Gold World News Flash |
- Guest Post: The Bubble in Modern Art
- China, the Cure for Lower Gold Prices | McAlvany Commentary
- The Dow/Gold Ratio
- The Dollar's Demise And The Rise Of Bitcoin
- David Morgan About Owning Hard Money: You Want To Be Too Early
- Lady Gaga: 25 Million Dollar Loss From Her New Album ARTFLOP
- Gold Daily and Silver Weekly Charts - FOMC Day in Paperland - The Fed Chairman Wears Nada
- Gold Daily and Silver Weekly Charts - FOMC Day in Paperland - The Fed Chairman Wears Nada
- U.S. Dollar’s Demise and the Rise of Bitcoin
- Bonds Shrug As Taper Smashes Stocks To Record Highs
- Fed Tapering & Propaganda To Lead Down A Disastrous Road
- Join GATA at its reception following the Vancouver conference Jan. 20
- GATA chairman interviewed by Finance and Liberty and Financial Survival Network
- Post-FOMC - Bonds, Gold, & Stocks Bid; And 5th Hindenburg Omen Appears
- China Has a Good Reason to Crackdown on Bitcoin
- Fed Heads, Forecasts and Dead Economists
- A Fed Policy Change That Will Increase the Gold Price
- Indian gold import curbs to stay despite easing trade gap, official says
- Cops Make How Much?!
- A Fed Policy Change That Will Increase the Gold Price
- ZIRP: Or How the Fed Gave the US Financial Diabetes
- Gold Investors: Take the Red Pill!
- South African gold mines now dust as jobs vanish
- Two lessons for gold from 2013
- Banro seeks to regulate DRC small-scale gold miners
- 2014: More tumult for Gold?
- Here is how you will know if the gold bull market has ended!
- Fed Policy Change That Will Increase the Gold Price
- Why 2014 to be Better for Silver Price - Video
- How the Middle East Will Cope With the US Oil Boom
- Market Monitor – December 18th
- Gold Investors: Take the Red Pill!
- Gold Price Seen Volatile on US Fed Tapering Vote Today, "Still on Defensive"
- Collapse Looming for Crude Oil Market in 2014?
- Eyes Down, Spin the Wheel
- Eyes Down, Spin the Wheel
- Junior Mining Stocks that Will Let You Sleep at Night: Ralph Aldis
- Junior Mining Stocks that Will Let You Sleep at Night: Ralph Aldis
- Junior Mining Stocks that Will Let You Sleep at Night: Ralph Aldis
- Gold Investors: Take the Red Pill!
- Inflation in the United States - Keeping it Real!
- Gold price suppression doesn't bother South Africa's government
- Paul Mylchreest: Western investors will be wrong-footed again when gold turns
- Fed Will Not Taper & You Can Expect Chaos After The Decision
- The Gold Price Fell to $1,231.20 Today
- The Gold Price Fell to $1,231.20 Today
- The Taper & Gold
- Peter Grant: Could Volcker Rule precipitate next financial crisis?
- A Fed Policy That Will Increase the Gold Price
- The Dollar And Gold In The New Great Monetary Game
| Guest Post: The Bubble in Modern Art Posted: 18 Dec 2013 03:10 PM PST Submitted by Pater Tenebrarum of Acting Man blog, Modern Art Goes Bananas As the Money Supply InflatesWe don't want to discuss the artistic merits of modern art, except to say that we are not averse to it at all. In other words, we personally like quite a bit of modern art, regardless of the field. Paintings, sculptures, literature, music, we find stuff that speaks to us everywhere. Of course we are not completely uncritical, we merely want to point out that art doesn't end sometime in the 19th century for us. We even like quite a bit of that modern 'classical' scratchy music that is on the receiving end of much contempt elsewhere. As it were, de gustibus non est disputandum.
Jeff Koons – 'Balloon Dog (Orange)'
However, we differ with many supporters of such art insofar that we do not believe it should be in any way subsidized by the State. We also believe the habit of sometimes forcing concert goers to listen to, say, Helmut Lachenmann's works by sandwiching them between pieces by Mozart and Beethoven is a slightly questionable practice – even though we like it personally. We are well aware though that most Mozart fans are probably only clapping perfunctorily when confronted with something like this. However, our focus here is actually on how the money supply inflation of recent years has been mirrored in the prices paid for modern art, which are becoming ever more absurd. A first wave of record prices was paid in the 2003-2008 bubble, but these records have been shattered over the past few years, especially in sculpture. A few examples are shown below.
The First Bubble Wave (2005-2008)If you are a sculptor, you're a real winner if your name is Alberto Giacometti. Regardless of the phase of the giant bubble we are in, your works will fetch record prices.
'Grande femme debout II', by Alberto Giacometti – sold for $27.4 million in 2008
'Tête de femme (Dora Maar)' by Pablo Picasso, sold for $29.1 million in 2007
Prices for sculptures really only went 'off the charts' in the 2009-2013 phase of the great bubble. Paintings are generally fetching even higher prices, and in the early bubble phase they beat the prices for sculptures noticeably.
Jackson Pollock's 'Nr. 5, 1948' – sold for $140 million in 2006
Willem de Kooning's 'Woman 3' – sold for $137 million in 2006
Pablo Picasso's 'Dora Maar au chat', sold for $95 million in 2006. Several other works by Picasso also sold at very high prices in this stage of the bubble, the first one was 'Garçon à la pipe', which sold for $104 million in 2004.
Kazimir Malevich's 'Suprematist Composition', sold for $60 million in 2008
Gustav Klimt's 'Portrait of Adele Bloch-Bauer I' sold for $135 million in 2006, making it the highest priced modern painting sold in this phase of the bubble ('Adele Bloch-Bauer II' incidentally sold for roughly $88 million the same year).
The Second Bubble Wave (2009-2013)Things became even more interesting in the second wave of the bubble, especially in the field of modern sculpture, where an enormous jump in prices was recorded. Numerous paintings were also sold at jaw-dropping prices, but the differences to the first bubble phase were not that great (with one notable exception, see further below). This time, Giacometti really became the center of attention. The most expensive sculpture ever sold was a version of his 'L'homme qui marche' (there exist several versions of most of his sculptures). Several other Giacometti sculptures also fetched record prices, including two versions of the same work ('Grande Tête Mince') selling in 2010 and 2013 at very similar prices.
Alberto Giacometti's 'L'homme qui marche I', sold for $104 million in 2010
Giacometti's 'Grande Tête Mince' – sold in 2010 for $53 million, while another version of the same work sold in 2013 for $50 million (it actually looks exactly the same, so there is no point in depicting both)
Amedeo Modigliani's 'Tête' sold in 2010 for $52.6 million
'Balloon Dog (Orange)' by Jeff Koons, sold for $58.4 million in November 2013
With regards to Jeff Koons' 'Balloon Dog' selling for more than $58 million, we can only repeat, 'de gustibus non est disputandum'. Next come a few paintings that were sold at very high prices fairly recently. We already mentioned the Lucian Freud triptych by Francis Bacon on another occasion. Edvard Munch's 'The Scream' is a well known painting – what is perhaps not so well known is that countless versions of it exist. One of the 'four most important versions' was auctioned for almost $120 million in 2012.
Francis Bacon's 'Three Studies of Lucian Freud' – sold for $142 million in 2013
The version of Edvard Munch's 'The Scream' that was sold for $119.9 million in 2012
Pablo Picasso also struck gold again in the current bubble phase, by setting a fresh record of his own earlier this year.
Pablo Picasso's 'Le Rêve', which sold for the princely sum of $155 million in March of 2013.
And finally, Andy Warhol continues to attract big money as well. His painting 'Silver Car Crash' fetched $105 million this year.
Andy Warhol's 'Silver Car Crash (Double Disaster)' sold for $105 million in 2013.
Conclusion:The effects of the massive monetary inflation of recent years are so far mainly reflected in asset prices. Modern art has become a major magnet for investors, whereby one gets the impression that this is truly a gargantuan bubble by now. Works of art are unique (well, modern works are only 'sort of' unique, since in many cases the works exist in more than one version as noted above), so there is really no yardstick by which one could make sensible comparisons regarding their valuations, except to note that prices today are at multiples of the prices paid in the not-too-distant past. When a Japanese insurance company bought van Gogh's 'Vase with Fifteen Sunflowers' for $39.7 million in 1987, the world was shocked that anyone would shell out so much money for a single painting. It was rightly seen as an outgrowth of Japan's bubble excesses of the 1980s at the time. Today it actually looks like they made a great investment. No-one bats an eyebrow anymore at anything that is not sold for more than $100 million.
So if you ever wonder whether there is really an inflationary bubble underway, the answer is clearly, yes, there is. As an aside, we have not mentioned Cezanne's 'Card Players' (it fell just outside our range of 'modern' art, as it was painted in the late 19th century and we only wanted to include 20th and 21st century art). The painting was sold for over $259 million in 2011, making it the most expensive painting ever – so far, that is. It is undoubtedly a great painting, although we could think of a number of paintings we personally like better. But $259 million? Really? That does strike us as somewhat excessive.
Cezanne's 'Card Players' – sold for $259 million in 2011. Sure, it looks nice, but $259 million?
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| China, the Cure for Lower Gold Prices | McAlvany Commentary Posted: 18 Dec 2013 03:00 PM PST from McalvanyFinancial: This Week: | ||||
| Posted: 18 Dec 2013 02:45 PM PST by Phil Champagne, Dollar Vigilante:
The Dow Jones Industrial Average dates back only to the late 1800s but Sharelynx extrapolated the index to the early 1800s. Assuming this extrapolation is right, there are a lot of interesting pieces we can glean from this chart. First of all, we can clearly see the rate of growth is fairly stable except for a few occasions such as the "civil war". A straight line on a log scale chart means an exponential growth rate; in this case it means the Dow increased its value as measured in gold. | ||||
| The Dollar's Demise And The Rise Of Bitcoin Posted: 18 Dec 2013 02:36 PM PST One of the questions investors have been asking lately concerns the outlook for the U.S. dollar index. Investors are understandably concerned by the dollar's weakness and worry that perhaps that any notable increase in inflation ... Read More... | ||||
| David Morgan About Owning Hard Money: You Want To Be Too Early Posted: 18 Dec 2013 02:27 PM PST In this video interview, David Morgan talks to Greg Hunter about his prospects for 2014 for Silver & Gold. Morgan believes that 2014 will be a better year for both metals. However, he is not "exceedingly bullish" on the metals, except in case a black swan were to take place (which is when you could get limit-up days in the metals “and never look back"). David Morgan has a firm idea about the Federal Reserve. He says:
Related to the stock market, Morgan is very prudent as he warns that insiders are already out of the market. He believes the general public is mostly being invested right now. When the general market goes down, it should be favorable for gold." David Morgan is a hard money enthusiast. He believes that the global financial system is at a place it has never been before. He says:
The forecast for the gold and silver price in 2014? Morgan bets on $30 to $34 silver and $1,700 gold by the end of 2014. | ||||
| Lady Gaga: 25 Million Dollar Loss From Her New Album ARTFLOP Posted: 18 Dec 2013 02:15 PM PST from Mark Dice: | ||||
| Gold Daily and Silver Weekly Charts - FOMC Day in Paperland - The Fed Chairman Wears Nada Posted: 18 Dec 2013 01:19 PM PST | ||||
| Gold Daily and Silver Weekly Charts - FOMC Day in Paperland - The Fed Chairman Wears Nada Posted: 18 Dec 2013 01:19 PM PST | ||||
| U.S. Dollar’s Demise and the Rise of Bitcoin Posted: 18 Dec 2013 01:13 PM PST One of the questions investors have been asking lately concerns the outlook for the U.S. dollar index. Investors are understandably concerned by the dollar’s weakness and worry that perhaps that any notable increase in inflation could lead to further erosion in the dollar’s value. | ||||
| Bonds Shrug As Taper Smashes Stocks To Record Highs Posted: 18 Dec 2013 01:03 PM PST The S&P 500 rallied well over 40 points (and the Dow up over 350 points) off the FOMC knee-jerk lows but bonds were largely unimpressed. USDJPY surged to new 5-year highs over 104. Bonds weakened, rallied,a nd then leaked back higher in yield to close almost unchanged from the FOMC announcement. VIX was smahsed back under 14% - its biggest drop in over 2 months.
