Gold World News Flash

---

• April Fools’ drop dead date for the Volcker Rule – what it might mean for gold
• ECB Chatter Weakens Euro; Dollar Rises
• Diamonds Are A Chinese Smuggler's Best Friend
• Mike Kosares: Volcker Rule starts April 1 and might push big banks out of gold
• Koos Jansen: A first glance at U.S. official gold reserves audits
• China's Credit Pipeline Slams Shut: Companies Scramble For The Last Drops Of Liquidity
• Evans-Pritchard sees Russia as loser in Crimea, Roberts as winner
• Intervention is killing commodity hedge funds, Turk tells KWN
• UBS said to suspend FX traders in New York, Zurich, and Singapore
• How The BRICs (Thanks To Russia) Just Kicked The G-7 Out Of The G-20
• Geoengineering & Collapse of Civilization -- Dane Wigington
• The Gold Price Has Corrected, Time To Buy
• The Gold Price Has Corrected, Time To Buy
• Gold And Silver Excellent Store Of Wealth In Last 60 Years
• Gold Price Projection by the Golden Ratio
• Rick Rule: Ownership Of Gold Is Critical To Your Wealth Next Years
• Gold Daily And Silver Weekly Charts - Option Expiration
• Gold Daily And Silver Weekly Charts - Option Expiration
• April Fools’ drop dead date for the Volcker Rule – what it might mean for Gold
• U.S. Dollar Value Could Suffer Instant Change
• Unsustainable?
• Gold Price vs. "Flattening" Yield Curve
• Gold Price vs. "Flattening" Yield Curve
• Gold Juniors? Choose Carefully, If At All
• Gold Juniors? Choose Carefully, If At All
• The Way the World Ends
• The Way the World Ends
• China Stimulus: Hope Against Hope?
• China Stimulus: Hope Against Hope?
• Go Gold! Got Gold?
• Go Gold! Got Gold?
• Welcome to the Currency War, Part 14: Russia, China, India Bypass the Petrodollar
• Gold Prices Drop Near $1300, Seen "Struggling" as US Rates Slip After Data, Options Expire
• In The News Today
• The West’s War On Gold Is Raging & There Are New Casualties
• Evil Entrepreneurs: How the Feds Spin Price Inflation
• Gold Prices Test $1308 Again as China Bank Run Hits Headlines, Bundesbank Says Euro QE "Not Out of Question"
• Extrapolation Fever
• One Match that Reliably Sparks a Rising Gold Price
• Gold Price Projection by the Golden Ratio
• U.S. Dollar Bottom - Third Time’s a Charm?

April Fools’ drop dead date for the Volcker Rule – what it might mean for gold Posted: 26 Mar 2014 11:44 PM PDT USAGold

ECB Chatter Weakens Euro; Dollar Rises Posted: 26 Mar 2014 08:00 PM PDT from Dan Norcini: The chatter in the Forex markets today centered around the comments of Bundesbank President Weidman who seemed to be concerned about the low level of inflation in the Euro Zone. Throw in the comments of some other major European Central Bankers and that hit the Euro as talk grew that the ECB was moving in the direction of its own version of Quantitative Easing. Over here in the US Fed Governor Charles Plosser (head of the Phillie Fed) commented that the hurdle to change course on the Fed’s plan to taper was “pretty high”. By the way, he was concerned that inflation was currently a little low and that he would actually like to see it creep up a bit! How’s that for some candid talk? Read More @ TraderDanNorcini.Blogspot.com

Diamonds Are A Chinese Smuggler's Best Friend Posted: 26 Mar 2014 07:33 PM PDT With copper, iron-ore, soybeans, and nickel all tough to carry when you need liquidity from your commodity-financing deals; it appears the Chinese people have turned to more spectaculr methods of moving 'wealth'. As The South China Morning Post reports, just week after a man was stopped at the China-Hong-Kong border with 4 kilograms of gold in his shoes, customs officers caught a man smuggling more than 7000 diamonds in plastic bags in his underwear. The tell, officers noticed he was walking in a pculair manner.   Via The South China Morning Post, A man from Hong Kong was caught at a checkpoint at Shenzhen trying to smuggle more than 7,000 diamonds in his underwear, according to a mainland media report.   The man was stopped at the Shenzhen Bay crossing last Thursday after customs officers noticed he was walking in a peculiar manner, the Guangzhou Daily said.   Officers searched him and found a small plastic bag in his underwear containing thousands of small diamonds, semi-finished stones and gold jewellery.   The report said customers officers spent several hours counting 7,443 small diamonds, plus 10 pieces of jewellery weighing about 130 grams.   Anti-smuggling officers are investigating.   Another Hong Kong man was caught at the Lo Wu crossing in January trying to smuggle 4kg of gold in his shoes, according to the Southern Metropolis Daily newspaper. Maybe he would have made it if he wore the diamonds like this?   However, this Chinese gentleman has nothing on a female smuggler entering Toronto (from Trinidad): The RCMP disclosed that more than 10,000 diamonds were found inside the body of 66-year-old Helena Freida Bodner, who arrived on a flight from Trinidad, but cannot confirm how the diamonds got into her body. Seems diamonds are a smuggler's best friend, as the Shanghaiist notes, as undesirable as diamonds in your underpants seem... is still a preferable alternative to those Taiwanese smugglers who were arrested while holding 24 pieces of gold up each of their rectums last July.

Mike Kosares: Volcker Rule starts April 1 and might push big banks out of gold Posted: 26 Mar 2014 06:50 PM PDT 9:48a HKT Thursday, March 27, 2014 Dear Friend of GATA and Gold: Speculative trading by banks is to end in the United States on April 1 upon implementation of the "Volcker Rule," Mike Kosares of Centennial Precious Metals in Denver notes today, with implications for the gold market. "The big trading banks traditionally have occupied the short side of the paper gold market," Kosares writes. "Some analysts feel that those positions will be handed off to the hedge fund business so things won't change much. On the other hand, hedge funds are not considered too big to fail, so their bets could be placed more evenly on either side of the market." Kosares' commentary is headlined "April Fools Drop-Dead Date for the Volcker Rule -- What It Might Mean for Gold" and it's posted at Centennial's Internet site, USAGold.com, here: http://www.usagold.com/cpmforum/2014/03/26/volcker-rule-goes-into-effect... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Buy metals at GoldMoney and enjoy international storage GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, ­taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit: http://www.goldmoney.com/?gmrefcode=gata Join GATA here: 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 Silver mining stock report for 2014 comes with 1-ounce silver round Future Money Trends is offering a special 18-page silver mining stock report about how to profit with the monetary and industrial metal in 2014, and it comes with a free 1-ounce silver round. Proceeds from the report's sales are shared with the Gold Anti-Trust Action Committee to support its efforts to expose manipulation in the monetary metals markets. To learn about this report, please visit: http://fmturl.com/gata/

Koos Jansen: A first glance at U.S. official gold reserves audits Posted: 26 Mar 2014 06:28 PM PDT 9:35a HKT Thursday, March 27, 2014 Dear Friend of GATA and Gold: Gold researcher and GATA consultant Koos Jansen today begins to examine in detail what have passed for audits of U.S. gold reserves in recent decades. The problem with these audits is that they don't extend past assertions that there is gold in the various vaults -- don't address whether the gold is oversubscribed, as through gold swaps with foreign central banks, arrangements for which the Federal Reserve has admitted to GATA, if inadvertently: http://www.gata.org/node/7819 Jansen's commentary is headlined "A First Glance at U.S. Official Gold Reserves Audits" and it's posted at his Internet site, In Gold We Trust, here: http://www.ingoldwetrust.ch/a-first-glance-on-us-official-gold-reserves-... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Silver mining stock report for 2014 comes with 1-ounce silver round Future Money Trends is offering a special 18-page silver mining stock report about how to profit with the monetary and industrial metal in 2014, and it comes with a free 1-ounce silver round. Proceeds from the report's sales are shared with the Gold Anti-Trust Action Committee to support its efforts to expose manipulation in the monetary metals markets. To learn about this report, please visit: http://fmturl.com/gata/ Join GATA here: 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

