Gold World News Flash

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• Reuters: Chatroom evidence challenges Bank of England's story in FX probe
• Gold Bull Market Corrections Then and Now
• Gold Bouncing Off The $1390-1400 Barrier
• Man Who Predicted Every Tapering Now Forecasts QE-Infinity
• Kremlin: If The US Tries To Hurt Russia’s Economy, Russia Will Target The Dollar
• The Run On U.S. Gold Continues…
• Economic Collapse 2014 -- The Fed Will Continue With The Economic Recovery Illusion
• How Gold Performs During FOMC Weeks (Spoiler Alert: Not Good)
• Dead Dollar Walking: The Truth About Government Debt
• The Chinese Yuan Is Collapsing
• Government Agency Warns If 9 Substations Are Destroyed, The Power Grid Could Be Down For 18 Months
• India allows more banks to import gold in easing of curbs
• "The Cacophony Of Fed Confusion," David Stockman Warns Will Lead To "Economic Calamity"
• The Gold Price Lost $17.60 by Comex Close at $1,341.40
• The Gold Price Lost $17.60 by Comex Close at $1,341.40
• The Problem With Forward P/Es
• The success of Singapore gold storage
• Fleckenstein - The Fantasy Is Alive & Well But The End Is Near
• US Fed Continues Tapering, Gold Down on Dollar Rally
• John Embry: Stay Strong, Own Gold And Silver, Wait
• Gold Miners: Red Alert Or All Clear?
• Gold Daily and Silver Weekly Charts - Another Triumphant FOMC Day
• Gold Daily and Silver Weekly Charts - Another Triumphant FOMC Day
• Top Economic Collapse Must Haves -- Harry Dent
• Harry Dent -- Timetable For The Next Collapse
• Despite Taper, The Fed Is Setting Up To Shock The World
• China Must Look Abroad For Metals and Energy To Support Growth
• Fukushima Fallout: Sick U.S. Sailors Sue TEPCO After Exposure to Radiation 30x Above Normal
• Gold tipped to hit $1,400 on Russia fears and ETF buying
• Obamacare Tax Credit: The Untold Story
• Gold Price Erases Last Week's 3% Gain as Russia Seizes Ukraine's Naval HQ in Crimea, Shanghai Discount Holds at $7 Per Ounce
• China Economy Isn't Slowing Down, It's Buying Up Resources
• Gold and Silver Price Fall on Huge Volume
• Michael Gray: Is Goldcorp's Bid for Osisko a Harbinger of a Gold Renaissance?
• Michael Gray: Is Goldcorp's Bid for Osisko a Harbinger of a Gold Renaissance?
• Michael Gray: Is Goldcorp's Bid for Osisko a Harbinger of a Gold Renaissance?
• Why Gold Is Unstoppable
• Fishing for Gold?

Reuters: Chatroom evidence challenges Bank of England's story in FX probe Posted: 19 Mar 2014 11:36 PM PDT By Jamie McGeever Reuters Thursday, March 20, 2014 LONDON -- British regulators are examining evidence relating to a 2012 meeting of currency dealers and Bank of England officials that potentially challenges the central bank's assertion it had not condoned sharing details of client orders. The practice of sharing details about such orders is at the center of a global rigging probe. Transcripts of a foreign exchange chatroom, now in the hands of Britain's Financial Conduct Authority, reveal that an unnamed senior dealer who attended the meeting told fellow traders the next day that Bank of England officials had agreed that there were advantages to sharing client order information to minimize market volatility around daily reference rates known as "fixings," two sources familiar with their content told Reuters. By sharing information during these fixings, traders are able to match trades and minimize price swings, thereby lessening the risk they take on big transactions. ... ... For the full story: http://www.reuters.com/article/2014/03/20/us-britain-boe-fx-idUSBREA2I21... ADVERTISEMENT Safe and Private Allocated Bullion Storage In Singapore Given the increasing risks in financial markets, it is more important than ever to own physical bullion coins and bars and to store them in the safest vaults in the world in the safest jurisdictions in the world. Gold advocates Jim Sinclair and Marc Faber have recommended Singapore. Now, with GoldCore, you can own coins and bars in fully insured, segregated, and allocated accounts in Singapore with the ability to take delivery. Learn more by downloading GoldCore's Essential Guide To Storing Gold In Singapore: http://info.goldcore.com/essential-guide-to-storing-gold-in-singapore And for more information call Daniel or Sharon at +44 203 0869200 in the United Kingdom or at +1 302 635 1160 in the United States. Or email them at info@goldcore.com. Join GATA here: 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/ Porter Stansberry Natural Resources Conference AT&T Performing Arts Center Margot and Bill Winspear Opera House 2403 Flora St., Dallas, Texas Saturday, May 31, 2014 http://stansberrydallas.com/ Canadian Investor Conference 2014 Vancouver Convention Centre West 1055 Canada Place, Vancouver, British Columbia Sunday and Monday, June 1 and 2, 2014 http://cambridgehouse.com/event/25/canadian-investor-conference-2014-inc... * * * 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

Gold Bull Market Corrections Then and Now Posted: 19 Mar 2014 11:30 PM PDT from Jesse's Café Américain: The rumours of the death of the precious metals bull market might just be a bit premature. I think we are in the midst of a generational change in the international currency system. The currency platform will continue to shift, and attempt to restabilize. Change is in the wind, and has been for some time, and flexibility with the ability to learn and adjust will continue to pay a premium. And it is hardly over and done yet. I think we are only at the end of Act I, the realization that the dollar reserve currency system put in place unilaterally by Richard Nixon is unsustainable. But no one knows yet exactly what comes next. Read More @ Jessescrossroadscafe.blogspot.ca

Gold Bouncing Off The $1390-1400 Barrier Posted: 19 Mar 2014 10:01 PM PDT from Armstrong Economics: So far, gold has been unable to get through the first primary resistance 1390-1400 barrier. We pressed higher into this week making the high but then turned back down. Now the two levels forming are 1323 and 1425. A weekly closing back below 1308.00 will signal a resumption of the downtrend. Read More @ ArmstrongEconomics.org

Man Who Predicted Every Tapering Now Forecasts QE-Infinity Posted: 19 Mar 2014 09:01 PM PDT Today the man who, astonishingly, correctly predicted every single Fed tapering is now forecasting QE-to-infinity. Gerald Celente, the man many consider to be the top trends forecaster in the world, also predicted that when the Fed reverses course it will have a tremendously negative impact on the U.S. dollar and send the prices of gold and silver soaring. Below is what Gerald Celente, founder of Trends Research, had to say in this remarkable and timely interview. This posting includes an audio/video/photo media file: Download Now

Kremlin: If The US Tries To Hurt Russia’s Economy, Russia Will Target The Dollar Posted: 19 Mar 2014 09:00 PM PDT by Wolf Richter, SilverBearCafe.com: Another warning shot was fired before an all-out assault on the dollar system begins. This time, an official shot: Alexey Ulyukaev, Russia's Minister of Economic Development and former Deputy Chairman of the Central Bank, fired it. It was a major escalation, Valentin Mândraùs¸escu, editor of The Voice of Russia's Reality Check, told me from Moscow. Last time, it was Sergei Glazyev, an advisor to Vladimir Putin who'd fired the shot. But he wasn't a government official. "Anonymous sources" at the Kremlin claimed he wasn't speaking for the government. As Mândraùsüescu, reported in his excellent article, From Now On, No Compromises Are Possible For Russia: Read More @ SilverBearCafe.com

The Run On U.S. Gold Continues… Posted: 19 Mar 2014 08:20 PM PDT from SRS Rocco: So where is China getting all of its gold? One of the large sources turns out to be the United States. The U.S. experienced another record year of net gold exports in 2013. Not only were gold exports at record levels, imports into the U.S. fell nearly half compared to 2010. If we look at the chart below, U.S. gold exports in 2010 were 383 metric tons (mt), however by 2013, they increased 81% to 692 mt. In addition, U.S. gold imports fell 48% from 604 mt in 2010 to 313 mt in 2013. Read More @ SRSroccoReport.com

Economic Collapse 2014 -- The Fed Will Continue With The Economic Recovery Illusion Posted: 19 Mar 2014 07:45 PM PDT Greece has struck a deal to take on more debt and push unemployment higher. Mortgage applications declined again sending housing into a death spiral. The Fed Chairman has reported that the economy is recovering because it has a strong underlying base. Obamacare premiums are set to sky rocket,... [[ 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! ]]

How Gold Performs During FOMC Weeks (Spoiler Alert: Not Good) Posted: 19 Mar 2014 07:30 PM PDT What is more confidence-inspiring in the Fed's ability to manage the world and the continued dominance of the US Dollar as global reserve currency than a falling gold price... and when better to show that than FOMC meeting weeks... welcome to the centrally-planned world where the announcement of ongoing trillions in fiat dilution constantly crushes the price of undilutable money.   Source: Meridian Macro

Dead Dollar Walking: The Truth About Government Debt Posted: 19 Mar 2014 07:00 PM PDT Global government debt has reached over one hundred trillion dollars. But where has all of that money really gone? There will be no economic recovery. Prepare yourself accordingly. [[ 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! ]]

The Chinese Yuan Is Collapsing Posted: 19 Mar 2014 06:57 PM PDT The Yuan has weakened over 250 pips in early China trading. Trading at almost 6.22, we are now deeply into the significant-loss-realizing region of the world's carry-traders and Chinese over-hedgers. Morgan Stanley estimates a minimum $4.8bn loss for each 100 pip move. However, the bigger picture is considerably worse as the vicious circle of desperate liquidity needs are starting to gang up on Hong Kong real estate and commodity prices. For those who see the silver lining in this and construe all this as a reason to buy more developed world stocks on the premise that the money flooding out of China (et al.) will be parked in the S&P are overlooking the fact that the purchase price of these now-unwanted positions was most likely borrowed, meaning that their liquidation will also extinguish the associated credit, not re-allocate it.   While widening the trading bands keeps some semblance of rationality, this is anything but an orderly unwind of the world's largest carry trades:   How Much Is at Stake? In their previous note, MS estimated that US$350 billion of TRF have been sold since the beginning of 2013. When we dig deeper, we think it is reasonable to assume that most of what was sold in 2013 has been knocked out (at the lower knock-outs), given the price action seen in 2013. Given that, and given what business we’ve done in 2014 calendar year to date, we think a reasonable estimate is that US$150 billion of product remains.   Taking that as a base case, we can then estimate the size of potential losses to holders of these products if USD/CNH keeps trading higher.   In round numbers, we estimate that for every 0.1 move in USD/CNH above the average EKI (which we have assumed here is 6.20), corporates will lose US$200 million a month. The real pain comes if USD/CNH stays above this level, as these losses will accrue every month until the contract expires. Given contracts are 24 months in tenor, this implies around US$4.8 billion in total losses for every 0.1 above the average EKI.   Below we have tried to simplify what is happening as much as possible... (since there are many pathways into and out of all of these positions) to try and enable most to comprehend the problem Virtuous circle... (last few years) Specs sell USD/JPY/EUR, Buy CNY Use CNY to buy copper/commodities Use copper to finance credit Use credit to finance working capital/real estate purchases Real estate goes up, more credit available Copper goes up, more credit available encourages more buying CNY to start virtuous circle... BUT what happens when one of these chains start to break? OR ALL OF THEM? (now!) Thanks to PBOC, can't roll debt via shadow banking system Can't rely on local govt to bail out cashflow Sell copper/commodities to meet cashflow needs Copper price goes down, credit tightens Credit tightens, Real estate prices drop Real estate prices drop, specs start exiting CNY CNY weakens... And then... (tomorrow) Plenty more firms piled on to use the inexorable trend in CNY strengthening as their carry-trade piggy bank (or merely to hedge their export receipts)... Those derivative (over-hedges) are now losing money very rapidly... Liquidate hedges - downward pressure on CNY downward pressure on CNY, more losses... Remember carry-traders are little more than sophisticated leveraged momentum players - so when the trend is no longer your friend, no amount of carry-arbitrage will cover MtM losses on the notional...   Arguing that the PBOC can defend the currency is moot (they clearly do not wish to); Arguing that the PBOC will manage liquidity via their huge FX reserves is moot (they have done so with the banks - who are awash with liquidity as noted by the low repo rates) - this is about forcing the shadow-banking system to shrink before the bubble becomes totally untenable... unfortunately, we suspect it already has...

