Wednesday, October 23, 2013

Gold World News Flash

Gold World News Flash


Faber: "1 Trillion Dollars A Month" Money Printing Coming

Posted: 23 Oct 2013 01:18 AM PDT

Today's AM fix was USD 1,311.75, EUR 959.51 and GBP 813.24 per ounce.
Yesterday's AM fix was USD 1,316.00, EUR 962.27 and GBP 814.05 per ounce.

Gold rose $1.10 or 0.08% yesterday, closing at $1,315.20/oz. Silver climbed $0.31 or 1.42% closing at $21.19. Platinum rose $2.64 or 0.2% to $1,433.74/oz, while palladium increased $8.50 or 1.2% to $747/oz.

Gold hovered in a tight range today between $1,310/oz and $1,330/oz. Traders await the release of U.S. jobs data to gauge the health of the struggling U.S. economy. A poor U.S. nonfarm payrolls number should lead to safe haven buying that could lead to a breach of resistance at $1,330/oz and gold soon testing $1,380/oz.


Gold in US Dollars - 40 Days

A good jobs number could see gold weakening below short term support at $1,310/oz and a possible retrenchment to $1,280/oz.  

The U.S. September jobs data has been postponed for 16 days due to the partial U.S. government shutdown that began on October 1st.  U.S. Fed Bank President of Chicago, Charles Evans, commented in an interview yesterday that the fiscal discord in D.C. will probably delay the decrease in the Fed's monthly bond buying which is gold positive.

The market continues to digest the continuing fall in the holdings of the biggest gold exchange-traded-holdings fund dropped the most in 15 weeks as gold flows from London to Switzerland and on to Asia. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 10.51 tonnes to 871.72 tonnes on Monday -- its biggest fall since early July. It is believed that this gold is flowing East to willing and eager buyers in China particularly.

Gold bullion dealers in India are struggling to get gold bullion and are paying record premiums just ahead of the peak festival season next month.

Marc Faber the author of "The Gloom & Doom Report" was interviewed on CNBC's Squawk Box today.

Faber commented, "The question is not 'tapering', the question is at what point will they increase the asset purchases to say $150 billion, $200 billion, or a trillion dollars a month."

Faber was one of the few investment advisers to clearly warn of the coming global financial and economic crisis in the months and years pre-Lehman. His company Marc Faber Limited provides investment advisory services to financial institutions, corporate clients, family offices and high net worth individuals around the world.


Mark Faber 

'QE-4-EVA' is here to stay, as Faber laid out "every government program that is introduced under urgency and as a temporary measure is always permanent."

Simply put, "The Fed has boxed itself into a position where there is no exit strategy," and while inflation may not be present in the 'chosen' indicators, Faber trumpets, there's been incredible asset inflation - "we are the bubble. We have a colossal asset bubble in the world [and] a leverage or a debt bubble."

There will be massive wealth destruction, he concludes, "one day this asset inflation will lead to a deflationary collapse one way or the other. We don't know yet what will cause it."

Last April, Faber said the world will face "massive wealth destruction" in which "well to-do people will lose up to 50% of their total wealth."

In this morning's Squawk  Box appearance, he said that could still happen but possibly from higher levels because of the "asset bubble" caused by the Fed.

Faber, whose advice has protected millions of investors in recent years, warned of a global systemic crisis possibly due to the massive size of the global derivatives market which is now worth over an incredible $700 trillion.

He warned "when the system goes down," and only plastic credit cards are left, "maybe then people will realize and go back to some gold-based system." He wisely said that, "I advise everyone to have some gold."


Gold in US Dollars - 5 Years

Faber has warned in recent months that there could be a flight out of cash and overvalued bonds and into equities and gold.

In January, in response to a question from Yale University's Robert Shiller querying the recommendation to hold gold, Faber said: "I'm prepared to make a bet, you keep yourU.S. dollars and I'll keep my gold, we'll see which one goes to zero first."

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China's 'tapering' counts more than Fed's, Kaye tells KWN

Posted: 23 Oct 2013 12:09 AM PDT

2:05p ICT Wednesday, October 23, 2013

Dear Friend of GATA and Gold:

Hong Kong fund manager William Kaye tells King World News that the bond buying "tapering" that matters is not the Federal Reserve's but China's, that the Fed is unlikely to avoid inflation when it starts monetizing the bonds China won't buy, and that awful things will follow in the United States. An excerpt from the interview is posted at the King World News blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/23_C...

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



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Jim Sinclair Plans Seminar in Florida

Gold mining entrepreneur and gold advocate Jim Sinclair plans to hold his next financial seminar in Kissimmee, Florida, near Orlando, on Saturday, November 2. Details can be found at his Internet site, JSMineSet, here:

http://www.jsmineset.com/2013/10/22/florida-qa-session-announced/



Join GATA here:

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Thursday-Friday, October 24-25, 2013

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Mines and Money Australia
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Tuesday, October 29-Friday, November 1, 2013

http://www.minesandmoney.com/

New Orleans Investment Conference
Sunday-Wednesday, November 10-13, 2013
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Jim Sinclair plans next seminar in Kissimmee, Florida

Posted: 22 Oct 2013 11:59 PM PDT

2p ICT Wednesday, October 23, 2013

Dear Friend of GATA and Gold:

Gold mining entrepreneur and gold advocate Jim Sinclair plans to hold his next financial seminar in Kissimmee, Florida, near Orlando, on Saturday, November 2. Details can be found at his Internet site, JSMineSet, here:

http://www.jsmineset.com/2013/10/22/florida-qa-session-announced/

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



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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...



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:

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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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Peter Schiff ~ Why The Gold Surge Is Just Starting

Posted: 22 Oct 2013 11:19 PM PDT

Gold, Silver and the Debt Ceiling

Posted: 22 Oct 2013 11:05 PM PDT

Read the Latest News About: Gold    Silver    Economy    Central Banking To paraphrase William Shakespeare, "the debt ceiling drama is a...

{This is a content summary only. Click on the blog title to continue reading this post, share your comments, browse the website, and more!}

Sprott’s Open Letter to the World Gold Council

Posted: 22 Oct 2013 11:04 PM PDT

from Sprott Global:

As you very well know, the business environment for gold producers has been extremely challenging over the past few years. While demand for physical gold remains extremely strong, prices on the COMEX have fallen precipitously. This contradictory situation is the single most important obstacle to a healthy gold mining industry.

In my opinion, the massive imbalance between supply and demand is not reflected in prices because available statistics are misleading. It is not the first time that GFMS (and World Gold Council) statistics have come under pressure from the investment community. In his now celebrated "The 1998 Gold Book Annual", Frank Veneroso demonstrated the inconsistencies in GFMS gold demand data and proceeded to show how they grossly underestimated demand. The tremendous increase in the price of gold over the following years vindicated his conclusions.

For very different reasons, we are now at a similar pivotal point for gold. Over the past few years, we have seen incredible incremental demand from emerging markets.

Read More @ SprottGlobal.com

Are we Beginning to see a loss of Confidence in the US Dollar?