China's Credit Pipeline Slams Shut: Companies Scramble For The Last Drops Of Liquidity Posted: 26 Mar 2014 06:26 PM PDT One of our favorite charts summarizing perfectly the Chinese credit bubble, better than any other, is the following which compares bank asset (i.e., loan) creation in China vs the US.   It goes without saying that while the blue line has troubles of its own (namely finding the proper rate of liquidity lubrication to keep over $600 trillion in derivatives from collapsing into an epic gross=net garbage heap), it is the red one, that of China, where $1 trillion in credit was created in the fourth quarter alone, that is clearly unsustainable for the simple reasons that i) China will quickly run out of encumbrable assets and ii) the bad, non-performing loan accumulation has hit an exponential phase, which incidentally is why Beijing is scrambling to slow down the "flow" from the current unprecedented pace of $3.5 trillion per year. It is also because of this wanton and mindblowing capital misallocation (the de novo created debt goes not into profitable, cash flow generating ventures, but into fixed asset investments which create zero and potentially negative cash flow, due to China's already epic overinvestment resulting in ghost cities, and building that fall down weeks after their erection) that China has finally decided to provide lenders with the other much needed component of the return equation: risk. This, in the form of debt defaults, something unheard of in China for two decades. Which brings us to today, when we find that China's credit formation, until now proceeding at a breakneck speed, has suddenly ground to a halt. Reuters explains: Some of China's struggling firms are finally getting the reception that regulators have been hoping for - a cold shoulder from banks in the form of smaller and costlier loans.   Reuters has contacted over 80 companies with elevated debt ratios or problems with overcapacity. Interviews with 15 that agreed to discuss their funding showed that more discriminate lending, long a missing ingredient of China's economic transformation, has become a reality.   Up against a cooling Chinese economy and signs that authorities will not step in every time a loan goes bad, banks are becoming more hard-nosed and selective about whom they lend to.   ...   For household goods maker Elec-Tech International Co Ltd (002005.SZ), less credit is the new reality. Its bank cut its borrowing limit by 500 million yuan ($80.79 million) to no more than 2.5 billion yuan this year, said Zhang, an official at Elec-Tech's securities department.   "Last year, the bank gave us a discount on our interest rates. This year, we probably won't get any discount," Zhang who declined to give his full name said. "It feels like banks are not lending and their checks are becoming more rigorous."   ...   There are signs that even state-owned firms, in the past fawned over by lenders for their government connections, have to contend with higher rates, lower lending limits and more onerous checks by banks.   "Interest rates are going up 10 percent for the entire industry," said Wang Lei, a finance department manager at PKU HealthCare Corp. "Obtaining loans is getting difficult and expensive." Here's why PKU Healthcare will likely be among the first to experience what happens when the liquidity runs out: PKU HealthCare, which is controlled by Peking University and makes bulk pharmaceuticals, has struggled to remain profitable. Its debt-to-EBITDA (earnings before interest, tax, depreciation and amortization) ratio exceeded 60 at the end of September, four times the average for listed Chinese companies from the sector. That's the kind of leverage that not even Jefferies would sign a "highly confident letter" it can raise a B2/B- debt deal at 10% or less. It is also a huge problem for Chinese corporates which suddenly realize they have just a tad too much debt on their books. Some gauges of China's corporate debt are already flashing red. Non-financial firms' debt jumped to 134 percent of China's GDP in 2012 from 103 percent in 2007, according to Standard & Poor's.   It predicted China's corporate debt will reach "stratospheric levels" and become the world's largest, overtaking the United States this year or next.   Fearing a wave of defaults as China's economy cools after decades of rapid growth, regulators in the past two years told banks to cut off financing to sectors plagued by excess capacity such as steel and cement.   Experts say banks were at first slow to respond, but in the past few months, banks have started turning down credit taps.   "We have become more prudent in issuing loans," said a spokesman for Bank of Ningbo.   He added that the bank has intensified communication with companies in troubled sectors or borrowers deep in debt.   "Under normal circumstances, we would review company loans every quarter or every six months, but for the sensitive cases, we will step up channel checks and work closely with the companies."   Another manager at a regional Chinese bank said it was overhauling its lending in cities identified as high-risk, such as Urdos and Wenzhou. Located in Inner Mongolia, Urdos is infamous for its clusters of empty apartment blocks that pessimists say is an emblem of China's housing bubble. Wenzhou, is China's entrepreneurial hotbed that recently lost its shine after local property boom went bust. So with increasingly more uber-levered companies suddenly blacklisted by the banks, what do they do? Why go to the shadow banking system for last ditch liquidity of course, where it will cost them orders of magnitude more to stay viable for a few more weeks or months. Ss companies bend the rules, risks shift outside the banking system into the universe of networks of seemingly unrelated firms connected by murky financial deals. For example, trade loans subsidized by the government to help selected sectors are quietly re-directed by companies to other unrelated businesses, firms say. New financing methods also emerge as easy credit dries up.   The latest plan hatched by a cash-strapped aluminum end-user involves having banks buy the metal and re-selling it to firms who pay out monthly loan plus interest. How do you spell re-re-rehypothecation again... while selling the collateral.... again? Remember this: it really does explain all one needs to know about China. "The local government has intervened, fearing social unrest. A local buyer of a unit in the office building committed suicide as he/she could not obtain the title to the property due to the title dispute between the trust and the developer." Anyway, continuing: Others such as Xiamen C&D Inc, an import and export firm, are directly cashing in on firms' thirst for funds. Xiamen C&D, which borrows at less than 6 percent per year is offering loans of several hundred thousand yuan to smaller firms at 7-8 percent, said Lin Mao, the secretary of Xiamen's board of directors.   For larger companies, typical loans amount to 20-30 million yuan, and are 90 percent insured by Chinese insurers, he said.   Banks grow more aware of the risks. But rather than pull the plug on teetering firms, some bankers say they prefer a slow exit to keep them afloat for as long as possible to claw back their loans. Unfortunately, for most the can kicking is now over. Which brings us to the second part of this story - China's housing bubble, and specifically how its foundations - China's own property developer firms - just imploded as a result of all the above. Also from Reuters: China's property developers are turning to commercial mortgage-backed securities and looking at other alternative financing as creditors grow more discriminating in the face of rising concerns about the country's real estate and debt markets. Bond buyers are shying away from second-tier developers because property sales have cooled as the economy slows. The expected bankruptcy of a local developer and the country's first domestic bond default this month have heightened scrutiny of borrowers. The property companies have a renewed sense of urgency to raise capital after U.S. Federal Reserve Chairman Janet Yellen indicated the central bank, which sets the tone globally for borrowing costs, may raise interest rates as early as the spring of 2015, sooner than many investors had anticipated. Higher rates mean higher borrowing costs, both for the companies and for their home-buying customers. Highlighting the search for alternative funding avenues, property fund MWREF Ltd earlier this month issued the first cross-border offering of commercial mortgage-backed securities (CMBS) since 2006. The offer was priced at a yield lower than two dollar bonds issued last week, IFR, a Thomson Reuters publication, said. "The market will see more of these products," said Kim Eng Securities analyst Philip Tse in Hong Kong. "It's getting harder to borrow with liquidity so tight in the bond market. It's getting harder for smaller companies to issue high-yield bonds." The notes, issued through a MWREF subsidiary, Dynasty Property Investment, were ultimately backed by rental income from nine MWREF shopping malls in China and were structured to give offshore investors higher creditor status than is normally the case with foreign investors. MWREF is managed by Australian investment bank Macquarie Group Ltd, which declined to comment.   Beijing Capital was the first Hong Kong-listed developer to issue dollar senior perpetual capital securities last year, an equity-like security that does not dilute existing shareholders.   "As market liquidity is changing constantly, we have to keep adapting and exploring different funding channels," said Bryan Feng, the head of investor relations.   Chinese regulators last week allowed developers Tianjin Tianbao Infrastructure Co. and Join.In Holding Co. to offer a private placement of shares, opening up a fund raising avenue that had been closed for nearly four years.   New rules were also unveiled last week allowing certain companies to issue preferred shares, including companies that use proceeds to acquire rivals.   "As liquidity tightens and developers see more pressure...they may consider M&A via preferred shares," said Macquarie analyst David Ng. CMBS, senior perpetuals, preferreds: what is the common theme? This is last ditch capital, far more dilutive of equity, and one which always appears just before the final can kick. As such, it means that the credit game in China is over. And now the only question is how long before the market realizes the jig is up. Some already have. As we reported last week, "Cash-strapped Chinese are scrambling to sell their luxury homes in Hong Kong, and some are knocking up to a fifth off the price for a quick sale, as a liquidity crunch looms on the mainland." In other words, those who sense which way the wind is blowing have already entered liquidation mode. Because they know that those who sell first, sell best. Soon everyone else will follow in their shoes, unfortunately they will be selling into a bidless market. Until then, we will greatly enjoy as finally, after many years of delays, the dominoes start falling. As of March 15, Chinese developers had issued 15 U.S. dollar bonds raising $7.1 billion so far this year, compared with 23 issues that raised $8.1 billion in the year-earlier period. "That said, quite a number of developers have demonstrated the ability to access alternative markets, such as the offshore syndicated loan markets as another means of raising capital," said Swee Ching Lim, Singapore-based credit analyst with Western Asset Management.   Offshore syndicated loans for Chinese developers have reached $1.17 billion so far in 2014, compared with $9.8 billion for all of last year, Thomson Reuters LPC data shows. Demonstrating the change in investor sentiment, bonds issued by Kaisa Group in January with a yield of 8.58 percent are now yielding 9.5 percent. The company did not immediately respond to a request for comment.   Times Property issued a 5-year bond this month, not callable for 3 years, to yield 12.825 percent. A similar instrument from China Aoyuan Property in January was priced at 11.45 percent. Both Kaisa and Times are in the B-rating "junk" category, which is four notches above a default rating.   Property prices on the whole are still rising, but there are signs of stress in second and third tier cities. Early indications of property sales in March, traditionally a high season, were not promising, although final figures for the month would not be available until April, said Agnes Wong, property analyst with Nomura in Hong Kong. That may mean developers have to cut prices and investor sentiment may worsen.   "This is hurting the cash flows of the smaller players," she said.   The market stresses ultimately could lead to the reshaping of the property development sector, said Kenneth Hoi, chief executive of Powerlong Real Estate Holdings Ltd (1238.HK), a mid-sized commercial developer.   "In the future, only the top 50 will be able to survive," he said during a briefing on the company's earnings on March 13. "Many small ones will exit from the market." The fun is about to start.