Government Agency Warns If 9 Substations Are Destroyed, The Power Grid Could Be Down For 18 Months Posted: 19 Mar 2014 05:49 PM PDT Submitted by Michael Snyder of The Economic Collapse blog, What would you do if the Internet or the power grid went down for over a year?  Our key infrastructure, including the Internet and the power grid, is far more vulnerable than most people would dare to imagine.  These days, most people simply take for granted that the lights will always be on and that the Internet will always function properly.  But what if all that changed someday in the blink of an eye?  According to the Federal Energy Regulatory Commission's latest report, all it would take to plunge the entire nation into darkness for more than a year would be to knock out a transformer manufacturer and just 9 of our 55,000 electrical substations on a really hot summer day.  The reality of the matter is that our power grid is in desperate need of updating, and there is very little or no physical security at most of these substations.    If terrorists, or saboteurs, or special operations forces wanted to take down our power grid, it would not be very difficult.  And as you will read about later in this article, the Internet is extremely vulnerable as well. When I read the following statement from the Federal Energy Regulatory Commission's latest report, I was absolutely floored... "Destroy nine interconnection substations and a transformer manufacturer and the entire United States grid would be down for at least 18 months, probably longer." Wow. What would you do without power for 18 months? FERC studied what it would take to collapse the entire electrical grid from coast to coast.  What they found was quite unsettling... In its modeling, FERC studied what would happen if various combinations of substations were crippled in the three electrical systems that serve the contiguous U.S. The agency concluded the systems could go dark if as few as nine locations were knocked out: four in the East, three in the West and two in Texas, people with knowledge of the analysis said.   The actual number of locations that would have to be knocked out to spawn a massive blackout would vary depending on available generation resources, energy demand, which is highest on hot days, and other factors, experts said. Because it is difficult to build new transmission routes, existing big substations are becoming more crucial to handling electricity. So what would life look like without any power for a long period of time?  The following list comes from one of my previous articles... -There would be no heat for your home. -Water would no longer be pumped into most homes. -Your computer would not work. -There would be no Internet. -Your phones would not work. -There would be no television. -There would be no radio. -ATM machines would be shut down. -There would be no banking. -Your debit cards and credit cards would not work. -Without electricity, gas stations would not be functioning. -Most people would be unable to do their jobs without electricity and employment would collapse. -Commerce would be brought to a standstill. -Hospitals would not be able to function. -You would quickly start running out of medicine. -All refrigeration would shut down and frozen foods in our homes and supermarkets would start to go bad. If you want to get an idea of how quickly society would descend into chaos, just watch the documentary "American Blackout" some time.  It will chill you to your bones. The truth is that we live in an unprecedented time.  We have become extremely dependent on technology, and that technology could be stripped away from us in an instant. Right now, our power grid is exceedingly vulnerable, and all the experts know this, but very little is being done to actually protect it... "The power grid, built over many decades in a benign environment, now faces a range of threats it was never designed to survive," said Paul Stockton, a former assistant secretary of defense and president of risk-assessment firm Cloud Peak Analytics. "That's got to be the focus going forward." If a group of agents working for a foreign government or a terrorist organization wanted to bring us to our knees, they could do it. In fact, there have actually been recent attacks on some of our power stations.  Here is just one example… The Wall Street Journal’s Rebecca Smith reports that a former Federal Energy Regulatory Commission chairman is acknowledging for the first time that a group of snipers shot up a Silicon Valley substation for 19 minutes last year, knocking out 17 transformers before slipping away into the night.   The attack was “the most significant incident of domestic terrorism involving the grid that has ever occurred” in the U.S., Jon Wellinghoff, who was chairman of the Federal Energy Regulatory Commission at the time, told Smith. Have you heard about that attack before now? Most Americans have not. But it should have been big news. At the scene, authorities found "more than 100 fingerprint-free shell casings", and little piles of rocks "that appeared to have been left by an advance scout to tell the attackers where to get the best shots." So what happens someday when the bad guys decide to conduct a coordinated attack against our power grid with heavy weapons? It could happen. In addition, as I mentioned at the top of this article, the Internet is extremely vulnerable as well. For example, did you know that authorities are so freaked out about the security of the Internet that they have given "the keys to the Internet" to a very small group of individuals that meet four times per year? It's true.  The following is from a recent story posted by the Guardian... The keyholders have been meeting four times a year, twice on the east coast of the US and twice here on the west, since 2010. Gaining access to their inner sanctum isn't easy, but last month I was invited along to watch the ceremony and meet some of the keyholders – a select group of security experts from around the world. All have long backgrounds in internet security and work for various international institutions. They were chosen for their geographical spread as well as their experience – no one country is allowed to have too many keyholders. They travel to the ceremony at their own, or their employer's, expense.   What these men and women control is the system at the heart of the web: the domain name system, or DNS. This is the internet's version of a telephone directory – a series of registers linking web addresses to a series of numbers, called IP addresses. Without these addresses, you would need to know a long sequence of numbers for every site you wanted to visit. To get to the Guardian, for instance, you'd have to enter "77.91.251.10" instead of theguardian.com. If the system that controls those IP addresses gets hijacked or damaged, we would definitely need someone to press the "reset button" on the Internet. Sadly, the hackers always seem to be several steps ahead of the authorities.  In fact, according to one recent report, breaches of U.S. government computer networks go undetected 40 percent of the time… A new report by Sen. Tom Coburn (R., Okla.) details widespread cybersecurity breaches in the federal government, despite billions in spending to secure the nation’s most sensitive information.   The report, released on Tuesday, found that approximately 40 percent of breaches go undetected, and highlighted “serious vulnerabilities in the government’s efforts to protect its own civilian computers and networks.”   “In the past few years, we have seen significant breaches in cybersecurity which could affect critical U.S. infrastructure,” the report said. “Data on the nation’s weakest dams, including those which could kill Americans if they failed, were stolen by a malicious intruder. Nuclear plants’ confidential cybersecurity plans have been left unprotected. Blueprints for the technology undergirding the New York Stock Exchange were exposed to hackers.” Yikes. And things are not much better when it comes to cybersecurity in the private sector either.  According to Symantec, there was a 42 percent increase in cyberattacks against businesses in the United States last year.  And according to a recent report in the Telegraph, our major banks are being hit with cyberattacks "every minute of every day"... Every minute, of every hour, of every day, a major financial institution is under attack.   Threats range from teenagers in their bedrooms engaging in adolescent “hacktivism”, to sophisticated criminal gangs and state-sponsored terrorists attempting everything from extortion to industrial espionage. Though the details of these crimes remain scant, cyber security experts are clear that behind-the-scenes online attacks have already had far reaching consequences for banks and the financial markets. For much more on all of this, please see my previous article entitled "Big Banks Are Being Hit With Cyberattacks 'Every Minute Of Every Day'". Up until now, attacks on our infrastructure have not caused any significant interruptions in our lifestyles. But at some point that will change. Are you prepared for that to happen? We live at a time when our world is becoming increasingly unstable.  In the years ahead it is quite likely that we will see massive economic problems, major natural disasters, serious terror attacks and war.  Any one of those could cause substantial disruptions in the way that we live. At this point, even NASA is warning that "civilization could collapse"... A new study sponsored by Nasa's Goddard Space Flight Center has highlighted the prospect that global industrial civilisation could collapse in coming decades due to unsustainable resource exploitation and increasingly unequal wealth distribution.   Noting that warnings of 'collapse' are often seen to be fringe or controversial, the study attempts to make sense of compelling historical data showing that "the process of rise-and-collapse is actually a recurrent cycle found throughout history." Cases of severe civilisational disruption due to "precipitous collapse - often lasting centuries - have been quite common." So let us hope for the best. But let us also prepare for the worst.

India allows more banks to import gold in easing of curbs Posted: 19 Mar 2014 05:44 PM PDT By Siddesh Mayenkar and Neha Dasgupta Reuters Wednesday, March 18, 2014 MUMBAI -- India has allowed five domestic private-sector banks to import gold, in what industry officials say could be a significant step toward easing of tough curbs on the metal imposed last year to cut the country's trade deficit. The move could boost gold supplies and bring down premiums for the metal in the world's second-biggest consumer after China. The Reserve Bank of India has allowed gold imports by HDFC Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank, and Yes Bank, officials at the respective banks told Reuters. ... ... For the full story: http://in.reuters.com/article/2014/03/19/gold-india-imports-banks-idINDE... ADVERTISEMENT How to profit with silver -- and which stocks to buy now Future Money Trends is offering a special 16-page silver report with profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million. Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets. To learn about this report, please visit: http://www.futuremoneytrends.com/index.php?option=com_content&id=376&tmp... Join GATA here: 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/ Porter Stansberry Natural Resources Conference AT&T Performing Arts Center Margot and Bill Winspear Opera House 2403 Flora St., Dallas, Texas Saturday, May 31, 2014 http://stansberrydallas.com/ Canadian Investor Conference 2014 Vancouver Convention Centre West 1055 Canada Place, Vancouver, British Columbia Sunday and Monday, June 1 and 2, 2014 http://cambridgehouse.com/event/25/canadian-investor-conference-2014-inc... * * * 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 Buy metals at GoldMoney and enjoy international storage GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, ­taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit: http://www.goldmoney.com/?gmrefcode=gata

"The Cacophony Of Fed Confusion," David Stockman Warns Will Lead To "Economic Calamity" Posted: 19 Mar 2014 05:22 PM PDT "We never should have painted ourselves so deep in this QE corner in the first place," chides David Stockman, "because the whole predicate [of Fed policy] is false." The author of The Great Deformation holds nothing back in this brief 3-minute primer of everything is wrong with the American economic system (and the CNBC anchors definitely did not want to hear). "We are already at peak debt and forcing more into the economy didn't work," and won't work as is merely funds Wall Street's latest carry trade to nowhere and fiscal irresponsibility in Washington. Simply put, "the private credit channel of monetary transmission is busted," so the Fed is exploiting the only channel it has left - "the bubble channel." "There is a massive bubble inflating on Wall Street" It's hump-day, grab a wine cooler and listen to 3 minutes of almost uninterrupted truthiness   And here is David on The Keynesian Endgame... Even the tepid post-2008 recovery has not been what it was cracked up to be, especially with respect to the Wall Street presumption that the American consumer would once again function as the engine of GDP growth. It goes without saying, in fact, that the precarious plight of the Main Street consumer has been obfuscated by the manner in which the state’s unprecedented fiscal and monetary medications have distorted the incoming data and economic narrative. These distortions implicate all rungs of the economic ladder, but are especially egregious with respect to the prosperous classes. In fact, a wealth-effects driven mini-boom in upper-end consumption has contributed immensely to the impression that average consumers are clawing their way back to pre-crisis spending habits. This is not remotely true. Five years after the top of the second Greenspan bubble (2007), inflation-adjusted retail sales were still down by about 2 percent. This fact alone is unprecedented. By comparison, five years after the 1981 cycle top real retail sales (excluding restaurants) had risen by 20 percent. Likewise, by early 1996 real retail sales were 17 percent higher than they had been five years earlier. And with a fair amount of help from the great MEW (measurable economic welfare) raid, constant dollar retail sales in mid-2005 where 13 percent higher than they had been five years earlier at the top of the first Greenspan bubble. So this cycle is very different, and even then the reported five years’ stagnation in real retail sales does not capture the full story of consumer impairment. The divergent performance of Wal-Mart’s domestic stores over the last five years compared to Whole Foods points to another crucial dimension; namely, that the averages are being materially inflated by the upbeat trends among the prosperous classes. For all practical purposes Wal-Mart is a proxy for Main Street America, so it is not surprising that its sales have stagnated since the end of the Greenspan bubble. Thus, its domestic sales of $226 billion in fiscal 2007 had risen to an inflation-adjusted level of only $235 billion by fiscal 2012, implying real growth of less than 1 percent annually. By contrast, Whole Foods most surely reflects the prosperous classes given that its customers have an average household income of $80,000, or more than twice the Wal-Mart average. During the same five years, its inflation-adjusted sales rose from $6.5 billion to $10.5 billion, or at a 10 percent annual real rate. Not surprisingly, Whole Foods’ stock price has doubled since the second Greenspan bubble, contributing to the Wall Street mantra about consumer resilience. To be sure, the 10-to-1 growth difference between the two companies involves factors such as the healthy food fad, that go beyond where their respective customers reside on the income ladder. Yet this same sharply contrasting pattern is also evident in the official data on retail sales. * * * That the consumption party is highly skewed to the top is born out even more dramatically in the sales trends of publicly traded retailers. Their results make it crystal clear that Wall Street’s myopic view of the so-called consumer recovery is based on the Fed’s gifts to the prosperous classes, not any spending resurgence by the Main Street masses. The latter do their shopping overwhelmingly at the six remaining discounters and mid-market department store chains—Wal-Mart, Target, Sears, J. C. Penney, Kohl’s, and Macy’s. This group posted $405 billion in sales in 2007, but by 2012 inflation-adjusted sales had declined by nearly 3 percent to $392 billion. The abrupt change of direction here is remarkable: during the twenty-five years ending in 2007 most of these chains had grown at double-digit rates year in and year out. After a brief stumble in late 2008 and early 2009, sales at the luxury and high-end retailers continued to power upward, tracking almost perfectly the Bernanke Fed’s reflation of the stock market and risk assets. Accordingly, sales at Tiffany, Saks, Ralph Lauren, Coach, lululemon, Michael Kors, and Nordstrom grew by 30 percent after inflation during the five-year period. The evident contrast between the two retailer groups, however, was not just in their merchandise price points. The more important comparison was in their girth: combined real sales of the luxury and high-end retailers in 2012 were just $33 billion, or 8 percent of the $393 billion turnover reported by the discounters and mid-market chains. This tale of two retailer groups is laden with implications. It not only shows that the so-called recovery is tenuous and highly skewed to a small slice of the population at the top of the economic ladder, but also that statist economic intervention has now become wildly dysfunctional. Largely based on opulence at the top, Wall Street brays that economic recovery is under way even as the Main Street economy flounders. But when this wobbly foundation periodically reveals itself, Wall Street petulantly insists that the state unleash unlimited resources in the form of tax cuts, spending stimulus, and money printing to keep the simulacrum of recovery alive. Accordingly, the central banking branch of the state remains hostage to Wall Street speculators who threaten a hissy fit sell-off unless they are juiced again and again. Monetary policy has thus become an engine of reverse Robin Hood redistribution; it flails about implementing quasi-Keynesian demand–pumping theories that punish Main Street savers, workers, and businessmen while creating endless opportunities, as shown below, for speculative gain in the Wall Street casino. At the same time, Keynesian economists of both parties urged prompt fiscal action, and the elected politicians obligingly piled on with budget-busting tax cuts and spending initiatives. The United States thus became fiscally ungovernable. Washington has been afraid to disturb a purported economic recovery that is not real or sustainable, and therefore has continued to borrow and spend to keep the macroeconomic “prints” inching upward. In the long run this will bury the nation in debt, but in the near term it has been sufficient to keep the stock averages rising and the harvest of speculative winnings flowing to the top 1 percent. The breakdown of sound money has now finally generated a cruel endgame. The fiscal and central banking branches of the state have endlessly bludgeoned the free market, eviscerating its capacity to generate wealth and growth. This growing economic failure, in turn, generates political demands for state action to stimulate recovery and jobs. But the machinery of the state has been hijacked by the various Keynesian doctrines of demand stimulus, tax cutting, and money printing. These are all variations of buy now and pay later—a dangerous maneuver when the state has run out of balance sheet runway in both its fiscal and monetary branches. Nevertheless, these futile stimulus actions are demanded and promoted by the crony capitalist lobbies which slipstream on whatever dispensations as can be mustered. At the end of the day, the state labors mightily, yet only produces recovery for the 1 percent.

