarian superstition. The basic principles were forgotten. The foundation was breaking apart. Soon after, the building fell down. With this new book, I want to build the new foundation – to do today what Ricardo and Mill did in 1817 and 1848. Their ideas were made manifest by the pre-1914 world gold standard, which I call "the greatest monetary system ever created." The book is all about Why and How. Why would we want a gold standard system, instead of the present fiat money system, or indeed any other system? This is not hypothetical. We did this for hundreds of years. We just have to look at the results – results that have never been bettered. Second, we have to know How to do it. Obviously, you can wish and hope all you want, but unless somebody knows How to do it, it will never happen. Not everybody needs to know How. But, somebody does. You can wish and hope to be able to fly in an airplane. You can even describe, in great detail, Why flying in an airplane is convenient and beneficial. But, unless some aeronautical engineer somewhere actually knows How to build a working airplane, with all the specialized technical details involved, your wishes and hopes will never be fulfilled. Fortunately, making a gold standard monetary system – that can be maintained indefinitely, even in the midst of crisis – is a lot easier than making an airplane. The book outlines the day-to-day operating mechanisms of How to do so, with many potential variations. It says exactly what a central banker (or other currency manager) should do between arriving in the office at 9am and leaving a 5pm every day – including crisis situations. The book describes options such as "free banking" (multiple currency issuers), "parallel currencies" (having both gold-based and fiat currencies simultaneously), "End the Fed" (what could replace today's monopoly central banks), "warehouse receipt" systems (100% bullion reserves), "no gold" systems (0% bullion reserves), and many other options – with specific instructions on how to implement each of them, and how one system might be better than another in certain situations. Descriptions are given for various ways that a country can transition from a floating fiat system to a gold standard system, allowing each government to choose the method that is most appropriate for their specific situation. The book also talks about the best ways to deal with banking system insolvency, liquidity-shortage crises, and sovereign insolvency. These events can often precipitate currency mismanagement and crisis, which certainly does not need to occur. It might take months – or years – for this "intellectual foundation" to be properly completed. A critical mass of people must understand, thoroughly, both Why a gold standard system is the superior option, and also How to implement one, in all the specific details. During this time, it might not seem as if much is going on. Once that intellectual foundation is in place, the actual creation of a new world monetary system – based on gold – can happen surprisingly quickly. Read the book. Take part in the process. It's going to be so much fun. I promise. |
| Choices for Tomorrow's Gold Standard Posted: 02 Sep 2013 12:29 PM PDT Even Subaverage Joe knows money is broken without gold involved somewhere... My NEW BOOK, Gold: the Monetary Polaris, is now available at Amazon.com, says Nathan Lewis at New World Economics. I call it a sequel to Gold: the Once and Future Money, which was published in 2007 and is now available in five languages worldwide. I want to talk a little about what the new book is about, and what I want to achieve with it. Steve Forbes generously wrote the introduction to the book. He said:
John Tamny, editor of the Forbes.com opinion section and proprietor of RealClearMarkets.com, said of the book: "Nathan Lewis has written a masterpiece...It's the best book on money yet." Yes, I know I wrote it, but seriously: this is the good stuff. I wouldn't waste my time, or yours, with anything else. Even Subaverage Joe is probably becoming aware that the present world monetary system – the system that emerged out of the breakdown of Bretton Woods in 1971 – is becoming less and less tenable by the week. The next world monetary system should be a "stable money" system, which in practical terms means: a gold-based monetary system. This is not just my opinion. It is a continuation of a very long historical pattern: After floating fiat currencies crumble, people want something that is not a floating fiat currency. However, the process of building a world monetary system doesn't happen just by wishing. Some real work needs to be done. If you have ever seen a high-rise building being built, you know that a big building requires a big foundation. For months and months, workmen putter around a big hole in the ground. It seems like nothing is happening. Finally, the foundation is done. The building itself can rise surprisingly quickly, and is soon finished and open for business. You can build a little shack on a little foundation. But something big – like a world monetary system – requires a big foundation. It has to be strong and stable, to last for a hundred years or more. The "foundation" that is required for a world monetary system is not made of concrete and steel. It is made of ideas – the principles and practical operating procedures that allow stable currency systems to be created, and maintained indefinitely. This "foundation" of ideas has been sorely lacking in recent decades. I would even say it