We can only imagine what would have happened if he'd tapered $20 billion?
USDJPY hit 5 year highs...
Stocks surged on the carry exuberance...
but bonds reverted back to almost unchanged (as Gold tumbled and the USD surged)...
Charts: Bloomberg | ||||
| Fed Tapering & Propaganda To Lead Down A Disastrous Road Posted: 18 Dec 2013 12:50 PM PST  On the heels of Fed propaganda after the $10 billion tapering announcement, today one of the top economists in the world spoke with King World News about the significance of what has taken place today from the Fed. This is a timely and powerful interview where Michael Pento, founder of Pento Portfolio Strategies, also discusses what this means for major markets, including gold. This posting includes an audio/video/photo media file: Download Now | ||||
| Join GATA at its reception following the Vancouver conference Jan. 20 Posted: 18 Dec 2013 12:15 PM PST 3:10p ET Wednesday, December 18, 2013 Dear Friend of GATA and Gold: At the close of the Vancouver Resource Investment Conference on Monday, January 20, GATA's delegation -- GATA Chairman Bill Murphy, board member Ed Steer, and your secretary/treasurer -- once again will hold an informal reception starting at 5 p.m. at the Lions Pub, 888 West Cordova St., a short walk from the conference venue, the Vancouver Convention Centre West. All friends of GATA are invited. There will be a cash bar and, if the GATA delegation doesn't beat you to them, some free snacks. The Lions Pub is a warm and cozy place in the heart of downtown Vancouver -- http://www.tcclub.com/Lions-Pub.aspx -- and we hope to see many old and new friends there. The GATA delegation will be speaking at the conference as well, and admission there will be free for those who register in advance. To learn all about the conference and register for it, visit its Internet site here: http://www.cambridgehouse.com/event/vancouver-resource-investment-confer... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Buy metals at GoldMoney and enjoy international storage GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit: http://www.goldmoney.com/?gmrefcode=gata Join GATA here: Vancouver Resource Investment Conference http://www.cambridgehouse.com/event/vancouver-resource-investment-confer... Mines and Money Hong Kong http://www.minesandmoney.com/hongkong/ * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT How to profit with silver -- Future Money Trends is offering a special 16-page silver report with our forecast for 2013 that includes profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million. Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets. To learn about this report, please visit: http://www.futuremoneytrends.com/index.php?option=com_content&id=376&tmp... | ||||
| GATA chairman interviewed by Finance and Liberty and Financial Survival Network Posted: 18 Dec 2013 11:46 AM PST 2:46p ET Wednesday, December 18, 2013 Dear Friend of GATA and Gold: GATA Chairman Bill Murphy has done 15-minute interviews with Finance and Liberty's Elijah Johnson, posted at YouTube here -- http://www.youtube.com/watch?v=YP21Bq6TLE0 -- and with Kerry Lutz of the Financial Survival Network here: http://financialsurvivalnetwork.com/2013/12/bill-murphy-2013-the-year-of... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Buy metals at GoldMoney and enjoy international storage GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit: http://www.goldmoney.com/?gmrefcode=gata Join GATA here: Vancouver Resource Investment Conference http://www.cambridgehouse.com/event/vancouver-resource-investment-confer... Mines and Money Hong Kong http://www.minesandmoney.com/hongkong/ * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT How to profit with silver -- Future Money Trends is offering a special 16-page silver report with our forecast for 2013 that includes profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million. Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets. To learn about this report, please visit: http://www.futuremoneytrends.com/index.php?option=com_content&id=376&tmp... | ||||
| Post-FOMC - Bonds, Gold, & Stocks Bid; And 5th Hindenburg Omen Appears Posted: 18 Dec 2013 11:32 AM PST UPDATE: S&P 500 crosses 1,800 (35-point swing off lows); USD starting to weaken along with bonds Well that escalated quickly... Stocks cracked lower instantly on the taper news then soared above recent highs ripping through the order book... but are fading back now as we prepare for Bernanke's last press conference. VIX was smashed lower (from over 16.6% to 14.1%). Gold and stocks spiked up pre-FOMC in an interesting move. Bonds are rallying as rumors of BoJ buying 5Y hit the market and the USD (despite considerable vol) is back to unch.
The initial weakness in stocks and bond and gold has faded
and the 5th Hindenburg Omen has appeared...
VIX is being monkey-hammered lower... | ||||
| China Has a Good Reason to Crackdown on Bitcoin Posted: 18 Dec 2013 10:54 AM PST The price of Bitcoin has been getting clobbered over the last day as China continues to crack down on its use. The latest huge blow is that Bitcoin exchange BTC China announced that due to regulatory issues it could no longer accept deposits in Renminbi (the Chinese currency) which is a huge problem to say the least. Interestingly, BTC China had just raised $5 million in venture money back in November, so that is very bad timing. But this isn’t the first time China has cracked down on bitcoins either. Earlier this month, the People’s Bank of China told financial institutions not to accept bitcoins as legal tender. At the time it said, “the warning is aimed at protecting the property rights of the public, safeguarding the Renminbi status as a fiat currency, preventing money laundering, and maintaining financial stability in China,” according to Xinhua. So why would China want to crack down on Bitcoin? Simple: capital controls. China tightly regulates all the money flowing in and out of the country. You can’t just bring a bunch of cash into the country, in part to prevent people from buying up the local currency (which is generally believed to be deliberately suppressed). And China makes it hard to get money out of the country as well. There are various ways currently that rich people do get their money out of Chinese banks and out of the borders. One popular way is through Macau. Rich people buy a bunch of gaming chips through seedy “junket operators.” Then they go to Macau and gamble a bunch. Then they take what they have left, and exchange their chips into the local Macau currency, at which point they can deposit that money in a Macau bank, and voilà the money is outside of the country. Bitcoin offered/offers an even quicker way to get your money out of the border. Buy 10,000 yuan work of bitcoins on a site like BTC China, transfer those bitcoins to a wallet outside of the country, and then sell those bitcoins in some new currency in a different country. Voilà, your money is liberated! Of course there’s also the arbitrage play which China isn’t too happy about. For a while, Bitcoin was more expensive in dollar terms on BTC China than it was when traded abroad. This made it easy for traders to buy bitcoins using the greenback elsewhere and then selling them on BTC China for a profit. And remember when China reported a surge in exports in November there was some speculation that fake invoicing was back. So as long as China is going to restrict the way money flows across the border, there’s no way they’re going to tolerate bitcoin use in a large scale, since it enables transactions that can’t easily be tracked and stopped. The more interesting question is whether Chinese regulations can actually stop bitcoin usage. Obviously restrictions will make it more difficult to use, but there are going to be all kinds of workarounds, even if financial institutions are prevented from dealing with bitcoin exchanges. The extent to which an even grayer bitcoin market emerges in China will be a big story to watch. Joe Wiesenthal Note: This originally appeared on BusinessInsider Ed. Note: The future of Bitcoin remains to be seen. But rest assured the Laissez Faire Today email edition will be following it very closely. If you want the most up-to-the-minute research on this and other freethinking topics, you owe it to yourself (and your portfolio) to sign up for the FREE Laissez Faire Today email edition. | ||||
| Fed Heads, Forecasts and Dead Economists Posted: 18 Dec 2013 10:51 AM PST The scene: Monday, inside the ornate board room of the Federal Reserve’s Eccles building on Constitution Avenue. Thirty-four years’ worth of Fed chairmen were present — Paul Volcker, Alan Greenspan and Ben Bernanke. The occasion? The celebration of 100 years since the signing of the Federal Reserve Act. We watched the whole hour and four minutes on YouTube so you don’t have to. Each chairman spoke in turn, nary uttering one ill or critical word of their counterparts: “In my time,” boomed Paul Volcker first, “interest rates were at 20% and we were preoccupied with inflation. Chairman Bernanke is ready to leave office with interest rates at zero.” The Fed is going to let the dollar die at the hands of the Chinese far before the next century is over. Then came Greenspan. “The crisis of 1987 was, in my judgment,” he said, pretending the ’90s and early ’00s didn’t exist, “the [Fed] operating at its best…” After him was current chairman Ben Bernanke, who began his last FOMC meeting today. (We could hardly…*sob*… hold back the tears as we watched him speak. Seven years feels like just yesterday…) “Given the well-known difficulties that economists have in forecasting even the next few quarters,” he said ironically to a roomful of laugher, “I will happily point out one important advantage in making a 100-year forecast, which is that I won’t be around to explain why the forceast went wrong…” [More laugher] Then, in the spirit of “forecast season,” Bernanke made a 100-year prediction: “I can venture one prediction that I don’t think is too bold,” he said. “The values that have sustained and served the Federal Reserve at its best and have permitted it to make critical contributions to the economic health of our nation during the past century will continue to serve it and the nation well in the century ahead.” Really… We’ll take the other side of that bet, thank you very much. In fact, we’re going to cut Bernanke’s forecast off at the ankles. Here’s our own bold prediction: The Fed is going to let the dollar die at the hands of the Chinese far before the next century is over. Let’s back up a bit… Our forecast, like most economic forecasts, traces its roots back to a dead economist. This one’s name is, rather, was Robert Triffin. Mr. Triffin prophesied China would tank the dollar — way back in 1960. Back then, he issued a stark warning to Congress all but foretelling the demise of the dollar’s role as the world’s currency of choice. Triffin prophesied that any reserve currency was ultimately doomed… at the time he cited the cracks he’d already observed in the foundation of the Bretton Woods system established after World War II. “As the global economy expanded,” Reuters columnist John Kemp gives us a head explaining, “demand for reserve assets increased. These could only be supplied to foreigners by America running a current account deficit and issuing dollar-denominated obligations to fund it. If the United States stopped running balance of payments deficits and supplying reserves, the resulting shortage of liquidity would pull the global economy into a contractionary spiral. “But Triffin warned that if the deficits continued, excess global liquidity risked fueling inflation. Worse still, the buildup in dollar-denominated liabilities might cause foreigners to doubt whether the United States could maintain gold convertibility or might be forced to devalue.” In a nutshell, this economic conundrum is known to academics, policy wonks, arm-chair economists, cranks and financial newsletter editors as “Triffin’s dilemma.” For most of the ensuing 53 years, Washington has chosen the latter of the two options, flooding the world with dollars. Triffin prophesied the inevitable result, in four stages… In Stage 1, the Bretton Woods system would collapse as other nations traded in their dollars for gold, draining the U.S. Treasury’s gold stash. Sure enough, President Nixon “closed the gold window” in 1971 and cut the dollar’s last tie to gold. Then, the dollar’s drop in value would accelerate and U.S. exports would decline dramatically. Sure enough, “Japan Inc.” gave the world cheap electronics and cars in the ’80s and early ’90s while buying up choice U.S. real estate like Rockefeller Center. After that, the U.S. would run massive budget deficits in the third stage, egged on by Federal Reserve money printing, ultimately triggering a financial crisis. Let’s see… hmmmm…yeah, check…. that was the Panic of 2008. The detritus from which we’re still coping. So…what about stage four? Well, China’s been quietly setting it. It’s allowing the yuan to strengthen gradually — 30% over the last eight years. Most recently, China’s central bank announced it will stop increasing its dollar reserves, allowing its currency to strengthen even more. At the same time, the government is silently building a huge stash of gold to back the yuan. The goal is to have a yuan that’s “fully convertible” to other world currencies by 2015. During the last two years, seven of the world’s top 12 economies have moved to bypass the dollar in their transactions with China. Even Japan is in on the act: Despite a wicked border dispute between the two governments, plans are in the works to trade directly in yen and yuan. What happens when the rest of the world no longer needs dollars to do business? For a sneak peek… we observe some political wrangling on the opposite side of the globe and forecast new intrigue in 2014 known colloquially as “the pivot”. You can read the whole assessment, right here: Looking For Enemies in All the Right Places Regards, Addison Wiggin Ed. Note: Only time will tell whether the US dollar maintains its status as world reserve currency. But, as Addison points out, the dollar’s days are certain to come to an end eventually. And when that happens, you’ll want to know exactly how to protect yourself — specifically your wealth and the wealth of your family. So stay informed. Soak up as much information as you can, in fact. It’s one of the only weapons you have against an uncertain future. We suggest you start by signing up for The Daily Reckoning, for free, right here. | ||||
