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Monday, October 21, 2013

Gold World News Flash

Gold World News Flash


Don’t Miss Out on These Important Charts

Posted: 21 Oct 2013 12:30 AM PDT

by Peter Degraaf, Silver Seek:

"The National Budget must be balanced. The Public Debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced, if the Nation does not want to go bankrupt. People must again learn to work, instead of living on public assistance." …..Marcus Tullius Cicero (+/- 55 BC).

The current correction in gold started in August 2011 and has now gone on for 112 weeks – (it most likely bottomed on June 28th).

This has been the longest correction since the current bull market started in 2002. The correction of 2006 lasted 71 weeks before a new high was reached. There followed then a 50% price rise, (+85% from bottom to the next top).

Read More @ SilverSeek.com

Report: Massive Vulnerability Detected In National Power Grids: “There Is No Way to Stop This”

Posted: 21 Oct 2013 12:00 AM PDT

by Mac Slavo, SHTFPlan:

If you think that our multi-billion dollar electrical power grids are secure and capable of withstanding a coordinated attack, think again.

According to one group of engineers, the grid is so vulnerable that it wouldn't even require a skilled hacker to compromise. In fact, when Adam Crain and Chris Sistrunk decided to test some new software they were developing they identified a vulnerability so serious that it could literally blind operational controllers to such an extent that they would be locked out of monitoring systems and unable to maintain grid integrity.

Read More @ SHTFPlan.com

China aiming for 'de-Americanized world’ with renminbi replacing dollar

Posted: 20 Oct 2013 09:54 PM PDT

By Andrew Critchlow
The Telegraph, London
Sunday, October 20, 2013

http://www.telegraph.co.uk/finance/commodities/10392620/China-aiming-for...

Given the scale of China's consumption of fossil fuels and raw materials, it is only a matter of time before the renminbi replaces the dollar as the primary currency for trading commodities and resources.

China has overtaken the United States as the world's largest oil importer and goods-trading nation. Over the next five years, it will surpass the rest of the world combined in its consumption of base metals.

Given the scale of the country's consumption of fossil fuels and raw materials, it is only a matter of time before the renminbi replaces the dollar as the primary currency for trading commodities and resources such as crude oil and iron ore.

The debt ceiling farce in Washington and China's growing reluctance to continue underwriting the US economy by buying up its bonds and adding to America's near $17 trillion (L10.5 trillion) debt mountain suggests that this tectonic shift in the global trade system could be just around the corner.

... Dispatch continues below ...



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Chinese state media are already calling for a "de-Americanised world." Some experts say that China is plotting to usurp the greenback's place in global commodities trade. Beijing's strategy hinges on quietly encouraging traders to bypass New York through the creation of a network of interlinked commodity markets based in the global financial hubs of Hong Kong and London.

"There can be little doubt from these actions that China is preparing herself for the demise of the dollar, at least as the world's reserve currency," writes Alastair Macleod, head of research at GoldMoney. A further signal that policymakers are beginning to warm to the renminbi playing a greater role in the global economy came last week when Chancellor George Osborne unveiled a historic deal to allow British investors direct access to China's markets and allow Chinese banks to expand operations in the UK.

The historic pact will also place the City, already the centre for global metals and foreign exchange trading, at the forefront of the race to capture more business denominated in the yuan.

In the world's major mining hubs such as Australia, resource companies are already taking advantage of new legislation that allows invoicing and trade settlement directly in renminbi, a process which completely cuts the US dollar out of the equation.

HSBC predicts that the Chinese currency will be the third-largest unit used for trade by 2015 and fully convertible within the next five years as the People's Bank of China gradually liberalises policy.

"The flow of transactions conducted in RMB [renminbi] will only continue to grow," said Frederic Vilsboe, head of commodity and structures trade finance for Europe, Middle East and Africa at HSBC in London.

Among the Organisation of Petroleum Exporting Countries, which controls a third of the world's supply of crude, members such as Iran -- constrained by sanctions -- are already agitating for a shift away from pricing in US dollars. China's oil imports set a record last month, with official figures showing that 6.47 million barrels a day of crude flowed into the country.

The scale of China's existing and forecast demand for resources almost makes any attempt by the US to maintain the dollar's status as the world's primary trading currency for resources entirely nugatory. Wood Mackenzie estimates that China will account for 52 percent of base metals demand by 2017, compared with 46 percent of the 96-million-tonne global market this year.

The Edinburgh-based company forecasts that the world's second-largest economy, will be consuming more base metals than the rest of the world combined by 2017 as the process of urbanisation that started at the beginning of the last decade continues. Of course, there are risks, not least China's ability to sustain the rapid rates of growth achieved since the country opened its economy after joining the World Trade Organization in 2001.

Politically too Beijing faces suspicion on the world stage but, if authorities in Beijing can continue to grow the economy, it is almost inevitable that traders will soon be quoting commodity prices in yuan, not dollars.

