Tuesday, October 15, 2013

Gold World News Flash

Gold World News Flash


The Peerless Way to Precious Metal Profits

Posted: 15 Oct 2013 07:00 AM PDT

Tom Szabo, an investment strategist and principal of MetalAugmentor.com, does not believe that you can judge all gold companies the same. In this interview with The Gold Report, Szabo uses the Peerless concept to rank companies qualitatively, but dynamically as their circumstances change.

It Is All Coming To A Head!

Posted: 15 Oct 2013 12:30 AM PDT

by Bill Holter, MilesFranklin.com:

I have long wondered "what" exactly the black swan event would be that tips the global financial system from its tight rope.  I/we don't exactly know what went on behind the scenes to prompt China to publicly call for a new reserve currency and for a new world order that "de Americanizes" the world…but something has.  Is it because China has done the math and come to the conclusion that no matter what happens with the debt ceiling that the U.S. simply cannot make good on its promises?  Have they been told that no more gold will be delivered?  Or have they purchased gold and the delivery time has been extended too far?  Have they been prompted by other countries collectively to pull the plug because they are fed up?  Have they purchased an amount of gold that they deem to be "enough?"  Do they see the U.S. "weakened" enough?

There are many more possibilities and questions but the point is this; China has now publicly spoken of stripping the U.S. of the privilege of issuing the worlds reserve currency.

Read more @ MilesFranklin.com

Petrol Increase because Traders Can’t Read

Posted: 15 Oct 2013 12:10 AM PDT

We all know that it's not actually the message that is important but the way that the words are interpreted by those reading them. Never has that been more important than with Twitter. You only get 140 characters, which might be too much when we read some of the comments on there. But, for others it's far from enough. Traders look like they could be needing a few more pages to get the full picture. Just a few days ago traders made a mistake when they read the tweet posted by the Israeli army on October 10th 2013. The tweet was to celebrate the 40th anniversary of the end of the Yom Kippur War in 1973. But traders in the world believed it was actually happening and acted immediately.

Twitter Account of the Israeli Army and Traders' Reactions


Twitter Account of the Israeli Army and Traders' Reactions

Oil Price

The traders of the financial markets thought that Israel was indeed bombing airports in Syria so as to stop weapons getting to the Syrian army (that in itself is telling that we are still in the same set-up and scenario as we were 40 years ago. We haven't moved on an inch, have we?). But, over and beyond the fact that the Israeli army was pretty backward in actually posting a 40th anniversary celebration in this way, the traders should also have read the entire tweet and seen that Soviets don't exist anymore and haven't done for the past 22 years. We call them Russians now. Do traders actually know that?

Nothing had actually happened, but because of the Tweet traders started panic buying petrol thinking that there was going to be a major hike in prices. They caused the hike themselves by buying up as much as possible and oil rose. Just how good is it to take decisions like buying petrol on the say-say of a tweet? When the traders realized what had happened, the prices didn't drop immediately. I guess they needed time to cash in on their error and make some money for the banks before the prices came back down to normal.

  • Oil prices rose by $1 a barrel, increasing from $110.40 to $111.50.
  • Prices rose even more (despite the knowledge that it was a mistake) reaching $111.74 per barrel.
  • The price of petrol has not reached that level for a month now.

Just like everyone, the traders are hooked in drip-feed fashion on their Twitter accounts grappling for every snippet of information that might have an effect on the markets. Might be a good idea for someone to make a mint. If you have friends somewhere in a high place, then get them to tweet, buy the commodity and then sell it at a profit. Easy.

Twitter Typos?

But, what country would gain anything more than propaganda votes from a tweet that celebrates the bombarding of airports in Syria, whether that be in the past or the present? That's the trouble with Twitter and the fact that you are your own worst enemy sometimes, able to post what you like and when you like. At least there is Politwoops that allows us to see the tweets that are posted and then deleted by our politicians in the US.

  • Democrat James E. Clyburn wrote "Ggfhdieodgih", which pretty much sums up the extent of his thinking perhaps.
  • Newt Gingrich (Republican) thinks that he has someone else inside his body when the talks in the third person: "Newt is backstage. Ready to take the podium", thankfully deleted after 7 minutes.
  • Buddy Roemer (former 52nd Governor of Louisiana) once asked on Twitter "What is a FUBAR?". There are just some questions that we should avoid asking, otherwise it's the enquirer that ends up being that "Beyond All Recognition".

Ambiguity is a splendid thing especially if it has a twist of humour thrown in for good measure. Except this time, the twitter account of the Israeli army should have been read with greater care. We could end up with another price rise in petrol that we could do without because a couple of traders can't read English correctly somewhere in the offices of investors. Traders should pay more attention to what they are doing as they have a direct effect on our lives. The Israeli army should also watch out what they post in memory of their wars and gaining benefit from the bombarding of an airport, wherever that may be is no cause for rejoicing.

It's no longer a Tweet if that happens it's just a Twit, with all the foolishness of that trait of character rolled into one.

Other than that the traders of the financial markets have proved themselves to be nothing more than limmings in the purchase of their wished-for-articles after reading a simple post, however enthusiastic it may have been. They lost all of their skills in the individual-thought process long ago and just act in groups these days. What the others do, they have to do for fear of being left out. FOMO (Fear Of Missing Out) Twits; that's what they are.

Originally posted: Petrol Increase because Traders Can't Read

 You might also enjoy: Darfur: The Land of Gold(s) | Obamacare: I've Started So I'll Finish | USA: Uncle Sam is Dead | Where Washington Should Go for Money: Havens | Sugar Rush is on | Human Capital: Switzerland or Yemen? | Wonderful President of USA and Munchkins | Last One to Leave Turn Out the Lights | Crisis is Literal Kiss of Death | Qatar's Slave Trade Death Toll | Lew's Illusions | Wal-Mart: Unpatriotic or Lying Through Their Teeth? Food: Walking the Breadline | Obama NOT Worst President in reply to Obama: Worst President in US History? | Obama's Corporate Grand Bargain Death of the Dollar | Joseph Stiglitz was Right: Suicide | China Injects Cash in Bid to Improve Liquidity

Technical Analysis: Bear Expanding Triangle | Bull Expanding Triangle | Bull Falling Wedge Bear Rising Wedge High & Tight Flag

 

 

 

 

Debt Ceiling, Schmedt Ceiling…

Posted: 14 Oct 2013 10:30 PM PDT

by Bill Rice, Jr., Silver Seek:

Congress still hasn't extended the federal debt ceiling and the government is still shut down – or at least some of it is.

I for one have yet to lose any sleep over this situation as I simply assume that at the last minute Congress will extend the debt ceiling and send all furloughed federal workers back to their jobs. In fact, Congress simply reminds me a lot of my procrastinating self – why act today when you can furiously act in the moments right before a deadline kicks in?

Going back to my school term-paper days and carrying forward to my newspaper days, I've always subscribed to this philosophy. I don't necessarily recommend this habit to young people, but I can report from experience that great and big tasks can indeed be accomplished at the last moment.

Read More @ SilverSeek.com

Interview of James Rickards About Central Bank Manipulation of Gold and Silver Markets

Posted: 14 Oct 2013 10:00 PM PDT

GoldBroker.com

The Depression, War & A Market Which Is Poised To Collapse

Posted: 14 Oct 2013 09:12 PM PDT

With global markets around the world waiting for an outcome to the ongoing chaos in the United States, today KWN is publishing a second piece with 60-year market veteran, legend, and the man I call "The Godfather" of newsletter writers. Richard Russell has been writing about the markets for six decades and there is nobody who is better at it. This one is a classic because it covers the Great Depression, war, and a major market in trouble.

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

James Rickards On Manipulation of Gold and Silver Markets

Posted: 14 Oct 2013 09:00 PM PDT

by Fabrice Drouin Ristori, Value Walk:

In view of the on-going manipulation in the gold and silver paper markets, I have decided to do a multi-interview with two prominent voices in the precious metal markets, and ask them exactly the same questions about gold and silver manipulation : Chris Powell (GATA)Jim Willie (Goldenjackass.com) and James Rickards.

Here is the third interview with James Rickards.

James Rickards is the author of the national bestseller, "Currency Wars: The Making of the Next Global Crisis" and a Partner in Tangent Capital Partners, a merchant bank based in New York. He is a counselor and investment advisor and has held senior positions at Citibank, Long-Term Capital Management and Caxton Associates. In 1998, he was the principal negotiator of the rescue of LTCM sponsored by the Federal Reserve. His clients include institutional investors and government directorates.

Read More @ valuewalk.com

China Enjoying Gold Clearance Sale

Posted: 14 Oct 2013 08:50 PM PDT

by John Rubino, Dollar Collapse:

Analyses of China's massive appetite for gold are everywhere lately. But the following chart, which appeared today in a GoldCore market update was especially striking because it compares 2013 demand with that of 2012 – which was a big year in its own right. Through August, China has imported 994 tons of gold through Hong Kong, versus 511 tons in the year-ago period. And that doesn't include the production of China's domestic gold mines (300 or so tons, all of which stays within the country) and whatever else finds its way in through other ports. Assume monthly imports for the rest of the year average 100 tons, add in domestic gold production, and China will have accumulated at least 1,700 tons of gold in one year.

Read More @ DollarCollapse.com

Today's Gold Price Closed at $1,276.40 Up $8.40

Posted: 14 Oct 2013 08:14 PM PDT

Gold Price Close Today : 1,276.40
Change : 8.40 or 0.66%

Silver Price Close Today : 21.31
Change : 0.10 or 0.45%

Gold Silver Ratio Today : 59.897
Change : 0.128 or 0.21%

Silver Gold Ratio Today : 0.0167
Change : -0.00000 or -0.21%

Platinum Price Close Today : 1,380.60
Change : 3.00 or 0.22%

Palladium Price Close Today : 714.25
Change : 5.45 or 0.77%

S&P 500 : 1,710.14
Change : 6.94 or 0.41%

Dow In GOLD$ : $247.81
Change : $ -0.60 or -0.24%

Dow in GOLD oz : 11.99
Change : -0.03 or -0.24%

Dow in SILVER oz : 718.03
Change : -0.19 or -0.03%

Dow Industrial : 15,301.26
Change : 64.15 or 0.42%

US Dollar Index : 80.26
Change : -0.04 or -0.05%

I'm going to say something that might surprise y'all: silver & GOLD PRICES did NOT break down last week. Yes, yes, I know they tumbled on Wednesday & Friday, but they did not "break down." By that I mean "break down through any significant line in the sand or change direction (first you have to HAVE direction to change direction). Look, I'll show y'all what I mean.

Today's gold price closed at $1,276.40, up $8.40, while silver rose 9.5 cents to 2131c.

The gold price remains in an upside-down head and shoulders building a right shoulder. Last weeks lows did NOT close below the support line connecting the shoulders' tops. More, that right shoulder has built a bullish falling wedge, which rouses expectations of a breakout toward the sun.

The SILVER PRICE hath done likewise. That top of the shoulders line caught silver, too, and it also has built a falling wedge.

Yet I will climb only so far out on this limb. If the gold price cannot hold above $1,272 at the close or silver cannot remain above 2090c, they'll take one more tumble down toward the June lows, which were 1817 & $1,179.40.

That means that if you buy here and they drop further, you'll look foolish If you buy here & silver and GOLD PRICES rocket upward, you'll have bragging rights to your brother-in-law.

I repeat, lest y'all missed my NGM comments above, if I were the NGM, I would be steady suppressing silver & gold while this debt-ceiling farce plays out. & I remind y'all again that whichever way this silly negotiation flops, it will still be a flop because nothing is being done to address the real problem, that the government debt has grown too big ever to pay off. Therefore, the government will most surely default, either by outright default, i.e., repudiating the bonds, or by severe inflation. I can't say WHEN it will happen, only that it WILL.Durn! Y'all let the market go to pot while I was gone!

Last Wednesday 10 October everything turned, stocks up & metals down. Dollar turned up then, too, but hasn't been able to hang on to the gains. Metals have not resolved their uncertainty, but stocks have. US dollar's hanging on by a gnat's ear.

Dow fell plumb to its 200 DMA & that bottom support line at 14,719.43 (intraday) before it turned up. Since has rallied plumb straight up, gained 323 points last Thursday alone, & busted through its 50 and 20 DMAs (15,180 & 15,230).

S&P500 didn't drop as far at the Dow, but hit an uptrend line from its June & August lows, pierced it to 1,646.47 (intraday), then turned slap around & headed up. It also has closed through its 50 & 20 DMAs (1,678 & 1,694).

So stocks are just a rallying away, but since I am a natural born fool from Tennessee, I keep asking, "Why?" I could see 'em rallying like mad on news of a debt ceiling deal, but why BEFORE a deal? If they're rallying without news, what happens when the news appears & they've already burned up all their buying power?

Logical target for this move is to the top channel line, call it 15,800 & 1,735. Of course, that's not guaranteed by any means. Both the S&P500 & the Dow have painted out head & shoulders top formations since April. For both, the neckline was the point where they turned around last week. If that H&S is ruling action, then I wouldn't expect this present rally to reach much further. But I expect this is the last hurrah, so they might even throw over the top of the channel. Internal measures like market breadth & margin debt make this stock market look like Grandpa on a walker & carrying an oxygen bottle.

As you would expect given last week's performance, the Dow in Gold & the Dow in Silver have risen. Both stand above their 50 & 20 day moving averages, so momentum for now lies skyward. Neither has yet reached the June highs at 12.514 oz or 816.77 oz. Today the Dow in gold closed at 11.988 oz (G$247.81 gold dollars), down 0.24% on the day, while the Dow in Silver ended at 718.03 oz, down a nothing 0.03% today.

Downtrends from June highs remain unbroken, although both indicators are in a short term uptrend.

I recall vividly that after August 1999 when stocks peaked against gold, i.e., the Dow in Gold peaked, how anxiously I watched that chart day after day. It fell into October, then rose into January, but never could reach that August peak. Then it went sideways for the rest of twelve months. Sometimes the turn ain't obvious, & you have to bite nails a while to see what turns out.

Until the US dollar index climbs above 81, we've got nothing to talk about. It did trade up through its 20 DMA (now 80.43) last week, but fell back under it today, trading now at 80.259. The dollar has no net below 79.50 but 73. Just keep remembering that.

The euro wrapped up the day at $1.3564, up 0.17%, but even with a week to work, it hasn't made any progress & is actually lower than it was the week before I left -- notwithstanding its breakout above its top channel line that week. When a market breaks out & ought to move higher but doesn't, it points to a dearth of supporters & all the weakness that implies.

Yen also last week lost all the previous weeks gains. Today it shuttered at 101.37, down 0.1%, or, in plain English, no place.

Now if I were the Nice Government Men with a whole economy & all sorts of markets to manipulate, what would I do? Why, I'd have worked my government fingers to the bone, dialing up my yellow running dogs who do my bidding in markets & working their bones to death. I'd have kept that dollar up, the euro & the yen down, I'd have bought stocks like my government pension depended on it, and I would have slapped silver & gold silly every chance I got.

Wow, here's something odd. That's just what happened. Shucks, just a coincidence.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 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 or 18 ounces of silver. or 18 ounces of silver. US $ and 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.

Today's Gold Price Closed at $1,276.40 Up $8.40

Posted: 14 Oct 2013 08:14 PM PDT

Gold Price Close Today : 1,276.40
Change : 8.40 or 0.66%

Silver Price Close Today : 21.31
Change : 0.10 or 0.45%

Gold Silver Ratio Today : 59.897
Change : 0.128 or 0.21%

Silver Gold Ratio Today : 0.0167
Change : -0.00000 or -0.21%

Platinum Price Close Today : 1,380.60
Change : 3.00 or 0.22%

Palladium Price Close Today : 714.25
Change : 5.45 or 0.77%

S&P 500 : 1,710.14
Change : 6.94 or 0.41%

Dow In GOLD$ : $247.81
Change : $ -0.60 or -0.24%

Dow in GOLD oz : 11.99
Change : -0.03 or -0.24%

Dow in SILVER oz : 718.03
Change : -0.19 or -0.03%

Dow Industrial : 15,301.26
Change : 64.15 or 0.42%

US Dollar Index : 80.26
Change : -0.04 or -0.05%

I'm going to say something that might surprise y'all: silver & GOLD PRICES did NOT break down last week. Yes, yes, I know they tumbled on Wednesday & Friday, but they did not "break down." By that I mean "break down through any significant line in the sand or change direction (first you have to HAVE direction to change direction). Look, I'll show y'all what I mean.

Today's gold price closed at $1,276.40, up $8.40, while silver rose 9.5 cents to 2131c.

The gold price remains in an upside-down head and shoulders building a right shoulder. Last weeks lows did NOT close below the support line connecting the shoulders' tops. More, that right shoulder has built a bullish falling wedge, which rouses expectations of a breakout toward the sun.

The SILVER PRICE hath done likewise. That top of the shoulders line caught silver, too, and it also has built a falling wedge.

Yet I will climb only so far out on this limb. If the gold price cannot hold above $1,272 at the close or silver cannot remain above 2090c, they'll take one more tumble down toward the June lows, which were 1817 & $1,179.40.

That means that if you buy here and they drop further, you'll look foolish If you buy here & silver and GOLD PRICES rocket upward, you'll have bragging rights to your brother-in-law.

I repeat, lest y'all missed my NGM comments above, if I were the NGM, I would be steady suppressing silver & gold while this debt-ceiling farce plays out. & I remind y'all again that whichever way this silly negotiation flops, it will still be a flop because nothing is being done to address the real problem, that the government debt has grown too big ever to pay off. Therefore, the government will most surely default, either by outright default, i.e., repudiating the bonds, or by severe inflation. I can't say WHEN it will happen, only that it WILL.Durn! Y'all let the market go to pot while I was gone!

Last Wednesday 10 October everything turned, stocks up & metals down. Dollar turned up then, too, but hasn't been able to hang on to the gains. Metals have not resolved their uncertainty, but stocks have. US dollar's hanging on by a gnat's ear.

Dow fell plumb to its 200 DMA & that bottom support line at 14,719.43 (intraday) before it turned up. Since has rallied plumb straight up, gained 323 points last Thursday alone, & busted through its 50 and 20 DMAs (15,180 & 15,230).

S&P500 didn't drop as far at the Dow, but hit an uptrend line from its June & August lows, pierced it to 1,646.47 (intraday), then turned slap around & headed up. It also has closed through its 50 & 20 DMAs (1,678 & 1,694).

