Tuesday, October 8, 2013

Gold World News Flash

Gold World News Flash


OBAMA DESTROYING DOLLAR, CHINA to TAKE U.S. LAND for DEBT: Ann Barnhardt

Posted: 07 Oct 2013 07:05 PM PDT

Guest Post: Government Shutdowns, The Debt Ceiling And Gold

Posted: 07 Oct 2013 06:43 PM PDT

Submitted by Pater Tenebrarum via Acting-Man blog,

Political Grandstanding and the Dreaded 'Shutdown'

There have been 18 so-called 'government shutdowns' in the US in the past four decades, including the current one. Some were of very short duration, lasting only a day or two, a few lasted much longer (the record was the 21 day event in 1995). These shutdowns tend to happen regularly when the administration is in cohabitation with a Congressional majority in the hands of the opposition party.

For instance, if the Congressional majority is Republican and the president a Democrat as is the case at the moment, the Republicans will suddenly pretend to rediscover their inner fiscal conservative. Republican administrations backed by a Republican Congress are well known for spending money like drunken sailors, so this is really only pretense. The grandstanding is designed to pull the wool over the public's eyes: see, there are finally a few principled politicians making a stand on reducing the public debt!

That is of course nonsense. What the grandstanding and prancing about before the media is all about is only one thing: the question of how the loot is going to be divided and whose pet projects will get the most funding. It is essentially similar to elections in this regard: part of an auction of stolen goods. No-one wants to actually reduce overall spending or the public debt mountain (there are always a few exceptions to the rule of course, but you can count those on the fingers of one hand).

However, one does learn a few interesting things during these 'shutdowns'. For instance, 'non-essential government employees' are sent on unpaid vacation. This immediately raises a question though: if they are 'non-essential', why do they even exist? Once one is apprised of some of the details, it becomes even more obvious that there is something odd about these 'non-essential' jobs. Why are government employees operating ferries to the statue of liberty or selling tickets to national parks visitors? Even if one erroneously believes that such things as 'public goods' exist (i.e., goods for which there is a demand, but which the market allegedly cannot or will not provide) one should recognize that these things cannot be part of such a category of goods, however broadly it is conceived.

The shutdown is therefore a salutary event, if only because it might get some people to ask questions they haven't pondered before. As Murray Rothbard noted on occasion of the 1990 shutdown:

“In politics fall, not spring, is the silly season. How many times have we seen the farce: the crises deadline in October, the budget “summit” between the Executive and Congress, and the piteous wails of liberals and centrists that those wonderful, hard-working, dedicated “federal workers” may be “furloughed,” which unfortunately does not mean that they are thrown on the beach to find their way in the productive private sector.

 

The dread furlough means that for a few days or so, the oppressed taxpaying public gets to keep a bit more of its own money, while the federal workers get a rare chance to apply their dedication without mulcting the taxpayers: an opportunity that these bureaucrats invariably seem to pass up.

 

Has it occurred to many citizens that, for the few blessed days of federal shutdown, the world does not come to an end? That the stars remain in their courses, and everyone goes about their daily life as before?

 

[...]

 

The 1990 furlough crisis highlights some suggestive but neglected aspects of common thinking about the budget. In the first place, all parties are talking about “fair sharing of the pain,” of the “necessity to inflict pain,” etc. How come that government, and only government, is regularly associated with a systematic infliction of pain?

 

In contemplating the activities of Sony or Proctor and Gamble or countless other private firms, do we ask ourselves how much pain they propose to inflict upon us in the coming year? Why is it that government, and only government, is regularly coupled with pain: like ham-and-eggs, or . . . death-and-taxes? Perhaps we should begin to ask ourselves why government and pain are Gemini twins, and whether we really need an institution that consists of a massive engine for the imposition and administration of pain and suffering. Is there no better way to run our affairs?”

Indeed, the world will not end because of such a shutdown – on the contrary, it is a great opportunity to observe how many of the functions government has arrogated to itself are indeed redundant. As an aside, it was widely reported that the Republicans tied the question of whether to pass a budget resolution to the 'defunding' of the Obamacare Act. This is an example of Orwellian language. The alleged 'defunding' would not have 'defunded' a penny; it was merely about a few points of implementation. Specifically this particular point:

“Obama and Democratic congressional leaders demanded that Boehner allow a vote on a straightforward Senate bill to fund the government through Nov. 15. Under pressure from conservatives insisting he draw a hard line, Boehner refused.

 

Before that, the Senate rejected a House amendment delaying the entire healthcare law for a year, Boehner pushed through a second series of amendments to delay only the individual mandate and scrap subsidies in the law for members of Congress, their staff and political appointees.

 

Led by Reid, the Democratic majority in the upper chamber swatted down each House volley like a tennis player hovering at the net.”

So the major stumbling point that has led to the shutdown was the fact that the Democratic majority refused to give up the special privileges that allow members of Congress - contrary to all other citizens of the US - to 'opt out' from the Obamacare legislation's more onerous provisions. They will be able to save a lot of money that way.

The Debt Ceiling

Since the current shutdown is tied in with the 'debt ceiling' debate, it provides an even wider canvas for deliberations about government finances. We don't necessarily want to discuss the embarrassing inanities uttered by members of the political class in this context, or even those purveyed in the media. Starved for anything interesting to report, they are blowing the event way out of proportion (their pronouncements could hardly sound more apocalyptic if an asteroid were about to hit the earth).

Anyway, the president and his party (who naturally wish to see the debt ceiling increased sans conditions, i.e., they want to be free to continue to spend with both hands) have decided it is time to play the 'default scare card'. We should perhaps point out here that a 'ceiling' that keeps getting raised is not a 'ceiling' at all, so one wonders why it was created in the first place.

On the other hand, because the debt ceiling occasionally provides us with wholesome diversions such as government shutdowns, we must admit it is not an entirely useless piece of legislation. In fact, what we have here is a rara avis that successfully combines entertainment with education. One might call it an infotainment bill.

We are supposed to be in mortal dread over the prospect of a default. To wit, here is a recent press report announcing: “U.S. Treasury warns debt default could plunge America into worst recession since Great Depression.”

What? Not again! Didn't we just emerge from the 'worst recession since the Great Depression'? And yet, here it is again, the Great Depression boogeyman.

A U.S. government default caused by Congress failing to raise the $16.7 trillion federal debt limit could have catastrophic consequences that might last decades, the Treasury Department said in a report Thursday.

 

“Not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments, and slow economic growth, could last for more than a generation,” the Treasury said in the report.

 

In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth — with many private-sector analysts believing that it would lead to events of the magnitude of late 2008 or worse, and the result then was a recession more severe than any seen since the Great Depression,” the department said in the report.”

Of course this is complete nonsense as well. While it is true that a default by the US government would have grave repercussions – for instance, it may well end the dollar's dominance as the world's reserve currency, which is an extraordinary privilege enjoyed by the US – a failure to raise the debt ceiling won't lead to a default unless the treasury decides to default voluntarily.

The only thing that needs to be done to avoid a default is to merely stop deficit spending. The US treasury takes in some $2.4 trillion in tax revenue every year. That should give it plenty of scope to both continue pay interest on its existing debt as well as paying the principal on maturing debt (note that it can also issue new debt as long as it repays old debt and thereby remains within the limit imposed by the 'ceiling').

In fact, the only thing that would happen if the ceiling were not raised is that it would finally morph from the joke it currently is into an actual ceiling. Of course this would also imply that there could be no more spending growth and that nearly all discretionary spending would have to be stopped. The government's size would shrink by about a third, to where it was – 10 years or so ago perhaps? However, one thing that the recurring wrangle over raising the phony debt ceiling shows, is that there is absolutely no intention to ever reduce the debt mountain or – gasp! - actually repay the debt or even a portion of it. As Ludwig von Mises wrote about the nature of government debt (in 'Human Action')

“But if the government invests funds unsuccessfully and no surplus results, or if it spends the money for current expenditure, the capital borrowed shrinks or disappear entirely, and no source is opened from which interest and principal could be paid. Then taxing the people is the only method available for complying with the articles of the credit contract. In asking taxes for such payments the government makes the citizens answerable for money squandered in the past. The taxes paid are not compensated by any present service rendered by the government's apparatus. The government pays interest on capital which has been consumed and no longer exists. The treasury is burdened with the unfortunate results of past policies.”

Therefore, if any 'services' are to be rendered by the government once its existing debt burden exceeds a certain threshold, it will have to spend ever more – and this can only be done by either raising taxes, borrowing more funds or by means of monetary inflation. In reality, all three have been and continue to be resorted to by modern-day governments.

We often hear that government debt is required by financial institutions to render the service of 'safe collateral', but this 'safety' is an illusion. As Mises notes on this point (ibid):

“The long-term public and semipublic credit is a foreign and disturbing element in the structure of a market society. Its establishment was a futile attempt to go beyond the limits of human action and to create an orbit of security and eternity removed from the transitoriness and instability of earthly affairs. What an arrogant presumption to borrow and to lend money for ever and ever, to make contracts for eternity, to stipulate for all times to come!

 

In this respect it mattered little whether the loans were in a formal manner made irredeemable or not; intentionally and practically they were as a rule considered and dealt with as such. In the heyday of liberalism some Western nations really retired parts of their long-term debt by honest reimbursement. But for the most part new debts were only heaped upon old ones. The financial history of the last century shows a steady increase in the amount of public indebtedness.

 

Nobody believes that the states will eternally drag the burden of these interest payments. It is obvious that sooner or later all these debts will be liquidated in some way or other, but certainly not by payment of interest and principal according to the terms of the contract.”

Indeed, deep down nobody truly believes that these debts will ever be paid – and if they are paid, then likely only with money the purchasing power of which has steeply diminished. Essentially, government debt everywhere is a Ponzi scheme: old creditors are paid off with funds received by new creditors and the scheme continues to expand in size, seemingly inexorably. Here is a chart showing the US Federal debt. Since the year 2000, the US government has issued almost twice as much additional debt as it has issued in its entire history from 1776 to 2000.

US federal debt has nearly tripled since the year 2000

It is no coincidence that the true broad US money supply TMS-2 has risen by nearly 230% over the same time span. Here is a chart showing this monetary aggregate. Note the remarks we have added – if the growth rate in this monetary aggregate should slow down again, the Bernanke echo bubble will crash. The entire so-called 'recovery', such as it is, depends on this money supply inflation continuing at a steep rate:

US money supply TMS-2 since 1988. Since the year 2000, the money supply has increased by nearly 230% - whenever the rate of increase merely slows down, asset markets and the economy tend to crash.

One conclusion from this is that the authorities are now 'boxed in'. They have to continue to spend and inflate, otherwise the liquidation of malinvested capital the Fed has arrested with its money printing exercises will immediately resume. But can such a policy be continued forever and ever without any untoward consequences?

The answer to this question must be a resounding 'no'. Already the US banking system has begun to sharply reduce the issuance of inflationary credit, which is a sign that the economy is structurally so severely damaged that there is literally 'nothing left to lend'. In other words, if the banks were to issue additional credit from thin air – something they could in theory do – they would do so in the knowledge that this credit cannot ever be repaid, as underlying economic activities are no longer able to support the addition of even more debt. In fact, it is to be questioned whether they can support the already existing outstanding debt. Too many credit bubbles have apparently consumed too much real capital. We may already be at the point of no return, where it is simply 'game over'.

