Gold World News Flash

Elliott Wave Suggests Bearish Gold Price Towards $1130
Bitcoin Banged Into Bear Market (Again) As Precious Metals Rise
Silver & Gold Surge On POMO; DeMark Tells Santelli “Big Move Coming”
Guest Post: Krugman Blowing Bubbles
Untitled Humor
Current Economic Collapse News — News Brief
‘Bitcoin Will No Longer Be the Anonymous Tool of Anarchists’
Happy 100th Birthday To The Fed - Live Feed
How to Make Money Collecting Art
Slight 'taper' won't impress markets, Turk tells KWN
Do I have to pay VAT on my silver purchase?
Visualizing The Overnight Stock Index Futures "Fat Finger?" Rout
The Long-Term Case for Bitcoin
Outperform The World’s Best Startup Investors
Fear and Trembling In Muni Land
Key Signs of a Weakening Economy, but a Strong Future for Gold
New Trend Guarantees Higher Gold Prices
100 Years of the Fed
100 Years of the Fed
100 Years of the Fed
Alasdair Macleod: FOMC, taper talk, and the gold price
Don’t Be Scared “Stockless”! There’s No Fear Anymore – Anywhere!
Economic Collapse Is Inevitable – Here’s Why
Gold Prices Flat as Investors Await Federal Reserve Meeting
Gold Analysts Split Over Fed's 2014 Impact on Gold Price
Gold: Strong Support Anticipated Near 1180.50
Fed Tapering "Not a One-Way Bet" Against Gold Prices But Analysts Trim 2014 Forecasts
Fed Tapering "Not a One-Way Bet" Against Gold Prices But Analysts Trim 2014 Forecasts
Fed Tapering "Not a One-Way Bet" Against Gold Prices But Analysts Trim 2014 Forecasts
YouTube Commentary: The Case For Gold Is Growing Stronger With Every Passing Month…
Gold price in a range of currencies since December 1978 XLS version
Miners Should Launch a Gold Cartel or Risk Losing Everything, Advises Stephan Bogner
Miners Should Launch a Gold Cartel or Risk Losing Everything, Advises Stephan Bogner
Miners Should Launch a Gold Cartel or Risk Losing Everything, Advises Stephan Bogner
Best Days for Gains in U.S. Housing Market Stocks Behind Us?
Analysts Split Over Fed’s 2014 Impact on Gold as QE in Spotlight
The Global Economy is Running Out of Time

Elliott Wave Suggests Bearish Gold Price Towards $1130

Posted: 16 Dec 2013 12:42 PM PST

Gold reversed sharply to the downside at the start of September, through the rising trend line of a corrective channel. As we know that's an important signal for a change in trend, which means that bearish price action is now back in play which is accelerating for the last couple of weeks from 1362 so we think that market is moving down in wave 3 that could reach 1130 region in the next few weeks. From a short-term perspective a break of 1210 opens door for 1180. On the other hand, if 1268 is broken then bearish reversal could be seen from second resistance placed at 1295.

Bitcoin Banged Into Bear Market (Again) As Precious Metals Rise

Posted: 16 Dec 2013 12:41 PM PST

With no clear news driver, Bitcoin prices have dropped over 20% from their overnight highs - trading at around $715 now. Perhaps most notable is the relationship between Bitcoin and the precious metals today with the early Bitcoin weakness corresponding almost perfectly to gold and silver strength (and again mid-morning in the US).

Silver & Gold Surge On POMO; DeMark Tells Santelli “Big Move Coming”

Posted: 16 Dec 2013 12:30 PM PST

from ZeroHedge:

Despite numerous “13s”, infamous technical analyst Tom DeMark tells Rick Santelli, the Fed’s liquidity pump has negated every one of these ‘potential sell’ signals and stocks have “unusually” kept going. DeMark goes on to note several analogs and trendlines that look extremely familiar; warning that the convergence of all these signals is notable and suggest “something comparable to 1929“. Unable to get a word in edgeways, Santelli is more intrigued by DeMark’s call on precious metals as he notes with downside limited, there is “a big move coming” for gold to the upside in 2014. Precious metals prices started to accelerate as POMO started (and again when it ended) and are extending the gains post DeMark (Silver +4% from early lows).

DeMark on the equity market analogs and Gold’s coming big move…

Read More @ ZeroHedge.com

Guest Post: Krugman Blowing Bubbles

Posted: 16 Dec 2013 12:01 PM PST

Submitted by James E. Miller of the Ludwig von Mises Institute of Canada,

The perennial question of modern economics is simple: how are market downturns best combated? It’s a good question, if you are trying to deduce truth in matters. It also makes for good fodder to appease career-granting benefactors, i.e. the government. It was not always this way however. Economists, if true to their craft, do not make for barrels of optimism. They are supposed to be a splash of cold water on wishful thinkers.

The unholy alliance between the state and the economic profession would never last if dismal science practitioners were gadflies who swatted down every harebrained scheme that festered in the dreams of central planners. This was one of the problems encountered by classical economists. Being market-friendly, it was tough appealing to monarchs or government leaders who wanted a quick fix to economic doldrums. No head of the public wants to tell his citizens, “Sorry, I cannot help you today. You must help yourself.”

Eventually John Maynard Keynes would come along and give the economic vocation the crony justification it needed to become respectable in the eyes of the state. His The General Theory of Employment, Interest and Money was a how-to guide for pols looking to spend other people’s money. At last they had an excuse: to boost unemployment by paying laid-off workers to dig holes aimlessly.

Our friend Paul Krugman is Keynes’s most vocal disciple, and never tires of reinvoking his intellectual master’s teachings of mo’ money, mo’ debt, and no mo’ problems. In a recent interview with the forever exhausted-looking Joe Weisenthal of Business Insider, Kruggy is perplexed by the Federal Reserve’s inability to inflate out of the ongoing economic slowdown. He snakes out a position between naysayer Larry Summers, who thinks the economy can only grow with artificial bubbles, and someone who is more optimistic about the future. On necessary bubbles, Krugman tells us:

“If we look at the evidence…and it kind of looks like…we need bubbles to grow. We’ve had one bubble after another. Long-term rise in debt, with no inflation…the economy is looking like it’s just barely managing to keep its above water with all those bubbles so…that’s the observation.”

Krugman blames the news status quo on slowing technological innovation and lower population growth. As for the United States, the Nobel Laureate is convinced the trade deficit is largely at fault. Lastly, he concedes that no one really knows why the economy must be goosed by a shot of exuberance.

That’s all true, if you forget the fact that some folks do actually understand why Krugman and his like-minded colleagues are scratching their heads over bubbles.

That the past few decades have witnessed financial bubble after financial bubble is not proof positive of a great need for them. Krugman’s assumption is that had the Fed not interfered in the marketplace to boost particular assets, the whole economy would have imploded. It’s a false assumption, but totally in line with Keynesian theory.

From the stagflation in the late 1970s to the stock market crash of 1987, forward to the failure of Long Term Capital Management in 1998, the popping of the dot-com bubble years later, and finally culminating in the housing crisis of 2007-2008, Krugman and Summers appear to have a point. All of these cases of faux prosperity were caused by the Fed’s meddling with the money supply, pushing interest rates down below their natural level. The headache after each instance was cured with the hair of the dog – meaning more inflation, more stimulus, and more central bank liquidity. The roller coaster ride of money printing has left the economy distorted and unable to find true balance again.

For the life of him, Krugman can’t seem to find any evidence of market stability without the animal spirits being thrown a liquidity bone. And yet, his go-to example of angelic prosperity – the 1950s – has all the markings of a relatively calm period of prosperity absent of central bank interference. As former Office of Management and Budget Director David Stockman points out, the heads of the Federal Reserve following World War II were less-than-enthusiastic about ginning up growth via the printing press. This was when William McChesney Martin was at the helm and President Eisenhower was reluctant to keep up the hog wild spending of his predecessor. In an interview with the American Mises Institute, Stockman comments:

Although central banking does cause moral hazards and lends itself to abuses, there have been periods in which monetary and fiscal discipline have been employed. Fed Chairman William McChesney Martin, for example, really did take the punch bowl away when the party got started because he took monetary discipline seriously. Fiscal discipline under Eisenhower and the gold standard behind Bretton Woods helped put off the day of reckoning for quite a long time.

After wartime price controls were relaxed in the late 1940s, capitalists and private investors were freed of government burden and began investing in the country yet again. Washington’s budget was cut significantly, including hundreds of billions removed from the Pentagon’s death machine expenditures. Stockman brings attention to the data: “Between 1954 and 1963, real GDP growth averaged 3.4 percent while annual CPI inflation remained subdued at 1.4 percent.”

So yes, this was the non-bubble prosperity Krugman is looking for. As Justin Raimondo writes, “[E]ight years of relative fiscal sanity under the Eisenhower presidency ushered in the greatest economic expansion in modern times.” What’s funny is that Krugman is one of the biggest cheerleaders of post-war prosperity and continually advocates going back to the Ike-era. But he wrongly attributes the golden times to pro-union labor policies and high rates of taxation.

Regardless, the takeaway from the decade of General Motors, Elvis, decent manners, and the Red threat is bubbles are not necessary for economic growth. By trying to stimulate demand, the Fed only mucks up economic calculation and capital accumulation.