Posted: 22 Oct 2013 09:20 PM PDT

from Dan Norcini:

Based on the price action, the answer to that question is it is certainly looking like that. The Dollar is within a hair’s breadth of a strong region of support. If it does not hold, we will know the answer to this question is “YES”.

I have also noticed that in conjunction with this move lower in the Dollar, interest rates at the long end of the yield curve are also beginning to drop once again. That is not good for the Dollar.

Read More @ TraderDanNorcini.Blogspot.com

Chaos Now Ready To Explode As The West Begins To Collapse

Posted: 22 Oct 2013 09:18 PM PDT

With the US Dollar Index encountering some serious selling recently, today one of the savviest and most well-connected hedge fund managers in the world told King World News that "This is going to be a horrific time for people in the West." He also surprised KWN when he warned, "there is a serious risk that the type of riots we have seen in Spain, Greece, Cyprus, Egypt, and parts of Italy may be imported into the United States and various other Western nations." William Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, had this to say in this chilling and powerful interview.

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

60-Year Market Veteran Says US Is Within Months Of Collapse

Posted: 22 Oct 2013 09:00 PM PDT

With continued volatility in global markets, today a 60-year market veteran told King World News that the US is within months of a total collapse. KWN takes this man's warning very seriously because, incredibly, his father tried the major cases as a lawyer over 100 years ago which formed the basis for US bankruptcy laws. Ron Rosen, who has been at this business for six decades, also spoke about what all of this means for the stock market, as well as gold. Below is what Rosen had to say in this incredibly powerful interview.

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

Tocqueville's Hathaway links ETF gold outflows with exports to Asia

Posted: 22 Oct 2013 07:52 PM PDT

9:47a ICT Wednesday, October 23, 2013

Dear Friend of GATA and Gold:

In commentary posted at King World News, Tocqueville Gold Fund manager John Hathaway joins those correlating the depletion of metal in exchange-traded gold fund accounts with the flow of Western gold to Asia. Hathaway sees the gold market as being ready for a major advance. His commentary is posted at KWN here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/22_M...

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



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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:

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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



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...


Eric Sprott's Open Letter To The World Gold Council

Posted: 22 Oct 2013 07:37 PM PDT

Authored by Eric Sprott of Sprott Global Resources,

Dear World Gold Council Executives;

As you very well know, the business environment for gold producers has been extremely challenging over the past few years. While demand for physical gold remains extremely strong, prices on the COMEX have fallen precipitously. This contradictory situation is the single most important obstacle to a healthy gold mining industry.

In my opinion, the massive imbalance between supply and demand is not reflected in prices because available statistics are misleading. It is not the first time that GFMS (and World Gold Council) statistics come under pressure from the investment community. In his now celebrated “The 1998 Gold Book Annual”, Frank Veneroso demonstrated the inconsistencies in GFMS gold demand data and proceeded to show how they grossly underestimated demand. The tremendous increase in the price of gold over the following years vindicated his conclusions.

For very different reasons, we are now at a similar pivotal point for gold. Over the past few years, we have seen incredible incremental demand from emerging markets. Indeed, so much so that the People’s Bank of China has announced that it is planning to increase the number of firms allowed to import and export gold and ease restrictions on individual buyers.1 In India, the government has been fighting a losing battle against gold imports by imposing import taxes and restrictions.2 Moreover, Non-Western Central Banks from around the world are replacing their U.S. dollar reserves by increasing their holdings of gold.3

But, demand statistics reported by the World Gold Council (WGC) consistently misrepresent reality, mostly with regard to demand from Asia.

To illustrate my point, Table 1 below contrasts mine production with demand from some of the world’s largest gold consumers. According to WGC/GFMS data, the world will mine, on an annualized basis, about 2,800 tonnes of gold for 2013.

But, I adjusted these figures to reflect mine production from China and Russia, which never leaves the country and is used solely to satisfy domestic demand. After adjustments, we have a total world mine supply of about 2,140 tonnes. On the demand side, I make some in-house adjustments to better represent demand from emerging markets. To proxy for gold consumption in China, Hong Kong, India, Thailand and Turkey, I use net imports of gold, as reported by their various governmental agencies. While imports might in general be an imperfect proxy for demand, those countries see very little re-export of what they import and keep most of it for themselves, so it is not unreasonable to assume that what they import they “consume”, on top of their domestic production. To this I add the demand, as estimated by the GFMS, from other countries and that of central banks. I annualized the year-to-date figures and found that for this year, annualized total demand is approximately 5,200 tonnes. On that basis, “core” annualized demand is approximately 3,000 tonnes more than mine supply.

TABLE 1: WORLD GOLD SUPPLY AND DEMAND 2013, IN TONNES
open-letter-table1.gif

Sources: GFMS data comes from the WGC’s “Gold Demand Trends” publications for 2013 Q1 & Q2. Chinese mine supply comes from the China Gold Association and is up to August 2013, the annualized number is a Sprott estimate.5 Russian mine supply comes from the WBMS (Bloomberg ticker WBMGOPRU Index) and is for 2012, 2013 statistics are still unavailable. Chinese data is taken from the Hong Kong Census and Statistics Department and covers the period Jan.-Aug. 2013 and is annualized to account for the 4 missing months to the year. Changes in Central Bank gold reserves are taken from the IMF’s International Financial Statistics, as published on the World Gold Council’s website for 2013 Q1 & Q2 and include all international organizations as well as all central banks. Net imports for Thailand, Turkey and India come from the UN Comtrade database and include gold coins, scrap, powder, jewellery and other items made of gold. The data is for 2013 Q1 & Q2. ETFs data comes from Bloomberg’s ETFGTOTL Index.

However, these figures also exclude what the GFMS dubs “OTC investment and stock flows”, which is a name for a simple plug because no one really knows what is traded in the OTC market. Also, to remain conservative and avoid possible double counting, I exclude the category “technology” from my demand estimate, which the WGC/GFMS estimates to be about 400 tonnes a year.6 Certainly, some of this demand is captured by the demand numbers for China, Turkey, India or Thailand, but it is near impossible to disentangle them. Nonetheless, it should be kept in mind that my demand estimate is conservative and probably understated by a few hundred tonnes.

Of course, another important source of supply is gold recycling, which the GFMS estimates at about 1,300 tonnes for the year. However, this number is questionable at best as gold recycling is hard to estimate. But, most importantly, a large share of it is probably done in India and China, which as mentioned before do not re-export their gold. In the context of my analysis, recycling from those countries should therefore be excluded from the total supply number.

The real incremental source of supply this year has been the flows out of ETFs. According to data compiled by Bloomberg, and as shown at the bottom of Table 1, ETFs have seen outflows of approximately 724 tonnes year-to-date. On an annualized basis, this represents an additional supply of 917 tonnes. But, this incremental supply is only temporary. As shown in Figure 1 below, ETF holdings of gold seem to have stabilized at around 1,900 tonnes after a rapid decline in the first few months of 2013.