has been lacking since about 1900. The crumbling of the Bretton Woods world gold standard system in 1971 was the aftereffect of the crumbling of the intellectual "foundation" that occurred over several decades previous. The principles upon which the pre-1914 world gold standard was founded were clearly expressed by writers such as David Ricardo and John Stuart Mill – even Karl Marx. However, by the 1920s, people had already started to forget what the system was for, and how it worked. By the 1960s, the world gold standard (the Bretton Woods system) seemed like little more than an antiquarian superstition. The basic principles were forgotten. The foundation was breaking apart. Soon after, the building fell down. With this new book, I want to build the new foundation – to do today what Ricardo and Mill did in 1817 and 1848. Their ideas were made manifest by the pre-1914 world gold standard, which I call "the greatest monetary system ever created." The book is all about Why and How. Why would we want a gold standard system, instead of the present fiat money system, or indeed any other system? This is not hypothetical. We did this for hundreds of years. We just have to look at the results – results that have never been bettered. Second, we have to know How to do it. Obviously, you can wish and hope all you want, but unless somebody knows How to do it, it will never happen. Not everybody needs to know How. But, somebody does. You can wish and hope to be able to fly in an airplane. You can even describe, in great detail, Why flying in an airplane is convenient and beneficial. But, unless some aeronautical engineer somewhere actually knows How to build a working airplane, with all the specialized technical details involved, your wishes and hopes will never be fulfilled. Fortunately, making a gold standard monetary system – that can be maintained indefinitely, even in the midst of crisis – is a lot easier than making an airplane. The book outlines the day-to-day operating mechanisms of How to do so, with many potential variations. It says exactly what a central banker (or other currency manager) should do between arriving in the office at 9am and leaving a 5pm every day – including crisis situations. The book describes options such as "free banking" (multiple currency issuers), "parallel currencies" (having both gold-based and fiat currencies simultaneously), "End the Fed" (what could replace today's monopoly central banks), "warehouse receipt" systems (100% bullion reserves), "no gold" systems (0% bullion reserves), and many other options – with specific instructions on how to implement each of them, and how one system might be better than another in certain situations. Descriptions are given for various ways that a country can transition from a floating fiat system to a gold standard system, allowing each government to choose the method that is most appropriate for their specific situation. The book also talks about the best ways to deal with banking system insolvency, liquidity-shortage crises, and sovereign insolvency. These events can often precipitate currency mismanagement and crisis, which certainly does not need to occur. It might take months – or years – for this "intellectual foundation" to be properly completed. A critical mass of people must understand, thoroughly, both Why a gold standard system is the superior option, and also How to implement one, in all the specific details. During this time, it might not seem as if much is going on. Once that intellectual foundation is in place, the actual creation of a new world monetary system – based on gold – can happen surprisingly quickly. Read the book. Take part in the process. It's going to be so much fun. I promise. |
| Who Says Gold Is Money? (Part Two) Posted: 02 Sep 2013 12:20 PM PDT Who is right? Warren Buffett and Charlie Munger and many more say you shouldn't own gold. Ray Dalio, David Einhorn, Jim Rogers, John Paulson, George Soros, and I (among many others) own some gold -- but that doesn't mean you should own it. Read More... |
| Drums Of War Spark Rally In Gold, Silver and Energy Posted: 02 Sep 2013 11:53 AM PDT A potential bull market in commodities, precious metals and miners could accelerate higher if Congress gives Obama the approval to attack Syria based on the use of chemical weapons of mass destruction against innocent civilians. Read More... |
| Gold Bull & Debt Bear Market In 50 Amazing Charts by Incrementum Posted: 02 Sep 2013 11:20 AM PDT In an excellent collection of 50 charts, Ronald Stoeferle presents all fundamental data related to gold’s bull market and the too-big-to-fail debt bubble. Stoeferle is Managing Director at Incrementum Liechtsenstein and writer of the famous In Gold We Trust reports. The charts cover three major themes: gold, debt and economy, currency debasement. In this article, we highlight the ten most powerful charts. They tell the complete fundamental story and lay out the most likely scenario going forward. The full presentation is mandatory study material. The debt bubble keeps on growing. The nominal amounts are beyond imagination. The key take-away here is the diminishing rate of return of a marginal unit of debt. In other words, central planners need to create increasingly more debt for less economic growth. That is worrisome, to say the least. By the way, did you know how much debt has been created per citizen (on average)? Please don’t try to imagine this figure also applies to yourself. It is no information for the faint-hearted.