Krugman’s solutions for the bubble-addicted economy are no better than his own understanding of economic theory. Widespread unemployment can be cured, in his opinion, by weaker purchasing power, a stronger welfare state, and continual government spending. In other words, by top-down central planning that attempts to tweak society “just so.” All these efforts are nothing but a shell game that take money from some and give it to another. Basically, Krugman is King Solomon with a sword, cutting everyone into parts he sees most fit.

Saying we need continuous financial bubbles to keep full employment is such a flawed conception of economics, it belongs on an island of misfit philosophies. Krugman’s incessant promotion of statism is doing more harm to the economy than good. As an opinion-molder, he is perpetuating the economic malaise of the last few years. More bubbles won’t help the recovery, just harm it more. In the middle of a grease fire, Krugman calls for more pig fat. And the rest of us are the ones left burnt.

Untitled Humor

Posted: 16 Dec 2013 11:45 AM PST

by JY896, TF Metals Report:

Here are another set of characters who have a strong aversion to dealing with the consequences of truth. Or rather, whose general methods of dealing with the truth being exposed, are in this case ineffective as the number of targets who possess the information is simply too large. I am, of course, talking about ‘Crazy’ Eddie Snowden’s former employer (or technically, the agency client of his former employer).

I would think twice about recommending a 60 Minutes segment these days, but this one is worth it for the comedy factor alone. This is simply gold, Jerry, GOLD. Pure, elemental comedy gold.

Read More at TFMetals.com

Current Economic Collapse News — News Brief

Posted: 16 Dec 2013 11:40 AM PST

by X22Report, via The Victory Report:

‘Bitcoin Will No Longer Be the Anonymous Tool of Anarchists’

Posted: 16 Dec 2013 11:20 AM PST

by Andre Moran, Black Listed News:

What was once considered the monetary tool for anarchists due to its anonymity and fight against fiat currency will soon become just another regulated payment system that will lose its prominence in the world of alternative currencies.

First, please allow me to confirm that I support the ultimate goal of a lot of bitcoiners: a legitimate alternative(s) to the failed experiment of fiat money. As a libertarian and a student of the Austrian School of Economics, I am fully in favor of competing currencies in the free market; gold and silver, bitcoin and litecoin. Anything is better than the greenback or the euro.

Therefore, to all the bitcoiners who will ultimately disagree with my conclusion, please do not bombard me with anger, rage, vitriol and even death threats. Now, onto the point of this piece, which I concede will not gain the favor of bitcoin owners, investors and miners.

Read More @ BlackListedNews.com

Happy 100th Birthday To The Fed - Live Feed

Posted: 16 Dec 2013 10:51 AM PST

The Federal Reserve System was created on December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law. Today, the Fed has decided to commemorate the event today with all three living Fed chairman delivering remarks. We are sure it will be very exciting but in the interests of 'balance' we offer a few alternative views of the "success" of the venerable monopoly including its cost: since 1913, the dollar has lost nearly 90% of its purchasing power.

The day it all changed...

The Birthday Celebrations - live feed

Live streaming video by Ustream

An Alternative view of the 100 Years of Boom and Bust

"If we evaluate an organization's performance by what it promised when it was created, the Federal Reserve has clearly failed the American people... the revolution of 1913 shifted power from individuals, communities and states to the federal government and its powerful allies in the private sector."

The Fed's 100-Year War Against Gold (and economic common sense)

Instead of providing protection, the Fed has robbed the public through the hidden tax of inflation brought about by currency devaluation.

25 Fast Facts About The Fed

The American people like to think that we have a "democratic system", but there is nothing "democratic" about the Federal Reserve. Unelected, unaccountable central planners from a private central bank run our financial system and manage our economy. There is a reason why financial markets respond with a yawn when Barack Obama says something about the economy, but they swing wildly whenever Federal Reserve Chairman Ben Bernanke opens his mouth.

The Federal Reserve has far more power over the U.S. economy than anyone else does by a huge margin.

Art Cashin On 100 Years of Fed Trial and error and error and error...

the Fed was supposed to extend credit only for “productive” and not for “speculative” purposes." Ironically, less than a year later, the Fed noticed that some loans were being diverted to "securities purchases"

A century with and a century without The Fed...

And last but not least...

The Fed's Dismal Track Record:

According to the popular lie, the Federal Reserve was supposed to have been established to smooth out the economic cycle, thus preventing booms, busts, recessions, and depressions.

It hasn’t really worked out that way.

In the 100 years prior to the establishment of the Federal Reserve, there were 18 distinct recessions or depressions:

1815, 1822, 1825, 1828, 1833, 1836, 1839, 1845, 1847, 1853, 1860, 1865, 1869, 1873, 1887, 1890, 1899, and 1902.

Since the establishment of the Federal Reserve, there have been 18 recessions or depressions:

1918, 1920, 1923, 1926, 1929, 1937, 1945, 1949, 1953, 1958, 1960, 1969, 1973, 1980, 1981, 1990, 2001, 2008.

So in other words, the economy experienced just as many recessions with the ‘expert’ management of the Federal Reserve as without it.

And this doesn’t even begin to capture all the absurd panics (the S&L scare), bailouts (Long-Term Capital Management), and ridiculous asset bubbles that they’ve created.

Hardly an impressive enough track record to justify conjuring trillions of dollars out of thin air, and awarding nearly totalitarian control of the money supply and economy to a tiny banking elite… wouldn’t you say?

How to Make Money Collecting Art

Posted: 16 Dec 2013 10:38 AM PST

Interviewer: Let’s talk about art. You’ve mentioned many times what a great investment it has been for you.

Mark: Are you sure that's a door you want to open? I can talk forever about art collecting.

Interviewer: Yes, let's hear it. I'm interested to know why art collecting? Why not cars, or antique dollhouses or something?

Mark: Fine art—paintings, drawings, and sculpture—has always held a special place in my heart, so it was a natural choice for me.

My art collection has enriched me in three ways: Buying it is a lot of fun—especially when you know you are buying it right. Owning it is a great pleasure. It enriches your life every time you look at it, and it tells your friends and people something important about you.

Thirdly, it can make you richer. My art collection, as a whole, has appreciated more than $1 million. I wouldn't care if it didn't. I'd be happy if it simply maintained its value. But I made investing in art a hobby, and it paid off.

Fine art, like a number of other historically recognized collectibles, has a lot of the qualities you want in an investment: It's a tangible asset, so it tends to appreciate during inflationary times. It's portable, which is a very good thing in case you might want to disappear one day. It's also private—and by that, I mean that you don't have to report your transactions to the government. And finally, if you buy the right art it can appreciate—sometimes a great deal.

Interviewer: So what does a novice need to know before collecting?

Mark: The novice needs to know that, from a wealth-building perspective, there are different kinds of art.

When you have studied 1,000 paintings… You will know what you like.

First, you have what I call "decorator art." These are pieces of art that simply fill a given space with color and texture but will never appreciate. This is the kind of art you see in Las Vegas hotel lobbies and Caribbean resorts. "Decorator art" is a waste of time and money.

Commercial art is what you find in galleries. However, the quality of this art can vary widely—it all comes down to the dealer and his expertise. While it's true that some dealers peddle that "decorator art" I was talking about, there are also some fine art commercial galleries that cater to local artists, graduate students, the talented Sunday dauber, as well as fine art by recognized talent. Priced right, these artworks make a very good starting point for the fledgling collector.

Those small local galleries I was talking about is where you want to go when starting your collection. You can find oils, pastels, and drawings that are worth a few hundred dollars. Buying pieces like that is a good way to train your eye.

Investment-grade art is different. It hangs in major museums. The artist is already in the art books. He's already a serious figure. His art isn't going to disappear. Nor will its value. It might fluctuate, as all investments do, but the long-term trend is good, and you can be confident that over the long run it will maintain or increase its value.

When buying art for investment purposes, collectors need to understand that appreciation happens over a substantial period of time. Unless an artist dies or is the subject of a 60 Minutes interview, collectors will cool their heels for a while before selling for a profit. However, studies show that high quality, investment-grade art is one of the top performers in terms of long-term return on investing.

Interviewer: Okay, so how does someone begin?

Mark: There are two methods. If you are new to art and aren't sure what you like, you can begin by buying inexpensive art. I'm not talking about decorative art. It won't teach you anything. I'm talking about art that you might find at small galleries, local art shows, or antique shops. Buy the stuff you like, but don't spend any more than a few hundred dollars on any individual acquisition.

As your taste improves—and it will improve—you may find that much of what you once admired is not so wonderful anymore. When that happens, you can sell it (for whatever you can) or give it away.

Ask questions of the dealer every time you buy art. If you meet the artist and like him, make friends. Gradually, your circle of contacts will improve and so will your eye. Eventually, you will feel ready to venture into investment-grade art.

Interviewer: Sounds like a relatively slow process. Is there a better way?

Mark: Yes. You can begin with investment-grade art, but you have to do your homework and be patient. Start by trying to figure out what genres of art you like. Do you like landscapes? Do you like abstract art? Do you like portraits? Sculpture? It doesn't matter. Don't let someone talk you into, say, abstraction, if you prefer portraits.

Art and collecting are life-enhancing endeavors, first and foremost. There is investment-grade art of every kind. The collector needs to figure out his personal tastes before acquiring. That is why museum visits, gallery openings, etc., are so important.

Find what type of art appeals to you. Then figure out what artists you like within that genre. Try to limit your interest to two or three artists to begin with. Study the price history of those artists. Find out what their pieces have sold for in auction in the past. Find out what they are selling for currently.