Evans-Pritchard sees Russia as loser in Crimea, Roberts as winner Posted: 26 Mar 2014 06:04 PM PDT 9a HKT Thursday, March 27, 2014 Dear Friend of GATA and Gold: The London Telegraph's Ambrose Evans-Pritchard argues today that Russia's Crimean adventure will inflict a devastating cost on the country and that China, far from being in league with Russia, is actually clawing away at its neighbor's interests in central Asia: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/107256... Former Assistant U.S. Treasury Secretary Paul Craig Roberts disagrees. In an interview with King World News, Roberts says China remains on Russia's side and the aggressiveness of the United States will push those two nations and developing nations closer together: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/26_Pa... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. 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: 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

Intervention is killing commodity hedge funds, Turk tells KWN Posted: 26 Mar 2014 05:55 PM PDT 8:50a HKT Thursday, March 26, 2014 Dear Friend of GATA and Gold: Blasted by government intervention in the markets, commodity hedge funds are closing all over the place, GoldMoney founder and GATA consultant James Turk tells King World News today. Professional traders may profit by trading with these interventions, Turk says, but ordinary investors may do best simply to acquire the monetary metals on a regular basis. Turk's interview is posted at KWN here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/26_Th... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Buy metals at GoldMoney and enjoy international storage GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, ­taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit: http://www.goldmoney.com/?gmrefcode=gata Join GATA here: 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

UBS said to suspend FX traders in New York, Zurich, and Singapore Posted: 26 Mar 2014 05:48 PM PDT By Liam Vaughan, Ambereen Choudhury, and Gavin Finch Bloomberg News Wednesday, March 26, 2014 LONDON -- UBS suspended foreign-exchange traders in the United States, Singapore, and Switzerland as its investigation into the alleged rigging of currency markets widened, according to a person with knowledge of the matter. They include Onur Sert, an emerging-markets spot trader based in New York, and at least three more worldwide, said the person, who asked not to be identified because of the probe. Sert and Dominik von Arx, a spokesman for UBS in London, both declined to comment on the suspensions. Switzerland's largest bank opened a review of its currency operations last year after Bloomberg News reported in June that traders in the industry had colluded to rig the WM/Reuters rates, a benchmark used by investors and companies around the world. ... ... For the full story: http://www.bloomberg.com/news/2014-03-26/ubs-said-to-suspend-fx-traders-... 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: 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

How The BRICs (Thanks To Russia) Just Kicked The G-7 Out Of The G-20 Posted: 26 Mar 2014 05:31 PM PDT By Paul Mylchreest of Monument Securities A critical juncture Over the course of the last century, the US Congress has been blamed for much that has gone wrong in international relations. The unwillingness of Congressional leaders in 1919 to support US participation in the League of Nations doomed from the outset that quixotic attempt to put global relations on a rational basis. Renewed world war was the eventual outcome. Then in 1930, Congressional passage of the Tariff Act, widely known as Smoot-Hawley, marked the break-out of beggar-thy-neighbour trade practices that no less an authority on that period than Mr Bernanke has maintained contributed to the length and depth of the global depression. It is no matter that some historians argue that Smoot-Hawley merely built on the Fordney-McCumber Tariff Act of 1922; that had been Congress's doing as well. More recently, the US Congress has resisted presidential demands for 'fast-track' authority to tie up international trade deals. The lack of faith of the USA's counterparties in Washington's ability to ratify trade agreements was an important factor in the collapse of the Doha Round, which has put a brake on the development of the World Trade Organisation. Now, the US Congress is acting in a way which could have consequences at least as serious as those that followed these past examples of obduracy. This week the US Congress is considering a bill to provide financial aid to Ukraine. President Obama had appended clauses to this bill to ratify the IMF's 2010 decision to increase the quotas, and hence voting power, of emerging countries, chiefly at the expense of European members, and to boost the IMF's capacity to lend. The USA enjoys a blocking minority in IMF decision-making under current quotas, and would continue to do so after the changes; it is essential, therefore, that US ratification be secured if the reform is to go ahead. However, many members of the US Congress, especially on the Republican side, are suspicious of the IMF and its activities. Specifically, that element of the reform package which would convert countries' temporary lending to the IMF during the global financial crisis into a permanent increase in IMF resources has roused fierce opposition. For more than three years, congressional leaders have thought better of exacerbating party tensions by bringing forward proposals to approve the IMF changes. However, the G20 meeting in February 'deeply regretted' that the reform was still held up and urged the USA to ratify 'before our next meeting in April'. Mr Siluanov, Russia's finance minister, then suggested that the IMF should move ahead with the reforms without US approval, a suggestion sympathetically received by other BRICS leaders but which would threaten to split the IMF. Mr Obama's concern to avoid this outcome is understandable and he has argued that, since the IMF will play the lead role in supporting Ukraine's economy, approval of the new quotas is relevant to the Ukraine legislation. All the same, Mr Reid, the Democrat Majority Leader in the Senate, yesterday stripped the IMF provisions from the text, taking the view that the bill would be given a rough ride through the Senate and no chance of passage through the House of Representatives if it retained them. It now seems unlikely that the USA will complete (or, indeed, begin) legislative action on the IMF reform by the 10 April deadline the BRICS have set. The odds are moving in favour of a showdown at the G20 finance ministers' and central bank governors' meeting due in Washington on that date. International discord over Ukraine does not bode well for the settlement of differences over the IMF's future. Though the G7 is excluding Russia from its number, in retaliation for its action in Crimea, this does not amount to isolating Russia. There has been no suggestion that Russia be excluded from the G20. The USA and its allies have suspected that several other G20 members would not stand for it. This suspicion was confirmed yesterday when the BRICS foreign ministers, assembled at the international conference in The Hague, issued a statement condemning 'the escalation of hostile language, sanctions and counter-sanctions'. They affirmed that the custodianship of the G20 belongs to all member-states equally and no one member-state can unilaterally determine its nature and character. In short, their statement read like a manifesto for a pluralist world in which no one nation, bloc or set of values would predominate. Meanwhile, Mr Obama has also been active at The Hague fostering warmer relations between South Korea and Japan. His aim seems to be to contain China's expansionism in the Asian region. But US worries in this regard may be exaggerated to judge by a recent article in the PLA Daily, the official media outlet of China's military. This urged China's leaders to study the history of the 1894-95 war with Japan, which China lost decisively despite being at least as well equipped. The concern in Beijing seems to be that problems of corruption and nepotism in the PLA today are no less serious than they were in China's forces in 1894. That may well deter China from taking military action. However, to the extent that China lacks confidence to use military force, it may be all the more intent on wielding financial weapons in pursuing its geopolitical aims. Beijing  leaders have long dreamt of displacing, or at least dethroning, the US dollar from its reserve currency role. US dominance of the IMF is one of several effective bars to the achievement of such a goal. The kind of action Russia is advocating, the BRICS wresting control of the IMF in despite of US veto power, might have some appeal. That would mark the end of the unified global monetary system that has developed since the IMF was founded in 1945, to be replaced by a bloc of fiat currencies in the developed countries and a system in the emerging sector where currencies were linked to drawing rights in some new international fund, possibly with some material backing. It seems unlikely that convertibility between these monetary systems could be maintained for long. Consequently, the 10 April meeting is shaping up as a potentially critical juncture in world economic history.