| A Fed Policy Change That Will Increase the Gold Price Posted: 18 Dec 2013 10:16 AM PST For investors having a rooting interest in the price of gold, the catalyst for a recovery may be in sight. “Buy gold if you believe in math,” Brent Johnson, CEO of Santiago Capital, recently told CNBC viewers. Johnson says central banks are printing money faster than gold is being pulled from the ground, so the gold price must go up. Johnson is on the right track, but central banks have partners in the money creation business—commercial banks. And while the FFed has been huffing and puffing and blowing up its balance sheet, banks have been licking their wounds and laying low. Money has been cheap on Wall Street the last five years, but hard to find on Main Street. Professor Steve Hanke, professor of Applied Economics at Johns Hopkins University, explains that the Fed creates roughly 15% of the money supply (what he calls “state money”), while the banks create “bank money,” which is the remaining 85% of the money supply. Higher interest rates actually provide banks the incentive to lend. So while investors worry about a Fed taper and higher rates, it is exactly what is needed to spur lending, employment, and money creation. The Fed has pumped itself up, but not much has happened outside of Wall Street. However, the Federal Open Market Committee (FOMC), during their October meeting, talked of making a significant policy change that might unleash a torrent of liquidity through the commercial banking system. Alan Blinder pointed out in a Wall Street Journal op-ed that the meeting minutes included a discussion of excess reserves and “[M]ost participants thought that a reduction by the Board of Governors in the interest rate paid on excess reserves could be worth considering at some stage.” Blinder was once the vice chairman at the Fed, so when he interprets the minutes’ tea leaves to mean the voting members “love the idea,” he’s probably right. Of course “at some stage” could mean anytime, and there’s plenty of room in the word “reduction”—25 basis points worth anyway. Maybe more if you subscribe to Blinder’s idea of banks paying a fee to keep excess reserves at the central bank. Commercial banks are required a keep a certain amount of money on deposit at the Fed based upon how much they hold in customer deposits. Banking being a leveraged business, bankers don’t normally keep any more money than they have to at the Fed so they can use the money to make loans or buy securities and earn interest. Anything extra they keep at the Fed is called excess reserves. Up until when Lehman Brothers failed in September of 2008, excess reserves were essentially zero. A month later, the central bank began paying banks 25 basis points on these reserves and five years later banks—mostly the huge mega-banks—have $2.5 trillion parked in excess reserves. I heard a bank stock analyst tell an investment crowd this past summer the banks don’t really benefit from the 25 basis points, but we’re talking $6.25 billion a year in income the banks have been receiving courtesy of a change made during the panicked heart of bailout season 2008. This has been a pure government subsidy to the banking industry, and one the public has been blissfully ignorant of. But now everything looks rosy in Bankland again. The banks collectively made $36 billion in the third quarter after earning over $42 billion the previous quarter—showing big profits by reserving a fraction of what they had previously for loan losses. The primary regulator for many banks—the FDIC—is even cutting its operating budget 11%, citing the recovery of the industry. The deposit insurer will have one short of 7,200 employees on the job in 2014. That’s a third of the number it had in 1991 after the S&L crisis, but almost 3,000 more than it had in 2007 just before the financial crisis. So with all of this good news, the Fed may indeed be thinking they can pull out the 25bp lifeline and the banks will be just fine. What Blinder thinks and hopes is the banks will use that $2.5 trillion to make loans. After all, one-year Treasury notes yield just 13 basis points, while the two-year only kicks off 31bps. Institutional money market rates are even lower. Up until recently, banks haven’t been active lenders. The industry loan-to-deposit ratio reflects a tepid loan environment. During the boom, this ratio was over 100%. Now it hovers near 75%. It turns out that what the Fed has been paying—25 basis points—has been the best source of income for that $2.5 trillion. However, banks won’t be able to cut their loan loss reserves to significant profits for much longer. Loan balances have grown at the nation’s banks the last two quarters and this will have to continue. If the Fed stopped paying interest on excess reserves and bank lending continues to increase, those $2.5 trillion in excess reserves could turn into multiples of that in money creation. Banks create money when they lend. As Blinder explains, Fed-injected reserves are lent “creating multiple expansions of the money supply and credit. Bank reserves were called ‘high-powered money’ because each new dollar of reserves led to several additional dollars of money and credit.” Fans of the yellow metal, like Mr. Johnson who sees the price going to $5,000 per ounce, have likely been too focused on the Fed’s balance sheet when it’s the banks that create most of the money. When the Fed announces it won’t pay any more interest on excess reserves, and banks start lending in earnest again, the price of gold will be very interesting to watch. And when that happens, you’ll want to be prepared. Find out all you need to know about the best ways to invest in gold—in the FREE 2014 Gold Investor’s Guide. Click here to read it now. | ||||
| Indian gold import curbs to stay despite easing trade gap, official says Posted: 18 Dec 2013 10:13 AM PST By Siddesh Mayenkar and Manoj Kumar India will keep a tight leash on gold imports despite a recent improvement in its trade deficit and lobbying by a bullion industry struggling with high premiums and a supply crunch. The government is worried that the trade gap could worsen again and the currency could weaken as the U.S. Federal Reserve looks set to start tapering its economic stimulus soon. "There is no proposal to relax restrictions on gold imports as of now," said a top finance ministry official who is part of the team deciding on gold import restrictions. He declined to be named as he is not authorised to speak to the media. "The question has not arisen as a U.S. decision on tapering its monetary stimulus could come at any time (and) that could have severe implications for the rupee." ... ... For the full story: http://in.reuters.com/article/2013/12/17/gold-india-imports-idINDEE9BG01... ADVERTISEMENT You Don't Have to Wait for Your Monetary Metal: Many investors lately report having to wait weeks and even months for delivery of their precious metal orders. All Pro Gold works with the largest wholesalers that have inventory "live" -- ready to go. All Pro Gold can ship these "live" gold and silver products as soon as payment funds clear. All Pro Gold can provide immediate delivery of 100-ounce Johnson Matthey silver bars, bags of 90 percent junk silver coins, and 1-ounce silver Austrian Philharmonics. All Pro Gold can deliver silver Canadian maple leafs with a two-day delay and 1-ounce U.S. silver eagles with a 15-day delay. Traditional 1-ounce gold bullion coins and mint-state generic gold double eagles are also available for immediate delivery. All Pro Gold has competitive pricing, and its proprietors, longtime GATA supporters Fred Goldstein and Tim Murphy, are glad to answer any questions or concerns of buyers about the acquisition of precious metals and numismatic coins. Learn more at www.allprogold.com or email info@allprogold.com or telephone All Pro Gold toll-free at 1-855-377-4653. Join GATA here: Vancouver Resource Investment Conference http://www.cambridgehouse.com/event/vancouver-resource-investment-confer... Mines and Money Hong Kong http://www.minesandmoney.com/hongkong/ * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: | ||||
| Posted: 18 Dec 2013 09:47 AM PST "I should be making $80,000 per year." I had arrived early at the local middle school for our weekly pickup basketball game, and was casually shooting baskets and chatting with the only other early bird, a youthful Vermont State Trooper. "But when I finished the academy, New York had a hiring freeze, so I came to Vermont to get a job. Vermont only pays me $70,000", he said. I found it curious that he would share such private information, since we had just met five minutes ago. But my thoughts quickly turned to his earnings. Earlier in our conversation, he had said he'd only been a cop for two years and went to the academy straight from college. That, along with his boyish appearance, suggested that he was no older than 25. Given that Vermont is the second-safest state in the country, and the sleepy ski town in which I reside is probably the safest place in Vermont, I wondered why this real-life Super Trooper earned so much. Then again, maybe I was just naïve. Perhaps he strapped on a bulletproof vest every morning and went to battle with the hidden criminal underbelly of Northern Vermont. Maybe the reason I'd never heard of anything remotely resembling a real crime up here was because he and his cohorts were doing such a good job preventing it. "So what do you do… you know, on a day-to-day basis?" I asked. "Mostly patrol the highway and make rounds," he replied. "There's a lot of paperwork, too. Once in a while I get a call about a crime, usually up in Whoville." [name changed] His reply solidified my view that $70k is an unreasonable salary for a 25-year-old Vermont police officer. But I certainly don't blame my new hoops companion for seeking out the best pay he can get; that's only human nature. It's not his fault that around these parts, one of the best ways to make a good living at a young age is to become a police officer. He followed the incentives. No RespectI recalled our encounter when I came across this survey that polls Americans on which professions they most respect. "Police Officer" is near the top, along with firefighter, doctor, teacher, and a few others. Financial and business occupations—accountant, stockbroker, banker, business executive—garner little respect. But most notable is a profession that's missing altogether: entrepreneur. To me, that's a travesty. More than any other occupation, entrepreneurs deserve thanks for civilization's progress. For every product or service you use, an entrepreneur took a personal risk to turn his or her vision into reality. An entrepreneur is the reason you're sitting in a comfy chair right now... the reason you have a computer... the reason this missive traveled thousands of miles through the air, to your computer, for free. So where's the love? As you've surely gathered, this week's feature is about entrepreneurship—specifically the lessons one serial entrepreneur has learned throughout his varied career. You probably know the author, Jeff Tucker, as architect of the mises.org website. He's also built a successful online venture called Laissez Faire Books and is in the midst of starting up another venture, Liberty.me, which you can read more about below. I suspect those among you who have worked for a startup—or aspire to create something of your own someday—will appreciate his insight the most. And if you love entrepreneurs as much as I do, check out Doug Casey's brand-new book, Right on the Money. Doug is the quintessential entrepreneur—he's blazed his own path to become one of the most successful contrarian investors in history. Right on the Money focuses on the investing knowledge he's accumulated over the years, along with his unique and insightful take on many other topics. One of my favorite chapters is Chapter 16: Doug Casey on Cattle, where he describes several lessons he's learned from cows, from losing a boatload of money by being long cattle on Black Friday to building a profitable cattle ranch himself. Click here to order Right on the Money. Dan Steinhart | ||||
| A Fed Policy Change That Will Increase the Gold Price Posted: 18 Dec 2013 08:55 AM PST For investors having a rooting interest in the price of gold, the catalyst for a recovery may be in sight. "Buy gold if you believe in math," Brent Johnson, CEO of Santiago Capital, recently told CNBC viewers. Read More... | ||||