Try to become an expert in their work as quickly as you can. You don't need to take any art appreciation courses. Just read books about the artists and the genres you like. You should also visit museums whenever you can and study the work of your preferred artists.

When you have studied 1,000 paintings, you will have developed your eye. You will know what you like. And more importantly, you will have a sense for quality.

You don't want to start off spending lots of money. This can lead to costly mistakes. Begin by buying inexpensive pieces such as sketches from major artists (expect to pay $1,500 and upwards) and gouaches and paintings of second-tier investment-grade artists ($2,500-7,500). This sort of buying will keep your risk relatively low, so if and when you do make the occasional mistake (like buying a fake or overpaying for a piece), it won't break you.

When I first got started, one of the things I got involved with was a school of art called CoBrA. CoBrA is an acronym for Copenhagen, Brussels, and Amsterdam. It was a period of art that officially took place from 1948-1952. It had a total of 10 or 12 artists in it, of which there were three major artists: Appel, Corneille, and Jorn.

All of these artists hang in the major museums in the world. I knew their art would never be worthless. This was a good group to begin with because it was small. It took place over a small period of time, it comprised a small number of artists, and each of them was recognizably different.

In other words, it was easy to study. So I began by collecting these three artists. I bought sketches and crayon pieces at first because they were cheap, and afterwards I sold some of them at a profit and "traded up." Eventually, I was able to purchase a very nice collection of good pieces that have appreciated over 300%.

Interviewer: Okay, so let's say I've done all that. I've picked my genre and my artists, I've spent months poring over paintings and visiting museums. When I'm ready to buy, how do I know what's a fair price, or how to value a piece of art?

Mark: That's actually easy. But you have to ignore what the pundits say. Art pundits say that valuing art is impossible because it's subjective. That is true in terms of the pleasure you get from art, but it is not true of the investment value of art.

From an economic perspective, art is valued by the marketplace, just as stocks are. An artist's work is valuable because important critics at some point decided it was good. Because of that, it went to the big museums. It got into books. It is taught in art courses. And when it goes to auction, people bid it up.

Once there's a 10- or 20-year market for a particular artist, the value of his art is unlikely to collapse. By that time, so many people—museums, brokers, and wealthy collectors—are invested in it. None of them, if they can help it, will allow it to collapse.

Who is ever going to say that Rembrandt wasn't a great artist? Or that his paintings aren't worth millions of dollars? Nobody. That doesn't mean he was the best Dutch painter of his time. If you look at paintings by his contemporaries, you might think that some of the other Dutch masters (or even a few of the minors) were just as good.

But Rembrandt's values will hold. Why are his paintings worth 100 times more than another one that is technically just as good? Because history has decided it should be so. Art critics—experts, people who dedicated their lives to studying art, have decided. The marketplace has put a value on it, and that's what makes it more valuable.

When you're collecting art, you're collecting the history of what art critics have decided. You might disagree with them on an aesthetic basis, but you'd be foolish to disagree with them with your money.

My point is that the value of art, from an investment point of view, is not subjective at all. It is objective. More objective and easier to predict, in fact, than stocks.

Regards,

Mark Ford
for The Daily Reckoning

Ed. Note: This essay was originally featured in the Sunday edition of The Daily Reckoning. That’s right… The Daily Reckoning is now being published 7 days a week, and each issue is full of insightful analysis and unique investment opportunities — like art collecting, for example… Don’t miss a single issue. Sign up for FREE, right here.

Slight 'taper' won't impress markets, Turk tells KWN

Posted: 16 Dec 2013 10:37 AM PST

1:33p ET Monday, December 16, 2013

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk today predicts to King World News that the Federal Reserve this week will announce a trivial reduction in its bond buying as the markets realize that "quantitative easing" is helping only the government and big banks, not the U.S. economy. But, Turk says, the markets won't be convinced that the slight adjustment in policy will accomplish any improvement in the economy. An excerpt from the interview is posted at the King World News blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/12/16_I...

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

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Do I have to pay VAT on my silver purchase?

Posted: 16 Dec 2013 10:31 AM PST

The Real Asset Co

Visualizing The Overnight Stock Index Futures "Fat Finger?" Rout

Posted: 16 Dec 2013 10:30 AM PST

As we noted overnight, at 22:08:32 ET, a large wave of sell orders hit many stock index futures contracts. Most notably, Nanex notes, over 6,000 March 2014 eMini contracts traded in 1 second. After closer inspection, it appears that trading began almost simultaneously in several contracts, with the March 2014 eMini (ES) starting just a few milliseconds before the others. It's unclear whether the trades in the other contracts were a reaction to the eMini or part of the same sell program... but the slowness of reversion in prices makes it clear that while the mainstream media would like to shrug it off as just another "fat finger," it was anything but.

Via Nanex,

Comparing ES, NQ, TF and YM at 22:08:32 on December 15, 2013.

Closeup of the collapse - and the clear indication it was not a single fat-finger trade...

(each pixel is 25 milliseconds)

and here each pixel is 1 millisecond...

The Long-Term Case for Bitcoin

Posted: 16 Dec 2013 10:08 AM PST

Bitcoin has been making headlines for months now. Extreme price fluctuations have sparked a vigorous debate: Is it a currency or a scam? Is Bitcoin viable in the long-term, or are we witnessing a bubble waiting to burst?

The answers to these questions are simple: Yes, Bitcoin is a currency, but we cannot know if it will remain so in the future. It does, however, have many properties that might make it viable in the long run.

There should be no controversy anymore about calling Bitcoin a currency. A currency is simply a good that serves as a medium of exchange, meaning that people trade it for the goods and services they want. In different circumstances, different goods serve this purpose. In prison, cigarettes are used as currency. In the early American colonies, tobacco was a currency. Bitcoins are used online as a medium of exchange for thousands of people around the globe.

No good in the universe is intrinsically valuable, any more than any particular food is intrinsically tasty.

Now, whether or not it is a “sound” currency is an entirely different question. In order to make that judgment, we need to understand the properties that make currencies sound or unsound in the first place. Consider gold and silver: They have persisted as a medium of exchange throughout history, and not by chance. They have desirable properties.

A sound currency needs to stay valuable over time, have a limited supply, and be easily divisible and portable. If any one of these properties is missing, it is reasonable to question the long-term viability of such a currency, especially if it is subject to competition. This is why many free-market economists are called “goldbugs” — they see the shortcomings of fiat money in comparison to hard-money alternatives.

Bitcoin, despite being entirely digital, stands up well to scrutiny. Bitcoins are incredibly portable; they can be sent anywhere in the world instantly, at almost no cost. They divide effortlessly down to one hundred-millionth of a Bitcoin. Their supply is strictly limited, even more than gold: There will only be 21,000,000 Bitcoins ever in existence — it’s written into the software. But what about their value? With wild price swings, is it accurate to say that they will remain valuable over time?

To answer that question, we first need to understand that there is no such thing as “intrinsic value.” No good in the universe is intrinsically valuable, any more than any particular food is intrinsically tasty. Value is entirely subjective, by its very definition. It is an evaluation of a good’s ability to satisfy our ends, and only subjective individuals can make such evaluations. Gold and silver have consistently been valued for their ability to satisfy our ends, but not because they contain value in their molecular makeup.

What people usually mean when they speak of the “intrinsic value” of a currency is something like this: It has a non-monetary use. If people did not accept gold as a medium of exchange, for example, they could wear it as jewelry or melt it down and use it in electronics. This is why critics have claimed that Bitcoin is destined to fail. You can’t “do” anything with a Bitcoin other than send it to somebody else.

There are two issues with this critique: First, it is not a logical necessity for currencies to have non-monetary use; second, even if this were the case, Bitcoins do indeed have a non-monetary use. It helps to make a distinction here between “Bitcoins” as currency units, and “Bitcoin” as software that runs on a decentralized network of computers.

Imagine that there was a payment system that allowed you to instantly move money anywhere on the globe, between any currencies, securely, at virtually no cost — and without reliance on intermediaries, like banks. Now imagine that system only accepted one currency to mediate these transactions. Surely, that currency would have value, and, in turn, each unit of that currency would have value. Well, that payment system is the Bitcoin network, running the Bitcoin software, and the currency unit is Bitcoins. Because Bitcoin (the software, payment system, and network) has value, Bitcoins (the currency units) have value.

That being said, we don’t know what the nominal price of each Bitcoin should be in relation to other currencies. And unquestionably, Bitcoin’s value has fluctuated wildly. Should one Bitcoin be worth $10? $1,000? $100,000? We don’t know, and the market is trying to figure it out. We can’t even be sure how many U.S. dollars are in existence, so determining an appropriate exchange rate between them is no easy task. Speculators have also rushed into the market, which has caused a series of booms and busts. But that should not surprise anyone, and it does not change any of the fundamental properties of Bitcoin.

We can’t know what the market will choose as a currency in the future, because it is entirely dependent on peoples’ values. We don’t even know if people will continue valuing U.S. dollars, much less Bitcoins. But we do know that Bitcoin possesses some of the fundamental properties that have made gold and silver successful currencies, and it even outperforms its competition in some categories.

It is no longer a question of whether or not people will accept Bitcoins as a currency: They already do, and the community is growing. The question is: Will Bitcoins continue to be valued in the future? Bitcoins certainly won’t rot, nor will the supply suffer from hyperinflation, but will these properties continue to be valued? I suppose the only appropriate answer is: We’ll see.

Steve Patterson
for The Daily Reckoning

Ed. Note: We’ll see, indeed. And whatever currency comes out on top, you’ll want to be positioned to take full advantage of it. Sign up for the Laissez Faire Today email edition to stay ahead of the curve.