* * *

Join GATA here:

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:

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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



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Eric Sprott, Grant Williams, and Egon von Greyerz at King World News

Posted: 20 Oct 2013 09:40 PM PDT

11:39a ICT Monday, October 21, 2013

Dear Friend of GATA and Gold:

In an interview in two segments with King World News, Sprott Asset Management CEO Eric Sprott marvels at the dichotomy between demand for gold and silver and the decline of futures prices:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/19_B...

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/20_B...

Singapore fund manager Grant Williams, also interviewed by King World News, does the same thing:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/19_P...

And Swiss gold fund manager Egon von Greyerz tells KWN that the world is starting to reject the U.S. dollar:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/19_H...

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



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Join GATA here:

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

The Time Has Come To Fully Diversify: Retreating From Banks And From The Dollar Itself

Posted: 20 Oct 2013 09:15 PM PDT

from Survival Blog:

The recent political crisis over the delayed raising of the U.S. debt ceiling was just a precursor of a much larger crisis that will occur when interest rates inevitably rise. Once they do rise, it will become impossible for the Federal government to service its debt without massive monetization and concomitant mass inflation. There may also be some draconian stopgap measures such as levies on bank accounts (a.k.a. “bail ins”), nationalization of private pension funds, nationalization or forced common stock purchases for IRA and 401(k) plans, currency controls, bank holidays, bank withdrawal limits, currency recalls, limited access to safe deposit boxes, IRA and 401(k) withdrawals limits, and perhaps even another ban on privately held gold bullion.

For the past seven years I have urged my readers to diversify their investments out of U.S. Dollars and into tangibles. I am now repeating that with an even greater sense of urgency. It is high time to deliberately draw down you bank accounts and stop rolling over your CDs. I now urge my readers to gradually withdraw as much cash as you can, leaving only as much in your checking accounts as you need to pay your monthly expenses and to make your tax payments.

Read More @ SurvivalBlog.com

Which Is the World’s Safest Major Currency – You’ll Be Surprised

Posted: 20 Oct 2013 09:04 PM PDT

fiat-currencyThe term 'safe fiat currency’ is as intellectually disingenuous as terms like 'fair tax' or 'government innovation' but, as we've been exploring recently why modern central banking is completely dysfunctional, it does beg the question– is any currency 'safe'? Let's look at the numbers for some data-driven analysis. Words: 575

So writes Simon Black (sovereignman.com) in edited excerpts from his original article* entitled Here's some hard data on the 'safest' fiat currency.

[The following article is presented by  Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample here – register here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Black goes on to say in further edited, and paraphrased in some instances) excerpts:

What Makes a ‘Safe’ Currency?

A nation's currency is issued by its central bank and a central bank is structured like any other bank– it has assets and liabilities. On the asset side of the balance sheet are things like government bonds and gold….Its liabilities include the nation's money supply, technically known as central bank 'notes'. Look at those US dollars, Canadian dollars, British pounds, etc. in your wallet. You'll see they're actually 'notes' issued by the central bank, i.e. liabilities.

1. A Central Bank’s capital ratio: Just like any other bank, healthy central banks hold portfolios of high quality assets and those assets should exceed liabilities by a substantial margin. This is known as a bank's capital ratio, and it represents a bank's margin of safety in the event of a crisis. Consequently, 'safe' currencies are issued by well-capitalized central banks with a high capital ratio.

2. A government’s balance sheet: It's also critical to check the government's balance sheet [because] central banks that get in trouble will require a government (i.e. taxpayer) bailout and heavily indebted governments won't have the ability to do this.

The U.S. Dollar

[The two points above] automatically eliminate the U.S. dollar because the Federal Reserve's capital ratio is a laughable 1.53% and, since the U.S. government's debt is nearly $17 trillion, there's no chance Uncle Sam can bail out the Fed.

The British Pound, Euro, Japanese Yen and Canadian Dollar

This reasoning also eliminates the British pound, euro, and yen. Even the Canadian dollar is not in good shape given the country's debt level and the razor-thin capital (0.53%) at the Bank of Canada.

The Singapore Dollar

Singapore is an interesting case. In its just-published annual report, the Monetary Authority of Singapore announced that it lost $8 billion last year trying to keep its currency depressed against the US dollar. This is astounding… and suggests more than anything that this absurd dollar-centric fiat system is on the way out.

Singapore's central bank balance sheet is still in much better condition than the West with a 7.2% capital ratio and the government there has zero net debt, so the Singapore dollar is far safer than the dollar or euro.

The Safest Major Currency Is the Norwegian krone

Looking at the numbers, the answer is simple. It's the Norwegian krone.

  1. Norway's central bank, which issues the krone, has among the highest capital ratios of any central bank in the world at 23.3%.
  2. The Norwegian government has zero net debt, i.e. its total financial assets far exceed debt.
  3. Norway isn't part of some supranational body like the European Union, which means that Norway cannot be stuck with some other nation's liabilities (just as we see Luxembourg stuck with a share of Greece's bailout)
  4. The krone is not pegged to any other currency, so it can't be dragged down with a sinking ship.