And yet, total credit market debt outstanding continues to grow, as the government has stepped in to an extent exceeding any private sector deleveraging that may have occurred. In fact, only part of the private sector is actually reducing its debt load, namely households. Corporations, just like the government, keep going ever deeper into debt (which is putting their record high aggregate cash hoards into perspective. Note that neither the cash held by corporations nor the debt on balance sheets are evenly distributed; the aggregation of such numbers obscures more than it reveals).

Total US credit market debt owed continues to zoom to new record highs after a one year pause following the 2008 crisis.

We strongly suspect that both government debt growth and money supply inflation will continue unabated – any pause will immediately bring about the kind of short term economic pain these policies have explicitly sought to prevent and will therefore be quickly reversed.

It is not unlike the situation the revolutionary assembly of France found itself in in the late 18th century: when it issued new money, industry seemed to revive. As soon as it stopped, industry slumped again. And so it was decided to issue ever more money, until the entire scheme blew up.

There can be little doubt that modern-day governments are on the road to a similar date with destiny – and lately the speed at which they travel toward it has increased markedly.

Gold

The gold market has been under pressure ever since it has begun to lose its 'euro crisis premium'. Nowadays nearly all the banks and brokers that turned bullish on gold when it rallied above $1,500 per ounce are fashionably bearish. Of course such analyses cannot help investors at all. Who needs an analyst who is turning bullish at $1,500 or 1,600 or 1,700 and then turns bearish at $1,400 or 1,300? Obviously one cannot make money with such advice.

However, these considerations are only relevant for traders. Longer term investors should not worry too much at what price gold trades from day to day or week to week. They buy gold because they must expect that government debt and monetary inflation will indeed continue on the path they have been on for quite some time now and that the above mentioned 'date with destiny' is very likely unavoidable.

Of course there is always a remote possibility that fiscal discipline and monetary policy rigor will make a comeback, but betting on such an outcome seems foolish. The incentives for politicians and bureaucrats are all firmly skewed in the opposite direction.

The current equanimity of markets and the enormous faith market participants apparently have in central banks and their ability to 'keep things under control' are likely to prove to be ephemeral phenomena. They are based on a comforting fantasy, as most people find other possibilities too ghastly to contemplate. That actually creates an opportunity to buy gold at a discount. On the day when this unbridled faith in central bankers crumbles, one will do well only if one already has one's insurance in hand, preferably safely stored where it is well outside the grasp of the bureaucratic and political classes.

As noted above, there is always an outside chance that this insurance won't be needed. The market economy, in spite of all the obstacles arrayed against it, continues to produce wealth. Not every investment is misguided, even though economic calculation is severely distorted by present-day policies. If the proper framework is put in place, the economy will thrive.

However, the chances that such insurance will indeed be needed seem greater today than ever. It matters little that Europe's crisis no longer dominates the headlines; what one must ask is: has anything changed? Nothing has – the mountain of public debt in Europe continues to grow. Japan is engaged in an extremely dubious monetary and fiscal experiment even while the size of its public debt hastens from record to record. Everybody knows this is unsustainable – the only question is when the day will come when the markets finally throw a fit and the unsustainable nature of this situation becomes glaringly obvious to all. It is unknowable at this time which of the many p

The Wild, Wild West: Dispatches from the lawless frontier of precious metals trading

Posted: 07 Oct 2013 06:00 PM PDT

by Pining 4 the Fjords, TF Metals Report:

For five long years, the Commodities Futures Trading Commission (CFTC) has described their investigation of manipulation in the silver markets as "ongoing". During this investigation, trader Andrew Maguire exchanged a series of emails with personnel at the CFTC informing them that he was witnessing obvious and recognizable manipulation of these markets to such a degree that he could often recognize when a manipulative event was going to take place BEFORE it happened.

Maguire then proceeded to demonstrate this for them, emailing the CFTC and informing them that a market smash was going to take place. With the CFTC watching, the manipulative event then occurred precisely as Maguire had warned them and price magically wound up at the exact level that Maguire has said it was going to.

Read More at TFMetals.com

Julian Robertson Warns "We Are In A Bubble Market" And Yellen Is "Way Too Easy Money"

Posted: 07 Oct 2013 05:40 PM PDT

"Steve Jobs was really a pretty terrible man... and I just don't believe bad guys do well in the long run," is the subtle way the billionaire fund managed describes the ex Apple CEO before shifting his view to the broader market. A spell-bound Maria Bartiromo was looking for any silver lining when Julian Robertson responded ominously, "we're in the middle of a kind of bubble market," and when they "prick the bubble, there will probably be a pretty bad reaction." With views on The Fed's easy-money, Twitter, and market frothiness, Robertson is a breath of truthy fresh air that we suspect will not be back on the money-honey's show anytime soon...

 

 

On Steve Jobs:

"I came to the conclusion that it was unlikely that a man as really awful as I think that Steve Jobs was, could possibly create a great company for the long term.

 

I just don't believe bad guys do well in the long run," Robertson said.

On The Market:

...the broader market is "fully valued" and otherwise appears a little frothy.

 

"I think we're in the middle of a kind of bubble market, where it's going to take something bubble-like to happen to prick the bubble and will probably have pretty bad reaction to the breaking of the bubble," Robertson said.

 

"Probably will not [happen] right now and somehow I think we'll wallow through the political and fiscal crisis we have in front of us and then we'll sort of see what happens."

On The Fed:

...he would not prefer Vice Chair Janet Yellen because he thinks she's "way too easy money."

Fed's only true purpose is to finance government, Turk tells KWN

Posted: 07 Oct 2013 05:04 PM PDT

8a CST Tuesday, October 8, 2013

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk tells King World News today that the Federal Reserve's only true purpose is to fund the U.S. government, not to pursue full employment with price stability, and that a recent speech by a Fed regional bank president confirms as much. An excerpt from Turk's interview is posted at the King World News blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/7_I_...

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



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Jim Sinclair Plans Seminar in Washington on Oct. 19

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

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



Join GATA here:

Louis Boulanger Now Seminar
Visitors Center, Holy Trinity Parnell
Auckland, New Zeland
Sunday, October 13, 2013

http://www.gata.org/files/GATAInNewZealand.pdf

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

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

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

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

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

http://www.minesandmoney.com/

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

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

* * *

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

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

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

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

http://gata.org/node/wallstreetjournal

Help keep GATA going

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

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To contribute to GATA, please visit:

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



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Silver and Gold Prices Rose with the Gold Price Closing at $1,325.10

Posted: 07 Oct 2013 04:47 PM PDT

Gold Price Close Today : 1325.10
Change : 15.20 or 1.16%

Silver Price Close Today : 22.380
Change : 0.630 or 2.90%

Gold Silver Ratio Today : 59.209
Change : -1.016 or -1.69%

Silver Gold Ratio Today : 0.01689
Change : 0.000285 or 1.72%

Platinum Price Close Today : 1402.10
Change : 8.10 or 0.58%

Palladium Price Close Today : 703.70
Change : 2.30 or 0.33%

S&P 500 : 1,676.12
Change : -14.38 or -0.85%

Dow In GOLD$ : $233.01
Change : $ (4.86) or -2.04%

Dow in GOLD oz : 11.272
Change : -0.235 or -2.04%

Dow in SILVER oz : 667.39
Change : -25.60 or -3.69%

Dow Industrial : 14,936.24
Change : -136.34 or -0.90%

US Dollar Index : 80.166
Change : 0.432 or 0.54%

Franklin is travelling this week, but he wanted y'all to receive today's prices.

God willing, Franklin will return on Monday, 14 October 2013.

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 Rose with the Gold Price Closing at $1,325.10

Posted: 07 Oct 2013 04:47 PM PDT

Gold Price Close Today : 1325.10
Change : 15.20 or 1.16%

Silver Price Close Today : 22.380
Change : 0.630 or 2.90%

Gold Silver Ratio Today : 59.209
Change : -1.016 or -1.69%

Silver Gold Ratio Today : 0.01689
Change : 0.000285 or 1.72%

Platinum Price Close Today : 1402.10
Change : 8.10 or 0.58%

Palladium Price Close Today : 703.70
Change : 2.30 or 0.33%

S&P 500 : 1,676.12
Change : -14.38 or -0.85%

Dow In GOLD$ : $233.01
Change : $ (4.86) or -2.04%

Dow in GOLD oz : 11.272
Change : -0.235 or -2.04%

Dow in SILVER oz : 667.39
Change : -25.60 or -3.69%

Dow Industrial : 14,936.24
Change : -136.34 or -0.90%

US Dollar Index : 80.166
Change : 0.432 or 0.54%

Franklin is travelling this week, but he wanted y'all to receive today's prices.

God willing, Franklin will return on Monday, 14 October 2013.

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.

Guest Post: Is Saving Money Bad For The Economy?

Posted: 07 Oct 2013 04:44 PM PDT

Submitted by Gregory Bresinger via the Ludwig von Mises Institute,

Our grandparents believed in the value of thrift, but many of their grandchildren don’t.

That’s because cultural and economic values have changed dramatically over the last generations as political and media elites have convinced many Americans that saving is passé. So today, under the influence of Keynesian economists who champion government spending and high levels of consumption, thrift has been devalued.

“The growth in wealth, so far from being dependent on the abstinence [savings] of the rich, as is commonly supposed, is more likely to be impeded by it,” according to John Maynard Keynes’s The General Theory of Employment, Interest and Money.

“The more virtuous we are, the more determinedly thrifty, the more obstinately orthodox in our national and personal finance, the more incomes will have to fall,” he writes. “Saving,” Keynes wrote in his Treatise on Money, “is the act of the individual consumer and consists in the negative act of refraining from spending the whole of his current income on consumption.”

But saving, pace Keynes, isn’t “negative.” It is deferred consumption. “The great producing countries are the great consuming countries,” writes Benjamin Anderson in Economics and the Public Welfare. More importantly, high rates of savings will lead to higher productivity, which would benefit our children and grandchildren, classical and Austrian economists have explained.

“We are the lucky heirs of our fathers and forefathers whose saving has accumulated the capital goods with the aid of which we are working today,” wrote Ludwig von Mises in Human Action. Saving, ultimately, is consumption, writes Detley S. Schlichter in Paper Money Collapse. “By setting aside some resources for meeting financial consumption needs, we invest them.”

Nevertheless, Keynesian ideas dominate the Obama administration and mass media. Most politicians, including Republicans who often pretend to be friends of thrift and self-improvement, are tacit or overt Keynesians. That’s because politicians, whether they have studied Keynes or not, generally love the idea of cheap money. Most delight in spending taxpayer dollars. They believe this is the way elections are won.

This Keynesian dominance has led to dramatic economic and cultural changes. These changes have been going on in America for over a half century. For instance, the United States has gone from a nation with one of the highest rates of savings during the 20s to having one of the lowest rates among major industrial nations today.

Yet penalizing thrift, the lifeblood of job creation and better tools that make current workers more efficient, has hurt the nation’s ability to grow and employ millions of young people looking for jobs. That’s because Keynesianism, according to its modern interpreters, amounts to a celebration of consumption. It is a belief that government spending combined with low savings rates lead to permanent booms.

It is the government’s role, Keynes’s followers believe, to keep the boom going through spending. So it is consumption, not supply, that makes a successful economy, they say.

Mainstream media rehashes the message that the consumer, not the producer, is the biggest part of the economy. Politicians agree.

As the economy started to slow down in 2006, President Bush urged Americans to “go shopping more.” Newsweek, in a headline story several years ago, told Americans to “Stop Saving Now.”

