Gold World News Flash

A Freebie from Uncle Ted
A Fed Induced Phony Recovery is Bullish For Gold
‘Affordable Care’ Meltdown: Patients Across the Nation Unable to Receive Care
2014: Some Thoughts on the Tumultuous Year Ahead
Setting up Gold for the Next Leg Down
Strong Physical Demand Out of Asia is the Story
The Handwriting Is On the Wall
Bitcoin Versus Gold
Good Things for Gold and Silver are Popping Up All Over
Good Things for Gold and Silver are Popping Up All Over
Why Taper-Driven EM Turmoil Is A Big Problem (In One Chart)
Silver Short Squeeze 2
Gold Prices Biased To The Upside, But Somewhat Limited `
War Rages In Gold As Inflation / Deflation Battle Continues
In The News Today
Gold Daily and Silver Weekly Charts - Release from the Year End Clamp Down
Gold Daily and Silver Weekly Charts - Release from the Year End Clamp Down
Gold Then and Now
A Silver Short Squeeze Could Ignite A Major Rally
New Trend Guarantees Higher Gold Prices
A Notable Week for Precious Metals
Von Greyerz: Gold has moved out of central bank vaults to private vaults
Sean Fieler: How to challenge Yellen -- and big government
Gold's 2014 Rally May Not Signal a Trend for the Troubled Asset
Time-Preference And Gold
Great performance from Terratec raise drill at Patagonian gold/silver mine
Can’t-miss headlines: Colossus down, Mediterranean facelift, gold up & more
Don’t get too carried away by gold’s good 2014 start
Gold, Silver, and Bitcoin - Author of Bitcoinomics Interview
China Gold eyes Canadian purchase but says prices still steep
China Gold eyes Canadian purchase but says prices still steep
Alasdair Macleod: Time-preference and gold
Alasdair Macleod: Time-preference and gold
Silver Price Short Squeeze
Ted Butler: 2013 — the year of JPMorgan
Ted Butler: 2013 -- the year of JPMorgan
Navigating a Frigid Market
Gold Price and Time Preference
Gold and Silver Stocks to Lead Metals Higher
In The News Today
The Fed’s War on Pennies
Gold and Silver Price on the turn?
2013 – The Year of JPMorgan
Annual Wrap Up
The Ratio of U.S. House Prices to Gold and Silver Market Sentiment
Gold and Silver Prices - You Can't Outrun the Long Arm of Equilibrium
Gold Bear Market Trend Update 2014
Gold and Silver Stocks to Lead Precious Metals Higher 2014
Stepping Away from the Desk
Optimist or Pessimist? Gold is Telling a Story

Posted: 04 Jan 2014 01:00 AM PST

Ted Butler’s “New Year” newsletter was released to subscriber’s on Wednesday. He’s made it public today through the SilverSeek site.

Here’s the link to the full report at SilverSeek: http://www.silverseek.com/commentary/2013-–-year-jpmorgan-12815

You should be sure to read the entire report but I want to C&P and highlight two paragraphs below. As regular know, I’ve been tracking JPM’s hoarding of Comex gold and silver deliveries since July of last year. Ted has, too, and these two paragraphs get to the crux of the matter:

Listen to the Podcast at TFMetals.com

A Fed Induced Phony Recovery is Bullish For Gold

Posted: 04 Jan 2014 12:30 AM PST

from Peter Schiff:

‘Affordable Care’ Meltdown: Patients Across the Nation Unable to Receive Care

Posted: 04 Jan 2014 12:00 AM PST

by Adan Salazar, Infowars:

The nation is quickly learning the Patient Protection and Affordable Care Act is neither protective nor affordable.

Weeks before the federal initiative's deadline, Americans reeled from sticker shock as many saw their health care premiums double and even triple. Some even witnessed individual-market rates quadruple.

And that's just the people that were able to keep their old plans. Millions of other Americans received letters of cancellation from their insurers telling them their plan no longer met federal guidelines.

Read More @ Infowars.com

2014: Some Thoughts on the Tumultuous Year Ahead

Posted: 03 Jan 2014 10:07 PM PST

by Mark S. Mann, SGT Report.com:

Hello Friends. Happy New Year! I hope that 2014 will at the very least be a peaceful year for everyone.

I have been pondering a few issues with friends, trusted colleagues, and the guys at SGT Report. Currently much attention is being focused on the global economy and justly so. As usually, there is much commentary and speculation about the next 12 months regarding social, political and financial issues. Things seem to be happening so fast now. On a regular basis, it seems almost weekly, there is some new major story / revelation / scandal about how our Government is trashing the US Constitution and the Bill of Rights. I wanted to share a few of my thoughts and opinions with you on the following topics:

Precious Metals: Ok…we've taken a pounding for about 2+ years here. People need to move on.
If you lose faith, do what you need to do. Even if you lost 50-60%, you still did not lose all your money like some chump that lost it ALL on a paper Ponzi scheme investment that went to ZERO. If hold your metals and don't sell, you have not incurred a physical loss. If you do sell, or if you do lose faith, it's no one else's fault EXCEPT the criminals that have manipulated the metals markets to its current price levels.

I respect many of the "experts" in this field, and have been following some of them closely for 5-6 years. This is not a direct jab at anyone because I appreciate all their hard work. These people have been responsible for waking many people up. However, I am getting tired of hearing about people's opinion on where the metals prices will go.

How do you predict the price of ANYTHING in an environment where we now know basic fundamentals and things like supply and demand no longer apply? Up is Down and Down is UP. I'd like to see that formula or equation. It's more like a wild guess. I forget who it was that recently said "There are no longer markets, just manipulations". I could not agree more. People in this community have said that metals prices were due for a "correction", and "there is no way that any commodity could rise for 15 years straight without a correction". I beg to differ. These experts still call the gross manipulations of the past 2+ years a "price correction". How do you have a "correction" in a rigged market where basic fundamentals and supply and demand are irrelevant? The "corrections" have obviously been put in place to bolster the US Dollar. The true price of metals will be determined by other people in another country at another time. Can you guess who???

With this said, even if very brief, I think there is going to be a period where cash is king in the next few years.

False Flags: There has been a lot of discussion in the alternative media about possible future potential false flag incidents, and attempted false flag operations that have been possibly foiled. Personally, I don't know what is true, what is not, and what is "grey". If you are awake and aware then you live with the reality that NOTHING our government says or does anymore is True or False. Everything it does is now a blend of a blend of actual Truth and outright Lies. In my opinion, the more time that goes by, the more serious and the more likely the potential for false flags become.

Firearms: If you have not sourced a means to protect your family, you must do so if you are legally able. The last year was a challenging time for people who wished to acquire weapons and ammunition. 2014 will be a good time to take advantage of lower prices, and availability. You are definitely going to get more for your money in 2014, than you did last year. Rifle Ammo availability is getting better in most parts of the country, and prices have come down significantly. Ball Pistol ammo is still not widely readily available and is still slightly expense. The national .22 rimfire draught is still pretty bad, but has slightly improved compared to the last year. .22 ammo is still bringing high premiums in secondary markets like internet sales and at gun shows.

If you have people that you care about, including yourself, and you need to either teach them to shoot or maintain their/ your skills, you need to consider investing in ammo, just like you would save money for books or school tuition. My personal opinion is that your ammo supply or Ballistic Precious Metals Portfolio (copper, lead, brass, and zinc) ammo will outperform your Precious Metals Investment on a percent return over cost. The ammo will probably be subject to less volatility as well. Be practical, be reasonable, but remember guns are useless without ammo.

Preparedness: You can have all the gold, silver, cash, or guns in the world. They will not get you, or buy you the last box of Macaroni & Cheese or the last can of beans. You can't live without water and food. I know there are lots of people out there with guns and / or gold, but they don't even have a basic 90 day food supply. In my opinion, this is highly essential at this point. The cost of these items will just keep getting higher. If any event interrupts your food supply for more than 90 days, life as we know it has changed.

I have written about the "Alpha Strategy" a few times over the last year or so. As more and more people become financially limited and financially stretched, it's important to look at your "survival" in terms of how long you can afford to be without money to spend on the things you need to maintain a comfortable existence. If you are dependent on government assistance, you need to accept the fact it could be interrupted for reasons too numerous to mention here. If you are going to live in the system, you should be prepared for it to be interrupted. A perfect example is what has happened in Argentina over the past few weeks with roving blackouts, looting, and temporary states of lawlessness. Although the mass media ignores these events, they are very good examples of the types of conditions we would see in the USA if various scenarios played out.

I must say that I am extremely concerned about the Fukushima situation. I think that the way this situation is being handled by "the powers that be" is proof of either complete incompetence or willful intention. Both way, it's bad, and if the situation deteriorates, there will be consequences for people living all over the world. It's been 2+ years and the hard evidence and data is starting to come in. It's going to be more and more difficult to hide effects of the disaster as time goes on. I also think it's interesting to see the US Government currently soliciting to purchase 14 million doses of potassium iodide. Interesting on the timing of all this? Possible real world or false flag event in the near future? I hope not!

Finally, I hope that people find balance in dealing with all these potential issues, and that they remember to live life, and enjoy the gifts that we have for as long as we can. I know it is something that I struggle with from time to time. Thanks to everyone for their support and interest in SGT Report!

Happy 2014!
Mark

Setting up Gold for the Next Leg Down

Posted: 03 Jan 2014 09:30 PM PST

Midas Letter

Strong Physical Demand Out of Asia is the Story

Posted: 03 Jan 2014 09:20 PM PST

from Dan Norcini:

There are a couple of things currently working in favor of gold for the time being. The first I noted yesterday which is index fund rebalancing as those fund managers benchmarking against the various commodity indices are forced to increase their holdings of gold contracts to bring their overall portfolios into line with the new index compositions. That is bringing buying into the gold market from a spec standpoint at the Comex.

The other is more important because it is longer-term in nature and that is the continued reports of very strong offtake of the physical metal in Asia. You might recall that back in June of the past year ( 2013), it was this soaring Asian demand that put a floor in the gold price when it had sharply fallen to $1180.

The Handwriting Is On the Wall

Posted: 03 Jan 2014 09:00 PM PST

by David Schectman, MilesFranklin.com:

The demand for gold from the Chinese people (in addition to the government) is enormous. They have a long history of valuing gold and distrusting paper currency. They are a force to be reckoned with. There are three hundred million middle class Chinese – more than the total population in the U.S. Many of them now have money and a desire to own gold, after decades when it was not allowed. But now, the Chinese government is encouraging it.

You have to ask yourself this about the Chinese, in such dramatic contrast to us, why are they encouraging their citizens, I'm not saying not forbidding them, I'm saying actively encouraging them on TV, etc., to buy gold?