In a paper currency system controlled by a tiny banking elite, the Norwegian krone is as 'low risk' as it gets. (Bear in mind, however, that this analysis does not suggest that the Norwegian krone is ideal for speculation or investment gain… but rather the fiat currency with the sturdiest fundamentals in the event of a global crisis.)

[Editor's Note: The author's views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]

*http://www.sovereignman.com/finance/heres-some-hard-data-on-the-safest-fiat-currency-12460/ (© Copyright 2012 Sovereign Man, All rights reserved)

Related Articles:

1. Shift From U.S. Dollar As World Reserve Currency Underway – What Will This Mean for America?

6 Comments

Today, more than 60% of all foreign currency reserves in the world are in U.S. dollars – but there are big changes on the horizon…Some of the biggest economies on earth have been making agreements with each other to move away from using the U.S. dollar in international trade…[and this shift] is going to have massive implications for the U.S. economy. [Let me explain what is underway.] Words: 1583 Read More »

2 Comments

The least imperfect monetary system by which civilized nations can conduct their business is the classical gold standard – a system in which every major nation defines its currency as a weight unit of gold. [Let me explain.] Words: 890 Read More »

3. Fiat Currencies from Around the World: An Interactive Quiz

Paper money was first used by the Chinese during the Tang Dynasty in 806 AD–500 years before Europe began printing money in the 17th century. It would be another 100 years before America started circulating a national paper currency…. How familiar are you with banknotes from around the world? Read More »

The post Which Is the World’s Safest Major Currency – You’ll Be Surprised appeared first on munKNEE dot.com.

Gold: Rattle Snake Investing With Marin Katusa of Casey Research

Posted: 20 Oct 2013 08:10 PM PDT

Weekend Report...The 'Dollar Diamond Top': Implications for the Precious Metals

Posted: 20 Oct 2013 07:13 PM PDT

In this Weekend Report I would like to show you some charts as to why I have made an abrupt short term move out of our short positions in the precious metals complex. I know some of you think I have lost my mind but I can assure you that ... Read More...

Alasdair Macleod Warns A Currency Crisis Is Dead Ahead

Posted: 20 Oct 2013 06:24 PM PDT

Submitted by Adam Taggart of Peak Prosperity,

This week's podcast interview introduces a new monetary measurement developed by Alasdair Macleod: the 'Fiat Quantity of Money', or FMQ.

Alasdair explains how FMQ is derived, as well as what it can tell us about the true levels of fiat money supply. In the case of the dollar, it reveals that levels are far above what is commonly appreciated – so far, in fact, that a currency crisis could arrive sooner than even many dollar bears expect.

 

What 'Fiat Money Quantity' (FMQ) Is Signaling

I started off with the desire to put together a metric of money which allows me to compare sound money with fiat money. My approach to this was to look at what happens in how fiat money was created.

 

It originally involved the money substitute. In other words, you and I or our great-grandfathers or our great-great-grandfathers would deposit gold in the bank for safekeeping. The bank would give them either notes, which they could then cash anywhere where it was accepted where that bank's credit was valuable, or alternatively, it would give them an account – a deposit account – which would show that yes, the bank holds the gold on your behalf. That was the starting point. So that was how deposits and cash were originally created as money substitutes.

 

Then the next thing happened: Central banks were invented. What happened was that they took over the note-issuing monopoly. They were given, by the government, essentially a monopoly. In return for that, all of the banks within the central bank's system would take the gold that was originally deposited and move it into the central bank in return for – guess what? – deposit accounts and nice new bank notes.

 

So really what I wanted to do was to quantify that process [by creating the FQM]. It involved taking cash, all of these instant-access deposits, or deposits which are readily accessible, plus the deposits that the banks have at the central bank, because that is money just the same as your deposit account is in your bank; it is exactly the same in that sense. If you look at that, you get some very interesting statistics.

 

Going from 1960 to the month before the Lehman crisis in 2008, the average exponential growth rate was around about 5.9%, year in/year out. It followed that track very closely. Then of course we had TARP and all of the rest of it.

 

And then we had QE. And guess what? The level of fiat-money quantity is now over 60% above that long-term trend line. Now, if we stand back unemotionally and look at that chart, we would say that this is monetary hyperinflation.

 

Here we have this situation now where the Central Bank, the Fed, is having to produce money to finance the government deficit. It's having to produce money to keep interest rates down so that the banks don't have balance-sheet problems. And if it slows down in that production of money, and even if it doesn't increase the rate of the production of that money, then our world is going to come to a rather nasty halt.

 

It looks like not only are we in a debt trap, but we are in a hyperinflationary trap, potentially. We need someone who is really quite strong and understands these things to be able to stand on the system and say, no more!

 

So my question to you, Chris, is, can anyone do that? Do you think Janet Yellen will do that?