So stocks are just a rallying away, but since I am a natural born fool from Tennessee, I keep asking, "Why?" I could see 'em rallying like mad on news of a debt ceiling deal, but why BEFORE a deal? If they're rallying without news, what happens when the news appears & they've already burned up all their buying power?

Logical target for this move is to the top channel line, call it 15,800 & 1,735. Of course, that's not guaranteed by any means. Both the S&P500 & the Dow have painted out head & shoulders top formations since April. For both, the neckline was the point where they turned around last week. If that H&S is ruling action, then I wouldn't expect this present rally to reach much further. But I expect this is the last hurrah, so they might even throw over the top of the channel. Internal measures like market breadth & margin debt make this stock market look like Grandpa on a walker & carrying an oxygen bottle.

As you would expect given last week's performance, the Dow in Gold & the Dow in Silver have risen. Both stand above their 50 & 20 day moving averages, so momentum for now lies skyward. Neither has yet reached the June highs at 12.514 oz or 816.77 oz. Today the Dow in gold closed at 11.988 oz (G$247.81 gold dollars), down 0.24% on the day, while the Dow in Silver ended at 718.03 oz, down a nothing 0.03% today.

Downtrends from June highs remain unbroken, although both indicators are in a short term uptrend.

I recall vividly that after August 1999 when stocks peaked against gold, i.e., the Dow in Gold peaked, how anxiously I watched that chart day after day. It fell into October, then rose into January, but never could reach that August peak. Then it went sideways for the rest of twelve months. Sometimes the turn ain't obvious, & you have to bite nails a while to see what turns out.

Until the US dollar index climbs above 81, we've got nothing to talk about. It did trade up through its 20 DMA (now 80.43) last week, but fell back under it today, trading now at 80.259. The dollar has no net below 79.50 but 73. Just keep remembering that.

The euro wrapped up the day at $1.3564, up 0.17%, but even with a week to work, it hasn't made any progress & is actually lower than it was the week before I left -- notwithstanding its breakout above its top channel line that week. When a market breaks out & ought to move higher but doesn't, it points to a dearth of supporters & all the weakness that implies.

Yen also last week lost all the previous weeks gains. Today it shuttered at 101.37, down 0.1%, or, in plain English, no place.

Now if I were the Nice Government Men with a whole economy & all sorts of markets to manipulate, what would I do? Why, I'd have worked my government fingers to the bone, dialing up my yellow running dogs who do my bidding in markets & working their bones to death. I'd have kept that dollar up, the euro & the yen down, I'd have bought stocks like my government pension depended on it, and I would have slapped silver & gold silly every chance I got.

Wow, here's something odd. That's just what happened. Shucks, just a coincidence.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 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 or 18 ounces of silver. or 18 ounces of silver. US $ and 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.

22 Reasons To Be Concerned About The U.S. Economy As We Head Into The Holiday Season

Posted: 14 Oct 2013 07:15 PM PDT

Submitted by Michael Snyder of The Economic Collapse blog,

Are we on the verge of another major economic downturn?  In recent weeks, most of the focus has been on our politicians in Washington, but there are lots of other reasons to be deeply alarmed about the economy as well.  Economic confidence is down, retail sales figures are disappointing, job cuts are up, and American consumers are deeply struggling.  Even if our politicians do everything right, there would still be a significant chance that we could be heading into tough economic times in the coming months. 

Our economy has been in decline for a very long time, and that decline appears to be accelerating.  There aren't enough jobs, the quality of our jobs continues to decline, our economic infrastructure is being systematically gutted, and poverty has been absolutely exploding.  Things have gotten so bad that former President Jimmy Carter says that the middle class of today resembles those that were living in poverty when he was in the White House.  But this process has been happening so gradually that most Americans don't even realize what has happened.  Our economy is being fundamentally transformed, and the pace of our decline is picking up speed.  The following are 22 reasons to be concerned about the U.S. economy as we head into the holiday season...

#1 According to Gallup, we have just seen the largest drop in U.S. economic confidence since 2008.

#2 Retailers all over America are reporting disappointing sales figures, and many analysts are very concerned about what the holiday season will bring.  The following is an excerpt from a recent Zero Hedge article...

Chico’s FAS [CHS] Earnings Call 8/28/13:

 

Traffic was our issue in quarter two. In a highly promotional and challenging environment, comparable sales result was a negative 2.6 percent on top of a positive 5.6 percent last year and a positive 12.8 percent in 2011.”

 

William-Sonoma [WSM] Earnings Call 8/28/13:

 

The retail environment, it seems to indicate there’s still a lot of uncertainty out there, that the promotional environment has not gone away and that the retail environment in general continues to be choppy, especially with the recent earnings releases and this global unrest, and we just don’t want to get ahead of ourselves.”

 

Zale Corp [ZLC] Earnings Call 8/28/13:

 

“Overall, we continue to take a conservative view of market conditions in both the U.S. and in Canada. That being said, we do expect to continue to achieve positive top line growth. We expect store closures will impact our overall revenue growth for the year by about 250 basis points. It represents net closures of approximately 50 to 55 retail locations.”

 

DSW Inc. [DSW] Earnings Call 8/27/13:

 

We did have a traffic decline in Q2, sort of similar to what just about every other retailer in America has reported.”

 

Guess? [GES] Earnings Call 8/28/13:

 

“The Korean business continued to be strong as revenue grew in the high single digits in local currency during the quarter. This was offset with the weakness from China, where we are seeing clear evidence of a pullback in consumer spending behavior because of the slowdown in the economy.”

 

Aeropostale [ARO] Earnings Call 8/22/13:

 

“Our business trends in the second quarter did not change materially from earlier in the year, which was disappointing given the level of change we registered with the brand. This performance in the third quarter outlook is being influenced by a challenging retail environment, with weak traffic trends and high levels of promotional activity.

#3 Domestic vehicle sales just experienced their largest "miss" relative to expectations since January 2009.

#4 One of the largest furniture manufacturers in America was recently forced into bankruptcy.

#5 According to the Wall Street Journal, the 2013 holiday shopping season is already being projected to be the worst that we have seen since 2009.

#6 The Baltic Dry Index recently experienced the largest 4 day drop that we have seen in 11 months.

#7 Merck, one of the largest drug makers in the nation, has announced the elimination of 8,500 jobs.

#8 Overall, corporations announced the elimination of 387,384 jobs through the first nine months of this year.

#9 The number of announced job cuts in September 2013 was 19 percent higher than the number of announced job cuts in September 2012.

#10 The labor force participation rate is the lowest that it has been in 35 years.

#11 As I mentioned the other day, the labor force participation rate for men in the 18 to 24 year old age bracket is at an all-time low.

#12 Approximately one out of every four part-time workers in America is living below the poverty line.

#13 Incredibly, only 47 percent of all adults in America have a full-time job at this point.

#14 U.S. consumer delinquencies are starting to rise again.

#15 The Postal Service recently defaulted on a 5.6 billion dollar retiree health benefit payment.

#16 The national debt has increased more than twice as fast as U.S. GDP has grown over the past two years.

#17 Obamacare is causing health insurance premiums to skyrocket and this is reducing the disposable income that consumers have available.

#18 Median household income in the United States has fallen for five years in a row.

#19 The gap between the rich and the poor in the United States is at an all-time record high.

#20 Former President Jimmy Carter says that the middle class in America has declined so dramatically that the middle class of today resembles those that were living in poverty when he was in the White House.

#21 According to a Gallup poll that was recently released, 20.0% of all Americans did not have enough money to buy food that they or their families needed at some point over the past year.  That is just under the record of 20.4% that was set back in November 2008.

#22 Right now, one out of every five households in the United States is on food stamps.  There are going to be a lot of struggling families out there this winter, so please be generous with organizations that help the poor.  A lot of people are really going to need their help during the cold months ahead.

China Enjoying Gold Clearance Sale

Posted: 14 Oct 2013 06:24 PM PDT

Analyses of China's massive appetite for gold are everywhere lately. But the following chart, which appeared today in a GoldCore market update was especially striking because it compares 2013 demand with that of 2012 ... Read More...

Gold and Silver

Posted: 14 Oct 2013 06:22 PM PDT

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

Colluding big bank currency traders called themselves 'bandits' and 'cartel'

Posted: 14 Oct 2013 05:07 PM PDT

Currency Probe Looks at J.P. Morgan Trader

By David Enrich, Jenny Strasburg, and Katie Martin
The Wall Street Journal
Monday, October 14, 2013

LONDON -- A U.K. investigation into potential manipulation of currency markets is looking at a J.P. Morgan Chase Co. trader who participated in electronic chat sessions with traders at other banks, according to people familiar with the investigation.

Richard Usher, currently J.P. Morgan's London-based head of spot trading for Group of 10 currencies in the region covering Europe, the Middle East, and Africa, took part in the chat sessions with top traders from various financial institutions when he was an employee of Royal Bank of Scotland Group, these people said. The group of traders in the chat rooms was known by various monikers including "The Bandits' Club" and "The Cartel," the people said.

J.P. Morgan hired Mr. Usher from RBS in 2010. He remains employed by the New York-based bank, according to a person familiar with the matter.

... For the full story:

http://online.wsj.com/news/articles/SB1000142405270230433090457913560391...



ADVERTISEMENT

Jim Sinclair Plans Seminar in Washington on Oct. 19

Gold mining entrepreneur and gold advocate Jim Sinclair will hold a seminar with questions and answers on Saturday, October 19, at a hotel at the international airport for Washington, D.C. To register for the seminar and learn more about it, including the discounted rate available at the hotel, please visit Sinclair's Internet site, JSMineSet, here:

http://www.jsmineset.com/qa-session-tickets/



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

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

The Silver Summit
Davenport Hotel, Spokane, Washington
Thursday-Friday, October 24-25, 2013

http://www.cambridgehouse.com/event/silver-summit-2013

Mines and Money Australia
Melbourne Conference and Exhibition Centre
Tuesday, October 29-Friday, November 1, 2013

http://www.minesandmoney.com/

New Orleans Investment Conference
Sunday-Wednesday, November 10-13, 2013
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana

https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16



ADVERTISEMENT

How to profit with silver --
and which stocks to buy now

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...


Is Casey Research peeking out from behind its ideological blinders?

Posted: 14 Oct 2013 04:29 PM PDT

10:35a AEST Tuesday, October 15, 2013

Dear Friend of GATA and Gold:

New commentary by Louis James of Casey Research suggests that the organization is finding gold market manipulation more plausible and perhaps not disparaging the idea so much anymore.

In "Shutdowns, Smackdowns, and Touchdowns," James writes that the recent frequent bombing of the gold market at counterintuitive times "prompts many gold enthusiasts to embrace theories of market manipulation."

He adds: "There certainly have been days this year when some entities dumped large amounts of gold onto the market with clear disregard for getting a good selling price. It's hard to see that as normal market behavior, but it does not prove that governments are suppressing the price of gold; it's just as plausible that major players with short positions acted to profit from the ensuing extreme fluctuations."

... Dispatch continues below ...



ADVERTISEMENT

How to profit with silver --
and which stocks to buy now

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...



Yes, the counterintuitive bombings just support suspicions that central banks are intervening surreptitiously against the gold price. What proves those suspicions are the documents and statements extracted from central banks and central bankers by GATA, like this secret report of the staff of the International Monetary Fund disclosing that central banks conceal their gold swaps and leases to facilitate their secret interventions in the gold and currency markets:

http://www.gata.org/node/12016

There's a lot more proof in GATA's "Documentation" file here:

http://www.gata.org/taxonomy/term/21

The libertarian aspects of Casey Research founder Doug Casey's ideology are probably pretty congenial to the general outlook of many GATA supporters, though not Casey's nihilist inclinations. So why has Casey himself long been so dismissive of concerns about gold market manipulation?

Maybe it is because, like many people, Casey has been blinded by his ideology and made smug by his financial success. Many such people figure that if something was happening they would know it already and that if they don't know it, it can't be happening. Casey's ideology holds that the markets are supreme. Maybe markets should be supreme, but when central banks have the power to create infinite money and debt, they can destroy any and all markets openly or surreptitiously -- and, indeed, now are doing so in a desperate effort to preserve their power.

Only one thing is superior to such power -- enough exposure so that people begin to refuse to be so exploited. When people realize that markets are no longer markets, they will not participate in them and market rigging will fail.

Casey Research could be a powerful help to GATA in that effort if it would remove its ideological blinders and consider the evidence. That would be research, rather than Casey's usual mere pontification.

James' commentary is posted at the Casey Research Internet site here:

http://www.caseyresearch.com/cdd/shutdowns-smackdowns-and-touchdowns

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

* * *

Join GATA here:

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

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

The Silver Summit
Davenport Hotel, Spokane, Washington
Thursday-Friday, October 24-25, 2013

http://www.cambridgehouse.com/event/silver-summit-2013

Mines and Money Australia
Melbourne Conference and Exhibition Centre
Tuesday, October 29-Friday, November 1, 2013

http://www.minesandmoney.com/

New Orleans Investment Conference
Sunday-Wednesday, November 10-13, 2013
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana

https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16



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


Bankrupt Governments Likely To Confiscate Wealth And Independence

Posted: 14 Oct 2013 04:21 PM PDT

The first Liberty Forum will take place between December 4th and 8th. The conference has a focus on asset protection, wealth preservation and the preservation of liberty. Some off-the-chart successful investors, metals and resource experts, offshore service providers, and international legal and accounting professionals will be on hand to help with personal preservation strategies.

Keynote speakers are Peter Schiff, Doug Casey and Mark Skousen. One of the many lectures will be held by Claudio Grass, a passionate advocate of free-market thinking and libertarian philosophy. Mr. Grass is convinced that sound money, i.e. gold and silver, and human freedom are inextricably linked to each other. In his function as Managing Director at Global Gold in Switzerland he offers investors a safe, convenient and competitive Swiss solution for buying, selling, storing and delivering a variety of physically allocated bullion coins and bars, completely outside of the banking system and protected under Swiss law.

Claudio Grass has written several white papers, research notes and articles. In them, he has clearly explained that the most likely outcome of the current global debt situation is that governments will try to inflate their debts away. That is what has always happened throughout history. The current evolution of events has not changed his view. The latest actions by Bernanke, in particular his decision not to stop QE, underlines the validity of Claudio Grass' view. "Taking Yellen's history into account, I am certain she will follow in the footsteps of her predecessor. Therefore, nothing has changed from my point of view."

The Liberty Forum conference brings up some fundamental statistics about the debt situation

  • The U.S. currently owes 885% of its GDP, more than any other industrialized country.
  • America hasn't passed a budget since April of 2009.
  • As a country, the U.S. has had a budget deficit in 42 out of the last 47 years.
  • U.S. expenses are 56% higher than its revenues.
  • America expects to double its debt within the next 10 years (the interest on that debt alone will equal $1 trillion a year).
  • Its annual income is $2 trillion, while its total debt obligations are $121 trillion (that's a debt ratio of 60/1 – typically anything over 1/1 is a HUGE red flag to any investor, indicating that a country is not likely to be able to pay its debts in 12 months' time).

The true US financial situation remains remarkably underexposed as the mainstream media is mainly concentrating on Europe and increasingly the emerging markets. We asked Claudio Grass about his opinion on that.

German economist Wilhelm Röpke once said: "The theories men construct, and the words in which they are framed, often influence their mind more strongly than the facts presented by reality".

This sentence nicely describes today's mindset amongst most people in the western word. It is no wonder because we were raised in a government controlled education system, in which we are indoctrinated from childhood that the path of success is based on memorizing and repeating! We are not taught to question [authority], the reason for this is that it is much harder to manipulate logical or independent thinkers.

This is why I am such a fan of history; our world is the result of thoughts and actions from the past. You see the cause and effect? The problem is that the actual system we live in focuses only on the effects but never discloses the underlying causes, let alone trying to connect the dots. This research needs to be done by the individual. However, research requires a healthy portion of curiosity and bravery as well as independence and self-confidence to stand up for one's own opinion, which will be in contrast to the story we are told by governments and the mainstream media. The emperor has no clothes; however, it always takes time until the child that reveals it will be heard.

The world reserve currency is still the USD and more than 60% of all the reserves with central banks are still based on the USD, and only approximately 25% are in Euros. Therefore, many more governments and pressure groups are dependent on the USD and have an interest in not disclosing the truth about the actual state of the dollar. Also, in terms of global trade the USD is still the prevailing currency, especially as long as the USD keeps its hegemony over the Middle East and its oil reserves. In addition, specifically related to the USD, there is a single institution that has decisive power. It is therefore much more reactive than the Euro system with different central banks and different nations, each with their own national political agendas. Therefore, the power of the Euro is much more limited, which makes it also more fragile and vulnerable.

Bankrupt governments likely to confiscate wealth and independence

Claudio Grass goes on to point to a concerning trend: as governments run out of money, people's sovereign rights to wealth and independence get increasingly trampled. What the world is experiencing for the last 100 years is an ongoing centralization especially in terms of credit – the so called monetary system – and political power in the hands of a few. This is only financeable if existing wealth is redistributed from the bottom to the top, through inflation and taxation. Since 2007 the average U.S. family wealth plunged 40%. Back in 1913 the average government quota was less than 10%. Today, depending on the country,  government quotas are between 50-70%. The trend is obvious! This system can go on until the remaining 50-30% is nationalized. The result is simple: Slavery!

That's why it is my conviction that we are going to see "tools of financial repression" kicking in much harder within the next 5 years, which will impoverish most of middle class, but also affluent people. I see some parallels with the Weimar Republic before World War II. Back then, the US government in cooperation with Wall Street, flooded especially Germany with cheap credit by implementing the Dawes and Young Plan during 1924 and 1932. Afterwards it happened what always comes after an artificial boom: destruction and bust. This created  a toxic environment for persons such as Hitler, Stalin, Franco and Roosevelt, to name just a few who came to power at about the same time, and more important, promoted more centralized political power and war. People were exhausted and the future was not really bright – and we are facing the same symptoms again today. We have 50 Million Americans living off food vouchers and this figure is still climbing. I believe history does not repeat itself but it rhymes, and therefore people need to understand that within the actual system property-rights do not really exist. People need to realize they are dependent on the whims of government and banks.

The first signs of these trends are already visible. Politicians and mainstream media say that things are improving which does not reflect the above mentioned trends. Most economic reports even expect economic growth. How can expectations be so different while everyone is looking at the same data? Claudio Grass answers that question with a quote of Edward Bernays, Father of Propaganda.

"The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in a democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. [...] We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. [...] In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons … who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind."