Original article posted on Laissez Faire Today

Outperform The World’s Best Startup Investors

Posted: 16 Dec 2013 09:57 AM PST

As you may know, every year, Forbes Magazine publishes the “Midas List” – a list of the top U.S. venture capital firms.

The folks on this list are professional investors with a track record of success – so if you’re interested in early-stage investing and want to emulate the best of the best, you should pay attention to their names, right?

Uh, wrong.

Today, not only will we show you who should really be on the early-stage Midas List – we’ll also show you how to “follow” them so you can invest alongside them.

And since our topic today is about how to leverage the best startup investors (and, yes, since it’s holiday time), we’re also going to share with you a special report from Crowdability that was just published. In this report, four professional early-stage investors reveal how they’d approach equity crowdfunding if they were in your shoes.

Venture capitalist Fred Wilson (Managing Partner in Union Square Ventures and early investor in such companies as Tumblr and Twitter), believes the Midas list is mistakenly capturing all kinds of investors – whether they’re “Seed” and “Series A” investors who write checks when a company is little more than an idea on the back of a napkin, or “Later Stage” investors who invest when a company is more mature.

It pays to be a follower when it comes to equity crowdfunding. You just need to be sure you’re following the right people!

As Fred wrote, “For me, the firms who invested in the Seed and Series A rounds of $1 billion+ exits is the only list I care about.”

You see, most of the firms on the Forbes List are “later stage” investors. Instead of investing small amounts of capital into unproven startups, they put a ton of capital into later-stage companies.

By the time a later-stage venture capital firm like Kleiner Perkins invests, a “startup” might already have hundreds of employees, and millions in revenue. They might even be on their way to going public.

What Fred is saying is that by the time the “Midas” investors put money into a company, it’s no longer a question of if the businesses will succeed, but rather a question of when the success will happen, and how big it’ll be. And if that’s the case, what could early-stage investors like us – investors focused on opportunities in the equity crowdfunding market – possibly learn from the folks on the Midas list?

The answer is this: Not much.

But what if we could put together our own Midas List? A list of investors who actually have the “golden touch” like old King Midas?

Let’s give it a shot…

Based on Fred’s criteria, let’s look for professional investors who have invested in multiple startups at their earliest stages – startups that have eventually been acquired or gone public (often called an “exit”) for over $1 billion.

According to a recent article on TechCrunch, since 2003, 39 venture-backed startups have been valued at over $1 billion. Some of the companies have yet to “exit,” so we’ll focus only on the ones that have already been acquired or gone public.

Using CrunchBase (an amazing tool for any early-stage investor), we can look for investors who were involved in these companies’ Seed or Series A rounds of financing.

Below is our “Midas List” – I’ve included the name of the firm or individual, and the number of “billion-dollar exits” they’ve been involved in. (Finding the names of individuals can be challenging; finding the name of firms is a piece of cake.)

1. Sequoia Capital – 5
2. Greylock Partners – 4
3. New Enterprise Associates – 4
4. Peter Thiel (including Founders Fund investments) – 4
5. First Round – 2
6. Charles River – 2
7. Union Square Ventures – 2
8. SV Angel – 2
9. Austin Ventures – 2

Now, you may be thinking, “Thanks for the great list, Wayne – but how does this help me make money?”

Well, if you read my recent article about one of my favorite crowdfunding investments going on right now, you know you can invest alongside top angel investors by “following” their activity on AngelList, a high-quality crowdfunding platform.

Now you can do the same with our “Midas List” above.

You see, even though many of the names are firms as opposed to individual investors, we can still find and follow people that work at those firms. For example, if you look up Greylock partners on AngelList, you’ll see that, 2 months ago, one of the partners, Josh Elman, started to follow a company on AngelList called memoir.

At the time, memoir was raising a seed round. In addition to Josh, there were a number of other successful angel investors following and investing in the company.

It pays to be a follower when it comes to equity crowdfunding. You just need to be sure you’re following the right people!

Regards,

Best Regards,

Wayne Mulligan
for The Daily Reckoning

P.S. Speaking of following the right people, in today’s issue of Tomorrow in Review, we gave readers a free gift that introduced them to some of the “rightest” people in the early-stage universe… My business partner and I have been talking to everyone we can about this new market – not just about ways we can help you navigate this new world, but ideally, how we can help them make money. And some of our venture capitalist friends offered to help us out. To ensure you never miss another great opportunity like this one, you can sign up for the FREE Tomorrow in Review email edition, right here.

Fear and Trembling In Muni Land

Posted: 16 Dec 2013 09:49 AM PST

Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter

Municipal bond investors, a conservative bunch who want to avoid rollercoaster rides and cliffhangers, are getting frazzled. And they’re bailing out of muni bond funds at record rate, while they still can without losing their shirts. So far this year, they have yanked out $52.8 billion. In the third quarter alone, as yields were soaring on the Fed’s taper cacophony and as bond values were swooning, net outflows from muni funds reached $32 billion, which according to Thomson Reuters, was more than during any whole year.

Muni investors have a lot to be frazzled about. Municipal bonds used to be considered a safe investment – though that may have been propaganda more than anything else. Munis are exempt from federal income taxes, hence their attractiveness to conservative investors in high tax brackets. Munis packaged into bond funds appealed to those looking for a convenient way to spread the risk over numerous municipalities and states. While the Fed was repressing rates, muni bond funds were great deals.

Then came the bankruptcies.

The precursor was Vallejo, CA, a Bay Area city of 115,000 that filed for Chapter 9 bankruptcy protection in 2008 and emerged two years ago. But it’s already struggling again with soaring pension costs that had been left untouched. Jefferson County, which includes Alabama’s largest city, Birmingham, filed in 2011 when it defaulted on $3.1 billion in sewer bonds, the largest municipal bankruptcy at the time [but it’s already issuing new bonds; read..... Municipal Bankruptcy? Why Not! And so The Floodgates Open].

Stockton, CA, filed in June 2012. Mammoth Lakes, CA, filed in July 2012. San Bernardino, CA, filed in August 2012. They were dropping like flies in the “Golden State.” Detroit filed in July this year, crushing all prior records with its debt of up to $20 billion. That’s $28,000 per person for its population of 700,000.

But Detroit is just a fraction of what is skittering toward muni investors: the Commonwealth of Puerto Rico. The poverty rate is 45.6%. Unemployment is 14.7%. The economy has been in recession since 2006. The labor force has shrunk 16% from 1.42 million in 2007 to 1.19 million in October. The number of working people, over the same period, has plunged from 1.8 million to 1.1 million, a breathtaking 39%.

Puerto Rico had a good run for decades as federal tax breaks lured Corporate America to set up shop there. But when these tax breaks were phased out by 2005, the companies went in search for the greener grass elsewhere. To keep splurging, the government embarked on a borrowing binge that left the now lovingly named “Greece of the Caribbean” with nearly $70 billion in debt.

That’s 70% of GDP, and for its population of 3.67 million, about $19,000 per capita, or about $64,000 per working person. And then there is the underfunded pension system. But unlike Detroit, Puerto Rico is struggling to address its problems with unpopular measures, raising all manner of taxes and cutting outlays. Not even the bloated government payrolls have been spared. Too little, too late? Given the enormous poverty rate and long-term shrinking employment, what are the chances that this debt will blow up?

Pretty good, according to Moody’s Investors Service. Last week, it put $52 billion of Puerto Rico’s debt under review for a downgrade – to junk. Moody’s litany of factors: “Failure to access the public debt market with a long-term borrowing, declines in liquidity, financial underperformance in coming months, economic indicators in coming months that point to a further downturn in the economy, inability of government to achieve needed reform of the Teachers’ Retirement System.” This followed a similar move by Fitch Ratings in November.

Alas, Puerto Rico has swaps and debt covenants with collateral and acceleration provisions that kick in when one of the three major credit ratings agencies issues the threatened downgrade. Which “could result in liquidity demands of up to $1 billion,” explained Moody’s analyst Lisa Heller. It would “significantly narrow remaining net liquid assets.”

Now Puerto Rico is under pressure to show that over the next three months or so it can still access the bond markets at a reasonable rate. If not....

Puerto Rico’s debt was a muni bond fund favorite because it’s exempt from state and federal taxes. Now fears of a default on $52 billion or more in debt are cascading through the $3.7 trillion muni market. But Puerto Rico isn’t alone. Numerous municipalities and some states have ventured out on thinner and thinner ice.

Default risks are dark clouds on the distant horizon or remain unimaginable beyond the horizon. And hopes that disaster can be averted by a miracle still rule the day. However, the Fed’s taper cacophony is here and now, and though the Fed is still printing money and buying paper at full speed, the possibility that it might not always do so hangs like a malodorous emanation in the air.

Taper talk and bankruptcies are a toxic mix for munis. Now add the lure of stocks that have become the official risk-free investment vehicle with guaranteed double-digit rates of return for all years to come. So muni-fund investors, tired of losing money, are seeking refuge in stocks. This has pressured munis further. The Bank of America Merrill Lynch master municipal index has dropped 2.8% and, unless a miracle happens, will end the year in the red. A first since 2008. Its index of bonds with maturities of at least 22 years has skidded almost 6% – though the Fed hasn’t even begun to taper.