Read More @ MilesFranklin.com

Bitcoin Versus Gold

Posted: 03 Jan 2014 06:14 PM PST

Submitted by John Browne via Euro Pacific Capital,

Ever since President Nixon broke the US dollar's last link to gold, the world has been set adrift on a sea of fiat currencies that have been increasingly debased, serving the interests of governments and financial elites. For the last five years, central banks have imposed near-zero rates of interest that have helped push up stock, bond, and real estate prices, but have made it nearly impossible for savers to receive meaningful returns on bank deposits.

To make matters worse, the apparatus of national security has turned financial transactions into a massive exercise in government surveillance. Under the camouflage of 'protective' measures, such as the USA PATRIOT Act, governments have invaded the privacy of citizens and compromised banking secrecy in an unprecedented and often unconstitutional manner. Despite huge potential transaction-cost reductions achievable through advances in digital technology, banks continue to charge exorbitant transaction fees while maintaining transfer delays that reflect a pre-digital age. In addition, bank regulators, led by the IMF, have shown a willingness, in the case of Cyprus, to make depositors liable for poor banking decisions. Many private citizens may naturally see the status quo as a deliberate policy to crush middle-class savers and pave the way for centralized socialism. Some have sought a way out.

Gold 2.0?

Traditionally, investors have turned to precious metals such as gold to help protect and privately transfer their wealth. However, ever-increasing regulation, monitoring, and physical searches have eroded some of the key protections afforded by gold. Gold's weakness over the past 24 months has also spooked many former adherents. In such an environment, many have seen the recent arrival of digital crypto-currencies as the means to restore the monetary independence that has been co-opted by big governments. Currencies like the now-famous Bitcoin offer the potential for a store of value, low transaction costs, free movement, and anonymity. It's no wonder that Bitcoin has taken the world by storm. But all that glitters is not gold.

Wikipedia defines a crypto-currency as, "a peer-to-peer, decentralized, digital currency [or medium of exchange] whose implementation relies on the principles of cryptology to validate the transaction and the generation of the currency itself." In short, it is a virtual currency traded by private, unregulated internet exchanges. Despite the recent fame of Bitcoin, there are actually a number of other crypto-currencies that have been created in recent years. Names include Litecoin, Peercoin, Namecoin, and Primecoin. Bitcoin, established in 2009, is undoubtedly the most successful, and it became a breakout news story in 2013.

Bitcoin Pros & Cons

Bitcoin offers a few distinct advantages over conventional currencies: it allows almost instantaneous peer-to-peer transactions that completely avoid the expensive and cumbersome bank-run electronic payment systems, and it allows for fast international movement of funds outside foreign exchange controls.

Many investors are also betting that Bitcoin will offer a better store of value over time than serially printed fiat currencies. That's because the Bitcoin protocol automatically, and apparently irrevocably, limits the number of bitcoins that will be created to 21 million. In this sense, they are immeasurably more honest than US dollars. However, unlike US dollars, pounds sterling, or euros, bitcoins do not carry legal tender status, but rather rely on the network of merchants and individuals to continue to accept them as payment for goods and services.

Finally, by utilizing anonymous wallets, some users may think that crypto-currencies like Bitcoin offer increased financial privacy. I believe that this is largely an illusion. Governments have shown a great ability to crack any code no matter how well planned (just look at the British government's success against the Germans in the Second World War). I have full faith that the US Federal government can, over time, develop techniques to map all cyber transactions.

A Volatile Elephant in the Room

But it is Bitcoin's volatility that will likely be its immediate undoing. In recent months, as more speculators have moved into the market, prices have been unstable to say the least. On November 29th, Bitcoin reached $1,242 in Tokyo just as gold dipped to $1,240 an ounce. When those two values crossed, many began to speculate that Bitcoin had replaced gold as the premier alternative to fiat money. With relatively high transaction costs and delivery delays, precious metals are expensive to store and transport. In contrast, Bitcoin transactions are fast, cheap, and transnational. But little, if any, store of value is offered. That reality has been demonstrated in recent weeks as Bitcoin has dropped by some 50 percent in market value.

While crypto-currencies remain insulated from central bank manipulation, governments have thus far been tolerant, perhaps because their capability to track transactions is more advanced than Bitcoin believers admit.

Nevertheless, the advent of crypto-currencies represents the increasing popular demand for a currency insulated from political debasement and bank profiteering. Crypto-currencies represent a legitimate attempt by private citizens to reassert their sovereignty over such government actions. I appreciate the effort, and I believe it holds much promise. But for now, I will stay with the traditional store of value, gold.

Good Things for Gold and Silver are Popping Up All Over

Posted: 03 Jan 2014 05:47 PM PST

Gold Price Close Today : 1,238.40
Gold Price Close 27-Dec-13 : 1,216.10
Change : 22.30 or 1.8%

Silver Price Close Today : 20.182
Silver Price Close 27-Dec-13 : 20.013
Change : 16.90 or 0.8%

Gold Silver Ratio Today : 61.362
Gold Silver Ratio 27-Dec-13 : 60.766
Change : 0.596 or 1.0%

Silver Gold Ratio : 0.01630
Silver Gold Ratio 27-Dec-13 : 0.01646
Change : 0.000 or -1.0%

Dow in Gold Dollars : $ 274.92
Dow in Gold Dollars 27-Dec-13 : $ 280.11
Change : -5.18 or -1.9%

Dow in Gold Ounces : 13.299
Dow in Gold Ounces 27-Dec-13 : 13.550
Change : -0.25 or -1.9%

Dow in Silver Ounces : 816.07
Dow in Silver Ounces 27-Dec-13 : 823.39
Change : -7.31 or -0.9%

Dow Industrial : 16,469.99
Dow Industrial 27-Dec-13 : 16,478.41
Change : -8.42 or -0.1%

S&P 500 : 1,831.37
S&P 500 27-Dec-13 : 1,841.40
Change : -10.03 or -0.5%

US Dollar Index : 81.040
US Dollar Index 27-Dec-13 : 80.500
Change : 0.54 or 0.7%

Platinum Price Close Today : 1,411.50
Platinum Price Close 27-Dec-13 : 1,376.00
Change : 35.50 or 2.6%

Palladium Price Close Today : 730.30
Palladium Price Close 27-Dec-13 : 711.05
Change : 19.25 or 2.7%

The GOLD PRICE added $13.40 to end at $1,238.40. Silver today gained 8.4 cents to 2018.2.

Platinum and palladium are pitching in their fair share, too. Both have shot straight up off mid-December lows to close above 20 and 50 day moving averages. Palladium even stands above its 200 DMA! Generally what's good for the white metals is good for the silver and gold price too.

GOLD/SILVER RATIO began trending down 2 December and has fallen ever since. Yesterday it fell sharply through its 50 DMA AND 200 DMA. Bear in mind that because silver and gold prices move together and silver usually moves faster than gold, the ratio DROPS in rallies. Thus a falling ratio promises very good things for silver gold prices. Stochastics, Rate of Change, MACD, RSI all point to a lower ratio.

This is solid trading, with steady gains every day jumping from resistance to higher resistance. Gold tested the floor at $1,221.30 today, just below yesterday's close, and jumped to the ceiling at $1,239.60, knocking on that $1,240 resistance. Hang on -- this is pretty but won't prove anything until gold climbs above the December $1,267.50 high and 50 DMA ($1,260.56).

Last two days have painted a breakout from a bullish falling wedge with a target of $1,295, where gold shamed itself with failure in November and where another resistance barrier lies. While the possibility of a further slide below June's $1,179.40 low, December lows at $1,186 and $1,181.40 argue for a double bottom with June and a truncation of this downleg. That bounce off the June lows speaks loudest of better things to come.

All indicators have fingers pointing toward the clouds, but first let's see that close through $1,240.

Pause to reflect that the last two days' strength for the silver and gold price came in the teeth of a strongly rising US dollar (y'all know, the green one with pictures of dead Americans that used to look like money but now looks like Monopoly money).

The SILVER PRICE closed barely above the downtrend on its weekly chart. First time since October. Silver let its toes drop to 1999c today, but reached up for 2033c. Silver is trying to close above its December intraday high at 2029c. Yesterday the high was 2044c, but silver needs to close above there. Resistance always lurks at 2100c, then looms the October high at 2309c.

Friends, indicators and cross markets have not lined up like this for silver and gold for a long, weary while. Too early to call this the turnaround, but only a few confirmations will take us there.

I bought quite a bit a few days ago, but then, I'm a plunger and a natural born fool.

For the second week in a row metals are stronger than stocks, and against a rising dollar too. The numbers don't show quite how badly stocks tumbled from their thin market highs before New Year. Dollar this week finally managed to climb and pierce its downtrend line.

Ponder stocks. After a new high on 30 December they've been rolling downhill and gaining momentum. Most indices closed down today slightly, although after a 135 point drop yesterday the Dow dead-cat-bounced up 28.64 (0.17%) to close at 14,469.99. Hard to argue with the scoreboard: that's lower for the week. Likewise the S&P500 lost ground this week, and lost 0.61% today (after losing 16.38 yesterday) to end at 1,831.37.

'Twas a portentous day for the Dow in Silver. Closing at 816.56 oz, it sneaked beneath the 818.86 oz 20 day moving average, dropping 0.67% for the day.

Dow in Gold hovereth yet above its 20 DMA. Closed today 13.31 oz against a 13.23 oz 20 DMA. Both DiG and DiS are flashing reversals by technical indicators. Four days isn't enough to use as a rope for a swing over hell, but it appears that stocks have turned down against metals. Taken together with other indicators, silver and gold are beginning to shine again.

Yesterday the US DOLLAR INDEX only pecked through the wall of its prison below the downtrend line, but today it made good its escape. MACD flashed a buy signal. Dollar might rally to 83 or 83.5.

Today's rally hit euro holders in the incisors with a pipe wrench. Euro gapped down yesterday below its uptrend line, and today closed wretchedly at the bottom of today's range, and below the 20 and 50 DMAs. Trapdoor is open for a fall to the 200 DMA, now $1.3300. Somebody stick a mirror under the yen's nose to see if its still breathing! Fell 0.08% to 95.36 today. Got to its downtrend line and fainted like a 14 year old boy asking his girlfriend to dance. No sunshine there.

In spite of stocks declines, gold and silver mining stock indices are climbing. XAU climbed over its downtrend line and hit its 50 DMA today after a double bottom in December. GDX pierced its downtrend last week, touched back to kiss goodbye, gapped up yesterday, and backed off a little today. HUI still needs to close above 207, but ended today at 203.49, and has followed the same pattern as the others. These all need but one little jump to confirm a turnaround skyward.

Y'all enjoy your weekend.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2013, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

WARNING AND DISCLAIMER. Be advised and warned:

Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold and silver on margin or with debt.

What DO I recommend? Physical gold and silver coins and bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose.