| ZIRP: Or How the Fed Gave the US Financial Diabetes Posted: 18 Dec 2013 08:37 AM PST Economic history is primed to repeat in the nastiest of ways unless the government stops distorting the price of something we use every day. Every product, good, or service has a price, which is essential to rational decision-making. We use prices every day as vital data that guide us. Without true prices, prices not distorted by government fiat, we would make mistake after mistake. We would spend too much money on some things and too little on others. Borrowing other people’s money also has a price. It is called an interest rate. Central banks are often in the habit of distorting rates for the political benefit of governments whose economic nationalism policies have caused untold misery. That is why so many critics of central banks have complained that without a gold standard such as that suggested by economists Ludwig von Mises and Murray Rothbard, or without some tight controls on money creation — such as an automatic pilot advocated by Milton Friedman — it is inevitable that governments end up creating too much money. Monetary policies are ruled by politics. So money supply and interest rates come not from the interpersonal interaction of market forces, but from the whims of governments, which need to pay for everything from entitlements to empires. But cheap money, the same as any cheap input, leads one to overbuy and overproduce. Too much money is a frequent theme of economic history, whether in 18th-century France with the banker John Law or in the Continental Congress’ overissuance of its paper money in 18th-century America, the Continental. That led disgusted holders of the devalued currency to use the expression that something was “not worth a Continental.” It is why the advocates of limited government were generally suspicious of an American central bank. (Thomas Jefferson, an ardent anti-militarist, is reputed to have said that a central bank is a greater threat to liberty than a standing army.) Overissuance of money backed by nothing but the promises of governments ultimately results in economies and markets that blow up. Such events have happened several times in my lifetime, and I believe they can happen again. That is despite the frequent assurances from the defenders of the central bank that it acts in an apolitical way, that its only goals are to promote healthy growth without excessive inflation. That sounds impossible, tantamount to saying someone can gobble up cheesecake every night and never put on a pound. Yet the Federal Reserve, since the latest mess some five years ago, has provided the nation with a politically popular yet economically wrongheaded solution — it creates more and more money, so the government is virtually giving away the currency. It is pushing a zero interest rate policy. Virtually, zero percent interest rates are to long-term economic policy what junk food is to nutrition — it tastes great going down, but later come horrible results. Like a drug one can’t stop taking, artificially low interest rates initially seem harmless. Cheap money even seems to produce good results in the early stages. However, later comes disaster, which, once again, is looming. Let us consider the consequences of the policies of America’s central bank, the Federal Reserve, yesterday and today. The Fed often takes short-term actions that are politically popular — who doesn’t want to pay a low price for something, especially to borrow money? — but later, tens of millions of people are hurt. When the economy is badly damaged, few seem to remember the cause of the woes. Richard Nixon is remembered for Watergate and the Vietnam War, not cheap money and wage and price controls, which caused problems throughout the 1970s. This is a point I will illustrate below. Given this historical illiteracy, the boom-bust cycle eventually starts all over. And then the only thing we learn from the history of central banks is that… most Americans never learn from history. The consequences of easy-money policies, of the bizarre 0% interest, are many and pose dangers for all of us. For instance, the Federal Reserve, just in time to re-elect Richard Nixon in 1972, kept interest rates low, flooding the markets with cash. For a year or so, the economy appeared better — just as today, when things seem somewhat better. However, it was a Potemkin-village economy. Stagflation followed a year or so later. There was close to a decade of misery, double-digit inflation, high unemployment, and an almost no-growth economy. It began when a new Fed chairman, Arthur Burns, was installed by Nixon with a charge of providing easy money. Money creation was 25% faster in 1972 than in 1971. Later, after the easy-money policy inflicted pain on millions of Americans, Burns would title a speech The Menace of Inflation. The Nixon/Burns policies failed. Burns announced in 1974, “Inflationary forces are now rampant in every major industrial nation of the world.” (Central banks overseas, both then and today, generally followed the lead of the United States.) Burns conceded that “the gravity of our current inflationary problem can hardly be overestimated” (from his Reflections of an Economic Policy Maker). Interest rates in the 1970s and early 1980s shot up to more than 20%. Interest-sensitive industries, such as cars and real estate, were devastated. Burns, by the way, blamed the woes on the huge deficits that the president and Congress, controlled by Democrats, were running. The parallels to today are stunning. Barack Obama and Congress have just set a record for red ink — four straight years of trillion-dollar deficits and uncounted off-budget red ink. These are deficits that lead some economists to claim that the United States is functionally bankrupt. So are we about to go through another bout of stagflation or some other economic woe? The stage seems set for it. For some time, the Fed has been buying $85 billion worth of long-term government bonds each month to keep interest rates low. “In particular,” the Fed recently wrote, “the committee decided to keep the target range for the federal funds at 0-0.25% and currently anticipates that this exceptionally low range for the federal funds will be appropriate at least as long as the unemployment rate remains above 6.5%” That seemed to indicate that the zero option would continue for the foreseeable future. Given that the jobless rate was 7.6% in June, that means unemployment would have to decline by about 15% to reach 6.5%. Yet the economy isn’t creating nearly enough jobs to reach that rate in the short term or maybe even in the long term. Perhaps the Fed understands that. In May, it announced that it would begin curtailing the bond-buying program, but it was not clear when. Once again, misguided or politically biased central bank policies endorsed by the president and many in Congress have put the nation in a mess. It is a mess that could lead us back to the 2007/08 meltdown. Today, few would dispute that the Fed’s holding interest rates artificially low was a major component in the housing and market disasters of 2007/08. Anna Schwartz, a monetary historian, told The Telegraph that “there never would have been a subprime mortgage crisis if the Fed had been alert. This is something Alan Greenspan has to answer for.” (Anyone doubting Schwartz’s wisdom is directed to Page 232 of Greenspan’s memoirs, where he reluctantly concedes that the Fed was responsible for the subprime failures of 2007, but, amazing to say, he continues to support the policy. “I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk, and that subsidized homeownership initiatives distort market outcomes,” he wrote. “But I believed then, as now, that the benefits of broadened homeownership are worth the risk.” The last part of that statement from Greenspan’s The Age of Turbulence is shocking. It means that supporters of the central bank and its giveaway money deals are like the Bourbon kings — they had “learned nothing and forgotten nothing.”) So cheap money, as it always does in its beginning stages, appears to produce recovery or even prosperity just as the economy is about to tank. What follows is a depression or maybe a recession or a slow-growth economy that seems more in recession than recovery. Whatever form it takes, it means misery for many. Indeed, for millions of unemployed and underemployed Americans, many of whom voted for Obama believing he would provide prosperity, the recession continues in their lives. The consequences of easy-money policies, of the bizarre 0% interest, are many and pose dangers for all of us. First, how can central bankers know what is the right interest rate any more than Soviet central planners could know what was the correct price for bread or clothing or anything else? Contrary to economists such as John Kenneth Galbraith and Paul Samuelson, who spoke positively about the Soviet economy right up to its demise, central planning can’t adequately feed or clothe nations or know how much money they need. Indeed, central bankers playing with money markets are guessing, warns fund manager William Fleckenstein. “Like bureaucratic leaders of central-planned or command economies, they pick an interest rate to within two decimal places that they guess will be the correct one, and then proceed to cram it down the throat of the banking system,” writes Fleckenstein in Greenspan’s Bubbles. Then, if the rate doesn’t reflect market forces, more problems follow. For instance, the United States has some of the lowest savings rates in the developed world. Americans, for macro- and microeconomic reasons, desperately need to save more. They need to lower the true costs of capital by increasing the capital pool. And millions of Americans need to save for their children’s higher education. (Suggestion: Why not, in the interests of improving a weak economy, simply declare a saving and investment tax holiday? Then, when that improves saving and capital gains levels, why not abolish those taxes forever? And by the way, regarding the advocates of Keynesian policies who insist that government must continue to consume “to keep the boom going,” isn’t saving, as the Austrian economists tell us, just a form of delayed consumption? It’s a matter of what economists of the Austrian School call “time preference.”) There are also tens of millions of Americans who need to save for a looming retirement, because cuts in Social Security are likely in the name of “entitlement reform.” The perils of rigging the bond and money markets and lowering their yields, as the Fed is doing, are many. For example, zero interest rates are difficult for retirees who depend on variable-rate annuities and bonds for part of their income. If retirees had known six years ago that the Fed would force and keep rates down, many would have invested their money differently. But there is a bigger problem with zero interest rates, and it is one everyone should be concerned with, regardless of whether he or she is retired. The Fed once again could be creating a bubble, as it has several times before. Many people are now turning to the stock market, not necessarily because they want to or because they like equities, but for another reason. It is one of the few investments in which they have a chance to get a decent return on capital. It is one of the few places where one has the chance of beating persistent implicit and explicit costs that drag down standards of living: the misunderstood tax — inflation — and the visible taxes we pay every day. But again, the cheap-money/stock market option — what some commentators have called “the Greenspan put,” an immediate Fed rate cut to pump up the market — is the biggest problem of zero interest rates. Here millions of investors are misled. They come to believe that cash is trash; that bonds are no good and that only stocks matter, which ultimately leads to a crash. It’s happened before. The government’s fooling with the price of money is a prescription for disaster. For example, in the Burns/Nixon cheap-money episode discussed above, the stock market eventually crashed in 1973/74. The market, in an 18-month period, lost about 40%. Billions of dollars in value were destroyed. The consequences just for those near retirement were terrible. Imagine you had just retired with a lot of stocks in your retirement nest egg just before the crash of 1973/74. All of a sudden, your retirement plan wasn’t secure. You probably had to return to work or reduce your expected retirement lifestyle. The result? For about a decade, millions of Americans wouldn’t touch stocks. The damage was felt for a long time. “For years, I didn’t want to come to work,” I remember an old-time stockbroker telling me. By the end of the decade, the average investor was so disgusted with the stock market that BusinessWeek famously ran a cover story entitled “The Death of Equities.” If the Fed doesn’t stop rigging the capital markets, it could be the death of millions of portfolios, the death of the savings and investment plans of millions of Americans who have depended on a currency that has been abused for the benefit of governments, both Republican and Democrat. “So let me warn you again,” writes business columnist John Crudele in the April 16 New York Post, that “the only thing this market has going for it is the Federal Reserve’s persistent money printing operation.” He warns that if an investor can’t afford to lose 20% in a hurry, he should get out, as easy-money policies will, as they did in the 2007/08 super storm, destroy trillions of dollars of assets. Central bankers will blunder again and again. That is, unless most Americans, many of whom who would resist the fixing of their wages, call for an end to these vicious money cycles of the central bank, with its tampering with interest rates. They must realize a simple economic truth: The government’s fooling with the price of money is a prescription for disaster. The logic is indisputable. The warnings of Jeffersonians and other central bank critics over centuries of monetary history should be heeded. The central bank should be abolished. Regards, Gregory Bresiger Ed. Note: With the Fed’s zero interest rate policy wreaking havoc on savings and the value of the dollar, it’s important that you protect yourself from another Fed-induced financial bubble. The best way to do that is to stay informed. That’s where Laissez Faire Today comes in… This newsletter is supremely focused on promoting liberty, freedom and financial independence no matter what the Fed does. So don’t wait. Sign up for the FREE Laissez Faire Today email edition, right here. Original article posted on Laissez Faire Today | ||||
| Gold Investors: Take the Red Pill! Posted: 18 Dec 2013 08:32 AM PST We make choices in our thinking, lifestyle, savings, and investments. We can look reality squarely in the face and swallow the red pill (from the movie – "The Matrix"). Or, we can swallow the blue pill with a healthy slug of whisky ... Read More... | ||||