Include a monetary crash in your risk assessment

Claudio Grass looks at the mess the world is in today and suggests to include a possible crash of the actual system as part of one's risk assessments. Therefore, an investment into a tangible asset, without having any counterparty-risk, makes absolutely sense.

It is impossible to foresee when the system will crash. Inevitable does not necessarily mean eminent. However, "I am convinced that this world will look very different in the coming years and what can be said, too, is that it is not developing in the right direction."

Anthony C. Sutton (British and American economist, historian and notable author, answered this question once by stating: "It will not stop until we act upon one simple axiom: that the power system continues only as long as individuals want it to continue, and it will continue only so long as individuals try to get something for nothing. The day when a majority of individuals declares or acts as if it wants nothing from government, declares it will look after its won welfare and interest, then on that day power elites are doomed."

I started buying physical Gold and Silver in 2004 and so far it has been a very good investment. At the same time I explored the fascinating history of money; it reads like a criminal novel or even like a horror story in some cases. I personally support a system that is based on free market money where people can freely decide what they want to use as currency – sound money for a sound society. Money stands in the center of how human beings live together. It must be consequently a property title and not a debt promise. Gold and Silver are money in its pure form! They allow people to exchange goods, based on mutual respect and honesty….. With sound money we used to have production and trade and therefore prosperity. With fake money these periods have been dominated logically by corruption and wars; or in the words of Lord Acton, "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."

Claudio Grass will be talking at the St. Kitts Liberty Forum Conference about facts and fiction about buying and holding gold in Switzerland. More info about the Liberty Forum Conference or register now.

 

Hathaway's gold market manipulation complaint emboldens MineWeb's Williams

Posted: 14 Oct 2013 03:55 PM PDT

9:50a AEST Tuesday, October 15, 2013

Dear Friend of GATA and Gold:

MineWeb's Lawrence Williams seems emboldened by the Tocqueville Gold Fund John Hathaway's recent complaining about gold market manipulation to do more complaining of his own. So much unbacked "paper gold" has been sold and so much central bank gold has been leased, Williams says, that a short squeeze is likely. His commentary is headlined "Bullion Banks 'Selling Gold They Don't Possess' -- Squeeze Alert!" and it's posted at MineWeb here:

http://www.mineweb.com/mineweb/content/en/mineweb-gold-analysis?oid=2085...

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



ADVERTISEMENT

You Don't Have to Wait for Your Monetary Metal:
All Pro Gold Has Product for Immediate Delivery

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

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

The Silver Summit
Davenport Hotel, Spokane, Washington
Thursday-Friday, October 24-25, 2013

http://www.cambridgehouse.com/event/silver-summit-2013

Mines and Money Australia
Melbourne Conference and Exhibition Centre
Tuesday, October 29-Friday, November 1, 2013

http://www.minesandmoney.com/

New Orleans Investment Conference
Sunday-Wednesday, November 10-13, 2013
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana

https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Derivatives let central banks suppress gold longer this time, Turk tells KWN

Posted: 14 Oct 2013 03:45 PM PDT

9:40a AEST Tuesday, October 15, 2013

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk today explains to King Worldl News why the latest central bank gold price suppression scheme is taking so long to be overthrown.

"What we are seeing today is a lot like what happened in the 1960s," Turk says. "Back then the U.S. government dishoarded over 12,000 tons of gold from Fort Knox to keep the price at $35 per ounce. ... But all of that dishoarding did not change gold's underlying fundamentals. ... Buying this gold was an easy decision by those who understood gold because they recognized that it was very undervalued.

"There is one thing different today from back then: The central planners back in the 1960s did not have all the derivative instruments at their disposal to cap the gold price."

But the fundamentals of the market will overwhelm price suppression again, Turk says, just as they did in the late 1960s.

An excerpt from Turk's interview is posted at the King World News blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/14_H...

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



ADVERTISEMENT

Don't Let Cyprus Happen to You

Depositors at the Bank of Cyprus lost 47.5 percent of their savings. So to preserve your wealth, get some of it outside the banking system into physical gold and silver.

Worldwide Precious Metals (Canada) Ltd., established in 2001, specializes in physical gold, silver, platinum, and palladium. We offer delivery or secure and fully insured storage outside the banking system in Brinks vaults. We have access to gold and silver from trusted worldwide refineries and suppliers. And when you have an account with us you have immediate access to it for buying and selling your stored bullion.

For information on owning physical precious metals in your portfolio, visit us at: www.wwpmc.com.



Join GATA here:

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

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

The Silver Summit
Davenport Hotel, Spokane, Washington
Thursday-Friday, October 24-25, 2013

http://www.cambridgehouse.com/event/silver-summit-2013

Mines and Money Australia
Melbourne Conference and Exhibition Centre
Tuesday, October 29-Friday, November 1, 2013

http://www.minesandmoney.com/

New Orleans Investment Conference
Sunday-Wednesday, November 10-13, 2013
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana

https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

After sudden plunge, gold traders cry conspiracy

Posted: 14 Oct 2013 03:22 PM PDT

By Alex Rosenberg
CNBC, New York
Monday, October 14, 2013

http://www.cnbc.com/id/101110403

Gold dropped $25 in two minutes Friday morning following what appeared to be a single massive sell order, and professional traders are now pronouncing the sale a deliberate attempt to manipulate the market.

At 8:42 a.m. ET Friday morning a firm appeared to sell 5,000 gold futures contracts "at the market," meaning at whatever price was available. The massive order was more than the market could take at once and led the CME to automatically halt trading for 10 seconds.

... 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



Eric Hunsader of Nanex told CNBC.com on Friday that 2,700 contracts were sold, which triggered the halt, and that the remaining 2,300 were sold once the market resumed trading.

Since one futures contract controls 100 troy ounces of gold, and each troy ounce was worth $1,285 at the time of the sale, this party was selling some $640 million worth of gold in one shot. And it overwhelmed the liquidity in the market.

"Anyone with knowledge of the size and volume in the market would absolutely never, ever place a 5,000 [contract] sell [order] at market, because you could not estimate the offset price," said iiTrader CEO Rich Ilczyszyn.

If Ilczyszyn's firm were placing the order, he said, "we generally would piece the order in to work a better price." That's why he believes the trade was "an error."

But Euro Pacific Capital CEO Peter Schiff, a longtime gold fan, infers darker motives.

"Someone's obviously trying to move the market lower," he told CNBC.com. "A legitimate seller would work a limit over time to get a good price."

Jim Iuorio, managing director at TJM Institutional Services, sees similarities between what happened to gold Friday and what happened Sept. 12, when a big gold sale at 2:54 a.m. ET similarly caused a trading halt and hurt the market.

"There is only one conclusion that seems logical regarding Friday's gold trade and the one from a month ago, and that's that they were designed to manipulate prices," Iuorio said. "They were slightly different, in that the one from a month ago was done when the market was illiquid in order to get the biggest prices movement. Friday's was done around the opening to ensure that there was maximum visibility."

Jeff Kilburg of KKM Financial noted that the trade was done when gold was at $1,285.
"If you look at the last few explosive moves in gold [to the downside as well as the upside], you can see as we approach significant levels that algos come alive," Kilburg said, referring to trading algorithms. "I think it was a predatory high-frequency trading algo that knew it could force a [boatload] of stops under $1,280."

But not everyone is on the conspiracy train.

George Gero of RBC Capital Markets, precious metals strategist and a veteran of the gold market, says what we saw could have simply have been a fund changing its mind.
"Gold has been a market hedge for some big funds, and of course you've had big ups in the stock market all week," Gero said. "As soon as they felt there would be a compromise in D.C. [on the shutdown and debt ceiling], they felt they had to cash in right away to get into stocks."

So is that how Gero would have sold $640 million worth of gold?

"Absolutely not," he said with a laugh. "But I don't know who the fund was, and I don't know who managed their order room."

When reached for comment, CME Group spokesperson Damon Leavell said: "Our markets functioned properly, and price discovery continued throughout the move."

* * *

Join GATA here:

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

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

The Silver Summit
Davenport Hotel, Spokane, Washington
Thursday-Friday, October 24-25, 2013

http://www.cambridgehouse.com/event/silver-summit-2013

Mines and Money Australia
Melbourne Conference and Exhibition Centre
Tuesday, October 29-Friday, November 1, 2013

http://www.minesandmoney.com/

New Orleans Investment Conference
Sunday-Wednesday, November 10-13, 2013
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana

https://jeffersoncompanies.com/landing/speakers?IDPromotion=613011610080...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16



ADVERTISEMENT

How to profit with silver --
and which stocks to buy now

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...


Watching the End of US Empire with Doug Casey

Posted: 14 Oct 2013 03:08 PM PDT

Libertarian Doug Casey sits back to watch the decline of the US empire...
 
DOUG CASEY, chairman of Casey Research LLC, is the international investor personified.
 
With 11 investment titles now being published by his group, Doug Casey has spent substantial time in more than 175 different countries so far in his lifetime, residing in 12 of them. And Casey literally wrote the book on crisis investing. In fact, he's done it twice. After The International Man: The Complete Guidebook to the World's Last Frontiers in 1976, he came out with Crisis Investing: Opportunities and Profits in the Coming Great Depression in 1979.
 
Speaking here to The Gold Report, Doug Casey details his libertarian view of the US economy, politics and investing. All told, it looks more like ancient Rome in its final days. But he's planning for the coming crisis – in another country, and watching on TV...
 
The Gold Report: Doug, we are at your conference in Tucson, Arizona, the day after former Congressman and presidential candidate Dr.Ron Paul gave the keynote speech to a sold-out crowd. How did you two first meet?
 
Doug Casey: It was about 30 years ago. Ron used to attend my Eris Society (named after the Greek goddess of discord) meetings in Aspen, Colorado. Everyone from Sonny Barger of the Hells Angels motorcycle club to Burt Rutan, inventor of SpaceShipOne, would meet to discuss ideas.
 
TGR: In those 30 years have Ron Paul's ideas changed much?
 
Doug Casey: Ron believes he was born a libertarian. He's right. I believe in Pareto's Law, the 80-20 rule. I prefer to think that 80% of humans are basically decent, which is to say that they were born libertarian oriented. But it takes a while to crystallize what that means. Ron and I, and many others, have moved beyond gut libertarianism to a structured, intellectual libertarianism.
 
Some people see the same things we see through a totally different lens, however. Those people tend to be the other 20%, or perhaps 20% of that 20%, or even 20% of that 20% of that 20%. They range from being wishy-washy on ethical subjects to being sociopaths or even outright criminals. These people are at the opposite end of the spectrum from us in every way.
 
TGR: One of the things Ron Paul mentioned last night is that a true libertarian advocates for the freedom of everyone to do what he or she wants as long as it's not hurting someone else. This includes people who don't agree with your views.
 
Doug Casey: Exactly. As opposed to busybodies who want to tell everybody else what to do. They think they know best and are perfectly willing to put a gun to your head to make sure that you do what they think is right.
 
TGR: We are meeting in the midst of a government shutdown. Ron Paul called it a paid holiday for federal workers. Are we doomed to an endless cycle of these man-made crises?
 
Doug Casey: I would like nothing better than to see the shutdown go on forever, but unfortunately the government is only shutting down things that inconvenience people, like monuments and national parks, things that should not be owned by the government to start with. I wish they would shut down all their praetorian agencies, like the FBI, the CIA and the NSA. Shut down the IRS. I am much more concerned about Silk Road being shutdown than I am the US government being shut down.
 
TGR: Do you think regular people care whether government is shut down or not?
 
Doug Casey: Over half of Americans are living off the state, receiving more from the state than they're putting into it, which makes them receivers of stolen property. They see the government as a cornucopia and therefore a good thing so they want it to be open and sending them checks.
 
The situation is fairly hopeless at this point and it's likely to get a lot worse before it gets better. Trends in motion, in whatever direction, tend to stay in motion until they hit a crisis at which point they transform into something else. This trend is not only in motion, but it's accelerating in the wrong direction.
 
TGR: Ron Paul said that the charade on the American people is that the two parties are different, that actually it's not that we need a third party, but we need a second party. Your presentation compared the end of the Roman Empire to the state of the US today. Is the current political system doing a better or worse job of protecting freedom and liberty in the US compared to ancient Rome?
 
Doug Casey: The founders consciously modeled the US after Rome, everything from the way government buildings looked to having an assembly and a senate. We are similar right down to the Latin mottos. When you model yourself after something, you eventually tend to resemble it. That partly explains why we are on the slippery slope of constant wars, less freedom, more power for the executive, destruction of the currency and barbarians at the gate. Another part is the natural tendency of all empires to reach their level of incompetence and then decline. It's to be expected. Entropy dictates all things wind down and degrade.
 
As I pointed out in my speech, America has gone through periods of what paleontologists call punctuated disequilibrium. Things evolve gently in one direction and then experience massive change very quickly. I'm afraid that the US might be approaching a phase similar to the one the Romans experienced before Diocletian made himself emperor. He completely changed the character of Rome; he believed that in order to save Rome, he had to destroy it.
 
As we go deeper into this crisis, of which we're just currently in the early stages, there's every chance that the American people are going to look for a savior, a strong man, probably a military person because Americans love and trust their military for some reason. I see the military as not much more than a heavily armed version of the post office, but I suspect that we'll find someone who is the equivalent of Diocletian, who will change the whole nature of society radically in the wrong direction.
 
TGR: Do you believe in changing from within the system or just getting out from under the system? Would you ever run for public office?
 
Doug Casey: I think the situation is beyond retrieval at this point. People generally get the government they deserve. At this point, Americans are much more interested in freebies than they are in personal freedom. They are like scared little rabbits. They're much more interested in safety than they are in personal liberty. I think they're going to get what they deserve good and hard over the years to come. I would much rather watch what goes on in the US on my widescreen TV in the lap of luxury in another country than be in the epicenter of things here. The system is beyond the point where it can be reformed.
 
And, no, I have zero desire to run for office. Plus, anyone who runs for office disqualifies himself for being in a position of power by the very fact that he wants to be in that position. My friend Harry Browne always used to say that when he ran for president on the Libertarian ticket the first thing he'd do if he were elected would be to quit – at least after rescinding all outstanding Executive Orders and recalling all the troops. Anyway, even if Ron Paul had been elected president and if he tried to make the necessary changes, the public would have rioted, Congress would have impeached him, and the heads of the CIA, FBI and the military would have sat him down and subtly intimated that they have the power and he shouldn't do anything they don't want done – or undone.
 
I don't think a change can be made at this point. I'm just interested in seeing what happens when we really get involved in a really big crisis, which I think is going to happen in the next couple of years as we go back into the trailing edge of the economic hurricane that started in 2007.
 
TGR: One of the things that has come up as part of the shutdown debate is healthcare. Do you have health insurance? And, how would you control healthcare costs?
 
Doug Casey: First of all, I don't call it health insurance because it doesn't insure your health. That's something that you're personally responsible for, not some third party. I call it medical insurance. Just as I call the FDA the Federal Death Authority because it probably kills more people every year than the Department of Defense does in a typical decade by slowing down the approval and hugely raising the cost of new drugs and technologies.
 
Getting to back to your question, no, I don't have medical insurance. If anything goes wrong with my body, I'll treat it as I would if something goes wrong with my car. I'll find the best doctor elsewhere in the world where medical costs can be 20% of what they are in this country. I'll pay for it in cash. I don't want to have to fight with an insurance company, or the government, about what's covered or not.
 
The whole idea of everybody having medical insurance is a corruption that arose during World War II when companies used insurance to attract workers. Then we had Medicare and then Medicaid. These are the reasons costs have escalated. In a free market society, medical costs should have collapsed and gone down in the same way as the cost of computers have collapsed and gone down even as they've gotten vastly better. People think they need the government in medicine, but it's been totally counterproductive. It's done the opposite of what was intended.
 
TGR: One of the things Ron Paul mentioned is that his speeches on college campuses, including UC Berkeley, have been some of the most well received. Do you have hope for the next generation?
 
Doug Casey: Yes, there is reason for hope over the longer term. Generally, older people in this country have voted all these "benefits" for themselves, and they don't want to have their rice bowls broken. The younger people are being turned into indentured servants to pay for these benefits. Young people are figuring this out.
 
Another worrisome thing is that a lot of young people have indentured themselves by taking on huge amounts of college debt; $1.2 trillion is the current number. They can't even discharge it through bankruptcy, although many are unable to pay it. More and more are deciding that doing four years in a college, to experience indoctrination from wrongheaded professors, is a complete misallocation of both their time and their money.
 
If I had to do it again, I definitely would not go to college. I recommend others skip college, unless they need to learn a specific technical set of skills, such as doctoring or lawyering or engineering or a science where you need lab work. Most kids today, however, are going off to college for things like gender studies, political science and English. These are things you should learn on your own, on your own time, at no cost. Meanwhile, avoid the indoctrination of the creatures who hang out in university faculty rooms who teach because they are incapable of doing anything else.
 
TGR: Ron Paul intimated that we're in a middle of a revolution. You said that the solution to our problems would be less command and control and more entrepreneurs. Are the small business owners the real revolutionaries?
 
Doug Casey: They could and should be, but it is becoming increasingly difficult to start a business because of the regulatory and tax environment in the US Smart people are leaving in droves. There just aren't enough left to change things. I'm afraid we're just going to have to let things take their course.
 
The main function that Ron Paul has served was educating people, which is necessary and laudable. But, the odds of him succeeding in changing things are close to zero.
 
TGR: You talked about the role of education and Ron Paul mentioned the power of the Internet to circulate new ideas based on the theory that ideas have consequences. Your ideas are having an impact thanks to the power of the internet. Does that bode well for the future?
 
Doug Casey: It does. The internet is the best thing that's happened since Gutenberg invented movable type and the printing press; it's a marvelous thing. That's exactly why the government wants to regulate the internet. It sees it as a huge danger.
 
TGR: Does suppressing ideas ever work? Is it working in China?
 
Doug Casey: Actually, in many ways China is freer than the US, but that's not one of them. If you are a businessman and you keep your nose out of politics, it actually is freer. You'll have less taxes, less regulation in China than you would in the US But instead of emulating the free part of China, the US government is trying to copy the Internet restrictions because it sees the Internet as a danger to the existing order. And they're right.
 
TGR: But didn't the governments of Middle Eastern countries find out that ideas have a life of their own and they find a way to spread despite attempts to shut them down?
 
Doug Casey: They do, so let's hope for the best.
 
TGR: Finally, Ron Paul said that things are worse than the government will admit and the idea of economic growth this year is a dream. He said we need to be serious, but not despondent. Make financial plans, but have fun doing it. Do you agree and are you having fun yet?
 