Good Things for Gold and Silver are Popping Up All Over

Posted: 03 Jan 2014 05:47 PM PST

Why Taper-Driven EM Turmoil Is A Big Problem (In One Chart)

Posted: 03 Jan 2014 05:38 PM PST

Emerging Market equities have tumbled over 4% in the last 2 days on heavy volume...

The last time the world experienced a major Emerging Market meltdown, the US was still by far the world's major 'consumer'. However, as the following chart from JPMorgan shows, that is very much not the case anymore...

and the last few days ugly echoes of the mid-Summer Taper Tantrum in Emerging Markets (most notably Asia), while being shrugged off by most, may be much more important to any sustained global recovery than your friendly local asset-gatherer would ever care to admit.

Silver Short Squeeze 2

Posted: 03 Jan 2014 03:40 PM PST

Gold Prices Biased To The Upside, But Somewhat Limited `

Posted: 03 Jan 2014 02:19 PM PST

Chicago-based iiTrader chief market strategist Rich Ilczyszyn checks in with Kitco News to discuss gold's early year rise. Rich tells Kitco News that despite the early year pop in prices, which isn't...

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

War Rages In Gold As Inflation / Deflation Battle Continues

Posted: 03 Jan 2014 02:03 PM PST

On the heels of continued war in the gold and silver markets, today a man out of Europe who has been extremely accurate with his calls on the gold market sent King World News a fantastic piece which covers the ongoing battle between inflation and deflation, as well as the metals markets. KWN was given exclusive distribution rights to the outstanding piece below by Ronald-Peter Stoferle of Incrementum AG out of Lichtenstein.

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

In The News Today

Posted: 03 Jan 2014 01:52 PM PST

Jim Sinclair's Commentary Snowstorm and sub zero huddle indoors! Jim Sinclair's Commentary George Soros recently acquired a substantial stake in the large-cap Market Vectors Gold Miners ETF (GDX) and kept his calls on Barrick Gold (ABX). China gold chief confirms gold price suppression by U.S. Submitted by cpowell on Thu, 2014-01-02 15:14.... Read more »

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

Gold Daily and Silver Weekly Charts - Release from the Year End Clamp Down

Posted: 03 Jan 2014 01:22 PM PST

Gold Daily and Silver Weekly Charts - Release from the Year End Clamp Down

Posted: 03 Jan 2014 01:22 PM PST

Gold Then and Now

Posted: 03 Jan 2014 12:00 PM PST

As the saying goes; “History often repeats, but is never exactly the same.” The same can be said for asset classes, if one understands their long term cycles. Let’s examine Gold.

A Silver Short Squeeze Could Ignite A Major Rally

Posted: 03 Jan 2014 11:53 AM PST

Silver is poised for a massive recovery upleg in 2014, a mean reversion from last year's dismal action. The main driver of silver's initial strength will be American futures speculators covering shorts. These bearish bets on silver soared to a bull-record high last month, which will require exceptional buying to unwind. Futures speculators as a herd always bet wrong at major lows, they are a fantastic contrarian indicator.

Because futures trading is such a hyper-leveraged zero-sum game, futures traders have a reputation of being smart and sophisticated. And they are to a great extent, futures are so unforgiving that survival of the fittest rules. Capital naturally flows from the poor traders to the good ones. Nevertheless, within their chests thump the same hopelessly emotional human hearts that are such a liability in the markets.

Even good futures traders succumb to groupthink, getting too greedy or too scared with the rest of the herd. They flood into silver futures after the metal has already surged in strong uplegs, buying into the popular euphoria. Then they flee silver after it has plunged, waxing bearish with everyone else. This leads to buying high and selling low, the same emotional affliction that torments nearly every trader.

Futures trading is one of the purest forms of speculation, making leveraged up-or-down directional bets on underlying prices. When these traders buy silver futures, they expect its price to rise imminently so they are effectively bullish on the metal. When they sell, they expect silver to fall in the near future so they are bearish. Thus looking at their aggregate bets on silver reveals their collective sentiment on it.

Thankfully this useful data is readily available. All silver futures buying and selling gets distilled into the famous Commitments of Traders reports from the US Commodity Futures Trading Commission. These weekly reports show how futures speculators as a group are betting on silver. They've always been the most bearish, as evidenced by the most selling, right when silver happens to be carving major bottoms.

Futures are a zero-sum game, every contract has a trader on the long side betting a price will rise and an opposing trader on the short side betting that same price will fall. Every dollar won by one trader is a direct dollar lost by the trader on the other side of that contract. The total number of longs and shorts in silver futures always nets to zero. But the classic CoT reports divide traders into three separate groups.

They are commonly known as commercial hedgers, large speculators, and small speculators. Of course the first group actually produces or consumes physical silver for business purposes. They are simply trying to lock in future prices to better manage their cashflows. The latter two groups of speculators take the opposing side of those hedging trades, and it is their bets that are a powerful contrarian indicator.

This first chart looks at the net-long and net-short positions among these broad categories of traders. The more net-long silver-futures speculators get, the more bullish they are on silver's price. But the opposite extreme is far more interesting today. The less net-long or even net-short speculators become on silver, the more bearish they are on it. And in recent weeks that bearishness has approached record extremes.

silver futures COT 2008 2013 trading

Recently in early December as silver slumped back towards its brutal June lows, futures speculators' net-long positions plunged. The large specs' net-long futures contracts held fell to just 2.9k. How low is that? Between 2009 and 2012 before last year's epic precious-metals selling anomaly, large specs averaged net-long positions of 28.1k contracts. A month ago they were merely 1/10th normal levels.

Silver's secular bull was born way back in November 2001 just above $4 per ounce. Since then there have been 631 weekly CoT reports. Large specs' net-long positions have fallen under 3.0k contracts on just 10 of those, or 1.6% of the time. 2 of those weeks were last year, the first in late June. When futures speculators as a herd get that bearish on silver, the white metal is always on the verge of a major surge.

Right after that late-June episode of exceptionally-low speculators' net-long positions, silver soared by nearly a third in the next couple months. Right when futures speculators were the most bearish on this metal as evidenced by their low net-long positions, it was bottoming. They were betting against silver at exactly the wrong time, selling low. And this certainly wasn't the first time, specs have always done this.

Late June's large-spec net-long contracts happened to fall to their lowest level in just over a decade, truly anomalous. But in general spec net-long lows are very bullish silver indicators even when they aren't as extreme. A basic rule of thumb is that if spec net longs are near their lowest levels in at least 6 months, they reveal excessive bearishness. And that has always been a universal contrarian indicator.

I highlighted some of these episodes above in blue. Pretty much without exception, when large futures speculators' net-bullish bets on silver reach a major low, this metal is also at a major low. Note above how the large-spec net-long lows coincide with bottomings in silver. Immediately after these speculators wax the most bearish, silver starts powering higher in either a sharp rally or a much longer major upleg.

While there are some very smart silver-futures traders out there, as a herd they succumb to popular greed and fear just like the rest of traders. They get too bullish after silver has already run too high too fast, and too bearish after silver has already fallen too low too fast. They trade like momentum players, betting that whatever mature trend is in place will continue indefinitely. But that really isn't prudent.

Universally in the financial markets, greed and fear dominate short-term price action. Once greed crests after a long upleg, everyone who is interested in buying in anytime soon has already bought. That leaves only sellers, so the price soon corrects. And once fear peaks after a deep correction, everyone who is susceptible to being scared into selling has already sold. That leaves only buyers, so the price rallies.

Excessive greed and fear naturally burn themselves out, spawning all the major trend changes. These are exceedingly profitable to trade if you can get in fairly early near the inflection points. Contrarian traders attempt to do this, buying low when everyone else wants to sell then later selling high when everyone else wants to buy. Being brave when others are afraid is the only way to consistently buy low.

But fighting the crowd is never easy, because your own heart will desperately try to convince you to wrongly be excited or scared exactly when everyone else is. You can short-circuit that desire with context data like silver-futures specs' net positions that reveals when everyone else is too bullish or bearish. And with net longs not far above decade-plus lows in recent weeks, specs' bearishness remains extreme.

And provocatively this very bearishness in futures is what drives the initial silver rallies out of net-long lows. Futures enable traders to easily sell silver short, to effectively borrow silver they don't own and sell it in the open market. If the silver price soon falls as these short sellers expect, they can then buy back the silver they originally borrowed at a lower price to pay it back. Then they pocket the difference as profit.

When a price is falling particularly sharply, and fear is exceptionally high, short sellers are often the only buyers around. Their buying to cover slows the price decline, reverses it, and then accelerates it back to the upside. The higher the short positions, the larger the necessary buying and the bigger these short-covering rallies become. And last month total spec silver shorts surged to a record, a super-bullish omen.

This next chart slices up the weekly CoT data a bit differently, adding the total long-side and short-side silver contracts that both large and small speculators hold. Every silver contract sold short has to be bought back before it expires, creating futures buying demand. And when silver starts rallying in the face of large short positions, the traders have to scramble to cover before their leverage slaughters them.

silver futures specs 2008 2013 trading

Just a month ago in early December, the total silver-futures short positions held by both large and small speculators surged to 54.3k contracts. This is astoundingly high, actually the highest levels ever seen in silver's entire dozen-plus-year secular bull! It is also over 2.5x the 2009-to-2012 average levels seen before 2013's wildly anomalous selling. And these shorts haven't come down much in recent weeks.

The speculators holding these massive shorts have no choice, they have to buy long-side contracts to offset their shorts and cover them. And this has to happen before expiration, which is in the next couple months for most of the outstanding contracts. But if silver starts rallying sharply, these speculators will have to buy very quickly to limit their leveraged losses. This should ignite a major short-covering rally.

Each silver futures contract controls 5000 ounces of silver. At $20 per ounce, that is worth $100k. Yet futures speculators are only required to put down an initial margin of $11k to buy a single contract, and the maintenance margin to keep that position is only $10k. So silver-futures speculators can effectively run 10-to-1 leverage today. That dwarfs the 2-to-1 legal limit for stock trading that's been in place since 1974.

While futures speculators don't typically run maximum leverage, they like to get close since that is the main allure of futures trading. They can win huge gains on their capital risked with relatively small moves in the underlying commodity's price. But when that moves against them, the losses snowball just as fast. And at or near 10x leverage, there is very little room for error in the enormous silver shorts.

As all silver investors know, silver has always been an exceptionally-volatile metal. 3%+ price moves in a single trading day aren't uncommon at all. For silver speculators shorting at minimum margin (maximum leverage), silver merely rallying 10% wipes out 100% of the capital they risked! And if silver keeps rallying, which is very likely once momentum shifts in its favor, they can lose far more than they initially bet.