| South African gold mines now dust as jobs vanish Posted: 18 Dec 2013 08:21 AM PST South Africa has been hit hard by this year's steep price decline, which saw 14,461 jobs lost in the first nine months of the year. | ||||
| Two lessons for gold from 2013 Posted: 18 Dec 2013 08:21 AM PST With gold set for its worst year since 1981, Adrian Ash looks back at some take aways from 2013. | ||||
| Banro seeks to regulate DRC small-scale gold miners Posted: 18 Dec 2013 08:21 AM PST The company says it may partner with USAID to help regulate small-scale gold mining near its Twangiza gold project in eastern DRC. | ||||
| Posted: 18 Dec 2013 08:20 AM PST With the global economy on the path to recovery, gold's 12-year bull run has ended. Evy Hambro, chief investment officer of BlackRock's natural resources equity team, joins FT commodities editor... [[ 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! ]]  | ||||
| Here is how you will know if the gold bull market has ended! Posted: 18 Dec 2013 07:00 AM PST Peter Degraaf | ||||
| Fed Policy Change That Will Increase the Gold Price Posted: 18 Dec 2013 06:13 AM PST For investors having a rooting interest in the price of gold, the catalyst for a recovery may be in sight. "Buy gold if you believe in math," Brent Johnson, CEO of Santiago Capital, recently told CNBC viewers. Johnson says central banks are printing money faster than gold is being pulled from the ground, so the gold price must go up. Johnson is on the right track, but central banks have partners in the money creation business—commercial banks. And while the FFed has been huffing and puffing and blowing up its balance sheet, banks have been licking their wounds and laying low. Money has been cheap on Wall Street the last five years, but hard to find on Main Street. | ||||
| Why 2014 to be Better for Silver Price - Video Posted: 18 Dec 2013 06:10 AM PST Precious metals expert David Morgan says, “I think 2014 is going to be better for both the metals.” Morgan is not “exceedingly bullish” on gold and silver, but he says, “If a black swan were to take place, all bets are off. This is where you could get limit-up days in gold and silver and never look back.” On the stock market, Morgan warns, “The insiders are already out . . . They’ve left the patsies holding the bag, which is the general public for the most part.” Morgan goes on to say, “As the general market goes down, you are going to see gold go up.” | ||||
| How the Middle East Will Cope With the US Oil Boom Posted: 18 Dec 2013 06:00 AM PST "If you thought the Middle East was a powder keg before, just wait till you see what could be on tap for 2013," I wrote to you a year ago. Today I want to give you an update on the whole story… As you can deduce if you've been reading my musings this past year, I don't think we're headed for $150 oil anytime soon. But, as an investor it's always important to keep an eye on these "fat tail" events. After all, that's where the life-changing profits reside. So without further ado, let's take a look at the scenario that could lead to $150 oil… "It's time to head down the wormhole" I told you last year. The story begins in Saudi Arabia. Saudi, according to the U.S. Energy Information Administration (EIA), holds nearly "one-fifth of the world's proven oil reserves" and currently sits at the head of the list for oil producing and exporting nations. As it stands, Saudi is the "friendliest" and most stable of the oil producing nations in the Middle East. With that said, it's safe to assume as Saudi goes, so follows the rest of the region. Lately, Saudi's position as top dog in oil production has come under some scrutiny. You've likely seen the reports from the International Energy Agency, Goldman Sachs and more, that predict the U.S. will out-produce Saudi Arabia (this could happen within the next year or two.) Regardless of how quick that forecast pans out, the Saudis and OPEC are starting to feel the heat from increased U.S. production. After all, with more oil coming out of the ground here in the U.S. the demand for Saudi oil heads lower. Indeed, from the peak in 2003, the U.S. now imports well below half of what it used to from the Saudis. (Note: that's a lot of dollars NOT heading to the Middle East.) This trend is immediately affecting Saudi and OPEC's ability to manipulate prices, too. With less demand for their crude, it's hard to jack prices artificially higher. This "added" premium, as you'll see is vitally important to the Saudis. Hold that thought. In the meantime, Saudi Arabia has been smoking a lot more of its own dope. That is, with abundant and cheap oil over the past few decades, the country has increasingly been consuming its own oil production. Whether it be for power generation or vehicle use, the statistics are rather alarming. Take a look at this chart, courtesy of the EIA:
Saudi Arabia, with each passing day, uses more of its own oil. Residents crank their air conditioners on hot days, modern conveniences suck up more kilowatts and car use is spurring the demand for more gasoline. It's all adding up in a big way. The sharp up-tick in consumption in recent years is proof-positive that the people like this "cheap" oil. Just how much oil is Saudi Arabia using? A write-up in The Atlantic puts it this way, "It’s astounding to consider that Saudi Arabia, for example, has an economy one-sixth the size of Germany and yet consumes as much oil." After all, that's what the current Saudi subsidy does (it's very similar to what happens in other emerging oil nations – and believe it or not, China – where most citizens don't ever see a "real" price of oil.) Heck, if you and I were given subsidized gasoline imagine how much more we'd use! But be warned, this cheap oil party in Saudi Arabia is going to come to an abrupt end. The way I've said it in the past, it can only happen two ways:
Either scenario leads to an unhappy population. Either the government has no money and can't continue welfare programs, or it cuts its energy subsidies and prices skyrocket. The Saudi government will soon be sinking in a sandpit of unhappy citizens. And when the government gets neck-deep, watch out. Of note, this was a prediction I came up with last year – and this doomsday scenario has yet to play out. But rest assured that crazier things have happened! And with more U.S. oil production pressuring prices, we could get a glimpse of it soon. Now, add restless natives to what we talked about above. Today, with more unconventional oil hitting the world market the Saudis are exporting less oil to the U.S., which is having a direct impact on Saudi's ability squeeze a premium price from the market. Without having that extra, say, $25 a barrel, the government is already struggling to keep pace. This gets back to something that Byron King calls "the breaking point."
You see, if oil drops to $80 or less the Saudis have a hard time paying their ever-growing bills. Last year, Bloomberg put it this way: "Saudi King Abdullah promised to spend $130 billion on extra subsidies for housing and benefits as well as $500 billion for previously announced infrastructure projects." Rising budgets and shrinking revenue, as it tends to happen, won't end well for this government. And when things go awry (see: social unrest), and Saudi production is impacted, we're talking about an epic impact on the oil market. Not to mention if the whole region loses stability, all bets on oil prices are off. Short-term, we could see $150 easily – and higher prices aren't out of the question. Compared to Arab Spring, this will feel more like Arab Armageddon. Pretty ironic, huh? A fresh supply of U.S. oil puts pressure on prices and topples the Saudi government… leading to a short-term spike in global prices. Oh what a tangled web! Keep your boots muddy, Matt Insley P.S. The only silver lining to this Saudi story is that the U.S. finds itself in a much better position than it would have been, say, three years ago. Today oil is flowing through the pipelines in Texas and North Dakota at an ever-increasing pace. Heck, the black goo has even been filling up some of the pipeline systems and making its way onto barges, trucks and railways all around the country. This added oil, no matter the price, means more revenue for the right midstream players. These are the pipeline and processing plays that essentially collect "tolls" on this newfound bounty. And in yesterday’s issue of the Daily Resource Hunter, I gave readers a chance to access a list of some of the best names in the field. Not a Daily Resource Hunter reader? Sign up for FREE, right here, and never miss another great opportunity like this one. Original article posted on Daily Resource Hunter | ||||
| Market Monitor – December 18th Posted: 18 Dec 2013 05:50 AM PST Top Market Stories For November 18th, 2013: YTD 856 Tonnes of Gold Bullion Leave the Comex and 10 Major Western ETFs and Funds - Jesse's Cafe JPM House Takes 13.77mt Gold In Dec, 17.8% 1-Day Drop In Registered Stocks – GoldSilver US to export a record 750 tonnes of gold this year, mainly to China as [...] | ||||
| Gold Investors: Take the Red Pill! Posted: 18 Dec 2013 05:43 AM PST We make choices in our thinking, lifestyle, savings, and investments. We can look reality squarely in the face and swallow the red pill (from the movie - "The Matrix"). Or, we can swallow the blue pill with a healthy slug of whisky, continue riding the roller coaster of mass delusion, and go back to watching "Reality TV" and the evening news. Either way we will experience the consequences of our actions and our thinking. | ||||
| Gold Price Seen Volatile on US Fed Tapering Vote Today, "Still on Defensive" Posted: 18 Dec 2013 05:32 AM PST The GOLD PRICE held flat in US Dollars Wednesday morning, ticking above $1230 per ounce in very quiet trade ahead of today's much-awaited decision on QE tapering from the US Fed. Tapering is a 60% shot today, says Mohamed El-Erian, CEO of the giant Pimco asset-management company. Only one-in-three economists polled by Bloomberg in early December see the Fed tapering some of its $85 billion in monthly QE asset purchases at this month's policy meeting. Out of 60 analysts surveyed last week by Reuters, just over half said Fed tapering – widely seen as the major catalyst for 25% gold price losses in 2013 – won't start until March, when new chair Janet Yellen will replace Ben Bernanke. "Precious metals are [meantime] continuing their rollercoaster ride," says a note from Commerzbank, pointing to this week's 2.5% trading range in the gold price and 4% range in silver. "Gold price action of late," says UBS analyst Joni Teves, "has been driven by the cross-currents of short-covering and lingering interest to sell rallies, which have contained prices within a $60-range over the past few weeks." "There continues," agrees Japanese trading house Mitsui's Singapore desk, "to be a lack of positive catalysts for the gold price to rally, and many [participants] remains convinced of selling into the short covering rallies." "The bear trend remains in place," concludes London market maker Scotia Mocatta's latest technical analysis of gold price charts. "Thus there is still risk of a test of the major $1180 low" hit at the end of June. Looking ahead to Wednesday's key US central-bank decision, "There is little reason for the Fed to delay tapering," reckons Deutsche Bank's chief US economist Joseph Lavorgna, quoted by Bloomberg and citing strong jobs data and GDP growth above 3%. But while "there's no doubt that the doves feel more comfortable with tapering," counters RBS Securities' economist Guy Berger in Stamford, Connecticut, "it's certainly not enough that it makes you think tapering is imminent." "We suspect," says broker-dealer INTL FCStone in a note "that most markets have discounted the Fed's tapering to start sooner rather than later. "But we still expect the gold price to be on the defensive given its poor chart picture and the lack of any support...from increased investment or physical buying." Giant gold ETF trust fund SPDR Gold yesterday shed another 2 tonnes of bullion from the metal needed to back its shares, dropping to a new 5-year low beneath 817 tonnes and extending this year's decline from record-high levels to 40%. "Despite the decline in ETF holdings," says ANZ Bank, "some support for gold was found from Asian buyers at the $1230 level." For Western investment managers, says the Buttonwood column at The Economist, "Gold's resurgence may require a moment when central banks explicitly agree to a higher inflation target or when they declare that inflation is now subordinate to their unemployment mandate." "That moment may yet come." US inflation was last pegged at 1.2% on the headline CPI measure. The Fed has restated its target of 2.0% throughout 2013. | ||||
| Collapse Looming for Crude Oil Market in 2014? Posted: 18 Dec 2013 01:22 AM PST Foreign experts provide devastating forecasts for the oil market and believe that the conflicts in the Middle East would affect the value of "black gold." According to the experts, price per barrel will fall at least five times. One of the major players, the Russian Federation, will then be in a disadvantaged position. However, Russian experts were quite amused by these forecasts. | ||||
| Posted: 18 Dec 2013 01:07 AM PST Placed your bets yet for today's US Fed meeting...? ALL EYES on the US Federal Reserve – again – today, writes Greg Canavan in The Daily Reckoning Australia. The US central bank concludes a two-day meeting Wednesday to decide on whether to 'taper' or not. Yes, we sound like a broken record, but how pathetically sad have capital markets become? Place your bets folks, the Federal Reserve is about to spin the wheel... The market is placing its bets on no taper. Overnight, the S&P500 rallied 0.6% and the Dow Jones jumped 129 points, or 0.8%. Even if the Fed does pare back its asset purchases by a few billion per month, the message from the statement is likely to be:
Our guess is that the US Fed will slowly phase out QE during 2014, and replace it with something else. The whole point of looser monetary policy is to create enough inflation to lighten the crushing debt load that is currently weighing on the global economy. But QE doesn't lead to inflation...or at least not goods and services inflation. The digital money created via the QE process goes into the banking system. The 'fed funds' (the 'money' created) sit as a liability on the Fed's balance sheet and as an asset on the banks' balance sheets. The banks make use of this asset to speculate in financial markets. It leads to asset price inflation. So QE causes asset price inflation but not goods and services inflation. In other words, QE created money does not find its way into the economy. The Fed understands this. That's why we think 2014 will be the year of more 'innovative' monetary policy. As Ben Bernanke hands the reigns over to Janet Yellen, she'll make her mark with some new-fangled policy experiment. That's the argument we made in the December issue of Sound Money. Sound Investments. We think the change from QE to something else will see gold and commodities bottom in 2014 and start another big move higher as the market starts to discount a pick-up in inflationary pressures. At some point in the first part of the year we think global capital will start moving back into these deeply oversold markets. And we think such a move is still possible, despite the prospect of a big slowdown in China next year (yesterday's HSBC manufacturing data release wasn't encouraging for the China bulls). If the performance of the gold market is any guide, the major commodity markets seem to be driven more by trading sentiment than underlying physical demand these days. Through the proliferation of derivatives, traders can speculate on price moves much more effectively and efficiently than buying or selling a physical good. And once momentum builds in either direction, the price moves take on a life of their own, no matter what the underlying physical market looks like. Despite China continuing to grow robustly (albeit a little more slowly) over the past few years, most commodity markets have been in decline. Only iron ore has bucked the trend. That's largely because China has the world's largest and most uneconomical steel production industry. But it also could have something to do with the fact that the iron ore market trades separately from other industrial commodities. Until recently iron ore contracts were negotiated annually between the major suppliers and the end users. In the past few years BHP led the development of a spot market. As such, the iron ore derivatives market is still in its infancy. If you're a hedge fund and you want to short iron ore, what do you do? Well you can't really short the price, so you'd probably have to short sell the producers. In gold, oil or any other widely traded metal like copper, you can do both. The point we're making is that physical demand seems like only one part of the equation these days. With vast amounts of speculative global capital moving around the place, and a massive amount of derivative products available to accommodate that capital, anticipating where it will move next is a valid speculative strategy. | ||||
| Posted: 18 Dec 2013 01:07 AM PST Placed your bets yet for today's US Fed meeting...? ALL EYES on the US Federal Reserve – again – today, writes Greg Canavan in The Daily Reckoning Australia. The US central bank concludes a two-day meeting Wednesday to decide on whether to 'taper' or not. Yes, we sound like a broken record, but how pathetically sad have capital markets become? Place your bets folks, the Federal Reserve is about to spin the wheel... The market is placing its bets on no taper. Overnight, the S&P500 rallied 0.6% and the Dow Jones jumped 129 points, or 0.8%. Even if the Fed does pare back its asset purchases by a few billion per month, the message from the statement is likely to be:
Our guess is that the US Fed will slowly phase out QE during 2014, and replace it with something else. The whole point of looser monetary policy is to create enough inflation to lighten the crushing debt load that is currently weighing on the global economy. But QE doesn't lead to inflation...or at least not goods and services inflation. The digital money created via the QE process goes into the banking system. The 'fed funds' (the 'money' created) sit as a liability on the Fed's balance sheet and as an asset on the banks' balance sheets. The banks make use of this asset to speculate in financial markets. It leads to asset price inflation. So QE causes asset price inflation but not goods and services inflation. In other words, QE created money does not find its way into the economy. The Fed understands this. That's why we think 2014 will be the year of more 'innovative' monetary policy. As Ben Bernanke hands the reigns over to Janet Yellen, she'll make her mark with some new-fangled policy experiment. That's the argument we made in the December issue of Sound Money. Sound Investments. We think the change from QE to something else will see gold and commodities bottom in 2014 and start another big move higher as the market starts to discount a pick-up in inflationary pressures. At some point in the first part of the year we think global capital will start moving back into these deeply oversold markets. And we think such a move is still possible, despite the prospect of a big slowdown in China next year (yesterday's HSBC manufacturing data release wasn't encouraging for the China bulls). If the performance of the gold market is any guide, the major commodity markets seem to be driven more by trading sentiment than underlying physical demand these days. Through the proliferation of derivatives, traders can speculate on price moves much more effectively and efficiently than buying or selling a physical good. And once momentum builds in either direction, the price moves take on a life of their own, no matter what the underlying physical market looks like. Despite China continuing to grow robustly (albeit a little more slowly) over the past few years, most commodity markets have been in decline. Only iron ore has bucked the trend. That's largely because China has the world's largest and most uneconomical steel production industry. But it also could have something to do with the fact that the iron ore market trades separately from other industrial commodities. Until recently iron ore contracts were negotiated annually between the major suppliers and the end users. In the past few years BHP led the development of a spot market. As such, the iron ore derivatives market is still in its infancy. If you're a hedge fund and you want to short iron ore, what do you do? Well you can't really short the price, so you'd probably have to short sell the producers. In gold, oil or any other widely traded metal like copper, you can do both. The point we're making is that physical demand seems like only one part of the equation these days. With vast amounts of speculative global capital moving around the place, and a massive amount of derivative products available to accommodate that capital, anticipating where it will move next is a valid speculative strategy. | ||||
| Junior Mining Stocks that Will Let You Sleep at Night: Ralph Aldis Posted: 18 Dec 2013 12:00 AM PST The best time to buy gold is when the market hates it, especially when it comes to junior explorers with market caps under $1 billion, asserts Ralph Aldis, senior mining analyst with U.S. Global... Visit the aureport.com for more information and for a free newsletter | ||||
| Junior Mining Stocks that Will Let You Sleep at Night: Ralph Aldis Posted: 18 Dec 2013 12:00 AM PST The best time to buy gold is when the market hates it, especially when it comes to junior explorers with market caps under $1 billion, asserts Ralph Aldis, senior mining analyst with U.S. Global Investors. In this interview with The Gold Report, Aldis shares his main modeling themes and companies that fit the bill. He also explains the win-win-win advantages of flow-through stock issuance, a technique allowed by some noteworthy Canadian provinces. | ||||
| Junior Mining Stocks that Will Let You Sleep at Night: Ralph Aldis Posted: 18 Dec 2013 12:00 AM PST The best time to buy gold is when the market hates it, especially when it comes to junior explorers with market caps under $1 billion, asserts Ralph Aldis, senior mining analyst with U.S. Global Investors. In this interview with The Gold Report, Aldis shares his main modeling themes and companies that fit the bill. He also explains the win-win-win advantages of flow-through stock issuance, a technique allowed by some noteworthy Canadian provinces. | ||||
| Gold Investors: Take the Red Pill! Posted: 17 Dec 2013 11:05 PM PST Read the Latest News About: Gold Silver Economy Central Banking We make choices in our thinking, lifestyle, savings, and... {This is a content summary only. Click on the blog title to continue reading this post, share your comments, browse the website, and more!} | ||||
| Inflation in the United States - Keeping it Real! Posted: 17 Dec 2013 08:25 PM PST “One only needs to reflect on the dramatic decline in the value of the dollar that has taken place since the Fed was established in 1913. The goods and services you could buy for $1.00 in 1913 now cost nearly $21.00. Another way to look at this is from the perspective of the purchasing power of the dollar itself. It has fallen to less than $0.05 of its 1913 value. We might say that the government and its banking cartel have together stolen $0.95 of every dollar as they have pursued a relentlessly inflationary policy.” - Ron Paul – End the Fed The BLS reported the CPI this morning. They tell me that inflation is well contained and has only risen by 1.2% in the past twelve months. Our beloved Federal Reserve chairman is worried inflation is too low. It is fascinating that the only people worried about inflation being too low are Ivy League educated economists and bankers whose wealth depends upon the middle class sinking further into poverty. | ||||
| Gold price suppression doesn't bother South Africa's government Posted: 17 Dec 2013 07:39 PM PST Another rich country insisting on being poor, and more mining companies dumber than the rocks they mine. * * * Gold Town Turns to Dust as Metal Decline Shutters Mines By Paul Burkhardt A half-dozen unemployed workers from the Blyvooruitzicht gold mine southwest of Johannesburg finish off the last scraps of a slaughtered cow in the searing October heat. Since losing their jobs in August, meals have become much less predictable. The men stand near a small wood fire as the sun shines off a hill of extracted earth, in sight of a housing block that was supposed to be vacated. One holds a jaw bone over the flame, nibbles the meat off, and tosses the rest into a rusty barrel. What's left of the carcass with its entrails spilling out is starting to dry at their feet. The scene, resembling something from an apocalypse film out of Hollywood, is an extreme example of the impact gold's 25 percent drop this year may have on towns around the world that are dependent on the precious metal. Mining companies have announced plans to shutter mines or reduce operations from Nevada and Peru to Papua New Guinea in the Pacific Ocean, as gold heads toward its first annual loss in 13 years. ... ... For the full story: http://www.bloomberg.com/news/2013-12-18/gold-town-turns-to-dust-as-meta... ADVERTISEMENT Buy metals at GoldMoney and enjoy international storage GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit: http://www.goldmoney.com/?gmrefcode=gata Join GATA here: Vancouver Resource Investment Conference http://www.cambridgehouse.com/event/vancouver-resource-investment-confer... Mines and Money Hong Kong http://www.minesandmoney.com/hongkong/ * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT How to profit with silver -- Future Money Trends is offering a special 16-page silver report with our forecast for 2013 that includes profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million. Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets. To learn about this report, please visit: http://www.futuremoneytrends.com/index.php?option=com_content&id=376&tmp... | ||||
| Paul Mylchreest: Western investors will be wrong-footed again when gold turns Posted: 17 Dec 2013 06:26 PM PST 9:29p ET Tuesday, December 17, 2013 Dear Friend of GATA and Gold: December's Thunder Road Report by Paul Mylchreest of Monument Securities Ltd. in London (http://monumentsecurities.com) provides a brilliant view of the gold market by weaving together much of GATA what has sent your way in recent weeks with key portions of the crucial "Another" commentaries archived at USAGold.com. Mylchreest writes of gold: "Western investors were completely wrong-footed when the price turned last time. ... The physical gold market prevailed last time and it will prevail again." This edition of the Thunder Road Report is titled "The New New Great Game: Geography, Energy, the Dollar, and Gold" and it's posted at GATA's Internet site here: http://www.gata.org/files/ThunderRoadReport-12-2013.pdf CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Buy metals at GoldMoney and enjoy international storage GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit: http://www.goldmoney.com/?gmrefcode=gata Join GATA here: Vancouver Resource Investment Conference http://www.cambridgehouse.com/event/vancouver-resource-investment-confer... Mines and Money Hong Kong http://www.minesandmoney.com/hongkong/ * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT How to profit with silver -- Future Money Trends is offering a special 16-page silver report with our forecast for 2013 that includes profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million. Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets. To learn about this report, please visit: http://www.futuremoneytrends.com/index.php?option=com_content&id=376&tmp...