The evidence presented here is clear, demand for physical gold is extremely strong and, in reality, without the massive outflows from ETFs (half of world mine supply), it is hard to imagine how this demand would have been met. Since ETFs have a finite size (about 1,900 tonnes left), these outflows cannot continue for much longer (see our article on the topic).7 All these observations point to a considerable imbalance between supply and demand (unless Western Central Banks decide to fill this void with what is left of their reserves). If recycling was reduced by one half (China, India and Russia) and the temporary sales from ETFs were excluded, demand could be as high as 5,185 tonnes versus supply of 2,140 tonnes. The supply-demand imbalance is obvious to all.

FIGURE 1:TONNES OF GOLD IN ETFS
open-letter-chart1.gif
Source: Bloomberg

As was the case when Frank Veneroso first published his book in 1998, the GFMS methodology understates demand and the World Gold Council, by using data from the GFMS, misleads the market place.

To conclude, I urge the leaders of the World Gold Council, for the benefit of their own members, to improve the quality of their data and find alternative sources than the GFMS, which paints a misleading picture of the real demand for gold. This lack of quality information has certainly been one of the driving factors behind the lack of investors’ confidence towards gold as an investment. Gold has been one of the best performing asset classes since 2000, and the World Gold Council should be promoting it accordingly.

Regards,
eric-sig.png

Eric Sprott

World Gold Council consistently understates gold demand, Sprott charges

Posted: 22 Oct 2013 07:33 PM PDT

9:30a ICT Wednesday, October 23, 2013

Dear Friend of GATA and Gold:

Gold demand statistics reported by the World Gold Council "consistently misrepresent reality" by understating metal flowing to Asia, Sprott Asset Management CEO Eric Sprott charges this week in an open letter to the council.

Challenging the WGC's data compilation, which relies on methodology of the GFMS consultancy, Sprott calculates that annual gold demand is actually running 3,000 tons greater than mine supply.

Sprott writes: "I urge the leaders of the World Gold Council, for the benefit of their own members, to improve the quality of their data and find alternative sources than the GFMS, which paints a misleading picture of the real demand for gold. This lack of quality information has certainly been one of the driving factors behind the lack of investors' confidence toward gold as an investment. Gold has been one of the best-performing asset classes since 2000 and the World Gold Council should be promoting it accordingly."

Sprott's letter is posted at the Sprott Internet site here:

http://sprott.com/markets-at-a-glance/open-letter-to-the-world-gold-coun...

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



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Join GATA here:

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Thursday-Friday, October 24-25, 2013

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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

Talk shifts away from 'tapering' and toward increased bond buying

Posted: 22 Oct 2013 07:02 PM PDT

Fed Likely to Delay Taper After Disappointing US Jobs Data

By Katherine Rushton
The Telegraph, London
Tuesday, October 22, 2013

http://www.telegraph.co.uk/finance/economics/10396946/Fed-likely-to-dela...

American employers created fewer jobs in September than forecast, raising expectations that the US Federal Reserve will keep pumping money into the world's largest economy at the same rate for several months yet.

Stock markets rose on Tuesday as investors bet that the central bank would keep on buying bonds at the rate of $85 billion a month until next year, and potentially even increase that figure to help fuel America's still-fragile economic recovery.

America added 148,000 jobs in September, according to delayed figures from the US Labour Department -- far short of analysts' forecasts of 180,000 jobs, and the 193,000 extra jobs created in August. The increase was also well below the average increase of 181,000 jobs a month which America has seen since the start of the year.

... Dispatch continues below ...



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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...



The country's labour market is expected to grow even more slowly in the last few months of 2013, as the US absorbs the impact of the political standoff which forced the government to shut down earlier this month.

"The October payrolls number will be bad due to the government shutdown. I think this might [delay] tapering to March," said Craig Dismuke, chief economic strategist at the US analysis firm, Vining Sparks.

Joseph Trevisani, chief market strategist at WorldWideMarkets, added that "another weak payroll" could push the Fed to increase its quantitative easing programme rather than scale it back.

The Fed has said it will start weaning the US economy off its fiscal stimulus scheme only after America's employment situation shows sustained improvement.

The country's unemployment rate fell to 7.2 percent in September, the lowest since November 2008, but the central bank has made it clear that it needs to see a sustained improvement in other factors, including job creation, before tapering begins.

It had been expected to start reducing its bond buying habit in the autumn, and surprised markets last month when it decided to keep the taps on full. The employment situation is just one of a number of factors which now appear to be kicking it into the long grass.

In addition to the weak jobs data, the government shutdown is expected to have forced a delay. Standard & Poor's, the ratings agency, estimated that the episode has sucked $24bn out of the US economy, shaving around 0.6 of a percentage point of its fourth quarter growth.

Chris Williamson, an analyst at Markit, said that tapering looks unlikely to happen before March and could be kicked back even further if it turns out that the US budget standoff had a major impact on business confidence. March "is by no means assured," he said.

The Fed is likely to ally its tapering decision to jobs growth even more closely under Janet Yellen, who will replace Ben Bernanke as chairman in January next year. Ms Yellen was one of the architects of the Fed's policy of linking fiscal stimulus measures to America's jobs situation, and is expected to be very vocal about ensuring the labour market is in good health before it starts pulling back on QE.

"I think it's reinforcing Yellen's hand as the dove on the committee," said Aaron Kohli, an interest rate strategist at, BNP Paribas.

The Dow Jones Industrial Average was up 119 points, or 0.8pc, to 15,511 in mid-morning trading in New York, whilst the S&P 500 index rose 14.1 points, or 0.8pc, to 1759. In London, the FTSE 100 had risen 53.4 points, or 0.9pc, to 6,713, by mid-afternoon.

* * *

Join GATA here:

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

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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:

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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:

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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:

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Trapped

Posted: 22 Oct 2013 06:37 PM PDT

Between the breakdowns in the US dollar and 10 year yields, precious metals have trapped the Johnny-come-lately and dogmatic bears and are surging higher this morning on the backs of their downtrodden miners. Read More...

China makes renminbi-trading agreement with Singapore

Posted: 22 Oct 2013 06:37 PM PDT

By Jeremy Grant and Josh Noble
Financial Times, London
Tuesday, October 22, 2013

http://www.ft.com/intl/cms/s/0/f3fe0f00-3ae8-11e3-87fa-00144feab7de.html

China is to further internationalise its currency by allowing Singapore-based investors to buy renminbi-denominated securities, paving the way for direct trading between the two countries' currencies.

The accord follows last week's announcement from George Osborne, Britain's chancellor -- or finance minister -- who touted a similar agreement as a breakthrough for London as a global hub for renminbi trading.

The deals highlight how China has been carefully handling the granting of trading privileges to financial centres jostling to win status as offshore renminbi hubs as use of the Chinese currency outside the country grows.

... Dispatch continues below ...



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In the latest agreement, China will extend its so-called renminbi qualified foreign institutional investors (RFQII) programme to Singapore, allowing Singapore-based banks and asset managers a quota of Rmb50 billion ($8.2 billion) to invest in Chinese securities, the Monetary Authority of Singapore said.

Under a similar arrangement struck last week with Britain, that quota was set at Rmb80 billion for financial institutions based in that country. Hong Kong is the only territory with an existing RFQII arrangement.