And the greater speculators' total short positions, the greater the risk they all face of a really big and fast rally erupting to wipe them out. Once again the only way to close these shorts is to buy futures to offset them. So as soon as a small fraction of speculators start buying to cover, silver's price starts rising. That convinces increasingly bigger fractions of the remaining traders to buy to cover, sparking a self-feeding cycle.

The more shorts who buy futures to cover, the faster silver's price rises. And the faster silver's price rallies, the more pressure it puts on the remaining short speculators to close their positions. That is why it is so exceedingly dangerous to be short when everyone else is. Short covering can quickly become a stampede for the exits, with very few speculators getting out unscathed. Their frantic buying creates a short squeeze.

While some minor short covering happened in December after that secular-bull-record short position of the futures traders, their shorts remain very high. As of the latest CoT report (Christmas Eve), they still had 45.5k contracts short! In the 631-CoT-week history of silver's secular bull, only 16 weeks saw spec shorts over 45k contracts. Fully 15 of those happened during 2013's wildly-anomalous silver selloff.

After shorting extremes, positions quickly mean revert back to averages. Between 2009 and 2012 in normal years for silver futures trading before 2013's anomaly, speculator short positions averaged 21.5k contracts. That means traders are going to soon have to buy to cover 24.0k merely to mean revert, not even to overshoot as usually happens after extremes. And that is a lot of silver buying likely to happen quickly!

At 5000 ounces per contract, this mean-reversion silver buying from short-side silver-futures speculators alone is 120.2m ounces! Both the US Geological Survey and the Silver Institute estimate total global mine production in 2012 around 780m ounces. So the short covering necessary by American futures traders merely to return to recent years' average levels of shorts is nearly 1/6th of total worldwide production!

And because of the risks rapidly-rising prices pose to short sellers' capital, short covering happens fast. So once this mean reversion starts, all this silver is very likely to be purchased in the US futures markets alone within a couple months. You can see how fast speculators' short positions dropped after past extremes in this chart. Once short covering starts, it rarely stops until positions fully mean revert or overshoot.

Today's near-record futures shorts are extremely bullish for silver as we dive into 2014. It is guaranteed near-future buying that feeds on itself. The early gains in major new silver uplegs are nearly always sparked by short covering, and the bigger the shorts the greater the initial boost. But futures speculators short silver are certainly not its only buyers. Their early buying will start enticing investors back into silver.

As I explained in an essay a couple weeks ago, silver has many exceptionally-bullish factors going for it in addition to the extreme futures shorting. It has converged on multiple major secular support zones, a technical launchpad from which past major uplegs were born. Silver also remains very cheap relative to its primary driver, the price of gold. Once silver starts rallying decisively, investors will start flocking back.

A silver short squeeze will spread like a wildfire in a bone-dry forest. Despite silver's miserable 2013, its ages-old allure certainly wasn't stamped out. Great latent interest in silver remains among investors and speculators alike. Though silver plummeted 36% last year thanks to gold's anomalous selloff dragging it down, the holdings of the flagship SLV silver ETF only fell 1%. And physical silver demand soared worldwide.

So as silver starts rallying again initially on short covering, it will ignite widespread buying from all quarters. This will feed on itself too. The more capital that returns to silver, the faster its price will rise. And the quicker it rallies, the more investors it will attract in. The gains in silver this year ought to be enormous, well over 50% as I explained a couple weeks ago. But the silver-stock gains will dwarf those.

The stocks of silver miners and explorers were thrashed to within an inch of their lives in last year's precious-metals carnage. They've never been more undervalued relative to silver even near its recent lows, truly at fundamentally-absurd levels. So as silver recovers this year, silver stocks are overdue to see gigantic mean-reversion gains. Most should at least quadruple, with the best flying even higher.

At Zeal we've been intensely studying silver stocks for over a decade. Very fortuitously considering the epic silver-stock bargains out there, we recently finished our latest 3-month deep-research project looking into silver stocks. We started with a universe of nearly 120 of them trading in the US and Canada, and gradually whittled them down to our dozen fundamental favorites. These winners are awesome.

They have been able to thrive operationally even in 2013's extreme carnage, and will enjoy vast upside leverage as silver recovers. All dozen are profiled in depth in our fascinating new 27-page silver-stock report recently published. We are offering these fruits of hundreds of hours of expert world-class research for just $95, a steal. Buy your report today while silver stocks are still cheap! That window will rapidly close.

We also publish acclaimed weekly and monthly subscription newsletters. They offer a priceless and rare contrarian perspective cultivated from our decades of hard-won experience, knowledge, wisdom, and ongoing research. I explain what is going on in the markets, why, and how to trade it with specific stock trades. 2014 will look very different from 2013, so subscribe today and start preparing for big changes!

The bottom line is silver is on the verge of a massive short squeeze. Speculators' silver-futures shorts surged to extreme bull-record levels less than a month ago. And they've barely started to mean revert, which means big buying to cover is still coming soon. While speculators' silver-futures positions are always a great contrarian indicator at extremes, exceptional shorts are the most bullish portent of all.

Unlike new long-side buying, short covering isn't optional. Silver futures' hyper-leverage guarantees that speculators have to quickly buy to cover as silver's price rises. This feeds on itself, igniting a buying frenzy as traders rush for the exits. The bigger their aggregate shorts, the greater the rally their covering sparks. So the recent bull-record shorts are a super-bullish harbinger for silver and its miners' stocks.

New Trend Guarantees Higher Gold Prices

Posted: 03 Jan 2014 11:30 AM PST

If you're like me, you've bought gold due to the money printing policies of most developed countries and the effect those policies will have on the future purchasing power of our paper money. Read More...

A Notable Week for Precious Metals

Posted: 03 Jan 2014 11:05 AM PST

Von Greyerz: Gold has moved out of central bank vaults to private vaults

Posted: 03 Jan 2014 10:51 AM PST

1:50p ET Friday, January 3, 2014

Dear Friend of GATA and Gold:

Western central banks don't permit audits of their gold reserves because the gold is no longer around, Swiss gold fund manager Egon von Greyerz tells King World News today. The metal, he says, has left their vaults and moved into private vaults largely in Asia. An excerpt from his interview is posted at the King World News blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/1/3_For...

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

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Monday-Friday, March 24-28, 2014
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Sean Fieler: How to challenge Yellen -- and big government

Posted: 03 Jan 2014 09:46 AM PST

Stop the Federal Reserve's manipulation of the bond market.

* * *

By Sean Fieler
The Wall Street Journal
Friday, January 3, 2014

"I want to come back as the bond market. You can intimidate everybody."

That was James Carville, President Clinton's chief political consultant, talking to this newspaper in February 1993.

When President Clinton backed away from HillaryCare and the rest of his big-government agenda, it wasn't just Democratic losses in the 1994 midterm elections that forced his hand. It was the power of the bond market, a point Mr. Carville understood but Republicans seem to have forgotten.

If today's Republicans are going to roll back President Obama's massive expansion of government, they will need the muscle of a bond market free from the Federal Reserve's manipulation. History suggests that only the prospect of higher and increasingly painful financing costs chastens committed big spenders. A liberated, and consequently less docile, bond market would not only restrain Washington's profligacy, it would also free the Republican Party to refocus on the big ideas and positive vision that made it a global force in the 1980s.

... For the full commentary:

http://online.wsj.com/news/articles/SB1000142405270230337090457929479141...

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Jim Sinclair plans seminar in Austin on Feb. 8

Gold advocate and mining entrepreneur Jim Sinclair will hold his next market seminar at the Austin, Texas, Airport Hilton from 2 to 6 p.m. on Saturday, February 8. Advance registration is required. Details are posted at Sinclair's Internet site, JSMineSet, here:

http://www.jsmineset.com/2014/01/02/austin-texas-qa-session-confirmed/

Join GATA here:

Vancouver Resource Investment Conference
Vancouver Convention Centre West
Sunday-Monday, January 19-20, 2014
Vancouver, British Columbia, Canada

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Mines and Money Hong Kong
Hong Kong Convention and Exhibition Centre
Monday-Friday, March 24-28, 2014
Hong Kong Special Administrative Region, China

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:

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

http://gata.org/node/wallstreetjournal

Help keep GATA going

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

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How to profit with silver --
and which stocks to buy now

Future Money Trends is offering a special 16-page silver report with our forecast for 2013 that includes profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million.

Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets.

To learn about this report, please visit:

http://www.futuremoneytrends.com/index.php?option=com_content&id=376&tmp...

Gold's 2014 Rally May Not Signal a Trend for the Troubled Asset

Posted: 03 Jan 2014 09:44 AM PST

Gold prices are gaining nearly $10 on Friday, putting the yellow metal up $30 for the year, but Kitco Global Trading Director Peter Hug tells TheStreet's Joe Deaux that investors should beware that...

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

Time-Preference And Gold

Posted: 03 Jan 2014 09:01 AM PST

Great performance from Terratec raise drill at Patagonian gold/silver mine

Posted: 03 Jan 2014 08:35 AM PST

A newly delivered Terratec TR 2000 raise borer has been performing extremely well at a silver-gold mining operation in the harsh conditions of Argentinean Patagonia.

Gold, Silver, and Bitcoin - Author of Bitcoinomics Interview

Posted: 03 Jan 2014 08:31 AM PST

if 5 million people in indian every year go out and buy 100 oz silver and 6 oz gold each year and 5 million people in china go out and buy 100 oz silver and 6 oz gold there will be none left for that...

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

China Gold eyes Canadian purchase but says prices still steep

Posted: 03 Jan 2014 08:23 AM PST

GATA

Steep? Huh?

* * *

From Reuters
Friday, January 3, 2014

VANCOUVER, British Columbia, Canada — China Gold International, a mid-sized Canadian-based company with two mines in China, is eager to make an acquisition in Canada, but asset prices remain very high despite a bombed-out mining sector, a company official said on Thursday.

At a time when small- and medium-sized miners are struggling to raise funds as investors have cooled on the sector, China Gold is in the enviable position of having ready access to finance through its biggest shareholder, China National Gold, a Chinese state-owned enterprise. …

“You have seen market-cap drops. But the asset values are still up there. People are refusing to sell at lower prices. We have tried a few times,” Jerry Xie, executive vice president of China Gold, told Reuters. …

… For the complete story:

http://www.reuters.com/article/2014/01/02/chinagoldinternational-idUSL2N…

* * *

Help keep GATA going

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

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To contribute to GATA, please visit:

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

China Gold eyes Canadian purchase but says prices still steep

Posted: 03 Jan 2014 08:23 AM PST

Steep? Huh?

* * *

From Reuters
Friday, January 3, 2014

VANCOUVER, British Columbia, Canada -- China Gold International, a mid-sized Canadian-based company with two mines in China, is eager to make an acquisition in Canada, but asset prices remain very high despite a bombed-out mining sector, a company official said on Thursday.