Doug Casey: I am having fun. I'm doing this not because I need the money, but because it's amusing and it's good karma to sow dissention in the ranks of the enemy.
 
TGR: Thank you for sharing your thoughts.
 
Doug Casey: Thank you.
 
The audio recordings of the Casey Research 2013 Summit are available here.

Watching the End of US Empire with Doug Casey

Posted: 14 Oct 2013 03:08 PM PDT

Libertarian Doug Casey sits back to watch the decline of the US empire...
 
DOUG CASEY, chairman of Casey Research LLC, is the international investor personified.
 
With 11 investment titles now being published by his group, Doug Casey has spent substantial time in more than 175 different countries so far in his lifetime, residing in 12 of them. And Casey literally wrote the book on crisis investing. In fact, he's done it twice. After The International Man: The Complete Guidebook to the World's Last Frontiers in 1976, he came out with Crisis Investing: Opportunities and Profits in the Coming Great Depression in 1979.
 
Speaking here to The Gold Report, Doug Casey details his libertarian view of the US economy, politics and investing. All told, it looks more like ancient Rome in its final days. But he's planning for the coming crisis – in another country, and watching on TV...
 
The Gold Report: Doug, we are at your conference in Tucson, Arizona, the day after former Congressman and presidential candidate Dr.Ron Paul gave the keynote speech to a sold-out crowd. How did you two first meet?
 
Doug Casey: It was about 30 years ago. Ron used to attend my Eris Society (named after the Greek goddess of discord) meetings in Aspen, Colorado. Everyone from Sonny Barger of the Hells Angels motorcycle club to Burt Rutan, inventor of SpaceShipOne, would meet to discuss ideas.
 
TGR: In those 30 years have Ron Paul's ideas changed much?
 
Doug Casey: Ron believes he was born a libertarian. He's right. I believe in Pareto's Law, the 80-20 rule. I prefer to think that 80% of humans are basically decent, which is to say that they were born libertarian oriented. But it takes a while to crystallize what that means. Ron and I, and many others, have moved beyond gut libertarianism to a structured, intellectual libertarianism.
 
Some people see the same things we see through a totally different lens, however. Those people tend to be the other 20%, or perhaps 20% of that 20%, or even 20% of that 20% of that 20%. They range from being wishy-washy on ethical subjects to being sociopaths or even outright criminals. These people are at the opposite end of the spectrum from us in every way.
 
TGR: One of the things Ron Paul mentioned last night is that a true libertarian advocates for the freedom of everyone to do what he or she wants as long as it's not hurting someone else. This includes people who don't agree with your views.
 
Doug Casey: Exactly. As opposed to busybodies who want to tell everybody else what to do. They think they know best and are perfectly willing to put a gun to your head to make sure that you do what they think is right.
 
TGR: We are meeting in the midst of a government shutdown. Ron Paul called it a paid holiday for federal workers. Are we doomed to an endless cycle of these man-made crises?
 
Doug Casey: I would like nothing better than to see the shutdown go on forever, but unfortunately the government is only shutting down things that inconvenience people, like monuments and national parks, things that should not be owned by the government to start with. I wish they would shut down all their praetorian agencies, like the FBI, the CIA and the NSA. Shut down the IRS. I am much more concerned about Silk Road being shutdown than I am the US government being shut down.
 
TGR: Do you think regular people care whether government is shut down or not?
 
Doug Casey: Over half of Americans are living off the state, receiving more from the state than they're putting into it, which makes them receivers of stolen property. They see the government as a cornucopia and therefore a good thing so they want it to be open and sending them checks.
 
The situation is fairly hopeless at this point and it's likely to get a lot worse before it gets better. Trends in motion, in whatever direction, tend to stay in motion until they hit a crisis at which point they transform into something else. This trend is not only in motion, but it's accelerating in the wrong direction.
 
TGR: Ron Paul said that the charade on the American people is that the two parties are different, that actually it's not that we need a third party, but we need a second party. Your presentation compared the end of the Roman Empire to the state of the US today. Is the current political system doing a better or worse job of protecting freedom and liberty in the US compared to ancient Rome?
 
Doug Casey: The founders consciously modeled the US after Rome, everything from the way government buildings looked to having an assembly and a senate. We are similar right down to the Latin mottos. When you model yourself after something, you eventually tend to resemble it. That partly explains why we are on the slippery slope of constant wars, less freedom, more power for the executive, destruction of the currency and barbarians at the gate. Another part is the natural tendency of all empires to reach their level of incompetence and then decline. It's to be expected. Entropy dictates all things wind down and degrade.
 
As I pointed out in my speech, America has gone through periods of what paleontologists call punctuated disequilibrium. Things evolve gently in one direction and then experience massive change very quickly. I'm afraid that the US might be approaching a phase similar to the one the Romans experienced before Diocletian made himself emperor. He completely changed the character of Rome; he believed that in order to save Rome, he had to destroy it.
 
As we go deeper into this crisis, of which we're just currently in the early stages, there's every chance that the American people are going to look for a savior, a strong man, probably a military person because Americans love and trust their military for some reason. I see the military as not much more than a heavily armed version of the post office, but I suspect that we'll find someone who is the equivalent of Diocletian, who will change the whole nature of society radically in the wrong direction.
 
TGR: Do you believe in changing from within the system or just getting out from under the system? Would you ever run for public office?
 
Doug Casey: I think the situation is beyond retrieval at this point. People generally get the government they deserve. At this point, Americans are much more interested in freebies than they are in personal freedom. They are like scared little rabbits. They're much more interested in safety than they are in personal liberty. I think they're going to get what they deserve good and hard over the years to come. I would much rather watch what goes on in the US on my widescreen TV in the lap of luxury in another country than be in the epicenter of things here. The system is beyond the point where it can be reformed.
 
And, no, I have zero desire to run for office. Plus, anyone who runs for office disqualifies himself for being in a position of power by the very fact that he wants to be in that position. My friend Harry Browne always used to say that when he ran for president on the Libertarian ticket the first thing he'd do if he were elected would be to quit – at least after rescinding all outstanding Executive Orders and recalling all the troops. Anyway, even if Ron Paul had been elected president and if he tried to make the necessary changes, the public would have rioted, Congress would have impeached him, and the heads of the CIA, FBI and the military would have sat him down and subtly intimated that they have the power and he shouldn't do anything they don't want done – or undone.
 
I don't think a change can be made at this point. I'm just interested in seeing what happens when we really get involved in a really big crisis, which I think is going to happen in the next couple of years as we go back into the trailing edge of the economic hurricane that started in 2007.
 
TGR: One of the things that has come up as part of the shutdown debate is healthcare. Do you have health insurance? And, how would you control healthcare costs?
 
Doug Casey: First of all, I don't call it health insurance because it doesn't insure your health. That's something that you're personally responsible for, not some third party. I call it medical insurance. Just as I call the FDA the Federal Death Authority because it probably kills more people every year than the Department of Defense does in a typical decade by slowing down the approval and hugely raising the cost of new drugs and technologies.
 
Getting to back to your question, no, I don't have medical insurance. If anything goes wrong with my body, I'll treat it as I would if something goes wrong with my car. I'll find the best doctor elsewhere in the world where medical costs can be 20% of what they are in this country. I'll pay for it in cash. I don't want to have to fight with an insurance company, or the government, about what's covered or not.
 
The whole idea of everybody having medical insurance is a corruption that arose during World War II when companies used insurance to attract workers. Then we had Medicare and then Medicaid. These are the reasons costs have escalated. In a free market society, medical costs should have collapsed and gone down in the same way as the cost of computers have collapsed and gone down even as they've gotten vastly better. People think they need the government in medicine, but it's been totally counterproductive. It's done the opposite of what was intended.
 
TGR: One of the things Ron Paul mentioned is that his speeches on college campuses, including UC Berkeley, have been some of the most well received. Do you have hope for the next generation?
 
Doug Casey: Yes, there is reason for hope over the longer term. Generally, older people in this country have voted all these "benefits" for themselves, and they don't want to have their rice bowls broken. The younger people are being turned into indentured servants to pay for these benefits. Young people are figuring this out.
 
Another worrisome thing is that a lot of young people have indentured themselves by taking on huge amounts of college debt; $1.2 trillion is the current number. They can't even discharge it through bankruptcy, although many are unable to pay it. More and more are deciding that doing four years in a college, to experience indoctrination from wrongheaded professors, is a complete misallocation of both their time and their money.
 
If I had to do it again, I definitely would not go to college. I recommend others skip college, unless they need to learn a specific technical set of skills, such as doctoring or lawyering or engineering or a science where you need lab work. Most kids today, however, are going off to college for things like gender studies, political science and English. These are things you should learn on your own, on your own time, at no cost. Meanwhile, avoid the indoctrination of the creatures who hang out in university faculty rooms who teach because they are incapable of doing anything else.
 
TGR: Ron Paul intimated that we're in a middle of a revolution. You said that the solution to our problems would be less command and control and more entrepreneurs. Are the small business owners the real revolutionaries?
 
Doug Casey: They could and should be, but it is becoming increasingly difficult to start a business because of the regulatory and tax environment in the US Smart people are leaving in droves. There just aren't enough left to change things. I'm afraid we're just going to have to let things take their course.
 
The main function that Ron Paul has served was educating people, which is necessary and laudable. But, the odds of him succeeding in changing things are close to zero.
 
TGR: You talked about the role of education and Ron Paul mentioned the power of the Internet to circulate new ideas based on the theory that ideas have consequences. Your ideas are having an impact thanks to the power of the internet. Does that bode well for the future?
 
Doug Casey: It does. The internet is the best thing that's happened since Gutenberg invented movable type and the printing press; it's a marvelous thing. That's exactly why the government wants to regulate the internet. It sees it as a huge danger.
 
TGR: Does suppressing ideas ever work? Is it working in China?
 
Doug Casey: Actually, in many ways China is freer than the US, but that's not one of them. If you are a businessman and you keep your nose out of politics, it actually is freer. You'll have less taxes, less regulation in China than you would in the US But instead of emulating the free part of China, the US government is trying to copy the Internet restrictions because it sees the Internet as a danger to the existing order. And they're right.
 
TGR: But didn't the governments of Middle Eastern countries find out that ideas have a life of their own and they find a way to spread despite attempts to shut them down?
 
Doug Casey: They do, so let's hope for the best.
 
TGR: Finally, Ron Paul said that things are worse than the government will admit and the idea of economic growth this year is a dream. He said we need to be serious, but not despondent. Make financial plans, but have fun doing it. Do you agree and are you having fun yet?
 
Doug Casey: I am having fun. I'm doing this not because I need the money, but because it's amusing and it's good karma to sow dissention in the ranks of the enemy.
 
TGR: Thank you for sharing your thoughts.
 
Doug Casey: Thank you.
 
The audio recordings of the Casey Research 2013 Summit are available here.

Gold: A Tool, Not an Idol

Posted: 14 Oct 2013 03:01 PM PDT

What makes gold so different from other asset classes that investors obsess about it...?
 
WHAT IS IT about gold that makes people view it differently than any other asset class, creating an almost religious fixation on the metal? asks Gary Tanashian in his Notes from the Rabbit Hole.
 
As long-term monetary insurance, you would think that it would be among the more boring items; sort of like insurance annuities. But that is not the case.
 
Gold is routinely propped up on a pedestal and obsessed upon in the world of money and finance. In actuality, gold is a geological element that has been deemed by humans to be money or to closely track monetary value, with a track record measured in centuries. Why, there it is on WebElements' element chart bracketed by things like Mercury, Cadmium and Copernicium, among other 'precious' metals.
 
'There is no fever like gold fever' I suppose, and that is what gets many market players in trouble. How can an asset of unquestionable value be trashed so routinely and with such ease when US and global policy makers are taking their inflationary operations to new heights, right out in the open? Why, the US just nominated Bernanke clone Janet Yellen as the new Fed Chair. Gold should skyrocket!
 
Well no, it shouldn't because it hasn't. As a counter cyclical asset (counter to the economic recovery that policy makers are trying to engineer) its price continues to reside in the dumps as the average market participant still leans toward confidence in policy makers and a view that "the crisis" is over; meaning that the crash of 2008 was a 'one off' that was the result of some financial institutions that screwed the pooch and have been brought back in line.
 
Gold is simply a value marker and insurance against the possibility that the US crisis in 2008 and the European crisis in 2011 were emblematic of much deeper and ingrained problems that will bubble (no pun intended) up to the surface once again at a place and time yet to be determined. Gold is insurance in support of the idea that new debt can leverage, but not fix, the economy. That is gold's ultimate fixation.
 
The bottom line is that gold should not get caught up in some kind of imagined war of good against evil. That is because it is not an idol, it is a tool to be used by right-minded investors to protect themselves against certain financial risks while going about business in an increasingly complex and leveraged financial system.
 
If they have fixed the system, gold is done for now. We'll keep watching gold's ratios to positively correlated markets for the big picture clues there. If they have not fixed the system, people who calmly viewed gold as a value instrument rather than a speculation play in the casino, will be rewarded.
 
Meanwhile, I would advise tuning out the gold price micro managers, the gold bug cheering squads and the likes of the Vampire Squid itself, Goldman Sachs, with its 'bearish, no bullish, no bearish…' line. It is all noise.

Gold: A Tool, Not an Idol

Posted: 14 Oct 2013 03:01 PM PDT

What makes gold so different from other asset classes that investors obsess about it...?
 
WHAT IS IT about gold that makes people view it differently than any other asset class, creating an almost religious fixation on the metal? asks Gary Tanashian in his Notes from the Rabbit Hole.
 
As long-term monetary insurance, you would think that it would be among the more boring items; sort of like insurance annuities. But that is not the case.
 
Gold is routinely propped up on a pedestal and obsessed upon in the world of money and finance. In actuality, gold is a geological element that has been deemed by humans to be money or to closely track monetary value, with a track record measured in centuries. Why, there it is on WebElements' element chart bracketed by things like Mercury, Cadmium and Copernicium, among other 'precious' metals.
 
'There is no fever like gold fever' I suppose, and that is what gets many market players in trouble. How can an asset of unquestionable value be trashed so routinely and with such ease when US and global policy makers are taking their inflationary operations to new heights, right out in the open? Why, the US just nominated Bernanke clone Janet Yellen as the new Fed Chair. Gold should skyrocket!
 
Well no, it shouldn't because it hasn't. As a counter cyclical asset (counter to the economic recovery that policy makers are trying to engineer) its price continues to reside in the dumps as the average market participant still leans toward confidence in policy makers and a view that "the crisis" is over; meaning that the crash of 2008 was a 'one off' that was the result of some financial institutions that screwed the pooch and have been brought back in line.
 
Gold is simply a value marker and insurance against the possibility that the US crisis in 2008 and the European crisis in 2011 were emblematic of much deeper and ingrained problems that will bubble (no pun intended) up to the surface once again at a place and time yet to be determined. Gold is insurance in support of the idea that new debt can leverage, but not fix, the economy. That is gold's ultimate fixation.
 
The bottom line is that gold should not get caught up in some kind of imagined war of good against evil. That is because it is not an idol, it is a tool to be used by right-minded investors to protect themselves against certain financial risks while going about business in an increasingly complex and leveraged financial system.
 
If they have fixed the system, gold is done for now. We'll keep watching gold's ratios to positively correlated markets for the big picture clues there. If they have not fixed the system, people who calmly viewed gold as a value instrument rather than a speculation play in the casino, will be rewarded.
 
Meanwhile, I would advise tuning out the gold price micro managers, the gold bug cheering squads and the likes of the Vampire Squid itself, Goldman Sachs, with its 'bearish, no bullish, no bearish…' line. It is all noise.

New Fed Boss Yellen: No Change

Posted: 14 Oct 2013 02:58 PM PDT

Next year's appointment of Janet Yellen to the US Fed won't change anything...
 
The NEWS that Janet Yellen was nominated to become the next chairman of the Board of Governors of the Federal Reserve System was greeted with joy by financial markets and the financial press, writes former Texas Congressman Dr.Ron Paul.
 
Wall Street saw Yellen's nomination as a harbinger of continued easy money. Contrast this with the hand-wringing that took place when Larry Summers' name was still in the running. Pundits worried that Summers would be too cautious, too hawkish on inflation, or too close to big banks.
 
The reality is that there wouldn't have been a dime's worth of difference between Yellen's and Summers' monetary policy. No matter who is at the top, the conduct of monetary policy will be largely unchanged: large-scale money printing to bail out big banks. There may be some fiddling around the edges, but any monetary policy changes will be in style only, not in substance.
 
Yellen, like Bernanke, Summers, and everyone else within the Fed's orbit, believes in Keynesian economics. To economists of Yellen's persuasion, the solution to recession is to stimulate spending by creating more money. Wall Street need not worry about tapering of the Fed's massive program of quantitative easing under Yellen's reign. If anything, the Fed's trillion Dollars of yearly money creation may even increase.
 
What is obvious to most people not captured by the system is that the Fed's loose monetary policy was the root cause of the current financial crisis. Just like the Great Depression, the stagflation of the 1970s, and every other recession of the past century, the current crisis resulted from the creation of money and credit by the Federal Reserve, which led to unsustainable economic booms.
 
Rather than allowing the malinvestments and bad debts caused by its money creation to liquidate, the Fed continually tries to prop them up. It pumps more and more money into the system, piling debt on top of debt on top of debt. Yellen will continue along those lines, and she might even end up being Ben Bernanke on steroids.
 
To Yellen, the booms and bust of the business cycle are random, unforeseen events that take place just because. The possibility that the Fed itself could be responsible for the booms and busts of the business cycle would never enter her head. Nor would such thoughts cross the minds of the hundreds of economists employed by the Fed. They will continue to think the same way they have for decades, interpreting economic data and market performance through the same distorted Keynesian lens, and advocating for the same flawed policies over and over.
 
As a result, the American people will continue to suffer decreases in the purchasing power of the Dollar and a diminished standard of living. The phony recovery we find ourselves in is only due to the Fed's easy money policies. But the Fed cannot continue to purchase trillions of Dollars of assets forever. Quantitative easing must end sometime, and at that point the economy will face the prospect of rising interest rates, mountains of bad debt and malinvested resources, and a Federal Reserve which holds several trillion Dollars of worthless bonds.
 