The Fed’s easy money policies over the decades encouraged borrowing binges by municipalities and states. When the hot air hissed out of history’s greatest credit bubble in 2008, the Fed’s remedy, its ingenious QE and zero-interest-rate policies, blew an even greater credit bubble – kudos! As that credit bubble transitions from full bloom to whatever comes afterwards, the plight of muni bond funds is just the beginning.

The Fed’s policies of dollar destruction took on a sudden virulent form in 1970 – clearly visible against the Swiss Franc. And it’s still going on. When even the Swiss couldn’t handle it anymore, they too jumped into the currency war. Read.... Mother Of All Currency Wars in One Chart: Dollar Vs. Swiss Franc

Key Signs of a Weakening Economy, but a Strong Future for Gold

Posted: 16 Dec 2013 09:28 AM PST

Gold reached its biggest gain in seven weeks on a weaker dollar this week. Don't expect this rally to continue in the immediate term, but as the dollar continues to weaken, gold will continue to...

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

New Trend Guarantees Higher Gold Prices

Posted: 16 Dec 2013 09:15 AM PST

Dear Reader,

Our own Jeff Clark has pulled together data on four major factors that will drive the price of gold, starting next year. The information below is concise and compelling, so I'll turn it over to him…

But first I want to mention to all of you who are interested in Doug's new book, Right on the Money, but prefer an ebook format rather than a physical copy, you can now get one on via this link to Amazon.com.

Next week the holidays will be upon us, so I'm going to go ahead and wish a very happy holiday season and a terrifically prosperous 2014 to all our readers and their loved ones.

Sincerely,

Louis James
Senior Metals Investment Strategist
Casey Research

Rock & Stock Stats	Last	One Month Ago	One Year Ago
Gold	1,238.70	1,268.40	1,696.80
Silver	19.68	20.44	32.28
Copper	3.28	3.16	3.65
Oil	96.60	94.49	86.44
Gold Producers (GDX)	21.11	23.91	46.34
Gold Junior Stocks (GDXJ)	30.23	35.41	84.68
Silver Stocks (SIL)	10.87	11.94	22.97
TSX (Toronto Stock Exchange)	13.125.70	13,370.66	12,289.17
TSX Venture	894.40	925.88	1,174.01

New Trend Guarantees Higher Gold Prices

Jeff Clark, Senior Precious Metals Analyst

If you're like me, you've bought gold due to the money printing policies of most developed countries and the effect those policies will have on the future purchasing power of our paper money. Probably also because there's no viable way for governments to escape the consequences of all the debt they've piled up. And maybe because politicians can't be trusted to formulate a realistic strategy to avoid any number of monetary, fiscal, or economic crises going forward.

These are valid, core reasons to hold gold in a portfolio at this point in time. But a new trend is under way, and someday soon it will be just as much a driving force for gold prices as anything else: a good old-fashioned supply crunch.

A few metals analysts have mentioned it, but it escapes many and certainly is off the radar of the mainstream financial media. But unless several critical factors reverse course, a supply shortage is on the way with clear implications for the price of gold.

The following four factors are combining to diminish gold supply. While we've touched on some of them before, put together they're creating a perfect storm that will, sooner or later, impact the gold market in several powerful ways. As these forces gather steam, you'll want to make sure you've already built a substantial position in physical bullion.

Factor #1: Production Pullbacks, Development Delays, Exploration Cancelations

Gold producers don't operate in a vacuum. If the price of their product falls by 30% over a two-year period, they've got to make some adjustments. And those adjustments, more often than not, result in lower production, delayed mine development plans, and cuts in exploration budgets. The response is industrywide, and even low-cost producers are not immune.

The drop in metals prices means some mines can't operate profitably, and if the losses exceed the cost of closure (and possibly, restart in the future), these mines will be shut down. As operations come offline, global output falls.

While lower metals prices are not what any of us want, they're long-term bullish because, as they say, the cure for low prices is low prices. If prices drop further, a greater number of projects will be unable to maintain production levels. For example, we know of several operating mines that, in spite of large reserves, will be forced offline if the gold price falls to the $1,100 level.

The impact on development and exploration projects is even greater—it's easy to postpone construction on tomorrow's new mine when you're worried about cash flow today. As a result, many companies have cut drilling projects and laid off geologists.

The chart below shows the precipitous decline in the number of drilling projects around the world.

Through the first nine months of 2013, 52% fewer drills have been turning compared to the same period last year. And it's not just fewer holes being poked in the ground—ore grades are declining too.

As of last year, ore grades of the ten largest gold operations are less than a third of what they were just five years ago, and less than a quarter of what they were 14 years ago.

Here's the troubling aspect: This trend cannot be easily reversed.

It takes about a decade to bring new projects on line, and even shuttered, recently producing mines held on "care and maintenance" take time and money to get going again.

In other words, even when gold prices start rising again, new mine supply will take years to rebuild. Many companies will find themselves with a lack of readily available ore, and the market with fewer ounces.

Lower metals prices obviously have an impact on how much metal gets dug up. This alone is bad enough for supply, but unfortunately it's not the only factor…

Factor #2: Now You See 'Em, Now You Don't

Many mining projects have both low-grade and high-grade zones. When prices fall, a company can mine the richer ore and still make money. It may sound shortsighted, but it can be the right thing to do to stay profitable and be able to survive in a temporarily weak price environment.

But high-grading, as it's called, can make low-grade ore part of a disappearing act. Here's how:

When metals prices are low and companies focus on high-grade ore, the low-grade material is temporarily bypassed. It's still physically there, so one might assume the company will come back at a later time to mine it. But not only is it not economic at lower metals prices, it may never get mined at all.

That's because some low-grade ore only "works" when it's mixed with high-grade ore. Even when gold moves back up, it doesn't matter, because the high-grade ore is gone. So it's not just gone legally, as per regulatory definitions of mining reserves—it may be economically gone for good.

Miners could return to some of these zones in a very high gold price environment (something well north of $2,000), but that's a concern for another day. The point for now is that many of today's low-grade zones would be written off if the high-grade they need to work is gone.

Critical point: You may read reports early next year that global production is rising. However, to the degree that's due to high-grading, it virtually guarantees lower production is around the corner.

Factor #3: Greed Is Good—Says the Politician

It's become increasingly difficult for mining companies to navigate the political minefield. Many governments have become so rapacious that supply is already suffering.

We've mentioned this issue before, but take a look at how governments and NGOs (nongovernment organizations) put an effective halt to some of the biggest precious metals discoveries seen this cycle…

Pebble Project in Alaska. Anglo American (AAUKY) spent $540 million on one of the biggest copper/gold discoveries ever, but recently announced that it will walk away from it. The company said it wants to focus on lower-risk projects and is undoubtedly tired of putting up with ongoing environmental scares and regulatory delays.

Fruta del Norte in Ecuador. Kinross Gold (KGC) bought Aurelian shortly after what many called the discovery of the decade, but the politicos demanded such a big slice of the pie that Kinross stopped developing the project.

New Prosperity Mine in British Columbia. Taseko Mines (TGB) has been relentlessly challenged by environmental activists at the world's tenth-largest undeveloped gold/copper deposit and pushed politicians to continually delay permitting.

Pascua-Lama in Argentina & Chile. This giant deposit has been postponed for several years, largely due to environmental issues and unmet regulatory requirements. Some analysts think it may never enter production.

Navidad in Argentina. Pan American Silver (PAAS) was forced to admit that the Navidad silver deposit—one of the world's biggest silver-primary deposits—was "uneconomic at any reasonable estimate of long-term silver prices" when the local governor announced he wanted "greater state ownership" and increased royalties from 3% to 8%.

Minas Conga in Peru. Newmont's (NEM) multibillion-dollar project was put on the back burner last year when the government gave the company two years to develop a way to guarantee water supplies for residents of the Cajamarca region.

Certainly bigger projects attract greater attention and scrutiny, but as it stands now, none of the above projects are in operation.

This list is by no means exhaustive; large numbers of smaller projects all around the world face similar challenges.

The bottom line is that finding economic gold deposits in pro-mining jurisdictions is getting increasingly difficult. The result? The metal stays in the ground.

Factor #4: Implosion Explosion

As you've likely read, the gold mining industry in South Africa is imploding.

Labor strife: Strikes are common, and layoffs have numbered in the thousands this year.
Rising costs: Labor and power costs have doubled since 2009. Some projects have been taken off line due to the one-two punch of higher costs and lower metals prices.
Maturing assets: Many mines in South Africa are past their heyday and have forced companies to dig deeper. The deepest mine is now 2.4 miles below surface and takes workers a full hour to reach the bottom.
Power inefficiencies: Electricity shortages are at their worst in five years. Poor power supply has led to blackouts and mining stoppages, and has made expansion difficult.
Political interference: The industry has faced frequent calls for nationalization. Miners were told earlier this year they can stay private, though in exchange they were forced to pay higher taxes. How gracious of the politicians.

The breakdown in South Africa is important because as recently as 2006, it was the world's top producing country; it's now #5. Unfortunately, there's every reason to expect this trend to continue, in many countries around the world.

The result is—you guessed it—fewer ounces come to market.

These four factors are already affecting gold supply. Gold production in the US was already 8% lower in the first half of 2013 vs. the first half of 2012. Through June of each year, output dropped from 655,875 ounces last year to 623,724 in 2013.

The net result of this perfect storm is that we should expect gold supply to decline until prices are much higher. Even when prices do rise, management teams will be reluctant to expand operations, reopen mines, or buy new projects until they feel the new price level is sustainable. As a result, this trend will almost certainly last several years.