Geoengineering & Collapse of Civilization -- Dane Wigington Posted: 26 Mar 2014 05:30 PM PDT Red Ice Radio - Dane Wigington -- Geoengineering & Collapse of Civilization Dane Wigington has an extensive background in solar energy. He is a former employee of Bechtel Power Corp. and was a licensed contractor in California and Arizona. His personal residence was featured in a cover... [[ 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 Gold Price Has Corrected, Time To Buy Posted: 26 Mar 2014 04:07 PM PDT Gold Price Close Today : 1303.40 Change : -8.02 or -0.61% Silver Price Close Today : 19.759 Change : -0.196 or -0.98% Gold Silver Ratio Today : 65.965 Change : 0.246 or 0.37% Silver Gold Ratio Today : 0.01516 Change : -0.000057 or -0.37% Platinum Price Close Today : 1406.50 Change : -14.40 or -1.01% Palladium Price Close Today : 781.15 Change : -8.25 or -1.05% S&P 500 : 1,852.56 Change : -13.06 or -0.70% Dow In GOLD$ : $258.02 Change : $ 0.02 or 0.01% Dow in GOLD oz : 12.482 Change : 0.001 or 0.01% Dow in SILVER oz : 823.37 Change : 3.13 or 0.38% Dow Industrial : 16,268.99 Change : -98.89 or -0.60% US Dollar Index : 80.110 Change : 0.030 or 0.04% Today the GOLD PRICE fell $8.02 (0.6%) to close Comex at $1,303.40. Silver fell 19.6 cents (1%) to 1975.9 cents. Today's action pretty well fulfills my targets for the correction, i.e., $1,300 and 1950c. Lows came at $1,299.30 and 1968c. Y'all can stand around waiting for perfection, but I'm not. Both metals fell off about noon, but without any more drama than a short waterfall. Little V-bottoms near day's end might mark the lows. Believe it or not I had a customer today who bought 60 cents off the day's lows. Good shooting! What's the downside risk? With the GOLD PRICE, possible drop to $1,287. the SILVER PRICE could -- but might not, drop as far as 1950 - 1945c. Not much from here, unless some surprise ariseth. Time to buy silver and gold. A reader wrote asking, "Many people are predicting a depression which will take down the price of almost everything. You feel that real estate and other tangible assets will also depreciate. Why don't you feel that precious metals and other commodities won't also take a big hit?" Because silver and gold are not commodities. Silver and gold prices are driven by MONETARY not economic demand as commodities are (copper, lumber, tin). They rise when inflation is eating out the dollar's value. So regardless of economic conditions, inflation will drive silver and gold higher, because people seeing their dollars lose value will seek refuge in silver and gold. Everything of value will NOT tank in the future, only those items whose value depends on economic demand, and that doesn't include silver and gold. It doesn't overstate much to say we are already in a depression, and that will over time lower most assets' value. However, the Fed and yankee government have shown that they will respond to every crisis by printing more money, so an inflationary depression will result. The underlying economic condition will be a depression (shrinking economic activity) while the monetary condition will be inflation resulting in rising prices. Although asset prices may rise, they will in fact be losing value or purchasing power, unless they rise faster than the dollar falls. Purchasing power is all that counts. You can see this in the Dow yesterday at 16,367.88, which appears much higher than its 2000 peak at 11,722. However, corrected for inflation (even using the government's understated and jimmied numbers), that 11,722 in 2000 equals only 15,982 today. Turn that around: 2014's 16,367.88 would equal only 12,005 in 2000. The Dow has not gained (16,367.88/11,722 = 40%, but 12,005/11,722 = 2.4% in purchasing power. Adjusted for real inflation loss, the Dow is lower now than it was in 2000. If I could teach y'all just one thing, it would be FORGET NOMINAL GAINS and LOOK ONLY AT PURCHASING POWER GAIN OR LOSS. Y'all remember this, too: inflation does not stimulate the economy, any more than illegal counterfeiting would. Inflation always creates booms that go bust, and disrupts the economy in thousands of other ways. Inflation benefits only those near the source of the inflation, i.e., Wall Street, and the bureaucrats and politicians who produce inflation while it robs all others. Now that I've hawked that bone out of my throat, let's look at markets. Stocks see-sawed back the other way today, losing more than they gained yesterday. Dow got near its upper downtrend line and looked like Dracula smelling garlic -- wilted. S&P500 bounced from top of its even-sided triangle to the bottom, and closed there for good measure. Dow lost 98.89 (0.6%) and closed 16,268.99. S&P500 coughed up 13.06 (0.7%) to roost at 1,852.56. Both of them perched below their 20 day moving averages. I have no opinion, triangles can surprise, but all this carries with it the scent of weakness. Silver is supposed to be strong relative to gold when stocks are strong and vice versa, but it hasn't been following that script lately. Dow in gold dropped slightly today, down 0.15% to 12.46 oz (G$257.57 gold dollars). It stands barely above the 50 DMA (12.39 oz or G$256.12), which might be a splendid place to turn down. But no indication of that yet. I'm anticipating. Dow in silver rose 0.63% to 824.37 oz (S$1,065.85 silver dollars). Unless stocks break down soon, it's liable to return to that December high at 853.1 oz. It has already fulfilled a 75% correction of the Dec - Feb drop. Last five days the US dollar index has established a downtrend with lower lows and lower highs. Now it's sort of bunching up, with a small range today, 80.29 - 80.06. Rose a less-than-gigantic three basis points today to 80.11. This sort of "stability" smacks of the strong hand of Nice Government Men. Euro back appears to have been broken. Closed again today beneath its 20 DMA, and lost another 0.3% to end at $1.3785. This comes after a breakout it could not cash in on. Yen rose 0.24% but that is sound and fury, signifying nothing, even with a close at 98.01 cents/Y100. Gold in euros and in British pounds looks like a buy here. 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 Has Corrected, Time To Buy Posted: 26 Mar 2014 04:07 PM PDT Gold Price Close Today : 1303.40 Change : -8.02 or -0.61% Silver Price Close Today : 19.759 Change : -0.196 or -0.98% Gold Silver Ratio Today : 65.965 Change : 0.246 or 0.37% Silver Gold Ratio Today : 0.01516 Change : -0.000057 or -0.37% Platinum Price Close Today : 1406.50 Change : -14.40 or -1.01% Palladium Price Close Today : 781.15 Change : -8.25 or -1.05% S&P 500 : 1,852.56 Change : -13.06 or -0.70% Dow In GOLD$ : $258.02 Change : $ 0.02 or 0.01% Dow in GOLD oz : 12.482 Change : 0.001 or 0.01% Dow in SILVER oz : 823.37 Change : 3.13 or 0.38% Dow Industrial : 16,268.99 Change : -98.89 or -0.60% US Dollar Index : 80.110 Change : 0.030 or 0.04% Today the GOLD PRICE fell $8.02 (0.6%) to close Comex at $1,303.40. Silver fell 19.6 cents (1%) to 1975.9 cents. Today's action pretty well fulfills my targets for the correction, i.e., $1,300 and 1950c. Lows came at $1,299.30 and 1968c. Y'all can stand around waiting for perfection, but I'm not. Both metals fell off about noon, but without any more drama than a short waterfall. Little V-bottoms near day's end might mark the lows. Believe it or not I had a customer today who bought 60 cents off the day's lows. Good shooting! What's the downside risk? With the GOLD PRICE, possible drop to $1,287. the SILVER PRICE could -- but might not, drop as far as 1950 - 1945c. Not much from here, unless some surprise ariseth. Time to buy silver and gold. A reader wrote asking, "Many people are predicting a depression which will take down the price of almost everything. You feel that real estate and other tangible assets will also depreciate. Why don't you feel that precious metals and other commodities won't also take a big hit?" Because silver and gold are not commodities. Silver and gold prices are driven by MONETARY not economic demand as commodities are (copper, lumber, tin). They rise when inflation is eating out the dollar's value. So regardless of economic conditions, inflation will drive silver and gold higher, because people seeing their dollars lose value will seek refuge in silver and gold. Everything of value will NOT tank in the future, only those items whose value depends on economic demand, and that doesn't include silver and gold. It doesn't overstate much to say we are already in a depression, and that will over time lower most assets' value. However, the Fed and yankee government have shown that they will respond to every crisis by printing more money, so an inflationary depression will result. The underlying economic condition will be a depression (shrinking economic activity) while the monetary condition will be inflation resulting in rising prices. Although asset prices may rise, they will in fact be losing value or purchasing power, unless they rise faster than the dollar falls. Purchasing power is all that counts. You can see this in the Dow yesterday at 16,367.88, which appears much higher than its 2000 peak at 11,722. However, corrected for inflation (even using the government's understated and jimmied numbers), that 11,722 in 2000 equals only 15,982 today. Turn that around: 2014's 16,367.88 would equal only 12,005 in 2000. The Dow has not gained (16,367.88/11,722 = 40%, but 12,005/11,722 = 2.4% in purchasing power. Adjusted for real inflation loss, the Dow is lower now than it was in 2000. If I could teach y'all just one thing, it would be FORGET NOMINAL GAINS and LOOK ONLY AT PURCHASING POWER GAIN OR LOSS. Y'all remember this, too: inflation does not stimulate the economy, any more than illegal counterfeiting would. Inflation always creates booms that go bust, and disrupts the economy in thousands of other ways. Inflation benefits only those near the source of the inflation, i.e., Wall Street, and the bureaucrats and politicians who produce inflation while it robs all others. Now that I've hawked that bone out of my throat, let's look at markets. Stocks see-sawed back the other way today, losing more than they gained yesterday. Dow got near its upper downtrend line and looked like Dracula smelling garlic -- wilted. S&P500 bounced from top of its even-sided triangle to the bottom, and closed there for good measure. Dow lost 98.89 (0.6%) and closed 16,268.99. S&P500 coughed up 13.06 (0.7%) to roost at 1,852.56. Both of them perched below their 20 day moving averages. I have no opinion, triangles can surprise, but all this carries with it the scent of weakness. Silver is supposed to be strong relative to gold when stocks are strong and vice versa, but it hasn't been following that script lately. Dow in gold dropped slightly today, down 0.15% to 12.46 oz (G$257.57 gold dollars). It stands barely above the 50 DMA (12.39 oz or G$256.12), which might be a splendid place to turn down. But no indication of that yet. I'm anticipating. Dow in silver rose 0.63% to 824.37 oz (S$1,065.85 silver dollars). Unless stocks break down soon, it's liable to return to that December high at 853.1 oz. It has already fulfilled a 75% correction of the Dec - Feb drop. Last five days the US dollar index has established a downtrend with lower lows and lower highs. Now it's sort of bunching up, with a small range today, 80.29 - 80.06. Rose a less-than-gigantic three basis points today to 80.11. This sort of "stability" smacks of the strong hand of Nice Government Men. Euro back appears to have been broken. Closed again today beneath its 20 DMA, and lost another 0.3% to end at $1.3785. This comes after a breakout it could not cash in on. Yen rose 0.24% but that is sound and fury, signifying nothing, even with a close at 98.01 cents/Y100. Gold in euros and in British pounds looks like a buy here. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose.

Gold And Silver Excellent Store Of Wealth In Last 60 Years Posted: 26 Mar 2014 03:06 PM PDT We are told that money is safe. Likewise, our bank is a trusted partner, so is the bank account where you hold your savings. While that could be true in normal circumstances, during times of stress nothing is further from the truth. Gold and silver in physical form outside the banking system are the ultimate stores of value. But readers of this site knew that for a long time. What is a much more interesting question, though, is how gold and silver preserve wealth over a long period of time. Consider, for instance, the last several decades … to which extent have the metals proven their “unique selling proposition” (to use some marketing jargon)? And how does this relate to the price change in a basket of goods that people are using in their daily lives? Or how does it compare to other regular investment alternatives? This article, written by contributor Gary Christenson, provides answers to those questions. The author looks back 60 years and comes with a very insightful set of findings. 2014 is the 60th anniversary of nothing special.  A quick review and comparison to 1954 seems appropriate. In 1954 the Military-Industrial Complex was fighting a cold war with the USSR.  Now they are fighting with Russia. In 1954 the President of the United States played golf regularly.  No change here. In 1954 due to the paranoia and power-politics of Senator Joseph McCarthy and others, it seemed that "there was a communist under every bed."  Now it is terrorists that captivate the national paranoia. In 1954 there was a great deal of unrest in the Middle East.  In 2014 there is a great deal of unrest in the Middle East. In 1954 the world powers were intimidating the smaller countries to advance their agenda.  No change since then. In 1954 the United States appeared to have the "moral high ground."  That "moral high ground" has slipped away. In 1954 there were no Americans on Food Stamps.  In 2014 there are almost 50,000,000 Americans who receive free food under the SNAP program. Some approximate numbers Summary The value of the dollar has declined over 60 years so prices for most items have increased.  Gold and Silver are still a store of value.  Politics and government are … well, the same as always. For the Future 1)   Politicians will borrow and spend, the national debt will increase, and more promises will be forthcoming. 2)   Deflation is a problem for the industries and governments that depend upon ever increasing prices and ever increasing debt.  There are few in power that would benefit from deflation.  Expect inflation. 3)   The Federal Reserve is committed to "printing dollars," increasing debt, expanding the money supply, and creating inflation.  Expect the Fed to succeed.  4)   The gold and silver bears will be disappointed.  Both precious metals will go much higher as all currencies weaken. 5)   A financial crash will demonstrate that debt based paper assets can plummet in value.  Gold will increasingly be seen as a store of value. 6)   Even without a crash, continued inflation in the money supply will demonstrate that debt based fiat currencies are not a store of value. 7)   A hot war in the Middle East, Asia, or Eastern Europe will be expensive.  Remember the Vietnam War.  The consequences will include more debt, more inflation, and higher prices.  Gold prices rose by over a factor of 20 between 1970 and 1980.  The cost of living increased substantially during that same decade.  It could happen again. 8)   Even a cold war or a currency war will be expensive, but less so than a hot war.  The consequences of either a hot or cold war will be similar. 9)   From Milton Friedman:  "Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless." Delusions die hard!  The delusions regarding the value of paper currency, usefulness of the Fed, government entitlements, the welfare and warfare state, and continual growth are weakening.  The ultimate reckoning may be sudden or slow, but it will not be pretty for the unprepared. Gold and silver will remain valuable and a store of value over the next 60 years.   GE Christenson  |  The Deviant Investor