This anti-saving philosophy is more than just bad macro-economics. It is the doctrine that has come to take over economic thinking, now dominated in the popular media by Keynesian economists such as Paul Krugman. In his latest book, End This Depression Now, he explains why growth rates are low. The administration hasn’t been sufficiently Keynesian enough. Obama’s stimulus, he complains, was on a “wholly inadequate scale.”

Keynesians of all stripes have constantly urged Americans, especially the government, to spend. The effect of this change has been more than numbers. It also changed how many Americans see the path to self-improvement. Joe Sixpack, the average American who once believed that through thrift, hard work and discipline he could save his way to a better life for his family, is the victim. Keynesian economists and mainstream media commentators often depict savers as selfish people.

Even the average person with his savings account, living in a Brooklyn tenement (I’m speaking of bus driver Ralph Kramden from the iconic television series The Honeymooners) must pay taxes on his measly $75 savings account. This anti-savings mentality has amazed some from nations where savings are viewed positively.

A former U.S. Commerce Secretary was asked by his Japanese counterpart in the 1970s in Pete Peterson’s book Facing Up, “please explain putting the highest taxes on what you call unearned income. We have always assumed that income from savings was the most earned of all. It is hard work to save, don’t you think?”

Tens of millions of baby boomers aren’t doing the hard work. They have little or no savings. How will Keynes and his scions’ misguided policies provide a decent standard of living for them?

America’s personal savings rate declined some 56 percent over the past 50 years from 1963-2012, according to the 2013 Economic Report of the President. The personal savings rate averaged just 3.8 percent in the decade between 2003 and 2012. That’s a big drop compared to the 1963-1972 period when it was 8.7 percent.

However, it’s worse than that. Since the end of last year, the personal savings rate has declined some more, dipping to 2.5 percent in March and April, according to the U.S. Commerce Department’s Bureau of Economic Analysis.

Even President Obama’s economic report, in documenting that savings rates are low, concedes that the recovery that began some four years ago is weak. The recovery, according to the president’s report, trails previous ones.

“From 1960 to 2007, the U.S. economy had seven recessions, and the annual rate of growth of real GDP during the 12 quarters following these recessions was 4.2 percent,” the presidential report said. “In contrast, during the 12 quarters following the trough in the second quarter of 2009, the average annual rate of growth of real GDP was 2.2 percent. After three years of recovery, the cumulative growth of real GDP was 6.3 percentage points lower than the average value for the earlier post-1960 recessions.”

Meanwhile, savers are penalized for their thrift. The Fed’s policies mean they receive almost nothing in interest.

Remarkably, President Obama, in the same report, in a move Keynes would have likely applauded, proposes to put a cap on qualified retirement plan balances. Apparently, the president agrees saving is “a negative act.”

These anti-saving policies should change, some say. A better tax code, one that promotes and doesn’t tax savings to death, will “mean more innovation, job creation and higher wages,” U.S. House of Representatives Ways and Means Committee Chairman Dave Camp noted when I interviewed him for an article in the New York Post.

“When workers see paychecks start to rise again,” Camp adds, “they will be better able to make decisions that best serve the financial needs of their family — including building up their savings.”

But that doesn’t necessarily mean Camp and others will now reject Keynes. Plenty of Republicans— consciously or unconsciously — have shown themselves to be philosophical followers of Keynes. And Camp, working on an overhaul of the tax code, might consider a logical measure: Why not drop all taxes on a savings and investment as a way to reverse decades of destructive economic policy?

That could be the most important decision for a generation of young people without work because doesn’t generate enough capital. It could also be critical for their parents who approach a retirement with a falling standard of living.

Despite the Keynesian sentiments of much of our political and media elites, we owe it to our grandparents to re-learn the lessons of thrift.

Stocks Set To Plunge – Gold To See A Spectacular Surge

Posted: 07 Oct 2013 04:20 PM PDT

from KingWorldNews:

One of the central tenets of cycle theory is that the long term trend always dominates the shorter term cycle. Joseph Schumpeter, the Austrian economist who did so much to promote our understanding of cyclical behaviour in the 1930s, warned that what he termed "external events" could temporarily distort the contours of a cycle.

When one of these external events occurs, the shorter term cycles are more easily blown off course than the longer terms ones (although these, too, can be twisted by very extreme events). In the current situation we regard Quantitative Easing (QE) as an external event because it is specifically designed to prevent the market acting as it would do without this intervention.

Robin Griffiths continues @ KingWorldNews.com

How My Gold Standard Thinking Has Changed The Last Two Years

Posted: 07 Oct 2013 03:01 PM PDT

New World Economics

Jim Rickards: Gold Price Could Double Overnight In US Dollar Crisis

Posted: 07 Oct 2013 02:53 PM PDT

Before proceeding, please be adviced that the statement in the title is not a forecast nor an expectation. The potential for the gold price to double overnight is real and existing, which is not the same as sure.

In a major US dollar devaluation crisis, which would occur if the US would fail to raise the debt ceiling on Thursday October 17th, there should be a significant impact on the gold price. Jim Rickards wrote about this in his book 'Currency Wars: The Making of the Next Global Crisis' in which he “envisages a series of 'black swan' events that trigger a loss of confidence in the US dollar precipitating a rush to get out of the greenback.”

In such a scenario, the market would question the Fed's staying power, which is the most fundamental aspect of the current monetary system. A dollar collapse would ensue and gold could double in price overnight.

The following comes from Arabianmoney:

The US President is then left with no alternative but to take charge under the 1977 International Emergency Economic Powers Act. He nationalizes all gold held on US soil and suspends bond trading to halt the dollar's fall. A bipartisan commission is appointed with 30 days to sort out what to do next.

Basically the US dollar has to be reissued and reset to a new value based on a much higher price of gold. If this all sounds far-fetched then it is. But so was the subprime mortgage crisis before it actually struck and yet it happened.

The unsinkable can sink, and so could the US dollar, just as HSBC was the biggest loser in the subprime crisis (although the bank did not sink because its compartments held and it managed to right itself without a government bailout).

Other currencies in over-indebted economies have suffered this fate in the past. However, as Jim Rickards points out in his book the US still has a final card to play in the global currency wars as it has 57 per cent of the world's gold reserves within its boundaries and so would command any new global monetary system as it did the old. To that extent it would not be different this time around.

But the gold price would be reset permanently higher, and $7,500-10,000 an ounce in old dollars is Mr. Rickards best estimate.

“I Believe We Are Now Approaching The End Game”

Posted: 07 Oct 2013 02:42 PM PDT

With the US dollar closing below the key psychological level of 80, and the Dow ending the trading day well below 15,000, a man who has been trading major markets for over four decades told King World News, "I believe we are now approaching the end game." He also warned KWN that "This unprecedented and incredibly dangerous monetary experiment is heading toward a catastrophic outcome." Below is what James Turk had to say.

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

Now The Chinese Are Wagging Their Fingers At Obama

Posted: 07 Oct 2013 02:21 PM PDT

Submitted by Simon Black of Sovereign Man blog,

 

“Diminishing Superpower”

This was the headline streaking across the weekend edition of the Jakarta Globe, one of the largest newspapers in Indonesia.

The photo beneath was of Barack Obama, his lips pursed and eyes steeled as if he was fighting back tears. Or perhaps staring off into the fiscal abyss.

The subheadline read: “Obama’s APEC absence symbolic of US waning influence in Asia.”

The article goes on to describe how the President’s conspicuous absence from this weekend’s summit of the Asia Pacific Economic Cooperation (a multinational trade bloc in the Asia/Pacific region) highlights the decline of the US as the world’s superpower.

It’s so obvious to everyone else that the US is in terminal decline.

(Granted, the Indonesians are a bit miffed given that they went to the trouble of closing the brand new airport in Bali for four days, partly because of the anticipated arrival of Air Force One… and then the President didn’t bother showing up.)

Russian President Vladimir Putin and Chinese President Xi Jinping stepped up in Obama’s stead, taking the world’s stage in yet another clear sign of where the real economic power and leadership is.

Putin himself was even nominated for the Nobel Peace Prize… for preventing a former Nobel Peace Prize recipient (Barack Obama) from starting a war Syria.

Meanwhile, China’s vice Finance Minister Zhu Guangyao has been wagging his finger at the US Treasury Department, warning that “the clock is ticking” and that Obama should “take decisive and credible steps to avoid a default on its Treasury bonds.”

All this comes at a time when the US has been caught red handed spying on the rest of the world, including its own people… and its allies. This prompted the Brazilian President Dilma Rousseff to cancel an official visit to the United States this month.

It’s amazing when you step back and look at the big picture.

The Russians are preventing a US military invasion. The Chinese actually have to step in and say something publicly to ensure that the US government pays its bills. The Brazilians are too disgusted to even visit Washington DC.

What a completely different world we live in, even compared to just 10 or 15 years ago.

Think back to the late 90s. The US really was the pinnacle of civilization. The government was beginning to pay down its debt. America’s reputation was unblemished. And to most foreigners, the US economy was the envy of the world.

What’s happening today would have been unthinkable back then. But it just goes to show how quickly things can unravel.

It’s tremendously important that the reputation of the US government is sinking to an all-time low internationally.

Remember, the reason that the US Federal Reserve can print trillions of dollars is because the rest of the world has for decades been willing to accept dollars for international transactions and sovereign reserves.

Nearly every government and central bank on the planet has a big pile of dollars stashed away.

The US government seems to think that this arrangement will last forever, and that their actions are without consequence. Nothing is further from the truth.

As the US government’s international reputation craters after one embarrassing episode after another, other nations are beginning to no longer trust the US, whether it comes to spying or managing a sound currency.

This puts the US dollar at even greater risk of quickly losing global reserve domination, and along with it, the ability to print money without damning ramifications.

As history has shown so many times before, this is exactly how the end begins.

Special Report: Precious Metals

Posted: 07 Oct 2013 01:55 PM PDT

Our Quick Pivot of August 22nd noted that the surge in Precious Metals had become speculative. The RSI on the silver/gold ratio had reached 79 when anything above 78 indicated "dangerous conditions". Read More...

When Wealth Disappears

Posted: 07 Oct 2013 01:44 PM PDT

By Stephen D. King, chief economist at HSBC
07-Oct (The New York Times) — As bad as things in Washington are — the federal government shutdown since Tuesday, the slim but real potential for a debt default, a political system that seems increasingly ungovernable — they are going to get much worse, for the United States and other advanced economies, in the years ahead.

From the end of World War II to the brief interlude of prosperity after the cold war, politicians could console themselves with the thought that rapid economic growth would eventually rescue them from short-term fiscal transgressions. The miracle of rising living standards encouraged rich countries increasingly to live beyond their means, happy in the belief that healthy returns on their real estate and investment portfolios would let them pay off debts, educate their children and pay for their medical care and retirement. This was, it seemed, the postwar generations' collective destiny.

But the numbers no longer add up.

…Policy makers simply pray for a strong recovery. They opt for the illusion because the reality is too bleak to bear. But as the current fiscal crisis demonstrates, facing the pain will not be easy. And the waking up from our collective illusions has barely begun.

[source]

PG View: King paints a pretty grim picture of our future, but we’ve heard it all before: If sluggish growth and disappearing growth is indeed the “new normal” then you should be diligently seeking to protect the wealth you’ve already accumulated. Gold served this very roll for thousands of years.

Gold Daily and Silver Weekly Charts - Bracing Against the Wind

Posted: 07 Oct 2013 01:16 PM PDT

Gold Daily and Silver Weekly Charts - Bracing Against the Wind

Posted: 07 Oct 2013 01:16 PM PDT

Gold Update – Still On Track For A Lower Low

Posted: 07 Oct 2013 01:00 PM PDT

In our last public article about gold, we presented the case for gold finding resistance somewhere near the $1,396 price level, before turning downward to seek slightly lower lows. Gold actually reached a bit higher than the number ... Read More...

