Gold World News Flash |
- Cyclical Bull for Gold
- Important Reuters Article on the Middle East
- Russian Gold Miners to Cut 2014 Output After Price Slump
- Collateral Long-Term Damage and High Frequency Silver
- Market Report: Germany’s gold is the story de jour
- Is the International Monetary Fund Hinting About an Economic Reset?
- World mints working overtime to fill coin demand
- Credit is Gold #1 and Icebergs
- Demand Delivery For the True Price of Gold
- The One Bank Brings False-Flag Terrorism to Egypt?
- A RUN ON PHYSICAL: Record One-Day Withdrawal of Gold From JP Morgan
- America’s Relative Decline: Should We Panic?
- 20 Early Warning Signs That We Are Approaching A Global Economic Meltdown
- Cyclical Bull for Gold
- Fed 'almost assuredly' no longer has Bundesbank's gold, Gold Newsletter's Lundin says
- A Glimpse At The "Most Potent Force In The Social World"
- HSBC imposes restrictions on large cash withdrawals
- CME Hikes Turkish Lira, Nat Gas Margins
- Gold and Silver Trading Alert: Strong Rally's Implications
- JPMorgan's Gold Vault Has Biggest One-Day Withdrawal Ever
- Gold Daily and Silver Weekly Charts - Flight to Safety, Papier-mâché Gold Story Fraying
- Gold Daily and Silver Weekly Charts - Flight to Safety, Papier-mâché Gold Story Fraying
- The Gold Price Closed Higher for the Fifth Week in a Row at $1,264.50
- The Gold Price Closed Higher for the Fifth Week in a Row at $1,264.50
- Gold and Silver Trading Alert: Strong Rally’s Implications
- Celente - The Entire World Is Now Unraveling Before Our Eyes
- More Money for Welfare, Warfare and Wonder Woman
- Gold Price Bottoming, Gold Stocks Set to Soar
- 2013: A Successful Year of Price-Suppression: Part II
- Buyers of physical picking off bullion at every London fix, Maguire says
- Gold Bottoming
- Alasdair Macleod: Updating fiat money quantity relative to gold and silver
- I Repeat: “Economic disaster of unprecedented scale is coming!” Here’s Why
- Three Men Make a Tiger
- A One-Way Ticket to Central Planning
- Fiat Money Implications for Gold and Silver
- Maguire - “Stunning” Physical Gold Buying Terrifies Shorts
- Germany’s Gold is the Story de Jour
- Yikes! Financial Times awakens to the paper gold fraud
- Comparing Apples and Oranges of Silver and Gold Price Manipulation
- Inside London: 'Demand Delivery For the True Price of Gold'
- Inside London: 'Demand Delivery For the True Price of Gold'
- Can’t-miss Headlines: Govt. mediation, exploration drilling and better than expected results
- Large SPDR gold ETF sales not enough to restrain gold
- First Quantum FY copper, nickel, gold and pgms all up strongly
- Indian government at gold crossroad after Gandhi letter
- India not yet planning roll back of gold import curbs
- Global mined gold output rose 4% in 2013
- Something Ominous May Be Coming At Us
- Something Ominous May Be Coming At Us
| Posted: 25 Jan 2014 12:25 AM PST Institutional Advisors |
| Important Reuters Article on the Middle East Posted: 25 Jan 2014 12:00 AM PST from The Daily Bell:
Dominant Social Theme: The Middle East – so much confusion, so much democracy! Free-Market Analysis: This article, written by Mark Leonard, co-founder and director of the European Council on Foreign Relations, seems to explain – if you read between the lines – what is really going on in the Middle East and environs. |
| Russian Gold Miners to Cut 2014 Output After Price Slump Posted: 24 Jan 2014 11:00 PM PST by Ed Steer, Casey Research:
The gold price began rallying anew just moments before the Comex open, but got capped at the London p.m. gold fix—and then chopped sideways into the 5:15 p.m. EST close of electronic trading in New York. The low and high ticks were reported as $1,230.80 and $1,267.00 in the February contract. |
| Collateral Long-Term Damage and High Frequency Silver Posted: 24 Jan 2014 09:49 PM PST Jeffrey Lewis |
| Market Report: Germany’s gold is the story de jour Posted: 24 Jan 2014 09:00 PM PST by Alasdair Macleod, Finance and Economics:
The burning question is why is it so difficult to get its gold back? The most logical answer is that the Bundesbank’s gold is long gone, but without hard evidence this can only be conjecture. One would have thought that the New York Fed would have at least come up with closer to 40 tonnes if only to stop the rumour mill running. |
| Is the International Monetary Fund Hinting About an Economic Reset? Posted: 24 Jan 2014 08:40 PM PST by JC Collins, SilverBearCafe.com:
The idea behind the reset is to prevent a complete collapse of the banking industry worldwide. When one calculates the amount of debt in the world today, the instability of the whole system is obvious. |
| World mints working overtime to fill coin demand Posted: 24 Jan 2014 08:23 PM PST By Paul Ebeling Austria's Mint is running 24 hours a day to meet orders for gold coins, joining those from the United States to Australia in reporting accelerating demand boosted by the Bear market in bullion. Austria's Muenze Oesterreich AG mint hired extra employees and added a third eight-hour shift to the day in a bid to keep up with demand. Purchases of bullion coins at Australia's Perth Mint rose 20 percent this year through 20 January from a year earlier. Sales by the U.S. Mint are set for the best month since April, when the precious yellow metal dove into a bear market. ... ... For the full story: http://www.livetradingnews.com/gold-world-mints-working-overtime-to-fill... ADVERTISEMENT A Personal Touch in Buying Precious Metals If you've not secured your allocation of precious metals and numismatic coins, 2014 may be the last year to get them at affordable and undervalued prices. With huge amounts of gold leaving the West for Asia, the future availability of precious metals is very much in doubt. All Pro Gold has competitive pricing on all bullion and numismatic products -- and offers prompt delivery too. Long-time GATA supporters Fred Goldstein and Tim Murphy are glad to answer any questions or concerns about acquiring the monetary metals. All Pro Gold has an extensive electronic library of articles from the world's top market analysts. Learn more at www.allprogold.com or write to Fred and Tim at info@allprogold.com or telephone them at 1-855-377-4653. Join GATA here: 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 Jim Sinclair plans seminars in Asheville and Austin Gold advocate and mining entrepreneur Jim Sinclair will hold his next market seminars from 2 to 6 p.m. Saturday, January 25, at the Clarion Inn Asheville, 550 Airport Road, Fletcher, North Carolina, and from 2 to 6 p.m. Saturday, February 8, at the Austin, Texas, Airport Hilton. Advance registration is required. Details for the Asheville seminar are posted at Sinclair's Internet site, JSMineSet.com, here: http://www.jsmineset.com/2014/01/07/north-carolina-qa-session-venue-conf... Details for the Austin seminar are posted at JSMineSet.com here: http://www.jsmineset.com/2014/01/02/austin-texas-qa-session-confirmed/ |
| Credit is Gold #1 and Icebergs Posted: 24 Jan 2014 07:45 PM PST The EM crisis took a turn for the worse. Read More... |
| Demand Delivery For the True Price of Gold Posted: 24 Jan 2014 07:40 PM PST from Jesse's Café Américain:
I nearly fell out of my chair when I read a description of the divergence between the paper and physical gold markets from the Inside London column of the Financial Times.
And this in the prince of mainstream financial publications. Quick, alert the spinmeisters for Davos man that the natives are growing restless. |
| The One Bank Brings False-Flag Terrorism to Egypt? Posted: 24 Jan 2014 07:27 PM PST by Jeff Nielson, Bullion Bulls Canada:
This item was bad enough, by itself. Since the One Bank (and its Fourth Reich) invented this “War on Terror”; it’s been one false-flag act of (multiple) murder after another. And occasionally (in between) there are now also REAL attacks — as the surivivors of the VICTIMS of Western war-crimes retaliate. |
| A RUN ON PHYSICAL: Record One-Day Withdrawal of Gold From JP Morgan Posted: 24 Jan 2014 07:20 PM PST by Steven St. Angelo, SRS Rocco:
In just one day, JP Morgan lost 22% over its total gold stocks at the Comex. Total gold inventories at JP Morgan declined from 1,459,027 oz yesterday, to 1,137,527 oz. Also, there was another 32,150 oz of gold withdrawn from Scotia Mocatta's Eligible inventories. This is quite interesting as the removals from both JP Morgan & Scotia Mocatta turn out to be exactly 10 metric tons (JP Morgan) and 1 metric ton (Scotia) for a total of 11 metric tons. |
| America’s Relative Decline: Should We Panic? Posted: 24 Jan 2014 07:06 PM PST Submitted by Zachery Zeck via The Diplomat, Over at the Washington Post, Charles Kenny has a provocative op-ed arguing that China’s GDP will almost certainly soon surpass America’s in absolute terms, and this is to the United States’ benefit (the op-ed is based on Kenny’s new book, which can be purchased here). Kenny’s first argument in support of this claim is that Americans’ quality of life will still be better than their Chinese counterparts, and that in fact “losing the title of largest economy doesn’t really matter much to Americans’ quality of life.” Fine. Kenny next concedes that there may be some negative effects, but nonetheless argues that these are limited. For example, he notes that the dollar may no longer be the world’s reserve currency, but “businesses in the rest of the world still manage to export, even though they must go through the trouble of exchanging currencies.” Similarly, while having the largest GDP has allowed America to maintain the largest and most powerful military, “how much [has] the three-quarters increase in defense spending between 2000 and 2011 enhanced America’s well-being?” Thus, lower defense spending could be a net positive. Kenny goes on to list a number of benefits America will receive from its relative economic decline. For example, this relative decline “is mainly a result of the developing economies becoming larger, healthier, more educated, more free and less violent. And there is little doubt the United States benefits from that,” such as through increased exports and being able to import the amazing new innovations these newly empowered countries will no doubt invent. Moreover, economic growth in the developing world “also means that there are more places for Americans to travel in security and comfort.” There’s no doubt some truth to at least some of this. Most notably, China having a larger GDP will not equate to a better quality of life for Chinese people, and, I suppose, having more vacation spots to choose from also could bring some amount of joy to the top 1% of Americans who get bored of laying out on the same hundreds of beaches they currently feel safe to vacation in. Still, China’s relative rise and the United States’ relative decline carries significant risks, for the rest of the world probably more so than for Americans. Odds are, the world will be worse off if China and especially others reach parity with the U.S. in the coming years. This isn’t to say America is necessarily as benign a hegemon as some in the U.S. claim it to be. In the post-Cold War era, the U.S. has undoubtedly at times disregarded international laws or international opinions it disagreed with. It has also used military force with a frequency that would have been unthinkable during the Cold War or a multipolar era. Often this has been for humanitarian reasons, but even in some of these instances military action didn’t help. Most egregiously, the U.S. overrode the rest of the world’s veto in invading Iraq, only for its prewar claims to be proven false. Compounding the matter, it showed complete and utter negligence in planning for Iraq’s future, which allowed chaos to engulf the nation. Still, on balance, the U.S. has been a positive force in the world, especially for a unipolar power. Certainly, it’s hard to imagine many other countries acting as benignly if they possessed the amount of relative power America had at the end of the Cold War. Indeed, the British were not nearly as powerful as the U.S. in the 19th Century and they incorporated most of the globe in their colonial empire. Even when it had to contend with another superpower, Russia occupied half a continent by brutally suppressing its populace. Had the U.S. collapsed and the Soviet Union emerged as the Cold War victor, Western Europe would likely be speaking Russian by now. It’s difficult to imagine China defending a rule-based, open international order if it were a unipolar power, much less making an effort to uphold a minimum level of human rights in the world. Regardless of your opinion on U.S. global leadership over the last two decades, however, there is good reason to fear its relative decline compared with China and other emerging nations. To begin with, hegemonic transition periods have historically been the most destabilizing eras in history. This is not only because of the malign intentions of the rising and established power(s). Even if all the parties have benign, peaceful intentions, the rise of new global powers necessitates revisions to the “rules of the road.” This is nearly impossible to do in any organized fashion given the anarchic nature of the international system, where there is no central authority that can govern interactions between states. We are already starting to see the potential dangers of hegemonic transition periods in the Asia-Pacific (and arguably the Middle East). As China grows more economically and militarily powerful, it has unsurprisingly sought to expand its influence in East Asia. This necessarily has to come at the expense of other powers, which so far has primarily meant the U.S., Japan, Vietnam and the Philippines. Naturally, these powers have sought to resist Chinese encroachments on their territory and influence, and the situation grows more tense with each passing day. Should China eventually emerge as a global power, or should nations in other regions enjoy a similar rise as Kenny suggests, this situation will play itself out elsewhere in the years and decades ahead. All of this highlights some of the advantages of a unipolar system. Namely, although the U.S. has asserted military force quite frequently in the post-Cold War era, it has only fought weak powers and thus its wars have been fairly limited in terms of the number of casualties involved. At the same time, America’s preponderance of power has prevented a great power war, and even restrained major regional powers from coming to blows. For instance, the past 25 years haven’t seen any conflicts on par with the Israeli-Arab or Iran-Iraq wars of the Cold War. As the unipolar era comes to a close, the possibility of great power conflict and especially major regional wars rises dramatically. The world will also have to contend with conventionally inferior powers like Japan acquiring nuclear weapons to protect their interests against their newly empowered rivals. But even if the transitions caused by China’s and potentially other nations’ rises are managed successfully, there are still likely to be significant negative effects on international relations. In today’s “globalized” world, it is commonly asserted that many of the defining challenges of our era can only be solved through multilateral cooperation. Examples of this include climate change, health pandemics, organized crime and terrorism, global financial crises, and the proliferation of weapons of mass destruction, among many others. A unipolar system, for all its limitations, is uniquely suited for organizing effective global action on these transnational issues. This is because there is a clear global leader who can take the initiative and, to some degree, compel others to fall in line. In addition, the unipole’s preponderance of power lessens the intensity of competition among the global players involved. Thus, while there are no shortages of complaints about the limitations of global governance today, there is no question that global governance has been many times more effective in the last 25 years than it was during the Cold War. The rise of China and potentially other powers will create a new bipolar or multipolar order. This, in turn, will make solving these transnational issues much more difficult. Despite the optimistic rhetoric that emanates from official U.S.-China meetings, the reality is that Sino-American competition is likely to overshadow an increasing number of global issues in the years ahead. If other countries like India, Turkey, and Brazil also become significant global powers, this will only further dampen the prospects for effective global governance. Therefore, many of the benefits that Kenny predicts will accompany the rise of developing countries may not occur, at least in as dramatic a fashion as one might think. For instance, there’s no doubt that a richer developing world should result in more American exports. However, American exports might at the same time be constrained by a far less open global trade environment in a multipolar world. Things we take for granted today, such as freedom of navigation and airflight, could very well be much less assured in a bipolar or multipolar future. There’s also the possibility that the world will divide into spheres of influence, in which regional hegemonic powers demand highly preferential access to markets in their home regions. Similarly, the decline of the U.S. dollar and greater international competition could also result in far more unstable international financial markets that also inhibit trade. In short, Kenny’s no doubt correct that China becoming the largest economy won’t be the doomsday that some in America predict. Indeed, there will almost certainly be some benefits that come with it. Still, the rise of China and the rest, should it continue, will also create new dangers and risks that the world would be wise not to neglect.