The Gold Price Lost $17.60 by Comex Close at $1,341.40 Posted: 19 Mar 2014 04:49 PM PDT Gold Price Close Today : 1641.40 Change : -17.60 or -1.06% Silver Price Close Today : 20.800 Change : -0.036 or -0.17% Gold Silver Ratio Today : 78.913 Change : -0.708 or -0.89% Silver Gold Ratio Today : 0.01267 Change : 0.000113 or 0.90% Platinum Price Close Today : 1451.20 Change : -10.00 or -0.68% Palladium Price Close Today : 768.65 Change : -3.10 or -0.40% S&P 500 : 1,860.77 Change : -11.48 or -0.61% Dow In GOLD$ : $204.30 Change : $ 0.75 or 0.37% Dow in GOLD oz : 9.883 Change : 0.036 or 0.37% Dow in SILVER oz : 779.91 Change : -4.12 or -0.53% Dow Industrial : 16,222.17 Change : -114.02 or -0.70% US Dollar Index : 80.150 Change : 0.620 or 0.78% The GOLD PRICE lost $17.60 (1.3%) by Comex close at $1,341.40, then lost another $10 in the aftermarket after the FOMC's eructations. Silver gainsaid the gold price by dropping only 3.6 (0.2%) to 2080, then dropped another 17 cents in the aftermarket to 2063c. I read several analysts, and had to laugh today that one of them was ruminating a BIG drop in gold and the other was chirping about what a bullish set-up had unfolded in gold and silver. Here's what the charts show: The GOLD PRICE has traded in the selfsame upward trading channel since its December low. Today's fall was the last of three days that have brought gold to touch the channel's bottom boundary. It also closed below its 20 DMA ($1,345). From here gold might (1) bounce off the lower channel boundary and resume its uptrend, or trade down to its 50 DMA ($1,295). The gold price is walking in some heavy boots here, my way of saying a lot of indicators point down. However, silver is gainsaying that weakness, and had a strong day, and that IS bullish. Lo, is the man batty? Nope, he ain't. The SILVER PRICE yesterday traded down to about 2065c, broke that level today and traded as low as 2052c (never quite touched 2050) about noon, then bounced up to 2097c, and fell off again to 2052. A double bottom, and down only 3.6 cents on the day. Trading at 2063 in the aftermarket. Of such days big surprise turnarounds are made. Of course, I might be just a fool spinning cobwebs in my brain, but silver did touch back to its 50 DMA today (2055c), a frequent target of corrections, and on the end of the day chart it closed unchanged. AND that 50 DMA happeneth to coincide, yea, to run atop of, the top boundary of silver's three month trading range, wherefrom it broke away stratosphereward in February. In plain English, silver broke out of that trading range, rallied to 2218c, and now hath fallen back to the breakout point for -- one final kiss good-bye, or to fall lower still? If you like to play guts ball, to take chances when you know the edge is on your side though the risk be great, then it's a ripe place to buy. I may be scalped tomorrow, but I bought this evening. I'm just a durned fool. I'd always rather trust metal in hand than central bank functionaries in Washington. I just don't care for liars much, and never could trust 'em. What if we all got it all wrong? What if the real business of the cosmos isn't work and sweat and tears but joy? What if CS Lewis was right when he said, "Joy is the serious business of heaven." What if joy is the serious business of our world, too, and of all creation? What if instead of the dreary round of self-improvement and economic purpose, the purpose of all creation is joy? Did y'all ever watch a dog? Ever notice how much a dog enjoys being a dog? Acts like a dog just for the fun of it? Ever notice that pigs dance? They do, especially when a storm is kicking up. And when somebody is playing, why do we say he's "horsing around"? What if our whole purpose is just to rejoice in being what we are? To play and write and dance and make music and sing just for the fun of it? To romp for joy in God. Wow. That'd put a lot of economists and politicians out of work, let alone do-gooders. FOMC press conference today demonstrated once more that famous stabilizing effect that central banks were created for. And as usual, the market's reaction followeth not logic. Predictably, the FOMC announced it would "taper" by buying only $55 billion in US treasuries and mortgage backed securities. Yet that was piddling to the announcement that the Fed was only kidding about keeping interest rates low until unemployment hit 6.5%. After all, so many people have given up on ever finding jobs now that 6.5% target is getting right easy to hit. Now the Fed has discovered previously unrecognized "scars" in the economy that won't heal for two more years. Thus the Great Healer, The Fed, must keep interest rates low and raise them only slowly. Rather perversely in the face of the FOMC's resolve to keep repressing the economy with low interest rates, markets interpreted the statement as immediately higher interest rates. Ten year treasury yield shot up 3.39% (bonds dropped) 20 2.772%, well above the 2.708% 20 day moving average, and above the 2.745% 50 DMA as well. -- this despite 15 of the Fed's 16 policy makers believe it will be inappropriate to raise rates this year. I am not a Fed policy maker but only a natural born durn fool from Tennessee, and I believe this is all hogwash, hoakum, and hype. They're lying as fast as their lips can move. They have to keep interest rates down below the inflation rate to inflate away the debt and to keep the US government's borrowing costs low. They've fallen into their own trap, and can't get out. All the rest is lies, and damn the economy, full speed ahead. They are harvesting you like a farmer harvests a herd of pigs, and think no more of you than he does a hanging side of pork. Leaving these disgusting my-honor-is-for-sale-cheap white trash behind, let's look at other markets. Stocks took the FOMC announcement hard, but why I can't guess. Everybody knew the Fed had telegraphed its tapering -- no news there. And if there were a real recovery, rising interest rates really wouldn't slow it down. Actually, rising rates usually accompany recoveries. Makes no sense, but markets have become schizophrenic information junkies, blown from side to side by the latest news without the slightest regard for the next 24 hours. Dow dropped 114.02 or 0.7%to 16,222.17. S&P500 rode the same sled, down 11.48 (0.61%) to 1,860.77. On the charts both indices bounced up to their short term downtrend line, hit it, and bounced down again. Momentum took a hit as the Dow closed below its 16,265.25 20 DMA and the S&P500 closed near its 20 DMA, 1858.43. Both indices are coiling up into a triangle which will break strongly one way or the other. Direction of least resistance is down. The repulsive US dollar index rose 62 basis points to 80.15, clean out of its falling wedge and above its 20 DMA (79.94), both bullish signs. MACD also turned up. The other two scrofulous fiat currencies are fairly mirror images of the dollar. Euro had broken out to the upside from a RISING wedge, above a long standing resistance line about $1.3900 and today fell nearly plumb through the wedge it had left behind. Closed $1.3828, down 0.75%. Yen jumped off a cliff, too, down 0.885 to 97.95 cents/Y100. Pointed itself firmly earthward. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose.