New Fed Alarm Over Shadow Banking

Posted: 07 Oct 2013 12:55 PM PDT

Fed's next power-grab coming, targeting private-sector lenders now free of Fed bail-outs...
 
IT COMES to something when every story you read in the papers makes you ask: What's the agenda? says Miguel Perez-Santalla at BullionVault.
 
But I can't help asking that question reading today's Wall Street Journal, and the article entitled "New Alarm on Shadow Loans".
 
Before I began reading it, I felt I knew what its intent would be: more control by the federal government, and less freedom for the private economy to serve consumers, householders and businesses as they would wish.
 
Once again, the Federal Reserve Bank – who has since its inception 100 years ago been a poor controller of banking practices and even poorer at policing banking entities – wants to expand its portfolio of lending institutions which it regulates and supports. These latest targets are those known as "Shadow Banking Businesses".
 
What that term actually reflects is businesses which lend money without any banking regulations. Of course, that doesn't mean they are unregulated. This "shadow banking sector" is regulated by all the normal business rules and regulations. We're talking about micro-lenders, pawnshops, auto lending, and any other form of lending that may not be directly controlled by the banking system.
 
Ask yourself why, in the last six months, you keep reading that the Federal Reserve Bank is concerned about shadow loans. Could it be the fact that all the quantitative easing – an $85 billion monthly injection of capital into the banking system – has not resurrected lending from the official banking sector? Could it be that they want to bring shadow banking under their umbrella so that they can claim that these loans are being made through the support of the fed banking system? Or is it just another power grab?
 
The WSJ article states there are one trillion dollars in this shadow lending sector. The New York Fed is quoted as saying "much of this money is being lent under loose conditions." It goes on to state that "the deterioration in loan underwriting has come hand-in-hand with an increased presence of retail investors in the leverage loan market."
 
I wonder: If these businesses are unregulated, how is it that the New York Fed has any idea about their lending practices? Moreover, why does it concern them at all anyway?
 
First I believe the Fed, the leader of the organized banking concerns, does not like competition. Secondly, they are losing business to the competition and so they want to bring it under their umbrella to stifle it. I can't see any other reason for their concern.
 
What if these "shadow lending" businesses did have problems with their loans? They would go bankrupt is the simple answer. They are not part of the banking system, they should not be bailed out, and there should not be any public money injected to help private lending institutions. So, it is not in the Fed's hands simply put.
 
So the Fed bringing these types of organizations under their umbrella would only undermine these already functioning lending institutions in the public domain. The Federal Deposit Insurance Corporation, or FDIC, which exists to support and regulate the banking institutions in essence increases the risk to both lender and depositor. Because it creates the ability to work with lower capital basis versus reserves, with the FDIC underwriting the risk of collapse.
 
Of course after the 2008 banking meltdown in the economy, we are all well aware of the deficiencies of our governing agencies in managing the licensed banking institutions which it already regulates. The question then remains, what would make their involvement in the shadow banking industry an important or positive influence?
 
One point made in favor is that individual investors, who represent roughly one third of the money behind leveraged loans issued in 2013, are at risk. No kidding! That is the risk they take when seeking high returns. This is why it is called an investment and not a deposit.
 
An investment is always a risk and the people and its government should not be responsible for risks taken by investors. Nor should the government step in every time it sees people taking risks, and spread that risk across all taxpayers instead by seeking to regulate – and so underwrite – the investment being done.
 
I sincerely fear that what I read in the Journal this morning intimates that the Federal Reserve Bank is gearing up to propose regulation of the shadow banking industry. This is an unwise and unjust cause. I for one would vote against if given any say, and I will write my representatives asking for them to vote against it whenever possible. Most likely if the ruling party agrees with the Federal Reserve it will find a way to give them this power.
 
In reverse, I would like to see all national US banking associations broken up by state. I would like to see more power given to state banking authorities. I would like to see a return to hands-on management of the banking industry something that cannot be done through a federally centralized organization.
 
This is also unlikely to happen. But in view of our constantly growing oligarchy – which we call the federal government – I consider it an omen that the problems we currently have and are trying to work through will only be exacerbated. Sadly as a citizen of the United States of America I lack confidence in the current structure that controls our money. For this reason alone I believe in holding gold as an asset that is outside of the banking industry and cannot be manipulated by machinations of governmental agencies.
 
With the current state of affairs, the government shutdown and the impending debt ceiling, I have little faith that the US government under its current leadership can get its affairs in order. Trying to extend its powers, and its responsibilities to utterly private risks taken freely, is just another example of how the state has lost its way.

New Fed Alarm Over Shadow Banking

Posted: 07 Oct 2013 12:55 PM PDT

Fed's next power-grab coming, targeting private-sector lenders now free of Fed bail-outs...
 
IT COMES to something when every story you read in the papers makes you ask: What's the agenda? says Miguel Perez-Santalla at BullionVault.
 
But I can't help asking that question reading today's Wall Street Journal, and the article entitled "New Alarm on Shadow Loans".
 
Before I began reading it, I felt I knew what its intent would be: more control by the federal government, and less freedom for the private economy to serve consumers, householders and businesses as they would wish.
 
Once again, the Federal Reserve Bank – who has since its inception 100 years ago been a poor controller of banking practices and even poorer at policing banking entities – wants to expand its portfolio of lending institutions which it regulates and supports. These latest targets are those known as "Shadow Banking Businesses".
 
What that term actually reflects is businesses which lend money without any banking regulations. Of course, that doesn't mean they are unregulated. This "shadow banking sector" is regulated by all the normal business rules and regulations. We're talking about micro-lenders, pawnshops, auto lending, and any other form of lending that may not be directly controlled by the banking system.
 
Ask yourself why, in the last six months, you keep reading that the Federal Reserve Bank is concerned about shadow loans. Could it be the fact that all the quantitative easing – an $85 billion monthly injection of capital into the banking system – has not resurrected lending from the official banking sector? Could it be that they want to bring shadow banking under their umbrella so that they can claim that these loans are being made through the support of the fed banking system? Or is it just another power grab?
 
The WSJ article states there are one trillion dollars in this shadow lending sector. The New York Fed is quoted as saying "much of this money is being lent under loose conditions." It goes on to state that "the deterioration in loan underwriting has come hand-in-hand with an increased presence of retail investors in the leverage loan market."
 
I wonder: If these businesses are unregulated, how is it that the New York Fed has any idea about their lending practices? Moreover, why does it concern them at all anyway?
 
First I believe the Fed, the leader of the organized banking concerns, does not like competition. Secondly, they are losing business to the competition and so they want to bring it under their umbrella to stifle it. I can't see any other reason for their concern.
 
What if these "shadow lending" businesses did have problems with their loans? They would go bankrupt is the simple answer. They are not part of the banking system, they should not be bailed out, and there should not be any public money injected to help private lending institutions. So, it is not in the Fed's hands simply put.
 
So the Fed bringing these types of organizations under their umbrella would only undermine these already functioning lending institutions in the public domain. The Federal Deposit Insurance Corporation, or FDIC, which exists to support and regulate the banking institutions in essence increases the risk to both lender and depositor. Because it creates the ability to work with lower capital basis versus reserves, with the FDIC underwriting the risk of collapse.
 
Of course after the 2008 banking meltdown in the economy, we are all well aware of the deficiencies of our governing agencies in managing the licensed banking institutions which it already regulates. The question then remains, what would make their involvement in the shadow banking industry an important or positive influence?
 
One point made in favor is that individual investors, who represent roughly one third of the money behind leveraged loans issued in 2013, are at risk. No kidding! That is the risk they take when seeking high returns. This is why it is called an investment and not a deposit.
 
An investment is always a risk and the people and its government should not be responsible for risks taken by investors. Nor should the government step in every time it sees people taking risks, and spread that risk across all taxpayers instead by seeking to regulate – and so underwrite – the investment being done.
 
I sincerely fear that what I read in the Journal this morning intimates that the Federal Reserve Bank is gearing up to propose regulation of the shadow banking industry. This is an unwise and unjust cause. I for one would vote against if given any say, and I will write my representatives asking for them to vote against it whenever possible. Most likely if the ruling party agrees with the Federal Reserve it will find a way to give them this power.
 
In reverse, I would like to see all national US banking associations broken up by state. I would like to see more power given to state banking authorities. I would like to see a return to hands-on management of the banking industry something that cannot be done through a federally centralized organization.
 
This is also unlikely to happen. But in view of our constantly growing oligarchy – which we call the federal government – I consider it an omen that the problems we currently have and are trying to work through will only be exacerbated. Sadly as a citizen of the United States of America I lack confidence in the current structure that controls our money. For this reason alone I believe in holding gold as an asset that is outside of the banking industry and cannot be manipulated by machinations of governmental agencies.
 
With the current state of affairs, the government shutdown and the impending debt ceiling, I have little faith that the US government under its current leadership can get its affairs in order. Trying to extend its powers, and its responsibilities to utterly private risks taken freely, is just another example of how the state has lost its way.

New Fed Alarm Over Shadow Banking

Posted: 07 Oct 2013 12:55 PM PDT

Fed's next power-grab coming, targeting private-sector lenders now free of Fed bail-outs...
 
IT COMES to something when every story you read in the papers makes you ask: What's the agenda? says Miguel Perez-Santalla at BullionVault.
 
But I can't help asking that question reading today's Wall Street Journal, and the article entitled "New Alarm on Shadow Loans".
 
Before I began reading it, I felt I knew what its intent would be: more control by the federal government, and less freedom for the private economy to serve consumers, householders and businesses as they would wish.
 
Once again, the Federal Reserve Bank – who has since its inception 100 years ago been a poor controller of banking practices and even poorer at policing banking entities – wants to expand its portfolio of lending institutions which it regulates and supports. These latest targets are those known as "Shadow Banking Businesses".
 
What that term actually reflects is businesses which lend money without any banking regulations. Of course, that doesn't mean they are unregulated. This "shadow banking sector" is regulated by all the normal business rules and regulations. We're talking about micro-lenders, pawnshops, auto lending, and any other form of lending that may not be directly controlled by the banking system.
 
Ask yourself why, in the last six months, you keep reading that the Federal Reserve Bank is concerned about shadow loans. Could it be the fact that all the quantitative easing – an $85 billion monthly injection of capital into the banking system – has not resurrected lending from the official banking sector? Could it be that they want to bring shadow banking under their umbrella so that they can claim that these loans are being made through the support of the fed banking system? Or is it just another power grab?
 
The WSJ article states there are one trillion dollars in this shadow lending sector. The New York Fed is quoted as saying "much of this money is being lent under loose conditions." It goes on to state that "the deterioration in loan underwriting has come hand-in-hand with an increased presence of retail investors in the leverage loan market."
 
I wonder: If these businesses are unregulated, how is it that the New York Fed has any idea about their lending practices? Moreover, why does it concern them at all anyway?
 
First I believe the Fed, the leader of the organized banking concerns, does not like competition. Secondly, they are losing business to the competition and so they want to bring it under their umbrella to stifle it. I can't see any other reason for their concern.
 
What if these "shadow lending" businesses did have problems with their loans? They would go bankrupt is the simple answer. They are not part of the banking system, they should not be bailed out, and there should not be any public money injected to help private lending institutions. So, it is not in the Fed's hands simply put.
 