The ongoing currency war started in 2010 according to Jim Rickards. Based on the previous two currency wars he expects this to continue till at least 2020. Gold reacts on a currency crisis by balancing the devaluation of a currency. It is like yin & yang. Gold is not going up but a currency loses value in comparison to gold. The first chart shows what happened in the past and should be considered as the most realistic future for the currencies of the major powers. The other charts show the ongoing trend which should accelerate going forward.   Gold has a terrible year. Some experts believe it is good to let off some steam in a heated market. Did you know that gold has been the strongest and longest rising financial asset in history of the financial markets? A mid-cycle correction is a good thing going forward. It appeared that the correction of the 70′s was very similar to the current one; we all know how it ended. For the bears out there, please don’t look at the second chart as it reveals gold has not been in a bubble. The parabolic phase is most likely still to come.   The monetary policy of the Fed will most likely result in a strong inflation down the road. Gold’s current reaction is a result of disinflation, i.e. a period in which inflation is still present but declining. Most likely, we will enter either deflation or inflation (hyperinflation is still a potential scenario). In either case, gold will be the ultimate store of value. That is undoubtedly a surprise to many disbelievers.   In closing, did you know why gold is money and why it is not correct to consider it a traditional commodity?  And the bonus chart answers the question if it is “by accident” that equities have been rising in the light of no real economic growth.   The full presentation is a must-read. |
| Posted: 02 Sep 2013 10:49 AM PDT Jim Sinclair’s Commentary Control over the free use of the US military in the form of Congressional Review is a huge event. The barrel has rolled on the US dollar, and this will be quite evident at the G20, now a dinosaur in finance. Analysis: Putin sees chance to turn tables on Obama at G20... Read more » The post In The News Today appeared first on Jim Sinclair's Mineset. |
| Cataclysmic Collapse in Housing on the Horizon-Fabian Calvo Posted: 02 Sep 2013 10:35 AM PDT By Greg Hunter's USAWatchdog.com Dear CIGAs, Real estate expert Fabian Calvo says, "They are pumping up the housing market all the way to the top until—boom. The thing blows up. I think that's what's happening and what people are counting on." Calvo, whose company handles $100 million in distressed debt annually, goes on to say,... Read more » The post Cataclysmic Collapse in Housing on the Horizon-Fabian Calvo appeared first on Jim Sinclair's Mineset. |
| What Next for Gold and Silver? Posted: 02 Sep 2013 10:29 AM PDT The gold price rose again in August, following up a 10 percent gain in July with an increase of 6 percent last month, however, precious metals are still working their way out of very deep holes in 2013. On Wednesday, gold rose above $1,430 an ounce for the first time since May [...] |
| Massive Debt Levels Will Push Silver To $150 And Beyond Posted: 02 Sep 2013 10:24 AM PDT The massive debt bubble created by our monetary system is about to burst. The demonetization of gold and silver, has over the years diverted value from these metals, to all paper assets (such as bonds) linked to the debt-based monetary system. Read More... |
| Solid reasons why gold is good buy now Posted: 02 Sep 2013 08:15 AM PDT This article by Grant Williams at Mauldin Economics offers a solid rationale for those thinking about making their first gold purchase. The changing demand fundamentals in Asia, he argues, add up to a major positive that will be with us for a long time to come. The East is different than the West and never the twain shall meet Says Williams, “Five of the ten most populous nations on earth are hungry buyers of gold, and each of them has a burgeoning middle class that has, over the years, embedded in its cultural psyche the idea that owning gold is just what you do when you can afford to. Period.” This quote from the British newspaper The Guardian explains the reasons for that demand in a nutshell: “India’s richest man is down to his last $17.5 billion after the plunging value of the rupee wiped out a quarter of his fortune, in dollar terms. Mukesh Ambani, the chairman of Reliance Industries, which operates the world’s largest oil refineries, has lost $5.6 billion of his personal wealth since May 1, according to the Bloomberg Billionaire’s Index. His fortune took a further hit on Thursday, as India’s currency hit fresh lows. adding to the sense of panic in emerging markets. Developing economies, excluding China, have seen an outflow of $81 billion in emergency reserves since early May, as central banks try to prop up their currencies.” As Williams explains, currency depreciation only adds to the innate desire to own gold and silver already embedded in Eastern cultures. |
| Drums Of War Spark Rally In Gold, Silver and Energy Prices Posted: 02 Sep 2013 08:13 AM PDT A potential bull market in commodities, precious metals and miners could accelerate higher if Congress gives Obama the approval to attack Syria based on the use of chemical weapons of mass destruction against innocent civilians. Commodities, energy, gold and silver are safe havens that usually rise in value during international conflicts and war. Remember the major breakout in gold after September 11th in 2001 and the invasion of Iraq in 2003. The ramifications of increased involvement in the Middle East could have a major impact on global trade. The tensions with Russia is increasing as Putin supports Assad. |
| India in Serious Trouble (and Gold at the Heart of It) Posted: 02 Sep 2013 07:00 AM PDT Global Economic Analysis |