"You have seen market-cap drops. But the asset values are still up there. People are refusing to sell at lower prices. We have tried a few times," Jerry Xie, executive vice president of China Gold, told Reuters. ...

... For the complete story:

http://www.reuters.com/article/2014/01/02/chinagoldinternational-idUSL2N...

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Hong Kong Convention and Exhibition Centre
Monday-Friday, March 24-28, 2014
Hong Kong Special Administrative Region, China

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:

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

http://gata.org/node/wallstreetjournal

Help keep GATA going

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

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How to profit with silver --
and which stocks to buy now

Future Money Trends is offering a special 16-page silver report 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...

Alasdair Macleod: Time-preference and gold

Posted: 03 Jan 2014 08:16 AM PST

GATA

11:12a ET Friday, January 3, 2014

Dear Friend of GATA and Gold:

As gold leasing by central banks diminishes and their expansionist money policies continue, gold increasingly will be preferred as money over government currencies, GoldMoney research director Alasdair Macleod writes today. His commentary is headlined “Time-Preference and Gold” and it’s posted at GoldMoney’s Internet site here:

http://www.goldmoney.com/research/research-archive/time-preference-and-g…

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

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Many investors lately report having to wait weeks and even months for delivery of their precious metal orders. All Pro Gold works with the largest wholesalers that have inventory “live” — ready to go. All Pro Gold can ship these “live” gold and silver products as soon as payment funds clear.

All Pro Gold can provide immediate delivery of 100-ounce Johnson Matthey silver bars, bags of 90 percent junk silver coins, and 1-ounce silver Austrian Philharmonics.

All Pro Gold can deliver silver Canadian maple leafs with a two-day delay and 1-ounce U.S. silver eagles with a 15-day delay.

Traditional 1-ounce gold bullion coins and mint-state generic gold double eagles are also available for immediate delivery.

All Pro Gold has competitive pricing, and its proprietors, longtime GATA supporters Fred Goldstein and Tim Murphy, are glad to answer any questions or concerns of buyers about the acquisition of precious metals and numismatic coins.

Learn more at www.allprogold.com or email info@allprogold.com or telephone All Pro Gold toll-free at 1-855-377-4653.

Join GATA here:

Vancouver Resource Investment Conference
Vancouver Convention Centre West
Sunday-Monday, January 19-20, 2014
Vancouver, British Columbia, Canada

http://www.cambridgehouse.com/event/vancouver-resource-investment-confer…

Mines and Money Hong Kong
Hong Kong Convention and Exhibition Centre
Monday-Friday, March 24-28, 2014
Hong Kong Special Administrative Region, China

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:

http://gata.org/tshirts

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

http://gata.org/node/wallstreetjournal

Help keep GATA going

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

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To contribute to GATA, please visit:

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

Alasdair Macleod: Time-preference and gold

Posted: 03 Jan 2014 08:16 AM PST

11:12a ET Friday, January 3, 2014

Dear Friend of GATA and Gold:

As gold leasing by central banks diminishes and their expansionist money policies continue, gold increasingly will be preferred as money over government currencies, GoldMoney research director Alasdair Macleod writes today. His commentary is headlined "Time-Preference and Gold" and it's posted at GoldMoney's Internet site here:

http://www.goldmoney.com/research/research-archive/time-preference-and-g...

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

Silver Price Short Squeeze

Posted: 03 Jan 2014 08:14 AM PST

Silver is poised for a massive recovery upleg in 2014, a mean reversion from last year’s dismal action. The main driver of silver’s initial strength will be American futures speculators covering shorts. These bearish bets on silver soared to a bull-record high last month, which will require exceptional buying to unwind. Futures speculators as a herd always bet wrong at major lows, they are a fantastic contrarian indicator. Because futures trading is such a hyper-leveraged zero-sum game, futures traders have a reputation of being smart and sophisticated. And they are to a great extent, futures are so unforgiving that survival of the fittest rules. Capital naturally flows from the poor traders to the good ones. Nevertheless, within their chests thump the same hopelessly emotional human hearts that are such a liability in the markets.

Ted Butler: 2013 — the year of JPMorgan

Posted: 03 Jan 2014 08:01 AM PST

GATA

11a ET Friday, January 3, 2014

Dear Friend of GATA and Gold:

Silver market analyst and market rigging exposer Ted Butler’s new commentary, “2013 — The Year of JPMorgan,” examines the investment bank’s control of the gold and silver futures markets, its transition from short to long, and its apparent exemption from commodity trading law. It’s posted at GoldSeek’s companion Internet site, Silver Seek, here:

http://www.silverseek.com/commentary/2013-%E2%80%93-year-jpmorgan-12815

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

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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

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Vancouver Resource Investment Conference
Vancouver Convention Centre West
Sunday-Monday, January 19-20, 2014
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Hong Kong Convention and Exhibition Centre
Monday-Friday, March 24-28, 2014
Hong Kong Special Administrative Region, China

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:

http://gata.org/tshirts

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

http://gata.org/node/wallstreetjournal

Help keep GATA going

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

http://www.gata.org

To contribute to GATA, please visit:

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

ADVERTISEMENT

How to profit with silver –
and which stocks to buy now

Future Money Trends is offering a special 16-page silver report with our forecast for 2013 that includes profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million.

Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets.

To learn about this report, please visit:

http://www.futuremoneytrends.com/index.php?option=com_content&id=376&tmp…

Ted Butler: 2013 -- the year of JPMorgan

Posted: 03 Jan 2014 08:01 AM PST

11a ET Friday, January 3, 2014

Dear Friend of GATA and Gold:

Silver market analyst and market rigging exposer Ted Butler's new commentary, "2013 -- The Year of JPMorgan," examines the investment bank's control of the gold and silver futures markets, its transition from short to long, and its apparent exemption from commodity trading law. It's posted at GoldSeek's companion Internet site, Silver Seek, here:

http://www.silverseek.com/commentary/2013-%E2%80%93-year-jpmorgan-12815

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

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Navigating a Frigid Market

Posted: 03 Jan 2014 07:55 AM PST

While a brutally cold blizzard slammed the East Coast this morning, the 2014 trading season began with a whimper.

Gold, solar stocks, a few prominent social media and technology shares sprinted higher. But the broad market sagged. By the end of the day, the Dow dropped 135 points, small-caps drilled lower with the Russell 2000 giving back more than 1%

What gives?

Gold is holding firm. Stocks are sinking. Is 2014 the year we see a distinct change of character in the markets?

I don’t have an answer to this question just yet. What I do know is if you’re looking for the last time the broad market ended the first trading day of the year in the red, you have to go all the way back to 2008. I’m not trying to spook you– that’s just the reality of the situation.

The next couple of weeks are going to give us plenty of crucial information about how the stock market might behave this year. But one day of market action shouldn’t sway our thinking too much. One bright spot for equities is that there are pockets of stocks that completely ignored yesterday’s sharp swing lower. And I’ve yet to see any glaring signal to short this market just yet…

The most important thing you can do today is to re-establish your trading system for the year. Heading into this pivotal trading month blind can only lead to pain and frustration. As I said yesterday, keep and open mind and prepare for every possible outcome. The gains will follow…

Regards,

Greg Guenthner
for The Daily Reckoning

Ed. Note: This morning, Greg offere his Rude Awakening email readers an extra word of caution about the markets going forward in 2014 — including 5 specific numbers to be aware of. If you didn’t get it, you only got half of the story. Don’t let that happen again. Sign up for the FREE Rude Awakening email edition, right here.

Gold Price and Time Preference

Posted: 03 Jan 2014 07:55 AM PST

The future price of gold cannot be discussed without considering its implied discount rate expressed through time-preference. This is the relative desire to own goods at an earlier date rather than later. There are several reasons gold is almost certainly more valuable sooner rather than later, including the fact that when someone wants something he naturally wants it now, and there is always the risk that a promise for future delivery will not be kept.

Gold and Silver Stocks to Lead Metals Higher

Posted: 03 Jan 2014 07:06 AM PST

In The News Today

Posted: 03 Jan 2014 06:04 AM PST

It may soon be time to go for the gold Jan. 2, 2014, 12:34 p.m. EST By Martin Pring Something tells me we might be experiencing the give-up phase for gold. By that I mean a point in the gold price cycle when just about everyone gives up on the possibility that gold prices will... Read more »

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

The Fed’s War on Pennies

Posted: 03 Jan 2014 06:00 AM PST

"A penny saved is twopence clear," wrote Benjamin Franklin in his now-classic Poor Richard's Almanack, published annually between 1732–58. Franklin's Almanack embodied — and perhaps shaped — the ethos of money in Colonial America.

Today, we're far from pennies earning more pennies. Heck, we hardly even talk about pennies after a century of inflation. These days, if you deposit money in a bank, you receive historically low interest rates. I'll show you an astonishing chart in a moment.

First, though, consider… What are the implications of low interest rates? How should you tailor investing to low interest? In this write-up, I have some thoughts on beating the low interest problem while preserving your wealth over the long haul…

How bad are interest rates — for savers, at least? Look at the chart below, based on data going back to 1790. It puts a new spin on Ben Franklin's old quip about a "penny saved." A penny saved earned strong interest, back in Franklin's day!

Long term interest rates

Throughout most of U.S. history, you could "earn" decent money by following Franklin's advice and saving pennies. For over two centuries, U.S. interest rates have seldom been less than 4–5%. Often, rates were higher. If you'd followed Franklin's advice and saved pennies, you'd have earned decent returns over the long haul.

Not anymore! In the past five years, interest rates have crashed below even previous rock bottoms during the Great Depression and World War II. How low is low these days? Let's take a closer look, using a chart of interest rates over the past six decades, prepared by the Federal Reserve Bank of St. Louis.

Effective Fed Funds Rate

Just eyeballing the chart, you can see the 5% interest level running across much of the past six decades. Rates were lower sometimes and higher at other times. For example, look at how the fed funds rate spiked up strongly during the recessions of the 1970s and early 1980s, in a battle against inflation.

But look at interest rates since 2008. Over the past five years, they plummeted. Where's Ben Franklin when you need him? After the crash of 2008, the Fed dropped rates like a stone, and kept them down near zero.

Savers suffer at zero interest. Down at the bank, you don't even earn pennies on the dollar. The Fed and its principals know this. In fact, they know it and don't care!

Last year, none other than Fed Chairman Ben Bernanke cried crocodile tears over the low interest issue. In a speech, Bernanke stated, "I know that people who rely on investments that pay a fixed interest rate, such as certificates of deposit, are receiving very low returns, a situation that has involved significant hardship for some."

Yes, and boohoo for you. If you're a saver, Ben Bernanke feels your pain. But pain or no, the Fed has kept interest rates low, and that's the plan looking ahead.