Under RQFII, those holding renminbi offshore are able to invest directly in mainland Chinese assets -- from stocks to bonds to money market funds. By widening the investment options for renminbi sitting outside China, the system is partly designed to encourage the use of the currency for trade settlement.

It also helps to increase foreign participation in China's domestic markets, something the authorities have been keen to do in an attempt to attract more long-term investment.

For Singapore, a tiny island nation of only 5.3 million people, the agreement with China marks another significant step in building itself up as the renminbi hub for southeast Asia.

One of China's biggest state-owned banks, Industrial & Commercial Bank of China, in May started clearing services for renminbi transactions in Singapore.

In September, Singapore overtook Japan as Asia's biggest foreign exchange centre for the first time, making it the third-largest such hub in the world after London and New York.

Currency strategists say that Singapore is not likely to rival Hong Kong as an offshore renminbi centre, and is seen as a future renminbi hub for business done in the Chinese currency across the Association of Southeast Asian Nations.

"Singapore is a significant foreign exchange hub, meaning the market structure is already in place, and its position as a regional manufacturing and trading centre will ensure there is real and growing demand around renminbi," said Loh Boon Chye, deputy president for Asia Pacific at Bank of America Merrill Lynch in Singapore.

However, use of the currency for trade settlement generally has failed to keep pace with trading.

While the renminbi was the eighth most popular trading currency in August this year -- the most recent month for which figures are available -- it was only the 12th most used payments currency, according to Swift, the payments system.

The MAS said Singapore would also be "given consideration" as one of the investment destinations under a separate "renminbi qualified domestic institutional investor" scheme. This would allow Chinese investors to use the renminbi to invest in Singapore's capital markets.

In addition SGX, the Singapore exchange, and the Shanghai Futures Exchange signed an initial agreement to jointly develop commodity derivatives.

* * *

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Another One Trillion Dollars ($1,000,000,000,000) In Debt

Posted: 22 Oct 2013 05:38 PM PDT

Submitted by Michael Snyder of The Economic Collapse blog,

Did you know that the U.S. national debt has increased by more than a trillion dollars in just over 12 months?  On September 30th, 2012 the U.S. national debt was sitting at $16,066,241,407,385.89.  Today, it is up to $17,075,590,107,963.57.  These numbers come directly from official U.S. government websites and can easily be verified.  For a long time the national debt was stuck at just less than 16.7 trillion dollars because of the debt ceiling fight, but now that the debt ceiling crisis has been delayed for a few months the national debt is soaring once again.  In fact, just one day after the deal in Congress was reached, the U.S. national debt rose by an astounding 328 billion dollars.  In the blink of an eye we shattered the 17 trillion dollar mark with no end in sight.  We are stealing about $100,000,000 from our children and our grandchildren every single hour of every single day.  This goes on 24 hours a day, month after month, year after year without any interruption.

Over the past five years, the U.S. government has been on the greatest debt binge in history.  Unfortunately, most Americans don't realize just how bad things have gotten because the true budget deficit numbers are not reported on the news.  The following is where the U.S. national debt has been on September 30th during the five years previous to this one...

09/30/2012: $16,066,241,407,385.89

09/30/2011: $14,790,340,328,557.15

09/30/2010: $13,561,623,030,891.79

09/30/2009: $ 11,909,829,003,511.75

09/30/2008: $10,024,724,896,912.49

The U.S. national debt is now 37 times larger than it was 40 years ago, and we are on pace to accumulate more new debt under the 8 years of the Obama administration than we did under all of the other presidents in U.S. history combined.

Of course all of the blame can't be placed at the feet of Obama.  During the last two elections the American people have given the Republicans a solid majority in the U.S. House of Representatives, and the government cannot spent a single penny without their approval.

Unfortunately, House Speaker John Boehner and the Republicans that are allied with him have repeatedly turned their backs on the people that gave the Republicans the majority and they have authorized trillions of dollars of new debt which will be passed on to future generations of Americans...

Since John Boehner became speaker of the U.S. House of Representatives on Jan. 5, 2011, the debt of the federal government has increased by $3,064,063,380,067.72. That is more than the total federal debt accumulated in the first 200 years of the U.S. Congress--during the terms of the first 48 speakers of the House.

In fact, if all of that debt had been given directly to the American people, every household in America would have been able to buy a new truck...

The $26,722 in new debt per household accumulated under Speaker Boehner would have been more than enough to buy every household in the United States a minivan or pickup truck--or to pay three years of in-state tuition (not counting room and board) at the typical state college.

Sometimes we forget just how much money a trillion dollars is.  In a previous article, I included some illustrations that I believe are helpful...

-If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.

-If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

We are doing the exact same thing that Greece did, only on a much larger scale.  What we are doing is not even close to sustainable, and it will inevitably end very, very badly.  The following is what Michael Pento, the president of Pento Portfolio Strategies, told RT the other day...

"That $17 trillion everybody says its 107 percent of GDP, that’s true. But who really cares about the percentage of GDP? It’s the percentage of the debt as a percentage of the revenue – its 700 percent of our revenue. Deficits are growing at 30 percent of our revenue every year added to the deficits we have already. So it’s unsustainable. What is going to happen eventually – a currency and bond market collapse! And it’s not going out 20 years, as I also heard someone mention. In 2016 we’ll probably be spending 40 percent of all of our revenue just to service our debt. That is what the interest payments will equal."

The U.S. debt situation is so bad that even the Prime Minister of Cyprus is scolding us...

"The U.S. has been fortunate in the sense that it’s like a bank, it prints the money that other people accept. So you can live beyond your means over an extended period of time without being punished by the market."

Unfortunately, we will not be able to live way beyond our means forever.  Reality is going to catch up with us at some point.

Right now, the rest of the world is lending us giant mountains of money at interest rates that are far below the real rate of inflation.  This is extremely irrational behavior, and this state of affairs will probably not last too much longer.

But if interest rates go up, it will absolutely cripple the U.S. economy.  For much more on this, please see this article.

And what would make things much, much worse is if the rest of the globe starts moving away from using the U.S. dollar.  At the moment, the U.S. dollar is the de facto reserve currency of the planet and this creates a tremendous demand for U.S. dollars and U.S. debt.

If that changes, it will be absolutely catastrophic for the United States, and unfortunately there are already lots of signs that this is already starting to happen.  I wrote about this in my recent article entitled "9 Signs That China Is Making A Move Against The U.S. Dollar".

But don't just take my word for it.  Just a couple of days ago a major U.K. newspaper came to the same conclusions...

China has overtaken the US 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 (£10.5 trillion) debt mountain suggests that this tectonic shift in the global trade system could be just around the corner.

So what will happen when the rest of the world decides that they don't need to use our dollars or buy our debt any longer?

At that point the consequences of decades of incredibly foolish decisions will result in an avalanche of economic pain that the American people are not prepared for.

Earlier today, I came across a photograph that perfectly captures what America is heading for.  The following photo of Mt. Rushmore crying has not been photoshopped.  It was taken by Megan Ahrens and it was posted on the Tea Party Command Center.  If George Washington was alive today, this is probably exactly how he would feel about the nation that he helped establish...