The future of the US economy with Chairman Yellen at the helm is grim indeed, which provides all the more reason to end our system of central economic planning by getting rid of the Federal Reserve entirely. Ripping off the bandage may hurt some in the short run, but in the long term everyone will be better off. Anyway, most of this pain will be borne by the politicians, big banks, and other special interests who profit from the current system. Ending this current system of crony capitalism and moving to sound money and free markets is the only way to return to economic prosperity and a vibrant middle class.

New Fed Boss Yellen: No Change

Posted: 14 Oct 2013 02:58 PM PDT

Next year's appointment of Janet Yellen to the US Fed won't change anything...
 
The NEWS that Janet Yellen was nominated to become the next chairman of the Board of Governors of the Federal Reserve System was greeted with joy by financial markets and the financial press, writes former Texas Congressman Dr.Ron Paul.
 
Wall Street saw Yellen's nomination as a harbinger of continued easy money. Contrast this with the hand-wringing that took place when Larry Summers' name was still in the running. Pundits worried that Summers would be too cautious, too hawkish on inflation, or too close to big banks.
 
The reality is that there wouldn't have been a dime's worth of difference between Yellen's and Summers' monetary policy. No matter who is at the top, the conduct of monetary policy will be largely unchanged: large-scale money printing to bail out big banks. There may be some fiddling around the edges, but any monetary policy changes will be in style only, not in substance.
 
Yellen, like Bernanke, Summers, and everyone else within the Fed's orbit, believes in Keynesian economics. To economists of Yellen's persuasion, the solution to recession is to stimulate spending by creating more money. Wall Street need not worry about tapering of the Fed's massive program of quantitative easing under Yellen's reign. If anything, the Fed's trillion Dollars of yearly money creation may even increase.
 
What is obvious to most people not captured by the system is that the Fed's loose monetary policy was the root cause of the current financial crisis. Just like the Great Depression, the stagflation of the 1970s, and every other recession of the past century, the current crisis resulted from the creation of money and credit by the Federal Reserve, which led to unsustainable economic booms.
 
Rather than allowing the malinvestments and bad debts caused by its money creation to liquidate, the Fed continually tries to prop them up. It pumps more and more money into the system, piling debt on top of debt on top of debt. Yellen will continue along those lines, and she might even end up being Ben Bernanke on steroids.
 
To Yellen, the booms and bust of the business cycle are random, unforeseen events that take place just because. The possibility that the Fed itself could be responsible for the booms and busts of the business cycle would never enter her head. Nor would such thoughts cross the minds of the hundreds of economists employed by the Fed. They will continue to think the same way they have for decades, interpreting economic data and market performance through the same distorted Keynesian lens, and advocating for the same flawed policies over and over.
 
As a result, the American people will continue to suffer decreases in the purchasing power of the Dollar and a diminished standard of living. The phony recovery we find ourselves in is only due to the Fed's easy money policies. But the Fed cannot continue to purchase trillions of Dollars of assets forever. Quantitative easing must end sometime, and at that point the economy will face the prospect of rising interest rates, mountains of bad debt and malinvested resources, and a Federal Reserve which holds several trillion Dollars of worthless bonds.
 
The future of the US economy with Chairman Yellen at the helm is grim indeed, which provides all the more reason to end our system of central economic planning by getting rid of the Federal Reserve entirely. Ripping off the bandage may hurt some in the short run, but in the long term everyone will be better off. Anyway, most of this pain will be borne by the politicians, big banks, and other special interests who profit from the current system. Ending this current system of crony capitalism and moving to sound money and free markets is the only way to return to economic prosperity and a vibrant middle class.

Marc Faber: Gold Between $1200 And $1250 Is Entering A Buying Range

Posted: 14 Oct 2013 02:57 PM PDT

In this interview, Faber gives an update on the ongoing evolution in the US debt ceiling debate and the reactions in markets. He also explains that no safe have is left in this world, a very concerning message without any doubt. Gold is entering a buy zone at these price levels.

Marc Faber his thoughts on the price of gold:

“We have a strong rally form the lows at 1180 to over 1400 and now we are backing off. I think between around 1200 and 1250 it is getting into buying range. The sentiment about gold is very negative, but if you look at everything considered – the monetization of debt, the debt ceiling, which sooner or later will be increased because both Republicans and Democrats are big spenders and the government’s debt has expanded from $1 trillion in 1980 to $5 trillion in 1999, now we are at $16 trillion. Both Democrats and Republicans have been big, big spenders because a lot of money flows through the government.”

Faber’s expected evolution in the debt ceiling debate:

“If they don’t agree by the 17th, I think what can happen is that the Fed will actually finance the Treasury independently so the interest payments are being met. If the interest payments are not being met, I think it will cause quite a bit disruption to the financial market. I am not that concerned about that. I think this larger issue is like the euro issue a year ago where people were very negative and it was debated and so forth. In the end it is a political decision. I think both parties want to spend. It’s just on different items that they want to spend money.”

Faber explains if the current evolution in equities, bonds, currencies and commodities, is comparable to other idiocies by governments in previous decades:

“Yes, idiocies by governments. That is exactly the word. It’s basically a dysfunctional government that we have that is far too large that is essentially wasting money left, right and center. The Republicans are wasting money on the military complex and the Democrats are basically buying votes with transfer payments, with entitlement programs, it goes on. It is a huge waste. The problem is that I don't see a solution. I think the current debate about the debt ceiling and the budget is more a symptom of a problem than a problem itself. The problem is really that the government, not just in the US but other countries as well, has grown disproportionally large and that retards economic growth.”

Which safe haven is left:

“There is no safe haven. Bank deposits are not safe, which used to be safe. Money in treasury bills is not 100% safe because there is inflation in the system and you hardly get any interest. Bonds are not very safe anymore because eventually interest rates will go up. Equities in the US are relatively expensive by any valuation metrics you might use. I don’t see anything particularly safe. The best you can hope for is that you have a diversified portfolio of different assets and that they don’t all collapse at the same time.”

 

[marc_faber_oct13]

 

Mining Stock Myths Exposed

Posted: 14 Oct 2013 02:46 PM PDT

Busting the myths that could wipe out your gold-mining investments...
 
AT THE RECENT Casey Research Summit 2013, The Gold Report met and spoke with 3 leading mythbusters-in-chief in the gold mining and natural resources sectors.
 
Louis James is the master of metals at Casey Research, senior editor of the International Speculator, Casey Investment Alert and Conversations with Casey. Fluent in English, Spanish and French, Louis regularly takes his skills on the road, evaluating highly prospective geological targets and visiting explorers and producers at the far corners of the globe and getting to know their management teams.
 
With a background in mathematics, Marin Katusa left teaching post-secondary mathematics to pursue portfolio management within the resource sector. Regularly interviewed on national and local television channels in North America, Katusa is chief investment strategist for the energy division of Casey Research.
 
Rick Rule is founder and chairman of Sprott Global Resource Investments Ltd., began his career in the securities business in 1974. He is a leading American retail broker specializing in mining, energy, water utilities, forest products and agriculture. His company has built a national reputation on taking advantage of global opportunities in the oil and gas, gold mining, alternative energy, agriculture, forestry and water industries.
 
First myth likely to harm your decisions about gold mining investment? That the US Fed's quantitative easing is being "tapered"...
 
The Gold Report: Why is the theory of tapering or turning quantitative easing off a myth and who really benefits from QE?
 
Rick Rule: My view, as an investor, not an economist, is that QE is misnamed. I think it's another way of saying counterfeiting. It exists in large measure because we're running a trillion-Dollar deficit and, while we can hoodwink investors into funding two-thirds of it, we need to print away the last third.
 
TGR: What are the consequences of turning off QE?
 
Louis James: Federal Reserve Chairman Ben Bernanke said himself that he had certain criteria he wanted to see before tapering – employment in particular. Those have not been met. Employment figures have improved, but only in – I guess the technical term would be "crappy" jobs. Long-term employment, the middle class' bread and butter, is not better.
 
TGR: Rick, you defy common sense and argue that bull markets are bad and bear markets are good, but it doesn't feel that way.
 
Rick Rule: At the risk of being sexist, women are normally more rational shoppers than men. Think about the stock market as a mall.
 
In the mall, the store on the left-hand of the entrance has a big flashing sign that says, "Bear Market Merchants All Goods 70% Off, No Reasonable Offer Refused, Come Back Tomorrow – Prices May be Lower." The store on the right-hand side has a tiny sign that says, "Bespoke Bear Market Merchants, No Deals Ever, High-Margin for Merchants, Don't Even Think About Asking for a Deal, Prices May be Higher Next Week."
 
If you're going to buy a pair of shoes, which store would you go to?
 
This is a no-brainer. When people buy physical goods, they act rationally. When they buy financial goods, such as mining stocks, they want to overpay. It's totally irrational and it's extraordinarily common. If you want to become wealthier, why wouldn't you buy financial assets when they're on sale?
 
TGR: Staying with the mall analogy, does that suggest that people are afraid mining stocks will be on even deeper sale tomorrow?
 
Marin Katusa: You have to look at the timeframe. This is a great market if you're an accredited investor and have an account with someone like Rick Rule or you subscribe to the International Speculator and follow the right management teams. Today, you can invest in deals with five-year full warrants that would not have been available three years ago. Rick and I have been in meetings where the venture teams laughed at me when I requested full warrants. Rick just said, bite your lip, smile and wait. And he was right.
 
If you're buying stock today in hopes that the market will go up the next day, you'll be in a lot of pain. But if you have a two-to-five year timeframe, you can get guys like Bob Quartermain and Lukas Lundin on sale.
 
Louis James: What would you give to go back in time and buy Apple just after the Apple II came out? Or buy Microsoft when DOS was new?
 
Over the course of the last decade, what I think of as the first half of this great bull cycle, billions of Dollars have gone into the ground and done good work.
 
Companies with 10 million ounces of high-grade gold in a safe mining jurisdiction are on sale below IPO prices. Some companies with excellent management and assets in hand are selling for less than cash value. You can buy these companies now, instead of looking for the next Apple or Microsoft.
 
Rick Rule: Words like want and hope in speculation are truly four-letter words, profanities. Having a stock in your portfolio that cost $200,000 and has a current market valuation of $40,000 is unfortunate, but irrelevant. Investors need to take advantage of their education and do their best with the situation at hand. Right now, things are cheap in the mining sector. When things are cheap you're supposed to buy. In bull markets when things are expensive, you're supposed to sell.
 
Right now, buying is easy because you have no competitors. In a bull market, selling is easy because everybody is a buyer. If the market is desperately looking for bids and you are scared to death because your stocks can't catch bids, you have to bid. They say the market was desperate for asks, but this market is desperate for bids.
 
TGR: Some have said this price drop marks the end of the commodity super cycle. Is that a myth? And is it more or less of a myth in some sectors than others?
 
Rick Rule: The narrative that existed in 2009-2010, when the commodity super cycle was the currency of all financial thinking, is unchanged. The first part of that narrative was founded on the idea that world population growth was taking commodity consumption higher. World population growth is not over.
 
The second part of the narrative was that as poor people gained more freedom, they got richer and consumed more. Political liberalization in emerging frontier markets has continued and people are wealthier and are consuming more.
 
A third part of the narrative was that Western consumers had lived beyond their means and as a consequence were debasing the denominators, the fiat currencies. If you debase the denominator, the nominal value of stuff would go up. We have not stopped debasing the denominator.
 
The entire narrative associated with the resource industry bull market is intact. Nothing has changed except the price. A cyclical decline in a secular bull market is a different way of describing a spectacular sale for people who understand that the narrative hasn't changed.
 
TGR: Are there some sectors that still feel as if it's a commodity super cycle?
 
Marin Katusa: Definitely. Look at oil.
 
Rick Rule: But your readers don't want to look for hot sectors, because they are overpriced. They want to look for cold sectors. They want to find the sector, management team or the company that's going to be hot.
 
TGR: If oil is hot right now, what is going to be hot?
 
Marin Katusa: From the energy side, I think within three years uranium will be hot.
 
TGR: Why the three-year timeline?
 
Marin Katusa: There are three major catalysts. First is the end of the US-Russia Highly Enriched Uranium Purchase Agreement (HEU). The last shipment will happen at the end of 2013.
 
Second is the transitional agreement, in which the Russians will provide up to 50% of the uranium on a new pricing metric than the HEU agreement. Only this time, the Russians have new dance partners: Saudi Arabia, China, India, Korea, even France. The reality is the Americans will have to pay more for uranium from the Russians.
 
Third, nuclear reactors are not all being taken down; they're being built. Japan plans to bring its reactors back on-line, just not on the timeframe the junior resource sectors wants them to. The Japanese cannot afford to pay the most expensive electricity prices in the world and stay competitive. They have no choice but to move forward with nuclear power.
 
TGR: Is the end of HEU already priced into uranium?
 
Marin Katusa: Yes, both because the market is determining what it's worth today and because Japan shut down 40 nuclear reactors. That's a black-swan game changer that shifted everything.
 
Yet, the long-term price is 50% higher than the spot price and more than 90% of the uranium being consumed and traded is based on the long-term price. That's the equivalent of saying gold today is $1300 per ounce, but if you want to take delivery in three or four years – which is what nuclear utilities do for uranium – you have to pay $1900 per ounce. Or copper at $4.50 per pound if you want delivery in five years. That's the situation in uranium today.
 
TGR: Louis, which sector are you looking forward to?
 
Louis James: There's talk on the streets about helium, although I'm not sure I want to move in that direction. I'm happier focusing on something right in front of me and that I understand. Finding a company that has a multimillion-ounce, high-grade deposit and is on sale at half-price is similar to going into the supermarket and finding the thickest, most beautifully marbled T-bone steak, fresh cut today, on sale for half-off. Why bother with hamburger of unknown quality?
 
TGR: We keep hearing that we've hit a bottom, which would imply that the market is moving up. However, Rick, you have described it as a bifurcated market in which the bad stocks will continue to sink, which would be a good thing. How do we know which companies will sink and which will revive?
 
Rick Rule: That's a critical question. Before your readers classify stocks, they need to classify themselves. Are they the type of person who will put enough time and attention into securities analysis to compete on their own? Or do they need other people to help them compete?
 
While securities analysis and stock selection in the junior market is imperfect, it can be done. It requires understanding the stock. If you're not willing to understand the stock, you need an adviser.
 
TGR: How many hours does that work take? What questions should investors be asking?
 
Rick Rule: Speculators running their own portfolios without advice should limit the number of stocks in the portfolio to the number that they can spend two or three hours a month working on. That means reading every press release, proxy, quarterly and annual report. Read the president's message and measure it against what he said the company would accomplish over the year.
 
Speculators unwilling to do that need to hire somebody who will. That may mean subscribing to one of the trading services offered by Casey or hiring an organization like Sprott to be a broker or a manager.
 
Getting to bifurcation and stock selection, if 15% of the stocks are moving higher, 85% are moving lower. You won't be able to concentrate 100% in either camp, but if you get more right than wrong you'll make so much money that the outliers will be irrelevant. If you get it wrong, you'll lose so much money that you ought to be in some other business.
 
TGR: Are there fewer brokers walking the streets of Vancouver these days?
 
Marin Katusa: Definitely, also fewer analysts and fewer corporate development positions and many fewer investor relations people. There are more BMWs, Mercedes and Ferraris on sale, and, now, more offices becoming vacant.
 
TGR: Does that mean only the best are left?
 
Marin Katusa: Not necessarily.
 
Rick Rule: But it does reduce the population. To be a responsible analyst, you once had to look in a cursory fashion at 4,000 companies. Today, having only 3,000 companies to look at is an advantage.
 
The three of us look at data in a summary fashion to try and dispose of a company. You look for something to kill your interest. The good news is that the population of timewasters is down by at least a third. That's unfortunate for their shareholders, but that's their problem not ours. Our job is to look after our subscribers or clients.
 
TGR: Let's talk about regions. Is it true that the Yukon is remote?
 
Louis James: It's no more remote now than it was last year. You can't write off the Yukon or anywhere without looking at and understanding the specifics of individual opportunities. Miners with remote projects that have high enough margins are able to barge or truck diesel fuel in and run gen-sets, etc. If Canadians can mine diamonds in the Arctic Circle, they can mine gold in the Yukon.
 
Remoteness by itself is not the issue. The issue is margin. If you're in the Yukon and you've got something low-grade, with low recoveries and complex metallurgy – don't call us, we'll call you. If you have something high-grade, open pit, that leaches, tell me more.
 
TGR: Rick, in your presentation you talked about platinum and palladium. Is that an area where the super cycle needs to whip things up?
 
Rick Rule: I don't think it even requires a super cycle. With platinum and palladium, I can look empirically at simple supply and demand. On a global basis, the platinum and palladium industry doesn't earn its cost of capital. That means one of two things will happen: The price of platinum and palladium will increase or there won't be enough platinum and palladium to supply current demand.
 
In the context of supply, you don't have to worry about investor inventories because there are almost none. The world supply of existing, finished platinum and palladium is less than one year's fabrication demand.
 
The consequence of the industry not earning its cost of capital is that production has fallen by 19% over six years. New mine supply is falling. South Africa itself accounts for 70% of world platinum production and 39% of world palladium production.
 
In South Africa, the industry has deferred $5 billion in sustaining capital investments; workers are dying and infrastructure is more and more decrepit.
 
A skilled worker crouching 7,000 feet underground in 105 degree heat, in two inches of water, makes $700 per month. An unskilled worker who mucks the material on his hands and knees 400 meters from the mine face to the adit makes $200 a month. A migratory worker sustaining a family in the homeland is probably sustaining another family at the mine face. Wages have to go up, but they can't because the companies don't earn their cost of capital.
 
According to the majority of South Africans, social take – taxes and royalties – has to go up, but can't because companies don't earn their cost of capital. Prices have to go up. Platinum and palladium prices can go up because their utility to users is so high. It goes into high-carat jewelry. Platinum goes up a smokestack. Mostly, it goes out a tailpipe.
 
It costs $200 – the cost of a catalytic converter in a new car – to give us the air quality we enjoy today. There's a social consensus in favor of stricter air quality standards. If the price of platinum and palladium doubled, the catalytic converter would cost $400 in a $27,000 new car; the demand impact would be de minimus.
 
Louis James: We all know the often-quoted phrase that most of the gold ever mined in the world is still sitting in purified form on the surface in one form or the other. Platinum and palladium are different; they are consumed. I agree with Rick.
 
I would go one step further regarding South Africa. It's not just the economics that don't work; it's the country itself. It's a balloon resting on pins. I see platinum and palladium as speculation on South Africa going up in flames, which is an easy bet to take now. I'm sorry for the South Africans, but it's a bad situation with no easy way out.
 