The Gold Price Lost $17.60 by Comex Close at $1,341.40 Posted: 19 Mar 2014 04:49 PM PDT Gold Price Close Today : 1641.40 Change : -17.60 or -1.06% Silver Price Close Today : 20.800 Change : -0.036 or -0.17% Gold Silver Ratio Today : 78.913 Change : -0.708 or -0.89% Silver Gold Ratio Today : 0.01267 Change : 0.000113 or 0.90% Platinum Price Close Today : 1451.20 Change : -10.00 or -0.68% Palladium Price Close Today : 768.65 Change : -3.10 or -0.40% S&P 500 : 1,860.77 Change : -11.48 or -0.61% Dow In GOLD$ : $204.30 Change : $ 0.75 or 0.37% Dow in GOLD oz : 9.883 Change : 0.036 or 0.37% Dow in SILVER oz : 779.91 Change : -4.12 or -0.53% Dow Industrial : 16,222.17 Change : -114.02 or -0.70% US Dollar Index : 80.150 Change : 0.620 or 0.78% The GOLD PRICE lost $17.60 (1.3%) by Comex close at $1,341.40, then lost another $10 in the aftermarket after the FOMC's eructations. Silver gainsaid the gold price by dropping only 3.6 (0.2%) to 2080, then dropped another 17 cents in the aftermarket to 2063c. I read several analysts, and had to laugh today that one of them was ruminating a BIG drop in gold and the other was chirping about what a bullish set-up had unfolded in gold and silver. Here's what the charts show: The GOLD PRICE has traded in the selfsame upward trading channel since its December low. Today's fall was the last of three days that have brought gold to touch the channel's bottom boundary. It also closed below its 20 DMA ($1,345). From here gold might (1) bounce off the lower channel boundary and resume its uptrend, or trade down to its 50 DMA ($1,295). The gold price is walking in some heavy boots here, my way of saying a lot of indicators point down. However, silver is gainsaying that weakness, and had a strong day, and that IS bullish. Lo, is the man batty? Nope, he ain't. The SILVER PRICE yesterday traded down to about 2065c, broke that level today and traded as low as 2052c (never quite touched 2050) about noon, then bounced up to 2097c, and fell off again to 2052. A double bottom, and down only 3.6 cents on the day. Trading at 2063 in the aftermarket. Of such days big surprise turnarounds are made. Of course, I might be just a fool spinning cobwebs in my brain, but silver did touch back to its 50 DMA today (2055c), a frequent target of corrections, and on the end of the day chart it closed unchanged. AND that 50 DMA happeneth to coincide, yea, to run atop of, the top boundary of silver's three month trading range, wherefrom it broke away stratosphereward in February. In plain English, silver broke out of that trading range, rallied to 2218c, and now hath fallen back to the breakout point for -- one final kiss good-bye, or to fall lower still? If you like to play guts ball, to take chances when you know the edge is on your side though the risk be great, then it's a ripe place to buy. I may be scalped tomorrow, but I bought this evening. I'm just a durned fool. I'd always rather trust metal in hand than central bank functionaries in Washington. I just don't care for liars much, and never could trust 'em. What if we all got it all wrong? What if the real business of the cosmos isn't work and sweat and tears but joy? What if CS Lewis was right when he said, "Joy is the serious business of heaven." What if joy is the serious business of our world, too, and of all creation? What if instead of the dreary round of self-improvement and economic purpose, the purpose of all creation is joy? Did y'all ever watch a dog? Ever notice how much a dog enjoys being a dog? Acts like a dog just for the fun of it? Ever notice that pigs dance? They do, especially when a storm is kicking up. And when somebody is playing, why do we say he's "horsing around"? What if our whole purpose is just to rejoice in being what we are? To play and write and dance and make music and sing just for the fun of it? To romp for joy in God. Wow. That'd put a lot of economists and politicians out of work, let alone do-gooders. FOMC press conference today demonstrated once more that famous stabilizing effect that central banks were created for. And as usual, the market's reaction followeth not logic. Predictably, the FOMC announced it would "taper" by buying only $55 billion in US treasuries and mortgage backed securities. Yet that was piddling to the announcement that the Fed was only kidding about keeping interest rates low until unemployment hit 6.5%. After all, so many people have given up on ever finding jobs now that 6.5% target is getting right easy to hit. Now the Fed has discovered previously unrecognized "scars" in the economy that won't heal for two more years. Thus the Great Healer, The Fed, must keep interest rates low and raise them only slowly. Rather perversely in the face of the FOMC's resolve to keep repressing the economy with low interest rates, markets interpreted the statement as immediately higher interest rates. Ten year treasury yield shot up 3.39% (bonds dropped) 20 2.772%, well above the 2.708% 20 day moving average, and above the 2.745% 50 DMA as well. -- this despite 15 of the Fed's 16 policy makers believe it will be inappropriate to raise rates this year. I am not a Fed policy maker but only a natural born durn fool from Tennessee, and I believe this is all hogwash, hoakum, and hype. They're lying as fast as their lips can move. They have to keep interest rates down below the inflation rate to inflate away the debt and to keep the US government's borrowing costs low. They've fallen into their own trap, and can't get out. All the rest is lies, and damn the economy, full speed ahead. They are harvesting you like a farmer harvests a herd of pigs, and think no more of you than he does a hanging side of pork. Leaving these disgusting my-honor-is-for-sale-cheap white trash behind, let's look at other markets. Stocks took the FOMC announcement hard, but why I can't guess. Everybody knew the Fed had telegraphed its tapering -- no news there. And if there were a real recovery, rising interest rates really wouldn't slow it down. Actually, rising rates usually accompany recoveries. Makes no sense, but markets have become schizophrenic information junkies, blown from side to side by the latest news without the slightest regard for the next 24 hours. Dow dropped 114.02 or 0.7%to 16,222.17. S&P500 rode the same sled, down 11.48 (0.61%) to 1,860.77. On the charts both indices bounced up to their short term downtrend line, hit it, and bounced down again. Momentum took a hit as the Dow closed below its 16,265.25 20 DMA and the S&P500 closed near its 20 DMA, 1858.43. Both indices are coiling up into a triangle which will break strongly one way or the other. Direction of least resistance is down. The repulsive US dollar index rose 62 basis points to 80.15, clean out of its falling wedge and above its 20 DMA (79.94), both bullish signs. MACD also turned up. The other two scrofulous fiat currencies are fairly mirror images of the dollar. Euro had broken out to the upside from a RISING wedge, above a long standing resistance line about $1.3900 and today fell nearly plumb through the wedge it had left behind. Closed $1.3828, down 0.75%. Yen jumped off a cliff, too, down 0.885 to 97.95 cents/Y100. Pointed itself firmly earthward. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose.

The Problem With Forward P/Es Posted: 19 Mar 2014 04:46 PM PDT Submitted by Lance Roberts of STA Wealth Management, In a recent note by Jeff Saut at Raymond James, he noted that valuations are cheap based on forward earnings estimates.  He is what he says: "That said, valuations are not particularly onerous with the P/E ratio for the S&P 500 (SPX/1841.13) currently trading around 15.2x this year’s bottom-up estimate of roughly $121 per share. Moreover, if next year’s estimates are anywhere near the mark of $137, the SPX is being valued at a mere 13.4x earnings." As a reminder, it is important to remember that when discussing valuations, particularly regarding historic over/under valuation, it is ALWAYS based on trailing REPORTED earnings.  This is what is actually sitting on the bottom line of corporate income statements versus operating earnings, which is "what I would have earned if XYZ hadn't happened."   Beginning in the late 90's, as the Wall Street casino opened its doors to the mass retail public, use of forward operating earning estimates to justify extremely overvalued markets came into vogue.  However, the problem with forward operating earning estimates is that they are historically wrong by an average of 33%.  The chart below, courtesy of Ed Yardeni, shows this clearly. Let me give you a real time example of what I mean.  At the beginning of the year, the value of the S&P 500 was roughly 1850, which is about where at the end of last week.  In January, forward operating earnings for 2014 was expected to be $121.45 per share.  This gave the S&P 500 a P/FE (forward earnings) ratio of 15.23x. Already forward operating earnings estimates have been reduced to $120.34 for 2014.  If we use the same price level as in January - the P/FE ratio has already climbed 15.37x. Let's take this exercise one step further and consider the historical overstatement average of 33%.  However, let's be generous and assume that estimates are only overstated by just 15%.  Currently, S&P is estimating that earnings for the broad market index will be, as stated above, $120.34 per share in 2014 but will rise by 14% in 2015 to $137.36 per share.  If we reduce both of these numbers by just 15% to account for overly optimistic assumptions, then the undervaluation story becomes much less evident.  Assuming that the price of the market remains constant the current P/FE ratios rise to 18.08x for 2014 and 15.84x for 2015.   Of course, it is all just fun with numbers and, as I stated yesterday, this there are only three types of lies: "Lies, Damned Lies and Statistics." With the continued changes to accounting rules, repeal of FASB rule 157, and the ongoing torturing of income statements by corporations over the last 25 years in particular, the truth between real and artificial earnings per share has grown ever wider.  As I stated recently in "50% Profit Growth:" "The sustainability of corporate profits is dependent on two primary factors; sustained revenue growth and cost controls.  From each dollar of sales is subtracted the operating costs of the business to achieve net profitability.  The chart below shows the percentage change of sales, what happens at the top line of the income statement, as compared to actual earnings (reported and operating) growth." "Since 2000, each dollar of gross sales has been increased into more than $1 in operating and reported profits through financial engineering and cost suppression.  The next chart shows that the surge in corporate profitability in recent years is a result of a consistent reduction of both employment and wage growth.  This has been achieved by increases in productivity, technology and offshoring of labor.  However, it is important to note that benefits from such actions are finite." This is why trailing reported earnings is the only "honest" way to approach valuing the markets.  Bill Hester recently wrote a very good note in this regard in response to critics of Shiller's CAPE (cyclically-adjusted price/earnings) ratio which smoothes trailing reported earnings. "More recently the ratio has undergone an attack from some widely-followed analysts, questioning its validity and offering up attempts to adjust the ratio. This may be a reaction to its new-found notoriety, but more likely it’s because the CAPE is suggesting that US stocks are significantly overvalued.  All of the adjustments analysts have made so far imply that stocks are less overvalued than the traditional CAPE would suggest." We feel no particular obligation defend the CAPE ratio. It has a strong long-term relationship to subsequent 10-year market returns. And it’s only one of numerous valuation indicators that we use in our work – many which are considerably more reliable. All of these valuation indicators – particularly when record-high profit margins are accounted for – are sending the same message: The market is steeply overvalued, leaving investors with the prospect of low, single-digit long-term expected returns. But we decided to come to the aid of the CAPE ratio in this case because a few errors have slipped into the debate, and it’s important for investors who have previously relied on this ratio to understand these errors so they can judge the valuation metric fairly.  Importantly, the primary error that is being made is not even the fault of those making the arguments against the CAPE ratio. The fault lies at the feet of a misleading data series." If I want to justify selling you an overvalued mutual fund or equity, then I certainly would try to find ways to discount measures which suggest investments made at current levels will likely have low to negative future returns.  However, as a money manager for individuals in retirement, my bigger concern is protecting investment capital first.  (Note: that statement does not mean that I am currently in cash, we are fully invested at the current time.  However, we are not naive about the risks to our holdings.) The following chart shows Tobin's "Q" ratio and Robert Shillers "Cyclically Adjusted P/E (CAPE)" ratio versus the S&P 500. James Tobin of Yale University, Nobel laureate in economics, hypothesized that the combined market value of all the companies on the stock market should be about equal to their replacement costs. The Q ratio is calculated as the market value of a company divided by the replacement value of the firm's assets.  Currently, the CAPE is at 25.41x, and the Q-ratio is at 1.01.   Both of these measures are currently at levels that suggest that forward stock market returns are likely to be in the low to single digits over the next decade.  However, it is always at the point of peak valuations where the search for creative justification begins. Unfortunately, it has never "been different this time." Lastly, with corporate profits at record levels relative to economic growth, it is likely that the current robust expectations for continued double digit margin expansions will likely turn out to be somewhat disappointing.  As we know repeatedly from history, extrapolated projections rarely happen.  Therefore, when analysts value the market as if current profits are representative of an indefinite future, they have likely insured investors will receive a very rude awakening at some point in the future. There is mounting evidence, from valuations being paid in M&A deals, junk bond yields, margin debt and price extensions from long term means, "exuberance" is once again returning to the financial markets.  Again, as I stated previously, my firm remains fully invested in the markets at the current time.  I write this article, not from a position of being "bearish" as all such commentary tends to be classified, but from a position of being aware of the "risk" that could potentially damage long term returns to my clients.  It is always interesting that, following two major bear markets, investors have forgotten that it was these very same analysts that had them buying into the market peaks previously.

The success of Singapore gold storage Posted: 19 Mar 2014 04:04 PM PDT The Real Asset Co

Fleckenstein - The Fantasy Is Alive & Well But The End Is Near Posted: 19 Mar 2014 03:01 PM PDT On the heels of the Fed's announcement of additional tapering, and with stocks, bonds, and gold on the move, today Bill Fleckenstein told King World News the fantasy is alive and well, but the end is near. Below is what Bill Fleckenstein, who is President of Fleckenstein Capital, had to say in this timely interview. This posting includes an audio/video/photo media file: Download Now

US Fed Continues Tapering, Gold Down on Dollar Rally Posted: 19 Mar 2014 02:45 PM PDT All that was required to launch the US Dollar higher away from strong downside chart support near the 79 level on the USDX chart was a hawkish sounding Fed. With the announcement today that they would trim another $10 billion/month off of their bond buys, interest rates shot up on the long end of the curve and with that, so did the Dollar away from support. The rally in the Dollar, along with higher interest rates (the latter is the big deal) resulted in a barrage of selling in gold as bulls rushed for the exits. The result was a clean break of the first level of chart support noted on the chart. The selling did not abate until gold reached the secondary support level noted. This level had better hold or gold is going to fall back closer to $1300. The breakdown in the ADX indicates the uptrend has been halted. I am closely watching those Directional Movement lines to see if we get a downside crossunder of the +DMI below the -DMI. So far the bulls remain in control of the market but if that support level gives way, I would expect to see it reflected in this indicator. That could very well put the bears back in control on the daily chart. Keep in mind, based on the long term monthly chart I posted up the other day, the bears have retained control over this market but their hold was slipping. If the daily chart breaks down further, they are going to be emboldened further and a lot of those who were forced out during this recent rash of short covering, are going to come back in on the short side once again. The jury remains out therefore. Let’s see what we get. We are going to need some positive economic data to confirm the Fed’s rather rosy view of the economic outlook. They are content to place a fair amount of blame for the recent poor data on the record breaking cold temps. That may be true but the warmer months are arriving and we will know very quickly whether or not that is indeed the case. One last thing – the Euro failed to best 1.40. In my view, that will be required for gold to best $1400. (Original source: Dan Norcini’s blog)