Based on the research we've done, it is my opinion that after a bump in output early in 2014, the shortfall will become increasingly evident by the end of the year and reach fractious levels by 2015.

If demand remains at current levels, or even if it falls by less than the decrease in supply, gold and silver prices will be forced up. And in an environment of currency depreciation, we should see more demand, not less. We have the makings of a classic supply squeeze.

Higher metals prices are not the only ramification, however: Investors will be required to pay higher premiums on bullion. Further, we can expect a lack of available product, most likely resulting in delivery delays or even rationing.

That's why it's so important to buy bullion now, before the storm. Even if you need to sell a little to maintain your standard of living, the effects on you will be all positive. The product you sell will…

Fetch much higher prices
Return the premium you paid—perhaps more than you paid
Have a steady stream of ready customers

All it takes to capitalize on this opportunity is to recognize the supply shortage that's on the way and act accordingly.

Critical point: Buy the physical gold and silver you think you'll need for the future NOW.

One of the best places I know has among the lowest premiums available in the industry, and also offers several international storage locations in case things get bad in your home country. This breakthrough program is as liquid as GLD and offers greater safety than storing bullion at home. Click here to find out more.

Gold and Silver HEADLINES

Kitco Metals Among Gold Traders Facing Québec Tax Fraud Allegations (Financial Post)

As a result of a years-long investigation by Revenu-Québec, Kitco Metals Inc. founder Bart Kitner and several directors, along with 11 other gold trading firms, are threatened with prison sentences and fines totaling $750 million. The case is one of the biggest tax fraud investigations in provincial history.

The alleged fraud by the 12 companies totals $350 million over a two-year period ending in 2010. Revenu-Québec claims Kitco specifically made false statements and tried to obtain tax rebates to which it wasn't entitled. The amount related to Kitco was not made public.

Kitco denied the allegations. Last year, the company filed a lawsuit against Revenu-Québec, seeking $122 million in damages caused to the company. The company says its legal action against the department will escalate as a result of the formal charges.

While we can't speak to the specific charges, we're skeptical of the government's motives.

Platinum Seen Steady to Higher in 2014; Another Supply Deficit Forecast (Kitco)

Precious metals analysts at HSBC expect platinum prices to stabilize or rise in 2014 due to the combination of higher auto-catalyst demand and persistent supply issues in South Africa.

Platinum's price performance has been impacted by gold's weakness, but that connection may change next year. "[B]ased on superior fundamentals and a tightening situation throughout 2014 … [platinum] will gradually decouple itself from the influence of gold and move higher," said Jim Steel, HSBC precious metals analyst.

Demand from the European auto market is expected to rise next year, plus a growing number of stringent emissions regulations go into effect, both of which should mean increased catalytic demand.

According to estimates from various institutions, the platinum deficit in 2013 is expected to range from 500,000 to 800,000 ounces, and is forecasted to stay at 200,000–500,000 ounces next year.

We've got our favorite platinum and palladium pick in hand—have you?

Pre-Election Disclosure Illustrates Gold's Appeal for India's Political Elite (Mineweb)

News coming from India shows that gold imports slumped 80.55% to $1.05 billion in November, the direct result of governmental measures to curb inbound shipments of the precious metal. However, affidavits of politicians' financial assets in India show—surprise, surprise—they have been buying significant quantities of the yellow metal!

The Mineweb article tells the story of just one Indian town, Indore, where 18 poll candidates of the ruling Congress party and the main opposition party have invested over $649,911 (Rs 40 million) to purchase 14 kilograms of gold. Indians' love for gold and silver is legendary, and apparently Indian politicians are no exception.

This is blatant hypocrisy, but one ramification is that gold restrictions in India are likely only temporary.

This Week in International Speculator and BIG GOLD—Key Updates

100 Years of the Fed

Posted: 16 Dec 2013 09:09 AM PST

Does the "great experiment" of the Federal Reserve System deserve another century...?

The FEDERAL RESERVE SYSTEM began 100 years ago this December 23rd, writes Miguel Perez-Santalla at BullionVault.

The purpose in 1913 was to form a regulatory body to help stem the tide of bank failures in the United States of America. Its proponents, Senator Nelson Aldrich, Senator Owens, Congressman Glass and others, believed that if an agency controlled the flow of money and the banking institutions, it could prevent many of the economic collapses that plagued the early years of the US.

Whatever its faults 100 years on, has the Federal Reserve System at least performed its charter well in actuality?

The establishment of such a power was in no way a unanimous decision. There were many in the government who opposed it, as G.Edward Griffin details in his history of the Fed, The Creature from Jekyll Island. The name itself, the Federal Reserve, was in part intented to address their concerns. Washington avoided calling it a "central bank", because many of the congress were also opposed to the centralization of power, especially monetary control to one agency in the government. So those supporting the central bank concept had to devise a similar method of control, but avoiding the appearance of direct control. That idea gave birth to the Federal Reserve.

The institution created to obfuscate the appearance of a central bank has 12 Reserve Banks across the country, which report up to the higher authorities within the system. This higher authority is the nine member board of directors, of which six are appointed by the 12 district banks themselves and the remaining three are appointed by the Board of Governors.

This of course is a centralization of power. It is apparent that the Board of Governors is the controlling arm of the Federal Reserve System. Where do they come from? The Board consists of seven members, appointed by the president of the United States and confirmed by the senate. Each member may hold this position for fourteen years (though the renewable terms are every two years). From among this board, the president also chooses the chairman and vice-chairman which are ultimately the final decision makers.

Voilà! We do have a central bank, yet it has only been recently that our government has openly admitted that the Federal Reserve is the "central bank" of the United States of America. This agency literally controls the entire banking system. They have the ability to turn on and off the spigot of cash that flows through the banking network.

Is that control a good or bad thing? Any benefits of the Federal Reserve System have as yet not been proven. Because if we take a look at the economic history of the United States of America over the last 100 years the picture "ain't pretty" as Tony Soprano would say.

Since the inception of the Federal Reserve System 100 years ago we have been in contraction or prolonged slowdown 38% of the time. Some may say this is a good track record. But in almost half of those 38 years the US had negative growth in gross domestic product.

Thanks to Isaac Newton it is generally believed that what goes up must come down. This is a law of gravity, not economics. As the population grows the economy should grow as well, as these same new people need to eat but also produce. So why should they suffer such frequent economic decline? Greed and stupidity often are the real cause of most crises. But these two proclivities do not exist only in the purview of the private sector

Washington Mutual was the largest bank failure ever in the US, collapsing in 2008 with assets of over $300 billion. That represented a little over 2% of that year's GDP. This and other notable failures such as Lehman Brothers would help drive the country into a deep recession that we have yet to climb out of. Where was the Federal Reserve before this occurred? The Fed got a lot of credit for rescuing the banking system after the fact. But why didn't they see this coming? If it is their job to mop up during and after a crisis, is it not their job to prevent these calamities too?

This experiment we call our central bank is also now playing a game it never had before, and the Board of Governors knows it. The unbridled creation of numbers that represent money characterizes a new attempt at economic manipulation that had never been tried before. Many believe that quantitative easing is working. But others, such as Jim Rogers, believe this artificial growth will collapse around us.

The Federal Reserve System's birthday is December 23rd, when it will be 100 years old. Yet it is still an experiment. Counterfactual history can't bear such a length of time, but there is no real proof that the Fed's existence has had any more positive effect than alternative outcomes. In fact, many such as the Cato Institute blame Federal Reserve policies and government banking deregulation, on which the Fed was often consulted, for our current economic crisis. Contrary to the Fed's charter, this not only affects millions of people in the USA but has caused a domino effect around the world.

But accepting the Fed and its power as status quo, the question for the individual becomes how does this system affect your investments or income moving forward? In a world where money is controlled by centralized agencies with ultimate power to create, and thus to destroy value, one might want to seek hard assets beyond their control. This year's drop in gold and silver prices doesn't undo their many thousands of years' use as stores of value, far longer than the US Fed's fiat Dollar. And with the odds basis historical data that there will be another economic crisis inside the next 10 years, many of us today should expect to live through a fresh recession despite the best intentions of the Federal Reserve System's creators 100 years ago.

100 Years of the Fed

Posted: 16 Dec 2013 09:09 AM PST

Does the "great experiment" of the Federal Reserve System deserve another century...?

The FEDERAL RESERVE SYSTEM began 100 years ago this December 23rd, writes Miguel Perez-Santalla at BullionVault.

Whatever its faults 100 years on, has the Federal Reserve System at least performed its charter well in actuality?

100 Years of the Fed

Posted: 16 Dec 2013 09:09 AM PST

Does the "great experiment" of the Federal Reserve System deserve another century...?

The FEDERAL RESERVE SYSTEM began 100 years ago this December 23rd, writes Miguel Perez-Santalla at BullionVault.

Whatever its faults 100 years on, has the Federal Reserve System at least performed its charter well in actuality?

Alasdair Macleod: FOMC, taper talk, and the gold price

Posted: 16 Dec 2013 08:42 AM PST

11:41a ET Monday, December 16, 2013

Dear Friend of GATA and Gold:

GoldMoney research director Alasdair Macleod predicts today that the Federal Reserve won't be "tapering" its bond purchases just yet. He also sees evidence that European central banks have increased their gold leasing to stabilize their bond markets. Macleod's commentary is headlined "FOMC, Taper Talk, and the Gold Price" and it's posted at GoldMoney's Internet site here:

http://www.goldmoney.com/research/research-archive/fomc-taper-talk-and-t...