Gold Price Projection by the Golden Ratio Posted: 26 Mar 2014 02:46 PM PDT Submitted by Trader MC, Cycles Expert & Market Timer (more about Trader MC): This article shows how Gold has been following the Golden Ratio which predicted all the major turning points with a high degree of accuracy for the past thirty years, and reveals the next possible major turning points. The Golden Ratio 1.618034… (also called the Golden Number, the Golden Section or the Golden Mean) can be found everywhere around us from mathematics to architecture, from nature to our own anatomy. But as you can see in the following analysis, it can also be found in the Gold Metal Charts. The first chart presents the Secular Bear Market from 1980 to 1999 and the Cyclical Bull Market from 1999 to 2011 and shows how they are connected to the Golden Ratio 1.618. Firstly, you can see that the three most important turning points (1980 top – 1999 low – 2011 top) had a time duration which is accurately connected to the Golden Ratio. It is also interesting to note that the Golden Ratio has an inverse correlation with the previous turning point (high-low-high). Secondly, the first leg up of the Cyclical Bull Market from the low on August 25, 1999 to the top of March 17, 2008 predicted exactly the low on June 28, 2013. Here again, the Golden Ratio has an inverse correlation with the previous turning point (low-high-low). Thirdly, the second leg up of the Cyclical Bull Market – from the low on October 24, 2008, to the top on September 6, 2011 – pinpointed also the low on June 28, 2013 and once again, the correlation is inverted (low-high-low). The next chart shows the Cyclical Bear Market from the 2011 top to the 2013 low. A look at the time duration of the tops and lows of this bear market reveals that it has an inverse correlation with the Golden Ratio. Contrary to the bull market, the bear market follows the 0.62 ratio which is the inverse of the Golden Ratio (1/1.618=0.62). We can also notice that the alternate relation between highs and lows is broken (high-low-low). As we can see, every turning point has been predicted by the Golden Ratio for the last thirty years. The charts are showing that these turning points did not happen by coincidence but followed a precise Golden Ratio road map. This ratio can therefore also be used to project the next important market turning points. On the following charts you can see a projection upon studying the tops and lows of the previous bull and bear markets. The entire leg up of the Cyclical Bull Market from the low on August 25, 1999 to the top on September 6, 2011, is pinpointing an important market turn date during the last week of January 2019. As history has shown, the Golden Number had an inverse correlation with the previous tops or lows, so odds favor that the last week of January 2019 could be a major low which will be reversed by the September 6, 2011 high. As for the Cyclical Bear Market from the 2011 high to the 2013 low, two possible turning points could be forecast, since I also take into account the Inverse Golden Ratio which pinpointed the highs and lows of the previous bear market. We can see that the first turning point could happen during the first week of August 2014 (Golden Ratio) and the second one during the third week of May 2016 (Inverse Golden Ratio). Based on the Golden Ratio study, the first week of August 2014 could be a top, as the Golden Ratio sequence has usually an inverse correlation with the previous turning point (the low on June 28, 2013). As for the third week of May 2016, history has shown that the Inverse Golden Ratio 0.62 keeps the same characteristic of the previous turning point. In that case the third week of May 2016 could be a low, as the previous turning point on 28 June, 2013 was a low. However, it is important to note that the history also reveals that turning point sequences can be broken whether we are in a cyclical bull or a cyclical bear market. Therefore I think that the most important is to watch how the price action will approach these turning points (in an uptrend or in a downtrend) and be prepared for a trend change. If the Golden Ratio has an important role for the time period, my analyses on Gold prices also reveals that prices of both legs up of the Cyclical Bull Market and of both legs down of the Cyclical Bear Market are connected to the Golden Ratio 1.618. The Correlation of Price is a little less accurate than the one for Time Duration but it is still very relevant. A measure move with round numbers of the first leg up and the second leg up of the Cyclical Bull Market presents that both legs up have a price ratio of 1.59 which is very close to 1.618. The two legs down of the bear market are also very close to the Golden Ratio (7 points less than 1.62). As far as Gold prices are holding above the Symmetry Guideline and Silver holds above its thirty years Base Pattern Neckline (as shown on the two charts below, also published in "2014 – The Year of Commodities"), the Secular Bull Market is still intact. In that case we could expect another leg up with a measure move between (the Golden Number) X (measure move of the Cyclical Bull Market) and (the Inverse Golden Number) X (measure move of the Cyclical Bull Market): 1.618 X (1921-252) = 2700 0.62 X (1921-252) = 1035 This leg up could therefore send prices to a range between $2215 and $3880 from the low at $1180. For the moment we need to see further development in the price action to confirm a new leg up.   As all the major turning points were predicted by the Golden Ratio both in terms of Price and Time, we can also note that Gold Time Duration is well balanced. The second leg up of the bull market lasted three times less that the first leg up, whereas the second correction lasted three times longer than the first one. The dynamic symmetry is therefore completed. The geometry of Time Dimension has an important role in the market structure, as the market likes geometry both in Price and Time. The Golden Ratio has accurately predicted all the Gold major turning points these last thirty years and it seems reliable for making future projections. It is one of the techniques that can be used but the most important is to understand the structure and the rhythm of the market to forecast future developments not only in terms of the dimension of Price but also of the dimension of Time. In order to gain superior returns, it is essential to study the history of the market and to follow the price action. Cycles and market timing research > more info.

Rick Rule: Ownership Of Gold Is Critical To Your Wealth Next Years Posted: 26 Mar 2014 02:30 PM PDT Rick Rule, Chairman of Sprott Global Resource Investments Ltd., answered 10 questions on precious metals investing and gold miners. Read Rick Rule’s previous interview “Gold Is A Store Of Wealth In A Mechanism Other Than Fiat Currency.” Gold price expectations for the next one-to-five years? "I believe that the gold price bottomed in 2013," Rick begins. "Between 2011 and 2013, traders drove the gold price down, unwinding leveraged bets on gold. For most of that period, there were forced sellers and not much buying. "In the middle part of 2013, we saw a stalemate between exhausted sellers and buyers. As the forced selling by leveraged traders passed, gold began to find a bid, taking the price higher so far in 2014. "The gold price rally will not necessarily continue through 2014. But as an investor with an outlook of three-to-five years, I believe ownership of gold will be critical to maintaining your wealth in the next few years." What about silver? "We often joke that 'silver bugs' are 'gold bugs on steroids,'" says Rick. "Moves in the price of silver tend to be more dramatic than in gold. So if gold moves up, silver can move up even more – and fall by a lot more too. "The problem with silver is that a lot of it comes as a by-product of producing some other metal. So in order to predict the silver production from mining you need to understand the economics of the other metals, where silver is mined as a by-product. "Another hitch is that estimates vary widely on how much silver really exists in circulation today – especially in places like India, Sri Lanka, Bangladesh, or Pakistan." Where are platinum and palladium headed? "We have recently seen an increasing popularity of platinum group metals among financial institutions, who are now speculating in the price of the metal. I believe they could now begin to unwind these positions now, which could drive the price lower in the short term. "But in the longer-term, I see them going higher," he adds. "Mining companies are losing money on their platinum production, which could force them to shut down. But platinum and palladium are extremely useful to modern society – primarily because they help prevent smog. "For these reasons, the price has to go up," he believes. Will there be a 'meltdown' in the metals sector before a new bull market takes off? "I don't think that we will see another move down like the one from 2011 to 2013, where gold dropped 30 percent and mining stocks fell by over 50 percent. But this is still the most volatile sector in the world. Just as gold went up by over 1,000 in only a few months, we could see it return to around 1,150 at some point before the year is over. "In fact, I believe the market will mostly move sideways over the next 18 months with intermittent rallies and subsequent sell-offs. Once this period is passed, we could see a major bull market truly take off." Are institutions intentionally driving down prices by shorting the metals? "The situation is different depending on the metal you are talking about," says Rick. "In platinum and palladium, for instance, there are almost no short-sellers of the metals. "On the gold side, traders are now covering their short positions, which could indicate that downwards momentum has subsided." Was there a concerted effort to drive down the metals? "I believe that any potential manipulation is disappearing," said Rick. "The banks' and other major institutions' ability to manipulate metals prices is under increasing regulatory scrutiny." Is there any store of wealth that cannot be manipulated? "The biggest threat to your wealth is not the government, the banks or market manipulators," says Rick. "It is almost always your own lack of conviction, courage, or knowledge. "Everyone wants to be a contrarian, but only when it's popular. That is why lots of people wanted to invest in 2011 when precious metals had enjoyed an unprecedented rise. Meanwhile, nobody wanted to invest in 2012 and 2013, when both the precious metals and the mining stocks were much cheaper. "If you believe in the precious metals in the long term, then manipulation by financial or government institutions to drive the price lower is an opportunity. You can buy the assets you want at an artificially low price. "So don't fear manipulation. Fear your own mistakes due to emotional decision-making and prejudices set by your experience in the immediate past." How long will the Fed keep interest rates low? "As long as they can get away with it," says Rick. "Suppressed interest rates take money from savers, who receive an artificially low return, and rewards spenders with the ability to borrow more at lower rates. "Because spenders outnumber savers, elections and political powers tend to favor low-interest-rate policies like the current ZIRP (zero-interest-rate policy) in the United States." So far, a weak recovery has prevented low interest rates from causing high inflation, he adds. "We are in a very strange situation – a jobless recovery with little new investment in production. The demand for capital has been muted as a result, which has prevented easy money from translating into greater inflation. "Because the economy remains anemic, interest rates could stay low for the next two or three years. But markets always win in the end. Eventually, I would expect inflation and higher interest rates to arise." Is the general stock market in for another crash? "It seems the general stock market has been driven by artificially low interest rates. If interest rates were to rise, as I believe they will eventually, it could severely adversely impact most stocks. "There is no real economic recovery going on to justify higher stock prices today. Few jobs are being created and there is little capital investment. It looks like a recovery 'on paper' – but it is a confidence recovery driven by low interest rates. "If confidence wears off and interest rates start to rise, I believe it could be extremely damaging to the overall stock market," he concludes. If the resource sector recovers, how will we know when to get out? "Remember back to 2010 and 2011 – and how well your portfolio was performing. Many investors were seeing their portfolios rise by double-digits each month. That is when we felt the smartest and the most aggressive. "As the height of a bull market, investors confuse a bull market with brains. So when we become most fearlessly bullish it is time to begin to sell stocks. The easiest sign of a top is really that you begin to see solicitations everywhere to invest in that sector – from the media and publishing companies. "In contrast, publishers begin to cancel their publications that have to do with natural resources when we are in a bear market. It is a harbinger of a bottom." What impact will the Mexican mining tax have on the industry? "Politicians and governments frequently turn to mining and oil and gas to increase their tax revenues because the assets are fixed. They cannot be moved elsewhere. "I believe the new tax will not be beneficial to Mexico. State ownership of the oil industry has severely impeded the oil and gas industry there. Now, they are turning their attention to mining, which is certainly not a positive development. "The mining industry has been a stellar contributor of revenues for the government and jobs for the Mexican people. It will only be weighed down by this tax, which is very unfortunate." More on the Mexican mining tax here. Where should an investor in natural resources put their money today? "Personalized investment advice is only available to clients. The full depth of our research and expertise at analyzing natural resource stocks is available through your Sprott Global broker. "The best investments for your portfolio will depend on your individual situations and willingness to tolerate risk. If you would like to know what are favorite companies are today, I urge you to either contact your Sprott Global broker or become a client of Sprott Global. Rick concludes: "Investing in natural resources and precious metals is attractive today because the sector is so much cheaper than it was three years ago. Many of the stocks are trading at a 90 percent discount to their prices in 2011. For a contrarian investor, I believe that we are seeing a historic opportunity now." Rick Rule is the Chairman and Founder of Sprott Global Resource Investments Ltd., a full-service brokerage firm located in Carlsbad, CA. Sprott Global is an affiliate of Sprott Inc., a public company based in Toronto, Canada.  Mr. Rule leads a team of earth science and finance professionals who form an intellectual pool for resource investment management. He and his team have experience in many resource sectors including mining, oil and gas, water, agriculture, forestry, and alternative energy.