John Embry: Stay Strong, Own Gold And Silver, Wait Posted: 19 Mar 2014 02:41 PM PDT This article contains highlights from an interview with John Embry, chief investment strategist at Sprott Asset Management who is working alongside Rick Rule and Eric Sprott. What gold and silver investors should look at: Well, I'm looking at the reality of the picture. First of all, the world economies are not what they are made out to be. Without exception, pretty much, they are weakening, and they are struggling. It's very simple: there's far too much debt in the world, in virtually every country at every level. If you believe in the tenets of Austrian economics to the extent that I do, when you get an excess debt situation in the world, you cannot create enough new debt to get the economy to grow. I think that's what we're up against. Consequently, I don't see the economy bailing out the bulls at this point. As things get worse and worse in the economy, I think that gold and silver become a worthwhile alternative. What goes unremarked is how small these markets really are. If you looked at every ounce of gold that's been mined since the beginning of time, that's only 170,000 tonnes—more or less. That's only worth a little over $7 trillion. So you think about how little gold there is—silver is a fraction of that. If money decides they want an outlet in these two metals, it's going to have an outsized impact on the price. I think as things get more and more difficult in the real world, people will seek outlets in gold and silver, and the impact will be outsized. The West is no longer creating real wealth: Well, I think what's really happened is that the West has abdicated its manufacturing space to China in particular and a number of satellites in that part of the world. I think one of the great problems with unemployment in the West today derives from that. There used to be huge numbers of well-paid manufacturing jobs in North America and Europe. A lot of those have been lost, and a lot of those products are being produced at lower cost these days in China, because they have a much lower cost base. I don't think that's a particularly positive development in the long term for North America and Europe. Drivers of the big world shift: Basically, for the longest time from the post-war era China was asleep; it was just over there, not doing much of anything. But they do have over 1.4 billion people now. All the wealth was centered in the Western world, in North America and Europe, and Japan to a lesser extent. There are not many people in that group, probably 600 million people. Suddenly China, and India to some extent, awoke. 2.7 billion people decided they wanted what we had and were prepared to work hard for it. It's started to have a dramatic impact on the standard of living in North America. And I think the manifestation of that is that the bottom half of our society is having trouble getting well-paying jobs, and it's starting to take a toll. The Canadian and European currencies vs the US dollar: Rather than criticize the US specifically, I would be more critical of the Western world in general. We've lived a pretty good life after the Second World War and in the ensuing 70 or so years. And if we run up an awful lot of debt, it's going to take some real doing to get back on the right track. In the intermediate, as we're dealing with all these issues, money might be debased just to keep all of these things afloat. That's one of the reasons I am so bullish on gold and silver. These are constants in an ever-changing world, and I think they are cheap now—very cheap. I don't think people own enough of it, and when they finally get that this is happening, there's not going to be enough to go around. So my advice to people is to get all the gold and silver you can at these prices. And better than that—if you really want leverage—buy the shares that mine the stuff. If you have the right shares, I think you're going to make a fortune. So I'm a huge bull on the gold and silver shares; the only caveat is that you've got to be very selective. There have been a lot of bad stocks promoted through the years. And if you're buying into this space, you've got to be real sure that they've got the goods—they've got a real ore body or they're in production. Or they're very close to production so you've got some kind of certainty that it's real. Those kinds of stocks are going to do spectacularly well when this market starts to rock and roll. This gold and silver issue is a huge deal; and I don't think most investors understand the playing field that we're on. Stay strong, own gold and silver, and wait. I want to reiterate that there is so much bad press out there that most people just avoid the sector, and it seems like in the fullness of time it will turn out to have been a terrible mistake not to have had the protection of gold and silver and some related shares in your portfolio. How long it will take to vindicate the case for gold and silver: I wouldn't say years. Of course, I want to leave myself some breathing room, but I think we are getting real close. There are more and more drumbeats about the degree to which the price has been messed with. And there's all this paper out there with no real gold or silver backing it. When all this comes together in a crescendo for gold and silver, I think the impact on the metals is going to be way beyond what most investors can even comprehend today. And that's why I think it's important to be early rather than late today. If you're late, you might never get in—because it may move so quickly and the availability is limited. The signs of an imminent change in gold and silver to the upside: I think there's a lot of evidence now of how they are controlling the paper markets with all the rules that they have put in place, and the way their algorithms work. If the price of gold ever goes up 2% in a day, they stop it. So I will be feeling comfortable that we are really rocking and rolling in this when we start to see some really outsized moves—say, gold going up by $50 in a day. I think that would really tell us that the game is on. And I think we're close—we're talking months, not years. The forces driving gold and silver to give way, as well as the expected response of the Federal Reserve: Lack of physical. I think the real Achilles heel of the paper market is that there is overwhelming physical demand from China and other sources. Recognition of the lack of physical, especially to back all of the paper products, could really push this thing dramatically in a very short time frame. I think they've already made all their responses. They have printed all this money, and I think that a lot of US officially held gold has entered the market through leases, swaps, or what-have-you. I think they have less and less firepower to maintain this sort of activity. As a result, when it changes, it will change dramatically, because there will be more demand than there is physical supply to meet. And the paper market, which has controlled the pricing mechanism for as long as I can remember, will finally be overrun.

Gold Miners: Red Alert Or All Clear? Posted: 19 Mar 2014 02:24 PM PDT Its getting really bad when you can’t trust the criminals in power to do what you you think they are going to do! Above we see on the XAU Chart that When the close of the XAU gets more than 10%(Gold Line) above it’s 50 Day Moving Average (three red circles make that very clear), it becomes vulnerable to a correction, which is where we are now. In the GREEN Box in the lower right hand margin of the XAU Chart we see the entirely unhearalded GOLDEN CROSS (except for a few PM Bulls). Now for those practicing and loving “Hill Billy” TA, that is a perfect indicator EXCEPT that it comes at a time when the close of the XAU has gotten 10% of its 50 Day Moving Average. Now from Cicero, we have this quote: “The Sinews of War are Infinite Money”, which we know to be true whether it is in the Industrial Stocks or the PM Stocks or whether it comes from Gvt Printing (Counterfeiting) or honest capital. Notice the Speed Resistance Lines (lower ones) 1 & 2, indicating where the capital in-flow rate will slow down before re-asserting itself. So far, IMO, its been Investor Capital fueling this run, and will be again once the Correction & Consolidation have run their course. What has struck me like the North Wind, cutting my face as it speeds off the Bay, is the ALL CLEAR called by a number of PM Analyst / Writers, classicaly at the end of the Third Leg in a Bull Movement started in early December, fully exploited by early Bull Riders. Now we have that “Spikey” top movement that like Circe and the Sirens, lure late comers into dangerous waters with their song of easy profits. Precisely when we are ripe for a correction. NOW the question becomes WHAT of this Leg & Rally ? The Breadth in this rally has slowed down in both daily and weekly measures and the rally has lost its Momentum, within its Longer Term TREND (which is still UP). A number of logical Support areas are in place by virtue of GAPS that opened on the way up.    They are: KEEPING in mind that certain dates can act like magnets, as I look at this, I recall the Great Gold TAX DAY (US) MASSACRE of April 15, 2013. I also note that on the Anniversary Week of that event, Good Friday of the Christian Easter Season occurs, which to me, given the events associated with it, is never a good time for a rally. In addition, as a Lunar determined occasion, Easter, it is noted that the Full Moon peaks on Mon, April 15. Based on cycles commonly occurring whose combined Nadir occurs during this week, I give weight to probabilities we see very poor market action the Week ending Friday, April 18th. If I were a wagering man, I’d lay odds that, any correction in the PM Complex, under the weight of a correction, would END its Correction in this week. Given as a very general rule that corrections tend to extend their moves to half the TIME of the move they are correcting, another case can be made for it ending in this time frame. So being Skeptic in my approach to Technical Analysis, I will be keeping a weather eye on the XAU, GDX & HUI as they settle back into “Correction” Mode. I ignore no hint or bit of Intell but treat each skeptically as if I were assembling a great puzzle, and thus I include the possible Support & Rebound Zones for the GDX and HUI in these Charts. If you’d like to have this level of Savvy at your fingertips and in your mail box, you may wish to Subscribe to PEAK PICKS. If you are more concerned where the PM Stocks can go rather than interminable analysis of where they have been, you may choose PEAK PICKS.   Find Juniors, Micro-Caps, Break Outs, and some stocks of which you have never heard by SUBSCRIBING to PEAK PICKS, using option #1 or #2. Subscribe using one of the two options below (U$D 33.97/m, no contract, satisfaction guaranteed, immediate refund on request, no questions asked). OPTION #1 OPTION #2 – E-Mail

Gold Daily and Silver Weekly Charts - Another Triumphant FOMC Day Posted: 19 Mar 2014 01:28 PM PDT

Gold Daily and Silver Weekly Charts - Another Triumphant FOMC Day Posted: 19 Mar 2014 01:28 PM PDT

Top Economic Collapse Must Haves -- Harry Dent Posted: 19 Mar 2014 12:39 PM PDT Economist Harry Dent details the essential ways one must be prepared financially for the coming crash. Alex welcomes the founder of economic forecasting firm Dent Research, Harry S. Dent, Jr. to discuss why he thinks the Dow Jones industrial average may spike at 17,000 then make a rapid... [[ 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! ]]

Harry Dent -- Timetable For The Next Collapse Posted: 19 Mar 2014 12:38 PM PDT Alex Jones has a fascinating conversation with Economist Harry Dent about the timetable of the next Financial collapse. Alex welcomes the founder of economic forecasting firm Dent Research, Harry S. Dent, Jr. to discuss why he thinks the Dow Jones industrial average may spike at 17,000 then... [[ 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! ]]

Despite Taper, The Fed Is Setting Up To Shock The World Posted: 19 Mar 2014 12:21 PM PDT Today one of the most respected money managers in the world warned King World News that despite the tapering action, the Fed is setting up to shock the world. Michael Pento, who is founder of Pento Portfolio Strategies, also spoke about the impact this will have on major markets, including gold. Below is what Pento had to say. This posting includes an audio/video/photo media file: Download Now