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

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Don’t Be Scared “Stockless”! There’s No Fear Anymore – Anywhere!

Posted: 16 Dec 2013 08:30 AM PST

There's no fear anymore – anywhere – and I'm talking about the type of fear that overwhelms investors – and, in turn, the market. The surest indication of this can be found in the following chart.

So says Louis Basenese, Chief Investment Strategist (wallstreetdaily.com) in edited excerpts from his original article* entitled The Single Most Important Chart for 2014.

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

Basenese goes on to say in further edited excerpts:

As I survey the landscape heading into 2014, there's no fear anymore – anywhere – and I'm talking about the type of fear that overwhelms investors – and, in turn, the market… Many things that once scared us “stockless” simply don't exist anymore.

There's no fear about a U.S. financial and economic collapse. Banks are on the mend and the economy is actually exhibiting signs of strength.
There's no fear about a eurozone crash.
There's no fear about a hard landing in China.
There's no fear about a debt ceiling default, either. The latest budget deal points to politicians finally working together.
Heck, even the "fear index" itself – the VIX Volatility Index (VIX) – hasn't registered a meaningful blip over 20 since December 2012.

That begs the question, though: Without an imminent crisis gripping investors – and no "end of the world" trade being touted tirelessly – what are we to do?…[The] chart [below] contains the all-important answer – and no, it's not an unabashed bullish call to go "all in" on stocks.

Fear Bubble: Deflated!

Forget about the stock market rising on bubble expectations…it's rising on the tremendous fear [that the] bubble [is] deflating…The surest indication of this can be found in the following chart [which] shows the spread between high-yield bonds (junk bonds) and super-safe Treasuries of comparable maturity.

After touching a high of 2,180 basis points following Lehman Brothers' collapse – when outright panic gripped the markets – spreads are all the way down to 411 basis points. That's more than a full percentage point below the long-term average and the lowest since October 2007.

What does it all mean? As I said before, there's no fear.

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

Related Articles:

1. Stocks to Continue to Soar & Gold to Continue to Fall in 2014 – Here's Why

2 Comments

Each December we publish a list of investment themes that we feel are critical to the coming year. Below are our expectations for the U.S, Japanese and European stock markets, municipal bonds and gold. Read More »

2. Relax! Take Stock Market Bubble Warnings With a Grain of Salt – Here's Why

Leave a comment

I would think that we are probably in the slow build-up to something interesting – a badly overpriced market and bubble conditions. My personal guess is that the U.S. market, especially the non-blue chips, will work its way higher, perhaps by 20% to 30% in the next year or, more likely, two years, with the rest of the world including emerging market equities covering even more ground in at least a partial catch-up. Read More »

4. Taking the Temperature of the U.S. Stock Markets: What's Hot, What's Not

[Given the] big swings in enthusiasm for owning common stocks [we thought it timely to present] our opinion on the current temperature of the U.S. stock markets as to what's hot and what's not and the reasons why that is the case. Read More »

5. Stock Market Bubble & Coming Recession? These Charts Say Otherwise

The real value of the stock market is positively correlated, over time, with the amount of freight hauled by the nation's trucks (in other words, the physical size of the economy has a lot to do with the real, inflation-adjusted value of the economy) and the latest numbers (see chart) strongly suggest that we are not in a stock market bubble. Read More »

6. The Stock Market: There's NOTHING to Be Bearish About – Take a Look

There's nothing to be bearish about regarding the stock market these days. I've reviewed my 9 point "Bear Market Checklist" of indicators and it is a perfect 0-for-9. Not even one indicator on the list is even close to flashing a warning sign so pop a pill and relax. There's no immediate danger threatening stocks. Read More »

7. Pop a Pill & Relax ! There's NO Immediate Danger Threatening Stocks

Right now there's nothing to be bearish about. I say that with conviction, because my "Bear Market Checklist" is a perfect 0-for-9. Heck, not a single indicator on the list is even close to flashing a warning sign. We've got nothing but big whiffers! Take a look. Pop a pill and relax. There's no immediate danger threatening stocks. Read More »

8. Latest Action Suggests Stock Market Beginning a New Long-term Bull Market – Here's Why

There are several fundamental reasons to believe that this week's stock market activity, where the S&P 500 has moved more than 4% above the 13-year trading range defined by the 2000 and 2007 highs, could mark the beginning of a long-term bull market and the end of the range-bound trading that has lasted for 13 years. Read More »

9. Sorry Bears – The Facts Show That the U.S. Recovery Is Legit – Here's Why

Today, I'm dishing on the unbelievable rebound in residential real estate, pesky rumors about the dollar's demise and a resurgent U.S. stock market. So let's get to it. Read More »

10. Correlation of Margin Debt to GDP Suggests Stock Market Has More Room to Run

Are stocks in a bubble? While leverage has returned to the stock market driving up stock prices and aggregate demand in the process, margin debt is still shy of its all-time high as a percentage of GDP, so there is certainly some headroom for further rises. A look at the following 5 charts illustrate that contention quite clearly. Read More »

11. Stocks Should Have a Record-Breaking Year According to These 7 Bullish Fundamentals

"A sluggish economy, political gridlock, tepid earnings, the European debt crisis, high gasoline prices…" I can't really argue with Barron's depiction of the current market environment yet, against all these seemingly negative conditions, the stock market keeps surging higher. Can it possibly continue, though? Read More »

12. Stocks Are NOT In Another Bubble – Here's Why

U.S. stocks are off to one of their best starts in years. Most indices are up 10% year to date, prompting many investors to ask: "Are we in another bubble?" The answer is no, at least when it comes to equities. Here are three reasons why:

13. Research Says Stock Market Bull Should Continue Its Run Until…

The mainstream financial press would like us to believe that because the S&P 500 and Dow 30 are at or near their record highs that it must mean we're nearing the end of the current bull market and, as such, now must be a terrible time to buy stocks. Let's not jump to any conclusions, though. Instead, let's do our own due diligence to find out. Hint: If you've been stuffing cash under the mattress since the last market crash, you might want to finally go deposit it in your brokerage account. Here's why… Words: 420

14. These 4 Indicators Say "No Stock Market Correction Coming – Yet"

While I remain cautious on stocks and the risk trade, the technical picture shows that the uptrend to be intact and the bulls should still be given the benefit of the doubt for now. At this point, any call for a correction is at best conjecture [as evidenced by the following 4 indicators]. Words: 399; Charts: 4

15.

Economic Collapse Is Inevitable – Here’s Why

Posted: 16 Dec 2013 07:58 AM PST

An inevitable economic collapse has been warned about since this website began over four years ago…[ based on the following] 3 key economic points [that] have been consistent since its beginning. Here they are:

There is no recovery – nor can there be a recovery – without a massive economic reset, a collapse.

Government interventions over the last several decades have put us into this position.

Government is now trapped and, like a wounded animal, will do anything to survive including harming the economy and those dependent on it.

So says Monty Pelerin (EconomicNoise.com) in edited excerpts from his original article* entitled Economic Collapse Ahead.

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

Pelerin goes on to say in further edited excerpts:

A bias that we all carry is that assuming people who agree with us are smart and that is an indirect form of reinforcement and self-aggrandizement that can be dangerous…At the risk of committing this error, I recommend an article by Captain Hook who expresses sentiments in line with my own.

Monty Pelerin Cuts Through All The Economic Noise To Tell It Like It Really Is!

Here are some excerpts which are perilously close to what I have expressed:

We are getting close to the day of reckoning… [of the] fiat currency economy suicide mission the Fed(s) has engineered for us so you [had] better get ready, because they will not ring a bell at the top of the stock market to warn [that] the party is over. –

… the end of the line in QE debt monetization-related economic growth is almost here –with diminishing returns in money printing and central bank balance sheet growth re-accelerating. While it’'s true central authorities can still increase QE to offset diminishing returns, and in fact have stated they intend to do just that in Europe and Japan early next year, … the effects of all this money printing will be negligible. Before it’'s all over, [however,] don’'t be surprised to see QE in the States moving from $1 Trillion per year where we are now to $1 Trillion per month, and to infinity essentially. (I think a collapse will occur before they get close to Captain Hook’s monthly projection.)

…QE will never stop until the system blows-up…

Add to this picture a new and naive Fed chair, with visions of sugar cookies in her head, and one needs to wonder how US Treasury yields [can] remain sanguine in coming years because, once confidence is lost, a negative spiral can grip macro-conditions quickly given the hollow nature of the much talked about 'economic recovery'…

… it's not just the bubble in Treasuries one should be worried about. Up until this point that has been no trouble at all with the QE backstop but there are also stocks and real estate to worry about as well where, as you know, a problem exists when the speculators are speculating on the degree of speculation. There' is no free lunch despite what lying bureaucrats would like you to believe.

… this lunacy can obviously continue for longer than anybody with a whisper of common sense could conceive. The sad part of this entire mess is the crazier it gets, the more anxiety is created, the more people will hold back, the more the Fed will have to print money, the more stocks will go up – until we reach the point of 'heart attack' for the over-drugged junkie. Then, the bond market is going to blow up, and it's all over.

We are caught in a liquidity trap that demands the Fed monetize some 70% of all net bond supply; meaning rates would be considerably higher if they were not doing so….[This] taper talk'…is just…BS because key debt markets are becoming increasingly stressed.