Cycles Say Gold Low In November - Kitco News

Posted: 22 Oct 2013 05:27 PM PDT

Are the cycles saying gold reached its bottom? Kitco News' Daniela Cambone speaks with David Gurwitz, managing director at Charles Nenner Research Center, about gold's volatility and what the...

[[ This is a content summary only. Visit http://goldbasics.blogspot.com or http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

Things That Make You Go Hmmm... Like Moral Hazard

Posted: 22 Oct 2013 05:00 PM PDT

A mere 24 hours before the US (at least according to Jack Lew, who, as some of you may have known, is the Secretary of the Treasury of the United States of America) was going to run out of money and default on its obligations (the Lew-styled "catastrophe", which according to the great and the good would once again "bring the financial system to its knees" — how many MORE times are we going to have to listen to that, I wonder?), the S&P 500 was trading exactly 2.30% from its all-time high.

Sound like anybody was worried about financial Armageddon to you, dear reader? Not to me, either, but here's the thing:

The danger WAS very real, as a default by the US on its debt obligations would have gone to the very heart of the "plumbing" that underlies financial markets and caused havoc in the repo market and all kinds of problems with collateral (or at least, what little collateral is allowed amongst market participants once central banks have hoovered up their ever-expanding allotments).

The key clue passed most people by a week ago; but it came from, of all places, Hong Kong:

(FT): Hong Kong's stock exchange decided the possibility of a US default had made some types of short-term Treasury bonds more risky, prompting it to force traders using the securities as collateral to provide extra backstops....

 

It came as the Asia Securities Industry & Financial Markets Association (Asifma), which represents banks, brokers and asset managers in the region, warned that any announcement by the US Treasury in advance of a default must arrive before the opening of the day's trading in Asia to avoid "chaos".

 

Japan's clearing house, the Japan Securities Clearing Corporation (JSCC), said it was in "intensive discussions" to prepare for "anything that might happen".

 

Hong Kong Exchanges & Clearing (HKEx) said on Thursday it had taken two measures designed to reflect the increased difficulty of valuing certain short-term US Treasuries amid the debt impasse.

 

First, its clearing house would apply an increased "haircut" to its valuation of US Treasuries held as collateral against futures trades. For bonds held with maturity of less than one year, that would be raised from 1 per cent to 3 per cent, effective immediately, HKEx said in a circular to members.

 

"This new haircut shall be applied on a daily basis to determine the value of the US Treasuries allowed to be used as cover for the margin requirements of HKCC [Hong Kong Clearing Corporation] participants," HKEx said.

 

"Participants should make necessary funding arrangements to cover any shortfall to their margin requirements resulting from the increase in the US Treasuries haircut."

Anyone posting US Treasuries with less than a year to maturity as collateral, would need to come up with three times their current posted margin.

Not good. Not good at all. The amount of liquidity this would suck out of a fragile market would be catastrophic very bad indeed, and any forced selling on behalf of those unable to post the additional collateral would be a catastrophe major problem, leading to falling prices and spiking rates — neither of which are allowed anymore. Now, if HKEx's move had become fashionable around the world (and it's safe to say that exchanges are very much pack animals), it would have been quite bad a catastrophe.

After a very subdued reaction to the can being kicked down the road until February debt ceiling being agreed, something rather strange happened on Thursday. See if you can identify at what point in the day it occurred:

(I should point out that the yellow overlay of the gold price looks green where it sits on top of the blue DXY chart. There are only two variables in this chart, the yellow gold price and the blue US dollar price.)

Now, there was already a clue as to what this event was, hidden away in an earlier chart, but (cue drum roll) the catalyst for the dollar's sudden drop and the sharp spike in the price of gold waaaaaaaaaaaas... THIS:

(Reuters): Chinese rating agency Dagong has downgraded the United States to A- from A and maintained a negative outlook on the sovereign's credit.

 

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.

 

"Hence the government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future," Dagong said in a press release.

Now those are the straight facts of the issue, but contained within the rest of what was a very short article are three fascinating sentences that speak to the very crux of the problem as things stand today. The first two constituted the very next paragraph:

(Reuters): Dagong's ratings are hardly followed outside of China. The agency also classifies most countries it follows very differently from major agencies such as Moody's, Standard & Poor's and Fitch.

Absolutely correct. Dagong's ratings are seen as something of a joke and very much inferior in nature to the Big Three — a poor man's Egan Jones, if you will.

...So here's where we get to the nub (finally!) of this week's philosophical wanderings.

The question I posed, all those charts ago, was this:

If something bad happens, but nobody reacts badly to it, did nothing bad happen?

Well, with each successfully navigated new crisis, the reaction of the market the next time a crisis flares up becomes more muted. We've seen the spectre of a Lehman-style collapse dealt with, and now the phrase "... could bring the global financial system to its knees..." is shrugged off with alacrity.

We've seen the spectre of a European fracture, a Grexit, a Spexit, and the end of the euro taken off the table by determined governments and central bankers; and now, each fresh outbreak of the European crisis is greeted with apathy and ennui. (I wonder if the French have a word for that.)

And now we've seen the extent of the reaction to the US debt-ceiling debacle the second time around. I would describe it as "quizzical interest" at best.

Why?

Because the Nannycrats are continually telling us that everything will be OK, that we shouldn't worry about things and ought instead to just Keep Calm and Carry On.

How bad has it gotten? Well, amidst the "hoo-ha on the Hill" recently, we saw one of the most bizarre things I've witnessed during the mayhem of recent years: Barack Obama's telling Wall Street that they SHOULD worry

...

Barack, let me explain something to you.

The reason Wall Street WASN'T worrying is that you and Bernanke and Geithner and Paulson (not you, John — Hank) and Yellen and the rest of the Crazy Crew have gone out of your way for five years to make absolutely certain that nothing bad ever happens again. Ever. Why the hell WOULD they worry?

 

It's YOUR fault that they're not. You just can't have it both ways.

That's what moral hazard looks like, I'm afraid...

Read Grant Williams' full letter below...

Ttmygh 14 October 2013

THE SIXTH STAGE OF COLLAPSE

Posted: 22 Oct 2013 04:45 PM PDT

I recently finished his book. It was both enlightening and depressing, just like his new article. Enjoy.   By Dmitry Orlov http://cluborlov.blogspot.com/ I admit it: in my last book, The Five Stages of Collapse, I viewed collapse through rose-colored glasses. But I feel that I should be forgiven for this; it is human nature to […]

Five central bankers who champion gold

Posted: 22 Oct 2013 03:30 PM PDT

The Real Asset Co

SILVER Elliott Wave Technical Analysis

Posted: 22 Oct 2013 03:28 PM PDT

Last analysis for silver expected some more downwards movement towards a target at 20.326 before a minor degree trend change. Price did move lower to 20.512, 0.186 short of the target, and has now clearly turned back upwards. Read More...