 

One of the things that's interesting in this, which I think is a dynamic that is going to play out over the next few months, is, here we are expanding a quantity of money hugely. But at the same time, what we're not seeing is the prices of raw materials, of things like that really reflecting that expansion of money. Now, there is always a time lag between the two effects. But actually we are seeing this effect on certain things, and in a way in which one would expect. That is that asset prices, particularly things like property, are beginning to rise.

What FMQ Indicates for Gold

The one thing which I think is being triggered is gold. We had a good rise today. We had about a $40 rise. Now I think that this is something quite significant, really, for a number of reasons, but if I go back to my FMQ (fiat money quantity), if I adjust the price of gold from just before Lehman Brothers went under, I think I'm right in saying that in July 2008, the price of gold at the close of that month was $918/ounce.

 

Now, if you adjust that price by the extra fiat money quantity that is now in circulation, gold has actually gone down, in real terms if you like, by about 30%. Put another way, if the price of gold was to match in real terms that $918 level, it would today be about $1,860. So we have this extraordinary thing where gold, for whatever reason, has become extremely undervalued compared to where it was before Lehman Brothers went under. Now this is important, because before Lehman Brothers went under, not many people actually understood systemic risk. So the price of gold did not really include the weighting for systemic risk.

 

The other thing I would say is that since then, with our FMQ having taken off, there is a substantial hyperinflation risk that is going to affect prices somewhere down the line. And yet, gold is trading at a discount of 30% to where it was before all of this happened, so it is horribly mispriced.

Click the play button below to listen to Chris Martenson's interview with Alasdair Macleod 45m:56s):

Click here to read the full transcript

JPY Drops, Nikkei Pops On Japan's Worst Trade Deficit On Record

Posted: 20 Oct 2013 05:20 PM PDT

You have to laugh really... We presume the rally in Japanese stocks and weakness in the JPY reflects an assumption that this dismal miss for both imports and exports - leaving Japan's adjusted trade deficit the worst in Bloomberg's 20 year history - means moar Abenomics. Of course, the headlines will be all about Abe's 'any minute now' comments or Kuroda's 'just one more quarter' hope (as he speaks later today) but the reality is that things are not getting better in the radioactive nation as this marks the 30th consecutive trade deficit... but, like Venezuela, when has that even been reason not to buy stocks... S&P futures are up 2.5 points (below Friday's highs still for now), gold has given back its earlier gains and is unchanged, and Treasury Futures are down a tick.

 

For the 30th consecutive month, Japan ran a trade deficit and this time it was the biggest ever as imports rose 16.5% YoY (missing the 19.9% YoY expectations by the most in 15 months) and exports rose 11.5% (missing the 15.6% YoY expectations by the most in 14 months)...

 

But of course, you buy stocks and sell the JPY on that shit-aweful news... (this is not catch up to US equities as it is an extension of the futures market's gains from Friday...)

 

 

Charts: Bloomberg

What the Republican Civil War Means For Gold

Posted: 20 Oct 2013 04:00 PM PDT

Dollar Collapse

The Shocking Reality Of The World Today

Posted: 20 Oct 2013 03:41 PM PDT

On the heels of the US continuing to lose credibility around the globe, today 40-year veteran, Robert Fitzwilson, wrote about the shocking reality of the world today. He also discusses what this reality means for key markets such as stocks, bonds, gold, silver, energy, as well as other commodities. Fitzwilson, founder of The Portola Group, put together another tremendous piece below for KWN readers around the world.

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

Caxton: Goodbye To The Self-Sustaining Recovery

Posted: 20 Oct 2013 02:31 PM PDT

"It's clear to us now that the US economy just isn't going to reach escape velocity," said Andrew Law, head of Caxton Associates (one of the hedge fund industry's most successful money managers) in a wide-ranging and rare interview with the Financial Times. "Tapering is off the table for the foreseeable future." As we have explained numerous times, Caxton notes the Fed has little option but to continue its policy of extraordinary monetary easing indefinitely, adding "what happened [last week] was just another can kicking exercise. The problem has not been solved and the hopes for a grand bargain are in tatters." Simply put, he concludes rather dismally, "there are no incentives for the corporate world to go out and spend right now..."

Via The FT,

One of the hedge fund industry's most successful money managers has warned that dysfunction in Washington has damaged the US economy, leaving the Federal Reserve with little option but to continue its policy of extraordinary monetary easing indefinitely.

 

"It's clear to us now that the US economy just isn't going to reach escape velocity," said Andrew Law, head of Caxton Associates, in a wide-ranging and rare interview with the Financial Times. "Tapering is off the table for the foreseeable future."

 

...

 

Mr Law's stark outlook for the US contrasts with widely-held expectations that the US economy will bounce back quickly in the coming months. Most investors and Wall Street analysts expect the Fed to begin "tapering" its programme of quantitative easing in December.

 

...