Even worse, there may be more pain to come, because lately there's talk of banks charging fees to hold your funds. That is, you'll pay the banks, in a form of "negative" interest! In the brave new world of modern money, the Fed's Ben has turned the other Ben — Mr. Franklin — on his head.

Low interest rates rob the noble saver. The saver defers instant gratification, yet receives nothing for the effort. It goes against history. It ought to change, "one of these days." But we're stuck with this situation for now – even as we enter the Janet Yellen era.

Along the way, it's infuriating to do the "right thing" and save but then get kicked around for it. All that and, broadly speaking, it's not so much individual savers who are harmed by low interest rates. Large-scale damage from low interest rates affects institutional money and pension funds. We're not talking about "pennies saved" here. We're looking at literally trillions of dollars of pension funds and such all seeking return.

With low interest rates, many basic assumptions behind large-scale saving and future returns go out the window. Institutional and fund managers look ahead, run the numbers and foresee account deficits. Then? Well, then they change their behavior. Often as not, people do things inconsistent with long-term economic growth. Like what?

Consider that at low interest rates, many individuals save more, borrow less and pay down debt. That's good for the individual, perhaps, but slows the economy.

Elsewhere, businesses divert funds from new capital expansion to bulk up pensions. Meanwhile, institutions beat up company managements to cut costs (often as not by laying off workers) and fund share buybacks. Fewer workers? Less capex? There goes the future seed corn for growth.

Even governments bite the bullet. The political tendency is to raise taxes and/or scale back on, say, maintenance on infrastructure, while steering funds to undercapitalized pension accounts.

At the Fed, policy honchos — welcome to the club Janet Yellen(!) — claim that low interest rates stimulate borrowing and spur the economy. So after five years of low rates, where's the spurred-on economy? One can just as easily argue that low interest rates lead to less money going to concrete, steel and new machinery. If the past five years are any guide, economic growth is slow when interest rates are zero.

Plus, low interest rates create large amounts of essentially "dry tinder" across the economy. That is, people and firms borrow simply for the sake of borrowing at low interest. It's more fun to play with somebody else's money, right?

But looking ahead into 2014 and beyond, what happens when the business cycle turns and profits or incomes fall? How does the borrower service debt? Or worse, what happens when (not if) those interest rates go back up? Where's the money? Well, I suppose that's what bankruptcy court is for.

In an era of low interest rates, investors aren't getting return down at the bank. To paraphrase that famous line from the television show Seinfeld, "No Ben Franklin for you!"

Another investment alternative is dividend-paying shares. In these pages we cover numerous solid, well-capitalized dividend payers, from large oil companies to master limited partnerships and others.

Meanwhile, we have to wait for the other interest rate shoe to drop from the Fed. My concern is what will happen when the markets sense the first signs of interest rates rising. Eventually, somebody has to pull that trigger and get rates back to some semblance of historical norm. On that day, expect heavy selling pressure as people book gains.

We're not there yet — even in the face of the taper, nobody is raising rates. For now, you need to appreciate the situation. As investors, we have to balance the need for return in a time of low rates with the risk of what happens when things begin to turn. Stick to those quality dividend payers. I'll write about this much more as 2014 unfolds.

Thanks for reading.

Byron W. King
for The Daily Reckoning

Ed. Note: It’s important to safeguard your wealth in an era when savers are treated as economic pariahs. And the best way to do that is to stay informed. That’s why Byron contributes regularly to the Daily Resource Hunter – a service designed to help investors protect and grow their wealth in uncertain times… especially in the resource and energy spaces. Sign up for FREE, right here to get started.

This article originally appeared in the Daily Resource Hunter

Gold and Silver Price on the turn?

Posted: 03 Jan 2014 05:46 AM PST

Encompassing the year end and its holiday on Wednesday, this week has been notable for precious metals. For gold there have been three important features: firstly, Tuesday saw a powerful one-day reversal, with gold falling $22 before recovering by $32; secondly the $1182 low was first tested six months ago before rallying strongly to $1430, and it looks like gold might be forming a double bottom, the prelude to the next bull leg; and lastly this happened on the last trading day of 2013, which suggests that the fall in price had more to do with window- dressing rather than genuine selling.

2013 – The Year of JPMorgan

Posted: 03 Jan 2014 05:33 AM PST

Probably owing to the dramatic decline in the price of gold and silver, I've read scores of year end metal reviews, more than I have ever read previously. Like most of you, I read in order to learn. Therefore, I approach every year end review and outlook with an eye towards understanding just what caused the prices of silver and gold to decline as much as they have and what that portends for the New Year.

I know I look at silver and gold differently than most commentators and what follows I haven't seen elsewhere, for better or worse. Let me assure you that I'm not trying to be different for the sake of being different; my objective is to understand what really moves the price of silver and gold – no more, no less. I'm not interested in making up stories that can't be verified or documented; I would not put my name on anything that I did not believe to be factual and accurate.

As has been the case for the past five years (since it acquired the concentrated short positions of Bear Stearns), 2013 was the year of JPMorgan in silver and gold. Everything important that transpired in silver and gold can be traced to JPMorgan, just as this bank will dictate what happens in the future. I realize I am being overly specific and that many different factors influence the price of any market; but the circumstances surrounding JPMorgan are so overwhelming as to render all those other factors combined moot when it comes to silver and gold.

From the very beginning of the year to the last two days of 2013, JPMorgan has dominated and controlled the price of silver and gold. Here are the documented facts. At the start of 2013, with gold at $1650 and silver at $30, JPMorgan held short market corners in COMEX gold and silver futures. JPM was short 75,000 gold contracts (7.5 million oz) and 35,000 silver contracts (175 million oz). JPMorgan's short market corners at the start of 2013 amounted to a 21% net share of the entire COMEX gold futures market (minus spreads) and an astounding (but typical) 35% of the entire COMEX silver market. No single entity had ever held such outsized and anti-competitive shares of any important regulated futures market. It is unreasonable not to associate such extreme market corners with what followed in price.

The next standout feature to this year's historic $450 (28%) decline in the price of gold and the $10.50 (35%) decline in silver is in the specific manner of the decline. The vast majority of the total price decline in gold and silver occurred within several days; two days in April (when gold fell $200 and silver by $5) and a few days in June (when gold fell another $150 and silver another $3). The price record clearly shows that the major damage of the worst year in gold and silver history transpired over a handful of days, something never witnessed before in gold, but occurring before in silver (twice in 2011). It wasn't just that gold and silver declined dramatically in 2013, but the nature of the decline.

Take away those five trading days of 2013 and it would have been a rather ho-hum year in gold and silver. Of course, we can't take away those five horrible days, but to ignore them would be a mistake. The degree of the time-compression of this year's decline in gold and silver, were it to occur in any other market would necessitate historical nomenclature (Black Monday or Friday). Even more than the plunge in price for gold and silver in 2013 was the time-concentrated nature of the decline. Try to imagine the furor that would arise if the stock or bond market were to decline 35% in a matter of days.

Let's stop for a moment and connect these two dots – JPMorgan's short market corner in COMEX gold and silver at the start of the year and the historic and concentrated price plunge of 2013, essentially completed for the year by the end of June. Can it be possible that these two facts were not directly related and a case of cause and effect? Let me restate that – is it possible that JPMorgan just happened to be in the right place at the right time and the historic gold and silver price plunge occurred through no input by JPM? Before you answer, let me comment further.

The price plunge through the end of June resulted in JPMorgan making more than $3 billion on their short market corners in COMEX gold and silver. So, to conclude that JPMorgan had nothing to do with the price plunge is the same as concluding that $3 billion in commodity futures trading profits is a normal and regular occurrence. But it wasn't just that JPMorgan innocently stood by while legitimate market forces bestowed a sudden $3 billion windfall on a financial institution found to have acted improperly in more different circumstances than can be recorded – it's what JPM did as a result of the gold and silver price plunge.

The facts show that JPMorgan not only took profits on their short market corners in gold and silver (to the tune of $3 billion+), JPM bought so aggressively on the price plunge thru June, that this bank almost eliminated their short market corner in COMEX silver and actually reversed their short market corner in COMEX gold to a long market corner. The facts indicate that JPMorgan was the single most aggressive trader on the extreme price plunge and not a lucky bystander.

It is well-established that a market corner is against commodity law. In fact, this is the most important aspect to commodity law, because market corners are unquestioned proof of manipulation. CFTC data indicate (as I've been reporting all year) that JPMorgan held short market corners in COMEX gold and silver at the start of the year and that this crooked bank holds a long market corner currently in COMEX gold. There can be no question that JPMorgan held and holds market corners in COMEX gold and silver based upon market share.

The only question is how the heck did these crooks pull it off? Specifically, how was JPMorgan able to buy so much COMEX gold and silver as prices plunged? Normally, one would think the net purchase of 150,000 COMEX gold contracts (15 million oz) and 23,000 COMEX silver contracts (115 million oz) by the US's largest bank would cause prices to soar. That would usually be the case, except for one other fact – JPMorgan and other collusive traders have come to control the price mechanism on the COMEX, thru high frequency trading (HFT), spoofing and other illegal computer trading means. The evidence of this is in the otherwise inexplicable daily price volatility on the COMEX and the fact that JPMorgan and other collusive commercials are always on the buy side on big down days with no exceptions.

This HFT daily price control, combined with trading counter parties (technical funds) solely motivated by price signals has created a Frankenstein-market – a monster out of control. Real commodity markets are supposed to have prices dictated and discovered by real world supply and demand forces; the COMEX monster market has computer algorithms dictating prices to real world producers, consumers and investors for the benefit of JPMorgan.

I've concentrated on what JPMorgan has done this year on the COMEX because that market determines gold and silver prices throughout the world. But JPMorgan's influence and activity is not limited to COMEX gold and silver futures. In addition to holding a long market corner in COMEX gold futures, JPM has been extraordinarily active in taking actual delivery of metal recently. For the month of December, JPMorgan has taken delivery of more than 96% of the 6493 gold deliveries issued this month. The 6254 contracts taken by JPMorgan in its house (proprietary) account is equal to 625,400 oz of gold. In addition, JPMorgan also took delivery of 10 million silver oz in December and another 5 million silver oz this week in the new January delivery month. http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf

Here's something new I've been meaning to mention. The CME Group (owner-operator of the COMEX) lists a spot month position limit and monthly limit on actual deliveries of 7.5 million silver oz and 300,000 gold ounces by any one trader. Yet the CME is reporting that JPMorgan in its house account took delivery of more than double the amount of gold allowed in any one month. Since JPMorgan held the 6254 gold contracts from first delivery day forward, it also means that JPM was in violation of CME rules limiting spot month holdings in gold futures of 3000 contracts for the entire month. The violations in silver were less egregious but were violations nonetheless.