Silver and Gold Prices Closed Higher — Both Jumping Two Resistance Levels

Posted: 22 Oct 2013 03:28 PM PDT

Gold Price Close Today : 1342.50
Change : 26.80 or 2.04%

Silver Price Close Today : 22.754
Change : 0.521 or 2.34%

Gold Silver Ratio Today : 59.001
Change : -0.177 or -0.30%

Silver Gold Ratio Today : 0.01695
Change : 0.000051 or 0.30%

Platinum Price Close Today : 1447.10
Change : -18.10 or -1.24%

Palladium Price Close Today : 752.60
Change : -2.05 or -0.27%

S&P 500 : 1,754.67
Change : 10.01 or 0.57%

Dow In GOLD$ : $238.17
Change : $ -3.67 or -1.52%

Dow in GOLD oz : 11.522
Change : -0.177 or -1.52%

Dow in SILVER oz : 679.78
Change : -12.54 or -1.81%

Dow Industrial : 15,467.66
Change : 75.46 or 0.49%

US Dollar Index : 79.634
Change : -0.051 or -0.06%

Franklin writes from the road: Astounding moves in silver and GOLD PRICES today - gold up $26.80 to $1,342.50 and silver jumped 52.1 cents to 2275.4c.

Miss not what this signifieth. Both jumped TWO levels of resistance.

The SILVER PRICE jumped the last high at 2252c plus the 50 DMA at 2243c.

Gold cleared all those snares from $1,315 to $1,325 then o'erleapt $1,332 and ran to 50 DMA at $1,342.89.

Silver is leading: GOLD/SILVER RATIO hit 59 flat. It is very strong when silver leads.

Start buying. These are the confirmations I was looking for.

Next gold must hurdle $1,376 and silver 2300c, but for now it appears that will come shortly.

The US Dollar Index is puking sick and broke 79.6. The buzzards will take it if it breaches 79. Be wary of a turnaround there.

Silver and gold prices are strong as a garlic milkshake Carpe Diem!

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.

Silver and Gold Prices Closed Higher — Both Jumping Two Resistance Levels

Posted: 22 Oct 2013 02:40 PM PDT

Gold Price Close Today : 1342.50
Change : 26.80 or 2.04%

Silver Price Close Today : 22.754
Change : 0.521 or 2.34%

Gold Silver Ratio Today : 59.001
Change : -0.177 or -0.30%

Silver Gold Ratio Today : 0.01695
Change : 0.000051 or 0.30%

Platinum Price Close Today : 1447.10
Change : -18.10 or -1.24%

Palladium Price Close Today : 752.60
Change : -2.05 or -0.27%

S&P 500 : 1,754.67
Change : 10.01 or 0.57%

Dow In GOLD$ : $238.17
Change : $ (3.67) or -1.52%

Dow in GOLD oz : 11.522
Change : -0.177 or -1.52%

Dow in SILVER oz : 679.78
Change : -12.54 or -1.81%

Dow Industrial : 15,467.66
Change : 75.46 or 0.49%

US Dollar Index : 79.634
Change : -0.051 or -0.06%

Franklin writes from the road: Astounding moves in silver and GOLD PRICES today - gold up $26.80 to $1,342.50 and silver jumped 52.1 cents to 2275.4c.

Miss not what this signifieth. Both jumped TWO levels of resistance.

The SILVER PRICE jumped the last high at 2252c plus the 50 DMA at 2243c.

Gold cleared all those snares from $1,315 to $1,325 then o'erleapt $1,332 and ran to 50 DMA at $1,342.89.

Silver is leading: GOLD/SILVER RATIO hit 59 flat. It is very strong when silver leads.

Start buying. These are the confirmations I was looking for.

Next gold must hurdle $1,376 and silver 2300c, but for now it appears that will come shortly.

The US Dollar Index is puking sick and broke 79.6. The buzzards will take it if it breaches 79. Be wary of a turnaround there.

Silver and gold prices are strong as a garlic milkshake Carpe Diem!

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.

Gold Daily and Silver Weekly Charts - Pop Go the Weasels

Posted: 22 Oct 2013 01:21 PM PDT

Gold Daily and Silver Weekly Charts - Pop Go the Weasels

Posted: 22 Oct 2013 01:21 PM PDT

Gold Seeker Closing Report: Gold and Silver Gain About 2%

Posted: 22 Oct 2013 01:13 PM PDT

Gold fell $5.10 to $1310.10 in late Asian trade, but it then climbed to as high as $1344.40 in New York and ended with a gain of 1.9%. Silver surged to as high as $22.805 and ended with a gain of 2.21%.

Site Visit - Seabridge Gold’s KSM Project

Posted: 22 Oct 2013 12:26 PM PDT

Northern British Columbia ­– Seabridge Gold (NYSE: SA, TSX: SEA) is in the enviable position of owning 100% of KSM, the world's largest undeveloped copper-gold deposit. With majors, for now, shying away from big acquisitions and building major new mines, the company is also in the unenviable position of working to improve the attractiveness of the already-impressive project.

Bond Burglars to Bring Bears Out of Hibernation

Posted: 22 Oct 2013 12:23 PM PDT

Although the Fed may realize (though I doubt it) that the current asset purchases have minimal impact on the real economy of the majority of American people, they probably think that continuous monetary stimulus is the lesser of two evils. This is a wrong assumption, in my opinion, because prices are rising far more than wages and salaries.

Increase in Annual per Person Expenditures and Earnings from 2000 to 2012

Moreover, the Fed wants to stimulate credit growth with its artificially low interest rates. But again, credit growth has largely lost its impact on the real economy. The multiplier on GDP of an additional dollar of debt is now negligible.

US Increase in Real GDP per Dollar of Incremental Debt from 1947 to 2012

I suppose that the conclusion we can draw from it is that the larger the debt as a percentage of the economy becomes, the less will be the impact of an additional dollar of debt. I actually think that there is a tipping point where additional debt has a "contractionary" effect on the economy, because at this tipping point, the debt becomes so large that interest rates will increase no matter how much a central bank monetizes the debt. (Subsequently, inflation accelerates and the currency collapses, which leads, contrary to Mr. Bernanke's view, to a general impoverishment of the population.)

But as I contended before, the probability that we have embarked on permanent asset purchases by the Fed is very high (until QE99 — or at least until the system breaks down, as just outlined).

Given my negative outlook for the global economy, I believe that 10-year Treasury note yields could decline once again to between 2.2-2.5%.

To Mr. Bernanke's credit, and to be fair to him, I need to point out that his economic sophism is shared by most central bankers around the world. We can see that the global monetary base has exploded more than fourfold since 2003. These universally common monetary policies are, of course, applauded by fund managers, bankers and the investment community, all of which benefit (including myself) from rising asset prices. (Within 24 hours of the Fed's announcement that there would be no "tapering," the value of my assets increased by about 3%.)

But what is good for me as an asset holder doesn't imply that it is the right monetary policy for the economy and for society as a whole. (Bill de Blasio's policy of increasing taxes on high-income earners is a direct consequence of the growing wealth and income inequality brought about by expansionary monetary policies.)

For investors, the challenge is the following. Despite record buying of Treasuries and mortgage-backed securities, since September 2012, interest rates are up, not down. This proves clearly that the Fed is not all powerful.

…even without tapering, there is a relative tightening of the turbocharged monetary expansion.