China Must Look Abroad For Metals and Energy To Support Growth Posted: 19 Mar 2014 11:58 AM PDT Headlines about a Chinese economic slowdown may get good web traffic, but the real story is that China is buying up uranium and other resources around the world, says Gold Stock Trades writer Jeb Handwerger. Meanwhile, tensions in Russia highlight the massive country’s resource dominance in natural gas, oil, uranium, platinum group metals, rare earths and nickel. Handwerger tells The Mining Report that North America is already acting to develop resources that can meet both domestic and international demand—and this global geopolitical uncertainty is an investment opportunity. The Mining Report: Jeb, how will the companies you follow be affected by the crisis in the Ukraine and the growing tensions in East Asia over China’s claims on islands held by Japan and the Philippines? Jeb Handwerger: This is really all about natural resources and the ability to control the trade. There’s a whole list of 10 to 15 strategic minerals that come from China almost exclusively. Russia, on the other hand, has a major control on palladium, platinum group metals and nickel, as well some of the agricultural fertilizers, such as potash. Russia also has a critical supply of uranium; it produces about 3,000 tons of uranium, close to double United States production of uranium. Not only that, but Russia has strategic ties with Kazakhstan, which produces close to 20,000 tons of uranium—over 36% of global supply.   Global Palladium Production  Source: North American Palladium Ltd. I’ve written for years that these metals and these materials are at risk of critical supply shortfall. It’s even more the case now as these tensions increase. There is greater risk of China or Russia turning off the natural gas pipelines or cutting exports of the rare earths and graphite. Their control of these critical metals is going to force the West, the European Union and the U.S. to develop their own strategic, secure supplies of these materials needed for the critical technologies. We’re already beginning to see that take place. Many junior miners have made strategic advancements with some jurisdictions in the rare earth sector. For instance, the state of Alaska made a proposal to help fund a rare earth mine in Alaska controlled by Ucore Rare Metals Inc. (UCU:TSX.V; UURAF:OTCQX). In Canada, there’s a push in the Parliament to look for secure supplies, an effort which may benefit Pele Mountain Resources Inc. (GEM:TSX.V). In Europe, I like Tasman Metals Ltd. (TSM:TSX.V; TAS:NYSE.MKT; TASXF:OTCPK; T61:FSE) as the company could be a strategic supplier of technology metals to the EU, which may be very concerned about supply as tensions increase with Russia over Crimea. If investors are not yet positioned, they should position themselves either through the strategic metal ETFs or even better, the specific REE junior miners that are positioned for upside breakouts. Another angle: In times of war and tension and geopolitical crises, commodities are often a very good hedge against inflationary price rises. We’re already seeing outsized gains in the commodity sectors in 2014. The smart money may be already positioned for the black swans we are currently observing. Source: USGS TMR: China is a major buyer of uranium. How do the tensions there affect business conditions in the uranium market? JH: China is building more nuclear reactors than ever before, and over the next 10 years it’s going to need a major increase in its supply of uranium. Uranium is one of the few materials that China is not self-sufficient in. Unlike the rare earths, it’s going to have to look abroad for that. China has already tried to go into Africa, which is also one of the largest suppliers of uranium: Niger and Namibia together produce about 14% of global uranium supply, but those areas are not so stable. Last year, AREVA SA’s (AREVA:EPA) Niger uranium facility was the target of an Al-Qaeda terrorist attack, a double-suicide bombing that shut down the plant. We believe that the Chinese trade agreement with the Canadians, Cameco Corp. (CCO:TSX; CCJ:NYSE), is critical. McArthur River in the Athabasca Basin is the world’s largest high-grade uranium mine. Canada provides about 17% of global supply. This is second only to Kazakhstan, but the Athabasca Basin is going to be able to cover the supply gap that may be coming. There are huge discoveries there, with the highest-grade uranium deposits; concentration is more than 100 times the global average. There are other areas within North America with significant resources, such as the Elliott Lake region in Ontario, where Pele Mountain is operating. Meanwhile, companies are coming into production in Wyoming. And there are a lot of uranium assets in Utah and New Mexico, which may benefit from a bounce in the depressed uranium spot price. We think that the U.S. and Canada over the coming years are going to increase production to alleviate the supply shortfall that may be coming from unstable areas. TMR: Can companies like Uranerz Energy Corp. (URZ:TSX; URZ:NYSE.MKT) and Laramide Resources Ltd. (LAM:TSX; LAM:ASX) afford to begin production in their new mines with uranium prices stuck where they are? “Uranerz Energy Corp.already has offtake agreements at higher uranium prices.“ JH: Uranerz already has offtake agreements at higher uranium prices. It can afford to begin production. Laramide is still a few years away from production in Australia, which has reversed the uranium ban. The uranium price may be depressed now, but investors realize the price could be significantly higher in two to three years. Uranerz is an in-situ mine so it’s lower cost. It can afford to begin production now because it has offtake agreements. We don’t think uranium prices are going to stick around where they are for much longer. Japan is slowly restarting its reactors. The Russian HEU Agreement has come to an end. There are more reactors being built today than ever before. We think the uranium spot prices are going to reverse higher making an astonishing move. Right now, you can get in at eight-year lows on the top uranium assets that are in the control of the juniors. Uranerz Energy has some of the top assets in the Powder River Basin that are coming into production, and Laramide has one of the top resources with over 50 million pounds (50 Mlb) near surface in Australia, which has now overturned a ban on uranium mining in the district. Now Laramide can go ahead with that Westmoreland project. Laramide has one of the top advanced resources that provides huge leverage for an investor for the uranium price. For investors who are looking for leverage and for advanced assets, Laramide is a good candidate. There are very few candidates in the junior sector that have 100% control of such a large asset. Investors must realize that there are so few high-quality junior uranium miners. When investors and funds return, the move could be dramatic—like an elephant trying to get through the eye of a needle. JH: Before I discuss Enterprise, let me reiterate that the key is trying to understand the long-term trend here: China is going to have to go abroad to support its expanding economy with natural resources over the long term. Short term, we are seeing market weakness in industrial metals as investors fear a slowdown. However, over the long term, commodity mine supply is not able to keep up with demand. While the media dazzles us with a Chinese slowdown, China’s buying up North American energy resources and precious metals during this pullback. One of the areas that has benefitted the most from this ongoing trend has been Western Canada, most notably Alberta. It may be one of the best economies in the world right now. Hundreds of billions of investment dollars are earmarked for this region to build liquefied natural gas (LNG) facilities and major pipelines to transport petroleum to the growing economies in Asia. Source: Statistics Canada There are already five major pipeline proposals. The major pipeline proposals have been the Enbridge Inc. (ENB:NYSE) Mainline expansion and the TransCanada Corp. (TRP:TSX; TRP:NYSE) Keystone XL pipeline. In addition, there are the proposed LNG facilities with owners such as Apache Corp. (APA:NYSE), Chevron Corp. (CVX:NYSE), Royal Dutch Shell Plc (RDS.A:NYSE; RDS.B:NYSE), Mitsubishi Corp. (MBC:LSE), PetroChina Co. Ltd. (PTR:NYSE; 857:HKSE), Imperial Oil Ltd. (IMO:TSX; IMO:NYSE.MKT) and Exxon Mobil Corp. (XOM:NYSE). This rising demand for electricity in automobiles and emerging Asian nations could continue to support a major boom for Western Canada. TMR: In a January issue of your newsletter, Gold Stock Trades, you expressed very high expectations forEnterprise Group Inc. (E:TSX.V). What do you like about that company, and is it meeting your expectations? JH: “Enterprise Group Inc. had a major run in 2013, and it may just be the beginning.“ Enterprise Group continues to have a phenomenal year. It’s making several strategic acquisitions in an area that’s going to benefit from this buildout in energy infrastructure. It has a tunneling company, which clears the way for the pipes to run under highways, trains and bodies of waters. It also has a pipeline business, Artic Therm, which has a patent-protected flameless heat technology to assist the operators working in cold weather conditions. It has Backhoe, a directional-drilling company. It has a heavy-equipment rental service for drill sites. Enterprise Group has developed and taken over these specialized hard-margin businesses that are generating earnings for shareholders. It has attracted a blue chip stable of companies, including Apache and Suncor Energy Inc. (SU:TSX; SU:NYSE). This is why it had a major run in 2013, and it may just be the beginning. As Enterprise continues to announce strong revenues, earnings per share and projects that are getting awarded, the story’s just beginning to get noticed in the United States. Enterprise announced that it’s going to become a reporting issuer in the U.S. and so it will hopefully attract a larger audience. It has very strong revenue growth. It has a return on equity over 35% and very strong revenue growth. Revenue is currently at $30M and management wants to grow that to $150M by the end of 2015. This could be a major growth company and could get a lot of attention in the U.S. TMR: You mentioned the possibility of International Tower Hill Mines Ltd. (ITH:TSX; THM:NYSE.MKT)bringing in a partner to open a mine in Alaska. How important is that and what are some good candidates? “International Tower Hill Mines Ltd.’s Livengood project has huge leverage to the price of gold.“ JH: Since International Tower Hill Mines released the feasibility study, the stock was sold off and hit a 52-week low. We took a contrarian view of that selloff. The concept behind International Tower Hill Mines is that it’s a low-grade, bulk-tonnage system, which at current prices may not be economic, but as prices begin rising to $1,500, $2,000, $2,500/ounce ($2,500/oz), the company’s Livengood project becomes one of the best deposits in North America, with huge leverage to the price of gold. It has over 20 million ounces (20 Moz) gold, and great leverage to an upward-trending gold price. With this feasibility study and management team, which consists of people who have built major Alaskan mines, such as Teck Resources Ltd.’s (TCK:TSX; TCK:NYSE) Pogo Project and Kinross Gold Corp.’s (K:TSX; KGC:NYSE) Fort Knox, International Tower Hill is one of the better candidates for strategic partners who are looking for large amounts of assets in friendly jurisdictions. We believe that there are strategic partners that want the International Tower Hill type of asset that’s able to produce over 0.5 Moz gold annually. One of its shareholders is AngloGold Ashanti Ltd. (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE). AngloGold may consider it because it may want a mine outside of Africa on its books that can have large production numbers in a stable jurisdiction. International Tower Hill is one of the few projects that have that potential. There’s a reason why the Livengood asset is attracting the people who built Fort Knox and Pogo. This management team makes me more confident that this will be a mine. We believe that there’s a potential for this stock to regain its uptrend and to continue to move and significantly outperform to the upside as the gold market turns higher. Huge optionality and leverage here. TMR: You have had high praise for Comstock Mining Inc. (LODE:NYSE.MKT). What do you like about this company? JH: What I like about it is that there are very few producers that have the strength in the balance sheet that Comstock has. It may be the gem of the entire mining industry. This balance sheet may begin to really start improving this quarter. Comstock recently announced it secured more than 300 acres of land, so there’s expansion opportunity. The company has an expanded mine plan, which includes additional operations, such as the Spring Valley and the Dayton Projects. What it’s demonstrating to the institutional investors, who are increasing their holdings in this stock, is that it may be one of the fastest-growing producers in the entire industry on track to go from 20,000 up to 200,000 ounces annually (20–200 Koz/year). The management of the company continues to seek guidance and build institutional shareholders. Now it’s on the verge of generating free cash flow in the coming quarters because it’s increasing production. It went from 20 Koz to 40 Koz. This brings its average costs down, generating greater profit. I’ve been to the property. This is a historic district, the Comstock district, which in the 1800s produced billions of dollars worth of gold and silver, largely underexplored by modern methods. It’s one of the few companies that’s actually able to generate cash flow, even in a lower cost environment, as most of the ounces are near surface and heap-leach amenable. TMR: Royal Nickel Corp.’s (RNX:TSX) Dumont Nickel project in Québec is getting good press. When will the company begin production? “Royal Nickel Corp.’s Dumont Nickel project is one of the best advanced nickel projects under the control of a junior.“ JH: Royal Nickel’s Dumont Nickel project is one of the best advanced nickel projects under the control of a junior. It could begin construction by the end of this year and start production in 2016. The company has a management team that knows nickel possibly better than any other junior, as it has some of the top Falconbridge Ltd. and Inco Ltd. personnel and management on the board of directors. Dumont is one of the largest nickel deposits in the world. Again, nickel is one of the metals of which Russia is a big producer. Also, Indonesia, one of the largest exporters of nickel, just announced an export ban. We expect the nickel price to start heading higher, and we expect much more interest in the nickel sector. There are very few assets like the Dumont project in the control of a junior. TMR: What do you expect to happen to the share price when it begins production? JH: Royal Nickel has the capability of bringing this production onstream, but I don’t think it’s going to be in control of Royal Nickel by then. I think the project is going to be acquired by a Vale S.A. (VALE:NYSE) or a BHP Billiton Ltd. (BHP:NYSE; BHPLF:OTCPK) as soon as this nickel market starts turning higher. It could be acquired at maybe a 50% to 75% premium from where it is today. TMR: Probe Mines Limited (PRB:TSX.V) has made a major discovery that some are calling a game changer for the company. What can you tell us about that? “Probe Mines Limited has already made a dramatic run since our last interview.“ JH: In my last interview with The Gold Report in December, I mentioned that I had taken a position in Probe Mines. Since that time there have been a lot of developments. Probe is developing the Borden Lake project in Ontario, another jurisdiction that’s getting a lot of attention. Potential is huge for this. Probe’s stock has already made a dramatic run since our last interview from around $2 to $3.35/share. Again, it’s similar to what we found with some other companies that I’ve invested in, such as Corvus Gold Inc. (KOR:TSX), where it had this low-grade, bulk-tonnage deposit, but then it had this high-grade discovery. Keep a close eye on Canamex Resources Corp. (CSQ:TSX.V; CX6:FSE), which is doing something similar and has made a major high-grade discovery in Nevada from a low-grade historical resource. Canamex has attracted Hecla Mining Co. (HL:NYSE) and Gold Resource Corp. (GORO:NYSE.MKT; GORO:OTCBB; GIH:FSE) as major shareholders during this down bear market. You can be sure they do a lot of due diligence before putting millions of dollars into a junior miner. TMR: Zimtu Capital Corp. (ZC:TSX.V) has been in the $0.50/share doldrums for 16 months, but it has been two or three times higher for most of its history. What does the company need to do to break out? “Zimtu Capital Corp. has found what we consider some of the higher quality, early-stage junior miners that are in industrial minerals and metals that I’m also very bullish on.“ JH: Zimtu is one of the forces behind some high-quality, early-stage junior mining companies. This provides a great way for investors to participate and profit in the junior, especially d

Fukushima Fallout: Sick U.S. Sailors Sue TEPCO After Exposure to Radiation 30x Above Normal Posted: 19 Mar 2014 09:00 AM PDT http://www.democracynow.org - Three years after the triple meltdown at the Fukushima nuclear power plant, scores of U.S. sailors and Marines are suing the plant's operator, the Tokyo Electric Power Company, for allegedly misleading the Navy about the level of radioactive contamination. Many of... [[ This is a content summary only. Visit http://www.GoldSilverNewsBlog.com or http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