TGR: There's been a lot of talk about the dearth of young, qualified people coming up to take their place in management teams. Has the next generation of managers, and investors for that matter, left the sector? If so, what will happen?
 
Marin Katusa: There's a significant age gap in our industry. When I was taking geology courses at university our professor would ask why we were taking this class. There are no jobs. He recommended we go into computers, and a lot of people did.
 
Unfortunately, good management teams are very difficult to come by. Only 1 in 3,000 projects ever becomes an economic mine and I'd say investing in the right people is more important than any other factor.
 
Louis James: This scarcity makes the investor's job a little easier. Just type the CEO's name in Google and look up his history. Has he done this before? Has he succeeded? Was he an accountant or a used car salesman? Google is one of our primary triage tools.
 
People is the first of Doug Casey's famous Eight Ps. If I hear about a story that fits our general criteria, the first thing I look at is management directors. If I recognize the name of someone who has lied to me or whom I don't trust, I don't even look at the project.
 
TGR: New people coming up need to get experience by being in a successful project. Are there enough successful projects that they're learning how to do it?
 
Louis James: I don't necessarily agree with that angle. All experience is good experience. A person can learn a lot from working for a company that does something wrong. It's having lots of experience, both good and bad, that is so important. The problem is that, unless you get very lucky, you need to have experience to really call shots well, and there are not enough people out there with the decades of experience needed.
 
On the bright side, because there is money in the field now, geology departments are no longer shutting down; enrollment is up. Supply is improving, but it will be another 5 to 10 years before the supply of highly experienced personnel really improves.
 
Rick Rule: Let's personalize it for your readers. There are three analysts in the room: an old one and two young ones.
 
I guarantee you that, as a consequence of the bear market they just experienced, the two younger analysts will make their readers more money with less risk in the next bull market.
 
Youth isn't enough. You need to have a decade under your belt so that you have lived through the changes. Marin and Louis just lived through the kind of challenges I lived through in the 1980s. They now have the two things needed to survive in this racket: legs and scars.
 
Marin Katusa: He's not joking about the scars.
 

Mining Stock Myths Exposed

Posted: 14 Oct 2013 02:46 PM PDT

Busting the myths that could wipe out your gold-mining investments...
 
AT THE RECENT Casey Research Summit 2013, The Gold Report met and spoke with 3 leading mythbusters-in-chief in the gold mining and natural resources sectors.
 
Louis James is the master of metals at Casey Research, senior editor of the International Speculator, Casey Investment Alert and Conversations with Casey. Fluent in English, Spanish and French, Louis regularly takes his skills on the road, evaluating highly prospective geological targets and visiting explorers and producers at the far corners of the globe and getting to know their management teams.
 
With a background in mathematics, Marin Katusa left teaching post-secondary mathematics to pursue portfolio management within the resource sector. Regularly interviewed on national and local television channels in North America, Katusa is chief investment strategist for the energy division of Casey Research.
 
Rick Rule is founder and chairman of Sprott Global Resource Investments Ltd., began his career in the securities business in 1974. He is a leading American retail broker specializing in mining, energy, water utilities, forest products and agriculture. His company has built a national reputation on taking advantage of global opportunities in the oil and gas, gold mining, alternative energy, agriculture, forestry and water industries.
 
First myth likely to harm your decisions about gold mining investment? That the US Fed's quantitative easing is being "tapered"...
 
The Gold Report: Why is the theory of tapering or turning quantitative easing off a myth and who really benefits from QE?
 
Rick Rule: My view, as an investor, not an economist, is that QE is misnamed. I think it's another way of saying counterfeiting. It exists in large measure because we're running a trillion-Dollar deficit and, while we can hoodwink investors into funding two-thirds of it, we need to print away the last third.
 
TGR: What are the consequences of turning off QE?
 
Louis James: Federal Reserve Chairman Ben Bernanke said himself that he had certain criteria he wanted to see before tapering – employment in particular. Those have not been met. Employment figures have improved, but only in – I guess the technical term would be "crappy" jobs. Long-term employment, the middle class' bread and butter, is not better.
 
TGR: Rick, you defy common sense and argue that bull markets are bad and bear markets are good, but it doesn't feel that way.
 
Rick Rule: At the risk of being sexist, women are normally more rational shoppers than men. Think about the stock market as a mall.
 
In the mall, the store on the left-hand of the entrance has a big flashing sign that says, "Bear Market Merchants All Goods 70% Off, No Reasonable Offer Refused, Come Back Tomorrow – Prices May be Lower." The store on the right-hand side has a tiny sign that says, "Bespoke Bear Market Merchants, No Deals Ever, High-Margin for Merchants, Don't Even Think About Asking for a Deal, Prices May be Higher Next Week."
 
If you're going to buy a pair of shoes, which store would you go to?
 
This is a no-brainer. When people buy physical goods, they act rationally. When they buy financial goods, such as mining stocks, they want to overpay. It's totally irrational and it's extraordinarily common. If you want to become wealthier, why wouldn't you buy financial assets when they're on sale?
 
TGR: Staying with the mall analogy, does that suggest that people are afraid mining stocks will be on even deeper sale tomorrow?
 
Marin Katusa: You have to look at the timeframe. This is a great market if you're an accredited investor and have an account with someone like Rick Rule or you subscribe to the International Speculator and follow the right management teams. Today, you can invest in deals with five-year full warrants that would not have been available three years ago. Rick and I have been in meetings where the venture teams laughed at me when I requested full warrants. Rick just said, bite your lip, smile and wait. And he was right.
 
If you're buying stock today in hopes that the market will go up the next day, you'll be in a lot of pain. But if you have a two-to-five year timeframe, you can get guys like Bob Quartermain and Lukas Lundin on sale.
 
Louis James: What would you give to go back in time and buy Apple just after the Apple II came out? Or buy Microsoft when DOS was new?
 
Over the course of the last decade, what I think of as the first half of this great bull cycle, billions of Dollars have gone into the ground and done good work.
 
Companies with 10 million ounces of high-grade gold in a safe mining jurisdiction are on sale below IPO prices. Some companies with excellent management and assets in hand are selling for less than cash value. You can buy these companies now, instead of looking for the next Apple or Microsoft.
 
Rick Rule: Words like want and hope in speculation are truly four-letter words, profanities. Having a stock in your portfolio that cost $200,000 and has a current market valuation of $40,000 is unfortunate, but irrelevant. Investors need to take advantage of their education and do their best with the situation at hand. Right now, things are cheap in the mining sector. When things are cheap you're supposed to buy. In bull markets when things are expensive, you're supposed to sell.
 
Right now, buying is easy because you have no competitors. In a bull market, selling is easy because everybody is a buyer. If the market is desperately looking for bids and you are scared to death because your stocks can't catch bids, you have to bid. They say the market was desperate for asks, but this market is desperate for bids.
 
TGR: Some have said this price drop marks the end of the commodity super cycle. Is that a myth? And is it more or less of a myth in some sectors than others?
 
Rick Rule: The narrative that existed in 2009-2010, when the commodity super cycle was the currency of all financial thinking, is unchanged. The first part of that narrative was founded on the idea that world population growth was taking commodity consumption higher. World population growth is not over.
 
The second part of the narrative was that as poor people gained more freedom, they got richer and consumed more. Political liberalization in emerging frontier markets has continued and people are wealthier and are consuming more.
 
A third part of the narrative was that Western consumers had lived beyond their means and as a consequence were debasing the denominators, the fiat currencies. If you debase the denominator, the nominal value of stuff would go up. We have not stopped debasing the denominator.
 
The entire narrative associated with the resource industry bull market is intact. Nothing has changed except the price. A cyclical decline in a secular bull market is a different way of describing a spectacular sale for people who understand that the narrative hasn't changed.
 
TGR: Are there some sectors that still feel as if it's a commodity super cycle?
 
Marin Katusa: Definitely. Look at oil.
 
Rick Rule: But your readers don't want to look for hot sectors, because they are overpriced. They want to look for cold sectors. They want to find the sector, management team or the company that's going to be hot.
 
TGR: If oil is hot right now, what is going to be hot?
 
Marin Katusa: From the energy side, I think within three years uranium will be hot.
 
TGR: Why the three-year timeline?
 
Marin Katusa: There are three major catalysts. First is the end of the US-Russia Highly Enriched Uranium Purchase Agreement (HEU). The last shipment will happen at the end of 2013.
 
Second is the transitional agreement, in which the Russians will provide up to 50% of the uranium on a new pricing metric than the HEU agreement. Only this time, the Russians have new dance partners: Saudi Arabia, China, India, Korea, even France. The reality is the Americans will have to pay more for uranium from the Russians.
 
Third, nuclear reactors are not all being taken down; they're being built. Japan plans to bring its reactors back on-line, just not on the timeframe the junior resource sectors wants them to. The Japanese cannot afford to pay the most expensive electricity prices in the world and stay competitive. They have no choice but to move forward with nuclear power.
 
TGR: Is the end of HEU already priced into uranium?
 
Marin Katusa: Yes, both because the market is determining what it's worth today and because Japan shut down 40 nuclear reactors. That's a black-swan game changer that shifted everything.
 
Yet, the long-term price is 50% higher than the spot price and more than 90% of the uranium being consumed and traded is based on the long-term price. That's the equivalent of saying gold today is $1300 per ounce, but if you want to take delivery in three or four years – which is what nuclear utilities do for uranium – you have to pay $1900 per ounce. Or copper at $4.50 per pound if you want delivery in five years. That's the situation in uranium today.
 
TGR: Louis, which sector are you looking forward to?
 
Louis James: There's talk on the streets about helium, although I'm not sure I want to move in that direction. I'm happier focusing on something right in front of me and that I understand. Finding a company that has a multimillion-ounce, high-grade deposit and is on sale at half-price is similar to going into the supermarket and finding the thickest, most beautifully marbled T-bone steak, fresh cut today, on sale for half-off. Why bother with hamburger of unknown quality?
 
TGR: We keep hearing that we've hit a bottom, which would imply that the market is moving up. However, Rick, you have described it as a bifurcated market in which the bad stocks will continue to sink, which would be a good thing. How do we know which companies will sink and which will revive?
 
Rick Rule: That's a critical question. Before your readers classify stocks, they need to classify themselves. Are they the type of person who will put enough time and attention into securities analysis to compete on their own? Or do they need other people to help them compete?
 
While securities analysis and stock selection in the junior market is imperfect, it can be done. It requires understanding the stock. If you're not willing to understand the stock, you need an adviser.
 
TGR: How many hours does that work take? What questions should investors be asking?
 
Rick Rule: Speculators running their own portfolios without advice should limit the number of stocks in the portfolio to the number that they can spend two or three hours a month working on. That means reading every press release, proxy, quarterly and annual report. Read the president's message and measure it against what he said the company would accomplish over the year.
 
Speculators unwilling to do that need to hire somebody who will. That may mean subscribing to one of the trading services offered by Casey or hiring an organization like Sprott to be a broker or a manager.
 
Getting to bifurcation and stock selection, if 15% of the stocks are moving higher, 85% are moving lower. You won't be able to concentrate 100% in either camp, but if you get more right than wrong you'll make so much money that the outliers will be irrelevant. If you get it wrong, you'll lose so much money that you ought to be in some other business.
 
TGR: Are there fewer brokers walking the streets of Vancouver these days?
 
Marin Katusa: Definitely, also fewer analysts and fewer corporate development positions and many fewer investor relations people. There are more BMWs, Mercedes and Ferraris on sale, and, now, more offices becoming vacant.
 
TGR: Does that mean only the best are left?
 
Marin Katusa: Not necessarily.
 
Rick Rule: But it does reduce the population. To be a responsible analyst, you once had to look in a cursory fashion at 4,000 companies. Today, having only 3,000 companies to look at is an advantage.
 
The three of us look at data in a summary fashion to try and dispose of a company. You look for something to kill your interest. The good news is that the population of timewasters is down by at least a third. That's unfortunate for their shareholders, but that's their problem not ours. Our job is to look after our subscribers or clients.
 
TGR: Let's talk about regions. Is it true that the Yukon is remote?
 
Louis James: It's no more remote now than it was last year. You can't write off the Yukon or anywhere without looking at and understanding the specifics of individual opportunities. Miners with remote projects that have high enough margins are able to barge or truck diesel fuel in and run gen-sets, etc. If Canadians can mine diamonds in the Arctic Circle, they can mine gold in the Yukon.
 
Remoteness by itself is not the issue. The issue is margin. If you're in the Yukon and you've got something low-grade, with low recoveries and complex metallurgy – don't call us, we'll call you. If you have something high-grade, open pit, that leaches, tell me more.
 
TGR: Rick, in your presentation you talked about platinum and palladium. Is that an area where the super cycle needs to whip things up?
 
Rick Rule: I don't think it even requires a super cycle. With platinum and palladium, I can look empirically at simple supply and demand. On a global basis, the platinum and palladium industry doesn't earn its cost of capital. That means one of two things will happen: The price of platinum and palladium will increase or there won't be enough platinum and palladium to supply current demand.
 
In the context of supply, you don't have to worry about investor inventories because there are almost none. The world supply of existing, finished platinum and palladium is less than one year's fabrication demand.
 
The consequence of the industry not earning its cost of capital is that production has fallen by 19% over six years. New mine supply is falling. South Africa itself accounts for 70% of world platinum production and 39% of world palladium production.
 
In South Africa, the industry has deferred $5 billion in sustaining capital investments; workers are dying and infrastructure is more and more decrepit.
 
A skilled worker crouching 7,000 feet underground in 105 degree heat, in two inches of water, makes $700 per month. An unskilled worker who mucks the material on his hands and knees 400 meters from the mine face to the adit makes $200 a month. A migratory worker sustaining a family in the homeland is probably sustaining another family at the mine face. Wages have to go up, but they can't because the companies don't earn their cost of capital.
 
According to the majority of South Africans, social take – taxes and royalties – has to go up, but can't because companies don't earn their cost of capital. Prices have to go up. Platinum and palladium prices can go up because their utility to users is so high. It goes into high-carat jewelry. Platinum goes up a smokestack. Mostly, it goes out a tailpipe.
 
It costs $200 – the cost of a catalytic converter in a new car – to give us the air quality we enjoy today. There's a social consensus in favor of stricter air quality standards. If the price of platinum and palladium doubled, the catalytic converter would cost $400 in a $27,000 new car; the demand impact would be de minimus.
 
Louis James: We all know the often-quoted phrase that most of the gold ever mined in the world is still sitting in purified form on the surface in one form or the other. Platinum and palladium are different; they are consumed. I agree with Rick.
 
I would go one step further regarding South Africa. It's not just the economics that don't work; it's the country itself. It's a balloon resting on pins. I see platinum and palladium as speculation on South Africa going up in flames, which is an easy bet to take now. I'm sorry for the South Africans, but it's a bad situation with no easy way out.
 
TGR: There's been a lot of talk about the dearth of young, qualified people coming up to take their place in management teams. Has the next generation of managers, and investors for that matter, left the sector? If so, what will happen?
 
Marin Katusa: There's a significant age gap in our industry. When I was taking geology courses at university our professor would ask why we were taking this class. There are no jobs. He recommended we go into computers, and a lot of people did.
 
Unfortunately, good management teams are very difficult to come by. Only 1 in 3,000 projects ever becomes an economic mine and I'd say investing in the right people is more important than any other factor.
 
Louis James: This scarcity makes the investor's job a little easier. Just type the CEO's name in Google and look up his history. Has he done this before? Has he succeeded? Was he an accountant or a used car salesman? Google is one of our primary triage tools.
 
People is the first of Doug Casey's famous Eight Ps. If I hear about a story that fits our general criteria, the first thing I look at is management directors. If I recognize the name of someone who has lied to me or whom I don't trust, I don't even look at the project.
 
TGR: New people coming up need to get experience by being in a successful project. Are there enough successful projects that they're learning how to do it?
 
Louis James: I don't necessarily agree with that angle. All experience is good experience. A person can learn a lot from working for a company that does something wrong. It's having lots of experience, both good and bad, that is so important. The problem is that, unless you get very lucky, you need to have experience to really call shots well, and there are not enough people out there with the decades of experience needed.
 
On the bright side, because there is money in the field now, geology departments are no longer shutting down; enrollment is up. Supply is improving, but it will be another 5 to 10 years before the supply of highly experienced personnel really improves.
 
Rick Rule: Let's personalize it for your readers. There are three analysts in the room: an old one and two young ones.
 
I guarantee you that, as a consequence of the bear market they just experienced, the two younger analysts will make their readers more money with less risk in the next bull market.
 
Youth isn't enough. You need to have a decade under your belt so that you have lived through the changes. Marin and Louis just lived through the kind of challenges I lived through in the 1980s. They now have the two things needed to survive in this racket: legs and scars.
 
Marin Katusa: He's not joking about the scars.
 

Hopeless, Not Serious

Posted: 14 Oct 2013 02:38 PM PDT

The US economy that is. And hope springs eternal for these market doomsters...
 
"AFTER listening to some of this morning's speakers, I made sure to program the number of the suicide hotline into my cell phone," real estate expert Andy Miller joked at the beginning of his speech, writes Shannara Johnson, chief editor at Doug Casey's research group, summarizing last week's Casey Research's investment summit 2013.
 
And legendary natural-resource investor and chairman of Sprott US Holdings, Rick Rule, quipped, "It's amazing – I actually get to be the positive guy here."
 
He summarized the main drift of the conference by paraphrasing behavioral psychologist Paul Watzlawick: "The situation is hopeless, but it need not be serious."
 
Rather than a reason to shy away from buying stocks, he reminded the audience, bear markets like the one we're seeing in gold right now are the greatest opportunity to load up on the best junior resource companies at fire-sale prices. You wouldn't insist on buying any other product when prices are high and shun it when it's on sale – so why act differently with stocks?
 
"You've already been through this," he said, "you've been through the pain. Why not hang on a little longer and actually enjoy the gain?"
 
That there's pain ahead became abundantly clear during Dr. Lacy Hunt's presentation, which ripped the rose-colored glasses off even the most blissful ignoramuses and received the vote for "most depressing speech" by many audience members.
 
HIMCO Executive VP Hunt – a high-profile speaker who served as senior economist at the Dallas Fed and as the chief US economist for banking giant HSBC – presented the dire facts in a pointed, easy-to-understand way. The cheerful title: "How Debt-Induced Monetary and Fiscal Policies Are Undermining the US Economic Prosperity."
 
Hunt is convinced that the US economic recovery is a sham. "Consumer spending," he said, "is at 2%, that's very low. We've seen lower percentages before, but never in a phase of economic expansion."
 