Similarly, commodities and precious metals are still well below their peaks. The majority of stock markets around the world are well below their peaks, as are the majority of stocks in the U.S. In other words, it is not likely that the Fed and other central banks can boost further all asset prices, since this would require them to accelerate the expansion of the balance sheets ad infinitum.

The global monetary base expanded at 35% in 2009. Thereafter, its growth slowed to an annual rate of 10% in early 2012. The global monetary base expansion then re-accelerated to an annual rate of over 20% in late 2012. However, it has since slowed to an annual growth rate of around 5%. Simply put, even without tapering, there is a relative tightening of the turbocharged monetary expansion.

Above, I mentioned that the Fed has lost control of the bond market. Now let us consider two extreme cases of monetary policies: The Fed announces an immediate stop of its asset purchases (policy A), or it announces an immediate increase in its asset purchases to $200 billion monthly (policy B). How would the bond market react to these announcements, and what would the subsequent performance be? I suspect that on the announcement of policy A, the bond market would sell off for a day or two.

But then the bond buyers would figure out that no asset purchases by the Fed would likely be somewhat deflationary and, therefore, beneficial for bonds. The announcement of policy B would likely lead to an immediate bounce in bond prices (though likely not a new high) and likely not to a new low in interest rates. In fact, I would assume that if the Fed's and other central banks' balance sheets were to expand forever at a rapid pace, the bond market would tank.

For what it's worth, when yields on the 10-year U.S Treasury note rose toward 3% I bought some of the notes. Sentiment was extremely bearish (small traders were heavily short the bond market) and I thought that "tapering" (I expected $10-15 per month) would be favorable for the bond market. I was wrong in my assumption, but right about buying the notes, since they rallied subsequently. That's the confusing world of investments we live in. Given my negative outlook for the global economy, I believe that 10-year Treasury note yields could decline once again to between 2.2-2.5%.

However, longer term, I remain bearish about bonds. Yet there is one point we need to consider. Is it wise to sell U.S. bonds of America? Its "Bank of America, Merrill Lynch (BofAML) private client flow data" shows a complete aversion to bonds and a strong appetite for equities.

According to BofAML's chief investment strategist, in the week ended Sept. 11, 2013, private investors put $14.3 billion into equity mutual funds and withdrew $3.5 billion out of bonds. (It was the largest weekly move out of bonds in the last three years.) I am raising this question because, based on current U.S. stock valuations, the future returns will be relatively small.

According to Robert Shiller's current P/E ratio, the five-year expected return will be 4% and the 10-year return just 1%. In the near term, I was also concerned that stocks had become extremely overbought following the strong rebound from their late August low, and that the current advance had not been confirmed by numerous technical indicators. From the Aug. 28 low at 1,627, the S&P 500 rose in a straight line to 1,729 on Sept. 29 (by 6.3% in three weeks, or by more than 100% when annualized).

As a reminder, the S&P 500 is also up 61% from its Oct. 7, 2011, low at 1,074 (two years). So I can understand why the phones are ringing at BofAML's retail offices from clients who want to switch their funds out of bonds into equities. But this doesn't imply that equities are a good value at present.

I want readers to perfectly understand that when I recently bought my Treasury notes yielding over 2.9%, I didn't think they were of particularly good value either. But within my asset allocation of 25% of total assets in emerging market bonds and cash, I held a lot of dollar cash, which was in the banking system and yielding next to zero. So by moving some cash into 10-year Treasury notes, I gained some additional income and a higher level of security (at least for now) as compared with holding bank deposits.

I should also mention that according to Shiller's current P/E ratio, the five-year expected return for emerging market equities will be 19% and the 10-year return 13.8%. I have to say that I consider these emerging market return expectations to be completely unrealistic. Given my negative outlook about the Chinese economy, which I have outlined in earlier reports, I think that emerging markets' returns could be as low as zero (or even less) for the next few years.

As James Burgh, a British Whig politician who stood up for "free speech" (1714-75), observed: "In prosperity, prepare for a change; in adversity, hope for one."

Regards,

Marc Faber
for The Daily Reckoning

Ed. Note: The questionable future of the U.S. bond market notwithstanding, there are certainly profit opportunities out there, if you know where to look. That’s why The Daily Reckoning email is delivered every single day to over half a million readers from all over the world. It’s designed specifically to keep you informed on all the most important investment stories currently facing the markets… and offers you several chances to discover real, actionable profit opportunities for yourself. Signing up is completely free, and comes with absolutely no obligation. So you’ve got nothing to lose. Click here now to sign up for FREE.

Man Who Predicted Surge In Gold Says Rally Just Beginning

Posted: 22 Oct 2013 11:44 AM PDT

On the heels of the US Dollar Index tumbling down near the 79 level, and the gold and silver markets on the move, today the man who predicted this surge in gold ahead of time sent King World News an absolutely incredible snapshot of the big picture for the gold and silver markets, along with 2 extraordinary charts. KWN was given exclusive distribution rights to this outstanding piece by superstar John Hathaway of Tocqueville Asset Management L.P.. John is without question one of the most respected institutional minds in the gold world today, and his fund was awarded a coveted 5-star rating.

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

Gold rallies to 3-week highs after U.S. job data

Posted: 22 Oct 2013 11:38 AM PDT

22-Oct (Reuters) — Gold rose over 2 percent to three-week highs on Tuesday as weak U.S. jobs figures raised expectations the Federal Reserve will continue into next year its massive stimulus program that has bolstered bullion prices.

Nonfarm payrolls rose by 148,000 in September, the Labor Department said, below the 180,000 forecast in a Reuters poll, increasing worries that the world’s largest economy was losing momentum even before the government shutdown this month.

“We were not even close to the 180,000 number…the main takeaway is that Fed tapering is still a long way away, probably not for this year and that’s the reason why everything shot up – equities, commodities and gold in particular,” Societe Generale analyst Robin Bhar said.

Signs the U.S. economy lost steam even before the acrimonious budget fight could convince the Fed to hold off any decision on scaling back its bond-buying stimulus until the extent of the economic damage from the fiscal standoff is clear.

[source]

Gold Market Tremors and Warnings

Posted: 22 Oct 2013 10:39 AM PDT

Here are three charts that capture the somewhat uniquely dangerous situation in the gold futures market on the Comex. The first chart shows all gold in storage at Comex certified private warehouses. The major bullion banks control the vast majority of this storage. Among these are JPM, HSBC, Scotia Mocatta. Storage and delivery services are also provided by Brinks and Manfra, Tordella, and Brookes, a large NYC coin and bar dealer.

Crude Oil and Its Connection with the U.S. Dollar

Posted: 22 Oct 2013 10:33 AM PDT

The recent months have been tough for the U.S. currency. Since July the greenback has lost 6% and dropped to a new eight-month low on Friday. Investors avoided the dollar, firstly after the Fed opted against cutting its stimulus in September and then as the budget spat in Washington pushed the country close to a default. Despite this decline, yesterday, the dollar pulled back from an eight-month low as investors awaited delayed U.S. jobs data.

Tremors and Warnings in the Gold Market

Posted: 22 Oct 2013 10:29 AM PDT

Tremors and Warnings in the Gold Market

Posted: 22 Oct 2013 10:29 AM PDT

Is the Silver Bull Market Over?