Gold Daily And Silver Weekly Charts - Option Expiration Posted: 26 Mar 2014 01:27 PM PDT

Gold Daily And Silver Weekly Charts - Option Expiration Posted: 26 Mar 2014 01:27 PM PDT

April Fools’ drop dead date for the Volcker Rule – what it might mean for Gold Posted: 26 Mar 2014 01:22 PM PDT It could get to be interesting as we move into the end of the month. The Volcker Rule which limits banks’ speculative investments (including gold) goes into effect April 1, 2014. There has probably already been quite a bit of adjustment to bank portfolios, but those who have held out will need to make their moves before the deadline.

U.S. Dollar Value Could Suffer Instant Change Posted: 26 Mar 2014 01:20 PM PDT span style="color:#000000; ">Silver expert David Morgan is warning of coming financial changes that may be forced on the U.S. during the next G20 meeting.  Morgan says, “The impetus here is the U.S. has had too much financial power backed by the military for far too long, and they (G20) are going to implement change one way or the other.   The IMF is basically an extension of the United States.   Even though it’s called the International Monetary Fund, it is really U.S. based.  With what’s been proposed here, the IMF is not going to have the clout that it once did because the G-20 is going to be able to overrule the IMF vote.  This is a point in history, monetary history and global economic politics that could set a precedent . . . where it’s official that the U.S. dollar has lost its primary status as world reserve currency.”

Unsustainable? Posted: 26 Mar 2014 01:05 PM PDT Via this item at Mining.com where someone took the time to read through this report from the World Gold Council on the subject of risk management and capital preservation comes the chart below where, clearly, they’ve got the correct caption. I’d read about gold’s share of financial assets then and now (i.e., back in 1980 as [...]

Gold Price vs. "Flattening" Yield Curve Posted: 26 Mar 2014 12:37 PM PDT Why you should care about the yield curve. Really...   THERE is a lot of talk now about a flattening of the yield curve, writes Gary Tanashian in his Notes from the Rabbit Hole.   A flattening curve is commonly viewed as bad for gold prices, and according to Mark Hulbert, is an indicator of a coming recession.   But is the curve really flattening or is this all hype based on Janet Yellen's press conference comments? Here is a chart the likes of which we have been using in NFTRH for many months now, the 30 year vs. the 5 year yield.     MarketWatch shows a similar chart in its article. So here we should lend some perspective.    I ask you what is different this time from the last flattening?     I am not going to pretend to sit here like some genius blogger and post all the conclusions so that we all know exactly what is going on (according to one guy's imperfect world view).   But what we do know is... In 2004 Alan Greenspan began to get the memo that his ultra lenient monetary policy had instigated a growing bubble in commercial credit. As the stock market and economy began to show favorable signs this policy was incrementally withdrawn, which in normal times would be the thing to do. The curve flattened in line with policy making goals (of tamping down inflation expectations). Unfortunately, it also tipped the leveraged system into a domino effect of high profile corporate financial failures, that resolved into the crash of 2008. Enter ZIRP in December 2008. This was brave new policy decreed by the will of man and endures to this day. The curve has been flattening for over a year now. Some Fed jawbone "you know", about a withdrawal of ZIRP sometime well out in 2015, "that sort of thing". There is a distortion built into the system. This is not opinion, it is a fact presented by the chart above. Now, how it will resolve is up for debate among various eggheads.   But there is a running distortion on the fly and not you or I know how it will resolve. It is not normal and it (in my opinion) belies desperation on the part of those promoting it. To me, it looks like the latter stages of an 'all or nothing' operation that was put in play years ago. 'All or nothing' implies all in and totally committed. Otherwise, why has ZIRP not already (and long ago) begun to be incrementally phased out?   One conclusion that can be made is that this alignment continues to be favorable to whomever it is that borrows from the Fed Funds window exclusively. That is of course due to the beneficial (and again in my opinion, immoral) ZIRP. They can lend out at any other point on the curve for a favorable spread.   The curve is not flattening when ZIRP is used as the short term measurement point, as it is when the 5, 3 or 2 year yields are measured.   And people wonder why the rich get richer. They should stop looking at politics and start looking at finance.

Gold Price vs. "Flattening" Yield Curve Posted: 26 Mar 2014 12:37 PM PDT Why you should care about the yield curve. Really...   THERE is a lot of talk now about a flattening of the yield curve, writes Gary Tanashian in his Notes from the Rabbit Hole.   A flattening curve is commonly viewed as bad for gold prices, and according to Mark Hulbert, is an indicator of a coming recession.   But is the curve really flattening or is this all hype based on Janet Yellen's press conference comments? Here is a chart the likes of which we have been using in NFTRH for many months now, the 30 year vs. the 5 year yield.     MarketWatch shows a similar chart in its article. So here we should lend some perspective.    I ask you what is different this time from the last flattening?     I am not going to pretend to sit here like some genius blogger and post all the conclusions so that we all know exactly what is going on (according to one guy's imperfect world view).   But what we do know is... In 2004 Alan Greenspan began to get the memo that his ultra lenient monetary policy had instigated a growing bubble in commercial credit. As the stock market and economy began to show favorable signs this policy was incrementally withdrawn, which in normal times would be the thing to do. The curve flattened in line with policy making goals (of tamping down inflation expectations). Unfortunately, it also tipped the leveraged system into a domino effect of high profile corporate financial failures, that resolved into the crash of 2008. Enter ZIRP in December 2008. This was brave new policy decreed by the will of man and endures to this day. The curve has been flattening for over a year now. Some Fed jawbone "you know", about a withdrawal of ZIRP sometime well out in 2015, "that sort of thing". There is a distortion built into the system. This is not opinion, it is a fact presented by the chart above. Now, how it will resolve is up for debate among various eggheads.   But there is a running distortion on the fly and not you or I know how it will resolve. It is not normal and it (in my opinion) belies desperation on the part of those promoting it. To me, it looks like the latter stages of an 'all or nothing' operation that was put in play years ago. 'All or nothing' implies all in and totally committed. Otherwise, why has ZIRP not already (and long ago) begun to be incrementally phased out?   One conclusion that can be made is that this alignment continues to be favorable to whomever it is that borrows from the Fed Funds window exclusively. That is of course due to the beneficial (and again in my opinion, immoral) ZIRP. They can lend out at any other point on the curve for a favorable spread.   The curve is not flattening when ZIRP is used as the short term measurement point, as it is when the 5, 3 or 2 year yields are measured.   And people wonder why the rich get richer. They should stop looking at politics and start looking at finance.