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| 20 Early Warning Signs That We Are Approaching A Global Economic Meltdown Posted: 24 Jan 2014 05:53 PM PST Submitted by Michael Snyder of The Economic Collapse blog, Have you been paying attention to what has been happening in Argentina, Venezuela, Brazil, Ukraine, Turkey and China? If you are like most Americans, you have not been. Most Americans don't seem to really care too much about what is happening in the rest of the world, but they should. In major cities all over the globe right now, there is looting, violence, shortages of basic supplies, and runs on the banks. We are not at a "global crisis" stage yet, but things are getting worse with each passing day. For a while, I have felt that 2014 would turn out to be a major "turning point" for the global economy, and so far that is exactly what it is turning out to be. The following are 20 early warning signs that we are rapidly approaching a global economic meltdown... #1 The looting, violence and economic chaos that is happening in Argentina right now is a perfect example of what can happen when you print too much money...
#2 The value of the Argentine Peso is absolutely collapsing. #3 Widespread shortages, looting and accelerating inflation are also causing huge problems in Venezuela...
#4 In a stunning decision, the Venezuelan government has just announced that it has devalued the Bolivar by more than 40 percent. #5 Brazilian stocks declined sharply on Thursday. There is a tremendous amount of concern that the economic meltdown that is happening in Argentina is going to spill over into Brazil. #6 Ukraine is rapidly coming apart at the seams...
#7 It appears that a bank run has begun in China...
#8 Art Cashin of UBS is warning that credit markets in China "may be broken". For much more on this, please see my recent article entitled "The $23 Trillion Credit Bubble In China Is Starting To Collapse – Global Financial Crisis Next?" #9 News that China's manufacturing sector is contracting shook up financial markets on Thursday...
#10 Japanese stocks experienced their biggest drop in 7 months on Thursday. #11 The value of the Turkish Lira is absolutely collapsing. #12 The unemployment rate in France has risen for 9 quarters in a row and recently soared to a new 16 year high. #13 In Italy, the unemployment rate has soared to a brand new all-time record high of 12.7 percent. #14 The unemployment rate in Spain is sitting at an all-time record high of 26.7 percent. #15 This year, the Baltic Dry Index experienced the largest two week post-holiday decline that we have ever seen. #16 Chipmaker Intel recently announced that it plans to eliminate 5,000 jobs over the coming year. #17 CNBC is reporting that U.S. retailers just experienced "the worst holiday season since 2008". #18 A recent CNBC article stated that U.S. consumers should expect a "tsunami" of store closings in the retail industry...
#19 The U.S. Congress is facing another deadline to raise the debt ceiling in February. #20 The Dow fell by more than 170 points on Thursday. It is becoming increasingly likely that "the peak of the market" is now in the rear view mirror. And I have not even mentioned the extreme drought that has caused the U.S. cattle herd to drop to a 61 year low or the nuclear radiation from Fukushima that is washing up on the west coast. In light of everything above, is there anyone out there that still wants to claim that "everything is going to be okay" for the global economy? Sadly, most Americans are not even aware of most of these things. All over the country today, the number one news headline is about Justin Bieber. The mainstream media is absolutely obsessed with celebrity scandals, and so is a very large percentage of the U.S. population. A great economic storm is rapidly approaching, and most people don't even seem to notice the storm clouds that are gathering on the horizon. In the end, perhaps we will get what we deserve as a nation. |
| Posted: 24 Jan 2014 05:41 PM PST Since November we have mentioned how fascinating it is when a methodical bull market lifts off to a speculative surge. Typically buying becomes compulsive and the numbers are now at levels seen only at important highs. Read More... |
| Fed 'almost assuredly' no longer has Bundesbank's gold, Gold Newsletter's Lundin says Posted: 24 Jan 2014 05:06 PM PST 8p ET Friday, January 24, 2014 Dear Friend of GATA and Gold: Dan Ameduri of Future Money Trends this week interviewed Gold Newsletter editor Brien Lundin, sponsor of the annual New Orleans Investment Conference, who reviews the German Bundesbank's apparent inability to recover much of its gold from the Federal Reserve Bank of New York. The Fed, Lundin says, "almost assuredly does not have the gold." Audio and a rough transcript of the interview are posted at Future Money Trends here: http://futuremoneytrends.com/blog/?p=18271 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: 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 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... |
| A Glimpse At The "Most Potent Force In The Social World" Posted: 24 Jan 2014 04:51 PM PST By Ben Hunt of Epsilon Theory
- standard response to Dick Clark's "how do you rate this song" question
- Robert Frost
- W.H. Auden
- George Carlin, stealing a line from Friedrich Nietzsche
- Chuck Prince, former Citigroup CEO, summer of 2007, before the Deluge
- Dick Clark American Bandstand In 1949, Yale anthropologist George Murdock spearheaded the establishment of an inter-university research organization to continue his life's work: the cataloguing of what he called cultural universals, the social behaviors that exist in every human society across time and geography. That institution — the Human Relations Area Files (HRAF) — is still going strong today, supporting all sorts of social science research by providing a fully-indexed electronic collection of cultural anthropological studies. The goal is to find patterns or commonalities in human social behavior, and it all stems from Murdock's List: his compilation of the 67 universal social behaviors of the human animal. Every now and then someone publishes an updated version of Murdock's List (either directly, like Donald Brown in his 1991 book, "Human Universals", or indirectly, like Steven Pinker in his 2002 book "The Blank Slate"), but it's hard to improve on the original. It's a fascinating list, with items such as "propitiation of supernatural beings", "eschatology", and "kinship nomenclature" right alongside "joking", "hair styles", and "mealtimes". Pretty much everything we do in life is instantly recognizable as an item on Murdock's List, and what isn't just needs a little tweak in perception to fit one category or another. I like looking at human behaviors through the lens of Murdock's list for the same reason I like looking through the lens of evolutionary theory: behaviors that seem illogical or just plain stupid through our standard lenses of small-I liberalism or modern economic theory take on a new appearance with a change in perspective. In "Adaptive Investing" I discussed how non-economic behaviors such as routine mammograms and daily multivitamins (and portfolio risk scenario tests) make sense from an evolutionary perspective as a behavioral adaptation to demonstrate fitness, much like the dance of the Blue-Footed Booby or the ceremonial fight of the Oryx Gazelle, but they also make sense from a Murdock's List perspective as a "propitiation of supernatural beings", where we attempt to appease the great modern god Cancer (or in the case of risk scenario tests, the great ancient god Luck) with a ritualized sacrifice of our time and money. One of Murdock's 67 cultural universals is dancing. You find dance in every human society that ever existed (more so than music), and it will exist in every human society in the future. Why? Because it is part of our eusocial nature, part of the 10% bee-ness than makes up the human animal. Like the bee, we dance both to communicate and as a hard-wired response to signals from fellow members of our species. It's not a language that we hear or generate in the same way that we speak English, but it has a grammar and a vocabulary nonetheless. Because it so primal, dance has an urgency that modern spoken languages do not, and I say that as an individual to whom dancing is very much a foreign language. Interestingly enough, mathematics is not on Murdock's List. Mathematics is an entirely formal language, about as far away in human terms as one can get from the language of dance (and yes, there have been efforts to create formal linguistic representations of dance, none of which have caught on). The unfortunate fact is that it's very hard to represent human social behaviors in formal linguistic terms. That's true whether the social behavior occurs in an artistic or cultural setting, like dancing, or whether it occurs in a market setting, like the "dancing" that Chuck Prince was referring to in 2007 when Citi was still underwriting and securitizing Alt-A and sub-prime mortgages as fast as humanly possible. But just because it's really hard to describe a group dynamic like dancing with the same symbols that describe a capital asset pricing model doesn't mean that dancing (or "dancing") lacks a language and a grammar. You just need to develop an ear for it, and that's where game theory can help. Game theory is a bridge between hot-blooded social languages like dancing and cold-blooded formal languages like mathematics. Game theory is an abstraction of dynamic social interactions. Because it's an abstraction, game theory usefully adopts some of the formal grammar of mathematics, which remains the most efficient way to represent theory regardless of what the theory is about. But game theory has no meaning or usefulness outside of a social setting. Like the tango, game theory takes two. Also like the tango, game theory is all about movement, the fluid movement of separate individuals who are bound up with each other in a system of mutual expectations and individual goals. Put it all together and game theory uses some basic mathematical concepts to organize our thinking about dynamic and strategic behaviors that have their origins in our social animal brains and Murdock's List. It's a powerful tool kit. Some people have an intuitive ability to "speak" game theory fluently. These are geniuses like Dick Clark who can translate between the language of the social animal and the language of the self-aware brain effortlessly, and make an enormous fortune in the process. Clark recognized the trends, nuances, and idioms of popular culture just as surely as he recognized the economic formulas behind radio and television syndication. Was he a brilliant artist? Nope. Couldn't dance, sing, or act. But he spoke the language of performers and somehow figured out how to communicate that primal grammar to Middle America in a way that felt "safe". It seems weird today, as we are immersed in a popular culture of youth, but "youth culture" (a phrase coined by Paul Anka in reference to Dick Clark) didn't exist before American Bandstand. As much as anyone over the past 50 years, from the Beatles to Elvis Presley to any performer you want to name ... Dick Clark was responsible for the modern landscape of how the languages of music and dance are communicated in a commercially lucrative fashion. His secret (other than a bizarrely youthful face)? Clark understood the Common Knowledge Game. Clark didn't poll America to determine their taste in music. He told them their taste in music ... not directly, but by creating common knowledge — ideas that a crowd believes that the crowd believes. With the American Bandstand group dance staging and scripted questions, Clark allowed the TV audience to see a crowd of attractive young people act as if the music were popular. This is all it takes. Clark didn't have to force his preferred choice of popular culture on his audience like some centrally-planned Ministry of Culture. The TV audience chose it all on their own, thinking all along it was their choice! This is the power of the Emperor's New Clothes. This is the power of the sitcom laugh track and the live studio audience. This is the power of public coronations and executions. This is the power of Tahrir Square and Tiananmen Square. This is the power of the crowd seeing the crowd, and it is the most potent force in the social world. It's certainly the most potent force in the social world of markets, and every Central Banker today is playing the Common Knowledge Game just as hard as Dick Clark ever did. Here's last Thursday's (Jan. 9) WSJ headline teaser at 9 am ET after the ECB press conference:
How is this the Common Knowledge Game? Since August 2012 we have watched the markets dance to Draghi's tune. If you don't know by now that Draghi's words move the market crowd, then you're an idiot. But you're not an idiot. And neither is any one of the hundreds of thousands of people reading the WSJ headline. And neither is Draghi. We are told by the WSJ that Draghi's words today have a good beat and you can dance to it. So we do. We dance, just like we've been trained to do by watching this show 30 times before. As a result, Italy and Spain's equity and credit markets outperformed Germany's by a mile after Draghi's signal ... which was exactly the intended effect (Spain is now borrowing money at the cheapest rate in the euro era!) and exactly why it is so difficult to be a macro Value investor today. All of your fundamental indicators that show (correctly) that Italy and Spain are ridiculously overvalued at current prices relative to, say, Germany don't matter in the least. Or rather, they matter, but they evaporate like dew when the Draghi sun shines at a press conference. Note to Jeremy Grantham: it costs Draghi nothing to use "unexpectedly strong language" to keep this game going for a loonnng time. Here's last Friday's (Jan. 10) WSJ headline teaser at 9 am ET after the disappointing jobs report: "Weak jobs report complicates Fed plans." Seems innocuous enough, right? Nope, this is a market roiler, especially for the most sensitive assets to the Narrative of Central Bank Omnipotence ... assets like gold. Gold rocked last Friday, on deflationary news. Huh? I know that gold bugs will tell you how great gold can be in a deflationary environment, but come on, that only makes sense if you're talking about end-of-the-world deflation. The jobs report last Friday was run-of-the-mill, plain vanilla disappointing growth news. Not end-of-the-world news, not even negative growth news ... just disappointing growth news. This should be bad for gold prices, not good, and Friday's price action made no sense through the lens of traditional economic theory. But it made perfect sense through the lenses of history and game theory, where the meaning of gold has shifted from an alternative store of value to insurance against Central Bank policy error. Of course, this sort of challenge to the Narrative of Central Bank Omnipotence could not go unaddressed, and sure enough by 7 pm last Friday you had a WSJ article by none other than Jon Hilsenrath, the Common Knowledge spokesman for the Fed, titled "Fed Unlikely to Alter Course After Jobs Report." Over the weekend and on Monday you had at least three Fed Governors come out with similar statements, that there was no confusion or complication imposed by the jobs report. Nothing to see here folks, move along. None of these Powers That Be are taking issue with whether or not the Friday jobs report was bad news ... the only thing that matters is how this news impacts the common knowledge structure that generates their power to control market outcomes. That's the threat that must be squelched. This is what Bernanke meant when he talked about using communications as a policy tool, and this is what Yellen (and Draghi and Abe and everyone else in the club) will continue to do ... use public statements to play the Common Knowledge Game and drive market outcomes by proxy. I can sleep well at night if you get nothing else out of Epsilon Theory beyond the recognition that a) you are being played, and b) there are rules and logic to how you are being played. But I'd also like to demonstrate that c) it's entirely rational to play along (to a point), and d) you can be a player, too. It can be entirely rational to act as if the Emperor is wearing a beautiful set of clothes. In fact, when you're caught in a Common Knowledge Game others will look at you askance if you act publicly according to the evidence of your own eyes rather than the evidence of the crowd watching the crowd. But you need to recognize that's what you're doing. It's critically important to avoid internalizing your behavior, falling into what Kant called a "dogmatic slumber", believing in your heart of hearts that the Emperor truly looks marvelous. The tragedy of 1984 is not that Big Brother rules Oceania, but that in the end, Winston loves Big Brother and gives himself over to collective solipsism. The fright of Invasion of the Body Snatchers is not the cat-and-mouse with alien pod people, but that in the end, Donald Sutherland becomes a pod person and outs the human survivors. Other than the minor detail of losing your free will, why is it so important to avoid becoming a pod person? Why is it a bad idea solely from the perspective of being an effective investor? Because the tango is an unpredictable dance. Because your best move in ANY game is not pre-ordained or even fully under your control. Your best move depends not only on Know Thyself, advice that Socrates gave almost 3,000 years ago and is still the smartest, deepest thing that anyone has ever said, but also on Watch the Other, the sensitivity that all social animals possess to look for and pick up on minute changes in the signals that our hive-mates emit. The moment you give yourself over to the Dick Clarks of the world who create common knowledge, the moment you abdicate your keenly evolved human abilities of self-awareness and other-evaluation ... that's the moment you put yourself at the most risk. Because the game will change. Even if the external conditions of the world today are exactly the same as the external conditions of the world yesterday, a change in the internal conditions of the other game-players, whether it's a queen bee like Draghi or a set of worker bees like us, can change your best move. This is the insight that game theory provides, an insight that econometrics (which only looks at external conditions) can't — how social dynamics and group interactions impact market behaviors. Game theory predicts that gold prices will go up on ANY news — even deflationary news — IF that news creates a worker bee perception that the queen bees are rattled by the news. And vice versa, gold will go down on ANY news — even inflationary news — IF that news improves the perception that global central banks are large and in charge ... the Narrative of Central Bank Omnipotence. It's not the news itself, which is what an econometric perspective would say, but how that news impacts the belief structures that comprise the game. It's not the card that's dealt (the news), but how that card fits the hand that your poker opponent is representing. An ace of spades is good news for your opponent in the abstract, but it might be terrible news if he's representing a heart flush. Game theory is all about playing the player, not the cards. That's not a replacement for understanding the fundamentals and the math of drawing this card or that, but it sure is a complementary skill set. If you want to win. |
| HSBC imposes restrictions on large cash withdrawals Posted: 24 Jan 2014 04:19 PM PST By Bob Howard http://www.bbc.co.uk/news/business-25861717 Some HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it, the BBC has learnt. Listeners have told Radio 4's "Money Box" they were stopped from withdrawing amounts ranging from L5,000 to L10,000. HSBC admitted it has not informed customers of the change in policy, which was implemented in November. The bank says it has now changed its guidance to staff. ... Dispatch continues below ... 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... Stephen Cotton, from Worcestershire, went to his local HSBC branch this month to withdraw L7,000 from his instant access savings account to pay back a loan from his mother. A year before, he had withdrawn a larger sum in cash from HSBC without a problem. But this time it was different, as he told "Money Box": "When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for. They wanted a letter from the person involved." Mr Cotton says the staff refused to tell him how much he could have: "So I wrote out a few slips. I said, 'Can I have L5,000?' They said no. I said, 'Can I have L4,000?' They said no. And then I wrote one out for L3,000 and they said, 'OK, we'll give you that.'" He asked if he could return later that day to withdraw another L3,000, but he was told he could not do the same thing twice in one day. He wrote to complain to HSBC about the new rules and that he had not been informed of any change. The bank said it did not have to tell him. "As this was not a change to the Terms and Conditions of your bank account, we had no need to pre-notify customers of the change," HSBC wrote. Mr Cotton cannot understand HSBC's attitude: "I've been banking in that bank for 28 years. They all know me in there. You shouldn't have to explain to your bank why you want that money. It's not theirs -- it's yours." Peter, from Wiltshire, had a similar experience. He wanted to take out L10 000 cash from HSBC, some to pay to his sons and some to fund his long-haul travel plans. Peter phoned up the day before to give HSBC notice and everything seemed to be fine. The next day he got a call from his local branch asking him to pay his sons via a bank payment and to provide booking receipts for his holidays. Peter did not have any booking receipts to show. The following day he spoke to HSBC again and this time, having examined his account, it said he could withdraw the L10,000. Belinda is another customer who was initially denied her cash, in her case to pay her builder. She told "Money Box" she had to provide the builder's quote. HSBC has said that following customer feedback, it was changing its policy: "We ask our customers about the purpose of large cash withdrawals when they are unusual and out of keeping with the normal running of their account. Since last November, in some instances we may have also asked these customers to show us evidence of what the cash is required for." "The reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime. However, following feedback, we are immediately updating guidance to our customer-facing staff to reiterate that it is not mandatory for customers to provide documentary evidence for large cash withdrawals, and on its own, failure to show evidence is not a reason to refuse a withdrawal. We are writing to apologise to any customer who has been given incorrect information and inconvenienced." "Money Box" asked other banks what their policy is on large cash withdrawals. They all said they reserved the right to ask questions about large cash withdrawals. But none said they would require evidence of what the money was being used for before paying out. Douglas Carswell, the Conservative MP for Clacton, is alarmed by the new HSBC policy: "All these regulations which have been imposed on banks allow enormous interpretation. It basically infantilises the customer. In a sense your money becomes pocket money and the bank becomes your parent." But Eric Leenders, head of retail at the British Bankers Association, said banks were sensible to ask questions of their customers: "I can understand it's frustrating for customers. But if you are making the occasional large cash withdrawal, the bank wants to make sure it's the right way to make the payment." Join GATA here: 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 Buy metals at GoldMoney and enjoy international storage GoldMoney was established in 2001 by James and Geoff Turk and safeguards 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 |
| CME Hikes Turkish Lira, Nat Gas Margins Posted: 24 Jan 2014 04:00 PM PST Once upon a time, the only CME margin hike releases the investing population cared about were those for gold (because no matter how high the E-Mini went, the CME never seemed too bothered). Now, the CME has more "important" things to worry about - such as preventing the "heating bill shock" that will come in February when the majority of the population opens their electricity and heating statements for January (sorry, there goes the discretionary retail spending cash). And of course, the ongoing deterioration of the emerging markets, in this case led by Turkey and the absolute collapse in the Turkish Lira. Which is why about an hour ago, the CME decided to hike both TRY (to both the USD and EUR) and Nat Gas margins, by 14 and 20% respectively. Will this normalize some of the vol seen around these products on Monday remains to be seen. Oh well, if not - the CME can just hike some more the same day, until it gets the desired outcome.
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| Gold and Silver Trading Alert: Strong Rally's Implications Posted: 24 Jan 2014 03:01 PM PST In short: Opening a speculative short position (half of the regular position) in gold, silver and mining stocks might be a good idea right now. Read More... |
| JPMorgan's Gold Vault Has Biggest One-Day Withdrawal Ever Posted: 24 Jan 2014 02:52 PM PST Curious why over the past few months JPM has quietly been accumulating a substantial amount of eligible physical gold (even as its registered gold inventory is the lowest it has ever been at just 87K ounces since December 13, 2013 when 147K ounces of gold was withdrawn - keep that date in mind for a few minutes)? This may have something to do with it: moments ago the daily Comex gold vault report confirmed what many expected, namely that the JPM accumulation was merely in advance anticipation of major withdrawals. How major? Well, on January 23, JPM saw 321,500 ounces of gold depart in one day. This was tied for the single biggest daily withdrawal in history!The last time JPM had an identically sized withdrawal? December 13.... 2012.