 

The 47-year old Mr Law said the shutdown and debt-ceiling debate in Washington had "undoubtedly" caused damage to the country's economy.

 

"What happened [last week] was just another can kicking exercise," he said of the political deal reached between Democrats and Republicans in Washington to raise the cap on the government's ability to borrow. "The problem has not been solved and the hopes for a grand bargain are in tatters . . . the lack of visibility is very damaging."

 

...

 

"We just don't see how the economy is going to accelerate in the foreseeable future," he said.

 

"Sequester spending cuts, the debt ceiling and shutdown have all taken their toll . . .  there are no incentives for the corporate world to go out and spend right now . . . that, and the housing market are critical. You've already seen earnings release statements for companies mentioning shutdown as a reason for a drop-off in orders."

 

The grim outlook, while contrarian, is shared by a number of hedge funds.

 

...

 

Caxton also believes the dollar will continue to weaken against the euro – potentially precipitating a currency fight with the eurozone.

 

"It will be fascinating to see how the ECB [European Central Bank] responds," said Mr Law, adding that one likely option for Frankfurt would be for it to lower rates. "They are not going to be too pleased [with a weakening dollar],"

Billionaire Sprott - Stunning Surprise In The Silver Market

Posted: 20 Oct 2013 01:20 PM PDT

 

In the aftermath of significant volatility in both the gold and silver markets, billionaire Eric Sprott told King World News there is a stunning surprise in central planners’ war against silver.  The Canadian billionaire also spoke about the enormous implications of this surprise for silver investors around the world.  Below is what Sprott, who is Chairman of Sprott Asset Management, had to say in part III of this remarkably powerful interview series.

Eric King:  “Eric, for the silver bulls that are out there, what about the silver market?”

Billionaire Sprott - Stunning Surprise In The Silver Market

Posted: 20 Oct 2013 10:39 AM PDT

In the aftermath of significant volatility in both the gold and silver markets, billionaire Eric Sprott told King World News there is a stunning surprise in central planners' war against silver. The Canadian billionaire also spoke about the enormous implications of this surprise for silver investors around the world. Below is what Sprott, who is Chairman of Sprott Asset Management, had to say in part III of this remarkably powerful interview series.

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

Gold and Silver – Back Story vs Charts; Charts Are Superior

Posted: 20 Oct 2013 08:59 AM PDT

Almost everybody wants a back story, some information to explain what is going on with gold and silver, mostly looking for some kind of psychological calm as prices decline, or a ray of hope to reinforce why price may reach the sun and the moon. Is there anything that has not been presented, repackaged and represented that has not already been more than fully covered to justify much higher price levels? Have any of them achieved what was promised?

Instead of exceptionally higher prices, as a counter to the exceptionally dire reports of the demise of central banks, their [lack of] gold holdings, the precipitously low COMEX and LBMA inventories for the metals, the inability to make good on deliveries over the past few months, etc, etc, prices continue to probe the recent lower levels without any signs of a turnaround. Guess those valid "fundamental" reasons were insufficient to lift prices up.

What about the state of the United States? It's broke, and broken. The acknowledged national debt is around $17 trillion, or about $53,000 for every man woman and child in the country. The real debt is more like $125 trillion, and that equates to about $360,000 that every man, woman, and child is responsible for paying. Are you willing to pay that amount, the one your government has run up for you with the prodding of the NWO's Federal Reserve central bank? Is the world's "richest" [richest in terms of debt] country that has not been paying its bills enough of an impetus to send gold and silver higher?

Apparently not.

What about King Draghi? As bad a shape as the US is in, Europe is worse. Last week, he just informed the world that steps would be needed to "recapitalize" the banks. Does anyone not stop and demand accountability for the previous capital the banks lost? And why are bank depositors responsible for bailing-outs through bail-ins? Why aren't the bankers making up for their own losses, or going out of business like an non-banking entity would do when faced with insurmountable losses?

Back to Draghi. He and his other unelected band of thieves that form the EU in Brussels have decided:

"The effectiveness of this exercise will depend on the availability of necessary arrangements for recapitalizing banks … including through the provision of a public backstop," Mario Draghi explained on Friday to set the mood for today's meetings. "These arrangements must be in place before we conclude our assessment."

The "assessment" under consideration is just how severely broke and illiquid the already failed banks are and how much will be required, how did he express it? Yes, "through the provision of a public backstop." Be prepared for more financial rape and pillaging, for it is sure to come.

The most reliable current story is found in the charts. Why is this so? Like we say, do not listen to what people are saying about the markets, listen to what the markets are saying about the people.

The higher the time frame, the more controlling the information because it takes a lot more effort over time to evince a change. Price has been put into a context between the current important current levels of resistance and support. Once price broke the 1525 area, last April, that support became resistance, and the market announced to the world that sellers were now in total control.