Gold Juniors? Choose Carefully, If At All Posted: 26 Mar 2014 12:27 PM PDT You could just plunge x 3 with $JNUG. Or actually study gold miners first...   JEFF KILLEEN has been with the CIBC Mining research team since early 2011, providing technical assessment of junior exploration and mining companies worldwide.   Previously, Killeen worked as an exploration and mine geologist in several major mining camps, including the Sudbury basin and the Kirkland Lake region.   Here he tells The Gold Report how, while the gold price may be enjoying a double-digit increase so far this year, it's not time to jump into metals with both feet. Especially not junior miners.   Be selective, Killeen says...   The Gold Report: The price of gold has increased 10% this year. Is that due to gold's safe haven status?   Jeff Killeen: The safe-haven mentality is one element that's supporting the gold price. There is uncertainty in the market about the strength of the US economy. A number of economic indicators reported during the last two months have not met forecasts. The rebound may be slower than expected. Buyers are coming back to bullion.   Unrest in the Ukraine is also helping to support the gold price, however, to a lesser extent than US economic data. If weaker-than-expected indicators persist – and severe weather in the US results in soft data – such a scenario could be positive for gold in the near term.   Even before this rebound, there was very strong physical buying around the $1200 per ounce level from Asia. The investment community believed that there was a base established and started putting money back into the space with much less risk of a downside move.   TGR: It's now six years since the economic crisis of 2008. Is it possible that a consensus could form that a traditional economic recovery is not going to occur? And if this consensus does form, would it be a big boost for gold?   Jeff Killeen: Certainly. However, I think that that consensus may take a little while to form because most of the US economic indicators started moving in the right direction in 2013. In the next three to six months the impact from severe weather last winter will obscure the data picture.   TGR: The mood at this year's Prospectors and Developers Association of Canada (PDAC) conference has been described as "cautious optimism." Would you agree?   Jeff Killeen: I'd say the tone was divergent – some senior management teams were feeling very cautious about commodity prices and general market appetite for mining equities, whereas a lot of the junior management teams had a much greater conviction that 2014 would be a strong year for the metals and equities.   TGR: If you look at the juniors and mid-caps, a lot of these stocks have gone up 25%, 50% and even 100% this year. I would have thought you would've seen a lot of smiling faces at PDAC as a result of that.   Jeff Killeen: Very true, but even a 100% uptick still leaves some share prices below where they may have been at better points in 2012. There is still that rearward-looking view to where the stock prices have come from, and a lot of them are a long way from there.   TGR: As capital returns to the mining sector, would it be correct to say that it will return first to the producers, second to companies with late-development assets and then, third and finally, to explorers?   Jeff Killeen: That succession sounds reasonable; however, new capital investment will certainly be selective. I would expect to see capital flowing into the space across the market-cap spectrum, but those companies or projects that are marginal at the current gold price or require further appreciation in the price to generate acceptable returns are likely to find it difficult to attract any new investments in 2014.   TGR: How can smaller companies, specifically explorers, demonstrate that they are worthy of financing?   Jeff Killeen: The first question anyone should ask when looking at the explorer space concerns the management team. Pick a solid team, especially in a market where accessing capital can be difficult. Spending Dollars wisely is important.   Beyond that, a project with strong grades can give a comfort level to the buy side that a project could be profitable in the future, considering it's very difficult to assess where gold prices might be four, five or seven years from now.   Other benefits – geographic or logistic – such as being in the right region for having a smooth permitting process and having good roadways, rail or power, can add value.   TGR: Given the recent increase in the price of gold and the significant uptick in a lot of equities, do you think that investors are embracing the sea change?   Jeff Killeen: There is a belief within the investment community that we're finding a bottom for the commodities. We do know that equities underperformed to the down side of the gold and silver price. Even just to revalue based on current spot prices means that there is probably still some upside to be had in a lot of the equities. With that in mind, investors are feeling better, but not excited to the point where there's going to be broad-scale investment across the mining space. It's going to be selective. It's going to be higher-quality names or those that have a higher prospect for development. It's not going to be widespread just yet.   TGR: Jeff, thank you for your time and your insights.

Gold Juniors? Choose Carefully, If At All Posted: 26 Mar 2014 12:27 PM PDT You could just plunge x 3 with $JNUG. Or actually study gold miners first...   JEFF KILLEEN has been with the CIBC Mining research team since early 2011, providing technical assessment of junior exploration and mining companies worldwide.   Previously, Killeen worked as an exploration and mine geologist in several major mining camps, including the Sudbury basin and the Kirkland Lake region.   Here he tells The Gold Report how, while the gold price may be enjoying a double-digit increase so far this year, it's not time to jump into metals with both feet. Especially not junior miners.   Be selective, Killeen says...   The Gold Report: The price of gold has increased 10% this year. Is that due to gold's safe haven status?   Jeff Killeen: The safe-haven mentality is one element that's supporting the gold price. There is uncertainty in the market about the strength of the US economy. A number of economic indicators reported during the last two months have not met forecasts. The rebound may be slower than expected. Buyers are coming back to bullion.   Unrest in the Ukraine is also helping to support the gold price, however, to a lesser extent than US economic data. If weaker-than-expected indicators persist – and severe weather in the US results in soft data – such a scenario could be positive for gold in the near term.   Even before this rebound, there was very strong physical buying around the $1200 per ounce level from Asia. The investment community believed that there was a base established and started putting money back into the space with much less risk of a downside move.   TGR: It's now six years since the economic crisis of 2008. Is it possible that a consensus could form that a traditional economic recovery is not going to occur? And if this consensus does form, would it be a big boost for gold?   Jeff Killeen: Certainly. However, I think that that consensus may take a little while to form because most of the US economic indicators started moving in the right direction in 2013. In the next three to six months the impact from severe weather last winter will obscure the data picture.   TGR: The mood at this year's Prospectors and Developers Association of Canada (PDAC) conference has been described as "cautious optimism." Would you agree?   Jeff Killeen: I'd say the tone was divergent – some senior management teams were feeling very cautious about commodity prices and general market appetite for mining equities, whereas a lot of the junior management teams had a much greater conviction that 2014 would be a strong year for the metals and equities.   TGR: If you look at the juniors and mid-caps, a lot of these stocks have gone up 25%, 50% and even 100% this year. I would have thought you would've seen a lot of smiling faces at PDAC as a result of that.   Jeff Killeen: Very true, but even a 100% uptick still leaves some share prices below where they may have been at better points in 2012. There is still that rearward-looking view to where the stock prices have come from, and a lot of them are a long way from there.   TGR: As capital returns to the mining sector, would it be correct to say that it will return first to the producers, second to companies with late-development assets and then, third and finally, to explorers?   Jeff Killeen: That succession sounds reasonable; however, new capital investment will certainly be selective. I would expect to see capital flowing into the space across the market-cap spectrum, but those companies or projects that are marginal at the current gold price or require further appreciation in the price to generate acceptable returns are likely to find it difficult to attract any new investments in 2014.   TGR: How can smaller companies, specifically explorers, demonstrate that they are worthy of financing?   Jeff Killeen: The first question anyone should ask when looking at the explorer space concerns the management team. Pick a solid team, especially in a market where accessing capital can be difficult. Spending Dollars wisely is important.   Beyond that, a project with strong grades can give a comfort level to the buy side that a project could be profitable in the future, considering it's very difficult to assess where gold prices might be four, five or seven years from now.   Other benefits – geographic or logistic – such as being in the right region for having a smooth permitting process and having good roadways, rail or power, can add value.   TGR: Given the recent increase in the price of gold and the significant uptick in a lot of equities, do you think that investors are embracing the sea change?   Jeff Killeen: There is a belief within the investment community that we're finding a bottom for the commodities. We do know that equities underperformed to the down side of the gold and silver price. Even just to revalue based on current spot prices means that there is probably still some upside to be had in a lot of the equities. With that in mind, investors are feeling better, but not excited to the point where there's going to be broad-scale investment across the mining space. It's going to be selective. It's going to be higher-quality names or those that have a higher prospect for development. It's not going to be widespread just yet.   TGR: Jeff, thank you for your time and your insights.