So the Fed bringing these types of organizations under their umbrella would only undermine these already functioning lending institutions in the public domain. The Federal Deposit Insurance Corporation, or FDIC, which exists to support and regulate the banking institutions in essence increases the risk to both lender and depositor. Because it creates the ability to work with lower capital basis versus reserves, with the FDIC underwriting the risk of collapse.
 
Of course after the 2008 banking meltdown in the economy, we are all well aware of the deficiencies of our governing agencies in managing the licensed banking institutions which it already regulates. The question then remains, what would make their involvement in the shadow banking industry an important or positive influence?
 
One point made in favor is that individual investors, who represent roughly one third of the money behind leveraged loans issued in 2013, are at risk. No kidding! That is the risk they take when seeking high returns. This is why it is called an investment and not a deposit.
 
An investment is always a risk and the people and its government should not be responsible for risks taken by investors. Nor should the government step in every time it sees people taking risks, and spread that risk across all taxpayers instead by seeking to regulate – and so underwrite – the investment being done.
 
I sincerely fear that what I read in the Journal this morning intimates that the Federal Reserve Bank is gearing up to propose regulation of the shadow banking industry. This is an unwise and unjust cause. I for one would vote against if given any say, and I will write my representatives asking for them to vote against it whenever possible. Most likely if the ruling party agrees with the Federal Reserve it will find a way to give them this power.
 
In reverse, I would like to see all national US banking associations broken up by state. I would like to see more power given to state banking authorities. I would like to see a return to hands-on management of the banking industry something that cannot be done through a federally centralized organization.
 
This is also unlikely to happen. But in view of our constantly growing oligarchy – which we call the federal government – I consider it an omen that the problems we currently have and are trying to work through will only be exacerbated. Sadly as a citizen of the United States of America I lack confidence in the current structure that controls our money. For this reason alone I believe in holding gold as an asset that is outside of the banking industry and cannot be manipulated by machinations of governmental agencies.
 
With the current state of affairs, the government shutdown and the impending debt ceiling, I have little faith that the US government under its current leadership can get its affairs in order. Trying to extend its powers, and its responsibilities to utterly private risks taken freely, is just another example of how the state has lost its way.

In The News Today

Posted: 07 Oct 2013 11:42 AM PDT

Jim Sinclair's Commentary Any step forward for the euro is a step backwards for the US dollar. Confidence is the key to a currency. In the Information Age this is bad PR for the US dollar. PANAMA LEADER TELLS GERMANY HE WANTS TO ADOPT EURO BERLIN | Thu Oct 18, 2012 2:19am EDT (Reuters) –... Read more »

The post In The News Today appeared first on Jim Sinclair's Mineset.

Jim’s Mailbox

Posted: 07 Oct 2013 11:37 AM PDT

Jim, Saving the Bond Market, Saving the Stock Market, Saving the Dollar, Saving Muni's, Saving Big Banks, etc. Reminds me of why Germany lost the Second World War… too many fronts. Or better yet, the little Dutch boy plugging the leaks in the dike. Putting 2+2 together paints the picture for the future. Too many... Read more »

The post Jim’s Mailbox appeared first on Jim Sinclair's Mineset.

Dollar Collapse To Trigger Massive Bull Market In Gold & Silver

Posted: 07 Oct 2013 11:17 AM PDT

Today the Godfather of newsletter writers, Richard Russell, warned that the "US dollar is poised right on the edge of a cliff." He also issued this ominous warning, "if we get a sell signal on the dollar it will have international implications." This is an incredibly powerful piece with a legend who has been writing about the markets for 60 years, and he concludes by discussing what is going to trigger a massive bull market in gold and silver.

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

Is the Next Bear Market About to Begin?

Posted: 07 Oct 2013 11:01 AM PDT

The stock market is finally beginning to show signs that the bull market may be coming to an end. Before I go into the stock market though, I want to discuss the dollar because I think currencies are going to be integrally tied ... Read More...

How India’s war on gold backfired

Posted: 07 Oct 2013 10:52 AM PDT

04-Oct (Mining.com) — Over the past year and a half P. Chidambaram, India’s finance minister, has been fighting his country’s insatiable appetite for gold.

The world has watched him plead, scold and lecture Indians – especially bankers – on the importance of not importing excessive amounts of the yellow metal.

The roughly 3.5 million workers of India’s gold sector has suffered under a raft of measures that have damaged the trade immensely.

…On top of all this, gold traders and jewellery manufacturers have to content with record gold prices in the local currency which has plunged to record lows against the US dollar this year.

…Sharps Pixley predicts that despite all this, Indian imports are expected to reach 350–400 tonnes in the April to June 2013 period, 200% higher than a year earlier, nearly half of last year's total.

For 2013 Sharps Pixley forecast Indian gold demand will achieve a record 1,000 tonnes.

[source]

India’s neighboring nation Pakistan’s Gold imports rise 841% y/y in July-Aug

Posted: 07 Oct 2013 10:33 AM PDT

07-Oct (Scrap Register) — World’s biggest bullion consumer India’s neighboring nation Pakistan's gold imports rose significantly by 841 % year-on-year to 3,265 kilograms in the first two months of current fiscal, as per latest data released by the Pakistan Bureau of Statistics (PBS). The Pakistan Government’s fiscal year runs from July 1st to June 30th.

According to PBS data, Pakistan has imported gold worth $ 135.618 million during July to August this year, up 621% year-on-year as compare to $18.797 million a year earlier.

Country has imported only 347 kilo gram of gold in July-August period last year.

[source]

Profiting Before the Robot Slaves Revolt

Posted: 07 Oct 2013 10:31 AM PDT

Slavery is coming back.

In the future, we'll all have personal servants. They'll clean our homes, tend to our gardens, harvest our food, manufacture our goods and fight our battles.

The slaves won't be human, fortunately, but they will be machines. Every new advance in machine intelligence and electronic sensing, along with other diverse and converging fields of technology, is hastening the adoption of these machine servants.

Robots.

Robots are a big, high-growth field investors need to pay attention to. Bill Gates has predicted that by 2025, robots will be as common as computers are today. If he's even half right, investors who get in on promising robotics techs today will be fantastically compensated for their vision. Getting in on the next wave of robotics now will be like getting in on Intel, AMD, Apple or Gates' own Microsoft in the 1980s.

Surgical robots… can make surgery less invasive and more precise, improving recovery times and reducing pain and blood loss. Even your next anesthesiologist could be a robot.

Incidentally, the word "robot" comes from a 1920s Czech science fiction play. The Czech word for servitude, robota, entered the English language as "robot" and has been with us ever since as a description for autonomous or semi-autonomous machines. The name for this field of technology, robotics, also is the product of science fiction — Isaac Asimov first coined the term for a short story in the 1940s.

Although the words date from the 20th century, the idea of self-operating machines is far older. Ancient myths first described artificial and lifelike machines in motion in legendary tales. Later, in the quest to measure time, intricate clockworks — run by weights or springs and self-regulating with mechanisms like pendulums and escapements for accuracy — were developed.

By the early 20th century, electrical controls allowed self-regulating machinery to come into industrial use. After WWII, of course, the invention of modern electronics, based on semiconductors and integrated circuits, meant that industrial automation could become truly "robotic." Microprocessors and sensors allowed the creation of industrial robots and computer numeric-controlled machinery. By the 1970s, the first microcomputer-controlled robots began to enter factories.

Today, the international automotive industry depends entirely on robots, as do several other manufacturing fields. Chip manufacturing, biotechnology and pharmaceutical companies rely on robotics to perform precise and repetitive functions in environments intolerable to humans.

Industrial robots can be hard to recognize, although the International Organization for Standardization has a working definition: "an automatically controlled, reprogrammable, multipurpose manipulator programmable in three or more axes." Using these terms, even a modern car might be considered robotic, since some of its internal components meet this definition.

Whatever appearance modern robots take, they form a swiftly growing market. By one estimate by transparency market research, for example, the industrial controls and robotics market was worth $102 billion in 2012, and will grow to $147 billion in 2019. Growth has been strong for years, after a brief pause during the last recession.

Advanced robotics will help solve some of our most vexing problems. In our day and age, the health care industry has proven highly resistant to price declines partly because of labor costs. Improved robotic automation is one way to increase productivity and reduce labor costs. And robots can be used to not only do things cheaper, but better. Surgical robots, for example, can make surgery less invasive and more precise, improving recovery times and reducing pain and blood loss.

Even your next anesthesiologist could be a robot. Johnson & Johnson has developed a "sedation machine" that could replace an anesthesiologist during a colonoscopy. A RAND Corp. study finds that more than $1 billion is spent each year sedating patients during the procedure. Johnson & Johnson believes its automated device can reduce the anesthesiology portion of the bill from over $600 down to $150.

Robot adoption is also being aided by a simple economic fact: While cost of production for goods has generally declined over time because of automation, prices for services generally don't fall quite as much, because they aren't as easily automated. Consider that for the performance you receive, your computer costs a fraction of what it did two decades ago, but the technician who repairs it has generally remained quite expensive to hire by comparison.

Automation has solved problems for us in the past. Food prices have fallen steeply in real terms over the last century. This is not only due to better agricultural techniques, but also because of increased automation. From John Deere and Allis-Chalmers, from balers to combines, mechanized agricultural equipment has drastically reduced what we have to pay to for our food. Now we don't generally worry about going hungry in countries with advanced economies. We worry about consuming too many calories. Automation made this possible.

We may even begin to see fully robotic agricultural operations. A convergence of recent technologies, including GPS, wireless communication and electronic sensors, is heralding a second agricultural revolution. Self-driving tractors, for example, are making their debut, able to automatically follow combines and receive the payload of grains. Another robotic appurtenance, dubbed the Lely Astronaut A4, can milk cows without any need for a human being to be part of the process. The robot even analyzes the milk as it works to monitor for possible bovine health problems.

Within 10 years… personal robots will have the ability to do everything from cleaning toilets… to keeping your schedule and monitoring your vital signs.

Robots also bring new capabilities in other areas. They are already being used for dangerous jobs that humans would rather not do. The U.S. military, for example, is deploying robots in the field and in the air. Some of the earliest recognizable robots were remote-controlled bomb detonation units.

Today, unmanned aerial vehicles can pilot themselves in hazardous situations. Some are sophisticated mobile weapons systems. Many are utility vehicles ranging from self-driving trucks to relatively small "PackBots" that climb stairs, risk tripwires, find land mines and look around corners. Some are armed and can be fired remotely or return fire automatically. Though the public may not think of them as robots, automated missile systems have been around for decades.

One experimental robot, called ATLAS, may be the most advanced humanoid robot ever made. ATLAS' hydraulically articulated joints enjoy 28 degrees of freedom, and its nimble hands can use human tools. The robot's sensor suite includes LIDAR, a laser sensor mounted on its head that allows it to measure distances. The military is developing this technology so that in the future, we'll be better able to deal with disasters like the meltdown at Japan's Fukushima nuclear plant. Robots can survive in radioactive environments that would quickly kill humans.

Ultimately, the consumer robot market will outgrow military applications as it enters an explosive growth phase. According to ABI Research, this market racked up $1.6 billion in sales in 2012 and will shoot through $6 billion in 2017.

Like industrial robots, consumer 'bots will become so ubiquitous that they won't always conform to what we may think of as a robot. As you know, some will look like automobiles. Electric automobile pioneer Tesla Motors expects to be able to build a self-driving car in three years that will be able to perform 90% of the driving. Nissan hopes to field its own autonomous automobiles by 2020. Google is also working hard on this technology.