… the Fed(s) have no choice but to keep accelerating the craziness which will become a problem for the bond market once rigging efforts on the part of the bureaucracy's price managers begin to fail noticeably. You will know this is the case when they can’'t keep credit markets supported anymore, which will tip diminishing returns into free-fall and, in turn, re-accelerate the need for more money printing as things spiral out of control.

… don'’t be fooled by taper talk which has the effect of catching offside short sellers when weak data points come out, causing a short squeeze. ( that’'s what happened last week post the Fed minutes release.) What market participants don’'t realize yet is [that] such talk is just expectation management on the part of the Fed so that people are not surprised when it happens…

Who needs gold when the 'traditional' stock market is going up…especially when Da Boyz are making copious amounts of fiat currency… which means stocks are likely going much higher and gold could remain in the doghouse for some time yet – well into next year.

Gold will of course be the place to be in the end, when all the Ponzi finance has collapsed… Better buy some gold so you can eat when inflation goes through the roof bailing out this ship of fools.

I disagree somewhat on the margins with a few of the comments presented above, but this disagreement is minor and could be seen as nitpicking.

In general, the statements presented are very much in line with my thinking. As always, the critical question is how long the economic fraud can continue.

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

*http://www.economicnoise.com/2013/12/12/inching-toward-economic-collapse/ (© 2013 Monty Pelerin’s World. All rights reserved. Monty Pelerin’s World)

More Articles by Monty Pelerin:

1. Monty Pelerin Cuts Through All The Economic Noise To Tell It Like It Really Is!

1 Comment

I read many hundreds of articles every week looking for writers who have an in-depth understanding of our economy and who are not reticent to tell it like it is. Monty Pelerin (a pseudonym) does just that week after week, year after year. This post includes introductory paragraphs and links to 25 of his most enlightening and current articles. Take a look. There are bound to be several that will grab your interest. Read More »

Other Related Articles:

1. 5 Red Flags of Imminent Economic Collapse

4 Comments

These 5 red flags will give you anywhere from a few days to a few months of warning that things are about to change drastically…and well before those around you grasp the full extent of what is going on. This is hopefully a scenario that never happens as this will truly be the end of the world as you knew it. Read More »

2. Rapid Rise In Interest Rates Will Collapse U.S. Financial System – Here's Why

There is one vitally important number that everyone needs to be watching right now, and it doesn't have anything to do with unemployment, inflation or housing. If this number gets too high, it will collapse the entire U.S. financial system. The number that I am talking about is the yield on 10 year U.S. Treasuries. Here's why. Words: 1161; Charts: 2 Read More »

3. Economic Forecasters Are Consistently Wrong – Here's Proof & Why It Is Important to Know

New research shows that forecasters tend to underestimate the expected outcome of anticipated economic data for several months in a row, and then overestimate it for several months in a row thereafter. Why does that matter? Read on. Read More »

4. Rising Interest Rates Could Plunge Financial System Into a Crisis Worse Than 2008 – Here's Why

If yields on U.S. Treasury bonds keep rising, things are going to get very messy. What we are ultimately looking at is a sell-off very similar to 2008, only this time we will have to deal with rising interest rates at the same time. The conditions for a "perfect storm" are rapidly developing, and if something is not done we could eventually have a credit crunch unlike anything that we have ever seen before in modern times. Let me explain. Read More »

5. Another Crisis Is Coming & It May Be Imminent – Here's Why

Is there going to be another crisis? Of course there is. The liberalised global financial system remains intact and unregulated, if a little battered…The question therefore becomes one of timing: when will the next crash happen? To that I offer the tentative answer: it may be imminent…[This article puts forth my explanation as to why that will likely be the case.] Read More »

6. What Will Happen When the Fed Finally Ends Its Extreme Easing Efforts?

Last Wednesday, Fed Chairman Ben Bernanke promised to end his bond-buying addiction – cold turkey – in mid-2014. That is, as long as the economy is strong enough. As a result, investor fortitude was pushed to the brink. Stocks sold off hard, sending the S&P 500 Index down 1.4%. Before you head for the exits, too, let's get a little perspective. Read More »

7. Bonds Getting Slaughtered, Interest Rates to Rise Dramatically, Economic Bubbles to Implode

What does it look like when a 30 year bull market ends abruptly? What happens when bond yields start doing things that they haven't done in 50 years? If your answer to those questions involves the word "slaughter", you are probably on the right track. Right now, bonds are being absolutely slaughtered, and this is only just the beginning. So why should the average American care about this? Read More »

8. Rapidly Rising Interest Rates Could Lead to Financial Collapse – Here's Why

The global financial system is potentially heading for massive amounts of trouble if interest rates continue to soar. So what does all this mean exactly? [Let me explain.] Read More »

9. U.S. Economy: Reduce Spending (Future Depression) OR Keep Spending (Future Hyperinflation)

The U.S. government is in what is known as a "debt death spiral". They must borrow money to repay prior debts. It is as if they are using their Visa Card to make an American Express payment. The rate of new debt additions dwarf any rate of growth the economy can possibly achieve. The end is certain, only its timing is unknown, and, once interest rates begin to rise, and they will, it's game over. Read More »

10. Fed's Tapering Plans Will Be Delayed For These 5 Reasons

The financial markets were in distress lately because of Fed Chairman Ben Bernanke's suggestion that the Fed might taper off its quantitative easing programs starting at the end of this year and ending in 2015. Here are five reasons why markets shouldn't worry too much about the Fed leaving the stage: Read More »

11.
Gold Prices Flat as Investors Await Federal Reserve Meeting

Posted: 16 Dec 2013 06:59 AM PST

Gold prices are little changed as investors await the Federal Reserve's policy-making meeting on Wednesday, RJO Futures' Phil Streible tells TheStreet's Joe Deaux.

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

Gold Analysts Split Over Fed's 2014 Impact on Gold Price

Posted: 16 Dec 2013 06:41 AM PST

The PRICE of gold bounced from a steady drop Monday lunchtime in London, trading back at $1234 per ounce as Asian stockmarkets ended sharply down but Europe ticked up ahead of this week's US Federal Reserve policy decision, due Wednesday. China's gold premiums above international prices edged lower again, dropping to $6 per ounce at the close of solid trading on the Shanghai Gold Exchange.

Gold: Strong Support Anticipated Near 1180.50

Posted: 16 Dec 2013 05:47 AM PST

Gold is approaching its key low at 1180.50 (28/06/2013). Strong support is anticipated close to this key level for a short-term recovery higher. However, failure to hold over this current annual low would instead open up scope for ... Read More...

Fed Tapering "Not a One-Way Bet" Against Gold Prices But Analysts Trim 2014 Forecasts

Posted: 16 Dec 2013 05:19 AM PST

GOLD PRICES bounced from a steady drop Monday lunchtime in London, trading back at $1234 per ounce as Asian stockmarkets ended sharply down but Europe ticked up ahead of this week's much-awaited US Federal Reserve decision on tapering its QE money printing program.

China premiums above international gold prices edged lower again, dropping to $6 per ounce at the close of solid trading on the Shanghai Gold Exchange.

Silver tracked and extended the moves in gold prices, cutting an earlier 1.2% drop in half to record a London Fix of $19.50 per ounce – exactly the level of Monday last week.

Looking ahead to Wednesday's Fed announcement, "A deferral of tapering and year-end squaring should be positive for gold prices," says a Japanese conglomerate's precious metals team.

Last week's high of $1268 per ounce reached Tuesday came as speculative traders in US gold futures and options raised their bullish bets and trimmed their bearish positions, new data from regulators showed Friday.

Over the week-ending Tues 10 December, the so-called speculative "net long" of bullish minus bearish bets held in US gold derivatives by non-industry traders rose by more than one-fifth to a 3-week high.

Equal to 184 tonnes of gold, however, the net long speculative position on rising gold prices remained near multi-year lows, down by two thirds from the start of 2013.

"If the Fed announces that it will be scaling back its bond purchases," says Commerzbank in Germany, "[it] could pave the way for higher prices" as it removes uncertainty.

"Tapering," agrees a Singapore dealing desk in a note, "does not automatically mean a one-way bet on lower gold prices."

But while the US Fed "will likely not do anything at its meeting," reckons INTL FCStone, a US brokerage and dealer, any "telegraphing" of its early 2014 intentions "will set up a weaker tone in gold heading into year-end, with a good chance that we could take out our 2013 lows in the process."

Last week J.P.Morgan analysts cut their 2014 average gold prices forecast by 10% to $1263 per ounce.

2014 gold prices will average $1294 per ounce says Bank of America Merrill Lynch, repeating its forecast from September according to the Dubai Chronicle.

"Bearish conditions persist," says Swiss investment and London bullion bank UBS.

"We see little to change our near-term outlook of being mildly bearish on gold prices," agrees ANZ Bank's precious metals note Monday.

"Gold has trended downward since late August," notes a technical analysis of gold prices from Societe Generale.

"Since late October, a steeper channel has traced but [now] a sideways market is possible."

Whatever the Fed decides Wednesday on QE taper, unemployment above 6.5% means the US zero interest-rate policy will remain "appropriate", the central banks has repeated over the last 12 months, so long as inflation doesn't rise above 3% or 4% per year.

The latest US budget deal does not extend unemployment benefits launched in 2008 for the longer-term jobless.

That means some 1.3 million people stand to lose benefits from December 28th, potentially knocking 0.2 or even 0.5 percentage points off the official US jobless rate, according to Goldman Sachs and J.P.Morgan analysts, currently at a 5-year low of 7.0%.