Something tells us the next few days will see matching withdrwawals from JPM's gold vault, which at last check was officially owned by the Chinese. And for those wondering how JPM's total gold holdings look over time here it is:
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| Gold Daily and Silver Weekly Charts - Flight to Safety, Papier-mâché Gold Story Fraying Posted: 24 Jan 2014 01:32 PM PST |
| Gold Daily and Silver Weekly Charts - Flight to Safety, Papier-mâché Gold Story Fraying Posted: 24 Jan 2014 01:32 PM PST |
| The Gold Price Closed Higher for the Fifth Week in a Row at $1,264.50 Posted: 24 Jan 2014 01:18 PM PST Gold Price Close Today : 1,264.50 Gold Price Close 17-Jan-14 : 1,251.70 Change : 12.80 or 1.0% Silver Price Close Today : 19,473 Silver Price Close 17-Jan-14 : 20,267 Change : -79.40 or -3.9% Gold Silver Ratio Today : 64.936 Gold Silver Ratio 17-Jan-14 : 61.760 Change : 3.176 or 5.1% Silver Gold Ratio : 0.01540 Silver Gold Ratio 17-Jan-14 : 0.01619 Change : -0.00079 or -4.9% Dow in Gold Dollars : $ 260.29 Dow in Gold Dollars 17-Jan-14 : $ 271.81 Change : -11.52 or -4.2% Dow in Gold Ounces : 12.592 Dow in Gold Ounces 17-Jan-14 : 13.149 Change : -0.56 or -4.2% Dow in Silver Ounces : 817.66 Dow in Silver Ounces 17-Jan-14 : 812.09 Change : 5.57 or 0.7% Dow Industrial : 15,922.27 Dow Industrial 17-Jan-14 : 16,458.56 Change : -536.29 or -3.3% S&P 500 : 1,794.23 S&P 500 17-Jan-14 : 1,838.69 Change : -44.46 or -2.4% US Dollar Index : 80.455 US Dollar Index 17-Jan-14 : 81.370 Change : -0.92 or -1.1% Platinum Price Close Today : 1,427.10 Platinum Price Close 17-Jan-14 : 1,452.60 Change : -25.50 or -1.8% Palladium Price Close Today : 733.90 Palladium Price Close 17-Jan-14 : 747.65 Change : -13.75 or -1.8% What confusion in silver and GOLD PRICES! Gold rose $1.90 to $1,264.50, pennies away from a breakout above the December high at $1,267.70. This makes the fifth week gold has closed higher, longest winning streak in a long time. Great, great, but what about silver, platinum, and palladium? The SILVER PRICE dropped 24.3 cents today to close Comex at 1947.3c. GOLD/SILVER RATIO rose to 64.048. Platinum dropped $34.6 and palladium $11.10. Why are they gainsaying gold? All this leaves the market unsettled. Gold is leading a charge, and it's all alone. Not impossible, but unusual. Picture will clear next week. I know that's unsatisfactory, but can I say more than the charts say? My instinct says that silver and GOLD PRICES will keep rising, and that silver, platinum, and palladium were pulled down by stocks today (historically silver's performance against gold is correlated closely to stocks). What is clear? Gold is tugging at the leash to run upward, stocks have found the trapdoor in the market and fallen through. It is possible that we have seen the ultimate high for stocks, but more likely is an extended correction then one more wild rise to the ultimate high that marks the top of a 300 year cycle. More the Moneychanger sayeth not. I must leave early today, so bear in mind these are 3:30 Eastern time prices, not closes for stocks or the dollar index, but final settlement prices for metals. Today was tossed by bewildering cross currents. Stocks suffered a bloody defeat, the dollar at least didn't fall onto its face, gold stands right at the line of confirming a breakout, but silver, platinum, and palladium all refused to confirm that strength. What gives? 'Twould be tough to overstate today's disaster in stocks. S&P and Dow both sliced clean through their 50 DMA (1,813 and 16,156) like a sharp knife through cold lard, and the Dow ended (as of 3:30 eastern) right at the channel line it broke above in November. Both indices show a two day waterfall, clearly panic selling. This will drop further and last longer. US Dollar index went flat, losing only 5.5 basis points after yesterday's plunge. Being a fiat currency and having no value in itself but the Hot Potato value of passing it along to another victim, it could just as well break down thoroughly here as rally. It's already below its 50 DMA. Needs to stay above 79.50 to survive. Y'all enjoy your weekend! Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2014, 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 Closed Higher for the Fifth Week in a Row at $1,264.50 Posted: 24 Jan 2014 01:18 PM PST Gold Price Close Today : 1,264.50 Gold Price Close 17-Jan-14 : 1,251.70 Change : 12.80 or 1.0% Silver Price Close Today : 19,473 Silver Price Close 17-Jan-14 : 20,267 Change : -79.40 or -3.9% Gold Silver Ratio Today : 64.936 Gold Silver Ratio 17-Jan-14 : 61.760 Change : 3.176 or 5.1% Silver Gold Ratio : 0.01540 Silver Gold Ratio 17-Jan-14 : 0.01619 Change : -0.00079 or -4.9% Dow in Gold Dollars : $ 260.29 Dow in Gold Dollars 17-Jan-14 : $ 271.81 Change : -11.52 or -4.2% Dow in Gold Ounces : 12.592 Dow in Gold Ounces 17-Jan-14 : 13.149 Change : -0.56 or -4.2% Dow in Silver Ounces : 817.66 Dow in Silver Ounces 17-Jan-14 : 812.09 Change : 5.57 or 0.7% Dow Industrial : 15,922.27 Dow Industrial 17-Jan-14 : 16,458.56 Change : -536.29 or -3.3% S&P 500 : 1,794.23 S&P 500 17-Jan-14 : 1,838.69 Change : -44.46 or -2.4% US Dollar Index : 80.455 US Dollar Index 17-Jan-14 : 81.370 Change : -0.92 or -1.1% Platinum Price Close Today : 1,427.10 Platinum Price Close 17-Jan-14 : 1,452.60 Change : -25.50 or -1.8% Palladium Price Close Today : 733.90 Palladium Price Close 17-Jan-14 : 747.65 Change : -13.75 or -1.8% What confusion in silver and GOLD PRICES! Gold rose $1.90 to $1,264.50, pennies away from a breakout above the December high at $1,267.70. This makes the fifth week gold has closed higher, longest winning streak in a long time. Great, great, but what about silver, platinum, and palladium? The SILVER PRICE dropped 24.3 cents today to close Comex at 1947.3c. GOLD/SILVER RATIO rose to 64.048. Platinum dropped $34.6 and palladium $11.10. Why are they gainsaying gold? All this leaves the market unsettled. Gold is leading a charge, and it's all alone. Not impossible, but unusual. Picture will clear next week. I know that's unsatisfactory, but can I say more than the charts say? My instinct says that silver and GOLD PRICES will keep rising, and that silver, platinum, and palladium were pulled down by stocks today (historically silver's performance against gold is correlated closely to stocks). What is clear? Gold is tugging at the leash to run upward, stocks have found the trapdoor in the market and fallen through. It is possible that we have seen the ultimate high for stocks, but more likely is an extended correction then one more wild rise to the ultimate high that marks the top of a 300 year cycle. More the Moneychanger sayeth not. I must leave early today, so bear in mind these are 3:30 Eastern time prices, not closes for stocks or the dollar index, but final settlement prices for metals. Today was tossed by bewildering cross currents. Stocks suffered a bloody defeat, the dollar at least didn't fall onto its face, gold stands right at the line of confirming a breakout, but silver, platinum, and palladium all refused to confirm that strength. What gives? 'Twould be tough to overstate today's disaster in stocks. S&P and Dow both sliced clean through their 50 DMA (1,813 and 16,156) like a sharp knife through cold lard, and the Dow ended (as of 3:30 eastern) right at the channel line it broke above in November. Both indices show a two day waterfall, clearly panic selling. This will drop further and last longer. US Dollar index went flat, losing only 5.5 basis points after yesterday's plunge. Being a fiat currency and having no value in itself but the Hot Potato value of passing it along to another victim, it could just as well break down thoroughly here as rally. It's already below its 50 DMA. Needs to stay above 79.50 to survive. Y'all enjoy your weekend! Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. |
| Gold and Silver Trading Alert: Strong Rally’s Implications Posted: 24 Jan 2014 12:49 PM PST In short: Opening a speculative short position (half of the regular position) in gold, silver and mining stocks might be a good idea right now. Yesterday, gold rallied significantly, mining stocks rallied less significantly (didn’t close higher than on Tuesday) and silver moved higher very insignificantly. Let’s see how much changed (charts courtesy of http://stockcharts.com). |
| Celente - The Entire World Is Now Unraveling Before Our Eyes Posted: 24 Jan 2014 12:43 PM PST  Today the man who remarkably predicted months ahead of time that the Fed would taper in December warned King World News that the entire world is now unraveling before our eyes. He also discussed his ominous 2014 predictions and a coming gold and silver spike. Below is what Gerald Celente, founder of Trends Research and the man many consider to be the top trends forecaster in the world, had to say in this remarkable interview.This posting includes an audio/video/photo media file: Download Now |
| More Money for Welfare, Warfare and Wonder Woman Posted: 24 Jan 2014 12:28 PM PST Supporters of warfare, welfare, and Wonder Woman cheered last week as Congress passed a one trillion dollar "omnibus" appropriation bill. This legislation funds the operations of government for the remainder of the fiscal year. Wonder Woman fans can cheer that buried in the bill was a $10,000 grant for a theater program to explore the comic book heroine. This $85 billion war budget contains $6 billion earmarked for projects benefiting… big defense contractors. That is just one of the many outrageous projects buried in this 1,582-page bill. The legislation gives the Department of Education more money to continue nationalizing education via "common core." Also, despite new evidence of Obamacare's failure emerging on an almost daily basis, the Omnibus bill does nothing to roll back this disastrous law. Even though the Omnibus bill dramatically increases government spending, it passed with the support of many self-described "fiscal conservatives." Those wondering why anyone who opposes increasing spending on programs like common core and Obamacare would vote for the bill, may find an answer in the fact that the legislation increases funding for the "Overseas Continuing Operations" — which is the official name for the war budget — for the first time since 2010. This $85 billion war budget contains $6 billion earmarked for projects benefiting Boeing, Lockheed-Martin, and other big defense contractors. Ever since "sequestration" went into effect at the beginning of last year, the military-industrial complex's congressional cheering session has complained that sequestration imposed "draconian cuts" on the Pentagon that will "decimate" our military — even though most of the "cuts" were actually reductions in the "projected rate of growth." In fact, under sequestration, defense spending was to increase by 18 percent over ten years, as opposed to growing by 20 percent without sequestration. Many of the defenders of increased war spending are opponents of welfare, but they are willing to set aside their opposition to increased welfare spending in order to increase warfare spending. They are supported in this position by the lobbyists for the military-industrial complex and the neoconservatives, whose continued influence on foreign policy is mystifying. After all, the neocons were the major promoters of the disastrous military intervention in Iraq. While many neocons give lip service to limiting domestic spending, their main priority remains protecting high levels of military spending to maintain an interventionist foreign policy. The influence of the neocons provides intellectual justification for politicians to vote for ever-larger military budgets — and break the campaign promises to vote against increases in spending and debt. Fortunately, in recent years more Americans have recognized that a constant defense of liberty requires opposing both war and welfare. Many of these Americans, especially the younger ones, have joined the intellectual and political movement in favor of limiting government in all areas. This movement presents the most serious challenge the bipartisan welfare-warfare consensus has faced in generations. Hopefully, the influence of this movement will lead to bipartisan deals cutting both welfare and warfare spending. The question facing Americans is not whether Congress will ever cut spending. The question is will the spending be reduced in an orderly manner that avoids inflecting massive harm on those depending on government programs, or will spending be slashed in response to an economic crisis caused by ever-increasing levels of deficit spending. Because politicians are followers rather than leaders, it is ultimately up to the people what course we will take. This is why it is vital that those of us who understand the dangerous path we are currently on do all we can to expand the movement for liberty, peace, and prosperity. Regards, Ron Paul Ed. Note: The need for reduced government spending is as paramount as it has ever been in American history. It’s at the heart of what’s wrong with the US financial system, and it threatens every aspect of your life, your prosperity and your savings. But you don’t have to take it lying down. In today’s issue of The Daily Reckoning, readers were given several opportunities to discover specific ways they can live happier, healthier and wealthier lives than ever before. If you didn’t read it, you didn’t get the full story. Make sure that doesn’t happen again. Sign up for the FREE Daily Reckoning email edition, right here. This articl originally appeared at The Free Foundation |
| Gold Price Bottoming, Gold Stocks Set to Soar Posted: 24 Jan 2014 12:17 PM PST Gold is bottoming, showing incredible resilience over the past 7 months. After suffering an epic plunge in last year’s second quarter, gold has held its ground ever since. This is despite still facing the same howling headwinds that forced that extraordinary selloff. Gold has found strong support and carved a massive double bottom. Thus 2013’s gold super-storm has passed, and a mighty new upleg is dawning. Obviously last year was exceedingly miserable for gold. This metal plunged 27.9%, its worst calendar-year performance in 32 years! When something hasn’t been witnessed for a third of a century, there is no doubt it is rare and extreme. But the whole year masks the real story, the second quarter. The gold price plummeted an astounding 22.8% in 2013’s Q2. That was its worst calendar quarter in 93 years! |
| 2013: A Successful Year of Price-Suppression: Part II Posted: 24 Jan 2014 11:43 AM PST Part I of this series ended with some rather ominous questions. Most of those questions tied-in to the chart below, and what it signified in both practical and statistical terms:
Here readers see a picture which is markedly different from the parameters we know to exist with (for example) precious metals. With gold and silver; we have two commodities where production is (now) falling, and inventories are (already) near-zero. It's easily understandable why these commodities are already at a crisis-point in terms of basic supply/demand analysis. It is much less-easy to understand why the chart above also represents a looming crisis. This is due in large part to the obvious/unequivocal importance of food production. Because food (self) sufficiency is a key policy objective of almost every nation; their reactions to the food-crisis looming ahead of us have coloured this data – and thus (somewhat) hidden the underlying problems. It's also important to point out another premise of simple logic. Because food-production (and sufficiency) will always remain a top priority; in the attempts to ward-off a near-term food catastrophe we could (will) see our governments simply trigger a different form of economic cataclysm – hyperinflation – which will also lead to mass hunger/starvation, but simply in a less-direct route. Here it is necessary to itemize the causal links in this (inevitable) chain. To do so; we start by simply looking at the current trend which the chart above indicates unequivocally: the ratio of inventories to supply/demand is falling – and at a rapid rate. While this does not appear close to any crisis-point (at present); we can understand that the continuation of this trend will (at some point) take us to parameters which will look very similar to what we see in precious metals today. So how/why does this trend represent an immediate – and enormous – problem? This is where it is necessary to add all of the additional, necessary economic/financial context to make the answer to this question self-evident. In the most general terms; what is the root problem leading to inventory-destruction in all commodity markets (especially precious metals)? |
| Buyers of physical picking off bullion at every London fix, Maguire says Posted: 24 Jan 2014 11:35 AM PST 2:35p ET Friday, January 24, 2014 Dear Friend of GATA and Gold: Longs are taking control of the London gold market and "the physical buyers are picking off the bullion at every single fix," metals trader and market-rigging whistleblower Andrew Maguire tells King World News today: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/1/24_Ma... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Jim Sinclair plans seminars in Asheville and Austin Gold advocate and mining entrepreneur Jim Sinclair will hold his next market seminars from 2 to 6 p.m. Saturday, January 25, at the Clarion Inn Asheville, 550 Airport Road, Fletcher, North Carolina, and from 2 to 6 p.m. Saturday, February 8, at the Austin, Texas, Airport Hilton. Advance registration is required. Details for the Asheville seminar are posted at Sinclair's Internet site, JSMineSet.com, here: http://www.jsmineset.com/2014/01/07/north-carolina-qa-session-venue-conf... Details for the Austin seminar are posted at JSMineSet.com here: http://www.jsmineset.com/2014/01/02/austin-texas-qa-session-confirmed/ Join GATA here: 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 A Personal Touch in Buying Precious Metals If you've not secured your allocation of precious metals and numismatic coins, 2014 may be the last year to get them at affordable and undervalued prices. With huge amounts of gold leaving the West for Asia, the future availability of precious metals is very much in doubt. All Pro Gold has competitive pricing on all bullion and numismatic products -- and offers prompt delivery too. Long-time GATA supporters Fred Goldstein and Tim Murphy are glad to answer any questions or concerns about acquiring the monetary metals. All Pro Gold has an extensive electronic library of articles from the world's top market analysts. Learn more at www.allprogold.com or write to Fred and Tim at info@allprogold.com or telephone them at 1-855-377-4653. |
| Posted: 24 Jan 2014 11:30 AM PST Gold is bottoming, showing incredible resilience over the past 7 months. After suffering an epic plunge in last year's second quarter, gold has held its ground ever since. This is despite still facing the same howling ... Read More... |
| Alasdair Macleod: Updating fiat money quantity relative to gold and silver Posted: 24 Jan 2014 10:41 AM PST 1:40p ET Friday, January 24, 2014 Dear Friend of GATA and Gold: GoldMoney research director Alasdair Macleod today recalculates his fiat money quantity figures and determines that gold remains "extraordinarily undervalued" relative to fiat money and gold's own above-ground stocks. Macleod's commentary is headlined "Fiat Money Quantity Update and the Implications for Gold and Silver Valuations" and it's posted at GoldMoney's Internet site here: http://www.goldmoney.com/research/analysis/fmq-update-and-the-implicatio... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT A Personal Touch in Buying Precious Metals If you've not secured your allocation of precious metals and numismatic coins, 2014 may be the last year to get them at affordable and undervalued prices. With huge amounts of gold leaving the West for Asia, the future availability of precious metals is very much in doubt. All Pro Gold has competitive pricing on all bullion and numismatic products -- and offers prompt delivery too. Long-time GATA supporters Fred Goldstein and Tim Murphy are glad to answer any questions or concerns about acquiring the monetary metals. All Pro Gold has an extensive electronic library of articles from the world's top market analysts. Learn more at www.allprogold.com or write to Fred and Tim at info@allprogold.com or telephone them at 1-855-377-4653. Join GATA here: 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 Jim Sinclair plans seminars in Asheville and Austin Gold advocate and mining entrepreneur Jim Sinclair will hold his next market seminars from 2 to 6 p.m. Saturday, January 25, at the Clarion Inn Asheville, 550 Airport Road, Fletcher, North Carolina, and from 2 to 6 p.m. Saturday, February 8, at the Austin, Texas, Airport Hilton. Advance registration is required. Details for the Asheville seminar are posted at Sinclair's Internet site, JSMineSet.com, here: http://www.jsmineset.com/2014/01/07/north-carolina-qa-session-venue-conf... Details for the Austin seminar are posted at JSMineSet.com here: http://www.jsmineset.com/2014/01/02/austin-texas-qa-session-confirmed/ |
| I Repeat: “Economic disaster of unprecedented scale is coming!” Here’s Why Posted: 24 Jan 2014 10:39 AM PST I get tired of preaching economic disaster and I am sure readers are just as tired of reading about it. Yet, it is So says Monty Pelerin (economicnoise.com) in edited excerpts from his original article* entitled Economic Disaster Coming Our Way. [The following is presented by Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]Pelerin goes on to say in further edited excerpts: My approach in discussing the on-coming economic disaster is usually from an abstract economic view. Economics has its own internal logic subject to the rules of mathematics. Knowledge about what exists and how economies operate make it easy for me to conclude that there is no recovery is under way nor will there be one until economic disaster strikes. Government inspired distortions and imbalances clog the commercial arteries. A form of economic catharsis (enema, if you prefer) known as a depression is necessary to remove the debt and other roadblocks that prevent recovery. The Great Depression is likely to appear like a picnic in comparison to the disaster that is coming. Michael Snyder regularly puts the best internet lists together on economic decline. For those who don't like abstract approaches and prefer lots of details, his approach is a great antidote or substitute for mine. He has put together a list of 83 factoids. Some of these may shock you. Be assured, the totality of them will scare the hell out of you. Here are a few items extracted from his piece**. All emboldening in mine:
Do any of these facts suggest that the economy is recovering or has a bright future? Does the extent of them shock you? [Editor's Note: The author's views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]*http://www.economicnoise.com/2014/01/22/economic-disaster-coming-way/ (© 2014 Monty Pelerin’s World. All rights reserved.) Register for Regular (free) or Preferred Membership (fee). **http://theeconomiccollapseblog.com/archives/83-numbers-from-2013-that-are-almost-too-crazy-to-believe (Copyright © 2014 The Economic Collapse) Related Articles: 1. 5 Red Flags of Imminent Economic Collapse  These 5 red flags will give you anywhere from a few days to a few months of warning that things are about to change drastically…and well before those around you grasp the full extent of what is going on. This is hopefully a scenario that never happens as this will truly be the end of the world as you knew it. Read More » 2. Another Crisis Is Coming & It May Be Imminent – Here's Why  Is there going to be another crisis? Of course there is. The liberalised global financial system remains intact and unregulated, if a little battered…The question therefore becomes one of timing: when will the next crash happen? To that I offer the tentative answer: it may be imminent…[This article puts forth my explanation as to why that will likely be the case.] Read More » 3. 14 Prognoses of Doom & Gloom for Economy Starting in '14  Some of the most respected prognosticators in the financial world are warning that what is coming in 2014 and beyond is going to shake America to the core. Many of the quotes that you are about to read are from individuals that actually predicted the sub-prime mortgage meltdown and the financial crisis of 2008 ahead of time so they have a track record of being right. Does that guarantee that they will be right about what is coming in 2014? Of course not. In fact, as you will see below, not all of them agree about exactly what is coming next but, without a doubt, all of their forecasts are quite ominous. Read More » The post I Repeat: “Economic disaster of unprecedented scale is coming!” Here’s Why appeared first on munKNEE dot.com. |
| Posted: 24 Jan 2014 10:08 AM PST Dear Reader, History has all but forgotten Pang Cong. But we shouldn't forget the critical lesson he taught us. Two and a half millennia ago, China was a jigsaw puzzle of seven separate territories. As ancient city-states were wont to do, they constantly tried to conquer each other. War was profitable back then—the victor got to claim its vanquished enemies' treasure and pillage its citizens. Not like today, when modern weaponry reduces the loser of any conflict to a smoking crater. Because of the constant threat of invasion, the cluster of Chinese city-states was an ever-shifting tangle of alliances. One day, the Yan and Qin states might be bitter enemies. The next, they would unite because a bigger, badder city-state was threatening to decimate both of them. But while the different states often needed each other to survive, they didn't trust each other one bit. So to keep their tenuous alliances honest, they implemented a primitive version of "Mutually Assured Destruction." When one state allied with another, they would exchange princes as hostages. This incentivized each king not to betray the alliance, because doing so would result in his son's head on a spike. During one of these princely exchanges, an unlucky prince from Qin was to travel to the Handan province to serve as hostage. The aforementioned Pang Cong, a high-ranking official and one of the king's most trusted advisors, was to escort him. One little-known fact about the ancient Chinese is that they liked to gossip. Pang Cong was worried that in his absence, those jealous of his lofty status would talk trash about him, purposely undermining his credibility and standing with the king. So Pang Cong told the king a story. "Your Majesty, if someone were to tell you that there was a tiger roaming the markets of our capital city, would you believe it?" "No," the king replied. "What if two people told you there was a tiger in the market?" "I might be suspicious of it, but I wouldn't believe it," the king replied. "What about three people?" Pang Cong said. After pondering for a bit, the king admitted that, yes, he would believe there was a tiger in the market if three people said it. Pang Cong said, "It is obvious that there is no tiger in the marketplace, yet three men saying so can make a tiger. Handan is further away from here than the marketplace. And the number of men wanting to slander me is far more than three. I hope your majesty can see my circumstances." "I understand," the king replied. But he didn't really understand. Just as Pang Cong feared, while he was away, slanderers poisoned his reputation. When Pang Cong returned from his journey, the king refused to see him. The moral of the story? Many people saying and believing something creates a powerful lie. One that others are prone to believe. Three men make a tiger. Here's where Pang Cong's story intersects with modern reality: countless tigers are strutting around the financial markets right now, masquerading as truth. Let's catch three of them by the toe to see where the "wisdom of crowds" goes wrong and why we should heed Pang Cong's lesson instead. Tiger #1: Markets Are EfficientAre markets efficient? Ask an average person with a respectable amount of financial knowledge this question, and I suspect he'll reply with a confident "yes." The common belief is that markets immediately agglomerate all information about a particular asset into its price—therefore, unless you have inside information, beating the market is impossible. To help evaluate that bit of conventional wisdom, let me tell you a story about a stock called Great Northern Iron Ore (GNI). GNI is a trust that owns iron-producing property in Minnesota. What's so interesting about this stock is that it has a clearly defined expiration date. The trust agreement stipulates that the trust will terminate 20 years after the last surviving beneficiary dies, which happened in April 1995. So GNI will cease to exist on April 6, 2015. On that date, the rights to the trust's underlying property pass to ConocoPhillips, and the shares become worthless. Shareholders will get a final liquidating distribution, which GNI management has estimated will be $8.39 per share. GNI remits all of its quarterly net income to investors as dividends. Given that there are five quarters left until GNI terminates, we know that it will make five more dividend payments. Its dividend has declined in recent years, but let's be generous and assume it can continue to pay out at its most recent clip, which was $2.65/share in Q4 2013. Let's