I'm sure if pressed the CME could come up with some cockamamie excuse why JPMorgan was allowed to hold and take delivery of so many gold and silver contracts in one month, but the real reason is that JPMorgan is above all rules and law. The CFTC backed down on policing JPMorgan and it would be foolish to think the CME would restrict its most important client in any way. Far from a band of brothers, this is a brotherhood of criminals. Besides, rules are for the little people, not JPMorgan.

2013 also highlighted the unintended consequences of JPMorgan's control on silver and gold prices. By rigging gold and silver prices lower on the COMEX to close out its gold market corner and flip it to long market corner, JPMorgan also caused the extraordinary liquidation of metal from the world's largest gold ETF, GLD. There can be little argument that the steep plunge in gold prices caused the massive liquidation of almost 18 million ounces (41%) of gold holdings in GLD. Investors dumped $25 billion worth of GLD in reaction to declining gold prices and prices declined because JPMorgan rigged prices lower on the COMEX in order to flip a short market corner into a long market corner. If there's an alternative plausible explanation, I haven't heard it.

Earlier in the year, when I first discovered that JPMorgan held a long market corner in COMEX gold, I speculated that JPM was gaining ownership of much of the gold liquidated from GLD. Numerous reports of buying by China and India subsequently persuaded me to think that most of the metal from GLD ended up there. But considering how aggressive JPMorgan has been in acquiring gold and silver metal via COMEX deliveries recently, I now believe JPM got a pretty good chunk of the liquidated GLD gold. I also think that JPMorgan has been getting serious amounts of silver from SLV by buying shares and converting to metal before share holdings require SEC reporting. There are just too many factors pointing to JPMorgan acquiring all forms of gold and silver to not consider this the key factor of 2013.

One of the questions I have been unable to answer to myself over the past several months is why hasn't JPMorgan let gold and silver prices rip to the upside after establishing a long market corner in COMEX gold and sharply reducing their short market corner in COMEX silver. After having made $3 billion on the short side, JPMorgan has been in position to make that much and more to the upside. I couldn't quite understand what was holding them back. The recent COMEX delivery data, as well as the continued outflows from GLD (and more recently from SLV), come close to answering my question.

It appears that JPMorgan hasn't let gold and silver rip to the upside because the bank is still acquiring important quantities of metal in physical form. It does appear that JPMorgan has hit the limit of COMEX gold futures ownership, as the bank's long market corner is pretty easy to track and, apparently, hard for anyone to deny. Likewise, JPM's short position in COMEX silver has been hard to reduce significantly for six months or longer.

But the documented data clearly indicate that JPMorgan has been acquiring important amounts of gold and silver thru COMEX deliveries and, most likely, in actual metal from GLD and SLV. Unlike futures contracts which are reported weekly in COT reports, there is no reporting requirement by JPMorgan for physical gold and silver held. Considering that the statistics from the COMEX have shed much light on JPMorgan taking delivery of gold and silver in extraordinary amounts and the knowledge that JPM doesn't welcome close scrutiny of its trading, I'm inclined to believe we are closer to the end of JPM taking such visible deliveries, rather than this being the start of growing delivery-taking by them. In addition, after the unprecedented bleed of more than 40% of the metal in GLD, further massive liquidations look improbable from that source.

Therefore, I can see what JPMorgan has accomplished in 2013 and why they haven't pulled the trigger yet to the upside, as they continue to acquire physical gold and silver. But the easy flow of physical gold and silver accumulation by JPMorgan now appears largely over. That's not to say JPMorgan is done with its dirty tricks to the downside, but it's important to put things in perspective, which is the main purpose of year end reviews.

As was the case in 2013 and every year since 2008, the next year in gold and silver will be determined by JPMorgan. But considering that JPMorgan now holds a long market corner in COMEX gold for the first time in history, it is hard to see how 2014 doesn't shape up to be the exact opposite of 2013. Throw in JPM's sharply reduced short position in COMEX silver and the massive quantities of physical gold and silver acquired by the bank and the start of 2014 couldn't be more different than the set up of a year ago.

While no one can accurately predict short term pricing or the exact moment the deliberate price beatings of 2013 will end, the facts indicate a remarkable turnabout in JPMorgan's positioning. We fell sharply in 2013 because of JPMorgan and will likely rise sharply in 2014 for the same reason. From my perspective, that's all that matters. 2013 – Good riddance. 2014 – Step right in. Happy and Healthy New Year to all.

Ted Butler

Published on January 1, 2014

For subscription info please go to www.butlerresearch.com

Annual Wrap Up

Posted: 03 Jan 2014 04:00 AM PST

“The bigger the breakdown, the bigger the breakthrough.”
~ Thomas Hupp

By Catherine Austin Fitts

In 2013, despite calls for volatility and even dollar collapse, US equity market prices were WAY up with relatively little volatility, while bonds and emerging markets equity prices fell and commodity prices fell sharply.

America became a net [...]

The Ratio of U.S. House Prices to Gold and Silver Market Sentiment

Posted: 03 Jan 2014 02:38 AM PST

The last time housing market sentiment and precious metals prices lined up this way, we were on the cusp of massive volatility and collapse. Housing had reached the end of its long great credit driven rope. At the same time, defaults began to create tremors deep below the house of cards. Silver and gold had recently been pummeled in the same not-for-profit manner that has riddled these markets for more than 40 years in the modern era (and perhaps much longer throughout the history of the monetary metals).

Gold and Silver Prices - You Can't Outrun the Long Arm of Equilibrium

Posted: 03 Jan 2014 02:35 AM PST

Currently, commodity price performance has lulled the speculative (and therefore, the mainstream) community into a sense of complacency. The speed with which accidents can happen and induce overall change in sentiment is something which can only be imagined in the context of the flash crashes. Outside of more circuit breakers, the HFT conditions that ultimately led to the May 2010 fat finger flash crash and its reverberating damage have not been resolved.

Gold Bear Market Trend Update 2014

Posted: 03 Jan 2014 02:33 AM PST

The Gold Universe (shares and gold price) looks like it “may” be about to reverse the bear trend in which it has been trapped for some time. Should this happen, the evidence suggests that fear for the integrity of fiat currency denominated capital markets rather than fear of inflation will be the ultimate cause. (Brian Bloom)

Gold and Silver Stocks to Lead Precious Metals Higher 2014

Posted: 03 Jan 2014 02:23 AM PST

In early November we turned bearish on the precious metals with the expectation that the sector was about to begin a final plunge that would lead to a V shaped bottom. In our last editorial, we asserted that the bear market was in its final throes. Interestingly, the plunge in precious metals stocks may have ended in early December. Over the past several weeks the gold and silver stocks failed to break lower despite the negative sentiment and the prevalence of tax loss selling. While we aren’t sure if Gold has bottomed, we think odds are strong that the stocks have bottomed.

Stepping Away from the Desk

Posted: 03 Jan 2014 01:13 AM PST

Dear Readers,

Happy New Year!

Today's edition of The Room will be, I suspect, something of a challenge to write.

That's because, other than continuing to lend whatever assistance I can to my partners Doug Casey and Olivier Garret, I have decided to henceforth studiously avoid anything resembling a hard deadline.

Which, in effect, makes this my last edition as editor of The Room.

Now, don't get me wrong: I love writing and I love my regular correspondence and interactions with so many of you dear readers. However, after 40 years of long hours and fixed deadlines, I came to the conclusion over the holidays I want to dedicate as much of the rest of my life as possible to enjoying my family and the wonderful lifestyle here at La Estancia de Cafayate.

This doesn't mean you're completely rid of me—I will still drop in now and again as a guest contributor, but only when passion moves me and not on a fixed schedule.

I will also remain involved in the production of various Casey Research conferences, video programs, and special events, the next one being here in Cafayate, Argentina March 25–30 in conjunction with the always popular Annual Harvest Celebration.

As I prepare to step away from the desk, I would like to leave with some musings on the world at this rather delicate point in history. As I write, I'm accompanied by the headbanging music of AC/DC, a band many consider to be the apex of the rock and roll genre, playing their hit song, Thunderstruck.

The World as I See It

Stating the obvious, each and every one of us views the world through a lens uniquely our own. That lens is forged by a combination of DNA and experience. Or, if you prefer, nature and nurturing (or lack thereof).

Thus, two people can observe the very same thing and yet have completely different points of view about it. I mention this because what follows are my own views of the world we share. Based on your own unique perspective, you might agree with my views, or disagree… perhaps even vehemently.

They are rather wide-ranging and follows no theme other than that they are a loose collection of observations based on the life I have lived to this point.

To begin, a look at what might be termed "The Big Picture."

The Big Picture

Socialism is on the rise. And it won't be turned back for a very long time, almost certainly not in our lifetime. This may be the single, most important trend now in motion. If you are a worker or an entrepreneur (i.e., a taxpayer), it puts you at serious risk.

The truth of this point becomes obvious when you consider there is no corner of the world where the principles of free markets aren't currently under assault. Likewise, concepts such as rugged self-reliance and working hard to get ahead are widely being replaced by an eager willingness to rely on government handouts and entitlements.

Anyone with even a modicum of awareness about economics will readily see the false promise of the socialist model by considering the number of governments running large deficits at this point.

The peak danger point for those on the productive side of the ledger will be reached when these governments run out of every rational way to keep the transfer payments coming. At that point, expect the demands for the government to "do more" to become aggressive, maybe even violent. Forced to respond, political policy makers will rush into the realm of devastating irrationality.

Political correctness is endemic and it is dangerous. I have never watched Duck Dynasty, but I have watched the media fast fry the patron of el familia pato over anti-gay comments he made. Do I personally care about someone's sexual preference? Not even a little. Likewise, I don't care in the slightest if a person's religious beliefs hold that homosexuality is abhorrent, unless those people flock together to insist the government coerce people into desisting in a personal behavior they find pleasurable.

Even so, that someone's personal views on such topics could ignite a firestorm of media outrage is a sure sign of the times we live in. That anyone could actually be surprised that someone from the Bible Belt, an avowed Christian based on all the evidence, is against homosexuality is beyond me.

But roasting ducks is only the tip of the very large iceberg of political correctness that threatens to sink individual liberties. That's because the heart and soul of the concept of political correctness is that individuals should take every care to conform to prevailing societal mores, with distinct punishments for failing to do so. And make no mistake, the notion of political correctness extends well beyond making comments about someone's race, gender, sexual preference, religion, height, girth, or any of a thousand other personal traits.

For instance, if the sages of politically correct society determine that it is not PC to explore and produce oil, or to provide base power with nuclear energy, then anyone involved in those activities are immediately cast by the willing media as pariahs. In fact, the entire environmental movement is blessed by the aura of political correctness, automatically making any business that actually manufactures something "bad."