Robots will enter the home too. iRobot's Roomba vacuum has been a sales success, but it represents only the beginning. Within 10 years, some roboticists say, personal robots will have the ability to do everything from cleaning toilets and washing dishes to keeping your schedule and monitoring your vital signs.

That may actually be a pessimistic projection. With the leading edge of the boomer generation entering retirement, there will be huge financial incentives for improved service 'bots. There will be great demand for anyone who can build an affordable robot that can help with housekeeping and basic care. Families that want to keep older members out of assisted care facilities and closer to home will look to robots for help.

In light of this, the famous Japanese enthusiasm for new robot technology is understandable, since more than a fifth of its population is over 65 years old, and the Japanese government is heavily funding robotics projects to provide care and plug holes in the workforce. There are simply not enough young people to take care of an aged Japanese population. The same trend should happen in the U.S. with the baby boomer generation, who are aging in unprecedented numbers.

One thing is certain: the robotic revolution isn't going anywhere. It's only getting started.

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Daily Reckoning

Ed. Note: There's never been a better time to pay attention to this space. All this week, the Tomorrow in Review email edition will be highlighting some great investment opportunities in the robotics industry, including an upcoming IPO that — surprisingly — very few people are talking about. It all started today, as TIR readers were treated to a special report showing how one kind of robot could mean big money for speculators. If you didn’t get the email edition, you missed out. But there’s still time to sign up and get tomorrow’s issue, which will be filled with more of the same excellent opportunities. Don’t wait. Sign up for FREE, right here.

The Daily Market Report

Posted: 07 Oct 2013 10:26 AM PDT

Gold Firms as Shutdown Enters Second Week


07-Oct (USAGOLD) — Gold prices are firmer as the second week of the government shutdown begins. Continued intransigence on the budget has heightened concerns that policymakers won’t be able to come to terms before the Treasury runs out of money next week.

Already there is talk of a very short-term debt ceiling deal to avoid default. And keep in mind that the CR currently being debated only funds the government through mid-November. Giving the can a short kick down the road, only to have the political battle resume in a few short weeks, is no way to run a government. It is no way to run the global economic superpower. It is not only incredibly disruptive to this country, but it is also disruptive to the entire global economy.

With the U.S. economy limping along at best, the shutdown and the possibility of default threatens to derail the tepid recovery. While I continue to believe that a default will be averted, there is always a new crisis right around the corner because our Representatives in Washington refuse to deal with the underlying fiscal issues.

In this light, one can reasonably expect the Fed to maintain its über-accommodative monetary policy indefinitely. Taper talk has been pretty much back-burnered by the twin fiscal crises, but even if a short-term solution is found, both political parties will be right back in the same position in about five-weeks. I don’t believe the Fed will be tapering any time soon.

The Impossible Gold Stock

Posted: 07 Oct 2013 09:37 AM PDT

Dear Reader,

A warm thanks to the many of you who joined us at the Casey Summit we just concluded yesterday. It was great to see old friends and meet so many interesting new ones. Your Casey metals team appreciates your many kind words.

One of the things we discussed a great deal was political risk around the world. The problem is truly global, but there are some places where risks are lower than others—and you usually pay more for assets in such locations. Plus there's all the technical risk inherent in building something new, or the risk of stagnation or depletion if you don't try to increase production.

BIG GOLD's Jeff Clark has further thoughts on this below, and a recommendation for those who are interested, a low-risk and high potential upside pick. The combination sounds impossible, but the company is real.

I'll be back next week with more industry news and ideas for your consideration.

Sincerely,

Louis James
Senior Metals Investment Strategist
Casey Research

Rock & Stock Stats
Last
One Month Ago
One Year Ago
Gold 1,311.20 1,389.60 1,796.50
Silver 21.74 23.37 35.10
Copper 3.28 3.24 3.79
Oil 103.84 107.23 91.71
Gold Producers (GDX) 24.19 28.58 54.25
Gold Junior Stocks (GDXJ) 38.70 48.25 100.58
Silver Stocks (SIL) 12.64 15.30 25.58
TSX (Toronto Stock Exchange) 12,758.65 12,757.81 12,447.68
TSX Venture 955.36 947.18 1,340.85

 

The Impossible Gold Stock

Jeff Clark, Senior Precious Metals Analyst

As a metals analyst, I sometimes find a stock that seems to have everything going for it—but then some darn politician steps in and ruins the investment…

On April 5, 2011, I recommended Pan American Silver (PAAS) to BIG GOLD subscribers. It was virtually a no-brainer pick—and yet we ended up selling for a loss. It was why we sold that really grated me.

At the time, the company generated a million dollars per day in operating cash flow, had a pristine balance sheet, and was headed by "broken slot machine" Ross Beaty, who earned the nickname from his uncanny ability to return a profit every time you invested in one of his companies.

But the real prize was the giant Navidad silver deposit in Argentina, which, if permitted, would have paved the way for Pan American's production to jump by 65%, to a whopping 40 million ounces per year. This would catapult PAAS to the rank of largest silver producer in the world—an exciting prospect.

But the politicos threw us a curveball.

The local governor announced he wanted "greater state ownership" of the mine and to increase the royalty from 3% to 8%. The leftovers were too little for Pan American to turn a profit; management was forced to admit that the world's largest pure silver deposit was "uneconomic at any reasonable estimate of long-term silver prices."

Navidad still sits idle today.

Greed Is Good—Until You're the Victim

Unfortunately, there are many stories like this—and the trend is getting worse. Veteran gold mining investors have witnessed the growing move of governments increasing their take in mining projects through higher taxes and royalties, higher regulatory or environmental bars, and sometimes outright nationalization.

The kicker is that a management team can do everything right and have a great project—much like Pan American—but a voracious government can render it uneconomic to develop or too burdensome or unprofitable to operate.

Unreasonable political interference doesn't just hurt mining companies or local communities. It hurts investors, too. Stock prices take a hit, and portfolios absorb losses. The pain spreads as money flees other companies operating in that jurisdiction. Trust is hard to re-earn.

The temptation is to hurl four-letter pejoratives at politicians. But it's more constructive to simply focus our money where it's safer.

Beat the Politicians: Vote with Your Investment Dollars

Three parties are involved in a mining project: the mining company that operates the project; the host country where the asset is located; and investors who back the project and buy the stock.

Two of these parties have very limited options:

  • The mining company can't move the deposit to a more friendly business environment. If local politicians demand more earnings, management teams have no choice but to negotiate. It can get more diabolical: the host government may permit a project and let the mining company spend millions (or billions) developing the project, only to add onerous taxes or royalties after it begins operation—if it doesn't just steal the whole thing.
  • A government can do great harm in its own territory, but its options are extremely limited regarding assets outside its borders. Politicians in South Africa, for example, can't tax or regulate a mine in British Columbia.

Only one party has complete freedom to choose which projects to back and what jurisdictions to take a chance on: the investor.

There will always be some risk when investing in mining—but what if you could find an opportunity where the host government is so low risk, it actually promotes mining?

Mining Investment Nirvana

If you've no appetite for investments that tank because of crazy dictators and the like, the good news is that it is possible to say goodbye to unnecessary political risk—and we've found a place where you can do it.

Our new stock pick in the October issue of BIG GOLD has a political-risk rating so low that it's essentially negligible and enormous upside potential—what Louis James called an "impossible" stock.

How do we know the risk is so low?

We spent months developing what we call our "Casey Country Score" for each of 74 countries with significant amounts of mining around the world—a proprietary indicator that taps a variety of sources to assess a country's investment climate. Combined with site visits when possible, the end result is a comprehensive analysis of the political risk for buying a gold or silver stock in that country. You won't find it anywhere else.

Our "Impossible" stock has a political-risk rating lower than any other stock in our portfolio—which says a lot, because the BIG GOLD portfolio is already rated 30% lower than the global average.

The political system in the jurisdiction where this company operates is very stable. The local government promotes mining and offers exceptionally generous tax incentive programs for mineral exploration. It even collects geological data for the mining community and has one of the largest such databases in the world.

A refreshing thing to hear in the present environment, eh?

Explosive Potential

Of course, low political risk alone can never be our sole reason to buy a stock… so what about the upside?

This company is a little different from what I normally recommend in BIG GOLD. That's because it's not a producer, but an explorer with massive potential—and cash flow.

Lucky for us, the political Shangri-La this company operates in is also known for its exceptional mineral potential, and the company controls almost two dozen properties there—which means the odds of making a game-changing discovery are much higher than average.

The company cleverly lowers its exploration risk by establishing partnerships with other mining companies. The upside is also shared, but not every exploration project works out, and this reduces the company's financial commitment.

A key part of this investment is that the company is led by an enormously successful, award-winning exploration geologist. He's under the radar of most retail investors, yet he's already found half a dozen economic mineral deposits, which is about half a dozen more than most geologists find in their lifetimes. I've dubbed him "the best explorer you don't know."

But the best part is that management made one of the richest gold discoveries anywhere in the world over the last decade, and now has a substantial royalty on the mine being built there—with advance royalty payments already rolling in. This is important because most exploration companies are what Doug Casey calls "burning matches," i.e., they burn out when the money runs out.

To have cash flow to fund exploration for the next giant gold deposit instead of diluting shareholders to the point of no returns is so exceptionally rare, it really is almost an impossible accomplishment.

This is an opportunity I just recommended to our BIG GOLD subscribers last week, so I can't give away the name of our Impossible pick. However, you can take advantage of it by giving BIG GOLD a try today (and I haven't even revealed another angle to this stock that is just as exciting as the exploration potential).

It's completely risk-free: You have 3 full months to test BIG GOLD, and if you're not 100% satisfied—for whatever reason—just cancel within those 3 months for a full refund of every penny you paid. Even if you cancel later, you'll still get a prorated refund.

Simply click here to start your risk-free trial now.


Gold and Silver HEADLINES

India's Silver Imports Rise 311% in Q1 FY14 (Scrap Monster)

Silver demand in India jumped an incredible 311% during the first quarter of the current financial year: $1.78 billion, up from $433.8 million year on year. No less impressive is the country's year-to-date silver imports: they've already topped 128.6 million ounces, more than double the total imports of 61 million ounces in the whole of 2012.

The surge in interest in "poor man's gold" is partly attributed to the tight restrictions imposed on gold. Demand for silver comes from both fabrication (silver jewelry) and investment.

It's clear how strongly Indians feel about hard assets. Watch this ongoing saga as it develops—the fireworks at the end should be spectacular.

China to Ease Gold Trade Restrictions (Reuters)

China's central bank has released a draft policy document that suggests it may ease some existing gold trade restrictions. The proposed measures are designed to increase the number of firms allowed to import and export gold, and to allow individuals to bring up to 200 grams (seven ounces) of gold into China from overseas without obligation to report to customs or pay tax.

One of the factors that probably initiated the new policy was a shortage in gold supply earlier this year, when a steep fall in prices caused a surge in demand. In China, gold normally trades at a premium to London spot prices, and shortages can push the premiums even higher, making the metal more expensive inside the country.

No decision has been made regarding when the new rules will be implemented. If the restrictions are eased, the amount of gold entering China could increase even beyond the massive inflows already seen.

Strike Costing Amplats 3,100 oz of Production a Day (Mining Weekly)

Workers at Anglo American Platinum (Amplats), the world's largest producer of the metal, went on strike September 27 over the company's plans to "retrench” 3,300 workers (down from 14,000) as part of a restructuring drive.

While worker turnout remains low, the action costs the company about 3,100 ounces per day of production. At about $1,350 platinum, that's over $4.1 million in lost revenue.