do the math… As you can see, a share of GNI is unequivocally worth no more than $21.64. And in reality, it's worth less, when you factor in the time value of money and taxes. All of this information has been available for several quarters. But as recently as January 3, GNI was trading for $65/share. Anyone who bought at that price—and plenty did—was effectively trading a dollar for 33 cents. Valuing companies usually involves a great deal of subjectivity. But not in this case. We know the terminal value. We know the distributions. We know every dollar that GNI will produce before it terminates. In other words, we know pretty much exactly what GNI is worth. Yet the market assigned it a value of more than triple that. As the cyberkids like to say: WTF? The allure of lucrative dividends seems to be the culprit—GNI paid out a hefty 18.2% in 2012. Apparently that fat quarterly paycheck blinded investors to the fact that they were trading dollar bills for dimes. The price of GNI did come crashing down recently. But as I write, it's still priced at a too-rich $22.65. So are markets efficient? Clearly not. They do assimilate all available information. But some information is bad. Humans are imperfect and are driven by more than pure logic. In this case, dividend chasers kept GNI sky-high when it deserved to be much cheaper. Pang Cong: 1 Tiger #2: Gold Can't Be ManipulatedWith gold mired in a prolonged correction, the idea that large traders are suppressing its price is a hot topic. Despite a vociferous minority that claims otherwise, the prevailing notion is that manipulation, at least in an attempt to turn a profit, is impossible. That conclusion seems intuitive: sure, a big-time trader could sell a boatload of gold all at once to depress its price. But to turn a profit, it would have to buy the gold back at those lower prices, which would undo the initial effect. Case closed, right? Actually, no. By far the best and most lucid explanation I've seen on the matter is Casey Research Senior Economist Terry Coxon's recent article in The Casey Report, "How to Piggyback on Gold Market Manipulation." He explains that under certain economic conditions, not only is it possible for a big investor to push the price of gold around to turn a profit, but that "in the entire investment universe, gold is the asset most likely to be manipulated by big purchases and sales." It's truly an eye-opening piece. Terry even concludes with two strategies that gold investors can use to take advantage of the potential manipulation to buy gold at better prices. If you'd like to read the article but aren't a subscriber to The Casey Report, consider taking it for a test drive. Our generous refund policy allows you to receive three new issues—plus peruse our entire archives of over 60 issues—before deciding if it's for you. If it's not, no problem—just cancel within 90 days for a full refund. Click here to subscribe to The Casey Report. Pang Cong: 2 Tiger #3: Invest in Countries with Rapidly Growing GDPI shudder whenever I hear a pitch to invest in a certain country's stock market that begins with "Look at how fast its GDP is growing!" That's because, counterintuitively, GDP growth rarely translates to strong stock market returns. In fact, many studies have found that there's no link at all between GDP and stock returns in the short and medium term; some even argue that the correlation between the two is negative. China is the poster child for this phenomenon: the Chinese economy has been growing at over 7% per year since 1991, yet Chinese stocks peaked at the end of 2008 and have gone nowhere in the past five years. To understand this strange dynamic, first recognize that a country's GDP and its stock market do not benefit from the same conditions. For example, the US economy (and therefore US GDP) thrives on low oil prices because America must import oil. But the S&P 500, which includes several prominent oil companies, benefits from high oil prices. For emerging economies, the disconnect is even more severe. Many of the biggest companies in emerging markets are state controlled, or at least state influenced. If PetroChina has the potential to make a $1 billion profit per year, the Chinese government has every incentive to take $500 million of that profit and spread it around to Chinese citizens in the form of jobs and higher salaries. After all, Chinese citizens vote (sort of); foreign investors don't. Of course, the Chinese government can't tell investors to take a hike and raid all corporate profits. That would discourage foreigners from investing in China. But it can and will pillage some profits. Profit maximization is simply not the Chinese government's #1 priority. Nor is it the priority of most emerging markets. Remember that when investing—especially in immature markets. The final tally: Pang Cong: 3 There you have it. To be fair, I'm sure we could find some examples of when the wisdom of crowds produced better results. But by and large, zigging when the crowd is zagging is a proven path to investment success. In fact, it's exactly how the most successful investors I know, including Doug Casey, made their fortunes. I'll now pass the reins to a friend of Casey Research, Pete Kofod, who has some thoughts on how modern libertarians are often an embarrassing bunch. Regular readers will recognize him as the author of one of the best and most thought-provoking articles ever published in these pages, "The Rise of the Praetorian Class." After that, you'll find some classic tips from David Galland about how to invest in junior miners in Casey Gems. I'll leave you with this quote, which is just too perfect not to share, given the subject of my above missive: "No one in this world, so far as I know, has ever lost money by underestimating the intelligence of the great masses of the plain people." What’s Wrong with Modern LibertariansLike many of you, I was sad to learn that David Galland would be stepping away from The Room. His insights always served as a highlight of the week, offering a dose of refreshing candor into the tragicomedy of our world. David has become a dear friend, and I look forward to seeing him regularly at the owners' events at La Estancia de Cafayate. David is unlikely to remain still, so join me in wishing him the best of luck in whatever endeavor is fortunate enough to attract his attention. I would like to say that our friendship has been fostered through many hours of spirited conversation, often over a glass of Malbec, with topics ranging from the mundane to the rather bizarre. We share a general optimism and love of life with a sprinkle of concern for the world we are leaving our children, as well as a passion for the genuine, unhurried, and earthen region of Northwest Argentina. We are, if you will pardon the thread-worn expression, like-minded. That doesn't mean that we agree on everything. Far from it, in fact, which is what makes many of our chats so interesting. With that as a backdrop, a recent topic of discussion centered on the ongoing fracas within the "libertarian community." While David is enjoying the climate of Cafayate, business commitments still keep me in the colder Northern Hemisphere. We therefore stay in touch primarily via email as well as Skype, which, by the way, is an amazing service that has single-handedly disrupted the telephone monopolies' death grip on toll calls. In said conversation, I observed that the broad libertarian movement has become a halfway house for a wide array of misanthropes who, thanks to the platform provided by the aforementioned Internet, are making a mockery of classical liberal thought. David's response followed shortly after: "You know, when you get right down to it, while I completely embrace the idea of small (almost nonexistent) government, the more I deal with libertarians, or anyone else who insists on putting themselves into a box, the less enamored I am of the breed. They are an oxymoron in action (complete with a lot of morons)—individuals who want to group together. And when they do group together, they can't work in concert because they place so much of their ego around being individuals. Which is why most of them don't have two nickels to rub together, because as the stoics correctly point out, humans do best when working in concert …" I found his statement to be spot on and copied it verbatim to one of my social media accounts. The feedback was overwhelmingly positive, which in turn caused me to ponder the matter in greater depth. Particularly, in the last few weeks, I have noticed a growing trend of pettiness and boorish behavior among those who claim membership in the "liberty movement." Name-calling that would earn Ralphie a bar of Lifebuoy soap for dinner has become accepted vernacular. Further, it appears that the more trivial the issue of contention, the angrier the rhetoric becomes. In reviewing my various social media threads over the past few weeks, the following drama unfolded before my very eyes. The Bitcoin versus Gold DebateAs bitcoin has moved beyond the obscure crypto-anarchy community, it has attracted its share of skeptics and detractors. In addition to receiving flak from the usual cheerleaders for the unbridled state, bitcoin has come under fire from unexpected corners. Critics of the Fed's digital print press have split and turned on each other. On one side is the gold faction that, in a bitter twist of irony, is criticizing what's perhaps the most revolutionary experiment in monetary history. On the flip side is the bitcoin faction, vulgarly dismissing the historical significance of gold. Both sides use mocking and hateful language. While anything new and untested deserves a high degree of scrutiny, particularly that which seeks to complement if not supplant the global monetary system, the conversation has been marked by ignorant fear masquerading as supercilious contempt. Real "-isms" versus Invented GrievancesAs an unintended consequence of the dim view most libertarians take on Political Correctness and the Thought Police that it fosters, the libertarian community has attracted its share of jerks, racists, sexists, and other uncouth louts. They promulgate the very beliefs that libertarians tend to abhor, namely the judgment of persons by their ethnic or gender classification as opposed to the nature of the individual. The truth is that these individuals have merely found a naïve audience for their atavistic garbage. Political Correctness to a libertarian is like garlic to a vampire. For the time being, many libertarians tolerate language and behavior that should be shunned, merely out of fear for being labeled "The PC Police." In turn, various "oppressed" people within the libertarian community have chosen to reach for the nuclear label, calling people a (fill-in-the-blank)-ist, because they know that the moniker is a powerful weapon, even in a broadly anti-PC community. Assuming an "-ism" first instead of last is a surefire way to never be able to have a civil conversation again. Well played, "libertarians." You have introduced the false narrative of people either being PC or racist/sexist/homophobic. As a result, most people do not engage in meaningful dialogue because they've learned the lesson that, to borrow from the movie War Games, "The only way to win is not to play." Academic Institutions Battling for Intellectual LeadershipThere seems to be a never-ending, infantile battle between ego-driven academics. What in some instances begins as a trivial argument over philosophical semantics invariably devolves into mudslinging à la "Elliott is a big poo-poo head." Obscure early writings from academics exploring political science and economics are dug up and used in a game of "Gotcha" that is reminiscent of the tawdriest political campaigns. And to what end? What these high priests of libertarian orthodoxy seem to miss is that the majority of their readership are not purists. Their views are informed by many sources, and acting like an ill-mannered preschooler is quite unseemly for individuals or organizations presenting themselves as a credible scholarly resource. I am frequently reminded of this classic scene from Monty Python's The Life of Brian (caution: strong language). Observing these discussions descend into pathetic name calling has led me to ask the question: "Is there a set of litmus tests for being a libertarian?" The question is in and of itself paradoxical, given that it essentially seeks to standardize membership for a group in which the defining trait is purportedly individualism: a seemingly hopeless task indeed. Instead, I went about cataloguing character traits of leading "libertarians" whom I respect. In no particular order, the traits are: Live and Let LiveEvery human being is the unique product of a complex set of formative conditions set in motion long before birth. Throw in free will, and it is really amazing that our species finds agreement on anything at all. Our criteria for happiness and success are as varied as are our methods of achieving them. How often we forget this and seek to condemn others for not only their preferences, but even for their very identities. Live and let live instructs us to go with the flow and seek to understand. For some, this is seen as compromising principles. Not so, I would argue. Principles and pragmatism can happily cohabitate. I am reminded of a story regarding the Dalai Lama. He was attending a fundraiser for Tibet at the private residence of a very wealthy supporter in Hawaii. The fundraiser included a cocktail in which hors d'oeuvres were served. As the hostess introduced four guests to the Dalai Lama, a waiter presented the Dalai Lama with a plate of Kobe beef appetizers. The Dalai Lama smiled, accepted a serving, and thanked the waiter. Now it is fairly well known that for ethical reasons the Dalai Lama is a strict vegetarian, yet he consumed the beef and carried on with the conversation. Shortly thereafter, the hostess excused herself from the conversation, at which point one of the remaining guests exclaimed, "Your Holiness, you just ate beef!" The Dalai Lama smiled and calmly replied, "The cow is dead. The hostess is alive." Win-Win or No DealIn his wild |