Gold tipped to hit $1,400 on Russia fears and ETF buying Posted: 19 Mar 2014 08:49 AM PDT German bank says that turmoil in Ukraine and a return of ETFs will push gold prices even higher in 2014 This posting includes an audio/video/photo media file: Download Now

Obamacare Tax Credit: The Untold Story Posted: 19 Mar 2014 08:22 AM PDT T-minus 12 days until open enrollment closes for Obamacare. It is crunch time for thousands as they decide if they want to enroll, and ultimately how much of a tax credit to accept in order to determine their first premium payment amount. Much attention has been lavished on the "positives" of the ACA's tax credits (also called premium subsidies). White House press releases often highlight the impact of the credits while chiding others for not including them when discussing the new higher premiums under the law. Yet the new reality of Obamacare's tax credits has left finance reporters to pen articles warning readers to "take care" when considering a tax credit and providing strategies for how best to "protect yourself." So what do finance reporters know that the White House doesn't? Just a few dollars of extra income could result in thousands of back taxes to be paid. By accepting a tax credit, low-income or lower-middle class families face significant tax ramifications and potential financial risk. Congress has changed the rules twice on consumers for the credits, making the income cliffs steeper, and fully equipping the IRS to claw back overpaid subsidies (unlike the individual mandate penalty). The flip side of the tax credits is almost unknown to the general public. The ACA's tax credits are given directly to the insurance companies, and are calculated on a sliding scale, based on family size, and in theory, to those making between 138% and 400% of the federal poverty level (FPL) in states that have expanded Medicaid eligibility. In states that have not expanded Medicaid, the tax credits are available to those making between 100% and 138% FPL. However, individuals can claim them by estimating that they will make over 100% FPL even if they end up making 90% FPL in these states, effectively closing the coverage gap we have heard Medicaid expansion supporters and the media complain so loudly about. However, the tax credits are unavailable to those with an "affordable" offer of employer-based insurance, or for those on other forms of government-approved coverage like standard Old Medicaid or Medicare. Yet, soon-to-be-published research by my colleague Jonathan Ingram will show that the tax credits phase out quickly for those in the exchange, and are therefore unavailable for many young people (18-34) in numerous states making far less than 400% FPL, based on the complex formula used to calculate the subsidies, and the price of the plans available on the exchange. This fact is only making the Administration's job of convincing young people to sign up even harder. The credits can only be used in a government-sanctioned Obamacare exchange. In other words, individuals purchasing private insurance on their own must decide if they want to keep their current insurance plan without a subsidy or drop their coverage to take the tax credit. Since so many states rejected the President's call to renew policies for those facing cancellations, and the recent extension of that policy, millions of Americans are facing this exact decision of joining an exchange or buying elsewhere by March 31. All citizens that take the credit must file a tax return to receive the credits regardless of their income. Failure to do so will result in them being prohibited from seeking a credit in the future. Married couples must file a joint return. The initial tax credit calculation will be based on an applicant's income tax return from the previous year, or a best estimate of what it will be next year. The credit can be taken in advance at the beginning of the year. However, individuals who enroll in the Obamacare exchange will run the risk of having to pay back a significant portion of the tax credit if their life circumstances change (more on this below). The credit can also be taken on the following year's return in the form of a refund. However, individuals who make this decision will be responsible for coming up with the full cost of the Obamacare exchange insurance at the beginning of the year. Individuals and families do have the option of taking a partial credit. Republicans have by and large ignored the tax credit issue unless talking about the budget implications. Perhaps the silence is due to the fact that Congress has voted to change Obamacare twice to increase the financial risk that families could face when they take the credit. Since the enactment of ACA, these limits have been amended twice: first under the Medicare and Medicaid Extenders Act of 2010 (P.L. 111-309), and then under the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayment Act of 2011 (P.L. 112-9). Congress changed the payback protection to vanish at the 400% poverty level and increased the payback amounts at 200% and 300% FPL from what they had been before. The result will be surprise bills from the IRS in the mail come tax time 2015, in the order of a couple hundred dollars all the way up to full value of any subsidy received if a family crosses the 400% FPL threshold. (This could be $10,000-$12,000 for a family of four, as an example.) Just a few dollars of extra income could result in thousands of back taxes to be paid. Our lives are constantly in flux. Lower and middle-class families rarely find themselves in static work and life environments, but that is exactly what Obamacare assumes. Even the most common and mundane life changes could significantly impact an individual's financial situation if he or she decides to take the tax credit. So Obamacare recommends that individuals report these changes immediately. In a recently released presentation by Centers for Medicare and Medicated Services (CMS), it was outlined that individuals will have to submit a new application to re-determine eligibility, triggering a special enrollment period and subsequently termination of the old policy. As reported by Sara Hansard at Bloomberg: "Life events resulting in a special enrollment period eligibility are: adding a member, such as a birth or by marriage; relocating; losing access to other coverage, such as employer coverage; being released from incarceration; and changing citizenship or immigration status. … "The presentation also listed life events that don't result in special enrollment period eligibility: removing a member as a result of death or divorce; gaining access to other coverage, such as employer coverage; becoming pregnant; a change in tax filing status; a change in status as American Indians, Alaska Natives or tribal status; changes in disability status; corrections to date or birth or Social Security number; or some changes in income." However many of these rules will cause significant confusion as a death or divorce could change the income of a family significantly, making some households appear more wealthy as they jump down a family size level on the FPL scale. Or gaining employer coverage should make an individual ineligible for a subsidy. To put a finer point on how many people are likely to be subject to a life change significant enough to trigger a payment to the IRS, UC Berkley's Ken Jacobs and Dave Graham-Squire, Elise Gould from the Economic Policy Institute, and Dylan Roby at UCLA wrote an illustrative piece for Health Affairs. Largely overlooked by the media the article "Large Repayments of Premium Subsidies May Be Owed to the IRS if Family Income Changes are Not Promptly Reported," made some important observations about the exchange eligible population in California that can be extrapolated to most of the rest of the country. "Nearly three-quarters (73.3%) of the predicted subsidy recipients were in families with income changes of more than 10% between the two years. Of those recipients, 37.8% had large income increases, while 35.5% had large decreases. Thirty percent of recipients were in families whose income increased more than 20%, and 18.9% had income increases of more than 40%." To be fair, some will receive even more subsidy as a result of a life change, the Health Affairs piece estimated that 41% would receive an additional credit. But given the level of income fluctuation in this population, one bad economic year (but a good subsidy year) is likely to be followed by a good economic year (but a bad subsidy year). "We estimate that 9% of those who are eligible for a subsidy at the beginning of 2018 would end the year with an annual income of more than 400% of poverty, requiring them to pay back any subsidy that they had received. Nineteen percent of those who started with an annual income of 251-400% of poverty would end the year with an annual income of more than 400% of poverty. "…if no income changes were reported…38.4% of individuals receiving subsidies would be in families that were predicted to owe repayments…" "If income changes of 10% or more were reported and the new income was used to adjust subsidy levels… 35.8% would…" still owe repayments. Percent of CA Exchange Subsidy Recipients Owing Repayment, 2019, By Scenario (Source: Health Affairs, September 2013 vol. 32 no. 9 1538-1545) Median repayment amounts with no income changes reported or subsidy adjustments will be close to $900. Nationally repayment will be a very big deal if we buy the estimates by the Kaiser Family Foundation that 48% of those that purchase individual policies will now qualify for a premium subsidy. In a recently released report I co-authored with CPA Jonathan Small, "Too Risky To Exchange?" we looked at five very common life events that could dramatically impact citizens' life, perhaps most dramatically near the income cliff found at the 400% FPL of eligibility. But there are income cliffs baked into Obamacare around 133% FPL and 250% FPL as well. A pull quote from the Health Affairs piece might have hit the nail on the head for why the report was largely ignored by the media. "If there is much media attention to the need for repayments, some people could be dissuaded from participating in the exchanges." Sadly the media has once again failed, and left millions of Americans with only half the information that is needed to make an intelligent decision about Obamacare's tax credits. We can anticipate a flurry of sad stories of families receiving multi-thousand dollar bills from the IRS next April, and quotes from the families wondering why no one told them the truth about the Obamacare tax credits. Regards, Josh Archambault for The Daily Reckoning Ed. note: Readers of the Laissez Faire Today email edition have been lucky enough to follow the story of a one-of-a-kind health care expert named Jud Anglin. For 4 years, he’s been on his quest to find the world’s best, most affordable health care. And in the process he’s helped thousands of people ostensibly “opt-out” of Obamacare. To read his full free report 4 Ways to "Opt-Out" of Obamacare and get the Best Healthcare When You Need It, sign up for the FREE Laissez Faire Today email edition, right here. This article originally appeared here on Forbes.com. This article was also prominently featured at Laissez Faire Today

Gold Price Erases Last Week's 3% Gain as Russia Seizes Ukraine's Naval HQ in Crimea, Shanghai Discount Holds at $7 Per Ounce Posted: 19 Mar 2014 07:11 AM PDT GOLD PRICE gains of 3.2% from last week were finally erased Wednesday lunchtime in London, with spot bullion falling to $1344 per ounce even as Russian troops stormed Ukraine's naval HQ in Crimea.   Ahead of today's US Federal Reserve vote – expected to leave interest rates at zero but taper QE to $55 billion for next month – silver fell to $20.64 for the third time in just over a week, nearing its lowest level in a month.   World stock markets held flat, but US futures pointed higher.   "As long as the situation in Ukraine remains unresolved," Bloomberg quotes Hong Kong trader and refiner Wing Fung Financial's head of research, Mark To, "this should keep gold prices supported."   "It was the fear of war that sent gold prices higher in the first place," claimed eponymous newsletter author Dennis Gartman to CNBC on Tuesday.   "Any incursion by the Russians into mainland Ukraine, while unlikely, but remotely possible, would send gold soaring."   "Any further intensification of tensions," said Bank of England members at their policy vote 2 weeks ago, "might cause a material increase in the international prices of grain and energy supplies."   Crude oil has since lost almost 3% against the US Dollar.   Rather than pursuing "weak" economic or political sanctions against Russia, reckons energy consultant Philip Verleger in the Financial Times, the United States could drop world oil prices by $10-12 per barrel over the next 2 years by releasing less than 1% of additional global supply from its strategic petroleum reserves.   Chinese gold prices meantime edged lower Wednesday, but the discount to London gold was cut as the Yuan also fell on the currency markets.   Barring last summer's spike lower, the Yuan stood today at its lowest Dollar value since spring 2013, down some 2.5% from this New Year's highs.   Trading at a premium to wholesale London gold bullion for all but 1 week over the last two years, Shanghai gold closed today some $7 per ounce below international prices, versus a discount of more than $8 on Tuesday.   "Gold's breakout seems to have faded," says US brokerage INTL FCStone, noting that prices have retreated below the October 2013 highs of $1362 per ounce.   "The gold price is continuing to correct," reckons Commerzbank's commodity team, pointing to "low inflation and positive economic data" from the US, as well as what it calls "the provisional pricing out of the Crimean crisis and the resulting higher risk appetite among market players."

China Economy Isn't Slowing Down, It's Buying Up Resources Posted: 19 Mar 2014 02:27 AM PDT Headlines about a Chinese economic slowdown may get good web traffic, but the real story is that China is buying up uranium and other resources around the world, says Gold Stock Trades writer Jeb Handwerger. Meanwhile, tensions in Russia highlight the massive country's resource dominance in natural gas, oil, uranium, platinum group metals, rare earths and nickel. Handwerger tells The Mining Report that North America is already acting to develop resources that can meet both domestic and international demandâ€"and this global geopolitical uncertainty is an investment opportunity.

Gold and Silver Price Fall on Huge Volume Posted: 19 Mar 2014 01:52 AM PDT Briefly: In our opinion short speculative positions (half) in silver and mining stocks are justified from the risk/reward perspective. The precious metals sector declined yesterday, which was likely to happen regardless of many factors pointing to a different conclusion, or simply because the precious metals sector was overvalued. The question is if we (charts courtesy of http://stockcharts.com) think that lower precious metals values are likely:

Michael Gray: Is Goldcorp's Bid for Osisko a Harbinger of a Gold Renaissance? Posted: 19 Mar 2014 01:00 AM PDT Optimism. Momentum. Buoyancy. Call it what you will, a positive current is running through the gold space. Macquarie Capital Markets' Canadian Mining Equity Research Team Head Michael Gray deconstructs some of the factors contributing to that newfound energy. Calling out merger & acquisition activity as a nascent trend, he shares with The Gold Report some of the names that could be on a senior gold producer's shopping list.