This Week in International Speculator and BIG GOLD—Key Updates for Subscribers

International Speculator

  • One of our favorite Nevada gold explorers continues reporting excellent drill results. We like this company a lot and are pleased to see our shares doing so well, especially at a time many other junior resource companies are struggling.

BIG GOLD

Is Crude Oil Ready for Further Growth? What Impact Could It Have on Gold?

Posted: 07 Oct 2013 09:34 AM PDT

One of the main events of recent days was the first U.S. government shutdown in 17 years. Light crude dropped to a new monthly low at $101.05 on concerns that this event would reduce demand for black gold in the world's largest oil ... Read More...

Is Homeland Security Preparing for the Next Wall Street Collapse?

Posted: 07 Oct 2013 09:26 AM PDT

The government seems to be getting ready for the next crisis. What about you? Reports are that the Department of Homeland Security (DHS) is engaged in a massive, covert military buildup. An article in the Associated Press in February confirmed an open purchase order by DHS for 1.6 billion rounds of ammunition. According to an op-ed in Forbes, that’s enough to sustain an Iraq-sized war for over twenty years. DHS has also acquired heavily armored tanks, which have been seen roaming the streets. Evidently somebody in government is expecting some serious civil unrest. The question is, why?

Forecast Psychology, Us Treasury Bond Bubble, Extreme Gold Price Rise

Posted: 07 Oct 2013 09:18 AM PDT

The analytic discussion and defense of viewpoints concerning the grandest asset bubble in history is covered, as well as exposure of corrupted markets. In addition, take the opportunity to discuss intriguing human psychology regarding forecasts. It might be enlightening to many folks. It might be entertaining to some. It is not complimentary of the human species actually. One is reminded of Cassandra in Greek Mythology. The USTreasury Bond market has been a frequent topic of analysis. This perspective is on the bubble dynamics mixed with forecast psychology. The recent essay featuring the Flash Trading and other USTreasury Bond factors deserves further discussion, since so important. To be sure, High Frequency Trading, also known as Flash Trading, is not skin in the game, and not typical capital at risk. It is a blatant price control practice that produces false levitation in asset prices and distorted volume reported. A good deal more light on the phony USTreasury Bond market is shed, which is not well understood for its status as being the greatest asset bubble in human history, not just modern history. It exceeds the housing & mortgage bubble that formed a decade ago, if not from volume, then from scope, since it is laced throughout the entire global banking system.

Is Crude Oil Price Ready for Further Growth? What Impact on Gold?

Posted: 07 Oct 2013 09:04 AM PDT

One of the main events of recent days was the first U.S. government shutdown in 17 years. Light crude dropped to a new monthly low at $101.05 on concerns that this event would reduce demand for black gold in the world's largest oil consumer market. In the previous week, the yellow metal also declined and dropped below $1,300 an ounce. Despite this declines, on Wednesday, both commodities rebounded sharply supported by a weaker U.S. dollar as commodities priced in the greenback became less expensive for holders of other currencies. Additionally, in the second half of the previous week we saw similar price action in both cases.

Stocks Set To Plunge - Gold To See A Spectacular Surge

Posted: 07 Oct 2013 09:00 AM PDT

With gold and silver moving higher, and the Dow threatening to break the 15,000 level, today King World News is pleased to share the thoughts of one of the top strategists in the world, Robin Griffiths of Cazenove out of London.  Cazenove Capital is the appointed stockbroker to Her Majesty The Queen. The acclaimed strategist warned global stock markets may now be set to plunge, but he also said that gold would see a spectacular surge as stocks cratered, and he even gave a price target. Griffiths also had some fascinating comments about central planners and their artificial impact on major markets. Below is Griffiths' outstanding piece.

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

Will The Uranium Price Make a Fourth Quarter Comeback?

Posted: 07 Oct 2013 08:51 AM PDT


For many months I reminded my readers to ignore the low uranium spot price and the hysteria in the media over nuclear power.  Instead I encourage all investors to focus on the increased M&A in the uranium mining sector where junior miners who are extremely early stage and do not even have a NI43-101 resource are being bought out for $185 million.  Despite the uranium spot price hitting generational lows, we are witnessing ongoing consolidation and increased M&A in the uranium mining sector.   This may mean the smart money is anticipating a major rebound in demand and prices.  If we are seeing this much M&A activity in the uranium mining sector when the spot price is hitting eight year lows, imagine what could happen in this small sector when uranium starts moving higher.

Just recently announced, Fission Uranium will buy Alpha Minerals for $185 million in order to have 100% control of the Patterson Lake South Discovery.  Many analysts are saying this is the best discovery in the Athabasca Basin where grades are exponentially higher than the rest of the world.  I don’t think Alpha shareholders should give that asset up in the middle of a drilling program.  Denison (DNN) is making an offer for Rockgate at ridiculously low levels. Energy Fuels just acquired Strathmore to try to become a bigger player in the U.S. market.  Although I am not a shareholder of Alpha or Rockgate I would vote against these bids as they may be coming at the bottom of the uranium cycle.  Think what these assets could be valued at when uranium is at a reasonable price.

Don’t be surprised to see further merger activity in the emerging Wyoming producers especially Uranerz (URZ) which has possibly the best land position in the Powder River Basin where Cameco is expanding production.  Uranerz is on the verge of commencing production at its Nichols Ranch in Wyoming.

This increase in M&A probably means that either Cameco, Denison or Rio Tinto want to acquire assets sooner rather than later.  It must be remembered that the Athabasca assets are extremely early stage and although the uranium assets may be high grade, it could take thirty years to build a mine.

Cigar Lake, which is the largest high grade undeveloped deposit in the Basin was discovered in 1981 and has still not yet produced one pound of uranium.  Cameco is continuing to delay startup.  The grades are phenomenal there, but Athabasca has challenges including being in an area of lakes where there is the risk of flooding.

Cigar Lake has been under construction for seven years with many problems occurring delaying production several times.  One must not forget that the uranium bubble back in 2007 was accelerated when a flood in Cigar Lake was announced.  Uranium ran up to $137 a pound.  One delay or shutdown of a major uranium mine such as Cigar Lake or Areva’s Niger Operations could lead to a powerful reversal in the spot price.

Fission may be building the next Hathor which was taken out for over $650 million by Rio Tinto back in 2011 if it is able to acquire Alpha.  From my evaluation the Alpha shareholders should not sell at these levels possibly at the bottom of the uranium market.  This is a buyer’s market.

Patience and fortitude should be exercised by shareholders of companies getting low bids.  There are several other juniors I have positions in the Athabasca Basin with smaller market caps.  Some of the teams have geologists I have followed for years with incredible resumes.  I will be highlighting some of those Athabasca stories in the coming weeks.

However, it must be understood that these Athabasca plays are highly speculative, early stage exploration stories with the potential for great gains but also greater risk.  Be careful of promotions and only invest in teams with experienced management.  When everyone is discussing a particular story, look for the next opportunity.

Fission and Alpha are probably unable to advance this project alone and most likely will be acquired by either Cameco, Denison or Rio Tinto.  These Athabasca mines require large miner expertise to be put into production.

This increased M&A activity in the uranium space may be forecasting a potential turnaround.  This sector is trying everyone’s patience as the spot price hits new lows and as the masses believe there will be no recovery.

I believe these are the times to buy not sell when the fundamentals are strong, yet the prices are low and sentiment is negative.  The Russian Megatons to Megawatts Deal which supplied 24 million pounds to the U.S. is done.  Reactors are being built all over the world and restarts are beginning in Japan.

M&A activity should increase with not only early stage discovery situations such as Fission and Alpha but with emerging producers such as Uranerz (URZ) and companies already nearing the Feasibility Stage such as Pele Mountain (GEM).  Near term supply should be tight as the Russian agreement expires.  Remember the uranium producers have had to compete with this 24 million pounds of extra supply for twenty years.

Many of the uranium mining companies believe the absence of that supply could boost uranium prices which are trading at decade lows and is way below production costs.  Look for a major turnaround in the uranium price in the fourth quarter of this year or in early 2014.  The low price environment has shut down mines and the absence of supply coupled with increased demand could cause a bullish reversal in uranium prices.

One uranium district that has been completely ignored by the investment community is Elliot Lake, Ontario.  I have been writing about Pele Mountain (GEM.V) for years as others ignored this undiscovered situation.  Now a Canadian Financial institution has just published a very positive research report.  View the Jacobs Securities report by clicking here…  The report concludes, “Given Pele's historic correlation with uranium prices, and the strong uranium fundamentals that we believe could drive prices higher, we maintain our view that investors should consider GEM based on its sizable near-surface resources, well-scoped project, supportive jurisdiction and well understood path to permitting and development. We believe, Pele is positioned for success as a developer of a geopolitically secure supply of U3O8, Critical REO, and scandium oxide.”

I couldn’t agree more with them.  More than 300 million pounds of uranium were mined in Elliot Lake, Ontario by Rio Algom and Denison Mines.  The Elliot Lake Mining Camp is known as the Uranium Capital of the World and was the only Canadian mine that commercially produced Rare Earth Oxides.

The Elliot Lake mines were closed down in the 90′s when rare earths were unknown and worth little and uranium was trading below $20 a pound.  Being a past producing district of both uranium and rare earths gives an advantage to Pele Mountain Resources (GEM.V or GOLDF) a small junior miner, who will hopefully begin feasibility on their enormous and valuable Eco Ridge resource.

Operating in an established, past producing district with power, labor and infrastructure is crucial when evaluating the potential viability of mining development.  Every twenty to thirty years Elliot Lake goes through a boom cycle.  Even though the Athabasca region has higher grade uranium, mining and processing is a lot more challenging.

Pele Mountain (GEM.V or GOLDF) may provide excellent leverage to uranium and rare earths for investors at these discounted levels.  Elliot Lake is a proven rare earth and uranium mining district which is very supportive of Pele Mountain's Eco Ridge Mine.  See the letter supporting the mine from the mayor and city council by clicking here…

Pele has a proven commercial processing method unlike so many other rare earth juniors of recovering the valuable rare earths used in the latest green energy technologies such as wind turbines and high efficiency lighting.  Pele has the Elliot Lake technical team led by Roger Payne who has the experience designing and developing efficient and safe production of critical clean energy metals such as uranium and rare earths.

When comparing Pele’s NI 43-101 compliant resource base to some of the recent acquisition prices of $7-10, Pele is trading for pennies of a penny on a dollar and may provide great leverage as uranium and rare earth prices recover.

Listen to a recent interview with Roger Payne, who leads Pele’s (GEM.V or GOLDF) technical team and previously managed Rio Algom’s operations in Elliot Lake by clicking here….  He has decades of experience in this region, which could blossom again providing a safe and secure supply of uranium, rare earths and scandium.

For More Information on Pele Mountain Resources Inc.: Email: ashefsky@pelemountain.com Telephone: 416.368.7224 or 1 800.315.7353  Website: www.pelemountain.com Twitter: @pele_mountain

Disclosure: Author owns Denison, Energy Fuels, Pele Mountain and Uranerz and Pele Mountain and Uranerz are both sponsors on this website.

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"Sense of calm" keeps the gold price flat

Posted: 07 Oct 2013 07:56 AM PDT

Prices were unchanged in what dealers called “thin, quiet” trade on Monday, despite increasing fears the US government will fail to meet its obligations in only 10 days’ time.

Read more….

Is there a US default premium being built into the gold price?

Posted: 07 Oct 2013 07:56 AM PDT

If a compromise is reached, will the removal of this political 'soapie' lower gold prices in the short-term? asks Julian Phillips.