Posted: 22 Oct 2013 10:17 AM PDT

This silver price is a market of extremes. Since the last Silver Summit, the price has fallen by nearly 50%, to the lowest levels since 2010. But take a longer-term view and we find from its 2008 lows, the silver price is still higher by 250%.

Strategies for Success in a Flat Commodity Price Market

Posted: 22 Oct 2013 10:00 AM PDT

It could be 2017 before the commodity supercycle is evident again, but stormy weather in the mining space has a silver lining: It is encouraging miners to develop new, innovative approaches to their business. In this interview for the first edition of The Mining Report, John Kaiser of Kaiser Research Online outlines strategies that are setting certain companies apart.

Crude Oil Teeters On The Brink – Of $100 A Barrel

Posted: 22 Oct 2013 09:55 AM PDT

MEMORIES OF THE 1986 PRICE CRASH Like the US debt ceiling saga – with the only possible result being more debt - the ultra-magic triple-digit dollar price of US WTI, and of course more for European Brent, needs extraordinary measures to stay that overblown. In the case of the US debt mountain the Fed does the extraordinary (over)blowing, but for oil and not so long ago, WTI counts on heavy lifting by leading members of Wall Street's oil market manipulator clique – sometimes called “investors” - who not so long ago forecast WTI as easily able to attain $125 per barrel by December 31st.

Gold Traders Lack Conviction

Posted: 22 Oct 2013 09:52 AM PDT

WHOLESALE gold held in a tight $5 range Tuesday morning in London, drifting around $1315 per ounce ahead of delayed data on US unemployment. The monthly Non-Farm Payrolls report had been due more than two weeks ago. It was set for release Tuesday after Congress's 3-month deal on the $16.7 trillion debt ceiling ended the shutdown of government services.

The Daily Market Report

Posted: 22 Oct 2013 09:39 AM PDT

Gold Jumps on Soft U.S. Jobs Data


Gold jumped in early New York trading as the shutdown delayed September jobs report revealed only 148k net new jobs were created last month. The market was expecting +180k. That should effectively quash any lingering expectations of Fed tapering, at least for the remainder of the year.

At least another several months of $85 bln in central bank asset purchases pushed the dollar index to new eight-month lows. The greenback hit new lows for the year against the euro. The stock market of course loves the notion that zero interest rate policy is here to stay and the deluge of liquidity will continue.

Some in the press are making hay out of the downtick in the unemployment rate to 7.2%, noting that it is the lowest level since 2008. That’s all well and good, but the number of Americans who are 16 years or older that are not in the labor force climbed by 516,000 to a record 90,609,000. That leaves the labor force participation rate at 63.2%, a level not seen prior to August since 1978.

University of Michigan economist Justin Wolfers expressed concerns about slowing average job growth this morning:

Knowing Fed chair nominee Janet Yellen’s sensitivity to the labor market, I would suggest that the QE pendulum may actually be swinging back toward boosting asset purchases, rather than tapering. Both Goldman Sachs and Barclays pushed their taper expectations out to March 2014 shortly after the jobs report.

That alone prompted gold to add another $10 to today’s gains. While gold is up 4.8% since the debt-ceiling deal was struck last week, there’s still no word from Goldman as to whether they’ve rescinded their “slam dunk” sell recommendation.

With the debt ceiling suspended until February 7, our national debt has quickly climbed above $17 trillion. In fact, the day after the deal, a record $328 bln was added to the debt.

As long as the debt continues to rise, the Fed will have to maintain its role as the primary source of demand for Treasuries. Unless of course a new source of demand is located, which seems increasingly less likely.

The more Treasuries the Fed is obliged to buy, the more dollars the central bank must click into existence to do so. The more dollars clicked into existence, the more the existing dollars are debased. The more the dollar is debased, the less Treasuries foreign buyers will be inclined to buy.

That in turn will force the Fed to fill the demand void to an ever greater extent. Lather. Rinse. Repeat.

Obviously this is inherently unsustainable, but as Marc Faber suggested recently, the Fed has “boxed themselves into a corner”. The Fed almost has to continue printing dollars and buying bonds, as the alternative is that the whole global economic system comes crashing down around our ears.

Junior Gold Stocks: Textbook Volume

Posted: 22 Oct 2013 09:30 AM PDT

Graceland Update

DAILY COMMENTARY FOR OCT. 22

Posted: 22 Oct 2013 09:29 AM PDT

By Toby Connor, Gold Scents
Click here

Toby Connor

GoldScents

A financial blog primarily focused on the analysis of the secular gold bull market.

If you would like to be added to the email list that receives notice of new posts to GoldScents, or have questions, email Toby.

Here Is The Shocking Reason Why Gold Is Soaring Today

Posted: 22 Oct 2013 09:12 AM PDT

With the price of gold and silver surging, today one of the savviest and most well-connected hedge fund managers in the world spoke with King World News about the shocking reason why gold is now soaring. He also predicted "there is going to be a mad scramble for physical gold around the globe -- the likes of which the world has never seen in all of human history." William Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, had this to say in his timely and powerful interview.

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

Open Letter to the World Gold Council

Posted: 22 Oct 2013 09:07 AM PDT

Dear World Gold Council Executives; As you very well know, the business environment for gold producers has been extremely challenging over the past few years. While demand for physical gold remains extremely strong, prices on the COMEX have fallen precipitously. This contradictory situation is the single most important obstacle to a healthy gold mining industry.

Traders lack conviction in gold going into 2014

Posted: 22 Oct 2013 08:59 AM PDT

Amongst Western traders, “market participants lack conviction that gold could stage a decent performance going into 2014,” says a note from VTB Capital.

Read more….

Dubai gold bourse benefitting from Indian import rules

Posted: 22 Oct 2013 08:59 AM PDT

The increase in purchases on the Dubai gold bourse has been helped by the run up to the festival season in India, and economic uncertainty in the US.

Read more….

Gold remains in a tight consolidation mode

Posted: 22 Oct 2013 08:59 AM PDT

US sellers made quite an effort to, not just sell their gold but also try force down the price, says Julian Phillips.

Read more….

Eyes on gold equities, price, after US jobs data – Pre-bell notes

Posted: 22 Oct 2013 08:59 AM PDT

A morning wrap on metals and news. Today gold steady with eyes on critical data out of the US, which will surely have an impact on base metals too.

Read more….

Romania parliament delays gold mine report to Nov. 10

Posted: 22 Oct 2013 08:59 AM PDT

Gabriel Resources has been waiting 14 years for approval to use cyanide to mine 314 tonnes of gold and 1,500 tonnes of silver in the town of Rosia Montana.

Read more….

3 essentials to look for in junior mining equities – Macpherson

Posted: 22 Oct 2013 08:59 AM PDT

In this Gold Report interview, Derek Macpherson says that investors need to look for junior explorers with long-term vision, high grades and simple operations in good jurisdictions.

Read more….

Junior Gold Stocks: Textbook Volume

Posted: 22 Oct 2013 08:48 AM PDT

The US government is finally releasing the jobs report today. Most institutional players are expecting the report to show that about 180,000 new jobs were created in September. Read More...

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