The overall trend, since 2008 and earlier, is up but weakened on the monthly time frame. April is when the central bank/JP Morgan moved to force price lower. Artificially or just plain manipulation does not matter, for the effort succeeded, despite all the positive news, you know, those things people were saying about the market. The market had a different message.

In May, on the same level of high volume as the previous month, the bar narrowed significantly. Buyers were meeting the effort of sellers, which is why that bar did not extend lower. However, the fact that the location of the bar was at the lower half of the April range, and the close was well under April's, told us that buyers won that battle, but the war was not over, as the next month clearly showed.

June saw another central bank-sponsored "intervention" to suppress the price of gold, [in order to keep the fiat Federal Reserve Note propped up]. Price closed poorly on another wide range down bar. The decline continues.

Well, not in July, [4th bar from right]. Not only was there no further downside, the exact opposite of reasonable expectations, the volume increased and price closed near the high. Clearly, buyers won another battle. The terms "battle" and within a "war" are apt, because what we are seeing now is a struggle between buyers and sellers which is in contrast to sellers having previously been in total control.

As was said, it takes more effort and time to effect a change on this higher time frame, and what you see, since the June decline, are overlapping bars within the June range, a sign of struggle between the forces of supply and demand.

The August rally, 3rd bar from right, had a decrease in volume which meant less buyers, even though price closed higher, again, but stopped at the June range high, evidence of ongoing resistance. However, we may be seeing a subtle change in behavior. The last two bars have narrowed while in a relatively slight decline mode, October still in progress.

While August showed a decrease in volume and the rally stopped at the June high, the last two months' total volume is much great than that of August, yet two months of effort to get price lower has not worked. Recall the most recent assault on gold, a 2,000,000 ounce sell order at one time. It does not even register on the chart, unlike the similar blatant sells in April and June.

The monthly chart is telling us the downside momentum has lost momentum. This can change in the next few days or few weeks, but the future has not yet happened, so we can only deal with what is known, at this point in time. With this context, we look to the lower weekly and daily time frames to see if a clearer message emerges.

gold price chart monthly 18 october 2013 price

The lines connecting the recent swing highs and lows shows how the momentum has slowed. The net decline at "D" is far less than the decline from "A" to "B." Notice the two bars leading into the lows at "B" and "D," both wide range with little to no overlap. The current decline into "F," [? = may or may not be over], has overlapping bars, the opposite of previous lows and in keeping with the small sign of potential change evidenced on the monthly chart. What is lacking in both time frames is confirmation of an actual change.

gold price chart weekly 18 october 2013 price

The comments on the daily shows the interchange of past behavior being somewhat determinative of future behavior. The development on the left side of the chart, A, B, C, D, gave reason for why the recent activity unfolded as it did, on the right side of the chart.

After the failed probe lower, [4th bar from right], an indication that sellers failed to show up when it was opportune to drive price lower, [like a 2 million oz order was not enough], we get confirmation of sellers being AWOL with Friday's strong rally, strong close, and increased volume. Just as one swallow does not a summer make, one bar, especially on this lower time frame, does not a bull market make, but it is a sign of change.

The rally did stop at/below two small failed rally highs. What will be key is how price corrects Thursday's rally bar. Maybe we should have labeled it D/S, Demand over Supply, for it is warranted by that show of activity. If it is real, we should see smaller bars and less volume on any retest of the bar, classically. If volume does increase, the largest increase should occur at/near the low of the correction. Time will tell.

gold price chart daily 18 october 2013 price

The analysis for gold facilitates an easier read for silver, under similar circumstances, but silver still showing a greater propensity to hold its recent lows. The lows can still give way, but sellers will have to show up with greater sway that is being evidenced by buyers.

The level of support is at a stronger support level than for gold. Keep in mind, however, the fact that gold has not declined as far into a past support range makes a greater bullish statement for that very reason.

The August rally, [3rd bar from right], is being retested by smaller ranges, what one would expect to see if a retest of a recent rally bar is to successfully hold. October has not yet finished, so the reservation of anything can happen remains in play, for the upside as well as the downside.

silver price chart monthly 18 october 2013 price

We deemed the breakout gap important when it happened, and while the gap was filled, one can count the fill in minutes before price rallied back higher, so it remains significant.

The clustering of closes is usually consolidation before price resumes the previous trend, OR it can signify a turnaround. The tight closes and overlapping of bars for the past six weeks lets us know of the balance, [still viewed as a battle with no declared winner, yet], and from balance comes unbalance. The farther price moves along the RHS [Right Hand Side] of any trading range, the closer is the resolve. The fact that last week was a KR one, [Key Reversal], and the highest close of the past six weeks, speaks to buyers attempting to wrest control from sellers.

silver price chart weekly 18 october 2013 price

Previously, we said price needs to get above 22 and demonstrate an ability to hold. It is close, and you can also see 22.50 creates the same agenda of proof. The daily trend has weakened, from a sellers perspective. The burden of proof for change remain with buyers.

Expect to always see evidence of change in the charts, first. On that you can rely.