Michael Gray: Is Goldcorp's Bid for Osisko a Harbinger of a Gold Renaissance? Posted: 19 Mar 2014 01:00 AM PDT Optimism. Momentum. Buoyancy. Call it what you will, a positive current is running through the gold space. Macquarie Capital Markets' Canadian Mining Equity Research Team Head Michael Gray deconstructs some of the factors contributing to that newfound energy. Calling out merger & acquisition activity as a nascent trend, he shares with The Gold Report some of the names that could be on a senior gold producer's shopping list.

Michael Gray: Is Goldcorp's Bid for Osisko a Harbinger of a Gold Renaissance? Posted: 19 Mar 2014 01:00 AM PDT Optimism. Momentum. Buoyancy. Call it what you will, a positive current is running through the gold space. Macquarie Capital Markets' Canadian Mining Equity Research Team Head Michael Gray... Visit the aureport.com for more information and for a free newsletter

Why Gold Is Unstoppable Posted: 18 Mar 2014 11:27 PM PDT Stars of stage, screen, and boardroom have come together to “ban ‘bossy.’” The world has lots of problems, and Sheryl Sandberg and Beyoncé think the word bossy tops the list. Reportedly, assertive girls are called the b-word growing up, dissuading them from pursuing leadership roles. At least that’s what Condoleezza Rice and Diane von Fürstenberg claim. Rest assured these women don’t want bossy attitudes to go away. They want it called something else. Jay-Z’s wife offers an alternative: “I’m not bossy. I’m the boss,”… which sounds a little bossy to me. No one knows whether the new head of the Federal Reserve, Janet Yellen, was called bossy when growing up. For sure she’s no wallflower these days. Four years ago as president of the San Francisco Federal Reserve Bank, she said, “Accommodative policy is appropriate, in my view, because the economy is operating well below its potential and inflation is undesirably low. If it were possible to take interest rates into negative territory, I would be voting for that.” Now that she’s the boss, Yellen might ban interest rates. As a believer in the musings of John Maynard Keynes, Chairwoman Yellen no doubt insists that people are too future-oriented (remember, in the long run we’re all dead), society doesn’t consume enough, saves too much, interest rates are too high, money printing will lower rates, and unused savings leads to unemployment. The last three Fed bosses have wanted to, if not do away with interest rates, at least ground them to nothing. What’s inescapable, however, is money today is worth more than money tomorrow. That means interest rates provide important signals to the marketplace. Left to the markets, these rates will reflect society’s time preference: How much must savers be paid to delay consumption? In turn, interest rates will direct capital toward its optimum use. When the Fed bosses interest rates down below what they would be naturally, entrepreneurs and investors receive faulty signals. The cheap money then flows into investment assets: stocks, bonds, land, art, etc. Eventually the asset bubbles will pop when people realize these investments were uneconomic in the first place. The Fed can ban interest by forcing the rates it controls to zero, but the Eccles Building bosses cannot dictate the results. Janet Yellen can’t print jobs or force Amazon to increase prices. The newly minted money will flow where it wants to—and it almost always gushes into the speculation du jour. Gold is (and always has been) its own boss. The cost to create an ounce is somewhere around the going price—$1,366. This fact will keep too much from being mined. This sort of economic brick wall doesn’t prevent Yellen and company from creating more dollars. Using Fed credit to buy Treasuries costs nothing. And while the cost of making the new, hi-tech C-Note is 60 percent higher than the old paper, the government can still make $100 bills—backed by legal tender laws—for only 12.5 cents. It’s good to be the boss. It’s bad for the rest of us. Today we have Sprott Global’s Henry Bonner interviewing one of the preeminent gold analysts in the world: John Embry. If you have your doubts about Dr. Yellen’s management of the government’s money, Mr. Embry makes a compelling case for holding the people’s money. Enjoy. Doug French, Contributing Editor John Embry: Why Gold Is Unstoppable By Henry Bonner (hbonner@sprottglobal.com) John Embry is a chief investment strategist at Sprott Asset Management LP and works alongside Rick Rule and Eric Sprott. Mr. Embry oversaw $5 billion in funds at RBC Global Investment Management before Sprott, and he is a well-known gold and silver bull and considered an influential thought leader on precious metals. Henry Bonner: There’s been a price move up in the metals; is this exciting to you as an investor in gold and silver? John Embry: Well, there’s been a good move up here. Gold and silver are doing well against resistance, and against sentiment, which remains very negative. So many people are still very bearish on the metals for reasons that I can’t understand. But that bearishness exists. I also think that there’s ongoing interference in the markets. One thing is that they don’t want gold and silver breaking out and running hard. I think they’ve done a good job at that because gold’s up $150 off the low that was established at the end of last year—it got down to $1,180 briefly, and even silver, against great resistance, is pushing forward. And yet, most commentators remain negative or worse on this subject shows that they’ve done a great performance. Henry: What do you think investors in gold and silver should look at now? John: Well, I’m looking at the reality of the picture. First of all, the world economies are not what they are made out to be. Without exception, pretty much, they are weakening, and they are struggling. It’s very simple: there’s far too much debt in the world, in virtually every country at every level. If you believe in the tenets of Austrian economics to the extent that I do, when you get an excess debt situation in the world, you cannot create enough new debt to get the economy to grow. I think that’s what we’re up against. Consequently, I don’t see the economy bailing out the bulls at this point. As things get worse and worse in the economy, I think that gold and silver become a worthwhile alternative. What goes unremarked is how small these markets really are. If you looked at every ounce of gold that’s been mined since the beginning of time, that’s only 170,000 tonnes—more or less. That’s only worth a little over $7 trillion. And a trillion dollars doesn’t go very far these days. So you think about how little gold there is—silver is a fraction of that. If money decides they want an outlet in these two metals, it’s going to have an outsized impact on the price. I think as things get more and more difficult in the real world, people will seek outlets in gold and silver, and the impact will be outsized. Henry: What about the situation with BaFin, the German equivalent of the SEC? After investigating Deutsche Bank, which is involved in the London price fix for gold, they announced that gold may be manipulated worse than LIBOR. Are we on the cusp of a great revelation about price fixing? John: I think it’s interesting that they’re focusing on the London price fixing. I’m sure that there’s probably been some chicanery there. But it’s absolutely a mere bagatelle compared to what’s going on in the gold market, between the Western central banks and the bullion banks and the amount of pressure they’ve brought on the gold price. The thing is, I would be more interested in the extent to which the gold and silver prices have been held back by relentless central bank activity. But you’ve got to start somewhere, and that BaFin inquiry is a positive step in the right direction. Henry: What do you mean by central bank activity? John: I mean clandestinely leasing out significant amounts of gold into the world. The last big thing was a major shipment of gold from Switzerland—that had to be central bank gold, because where else was it coming from? That stuff was being re-refined in Switzerland and shipped on to China. This whole West-to-East transport of major quantities of gold, from a Westerner’s perspective, is not a good development. The old adage is that gold goes where the wealth is being created. And the other is that those that have the gold make the rules. So I’m really upset with this whole migration of gold from West to East. Henry: Do you think that the West is no longer creating real wealth? John: Well, I think what’s really happened is that the West has abdicated its manufacturing space to China in particular and a number of satellites in that part of the world. I think one of the great problems with unemployment in the West today derives from that. There used to be huge numbers of well-paid manufacturing jobs in North America and Europe. A lot of those have been lost, and a lot of those products are being produced at lower cost these days in China, because they have a much lower cost base. I don’t think that’s a particularly positive development in the long term for North America and Europe. Henry: What is driving this big world shift? John: Basically, for the longest time, Henry, from the post-war era China was asleep; it was just over there, not doing much of anything. But they do have over 1.4 billion people now. All the wealth was centered in the Western world, in North America and Europe, and Japan to a lesser extent. There are not many people in that group, probably 600 million people. Suddenly China, and India to some extent, awoke. 2.7 billion people decided they wanted what we had and were prepared to work hard for it. It’s started to have a dramatic impact on the standard of living in North America. And I think the manifestation of that is that the bottom half of our society is having trouble getting well-paying jobs, and it’s starting to take a toll. Henry: Do you think that China might follow the West’s path of expanding debt and letting go of gold? John: Well no; in fact I think the opposite. What’s happened is that we in the West, and America in particular, were paying for all these goods from China with more and more printed money. And China was running up huge surplus accounts as a result. So they had this enormous quantity of US dollars in reserve, and they know it’s pretty vulnerable. And I think that’s an underlying reason that they’ve been buying gold—and it’s not just gold, but properties and other stores of value. They really want out of these US dollars and into hard assets to whatever extent they can do it. Henry: Are the Canadian and European currencies on a better track that the US dollar? John: Well, no. Rather than criticize the US specifically, I would be more critical of the Western world in general. We’ve lived a pretty good life after the Second World War and in the ensuing 70 or so years. And if we run up an awful lot of debt, it’s going to take some real doing to get back on the right track. In the intermediate, as we’re dealing with all these issues, money might be debased just to keep all of these things afloat. That’s one of the reasons I am so bullish on gold and silver. These are constants in an ever-changing world, and I think they are cheap now—very cheap. I don’t think people own enough of it, and when they finally get that this is happening, there’s not going to be enough to go around. So my advice to people is to get all the gold and silver you can at these prices. And better than that—if you really want leverage—buy the shares that mine the stuff. If you have the right shares, I think you’re going to make a fortune. So I’m a huge bull on the gold and silver shares; the only caveat is that you’ve got to be very selective. There have been a lot of bad stocks promoted through the years. And if you’re buying into this space, you’ve got to be real sure that they’ve got the goods—they’ve got a real ore body or they’re in production. Or they’re very close to production so you’ve got some kind of certainty that it’s real. Those kinds of stocks are going to do spectacularly well when this market starts to rock and roll. This gold and silver issue is a huge deal; and I don’t think most investors understand the playing field that we’re on. Henry: So stay strong; own gold and silver; and wait? John: Well yes; and I want to reiterate that there is so much bad press out there that most people just avoid the sector, and it seems like in the fullness of time it will turn out to have been a terrible mistake not to have had the protection of gold and silver and some related shares in your portfolio. Henry: Do you think we are getting close to vindicating the case for gold and silver? Will it take a few more years? John: I wouldn’t say years. Of course, I want to leave myself some breathing room, but I think we are getting real close. There are more and more drumbeats about the degree to which the price has been messed with. And there’s all this paper out there with no real gold or silver backing it. When all this comes together in a crescendo for gold and silver, I think the impact on the metals is going to be way beyond what most investors can even comprehend today. And that’s why I think it’s important to be early rather than late today. If you’re late, you might never get in—because it may move so quickly and the availability is limited. Henry: Will there be signs of an imminent change in gold and silver to the upside? John: I think there’s a lot of evidence now of how they are controlling the paper markets with all the rules that they have put in place, and the way their algorithms work. If the price of gold ever goes up 2% in a day, they stop it. So I will be feeling comfortable that we are really rocking and rolling in this when we start to see some really outsized moves—say, gold going up by $50 in a day. I think that would really tell us that the game is on. And I think we’re close—we’re talking months, not years. Henry: What forces the pressure on gold and silver to give way? John: Lack of physical. I think the real Achilles heel of the paper market is that there is overwhelming physical demand from China and other sources. Recognition of the lack of physical, especially to back all of the paper products, could really push this thing dramatically in a very short time frame. Henry: What will be the response of the Federal Reserve? John: I think they’ve already made all their responses. They have printed all this money, and I think that a lot of US officially held gold has entered the market through leases, swaps, or what-have-you. I think they have less and less firepower to maintain this sort of activity. As a result, when it changes, it will change dramatically, because there will be more demand than there is physical supply to meet. And the paper market, which has controlled the pricing mechanism for as long as I can remember, will finally be overrun. Want to hear more from John Embry, Rick Rule, Eric Sprott, and other experts? Sign up for Sprott’s free e-letter, Sprott’s Thoughts, to receive insights on natural resource and precious metals investing.

Fishing for Gold? Posted: 18 Mar 2014 05:00 PM PDT If interest rates are supposed to be on the rise, why has the price of gold gone up so much this year? Is it merely because it is bouncing back after a sharp decline in 2013? We have a closer look at the link between gold and interest rates to gauge how investors may want to approach the bait provided by the Fed.

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