| Thin Gold Trading Whips Price on Labor Day, Speculators "Shy of Being Short" on Syria & US Tensions Posted: 02 Sep 2013 05:05 AM PDT THIN gold trading saw the price of bullion slip Monday morning, with an early $25 drop recovered as Asian and European stock markets rose following strong manufacturing data. With volumes low as the US stayed closed for the end-of-summer Labor Day holiday, gold was trading at $1389 per ounce by lunchtime in London, just over 3% below last week's three-month high. The price of silver meantime whipped around $24.00 per ounce, almost 5% beneath Wednesday's spike above $25 – the highest level since mid-April. Commodity prices fell, as did major government bonds. Official PMI data in China showed the manufacturing sector growing at the best rate in 16 months, while the private Markit consultancy's gauge showed expansion for the first time since April. Markit's PMI data for Italy and Spain leapt ahead of analyst forecasts. "Uncertainty on whether or not military action will be taken against Syria has taken off some of gold's safe-haven bid," reckons Joni Teves at Swiss investment and bullion bank UBS in London. But amongst hedge funds trading gold, "the recent move in positioning clearly indicates further reluctance to be short," says Teves, "as geopolitical tensions add to looming event risks out of the US" such as the possible tapering of Federal Reserve asset purchases, and then the likely debt-ceiling deadline in mid-October. Speculators trading gold cut the number of bearish bets on US futures and options they held by 24% in the week-ending last Tuesday – the fastest pace since March 2009 – reducing it to near 7-month lows. Net of those bearish bets, the so-called "net long" position held by speculators trading gold derivatives rose 173% from a month earlier, its fastest rise since June 2005. "First it was short-covering," said US consultancy CPM Group's Jeffrey Christian to BNN late last week – "about half of the shorts liquidated. Now you're seeing some long building, and you're seeing trend followers. "Soon as the price stalls out, and it will, you'll see those trend followers back off." But "Bullish potential is beginning to emerge for gold," reckons a technical gold trading note from London market-maker Barclays in London. "Price charts highlight the rare occurrence of a strong bullish month on the heels of corrective extremes, which previously led to a significant move higher." Last week's rise above $1400 per ounce saw "considerably stronger demand" for gold investment bars, says a note from German refining group Heraeus. But "it resulted in lower premiums for physical metal in Asia...and some market participants cashed in on the higher price level." After a surge in first-half sales of gold coins worldwide, the US Mint reported its weakest month in six years for August. Sales of American Eagle and Buffalo gold coins halved last month from July 2012. In the wholesale and derivative markets, "players [trading gold] are likely to be focusing most of their attention this week on the European Central Bank's meeting on Thursday and the publication of the US labour market report on Friday," says a note from German bullion dealers Commerzbank. Meantime in India – the world's No.1 gold consumer – the government's raft of anti-gold-import rules have led to a doubling in gold smuggling since April, the Business Standard says today, citing strong flows from neighboring Pakistan and Bangladesh. The Reserve Bank of India today denied press reports of a plan to buy gold from households and temples so it could offering it for sale to reduce the country's annual imports. On the supply side, two thirds of the 120,000 gold mine-workers in South Africa – now the world's fifth largest producer – will begin a two-day strike over pay tomorrow. World No.2 Australia grew its gold output by 4.7% between April and July, according to private consultancy Surbiton Associates, adding 3 tonnes from Q2 2012 to produce 67 tonnes. |
| Gold Slips in Thin Holiday Trade, But Hedge Funds "Wary of Being Short" Posted: 02 Sep 2013 03:26 AM PDT The PRICE of gold bullion bars slipped Monday morning, recovering early $25 drop in quiet dealing as Asian and European stock markets rose following strong manufacturing data. With the US markets closed for the end-of-summer holiday, gold edged down to $1389 per ounce by lunchtime in London, just over 3% below last week's three-month high. |
| U.S. Dollar Index Strength Suggests Lower Euro and GBP Ahead Posted: 02 Sep 2013 03:08 AM PDT Markets gapped on Sunday againts the USD after the U.S. President Barack Obama delayed a military strike against Syria by requesting authorization first from an incredulous Congress. From a technical perspective the wave patterns and direction did not change much. We are bullish on USD, it means we expect weaker majors, such as EUR, GBP, CHF, AUD and even JPY. |
| Gold price in a range of currencies since December 1978 XLS version Posted: 02 Sep 2013 02:40 AM PDT Excel file of gold price charts and data - Updated weekly in 19 curriences: US dollar, Euro, Japanese yen, Pound sterling, Canadian dollar, Swiss franc, Indian rupee, Chinese renmimbi, Turkish lira, Saudi riyal, Indonesian rupiah, UAE dirham, Thai baht, Vietnamese dong, Egyptian pound, Korean won, Russian ruble, South African rand, Australian dollar |
| Massive Debt Levels Will Push Silver Price To Beyond $150 Posted: 02 Sep 2013 01:50 AM PDT The massive debt bubble created by our monetary system is about to burst. The demonetization of gold and silver, has over the years diverted value from these metals, to all paper assets (such as bonds) linked to the debt-based monetary system. |
Seventy-six trombones led the big parade
Well, I’m in love with Chile. Now that I am here I understand very clearly the reason for the excitement about this narrow strip of South America…and why it was chosen as the home of 
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