This posting includes an audio/video/photo media file: Download Now | ||||
| Fed Will Not Taper & You Can Expect Chaos After The Decision Posted: 17 Dec 2013 05:20 PM PST  Today the 42-year market veteran who correctly predicted that the Fed would not taper at their last meeting told King World News to expect chaos after the Fed once again decides not to taper tomorrow. He also spoke about what this decision by the Fed will mean for major markets, including gold. Below is the powerful and timely interview with Egon von Greyerz, who is founder of Matterhorn Asset Management out of Switzerland.This posting includes an audio/video/photo media file: Download Now | ||||
| The Gold Price Fell to $1,231.20 Today Posted: 17 Dec 2013 05:04 PM PST Gold Price Close Today : 1231.20 Change : -14.30 or -1.15% Silver Price Close Today : 19.792 Change : -0.257 or -1.28% Gold Silver Ratio Today : 62.207 Change : 0.084 or 0.14% Silver Gold Ratio Today : 0.01608 Change : -0.000022 or -0.14% Platinum Price Close Today : 1343.70 Change : -15.50 or -1.14% Palladium Price Close Today : 699.65 Change : -6.25 or -0.89% S&P 500 : 1,781.00 Change : -5.54 or -0.31% Dow In GOLD$ : $266.54 Change : $ 2.91 or 1.10% Dow in GOLD oz : 12.894 Change : 0.141 or 1.10% Dow in SILVER oz : 802.10 Change : 9.82 or 1.24% Dow Industrial : 15,875.26 Change : -9.31 or -0.06% US Dollar Index : 80.220 Change : 0.000 or 0.00% Some of the Nice Government Men did get around to taking out their club and bashing silver and GOLD PRICES. The SILVER PRICE staggered back 25.7 cents to 1979.2c, familiar territory. The gold price went down for $14.30, landing on $1,231.20. Plumb on 8:30 when New York opened somebody sold the dickens out of both silver and gold, then little happened the rest of the day. All right, I'm going to tell y'all what I see. Eight days ago silver and gold prices broke through the downtrend line from the October top. They remain above and outside that downtrend line. If the GOLD PRICE drops below $1,210 or silver below 1890c, they'll tumble. Otherwise, we are waiting for them to confirm this little breakout with a closes above resistance at 2100c and $1,267. Other than a giant whacking that fell on silver and gold, nothing much happened today. Over all is cast the shadow of the midgets and teenagers who run the Federal Reserve, waiting on them to tell us tomorrow after the FOMC meeting how they plan to mess up the US economy and monetary system next. The Greeks used to say that when you fight an enemy a long time, you become your enemy. Your take on your enemy's position. The Fed is a picture of that: the capitalist central bank has become the head socialist. Now think: what presupposition underlies a central bank? Other than stealing the most money from the most people the most easily? A central bank presupposes that somebody, or some committee, is clever enough, and hath knowledge exhaustive enough, to run the economy. But instead of Stalin, we have Bernanke. Think about the gall: that one man or twenty men know better than the millions of market participants what business should be done, how much, and at what interest rate. If that ain't certifiably insane, I ain't a natural born fool from Tennessee. US dollar index didn't even move. Literally, it was unchanged at 80.22. Euro was also nearly unchanged, up 0.05% to $1.3768. Yen rose 0.34% to 97.40, but it's so far down in the well you can hardly spy it anyway. Dow lost 9.31 (0.6%) to 15,875.26 and the S&P gave up 5.54 (0.31%) to end at 1,781. Who knows what nutty effect the FOMC's announcement will wreak? As I said yesterday, their mere meeting, let alone their speaking, jams human brain waves. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2013, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. | ||||
| The Gold Price Fell to $1,231.20 Today Posted: 17 Dec 2013 05:04 PM PST Gold Price Close Today : 1231.20 Change : -14.30 or -1.15% Silver Price Close Today : 19.792 Change : -0.257 or -1.28% Gold Silver Ratio Today : 62.207 Change : 0.084 or 0.14% Silver Gold Ratio Today : 0.01608 Change : -0.000022 or -0.14% Platinum Price Close Today : 1343.70 Change : -15.50 or -1.14% Palladium Price Close Today : 699.65 Change : -6.25 or -0.89% S&P 500 : 1,781.00 Change : -5.54 or -0.31% Dow In GOLD$ : $266.54 Change : $ 2.91 or 1.10% Dow in GOLD oz : 12.894 Change : 0.141 or 1.10% Dow in SILVER oz : 802.10 Change : 9.82 or 1.24% Dow Industrial : 15,875.26 Change : -9.31 or -0.06% US Dollar Index : 80.220 Change : 0.000 or 0.00% Some of the Nice Government Men did get around to taking out their club and bashing silver and GOLD PRICES. The SILVER PRICE staggered back 25.7 cents to 1979.2c, familiar territory. The gold price went down for $14.30, landing on $1,231.20. Plumb on 8:30 when New York opened somebody sold the dickens out of both silver and gold, then little happened the rest of the day. All right, I'm going to tell y'all what I see. Eight days ago silver and gold prices broke through the downtrend line from the October top. They remain above and outside that downtrend line. If the GOLD PRICE drops below $1,210 or silver below 1890c, they'll tumble. Otherwise, we are waiting for them to confirm this little breakout with a closes above resistance at 2100c and $1,267. Other than a giant whacking that fell on silver and gold, nothing much happened today. Over all is cast the shadow of the midgets and teenagers who run the Federal Reserve, waiting on them to tell us tomorrow after the FOMC meeting how they plan to mess up the US economy and monetary system next. The Greeks used to say that when you fight an enemy a long time, you become your enemy. Your take on your enemy's position. The Fed is a picture of that: the capitalist central bank has become the head socialist. Now think: what presupposition underlies a central bank? Other than stealing the most money from the most people the most easily? A central bank presupposes that somebody, or some committee, is clever enough, and hath knowledge exhaustive enough, to run the economy. But instead of Stalin, we have Bernanke. Think about the gall: that one man or twenty men know better than the millions of market participants what business should be done, how much, and at what interest rate. If that ain't certifiably insane, I ain't a natural born fool from Tennessee. US dollar index didn't even move. Literally, it was unchanged at 80.22. Euro was also nearly unchanged, up 0.05% to $1.3768. Yen rose 0.34% to 97.40, but it's so far down in the well you can hardly spy it anyway. Dow lost 9.31 (0.6%) to 15,875.26 and the S&P gave up 5.54 (0.31%) to end at 1,781. Who knows what nutty effect the FOMC's announcement will wreak? As I said yesterday, their mere meeting, let alone their speaking, jams human brain waves. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2013, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. | ||||
| Posted: 17 Dec 2013 04:37 PM PST What the Fed means for gold. Will the Fed rock the precious metal. Bullion's next move, with CNBC's Jackie DeAngelis and the Futures Now Traders. [[ 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! ]]  | ||||
| Peter Grant: Could Volcker Rule precipitate next financial crisis? Posted: 17 Dec 2013 04:02 PM PST 7p ET Tuesday, December 17, 2013 Dear Friend of GATA and Gold: Peter Grant of Centennial Precious Metals in Denver today reflects on the profit-erasing charge taken by Utah's largest bank based on its interpretation of the soon-to-be-implemented Volcker Rule -- that the derivative instruments the bank owns have to be marked to market, which means down. Grant's commentary is headlined "Could Volcker Rule Precipitate Next Financial Crisis?" and it's posted at Centennial's Internet site, USAGold, here: http://www.usagold.com/cpmforum/2013/12/17/could-volcker-rule-precipitat... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT You Don't Have to Wait for Your Monetary Metal: Many investors lately report having to wait weeks and even months for delivery of their precious metal orders. All Pro Gold works with the largest wholesalers that have inventory "live" -- ready to go. All Pro Gold can ship these "live" gold and silver products as soon as payment funds clear. All Pro Gold can provide immediate delivery of 100-ounce Johnson Matthey silver bars, bags of 90 percent junk silver coins, and 1-ounce silver Austrian Philharmonics. All Pro Gold can deliver silver Canadian maple leafs with a two-day delay and 1-ounce U.S. silver eagles with a 15-day delay. Traditional 1-ounce gold bullion coins and mint-state generic gold double eagles are also available for immediate delivery. All Pro Gold has competitive pricing, and its proprietors, longtime GATA supporters Fred Goldstein and Tim Murphy, are glad to answer any questions or concerns of buyers about the acquisition of precious metals and numismatic coins. Learn more at www.allprogold.com or email info@allprogold.com or telephone All Pro Gold toll-free at 1-855-377-4653. Join GATA here: Vancouver Resource Investment Conference http://www.cambridgehouse.com/event/vancouver-resource-investment-confer... Mines and Money Hong Kong http://www.minesandmoney.com/hongkong/ * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: | ||||
| A Fed Policy That Will Increase the Gold Price Posted: 17 Dec 2013 04:00 PM PST Higher interest rates actually provide banks the incentive to lend. So while investors worry about a Fed taper and higher rates, it is exactly what is needed to spur lending, employment, and money creation. | ||||
| The Dollar And Gold In The New Great Monetary Game Posted: 17 Dec 2013 03:31 PM PST This is an excerpt from the latest Thunder Road Report entitled “The New New Great Game” by Paul Mylchreest. Let's consider recent developments in the monetary element of the NNGG, because they are coming thick and fast now. A good place to begin is the March 2012 meeting of the BRICS nations, which saw them sign the "Master Agreement on Extending Credit Facility in Local Currency. " This made it their POLICY to increase trade in local currency. This process is beginning to speed up. China is driving this process and now conducts 17% of its foreign trade in Yuan compared to almost zero in 2010. It has set up 23 (at the last count) currency swap agreements with major trading partners (including We also had the recent news that the Yuan is now the second most-used currency in trade finance, supplanting the Euro. According to SWIFT, the Chinese currency had a market share of 8.66% in October 2013 compared with 6.44% for the Euro. This share looks set to grow rapidly. The FT reported on 2 December 2013 that companies can now clear Yuan-denominated transactions in London. "UK-based Standard Chartered and Agricultural Bank of China have signed an agreement to start renminbi clearing services in the UK for the first time, in a deal announced to coincide with the visit of David Cameron, prime minister, to Beijing. London is becoming the main city outside of Asia for trading and transacting in the Chinese currency." A major pillar of the dollar's dominance in world trade is pricing oil. China surpassed the US as the world's largest oil importer in September this year. So, a potentially significant development was the comment from the Chairman of the Shanghai Futures Exchange that preparatory work for a crude oil futures contract priced in Yuan is being accelerated. This was from a Reuters report on 21 November 2013. "China is the only country in the world that is a major crude