Likewise, having money today is widely conflated with a non-PC level of greed. And every attempt to shirk paying your "fair share" in taxes is about as non-PC as it gets. When the government changes the rules to retroactively disallow currently legal methods of minimizing tax burdens, expect no sympathy… quite the opposite.

The media is, of course, not only complicit, but an active partner in identifying what is, and what is not, politically correct. For those of you who have had any interaction with members of the Fourth Estate, that should make you shake in your boots.

Or pull those boots on precedent heading out to less PC pastures. Here in Argentina it will be quite some time before the PC movement takes over. In support of that contention, nicknames are still widely used… and almost every nickname has to do with an observable or assigned physical trait. Thus, I count among my friends here Pelado (baldy), Grande Cabeza (big head), Gordo (fatty), Flaca (skinny), Rojo (carrot top), Negro (dark skinned), Turko (essentially "Arab"), and Puto (male prostitute, though he's not).

To understand the power of the political correctness movement in the more developed world, consider the recent case of a public relations functionary who tweeted some admittedly rather stupid comments about the statistical probability of a white person becoming infected with AIDS in Africa. Despite being pretty much a nobody, the woman's brief message dominated international news headlines causing her to be fired and, I suspect, ending her career in public relations. (Would it be politically incorrect to point out that she is a blonde?)

While things haven't quite reached the level where religious police wander around like they do in countries such as Saudi Arabia whipping anyone who fails to conform, the level of personal persecution for being on the wrong side of the PC movement is very much on the rise, with no end in sight.

The world is full of risk: diversify. When it comes to building your investment nest egg, concentration can often be the right approach, provided you have thoroughly done your homework. That said, the risks to your wealth today are as numerous as they are acute. This overconcentration can result in a complete wipeout.

That's because government meddling has resulted in historic levels of mal-investment, and that mal-investment is then multiplied exponentially by hundreds of trillions of dollars in derivatives. Fiscal and monetary policy are completely out of control, ultimately requiring the governments involved to twist and contort policies in an attempt to keep the train of state from flying off the tracks.

And that is just one of many threats. Another is the army of lawyers adept at bending the predatory legal system to their benefit. The US has the highest population of lawyers per capita (1:265), and in total (1.1 million)—more than any country in the world.

As a result, you can live your life and manage your finances in ways traditionally considered "prudent" and still lose everything. The only real solution is to spread that risk across as many asset classes, political borders, and financial institutions as possible.

Just because it is the right thing to do, doesn't make it the easy thing to do. Speaking from fairly deep personal experience, getting things established in a number of different jurisdictions takes some reasonably serious legwork. But once you have things properly set up (foreign trusts; international real estate; accounts in numerous political jurisdictions, spread across a number of brokerage and banking institutions—all fully disclosed to the appropriate taxing authorities, of course), you will sleep a lot better.

War is hell. And is it the life of the state. As those who have read my past articles in The Room will already know, of all the many forms of government meddling we have to put up with, none irks me more than the waging of war.

That is not to say I'm against a strong national defense; I am, as long as the emphasis falls entirely on the word "defense." For those who live in the United States, the ability to defend national borders is pretty straightforward. Provided neither Mexico nor Canada are amassing armies on our borders, then it's a relatively straightforward proposition. Just as soon as a foreign fleet with ill-intent gets about halfway across either the Atlantic or Pacific Oceans, we drop a couple of nukes and the war's over.

But what about the terrorists, some of you might ask. While there are those who would argue against it, my unshakeable view is that if the US government wasn't running around the world hitting hornets nests with drone-fired missiles, the terrorist threat level would fall to insignificance.

Were I in charge, I would pull all our troops back home and spend some small percentage of the (considerable) savings on computer network security, as there is a clear threat to critical utilities—not so much from other countries (especially if we stop meddling in their affairs) as much as from some smartass teenager with too much time on their hands.

Unfortunately, the military industrial complex remains so well entrenched in the halls of power that there is almost no chance the United States will reduce its military to the point where it is a credible threat to anyone considering attacking, but not much more than that.

Which begs the question: Now that the US military has again been bested by a bunch of 19^th century warriors and is being forced to extricate itself from Iraq and Afghanistan, where will the war machine point its guns next? While I couldn't begin to anticipate the specifics of where and when the next flashpoint will occur, I'm pretty sure the chosen enemy will be Russia.

And the war may not take the form, at least initially, of firing missiles at each other… but rather kick off with a full-fledged currency war, morphing into a cyber war. No matter what form the conflict takes, given Uncle Sam's psychopath-like record of steady war-making, you can expect the United States to be right in the thick of things.

This becomes a real problem not just for the foreign opponents, but for the citizenry as well. All it will take is for one more serious blowback attack that targets the mainland United States for the massive machinery of the state security system to be fully deployed. At which point, pretty much everything changes.

We have already witnessed the wholesale collection of personal data by the NSA, and a great leap forward in the presence of Homeland Security in everyday life… all with nary a peep out of the populace. The stage is set for things to ratchet in entirely more unpleasant ways, it's just a matter of time… and maybe even the day after tomorrow.

Debt + Deficits = Disaster. People in today's world have come to the idea that governments can run up an unlimited amount of debt without serious consequence. This is simply not true. Eventually, the existing debt, which in the United States is increasing by approximately $3.7 billion per day, must trigger higher interest rates. And when it does, the currency—and the fabric of polite society—will begin to tear apart. For those paying attention, watching for significant upward movement in the 10-year Treasury rate is one of the best ways to know when the time has come to duck. On that front, as you can see in the chart here, while it's too soon to say, the trend is currently going in the wrong direction for the economy.

Funny money is not funny. It's actually just bad money getting worse. That the vast majority of people are asleep at the wheel is a major tragedy in the making. Especially because if they were actually paying attention, then a mass movement advocating for a return to something approaching sound money might have a chance of succeeding. Instead, probably 98.9% of the people in the world have pretty much exactly zero idea that governments are scrambling to cover their soaring expenses by creating currency units out of thin air.

While no one can predict when the current fiat currency system will collapse, the important point is that, in time, it must. At which point, the masses are going to be in for the surprise of their lives, and not a happy one. For what happens then, refer to my comments on the trend toward socialism above.

Technology to the rescue? While one doesn't like to be biased, I confess that Casey's Extraordinary Technology is among one of my favorites of the services we offer. That's because it tracks the progress of companies that are literally changing the world—and that are still fairly priced, so we can profit as they fulfill their promise.

I agree with Doug Casey's comment that, thanks to technology, the world of the not-so-distant future will not only be better, but it will be better than we can imagine. (Personally, because I hate to drive, I can't wait for driverless cars to be the norm).

Of course, one obvious consequence of governments trying to shift their social obligations onto the backs of companies is that managers will look for every new way to reduce their workforce, something the new technologies are very good at. Which mean that between here and World 2.0, society is going to have to deal with the very serious problem of the mass unemployed. No need to worry things will get out of control, however. As you read this, the best and brightest are competing to refine walking, jumping, diving, killing robots for the US military. We shall live through interesting times, no question.

On a More Personal Level

Negatives vs. Positives. I have come to recognize two basic personality types in this world: negatives and positives. Simply, there are people who manage to find the negative in every situation, and those who reflexively look for the positives.

In my experience, life is a greatly enhanced by hanging out with the positive types and actively avoiding the negatives. By extension, as much as possible, one should avoid exposing oneself to the mainstream media, with its institutionalized negativity and constant mantra of "if it bleeds, it leads."

People do better when they work together. While much of human progress can be attributed to innovative individuals with big ideas, and the energy and passion to turn those ideas into reality, the older I get the more I appreciate that we humans are herd animals.

That doesn't mean we should act like a bunch of sheep. Rather, it seems to me that being a part of a productive community, ideally made up of generally like-minded individuals with whom you can enjoy the good times—and be there for in the bad—seems a prerequisite for living a positive, fulfilled life.

Take care of your money and it will take care of you. One of the best things about life here in Argentina is that the cost of living is very low. As a consequence, once you have arranged for a house over your head (and mortgages are nearly nonexistent, so you have to save to buy a house), then the cost of living an extremely high-quality life is almost ridiculously inexpensive.

Case in point, on at least a couple of Friday nights each month, a group of us here at La Estancia get together down at Baco's, a local café, for pizzas and drinks. Recently, 12 of us spent about three hours at a long table on the sidewalk in front of Baco's eating and drinking our fill. When it came time for the bill, it worked out to about $10 a person. In the US, the tab would have easily been five times that amount.

In many parts of the world these days, people are still caught up in the notion that quality of life means "the latest electronic device" or the splashy new car that they can buy with 10% down. All that stuff is just stuff when you get right down to it. And when you approach your retirement years, if you are not careful you'll regret having wasted so much money on what are little more than useless bangles.

Given the economic outlook, with the very real potential for big troubles ahead, it's worth reflecting on what you actually need versus what you want. And if it works for you, consider setting up a bolt-hole in a peaceful and inexpensive country where, should push comes to shove, even a modest nest egg will allow you to live well for the rest of your days, very much not the case in the United States, Europe, and other developed nations at this point.

Of course, a place like Argentina is just one of any number of attractive options for you to choose from.

And finally, don't forget to enjoy your life. With even a little thought, each of us can come up with a list of things that make our lives more enjoyable. And we can identify things that make our lives unnecessarily difficult or unpleasant.

While admittedly simplistic, making time in your life for more of the former and less of the latter, can lead to a much happier existence.

And while things are likely to get fairly tough in the years ahead, we can all take comfort in the fact that we humans are a remarkably resilient species. Do what you need to get your affairs in order, then don't dwell on what might be.

I could go on, but it is a truly stunning day outside and the kids will soon be home from school for lunch, so I am going to move along by saying that writing this column—today, and for the last four years—has been highly energizing to me, and I have all of you dear readers to thank for that.

Yet, per above, I have come to the conclusion that the constant pressure of deadlines is keeping me from enjoying my life to the fullest, and so I must be true to myself by moving on to other pastures. I'll have a bit more to say at the end of this edition of The Room.

Casey's Club: Now Open for New Members

Not sure if you saw it, but Casey's Club is again accepting new members for the first time in 12 months.

As a member in Casey's Club you'll enjoy our highest level of service… receiving all our monthly newsletters, both of our premium Alert services, all special reports, plus invites to VIP events and more… for the rest of your life.

And all for one low fee (plus a modest annual maintenance fee to help offset inflation).

However, because we can only accept a very limited number of new members each year, the enrollment period closes again at midnight on Friday, January 17, after which it will remain closed to new members for at least another year.

It is a truly unbeatable value, and the single best way to assure that you get the best of the best of our research, year after year, for as long as you are an active investor—and beyond.

If you are interested in joining, then now's the time to learn more and to sign up.

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Save Your ASSets First

Saturday, January 4, 2014