Continue, maybe even with a far greater sense of urgency, to buy and personally hold, both physical metals, gold and silver. No one can accurately measure when central bankers will lose total control, but the signs are building. When the ultimate pressure is too great to contain, price will explode upside, leaving behind those who thought they were smart enough to get a better price or "see" more evidence of the obvious.

silver price chart daily 18 october 2013 price

US Happily Digs its Own and Dollar's Grave

Posted: 20 Oct 2013 06:32 AM PDT

Yet another budget crisis in the U.S. has made many people around the world, even those, who consider themselves indifferent to the vicissitudes of political controversy and global economic problems, wonder what is going to happen to the American dollar. The shutdown in the US - the controlled suspension of most public institutions due to the inability of the federal authorities to finance them - raised concerns not only with financial, economic elites and politicians all over the world, but with mere mortals as well. In Russia, many started talking about the looming collapse of the US financial system, the collapse of the dollar and the collapse of the entire global financial system. Some even said that the United States may switch to the new currency - amero - to get rid of the incredible national debt, which has exceeded the level of 17 trillion dollars.

Gold and Silver Back Story vs Charts; Charts Are Superior

Posted: 20 Oct 2013 06:07 AM PDT

Almost everybody wants a back story, some information to explain what is going on with gold and silver, mostly looking for some kind of psychological calm as prices decline, or a ray of hope to reinforce why price may reach the sun and the moon. Is there anything that has not been presented, repackaged and represented that has not already been more than fully covered to justify much higher price levels? Have any of them achieved what was promised?

Gold and Silver Big Moves In and Out of Comex Bullion Warehouses

Posted: 20 Oct 2013 05:47 AM PDT

Yesterday saw two big withdrawals of gold bullion from the Comex warehouses. 62,050 ounces came out of HSBC and 16,556 ounces left Scotia Mocatta, both out of eligible storage. But never fear, JPM came to the rescue with a whopping deposit of 192,900 ounce of gold bullion into eligible storage. I wonder where that came from. Wink wink, nod nod.

Gold: Rattle Snake Investing with Marin Katusa of Casey Research

Posted: 20 Oct 2013 03:42 AM PDT

Marin Katusa: Ten years? Well usually when I do my personal investments, I like to go for five to seven years. I'll tell you the story of when I started Copper Mountain team. I found these great...

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Gold Investors Weekly Review – October 18th

Posted: 20 Oct 2013 02:04 AM PDT

In his weekly market review, Frank Holmes of the USFund.com discusses the strength, weakness, opportunity and threat for gold investors.

The yellow metal recovered from past week’s losses. Gold closed the week at $1,316.18 which is $44.07 per ounce higher (3.46%). The NYSE Arca Gold Miners Index went 5.56% higher.

Gold market strengths

  • James Steel of HSBC argues that the debt ceiling resolution left investors sufficiently uncertain as to whether the suspension of the debt ceiling only delays another showdown in Congress come February. An important factor that acted to move gold on Thursday was a trade in the early hours of the New York morning, when gold trading is very thin, and a wave of buy orders worth over $2.3 billion surged into the market. Prices soared, puzzling many traders who have been rattled by a series of similarly abrupt, and largely unexplained, trade surges over the past two weeks. The key difference this time around is the fact that the overnight spike occurred at around the same time as Chinese rating agency Dagong's downgraded the United States credit rating to A- from A. Reuters reports the agency suggested that, while a default has been averted by a last-minute agreement in Congress, the fundamental situation of debt growth outpacing fiscal income and GDP remains unchanged. Dagong’s ratings are hardly followed outside of China, yet they must have a respectable following capable of a $2.3 billion buy order.
  • VTB Capital reports Russia's first gold-backed ETF "The FinEx Physically Held Gold ETF fund" has been launched by FinEx Group and the Moscow Exchange. The new ETF is listed on the Moscow Exchange and cross-listed on the Irish Stock Exchange. The new ETF is following a similar product launched in Shanghai, while seeking to benefit from Russia's increasing gold jewelry demand which rose 7.6 percent in 2012.

Gold market weakness

  • St. Joseph Partners weekly gold review brought to our attention an interview with Paul Singer, founder of $20-billion Elliott Management Corporation, which has had only two down years since its inception in 1977, and whose returns have roughly exceeded the markets by 40 percent over that period. In the interview, Singer remarks that his company has direct beneficial owners of about 130 million people, who in turn control several trillion dollars. His clients range from sovereign wealth funds to pension funds and endowments, meaning he has a wide investor base. However, the most concerning comment of his interview is the fact that out of his client base, Singer has yet to find one who has any position hedging them against inflation. Singer as a seasoned market veteran is aware that the first wisps of inflation are hard to detect, but those wisps may cause a self-reinforcing move in markets and have the potential to cause an "electrifying" move in gold because of the narrow, non-expandable supply of gold. Singer states that those who are under-invested in gold, and who think they can predict when the tide will turn, are making a large mistake.
  • Scotia Capital predicts most mining company gold reserves and resources will be generally lower for the upcoming year-end reserves estimates as gold price assumptions will be lower than 2012 reserve estimates. In general, Scotia Capital also expects reserves will decline as higher cost ounces are removed, with the silver lining that these will result in an overall improvement in grade and profitability.