Read more….

Gold, jobs and the Fed

Posted: 07 Oct 2013 07:56 AM PDT

How the story told by the headline data differs from that told by the Labor Force Participation survey.

Read more….

U.S. Government Shutdown Gold Fuel

Posted: 07 Oct 2013 07:54 AM PDT

The shutdown, albeit it temporary, of much of the U.S. government has drawn both fierce and mixed emotions. On one hand are those that believe a day without government is day with greater liberty. The other group is upset that government is prevented from repressing the spirits of a free economy. Regardless of which group you find yourself, as an investor one should recognize that the shutdown will increase the availability of the fuel necessary to push the price of Gold higher.

U.S. Shutdown: Gold Fuel

Posted: 07 Oct 2013 07:39 AM PDT

The shutdown, albeit it temporary, of much of the U.S. government has drawn both fierce and mixed emotions. On one hand are those that believe a day without government is day with greater liberty. Read More...

Gold gains as U.S. shutdown drags on, debt limit looms

Posted: 07 Oct 2013 07:37 AM PDT


07-Oct (Reuters) — Gold rose on Monday as investors assessed the impact of a lower dollar after politicians in Washington showed no signs of making progress to resolve the U.S. budget standoff.

While investors are increasingly worried that the political standoff in Washington will spark greater market volatility as the October 17 deadline to raise the borrowing limit nears, hopes for a deal remain strong, analysts said.

The U.S. Congress is already divided on a spending bill, resulting in a partial government shutdown that is hurting the economy and delaying key data releases.

During the last debate over the U.S. debt ceiling in 2011, gold hit an all-time high of $1,920 an ounce. An agreement was reached by Congress only at the last minute.

[source]

Another Wild Week In Precious Metals Markets

Posted: 07 Oct 2013 07:15 AM PDT

After a dismal April-to-June period, the gold price notched its first quarterly gain in a year during the third quarter that ended last Monday. However, the start of the fourth quarter on Tuesday ushered in one of the worst sell-offs in months. Amid more calls of market manipulation, this came just as the U.S. government [...]

Is the Next Stocks Bear Market About to Begin?

Posted: 07 Oct 2013 06:31 AM PDT

The stock market is finally starting to show signs that the bull market may be coming to an end. Before I go into the stock market though, I want to discuss the dollar because I think currencies are going to be integrally tied to the topping process. For the better part of the past five years a lower dollar has generally been positive for the stock market. However, we are now five years into QE and I think we are at the point where it's important that the dollar hold its value. At this point I think the stock market is deathly afraid that the dollar is going to crack under five years of continual debasement. As many of you have probably noticed over the last several weeks stocks have been dropping along with the dollar.

Gold price is ‘bound to go through the roof’

Posted: 07 Oct 2013 06:29 AM PDT

GOLD bulls have had it rough this year but many would have found solace in the Precious Metals Round Table web-based conference call and presentation held recently by Sprott Asset...

[[ 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! ]]

Taiwan and New Zealand want their dollars down

Posted: 07 Oct 2013 06:26 AM PDT

Taiwan Dollar Rally Seen Ending on Intervention, Market Reversal

From Bloomberg News
Monday, October 7, 2013

Trading patterns suggest the rally that drove the Taiwan dollar to an eight-month high will end on speculation that central bank Governor Perng Fai-nan will step up intervention to support exporters.

The currency's 0.7 percent advance since the Federal Reserve unexpectedly maintained its bond-purchase program on Sept. 18 pushed the 14-day relative strength index to 29 on Oct. 4, below the 30 threshold that typically signals a reversal, according to data compiled by Bloomberg. The Taiwan dollar's commodity channel index stayed below minus 100 in the last four trading days, which some technical analysts interpret as meaning the U.S. currency was oversold.

... For the full story:

http://www.bloomberg.com/news/2013-10-07/taiwan-dollar-rally-seen-ending...

* * *

English Says New Zealand Dollar Exchange Rate Still Too High

By Matthew Brockett
Bloomberg News
Sunday, October 6, 2013

WELLINGTON, New Zealand -- New Zealand Finance Minister Bill English said the nation's currency remains too strong and is hampering exports.

"The exchange rate, in our view, is still too high," English said in Wellington today after the Treasury published financial statements for the year through June. "It remains a headwind for the export sector."

... For the full story:

http://www.bloomberg.com/news/2013-10-07/english-says-new-zealand-dollar...



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Join GATA here:

Louis Boulanger Now Seminar
Visitors Center, Holy Trinity Parnell
Auckland, New Zeland
Sunday, October 13, 2013

http://www.gata.org/files/GATAInNewZealand.pdf

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

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

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

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

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

http://www.minesandmoney.com/

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

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

* * *

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

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

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

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

http://gata.org/node/wallstreetjournal

Help keep GATA going

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

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To contribute to GATA, please visit:

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



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Gold price 'is bound to go through the roof'

Posted: 07 Oct 2013 06:15 AM PDT

By Brendan Ryan
Business Day, Johannesburg
Monday, October 7, 2013

http://www.bdlive.co.za/markets/2013/10/07/gold-price-is-bound-to-go-thr...

Gold bulls have had it rough this year but many would have found solace in the Precious Metals Round Table web-based conference call and presentation held recently by Sprott Asset Management.

About 6,300 participants logged on to listen to speakers like investment "guru" Marc Faber -- publisher of the Gloom, Boom and Doom Report -- and Toronto-based Sprott chief investment strategist John Embry, a regular keynote speaker at gold conferences.

The bottom line? Hang on to your physical gold and gold shares because the point is fast approaching when the gold price is going to explode.

... Dispatch continues below ...



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That prediction is, of course, completely at odds with what has actually happened in the gold market this year, where the price has plunged from about $1,700 per ounce to $1,200 per ounce, before recovering marginally to just above $1,300.

Predictions from institutions such as Natixis are far more restrained. The recently published Natixis Metals Review predicts gold dropping back to lows around $1,170 over the coming six months to a year and averaging $1,200 for next year.

By contrast, Mr Faber says the U.S. Federal Reserve is well on the way to creating a situation where the ---- will hit the fan."

Mr Embry says: "We are in the early stages of a classic monetary debasement. We are seeing more and more instances of where the physical gold does not seem to be available. The paper gold market will be seen for what it is, which is one of the greatest Ponzi schemes in history.

"The paper market has been controlled aggressively by the central banks, the BIS (Bank for International Settlements) and the bullion banks. Investors have been presented with an unbelievable opportunity," he says. "Demand for gold will explode at a time when the supply is not available and the price will reflect this dramatically."

The conviction held by all the speakers is that the gold price has been forced down through blatant manipulation of the gold investment paper market and that much of the gold that is supposedly held by various institutions such as the Fed is no longer available.

That is because the metal has been leased out to bullion banks, which have, in turn, sold it to investors and that bullion is not readily recoverable.

The allegation is that various banks are acting in concert to drive down the gold price so they can buy bullion back without sending the price through the roof.

Such suggestions of manipulation are dismissed out of hand in many investment circles as gold "conspiracy theories."

But one development has really focused attention on the issue and that was when Germany's Bundesbank early this year announced it had requested the return of 300 tons of gold from the Federal Reserve Bank of New York. However, this would take seven years to complete.

That situation was forensically dissected by Grant Williams, analyst for Mauldin Economics, in his "Things That Make You Go Hmmmm" newsletter.

He says that three Boeing 747-400 aircraft in standard cargo freighter configuration could deliver the gold immediately from New York to Frankfurt -- assuming, of course, that the gold is actually available at the New York branch of the Fed.

On April 1 came news of the letter from Dutch state-owned bank ABN Amro to customers effectively stating that any holders of physical gold who had left the metal in custody with the bank would, in future, not be able to request physical delivery of their gold and would instead be compensated in cash. Mr Williams says: "There is a word for that where I come from: confiscation."

Sprott CEO Eric Sprott says: "Our analysis of the physical gold market shows that the central banks have most likely been a massive, unreported supplier of physical gold and that strongly implies that their gold reserves are negligible today."

His conclusion is that "a large portion of the Western central banks' stated 23,000 tons of gold reserves are merely a paper entry on their balance sheets -- completely unbacked by anything tangible other than an IOU from whatever counterparty leased it from them in years past."

Mr Sprott says: "We also realise that some readers may scoff at any analysis of the gold market that hints at 'conspiracy.' We're not talking about conspiracy here, however. We're talking about stupidity.

"After all, Western central banks are probably under the impression that the gold they've swapped and/or lent out is still legally theirs, which technically it may be.

"But if what we are proposing turns out to be true, and those reserves are not physically theirs -- not physically in their possession -- then all bets are off regarding the future of our monetary system."

* * *

Join GATA here:

Louis Boulanger Now Seminar
Visitors Center, Holy Trinity Parnell
Auckland, New Zeland
Sunday, October 13, 2013

http://www.gata.org/files/GATAInNewZealand.pdf

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

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

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

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

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

http://www.minesandmoney.com/

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

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

* * *

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

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

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

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

http://gata.org/node/wallstreetjournal

Help keep GATA going

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

http://www.gata.org

To contribute to GATA, please visit:

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

A U.S. Default Seen as Catastrophe Dwarfing Lehman’s Fall

Posted: 07 Oct 2013 06:10 AM PDT

06-Oct (Bloomberg) — Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.

Failure by the world's largest borrower to pay its debt — unprecedented in modern history — will devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression. Among the dozens of money managers, economists, bankers, traders and former government officials interviewed for this story, few view a U.S. default as anything but a financial apocalypse.

The $12 trillion of outstanding government debt is 23 times the $517 billion Lehman owed when it filed for bankruptcy on Sept. 15, 2008. As politicians butt heads over raising the debt ceiling, executives from Berkshire Hathaway Inc.'s Warren Buffett to Goldman Sachs Group Inc.'s Lloyd C. Blankfein have warned that going over the edge would be catastrophic.

[source]

Sense of Calm Keeps Gold Flat Despite Threat US Won't Pay Its Bills

Posted: 07 Oct 2013 06:05 AM PDT

PRECIOUS METAL prices were unchanged in what dealers called "thin, quiet" Asian and London trade Monday morning, despite increasing fears the US government will fail to meet its obligations in only 10 days' time. "Congress is playing with fire," Treasury secretary Jack Lew told CNN on Sunday. Because "if the United States government, for the first time in its history, chooses not to pay its bills on time, we will be in default.

Gold finds bid as budget impasse intensifies

Posted: 07 Oct 2013 06:01 AM PDT

(MarketWatch) — Gold futures found modest support Monday, with the safe-haven metal rising as Washington's budget impasse entered a second week, accompanied by fears the standoff could lead to a U.S. default.

December gold futures rose $7, or 0.5%, to $1,316.90 an ounce in recent trade. Silver was also on the rise, with the December contract up 13 cents at $21.88 an ounce.

After news reports late last week said House Speaker John Boehner, R-Ohio, had told colleagues he would take steps to ensure the government avoids default, the lower chamber's top Republican dug in his heels on Sunday. He told the morning talk shows that he didn't have the votes needed to ensure passage of a "clean" bill to fund the government and said a default was possible unless the White House gives ground on Republican demands.

"We expected the shutdown to be relatively brief and end after activist conservatives had their say, but Speaker Boehner is giving those activists more deference than we expected," wrote strategists at futures broker R.J. O'Brien in Chicago.

With Boehner refusing to hold a vote on a clean funding bill, "the government shutdown could easily last at least until next Thursday's Oct. 17 Treasury target for a debt-ceiling increase," they said, in a note.

[source]

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