| A One-Way Ticket to Central Planning Posted: 24 Jan 2014 10:04 AM PST We’d like to give the banks in Australia some credit. They’ve finally gone and done it. They have caught up with 1960s technology. They’ve figured out how to use PIN numbers. How to only use PIN numbers, that is. They’re considering scrapping signatures on credit cards to cut down on fraud. Apparently, having to verify your identity at the point of purchase is a good idea… Credit card fraud costs the banks around AU$35 million a year. In Canada, getting rid of signatures in 2008 saw card fraud fall by 36%. Sounds like a no brainer, right? In fact, it seems painfully obvious to us. Especially after being a victim of card fraud recently. Can you imagine if bankers used their ingenuity and effort to make payment systems more efficient instead of devising weird investment schemes involving unaffordable mortgages or gold futures which don’t involve any physical gold? The economy would surge on a wave of efficiency instead of speculation. But the banks’ revelations aren’t today’s topic. Instead, we’d like to confirm your booking on a one way trip to… well, we’re not entirely sure where to be honest. But it’s definitely a one way ticket. Money printing, stimulus, currency wars, bailouts and just about everything else you’ve seen since 2008 is pretty much irreversible. In fact, the bailouts part has always been there. Governments have always bailed out financial institutions. We don’t mean that the policies of the past can’t be undone. It’s more the fact that they will forever be haunting our future. At what point do stimulus, money printing and bailouts fail so badly they lose all credibility? The market now knows that central banks will print money if they need to. “Whatever it takes,” said European Central Bank President Mario Draghi. And he pulled it off without sounding like Gideon Gono, Zimbabwe’s former chief central banker. The market knows big financial institutions will get bailed out. “I’ve abandoned free market principles to save the free market,” President George W. Bush told us with his sheepish grin. Economists told politicians that, if they didn’t approve stimulus packages, the unemployment rate would rise to a whopping 8.8%. Congress voted for the stimulus, and unemployment rose above 10%. But people still see economic stimulus packages as credible. As soon as a recession hits, presidents and prime ministers will be on about their “shovel ready projects” again. In Japan, the world had high hopes for Abenomics. The blend of monetary and fiscal stimulus, combined with devaluing the yen, looked set to spur Japan back on track. It hasn’t. If a private company performed like the world’s politicians and central bankers, what would happen? The company would fail, and someone else would pick up the capital to have a go at doing something better. Creative destruction steadily improves the consumers’ and producers’ lots in life. Do you think that politicians and central bankers close down shop and get a job elsewhere when they fail? No. They will do more of the same. The next time there is a recession, governments will pass stimulus packages without as much of a debate. Central bankers will revamp quantitative easing (QE) without any credible voices preaching about inflation. And every bank CEO will know his job is perfectly safe no matter what. Rinse, lather, repeat. When you give someone the power to make laws, backed by a money printer to pay the bills, they will never see the error of their ways. It will always be a matter of doing more. Until what? What breaks? How does this end? At what point do stimulus, money printing and bailouts fail so badly they lose all credibility? Because that’s the way we’re going. Even if there was a half decent recovery in the U.S. and Europe, it’s only a matter of time before a new recession. Economist Friedrich Hayek explained that socialism fails because it relies on central planning. In other words, the motivations and altruistic aims of socialism may or may not be workable and to your liking. Hippie communes, Israeli Kibitzes and nuclear families are examples where something resembling socialism can work. But it’s the central planning part that makes national socialism fail. National socialism as in socialism on a national scale, that is. There are a myriad of reasons for this. But an interesting one is that everyone’s plan is different. Mario Draghi’s vision of Europe differs from Manuel Barroso’s (president of the European Commission), which differs from Nigel Farage (European politician and EU skeptic), which differs from everyone else’s. That’s why you get a complete mess when you put a bunch of politicians in a parliament to decide how the world should work, instead of letting it work the way it inherently does. That applies whether it’s the European or the Australian parliament. If politics made any sense, the amount of laws needing to be passed would be a tiny fraction of those which are passed. Instead, each government meddles in its own different way. Right down to determining which way dinghies in Indonesian waters should be travelling. This mess eventually becomes so bad that the people demand someone who can fix it. Someone strong, charismatic and accountable. That’s why all attempts at central planning end up with a power struggle at the top. And violent, corrupt and immoral people tend to win power struggles. That was Hayek’s story of why socialism fails. These days we have all the problems of central planning without the warmth and fuzziness of socialism. In fact, socialism is discredited, despite the fact that conservative politicians practice it at home every day. But it’s central planning that is the problem. Mainstream economists are completely clueless about this. To them, central planning makes a lot of sense. It provides data for their models (which is usually based on a mid-level bureaucrat’s fantasy), linear relationships (which don’t actually exist in economics) and a job. Paul Samuelson’s 1960s economics textbooks featured charts showing how the USSR would outgrow the U.S. because of its centrally planned policies.
The best he ever managed as an acknowledgement of his failed predictions was that the weather was bad in Russia. The same types of predictions are being made today. The IMF boosted its outlook for global economic growth. Our favorite is this chart, which shows the U.S. Department of Transportation’s predictions for road traffic:
How many times do they need to get it wrong? The good news is that all this dawned on one politician recently. Strangely enough, it was the French President Francois Hollande. Sure, it’s only lip service, but he’s rather good at that apparently. He recently told his fellow countrymen about the ramblings of a 19th-century French economist called Jean-Baptiste Say. Quoting the modern version of what economists call Say’s law, he said: “Supply creates its own demand.” That’s not a very useful way of putting it, we know. Say’s point was that, if you want to buy something, you have to produce something first. To most economists, this is a chicken and egg problem. Supply-siders believe you need a chicken to lay an egg. Demand-siders say there has to be demand for eggs before anyone will bother with the chickens. Once central planning has a grip on the economy, it won’t let go. Power over the law and currency is just too great a power. Now demand is effectively infinite. People always want more eggs. The question is whether they can afford them. And how do they afford them? By producing something that a chicken owner wants. Like chicken wire. Hence, producing the chicken wire (supply) allows someone to buy an egg (demand). Without producing the chicken wire, it’s difficult to get your hands on an egg. But what if you can create purchasing power out of thin air? What if you can print up a few dollars and buy the egg? Demand siders see this as solving the problem. Hence they want to stimulate demand. And it does work… for a while. If it worked well enough, you wouldn’t ever have to produce much at all though. You could just print money and buy whatever you like. That’s what the U.S. has been doing. Hence the trade deficit. The country simply prints dollars to pay people to sell them stuff. This can go on as long as people are willing to accept printed dollars in exchange for real stuff. But eventually they’ll get sick of all those dollars. That’s why China’s monetary meddling is so important. It’s steadily increasing its holdings of real assets like gold and productive capacity. Once it stops accepting so many dollars, America will have to produce something for China if it wants China’s goods. Back to our original point. Once central planning has a grip on the economy, it won’t let go. Power over the law and currency is just too great a power. In our opinion, it can only be broken when people stop following the law and faith in the currency collapses. Usually that’s a combination of hyperinflation and a grumpy populace. Regards, Nick Hubble Ed. Note: When central planning takes over an economy it never ends well. And that’s exactly what’s happening in the U.S. right now. But no matter how much the do-gooders try to improve the U.S. economy, there will always be a way for you to protect yourself. Readers of the Laissez Faire Today email edition are treated to several of those ways, every single day. To make sure you’re getting the full story, sign up for the FREE Laissez Faire Today email edition, right here. This article originally appeared here in The Daily Reckoning Australia. Article posted on Laissez Faire Today |
| Fiat Money Implications for Gold and Silver Posted: 24 Jan 2014 09:58 AM PST By December, the most recent month for which statistics are available, the US dollar Fiat Money Quantity (FMQ) had grown to $12.48 trillion. This is $5.05 trillion more than if it had grown in line with the established average monthly growth rate from 1960 to the month before the Lehman Crisis. By this measure of currency inflation, since August 2009 inflation is now 68% above trend. This is illustrated in Chart 1 below. |
| Maguire - “Stunning” Physical Gold Buying Terrifies Shorts Posted: 24 Jan 2014 09:57 AM PST  Today London metals trader Andrew Maguire told King World News that the physical gold buying which took place in London on Thursday can only be described as "stunning." He also said this terrified the shorts and created the panic spike in gold that shocked many market participants that day. Maguire also described what is happening the scenes in the war on gold, and with gold demand in his remarkable interview below.This posting includes an audio/video/photo media file: Download Now |
| Germany’s Gold is the Story de Jour Posted: 24 Jan 2014 09:49 AM PST It transpired last week that of the 43-odd tonnes per annum the Bundesbank expects to be returned from the New York Fed only 5 tonnes arrived in 2013. Furthermore, of the 373.7 tonnes stored with the Banque de France only 32 tonnes was delivered. This is little more than a morning’s delivery in the London market, so it is hard to swallow the Bundesbank’s excuses about logistics. |
| Yikes! Financial Times awakens to the paper gold fraud Posted: 24 Jan 2014 09:29 AM PST Learn from Buba and Demand Delivery for True Price of Gold By Neil Collins http://www.ft.com/intl/cms/s/0/1586a7fe-84d6-11e3-a793-00144feab7de.html A year ago the Bundesbank announced that it intended to repatriate 700 tons of Germany's gold from Paris and New York. Although a couple of jumbo jets could have managed the transatlantic removal, it made security sense to ship the load in smaller consignments. Just how small, and over how long, has only just become apparent. Last month Jens Weidmann, Bundesbank president, admitted that just 37 tons had arrived in Frankfurt. The original time scale, to complete the transfer by 2020, was leisurely enough, but at this rate it would take 20 years for a simple operation. Well, perhaps not so simple. While he awaits delivery, Herr Weidmann is welcome to come and look through the bars in the Federal Reserve's vaults, but the question is: Whose bars are they? ... Dispatch continues below ... 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 In the "armchair farmer" fraud you are told: "Look, this is your pig, in the sty." It works until everyone wants physical delivery of their pig, which is why Buba's move last year caused such a stir. After all, nobody knows whether there are really 260 million ounces of gold in Fort Knox, because the US government won't let auditors inside. The delivery problem for the Fed is a different breed of pig. The gold market is far more than exchanging paper money for precious metal. Indeed the metal seems something of a sideshow. In June last year the average volume of gold cleared in London hit 29 million ounces per day. The world's mines are producing 90 million ounces per year. The traded volume was many times the cleared volume. The paper gold in the London Bullion Market takes the familiar forms that bankers have turned into profit machines: futures, options, leveraged trades, collateralised obligations, ETFs . . . a storm of exotic instruments, each of which is carefully logged, cross-checked, and audited. Or perhaps not. High-flying traders find such backroom work tedious, and prefer to let some drone do it, just as they did with those money-market instruments that fuelled the banking crisis. The drones will have full control of the paper trail, won't they? There's surely no chance that the Fed's little delivery difficulty has anything to do with the cat's cradle of pledges based on the gold in its vaults? John Hathaway suspects there is. He worries about all the paper (and pixels) linked to gold. He runs the Tocqueville gold fund (the clue is in the name) and doesn't share the near-universal gloom of London's gold analysts, who a year ago forecast an average $1700 for 2013. It is currently $1,260. As has been remarked here before, forecasting the price is for mugs and bugs. But one day the ties that bind this pixelated gold may break, with potentially catastrophic results. So if you fancy gold at today's depressed price, learn from Buba and demand delivery. Join GATA here: 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 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... |
| Comparing Apples and Oranges of Silver and Gold Price Manipulation Posted: 24 Jan 2014 09:23 AM PST By now, most observers have heard of precious metals price manipulation. As the issue creeps into the mainstream, more and more investors will come to understand it - along with its vast implications. We've covered the mechanisms used to manipulate the metals extensively, but it is important to point out the differences between gold and silver in terms of how they are managed. This is because it provides excellent insight into the relative character of each metal's unique supply and demand profile. |
| Inside London: 'Demand Delivery For the True Price of Gold' Posted: 24 Jan 2014 09:14 AM PST |
| Inside London: 'Demand Delivery For the True Price of Gold' Posted: 24 Jan 2014 09:14 AM PST |
| Can’t-miss Headlines: Govt. mediation, exploration drilling and better than expected results Posted: 24 Jan 2014 08:04 AM PST While strikes continue on SA's platinum belt, the Government has begun mediating talks, while Lake Shore Gold and First Quantum put out results. |