He compared economic growth throughout the entire US history with what we're seeing today. In terms of GDP growth – currently a pathetic 1.6% – we're only doing marginally better than in the 1930s, during the Great Depression.
 
Then he fired off charts with dismal graph lines and numbers, one after another:
  • The US birth rate in the last two years is the lowest since the 1920s and will soon lead to redundancies in elementary and then middle schools;
  • One out of 6.5 Americans is now on food stamps;
  • The number of 25- to 30-year-olds living with their parents is at 36%, an all-time high;
  • Federal debt is currently 100% of GDP, and the US government is $60 trillion in the hole on unfunded liabilities – the only way to feel good about this is to look at Europe, which is worse off at $70 trillion;
  • Unemployment is not getting better, capital spending is not getting better, and we're seeing a significant decline in US imports and exports, as well as the average American's standard of living;
  • Current Fed policy is making things worse, Hunt said. Corporate profits are down, capital spending and investment is down, and we're seeing "a significant decline in both US exports and imports." Median household income has dropped 3% and is now equal to that in 1995, and the personal savings rate is the lowest since 1929. 
If the Federal Reserve wants to phase out QE, Hunt said, there'll be tremendous exit costs. Even though studies from top researchers at Stanford, Princeton, and Berkeley have found that "an expansion of reserves contracts the economy," the Fed is like a runaway train. It's now so committed to what it is doing that despite the plethora of negative data, it just won't stop.
 
I sort of wish he still worked for the Federal Reserve – it'd be nice if they had at least one person with some common sense on their payroll.
 
James Rickards, Currency Wars author and senior managing director of Tangent Capital Partners, agreed with Lacy Hunt that all the talk of economic recovery is a bad joke: "If you want to know what a depression feels like, this is it."
 
He said most economists have been dead wrong in their recent forecasts because they assume we're in a normal business cycle – but this is anything but normal. According to Rickards' analysis, we're due to enter the second recession within this prolonged depression, which he believes will start in early 2014.
 
"Deflation is the Fed's worst nightmare," he said. To maintain a semblance of control over the economy, Bernanke & Co. have to manipulate Americans into behaving in certain ways – by keeping real interest rates in negative territory, they encourage people to borrow, and they use inflation expectation shocks to encourage them to spend.
 
In the last installment of the game, Rickards said, the Fed will employ the "helicopter money" tactic, putting more money directly into the hands of the populace by persuading the US government to provide tax cuts.
 
How did he manage to accurately predict that there would be no easing of the easing this year? Simple: "The Fed said, 'We taper if the economy grows according to our forecasts' – but their forecasts are always wrong."
 
He said Bernanke is playing a very dangerous game: "The Fed thinks it's playing with a thermostat, but in fact it's playing with a nuclear reactor, and if they do something wrong, they'll cause a meltdown."
 
Aside from money, it's indeed energy that makes the world go around – so the Energy Panel with Spencer Abraham, former US energy secretary, Lady Barbara Judge, chairman emeritus of the UK Atomic Energy Authority, Uranium Energy Corp. CEO Amir Adnani, and oil explorers Keith Hill of Africa Oil and Michael Greenwood of PRD Energy was one of the most raptly watched events of the Summit.
 
One of the topics was shale oil exploration and fracking, a topic that is becoming more and more critical for European countries striving to get out of Russia's energy chokehold.
 
Michael Greenwood said that PRD Energy, which is currently test-drilling in an oil-rich area in Germany, is moving cautiously. Unions and environmental groups in many European countries vehemently oppose fossil fuel exploration and fracking, but he believes that sooner or later, those countries will have to deal with these important matters of national energy security.
 
(As an interesting aside, the documentary Gasland, which created a worldwide anti-fracking hysteria, was funded by Abu Dhabi and Russian state-owned oil and gas company Gazprom.)
 
Lady Barbara Judge also sees a future for nuclear power in Europe, despite the current negative attitude, because "the CO2 story will make oil less and less attractive, and green energy doesn't work."
 
Africa Oil President and CEO Keith Hill agreed. Since the cheap, easy-to-extract oil is pretty much gone, he believes the oil price will go to $200 per barrel in the not-too-distant future. "Eventually oil is going to price itself out of the market. It's still the best energy out there, but in the next 20 years, other forms of energy will become more and more important."
 
Andy Miller, partner and co-founder of the Miller Frishman Group, stepped up to the podium to give a much-needed update on real estate. He believes that the housing market is headed into another recession.
 
"I don't see a recovery, I see a manipulated market," he said, pointing out that the US home market also has an impact on consumer spending and employment.
 
More and more single-family homes are now owned by large hedge funds and other institutional investors, and the government is forcing them to fix up the homes and rent them out. "When you buy a single-family home, all you can hope for currently is a 3% yield," said Miller. "So they're in it for an appreciation play."
 
It's a dangerous game, though: "First-time homebuyers and individual investors are a fickle crowd; they get out of the market immediately when the numbers don't work for them." And the recent rate increases have already removed a lot of purchasing power from buyers.
 
Overall, the news from the housing market is not that good:
  • New-home sales have fallen since 2008;
  • 20-22% of Americans are underwater with their mortgage, but Miller believes that the real number of "zombie homeowners" who can't sell or move may be around 40-45%;
  • Car and truck sales are trending up – a bad omen, said Miller, because "no one goes out and buys both a house and a new car."
His personal strategy: He circled 250 minor markets in the US and bought multi-family homes in resource-rich, booming regions.
 
How important are Fannie Mae and Freddie Mac for the mortgage market? "They dominate the market right now; if you turned it over to the private sector right now, it would be a calamity."
 
That something big – and potentially nasty – is coming is not hard to believe after listening to Dr. Elizabeth Lee Vliet and Marc Victor.
 
Dr. Vliet is an acclaimed expert on Obamacare, and has nothing good to say about it. The "Affordable Care Act" will indeed make health care more expensive, she said (Ron Paul quipped in his keynote speech that if you want to know what a government bill really does, just assume the opposite of its name).
 
But that's not the worst of it: Americans will actually lose their choice of treatment. Government-appointed panels will decide what kinds of treatment are appropriate for you, and if Dr. Ezekiel Emanuel (brother of Rahm Emanuel) has his way, many surgeries and other treatments will be "attenuated" (i.e., rationed) for those over 45. That means expensive procedures like hip replacement or triple bypass probably won't be approved.
 
"No problem," you say, "I'll pay for it myself, then."
 
But no, you may not even get surgery if you're loaded. According to Dr. Vliet, "hold harmless" clauses in many health insurance contracts prevent doctors and hospitals from providing care that government or insurance reviewers have deemed medically unnecessary. Most patients have no clue these provisions exist. So you have two options: suffer in silence (and die quietly, if you please), or become a medical tourist.
 
We're moving toward a single-payer system, as in the UK, said Dr. Vliet. "In the UK, if you suffer from macular degeneration, you have to go blind in one eye before you can get surgery to save your remaining eye." Prostate cancer, which is very treatable when taken care of early, has a 90% survival rate in the US. In the UK, with 18- to 24-month waiting lists, it's only 53%.
 
But it's not just our health care needs that will be completely run by the government, said Arizona criminal-defense attorney and liberty advocate Marc Victor: the police state is already upon us.
 
He's not one to mince his words: "If you believe that the Constitution is protecting you, let me tell you: the Constitution isn't protecting you from anything. It's merely words on paper; any creative lawyer can interpret them any way he wants."
 
If you have a car, they own you, he says. For example, if you get in a traffic stop with drug-sniffing dogs, there are two signs that the dog "alerts":
  • The dog changes its respiratory pattern;
  • The dog changes its posture.
In other words, "if the dog 'alerts' for any reason, or the dog's handler says it does, they're going to rip your car apart."
 
On a regular basis, Victor holds classes on what to do when you get pulled over in a traffic stop. "Most of my advice is about how not to get yourself killed, never mind the ticket. Don't try to get out of a ticket; just pay it and keep your mouth shut – you don't know who you're messing with."
 
You can hear all of the presentations and panel discussions – including detailed investment advice and specific stock picks from the Casey editors – via our Summit Audio Collection on CD and MP3. For just another few days, you'll save $100 by pre-ordering.

Hopeless, Not Serious

Posted: 14 Oct 2013 02:38 PM PDT

The US economy that is. And hope springs eternal for these market doomsters...
 
"AFTER listening to some of this morning's speakers, I made sure to program the number of the suicide hotline into my cell phone," real estate expert Andy Miller joked at the beginning of his speech, writes Shannara Johnson, chief editor at Doug Casey's research group, summarizing last week's Casey Research's investment summit 2013.
 
And legendary natural-resource investor and chairman of Sprott US Holdings, Rick Rule, quipped, "It's amazing – I actually get to be the positive guy here."
 
He summarized the main drift of the conference by paraphrasing behavioral psychologist Paul Watzlawick: "The situation is hopeless, but it need not be serious."
 
Rather than a reason to shy away from buying stocks, he reminded the audience, bear markets like the one we're seeing in gold right now are the greatest opportunity to load up on the best junior resource companies at fire-sale prices. You wouldn't insist on buying any other product when prices are high and shun it when it's on sale – so why act differently with stocks?
 
"You've already been through this," he said, "you've been through the pain. Why not hang on a little longer and actually enjoy the gain?"
 
That there's pain ahead became abundantly clear during Dr. Lacy Hunt's presentation, which ripped the rose-colored glasses off even the most blissful ignoramuses and received the vote for "most depressing speech" by many audience members.
 
HIMCO Executive VP Hunt – a high-profile speaker who served as senior economist at the Dallas Fed and as the chief US economist for banking giant HSBC – presented the dire facts in a pointed, easy-to-understand way. The cheerful title: "How Debt-Induced Monetary and Fiscal Policies Are Undermining the US Economic Prosperity."
 
Hunt is convinced that the US economic recovery is a sham. "Consumer spending," he said, "is at 2%, that's very low. We've seen lower percentages before, but never in a phase of economic expansion."
 
He compared economic growth throughout the entire US history with what we're seeing today. In terms of GDP growth – currently a pathetic 1.6% – we're only doing marginally better than in the 1930s, during the Great Depression.
 
Then he fired off charts with dismal graph lines and numbers, one after another:
  • The US birth rate in the last two years is the lowest since the 1920s and will soon lead to redundancies in elementary and then middle schools;
  • One out of 6.5 Americans is now on food stamps;
  • The number of 25- to 30-year-olds living with their parents is at 36%, an all-time high;
  • Federal debt is currently 100% of GDP, and the US government is $60 trillion in the hole on unfunded liabilities – the only way to feel good about this is to look at Europe, which is worse off at $70 trillion;
  • Unemployment is not getting better, capital spending is not getting better, and we're seeing a significant decline in US imports and exports, as well as the average American's standard of living;
  • Current Fed policy is making things worse, Hunt said. Corporate profits are down, capital spending and investment is down, and we're seeing "a significant decline in both US exports and imports." Median household income has dropped 3% and is now equal to that in 1995, and the personal savings rate is the lowest since 1929. 
If the Federal Reserve wants to phase out QE, Hunt said, there'll be tremendous exit costs. Even though studies from top researchers at Stanford, Princeton, and Berkeley have found that "an expansion of reserves contracts the economy," the Fed is like a runaway train. It's now so committed to what it is doing that despite the plethora of negative data, it just won't stop.
 
I sort of wish he still worked for the Federal Reserve – it'd be nice if they had at least one person with some common sense on their payroll.
 
James Rickards, Currency Wars author and senior managing director of Tangent Capital Partners, agreed with Lacy Hunt that all the talk of economic recovery is a bad joke: "If you want to know what a depression feels like, this is it."
 
He said most economists have been dead wrong in their recent forecasts because they assume we're in a normal business cycle – but this is anything but normal. According to Rickards' analysis, we're due to enter the second recession within this prolonged depression, which he believes will start in early 2014.
 
"Deflation is the Fed's worst nightmare," he said. To maintain a semblance of control over the economy, Bernanke & Co. have to manipulate Americans into behaving in certain ways – by keeping real interest rates in negative territory, they encourage people to borrow, and they use inflation expectation shocks to encourage them to spend.
 
In the last installment of the game, Rickards said, the Fed will employ the "helicopter money" tactic, putting more money directly into the hands of the populace by persuading the US government to provide tax cuts.
 
How did he manage to accurately predict that there would be no easing of the easing this year? Simple: "The Fed said, 'We taper if the economy grows according to our forecasts' – but their forecasts are always wrong."
 
He said Bernanke is playing a very dangerous game: "The Fed thinks it's playing with a thermostat, but in fact it's playing with a nuclear reactor, and if they do something wrong, they'll cause a meltdown."
 
Aside from money, it's indeed energy that makes the world go around – so the Energy Panel with Spencer Abraham, former US energy secretary, Lady Barbara Judge, chairman emeritus of the UK Atomic Energy Authority, Uranium Energy Corp. CEO Amir Adnani, and oil explorers Keith Hill of Africa Oil and Michael Greenwood of PRD Energy was one of the most raptly watched events of the Summit.
 
One of the topics was shale oil exploration and fracking, a topic that is becoming more and more critical for European countries striving to get out of Russia's energy chokehold.
 
Michael Greenwood said that PRD Energy, which is currently test-drilling in an oil-rich area in Germany, is moving cautiously. Unions and environmental groups in many European countries vehemently oppose fossil fuel exploration and fracking, but he believes that sooner or later, those countries will have to deal with these important matters of national energy security.
 
(As an interesting aside, the documentary Gasland, which created a worldwide anti-fracking hysteria, was funded by Abu Dhabi and Russian state-owned oil and gas company Gazprom.)
 
Lady Barbara Judge also sees a future for nuclear power in Europe, despite the current negative attitude, because "the CO2 story will make oil less and less attractive, and green energy doesn't work."
 
Africa Oil President and CEO Keith Hill agreed. Since the cheap, easy-to-extract oil is pretty much gone, he believes the oil price will go to $200 per barrel in the not-too-distant future. "Eventually oil is going to price itself out of the market. It's still the best energy out there, but in the next 20 years, other forms of energy will become more and more important."
 
Andy Miller, partner and co-founder of the Miller Frishman Group, stepped up to the podium to give a much-needed update on real estate. He believes that the housing market is headed into another recession.
 
"I don't see a recovery, I see a manipulated market," he said, pointing out that the US home market also has an impact on consumer spending and employment.
 
More and more single-family homes are now owned by large hedge funds and other institutional investors, and the government is forcing them to fix up the homes and rent them out. "When you buy a single-family home, all you can hope for currently is a 3% yield," said Miller. "So they're in it for an appreciation play."
 
It's a dangerous game, though: "First-time homebuyers and individual investors are a fickle crowd; they get out of the market immediately when the numbers don't work for them." And the recent rate increases have already removed a lot of purchasing power from buyers.
 
Overall, the news from the housing market is not that good:
  • New-home sales have fallen since 2008;
  • 20-22% of Americans are underwater with their mortgage, but Miller believes that the real number of "zombie homeowners" who can't sell or move may be around 40-45%;
  • Car and truck sales are trending up – a bad omen, said Miller, because "no one goes out and buys both a house and a new car."
His personal strategy: He circled 250 minor markets in the US and bought multi-family homes in resource-rich, booming regions.
 
How important are Fannie Mae and Freddie Mac for the mortgage market? "They dominate the market right now; if you turned it over to the private sector right now, it would be a calamity."
 
That something big – and potentially nasty – is coming is not hard to believe after listening to Dr. Elizabeth Lee Vliet and Marc Victor.
 
Dr. Vliet is an acclaimed expert on Obamacare, and has nothing good to say about it. The "Affordable Care Act" will indeed make health care more expensive, she said (Ron Paul quipped in his keynote speech that if you want to know what a government bill really does, just assume the opposite of its name).
 
But that's not the worst of it: Americans will actually lose their choice of treatment. Government-appointed panels will decide what kinds of treatment are appropriate for you, and if Dr. Ezekiel Emanuel (brother of Rahm Emanuel) has his way, many surgeries and other treatments will be "attenuated" (i.e., rationed) for those over 45. That means expensive procedures like hip replacement or triple bypass probably won't be approved.
 
"No problem," you say, "I'll pay for it myself, then."
 
But no, you may not even get surgery if you're loaded. According to Dr. Vliet, "hold harmless" clauses in many health insurance contracts prevent doctors and hospitals from providing care that government or insurance reviewers have deemed medically unnecessary. Most patients have no clue these provisions exist. So you have two options: suffer in silence (and die quietly, if you please), or become a medical tourist.
 
We're moving toward a single-payer system, as in the UK, said Dr. Vliet. "In the UK, if you suffer from macular degeneration, you have to go blind in one eye before you can get surgery to save your remaining eye." Prostate cancer, which is very treatable when taken care of early, has a 90% survival rate in the US. In the UK, with 18- to 24-month waiting lists, it's only 53%.
 
But it's not just our health care needs that will be completely run by the government, said Arizona criminal-defense attorney and liberty advocate Marc Victor: the police state is already upon us.
 
He's not one to mince his words: "If you believe that the Constitution is protecting you, let me tell you: the Constitution isn't protecting you from anything. It's merely words on paper; any creative lawyer can interpret them any way he wants."
 
If you have a car, they own you, he says. For example, if you get in a traffic stop with drug-sniffing dogs, there are two signs that the dog "alerts":
  • The dog changes its respiratory pattern;
  • The dog changes its posture.
In other words, "if the dog 'alerts' for any reason, or the dog's handler says it does, they're going to rip your car apart."
 
On a regular basis, Victor holds classes on what to do when you get pulled over in a traffic stop. "Most of my advice is about how not to get yourself killed, never mind the ticket. Don't try to get out of a ticket; just pay it and keep your mouth shut – you don't know who you're messing with."
 
You can hear all of the presentations and panel discussions – including detailed investment advice and specific stock picks from the Casey editors – via our Summit Audio Collection on CD and MP3. For just another few days, you'll save $100 by pre-ordering.

Busting Economic and Natural-Resource Myths

Posted: 14 Oct 2013 02:20 PM PDT

At the recently concluded Casey Summit, Louis James, Marin Katusa, and Rick Rule spoke with The Gold Report in a wide-ranging interview. Read on to learn about what's important and what's hype in today's natural-resource sector. Read More...