Gold market opportunities

  • Over the past 20 years, gold bullion is down 2 standard deviations (sigma) year-over-year as of October 11, 2013. A reading of 2 sigma or lower is an extremely rare occurrence, happening only 21 times over the last 20 years, or 0.04 percent of the time. The most curious fact is that these 21 occurrences all happened within the last four months. This analysis leads us to believe that gold is in extremely oversold territory and mathematically due for a reversal toward the mean. Often, when gold prices plummet, fear takes over and investors forget our recommendation to own 5 to 10 percent gold in a portfolio. Gold is a diversifier for almost every portfolio, and should be held as a store of value. We argue gold should not be considered as a way to get rich quick because the inherent volatility is too high.

GOLD price oscillator buy signal october 2013 investing

  • The gold market has been hijacked by big sellers of paper gold according to Jeff Nichols, adding these transactions are being made with "nary an ounce of physical gold actually changing hands." He warns "gold remains vulnerable and possibly quite volatile…but it is becoming increasingly attractive to long-term investors with a significant rise in the price all the more likely over the next three-to-five years." The rationale is that the U.S. Fed continues to duck tapering, indirectly pumping more and more dollars into the economy. In addition, the U.S. economy is perhaps less robust than many observers believe. Yet the most important reason is the continuing demand in the East.
  • John Hathaway, a renowned gold portfolio manager, commented last week how in his opinion a couple of bullion banks are using their balance sheets to sell gold they don't possess. These entities are moving a major market by making leveraged bets, but they do it without having to take physical possession and short the way it would be done on a normal exchange. Perhaps these players believe that gold is such a small part of the global investment scene that it can be manipulated for their own benefit with total impunity. What they ignore is the fact that there are gold believers with virtually unlimited pockets – the Chinese in particular – who must be feeling every day is Christmas as they rake in physical gold at depressed prices, knowing that at some day in the future, the yellow metal's price will soar. It will result in a massive short squeeze for these market manipulators.

Gold market threats

  • Tom Kendall, head of Precious Metals research at Credit Suisse, speaking on Mineweb’s Gold Weekly podcast, said the problem gold has at the moment, “is that even if you are an investor who believes that you should have a significant allocation to gold as a hedge against inflation or some other… risk hedge, you probably accumulated that allocation through 2009, 2010, 2011 and you don't need to add to it at the present time, or until there is a feeling that there is a greater prospect of inflation on the horizon.” Looking to China, he says, “the market certainly is not nearly as strong as it was during the first half of the year and the Chinese are as reluctant as any other buyer to buy heavily in a market which tends to be trending downwards." In our opinion Mr. Kendall has not been reading the news lately, especially given HSBC and others are reporting gold demand across Asia will keep expanding as inflation spurs investment purchases. HSBC adds that in markets like India, Vietnam and China, consumers have few tools with which to protect their savings against rising prices. To go even further, Kendall must have missed Gluskin Sheff David Rosenberg's latest reports in which he has gone to great lengths to show the prospect of inflation is quite real, and already among us. To paraphrase just one of his most recent commentaries: Rosenberg shows it cost $9 to go to the top of the Empire State Building in 2001, today it costs $44. The MoMA entrance cost $10 in 2001, and now it costs $25. A taxi ride from JFK Airport to Manhattan cost $30 then, but now it starts at $52. If you were to plug those rates into the CPI calculation, we'd have 4.1 percent headline inflation, and 5.2 percent core inflation.
  • Dundee Capital Markets reports that as we head into the final months of 2013, the season for tax loss selling is quickly approaching, which means a large number of funds and retail investors will be wrapping up their tax years in the calendar fourth quarter. Given the generally poor performance observed in precious metal equities over the past year, gold stocks have become likely candidates for tax loss selling this year.
  • Last Friday's large drop in gold was a result of one tremendously large sell order, which offered 500,000 gold ounces or about $650 million dollars for sale at market price. According to Seeking Alpha contributor Hebba Investments, no seller trying to get a fair price for their gold would sell in such a way, leading to the conclusion that the trade was made to ignite negative momentum. It is important to put the sell order into context given the size of this trade compared to the size of COMEX gold registered inventories. The order represents almost 70 percent of gold available for delivery at COMEX and would be most certainly impossible to deliver. To make it even more dramatic, this took less than one minute, meaning essentially all of the COMEX gold eligible for delivery was sold by one trader in less than one minute. If that doesn’t catch a regulator's attention for market manipulation, then nothing will.

Silver Prices and the Flow of Physical

Posted: 19 Oct 2013 03:07 PM PDT

Jeffrey Lewis

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