| Large SPDR gold ETF sales not enough to restrain gold Posted: 24 Jan 2014 08:04 AM PST Julian Phillips says yesterday's sales were large, but did not restrain the gold price from rising as it broke through some resistance to rise into the $1,260 area. |
| First Quantum FY copper, nickel, gold and pgms all up strongly Posted: 24 Jan 2014 08:04 AM PST First Quantum Minerals has reported a good production year overall with copper, nickel gold and pgm production all up to near the top end of guidance and seems to be assimilating the ex-Inmet properties well. |
| Indian government at gold crossroad after Gandhi letter Posted: 24 Jan 2014 08:04 AM PST The Indian government is at a crossroads – while the ruling party leader asks for a relaxation in gold import curbs, the finance minster says it might be considered in February Budget. |
| India not yet planning roll back of gold import curbs Posted: 24 Jan 2014 08:04 AM PST Finance Minister, P. Chidambaram, says India is not planning any changes to its record import duty on gold until the current account deficit is firmly under control. |
| Global mined gold output rose 4% in 2013 Posted: 24 Jan 2014 07:52 AM PST Despite the big drop in the gold price, global mined gold output continues to rise as new projects already under way come on stream and miners look to work higher grade ores to counter the price downturn. |
| Something Ominous May Be Coming At Us Posted: 24 Jan 2014 07:07 AM PST Earlier this week 30-day/4-wk T-Bills were auctioned off a 0% rate. Intra-day, after the auction, the rate went negative. Negative short term rates were last observed in 2008, before the Lehman/AIG/Goldman collapse occurred. Of course, Lehman was allowed to implode and Goldman, who's ex-CEO was the Treasury Secretary, was bailed out. AIG was the beneficiary of that bailout because Goldman had impaled itself on AIG nuclear waste. The point here is that negative T-bill rates only occur when very big investors are concerned about the return OF their money and not the return on their money. Think about what a negative T-bill rate means. It means that someone is paying more for the T-bill than they get in return when it matures a few weeks later. Why would someone do that? It's the "safest" place to park large sums of cash. A big institutional fund or very wealthy investor pays for a T-bill because they they see something which indicates that the risk of the Government defaulting in the next four weeks is less than the risk of parking that money in a bank or a money market fund. We're talking millions and tens of millions in short term money. Bank deposits are insured only up to a small amount. After 2008, it has been decided that money market funds will no longer be bailed out by the Government/Fed. In other words, big big investors with cash that needs to be parked are seeing something that gives them concern about the financial system. The negative rates on T-bills means that whatever was spooking big money in 2008 is spooking it again. My best guess right now is that there is massive risk of derivatives default. This would be the derivatives that blew up the system in 2008 but that the Fed/Government quickly monetized. The problem was never fixed, contrary to Obama's recent end zone dance on the safety of the banking system. In fact, the Fed swallowed a portion of the bad derivatives and has been using the better part of the $85+ billion per month it's been printing since early 2009 to monetize the rest. In other words the catastrophic problems were kicked down the road. Worse, the big banks went out and replaced the crap the Fed took off their balance sheets with even more crap. Accounting rules were changed, and ratified by BOTH political parties plus Obama, which enabled the big banks to hide the problem. But now the financial system is wearing the Scarlet Letter of negative T-bill rates. The source that is lighting the fuse is emerging market problems, reflected in the currency devaluations by Argentina and Venezuela. But the currencies of other important emerging market economies have been plunging against the dollar as well. The cost of derivatives "insurance" on the sovereign debt of these countries has suddenly increased at a rate that would make Obamacare insurance providers blush. What the currency plunge/derivatives blow-out implies is that sovereign bond defaults are on the horizon. This is not just confined to "emerging" economic countries. Spain, Portugal, Italy and France are on the ropes financially and economically as well, despite the official European story-line that Europe is in "recovery." The issue for the U.S. here is that the Too Big To Fail banks are the ones who have underwritten most of the credit insurance derivatives associated with the sovereign debt that may be at risk to default. They also hold a lot of it on their balance sheet. That's why the Fed's Excess Reserve accounts of the big banks have ballooned up in correlation with amount of QE that has been printed. The Fed has monetizing the derivatives exposure but that works only up to the point of a default event. In other words, a big nuclear derivatives may be coming at our system. Another interesting tidbit to think about. While the paper price of gold was being plunged using Comex futures by the Fed-backed big banks, a major portion of the gold held in the GLD Trust was removed. The common narrative scooped up like dog crap and tossed in our face by Wall Street analysts was that the decline of the gold in GLD was indication of a new bear market in gold. Essentially gold bottomed in price on June 28th, with a retest of that bottom at the end of December. Based on the $1180 bottom, gold has risen $90 since since the end of June. But guess what? Another 179 tonnes of gold - or 19% - of the amount of gold in the GLD trust at the end of June has disappeared. If gold is rising again, shouldn't gold be flowing back into GLD? The 500+ tonnes of gold that has been removed from GLD in a little over a year has disappeared down the rabbit hole. There's no way to know for sure but I'm sure a large portion, if not all, has been shipped to China. But maybe not all of it. In addition to the huge ratio of gold to physical gold visible on the Comex, according to the latest OCC bank derivatives report the top 4 banks - JPM, Citi, Goldman, Bank of America - are long over $81 billion in gold OTC derivatives. That's the equivalent of about 1800 tonnes of gold at current at the current price. 1800 tonnes is slightly less than than the annual amount produced globally by gold mines. That amount dwarfs by many multiples the ratio of paper/gold on the Comex that has drawn everyone's attention. Maybe that's why the Comex publishes as much data as it does about Comex futures positions and inventory. It draws everyone's attention from the much bigger problem. Here's a link to the OCC derivatives report for anyone interested (it's from Q3, 2013 - there always a big time lag): Latest OCC Bank Derivatives Report Something really ugly is coming at our system. Have a great weekend. |
| Something Ominous May Be Coming At Us Posted: 24 Jan 2014 07:07 AM PST Earlier this week 30-day/4-wk T-Bills were auctioned off a 0% rate. Intra-day, after the auction, the rate went negative. Negative short term rates were last observed in 2008, before the Lehman/AIG/Goldman collapse occurred. Of course, Lehman was allowed to implode and Goldman, who's ex-CEO was the Treasury Secretary, was bailed out. AIG was the beneficiary of that bailout because Goldman had impaled itself on AIG nuclear waste. The point here is that negative T-bill rates only occur when very big investors are concerned about the return OF their money and not the return on their money. Think about what a negative T-bill rate means. It means that someone is paying more for the T-bill than they get in return when it matures a few weeks later. Why would someone do that? It's the "safest" place to park large sums of cash. A big institutional fund or very wealthy investor pays for a T-bill because they they see something which indicates that the risk of the Government defaulting in the next four weeks is less than the risk of parking that money in a bank or a money market fund. We're talking millions and tens of millions in short term money. Bank deposits are insured only up to a small amount. After 2008, it has been decided that money market funds will no longer be bailed out by the Government/Fed. In other words, big big investors with cash that needs to be parked are seeing something that gives them concern about the financial system. The negative rates on T-bills means that whatever was spooking big money in 2008 is spooking it again. My best guess right now is that there is massive risk of derivatives default. This would be the derivatives that blew up the system in 2008 but that the Fed/Government quickly monetized. The problem was never fixed, contrary to Obama's recent end zone dance on the safety of the banking system. In fact, the Fed swallowed a portion of the bad derivatives and has been using the better part of the $85+ billion per month it's been printing since early 2009 to monetize the rest. In other words the catastrophic problems were kicked down the road. Worse, the big banks went out and replaced the crap the Fed took off their balance sheets with even more crap. Accounting rules were changed, and ratified by BOTH political parties plus Obama, which enabled the big banks to hide the problem. But now the financial system is wearing the Scarlet Letter of negative T-bill rates. The source that is lighting the fuse is emerging market problems, reflected in the currency devaluations by Argentina and Venezuela. But the currencies of other important emerging market economies have been plunging against the dollar as well. The cost of derivatives "insurance" on the sovereign debt of these countries has suddenly increased at a rate that would make Obamacare insurance providers blush. What the currency plunge/derivatives blow-out implies is that sovereign bond defaults are on the horizon. This is not just confined to "emerging" economic countries. Spain, Portugal, Italy and France are on the ropes financially and economically as well, despite the official European story-line that Europe is in "recovery." The issue for the U.S. here is that the Too Big To Fail banks are the ones who have underwritten most of the credit insurance derivatives associated with the sovereign debt that may be at risk to default. They also hold a lot of it on their balance sheet. That's why the Fed's Excess Reserve accounts of the big banks have ballooned up in correlation with amount of QE that has been printed. The Fed has monetizing the derivatives exposure but that works only up to the point of a default event. In other words, a big nuclear derivatives may be coming at our system. Another interesting tidbit to think about. While the paper price of gold was being plunged using Comex futures by the Fed-backed big banks, a major portion of the gold held in the GLD Trust was removed. The common narrative scooped up like dog crap and tossed in our face by Wall Street analysts was that the decline of the gold in GLD was indication of a new bear market in gold. Essentially gold bottomed in price on June 28th, with a retest of that bottom at the end of December. Based on the $1180 bottom, gold has risen $90 since since the end of June. But guess what? Another 179 tonnes of gold - or 19% - of the amount of gold in the GLD trust at the end of June has disappeared. If gold is rising again, shouldn't gold be flowing back into GLD? The 500+ tonnes of gold that has been removed from GLD in a little over a year has disappeared down the rabbit hole. There's no way to know for sure but I'm sure a large portion, if not all, has been shipped to China. But maybe not all of it. In addition to the huge ratio of gold to physical gold visible on the Comex, according to the latest OCC bank derivatives report the top 4 banks - JPM, Citi, Goldman, Bank of America - are long over $81 billion in gold OTC derivatives. That's the equivalent of about 1800 tonnes of gold at current at the current price. 1800 tonnes is slightly less than than the annual amount produced globally by gold mines. That amount dwarfs by many multiples the ratio of paper/gold on the Comex that has drawn everyone's attention. Maybe that's why the Comex publishes as much data as it does about Comex futures positions and inventory. It draws everyone's attention from the much bigger problem. Here's a link to the OCC derivatives report for anyone interested (it's from Q3, 2013 - there always a big time lag): Latest OCC Bank Derivatives Report Something really ugly is coming at our system. Have a great weekend. |
Seven reasons why the Arab uprisings are eclipsing western values … This year marks the twenty-fifth anniversary of the collapse of the Berlin Wall — an event that led Francis Fukuyama to predict the end of history and the beginning of universal western liberal values. It is three years since the Arab uprisings threatened to upend the Middle East and North Africa. Many at that time predicted that the region would embrace liberal democracy and human rights. – Reuters Opinion
The gold price got sold off a few dollars in early Far East trading, but the price was back to unchanged by the London open. Then at 9:45 a.m. GMT the gold price rallied, only to get capped by 10 a.m. GMT by a wall of HFT selling.
It transpired last week that of the 43-odd tonnes per annum the Bundesbank expects to be returned from the New York Fed only 5 tonnes arrived in 2013. Furthermore, of the 373.7 tonnes stored with the Banque de France only 32 tonnes was delivered. This is little more than a morning’s delivery in the London market, so it is hard to swallow the Bundesbank’s excuses about logistics.
It has been rumored for quite some time that the economic powers in the world, namely the Bank for International Settlements, The International Monetary Fund, and the World Bank have been working closely with most of the worlds countries on an economic reset.
Buba is the nickname for Deutsche Bundesbank, the central bank of Germany.
There was (yet another) disturbing news item I spotted today at (surprisingly) Basher Central. It’s not even 9:30 am (my time) and I’m already close to the information-overload level. I would encourage other Members to keep their eyes open for any other ‘atrocities’ I may have missed today…
In a surprising change from its inventory build over the past few months, JP Morgan had the largest one-day withdrawal of gold ever. JP Morgan had 321,500 (exactly 10 metric tons) withdrawn from its Eligible category today.
Source: Marginal Revolution
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