producer, consumer and a big importer. It has all the necessary conditions to establish a successful crude oil futures contract,' Yang Maijun, SHFE chairman, said at an industry conference." And Tyler Durden at Zero Hedge: "In doing so China is effectively lobbing the first shot across the bow of the Petrodollar system, and more importantly, the key support of the USD in the international arena. This would be in keeping with China's strategy to import about 100 tons of gross gold each and every month, in addition Oil and gold again. Given all of the above, it's fairly obvious that China is moving ahead with its plan to dismantle the dollar's dominance in world trade and internationalise the Yuan. However, it would hasten this process if the Chinese make good on recent comments from the PBOC. This was a Bloomberg report on 21 November 2013. "It's no longer in China's favor to accumulate foreign-exchange reserves,' Yi Gang, a deputy governor at the central bank, said in a speech organized by China Economists 50 Forum at Tsinghua University yesterday. The monetary authority will 'basically' end normal intervention in the currency market and broaden the yuan's daily trading range, Governor Zhou Xiaochuan wrote in an article in a guidebook explaining reforms outlined last week following a Communist Party meeting. Neither Yi nor Zhou gave a timeframe for any changes." This would be a MASSIVE development. Confrontation in the monetary sphere between the US and China has been building for many years Both sides seem to be preparing for just such a scenario. In his book "Currency Wars", James Rickards recounts participating in the first Pentagon-sponsored "financial war game", at the Applied Weapons Laboratory, outside Washington in 2009. In an interview with Max Keiser he commented. "There was a Russia team, a China team, a United States team and then we had Europe, Switzerland, hedge funds…I was on the China team…My object, in order to help the United States, was to attack the United States as hard as we could in order to teach our own intelligence community what the threats were…I actually cooked up a little plot with a friend of mine who was on the Russia team and China and Russia combined forces and combined their gold and announced a new gold-backed currency using UK banks and Swiss depositories. And what they said was, from now on, if you want Chinese exports or Russian natural resources, we will no longer accept dollars, you must pay us in this new gold-backed currency." It seems that China is not sitting back either. For example, this was Zheng Gang, the CEO of Keen Risk Solution Co. and consultant member of the Chinese Competitive Intelligence Association. "Before actual combat over land, sea and air, an enemy nation that possesses offensive capabilities in finance can disrupt China's economic stability, thereby striking before a physical war, subduing us without a fight. The strategic 'Game' to preserve the USD's global status is now focus of international political and economic activity; the US makes a new kind of non-military offensive against developing and transforming countries derived from her ability to set favorable rules, an ability she possesses through the dollar hegemony." One of the ultimate anti-dollar elements of the New New Great Game is China's accumulation of gold at both state and private level. Whatever way you cut the analysis, it seems that China's annual gold consumption is running at about 2,000 tonnes, possibly more. This is a HUGE 70-75% of estimated 2013 world mine production. The much discussed Chinese net imports through Hong Kong amount to just over 980 tonnes this year through October. This is an increase of 160% versus the first 10 months of 2012. The October figure of 130 tonnes was the second largest ever. So we should see more than 1,200 tonnes in 2013 as a whole. Then we have to add in domestic mine production, hardly any of which leaves Chinese shores. This will be about 430 tonnes in 2013. It's no surprise, nor coincidence, that China has ramped up gold supply dramatically. So Hong Kong imports plus domestic mine production total about 1,600 tonnes. This is just one point of entry for gold into China and note this comment from Koos Jansen from the "In Gold We Trust" website (which has the best analysis of Chinese gold demand). "There is also gold going into China through other ports that is not reported. I know this from the biggest transport company that ships gold from Switzerland to China." Including imports through Shanghai and other points of entry and we are probably getting close to 2000 tonnes. The other way of looking at it is from physical deliveries on the Shanghai Gold Exchange (SGE). The diligent Mr Jansen keeps close tabs on this – and produces great charts comparing SGE deliveries with world mining output ex-China (see below). From his conversations with the SGE, Jansen discovered an unusual aspect of what constitutes "delivery" on this exchange – it is metal that has been withdrawn from the vault and none of these bars are permitted to come back in. As he says. "mine and import supply in China are required to be sold over the SGE. The result is that the gold that leaves the SGE vaults reflects total supply, and thus demand." Through the first 47 weeks of 2013, SGE deliveries amounted to 1,928 tonnes. Then consider this quote. "The Western governments needed to keep the price of gold down so it could flow where they needed it to flow. The key to free up gold was simple. The Western public will not hold an asset that is going nowhere, at least in currency terms (if one can only see value in paper currency terms then one cannot see value at all)." Western investors were completely wrong-footed when the price turned last time. And finally. "The battle now is between the CBs [central banks] trying to keep gold in the $300s and the 'others' buying it up…Some people know this, that is why they aren't trading it, they are buying it." It's also clear that the Chinese fully understand the mechanics of the gold market and the determinants of the price. For example, the following is a translation of an article from Zhang Jie of the China Gold Association (basically an arm of the State Council), "Gold Leasing Is A Tool For The Global Credit Game", published on 15 April 2013. This will probably shock many investors in the West. With thanks to Koos Jansen for the translation. "Gold leasing is an important innovation in the gold settlement system. Through continuous gold leasing the gold in the market can be circulated and produce derivatives, creating more and more paper gold. This is very significant for the United States. Gold leasing is a major tool for the Federal Reserve and other central banks in the West to secretly control and regulate the gold market, creating gold credit derivatives…The purpose of gold leasing is not just to receive a rent, but it also provides the ability to short-sell gold, which allows central banks to interfere in the currency market…If one wants to control gold, it is a necessity to have the ability to short-sell the same. A central bank that directly suppresses gold would be suspected as a market manipulator. However, gold leasing by the central bank can take place unnoticed…For the Fed, it is crucial that the dollar dominates the world and so the Fed will store gold reserves from countries all over the world to control the gold settlement system. If there were another gold settlement system, it would compete with the dollar's trust. Natural gold credit would be a nightmare for the continuous printed dollar. The dollar can only be the world currency as a result of the United States controlling global gold settlement. However, if other countries want their gold back from the Fed, the Fed will lose its gold settlement position." The physical gold market prevailed last time and it will prevail again. Current tightness in physical supply is suggested by market indicators. For example, GOFO (gold forward offered rate), which is the interest rate for borrowing dollars using gold as collateral, has moved back into negative territory…just. The market will pay gold holders to borrow dollars
The gold futures market remains in backwardation, i.e. there is a negative gold basis (spot versus near-month future). Traders are turning down a free profit (albeit a small one currently) rather than risk any physical delivery problems in the futures market. See the blue line in negative territory in this chart from Sandeep Jaitly’s excellent “Gold Basis Service.”
Gold should, and almost always has traded in contango, the only other exception was a brief period following the collapse of Lehman. It's our contention that the demarcation between paper and physical markets is becoming increasingly apparent. As an indication of the strength of physical gold demand, especially coming from China, here is an excerpt from an interview Koos Jansen conducted earlier this month with Alex Stanzyk of Anglo Far-East, a precious metals investment and custodial company. The interview followed Stanczyk's meeting (along with "Currency Wars" author, Jim Rickards) with the managing director of a major Swiss refiner. "He (the managing director) indicated the price didn't make sense because he has got so much fabrication demand. They put on three shifts, they're working 24 hours a day, and originally he thought that would wind down at some point. Well, they've been doing it all year. Every time he thinks it's going to slow down, he gets more orders, more orders, more orders. They have expanded the plant to where it almost doubles their capacity. 70 % of their kilobar fabrication is going to China, at a pace of 10 tons a week. That's from one refinery, now remember there are 4 of these big ones (refineries) in Switzerland. … At this Swiss refinery there have been several times this year on which they were unable to source gold, this shocked me. They're bringing in good delivery bars, scrap and dore from the mines, basically all they can get their hands on. This gentleman has been in the business for 37 years, he was there during the last bull market in the late seventies. I asked him when was the last time this happened, that he was unable to source gold, he said never. And I clarified it, I asked: let me make sure if I understand what you're saying to me, in the last 37 years you've worked in the gold industry this has never happened? He said: this has never happened." The consensus seems to be upbeat on 2014, tapering not withstanding. Indeed, we've seen reports about "show time" for growth in developed economies. Hmmm, we are less upbeat and when it comes to the "New New Great Game", we may only just be getting started. Given all of the threats to the US dollar as we head into 2014, you start wondering whether the Fed's expressed desire to taper is also about trying to shore up the dollar (as well as addressing collateral shortages in the repo market).
We're also mindful that when the Fed began to float the idea of tapering back in May 2013, the BRICS currencies (albeit excluding the managed Remnimbi) were hammered. Read the full report: |
Sharelynx.com provides this interesting long term chart of the Dow measured in gold. I find this chart very interesting, although I would prefer if Sharelynx would have created two separate trend lines, one before 1913 going up at a much higher rate, and one after 1913, clearly at a much more unstable and slower growth rate.
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