ECB Head Mario Draghi On Gold & Banking

Posted: 14 Oct 2013 01:46 PM PDT


14-Oct (Bull Market Thinking) — Tekoa Da Silva: "Dr. Draghi, what are your thoughts on gold as a reserve asset? You have central banks like China, Russia, increasing their reserves, especially over the last ten years. Germany for example asking for some of their holdings back from New York. It [gold] doesn't produce any income unless it's leased. So why do you think they would want that, and what value does it offer in your opinion?"

Dr. Mario Draghi: "Well you're also asking this to the former Governor of the Bank of Italy, and the Bank of Italy is the fourth largest owner of gold reserves in the world, which is out of all proportion to the size of the country. But I never thought it wise to sell it, because for central banks this is a reserve of safety, it's viewed by the country as such. In the case of non-dollar countries it gives you a value-protection against fluctuations against the dollar, so there are several reasons, risk diversification and so on. So that's why central banks which have started a program for selling gold a few years ago, substantially I think stopped…most of the experiences of central banks that have leased or sold the stock of gold about ten years ago, were not considered to be terribly successful from a purely money viewpoint."

…Bottom Line: A key takeaway from Draghi's commentary should be the point that while many still debate the value of gold as an asset class, and whether or not it remains in a bull market—central banks are quietly accumulating the metal in ton-sized increments, and as Draghi implied, with plans of never selling it.

When the president of a banking organization which arguably controls trillions of dollars (or euros in this case), indicates it to be "unwise" to sell core gold holdings—what more needs to be said for the individual?

[source]

Gold Daily and Silver Weekly Charts - Through the Looking Glass

Posted: 14 Oct 2013 01:29 PM PDT

Gold Daily and Silver Weekly Charts - Through the Looking Glass

Posted: 14 Oct 2013 01:29 PM PDT

Gold Seeker Closing Report: Gold and Silver End Near Unchanged

Posted: 14 Oct 2013 01:11 PM PDT

Gold climbed to as high as $1289.50 by a little after 8AM EST before it fell back off in New York, but it still ended with a gain of 0.2%. Silver surged to as high as $21.651 at one point, but it then fell back off for most of the rest of trade and ended with a loss of 0.14%.

Een gouden (Sand)storm?

Posted: 14 Oct 2013 12:44 PM PDT

Sandstorm Gold is één van de weinige Goud-Royalty bedrijven die er te vinden zijn. U heeft vast en zeker wel gehoord van de grote spelers (Royal Gold, Franco Nevada Gold, Silver Wheaton en anderen). Sandstorm Gold is echter een kleintje. … Continue reading

ECB Head Mario Draghi On Gold & Banking; Admits “Central Bankers Are Powerful—They Are Also Not Elected”

Posted: 14 Oct 2013 12:26 PM PDT

(Please scroll down for the full audio version of this post)

I had the chance a few days ago to speak with Dr. Mario Draghi, former Governor of the Bank of Italy & President of the European Central Bank(ECB).

During an open forum at Harvard's Kennedy School of Government, Dr. Draghi was kind enough to address one of my questions on gold, as well as comment on the intertwining relationship between central banking and host-government legislature.

Larry Summers, also in attendance, used the opportunity to promote Draghi's having "saved the European continent in 2012."

According to Summers,

"Churchill famously made an observation about never have so many owed so much to so few. Roughly in the same

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

Gold and Silver Through the Looking Glass

Posted: 14 Oct 2013 11:07 AM PDT

"A rogue does not laugh in the same way that an honest man does; a hypocrite does not shed the tears of a man of good faith. All falsehood is a mask; and however well made the mask may be, with a little attention we may always succeed in distinguishing it from the true face." Alexandre Dumas It was capping all the way today as stocks rallied back from overnight lows to close on the highs, while gold and silver were pushed down and went out near the lows.

Yellen Heading Fed very Bullish for Gold-Peter Schiff

Posted: 14 Oct 2013 11:00 AM PDT

Greg Hunter's USAWatchdog.com Dear CIGAs, Money manager Peter Schiff thinks the nomination of Janet Yellen as Fed Chairman is "very bullish for gold."  Yellen has admitted she did not see the 2008 financial meltdown coming which was caused by an enormous housing bubble.  Schiff goes on to say, "Not only was she not warning about... Read more »

The post Yellen Heading Fed very Bullish for Gold-Peter Schiff appeared first on Jim Sinclair's Mineset.

Historic Events Unfolding As West Becomes More Desperate

Posted: 14 Oct 2013 10:31 AM PDT

With an eery calmness in global markets, even with the continued chaos in Washington, today a man who has been trading major markets for over four decades told King World News, "Western manipulators are going to be crushed by the growing tidal wave of physical gold demand." He also spoke about the incredible and historic events which are now taking place. Below is what James Turk had to say in this powerful interview.

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

China Enjoying Gold Clearance Sale

Posted: 14 Oct 2013 10:31 AM PDT

Analyses of China's massive appetite for gold are everywhere lately, but the following chart, which appeared today in a GoldCore market update was especially striking because it compares 2013 demand with that of 2012 – which was a big year in its own right. Through August, China has imported 994 tons of gold through Hong Kong, versus 511 tons in the year-ago period. And that doesn't include the production of China’s domestic gold mines (300 or so tons, all of which stays within the country) and whatever else finds its way in through other ports. Assume monthly imports for the rest of the year average 100 tons, add in domestic gold production, and China will have accumulated at least 1,700 tons of gold in one year.

China gold imports

To put this in perspective, Germany claims gold reserves of a bit more than 3,000 tons (though much of this is stored in the US and has probably been loaned out and replaced with a financial asset called a "gold lease" which is only as valuable as the big US money center banks are solvent). So in one year China will have accumulated gold equal to more than half the reserves of one of the West's financial and industrial powers.

Why? Well, they could simply be investing in something they expect to go up, much like the typical American gold/silver coin buyer of the past few years. Or – way more interesting and probably more likely – they could be planning to back their currency with gold and push the dollar to the sidelines. One hint that a gold-backed yuan is being contemplated came in early 2013 when Yao Yudong of the Chinese central bank's monetary policy committee called for a new Bretton Woods system. Bretton Woods was the post-World War II fixed-exchange-rate system in which one currency – the dollar – was convertible to gold, while other currencies were pegged to the dollar. A new Bretton Woods-style monetary system, designed when China has the world's only gold-backed currency, would presumably have the yuan at its center and the dollar, euro and yen as mere satellite currencies.

More recently, China’s official press agency, Xinhua, published an article that calls for a "de-Americanized world” that includes a new reserve currency.

With the rest of the world annoyed by America's abuse of the limitless credit card that is an un-backed global reserve currency – especially the global surveillance state we've created with all that free money – it's not a surprise that lots of people would prefer a different system. And at the rate gold is flowing from West to East, it might not be long before the latter has the leverage to make it happen.

At which point we in the US would have to start living within our means. Since the difference between Washington’s tax revenue and its present spending and future commitments, when calculated honestly, is about $6 trillion a year, or roughly one-third of U.S. GDP, the cutbacks required to bring its finances into balance would be a lot like what Greece is going through. Except that we'll still have a printing press. Get ready to make history…

The direct economic impact of gold

Posted: 14 Oct 2013 10:15 AM PDT

14-Oct (PricewaterhouseCoopers) — This report addresses, for the first time, the direct economic impact of gold on the global economy, and does so in a way which is objective in stance and rigorous in its treatment of complex data. The report is unique in looking at an entire value chain, including gold mining, refining, and fabrication and consumption. It helps us understand the fundamental role that gold plays in advancing economic development and ultimately the needs of society.

Key findings include:

• Global gold supply reached 4,477 tonnes in 2012 with approximately two thirds coming from mining and one third from the recycling of gold

• The 15 largest gold producing countries, which accounted for around three quarters of global output, directly generated US$78.4 billion of gross value added (GVA) in 2012 – approximately equal to the GDP of Ecuador or Azerbaijan or 30% of the estimated GDP of Shanghai.

• Large scale, formal gold mining in the top 15 producing countries directly employed an estimated 527,900 people in 2012.

• Gold mining is a significant source of exports for some countries: in 2012, gold exports were 36% of all Tanzanian exports and 26% of exports in Ghana and Papua New Guinea.

• Limited data are available on the scale of the contribution of gold mining to the public finances: such evidence as exists suggests that mining royalties are only a small proportion of the total fiscal contribution of gold mining companies.

• The estimated GVA of global gold recycling is between US$23.4 billion and US$27.6 billion.

• The GVA per tonne of recycled gold is approximately US$16 million compared with approximately US$36 million for gold produced from mines.

In 2012, investment demand (consisting of bar and coin and gold-backed exchange traded funds (ETFs)) accounted for 35% of global gold demand, central bank gold purchases accounted for 12%, jewellery accounted for 43% and use in technology/manufacturing accounted for around 10% of gold demand.

• The 13 largest gold consuming countries in 2012 accounted for 75% of gold used for fabrication and 81% of gold used for (final) consumption, either in the form of jewellery or investment products such as small bars and coins.

• Their activities directly generate up to USS110 billion of GVA – approximately equal to the GDP of Bangladesh or half the GDP of Hong Kong or Singapore.

• The direct GVA associated with the fabrication of small bar and coin is estimated to be US$13.3 billion across the top 13 consuming countries whilst the direct GVA associated with consumption is estimated to be US$38.3 billion: these estimates are not additional since the estimated GVA based on fabrication will be included in the consumption based estimate.

• The direct GVA attributable to gold jewellery fabrication and consumption across the top 13 gold consuming countries is estimated at US$69.8 billion.

• The direct GVA attributable to gold's use in technology fabrication is estimated at almost US$4 billion (excluding the value generated by the retail component of these goods)

Overall, the GVA associated with the supply of and demand for gold is estimated to be in excess of US$210 billion across those countries in scope of this analysis: this means it is similar to the GDP of the Republic of Ireland or the Czech Republic or Beijing.

[source]

Born Libertarian: Doug Casey on Ron Paul and the Price of Freedom

Posted: 14 Oct 2013 09:45 AM PDT

The Gold Report: Doug, we are at your conference in Tucson, Arizona, the day after former Congressman and presidential candidate Dr. Ron Paul gave the keynote speech to a sold-out crowd. How did you two first meet? Read More...

The Daily Market Report

Posted: 14 Oct 2013 09:21 AM PDT

T-Bill Market Duress May Help Underpin Gold


14-Oct (USAGOLD) — Gold begins to week on a more positive note, but remains below $1300. Nonetheless, much of Friday’s losses have been recouped as the political wrangling continues just days before the Treasury Department’s defined x-date of October 17, where they lose the authority to issue more debt.

Nothing like the threat of an impending U.S. default to send short-term rates screaming in the direction of reality. Because let’s be honest here, years of zero interest rate policy (ZIRP) and the heavy hand of central bank asset purchases has left risk grossly mispriced here in the good ol’ U.S. of A.

The yield on a 4-week Treasury Bill has surged dramatically since the government shutdown commenced and Treasury Secretary Lew issued his dire warning about October 17. Bill yields surged from 0.03% on September 30 to a high of 0.46% last week (a level not seen since late 2008), before settling at 0.27% on Friday. The Treasury market is closed today for Columbus Day.

While 0.27% may still seem like a pretty reasonable rate for 4-week money, it’s an 800% increase in just over a week’s time. That type of volatility is reflective of a growing unease in the all-important Treasury market. It’s reminiscent of volatility seen in Greek, Portuguese, Irish, Spanish, Italian and Cypriot debt markets in recent years. It suggests that the U.S. crisis is very real.

Last week’s $30 bln 4-week T-bill auction, saw a 23bps jump in yields. That’s far worse than anything seen during the 2011 debt ceiling fight. Given the signals that Congress may seek to punt the problem a little ways down the road, there is starting to be some contagion further out on the yield curve.

There was a $65 bln 3- and 6-month bill auction last week as well, which “met some of the weakest demand in more than three years as investors grow more fretful about a possible default on the federal debt as Washington’s budget standoff drags on with no end in sight,” according to Reuters.

Primary dealers largely divested themselves of T-bills in the last couple weeks of September in anticipation of the twin crises in which we currently find ourselves embroiled. The Zerohedge blog reported that the last time primary dealers ditched short-term Treasuries with such abandon was during the 2011 debt ceiling crisis.

As we enter the third week of the government shutdown, with the x-date just four-days away, Congress doesn’t seem any closer to reaching agreements that would reopen the government and lift the debt ceiling. Stocks are under pressure today and gold is higher. When the Treasury market reopens tomorrow, investors will be looking for further signs of displacement, which may heighten the appeal of gold as the one true safe haven asset that has no counterparty risk.

The Most Qualified Fed Chair Since Arthur Burns

Posted: 14 Oct 2013 09:09 AM PDT

There's plenty of gushing about the Janet Yellen appointment as Federal Reserve Chairman. Yale economist Robert Shiller says she's "a real mensch." Greg Mankiw from Harvard says President Obama made a great decision in choosing her. "Reports of Janet Yellen's forthcoming nomination will be greeted well by market agents,” says David Kotok. "It should be."

However it was this endorsement which most caught my attention. "Yellen is quite simply more qualified for the job than any of her predecessors," claims Justin Wolfers with the University of Michigan. "She's an imaginative and technically adept economist possessed of a brilliant and precise mind." Wolfers continues, "Tonight, I feel reassured that my daughter's economic future is in good hands."

"Yellen is quite simply more qualified for the job than any of her predecessors,"

First we should take pity on any man who honestly believes a Fed Chair has the power to make a child's economic future bright. But he does make a living teaching economics and public policy so delusions like this aren't that unusual for someone in that profession. However, the "simply more qualified" quote has been used before and may shed light on a bleak future.

When Arthur Burns was nominated by Richard Nixon to be Fed Chair, Milton Friedman wrote in Newsweek, Burns "is the first person ever named Chairman of the Board who has the right qualifications for that post."

The previous Chairmen were in Friedman's words, "able, public-spirited men with high standards of integrity and service."  However, none saw the big picture, only having "experience in individual business or financial institutions," and none "had any training or special competence in the problems of the economy as a whole."

"Arthur Burns is at the right place, because of the extraordinarily important influence monetary actions exert on the economy as a whole–and also because the Fed is the preeminent financial institution in the world." Friedman went on to write the time was right for a man like Burns to change the Fed's "basic philosophy" and move the central bank "to a less restrictive policy."

The nominating of Burns started the dollar on the PhD standard as the gold standard was cast away not long after Burns took the job. The Columbia professor had no experience in the real world and Friedman, despite his free market reputation, believed Burns's experience was perfect to run the central bank.  His mentor's experience as a college professor and working for government is what had Friedman convinced.

Burns was Friedman's professor at Columbia and the two were close. Friedman wrote, "Save for my parents and wife, no one has influenced my life more than Arthur."

Like Burns, Janet Yellen has spent her career in academia and government. She was an assistant professor at Harvard in 1971–76 and was then an economist with the Federal Reserve Board of Governors. Yellen conducted research at the University of California, Berkeley's Haas School of Business and taught macroeconomics to full-time and part-time MBA and undergraduates students.

She's been President and Chief Executive Officer of the Federal Reserve Bank of San Francisco, and Chair of the White House Council of Economic Advisers under President Bill Clinton.

Burns believed he could fix economic problems with policy. He began to lay the groundwork for economic engineering, telling a congressional committee, "The rules of economics are not working the way they used to.  Despite extensive unemployment in our country, wage rate increases have not moderated.  Despite much idle industrial capacity, commodity prices continue to rise rapidly."

Burns gunned the money supply to jump start the economy in hopes of getting his boss re-elected.  When stagflation reared its ugly head, Burns blamed everything but his loose money policies.  "He thought that inflation persisted because it was ingrained in the attitudes of businessmen, workers, and consumers, and that an effective income policy offered the best way to change these attitudes," writes Burns biographer Wyatt Wells.

In a 1976 speech, Burns cited the business community's "exuberant mood" and "waves of speculation" as inflation causes. After leaving the Fed, in a lengthy speech delivered in Belgrade,  Burns conceded that central banks had been "participants in the inflationary process in which the industrial countries have been enmeshed, but their role has been subsidiary."

As F.A. Hayek pointed out in his Nobel acceptance speech, humans lack the knowledge to implement the correct monetary policy to achieve the outcomes desired. Hayek said, "If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible."

It is not possible for any one human to have the knowledge needed to accomplish the goals established for the Federal Reserve. No person can assure Mr. Wolfers' daughter her economic future will be bright. Ironically, that might only happen if Yellen took the job but then stepped aside to let the market determine interest rates and the flow of capital.

Given Yellen's views and experience, best case, the professor's daughter can look forward to a world of no-growth punctuated with the occasional banking crisis. In the worst case, Ms. Yellen will conjure up the memory of Arthur Burns.

Doug French
for The Daily Reckoning

Ed. Note: Whether Janet Yellen is a “good Fed Chair” or a “bad Fed chair” is really a matter of opinion. But that she accepted the post at all is probably not a good sign. That said, the markets will ultimately pay attention to her inevitable sound bites, and so we must. And that’s when you’ll be glad you’re a Laissez Faire Today email reader. The email edition of Laissez Faire Today offers readers unique opportunities (no less than 3) every day to discover specific profit opportunities – designed especially for liberty-minded, free-thinking investors. If that sounds like you, sign up for FREE, right now. Your next free issue is just a few hours away.

Original article posted on Laissez Faire Today

Gold recovers more than $20 of last week’s $50 drop

Posted: 14 Oct 2013 08:55 AM PDT

Gold recovered more than $20 of last week’s $50 drop on Monday as world stock markets fell ahead of this week’s technical default by the US government.

Read more….

Gold prices to be very volatile this week

Posted: 14 Oct 2013 08:55 AM PDT

Gold and silver suffered body blows last week, with U.S. sales contributing to the fall on Friday, says Julian Phillips.

Read more….

Nord Gold Q3 revenue up 1% year-on-year

Posted: 14 Oct 2013 08:55 AM PDT

The Russian gold miner says its third quarter revenues rose 1% year-on-year as higher gold production offset lower global prices.

Read more….

St. Augustine restructures Philippines copper-gold project

Posted: 14 Oct 2013 08:55 AM PDT

The company has restructured its stake in the $2 billion King-king project in southern Philippines in a bid to kickstart funding.

Read more….

The US Dollar Is Now Set To Plunge

Posted: 14 Oct 2013 08:55 AM PDT

With the US Dollar Index still trading very close to the psychologically key level of 80, today top Citi analyst Tom Fitzpatrick warned King World News that the dollar is now set to plunge. Below is the timely Fitzpatrick commentary, along with the chart which illustrates the dollar is set to take a major hit.

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

No comments:

Post a Comment