The Way the World Ends Posted: 26 Mar 2014 12:22 PM PDT Well, this particular stage in its farce, at least – the debt bubble...   We PROMISED to explain how it ends, writes Bill Bonner in his Diary of a Rogue Economist.   The world, that is. The world we live in now. The one in the middle of a rapidly inflating central bank bubble.   First, we need to understand that this is a very different world from the world of the 19th and early 20th centuries. It is a world where central bankers play a role somewhere between con artists, mad scientists and God Himself.   They deceive and cheat. They conduct their experiments without any real idea how they will affect people. And they move almost every price in the world – sending investors, householders and business people all running in one direction.   Their experiments change not only prices quoted on the Big Board and the supermarket. They also change the physical world. Jobs are lost to machines that – without such low interest rates – would not have been built.   Those in the 1% are only as rich as they are today thanks to the Fed's manipulations. America's super-sized houses also are largely the result of the Fed's 2002-07 real estate bubble. And many a mansion has been built in Aspen or the Hamptons with money from Wall Street bonuses, which wouldn't have been possible without central bankers' grand designs.   And China is the way it is today – with its gleaming towers, its mega-factories, its empty cities and clogged roads – largely because US officials made it easy for Americans to buy things they didn't need with money they didn't have.   Central bankers – along with central governments – have created a kind of monetary fantasy...which depends on ever increasing amounts of credit.   But where can all this new money go? Real output can't keep up with it. So prices must adjust. In the event, they bubble up...first one market, then another...first one sector, then another...   And after the bubble, what?   The bust!   That's what we're waiting for. A bust in the biggest debt bubble of all time.   When the credit inflation ball bounces off the ceiling, it produces an equal and opposite reaction in the other direction. Asset prices fall. This is deflation. It begins with asset prices...and then makes its way into consumer prices.   Most investors think they need to protect themselves from this kind of volatility.   Academic studies show that more volatile stocks under-perform less volatile stocks – they call it the "volatility anomaly." And it is obvious that if your stock goes down 50% you need 100% on the upside to get back to where you started. Losses and gains have "asymmetric" effects on your portfolio.   But at our small family wealth advisory, Bonner & Partners Family Office, one of our principles is that you need to "make volatility your friend." Because volatility is not the problem. The real problem is risk. There is risk that you will buy the wrong investment at the wrong price. Then you'll get whacked.   EZ money policies – low rates, QE, paper money – produce an apparent stability. As long as the money flows freely, even some of the worst businesses and the worst speculators can borrow to cover their losses.   Stocks go up and up and up. It looks good. But it masks real risk. As the bubble in credit increases the risk of a major blow-up increases...until it becomes a certainty.   This is where volatility can be your enemy and your friend. Just as Fed policies have made stocks too expensive...the equal and opposite reaction of the financial markets will be to make them too cheap. (Stay tuned.)   So, there you have it. The first stage of "the end" will be a major selloff of stocks. At present prices, of course, they've got it coming anyway.   But the implosion of the debt bubble and the collapse of asset prices are not likely to be the end of the story. Not as long as we have delusional activists running central banks and central governments.   The end of the world comes when the debt bubble pops. But before we get there, we will see more attempts by central banks to keep the debt bubble expanding. From Richard Duncan, author of The New Depression: The Breakdown of the Paper Money System: "Given that the Fed has been driving the economic recovery by inflating the price of stocks and property, it is unlikely to allow falling asset prices to drag the economy back down any time soon. To prevent that from happening, it looks as though the Fed will have to extend QE into 2015 and perhaps significantly beyond." So far, so predictable. But there is a "sooner or later" for QE, too. There will come a time when the world can take no more debt...and at that point, the debt bubble will finally blow up.   Then we get the equal and opposite reaction. Asset prices that have been inflated by debt will be deflated by debt de-leveraging. A depression will most likely follow.   This is not a bad thing...not at all. Contrary to popular opinion, crashes and depressions do not destroy wealth. They merely tell you that the wealth you thought you had really didn't exist.   As long as the EZ money flows freely, mistakes remain invisible. Rotten companies are kept alive. Bad speculations seem to pay off. Debts that can never be paid are still serviced. Stocks with little or no earnings shoot up.   Then when the bubble explodes the mistakes become painfully obvious. Phony gains return from whence they came. Investors reprice assets at more realistic levels. (After first going to unrealistically low levels and presenting opportunities for patient investors with plenty of cash onboard).   Only then, when the economy has been thoroughly thrashed can it get up, dust itself off and get back to work.   But central bankers are not likely to let it happen. They've made their careers by pretending to improve the economy. When the bust comes they will swing into action with more quack cures.   That is when we arrive at the second stage of the coming debt deflation. It is when we will wish we had bought more gold...more real estate...more old cars and new potatoes.   Most likely (but this is not guaranteed) central banks will find new and bolder ways to get money into consumers' hands. (Remember Ben Bernanke's "helicopter" speech?) This will be followed by a crisis of a different sort: high levels of consumer price inflation.   Put on your seat belt. It's gonna be one helluva ride.

The Way the World Ends Posted: 26 Mar 2014 12:22 PM PDT Well, this particular stage in its farce, at least – the debt bubble...   We PROMISED to explain how it ends, writes Bill Bonner in his Diary of a Rogue Economist.   The world, that is. The world we live in now. The one in the middle of a rapidly inflating central bank bubble.   First, we need to understand that this is a very different world from the world of the 19th and early 20th centuries. It is a world where central bankers play a role somewhere between con artists, mad scientists and God Himself.   They deceive and cheat. They conduct their experiments without any real idea how they will affect people. And they move almost every price in the world – sending investors, householders and business people all running in one direction.   Their experiments change not only prices quoted on the Big Board and the supermarket. They also change the physical world. Jobs are lost to machines that – without such low interest rates – would not have been built.   Those in the 1% are only as rich as they are today thanks to the Fed's manipulations. America's super-sized houses also are largely the result of the Fed's 2002-07 real estate bubble. And many a mansion has been built in Aspen or the Hamptons with money from Wall Street bonuses, which wouldn't have been possible without central bankers' grand designs.   And China is the way it is today – with its gleaming towers, its mega-factories, its empty cities and clogged roads – largely because US officials made it easy for Americans to buy things they didn't need with money they didn't have.   Central bankers – along with central governments – have created a kind of monetary fantasy...which depends on ever increasing amounts of credit.   But where can all this new money go? Real output can't keep up with it. So prices must adjust. In the event, they bubble up...first one market, then another...first one sector, then another...   And after the bubble, what?   The bust!   That's what we're waiting for. A bust in the biggest debt bubble of all time.   When the credit inflation ball bounces off the ceiling, it produces an equal and opposite reaction in the other direction. Asset prices fall. This is deflation. It begins with asset prices...and then makes its way into consumer prices.   Most investors think they need to protect themselves from this kind of volatility.   Academic studies show that more volatile stocks under-perform less volatile stocks – they call it the "volatility anomaly." And it is obvious that if your stock goes down 50% you need 100% on the upside to get back to where you started. Losses and gains have "asymmetric" effects on your portfolio.   But at our small family wealth advisory, Bonner & Partners Family Office, one of our principles is that you need to "make volatility your friend." Because volatility is not the problem. The real problem is risk. There is risk that you will buy the wrong investment at the wrong price. Then you'll get whacked.   EZ money policies – low rates, QE, paper money – produce an apparent stability. As long as the money flows freely, even some of the worst businesses and the worst speculators can borrow to cover their losses.   Stocks go up and up and up. It looks good. But it masks real risk. As the bubble in credit increases the risk of a major blow-up increases...until it becomes a certainty.   This is where volatility can be your enemy and your friend. Just as Fed policies have made stocks too expensive...the equal and opposite reaction of the financial markets will be to make them too cheap. (Stay tuned.)   So, there you have it. The first stage of "the end" will be a major selloff of stocks. At present prices, of course, they've got it coming anyway.   But the implosion of the debt bubble and the collapse of asset prices are not likely to be the end of the story. Not as long as we have delusional activists running central banks and central governments.   The end of the world comes when the debt bubble pops. But before we get there, we will see more attempts by central banks to keep the debt bubble expanding. From Richard Duncan, author of The New Depression: The Breakdown of the Paper Money System: "Given that the Fed has been driving the economic recovery by inflating the price of stocks and property, it is unlikely to allow falling asset prices to drag the economy back down any time soon. To prevent that from happening, it looks as though the Fed will have to extend QE into 2015 and perhaps significantly beyond." So far, so predictable. But there is a "sooner or later" for QE, too. There will come a time when the world can take no more debt...and at that point, the debt bubble will finally blow up.   Then we get the equal and opposite reaction. Asset prices that have been inflated by debt will be deflated by debt de-leveraging. A depression will most likely follow.   This is not a bad thing...not at all. Contrary to popular opinion, crashes and depressions do not destroy wealth. They merely tell you that the wealth you thought you had really didn't exist.   As long as the EZ money flows freely, mistakes remain invisible. Rotten companies are kept alive. Bad speculations seem to pay off. Debts that can never be paid are still serviced. Stocks with little or no earnings shoot up.   Then when the bubble explodes the mistakes become painfully obvious. Phony gains return from whence they came. Investors reprice assets at more realistic levels. (After first going to unrealistically low levels and presenting opportunities for patient investors with plenty of cash onboard).   Only then, when the economy has been thoroughly thrashed can it get up, dust itself off and get back to work.   But central bankers are not likely to let it happen. They've made their careers by pretending to improve the economy. When the bust comes they will swing into action with more quack cures.   That is when we arrive at the second stage of the coming debt deflation. It is when we will wish we had bought more gold...more real estate...more old cars and new potatoes.   Most likely (but this is not guaranteed) central banks will find new and bolder ways to get money into consumers' hands. (Remember Ben Bernanke's "helicopter" speech?) This will be followed by a crisis of a different sort: high levels of consumer price inflation.   Put on your seat belt. It's gonna be one helluva ride.

China Stimulus: Hope Against Hope? Posted: 26 Mar 2014 12:03 PM PDT Beijing did it before. Stock and FX traders seem to think it will repeat big stimulus...   THIS WEEK we got further confirmation that China's economy is slowing, writes Greg Canavan in The Daily Reckoning Australia.   Yet the Aussie Dollar and stock market jumped higher. How does that make sense? Well, it doesn't really, but here's the logic...   HSBC released preliminary Chinese manufacturing data for March, showing activity in China's manufacturing sector slowed to an eight-month low. Bad news, right?   Wrong. It's good news. Apparently, it means China is closer to announcing a large stimulus program. (Because the last stimulus program was so successful.) Once this little rumour swirled through the market, the Aussie Dollar and stock market pushed higher.   Ahhh stimulus, is there anything you can't do?   Of course, the bubbliest sectors panic first. New York Nasdaq's biotech sub-index has now doubled from the start of 2013. It's in the process of taking some of those gains back right now.   Why? Hot money – a euphemism for short term, speculative, leveraged funds – is getting out of the 'hottest' sectors as the prospect of tighter monetary conditions in the US takes hold. Recent data releases support this view.   US manufacturing is humming along. This week's release of preliminary PMI data for March showed a strong reading of 55.5, down from February's 57.1, which was the strongest month in over 3.5 years. Anything over 50 signifies expansion.   So the US economy continues to show signs of health, which means the Fed's trajectory of QE reductions and 'normalisation' of interest rates (whatever that means when you have a US$4 trillion balance sheet) continues.   Meanwhile, over in China momentum is definitely slowing, driving the calls for more stimulus. As the Wall Street Journal reports: "Some analysts expect the People's Bank of China to cut banks' reserve requirements, freeing up funds that can be used for lending. Others think authorities will rely on the type of stimulus spending they've used in the past." Our feeling is that the authorities in China, under the leadership of President Xi Jinping, have a higher tolerance for pain than they did in the past. Previous efforts to provide stimulus only exacerbated economic imbalances and made the task of trying to normalise the economy even harder.   We don't know how the mind of a central planner works, but we're thinking that pushing the stimulus button now would not send the signal needed to help reform the Chinese economy. Having said that, the authorities are playing a very dangerous game in trying to gently deflate the credit bubble.   Part of the focus is on ridding Chinese industry of overcapacity. An industry with too much capacity generates sub-standard returns and must implicitly be subsidised by other parts of the economy. Steel and cement are two sectors with chronic overcapacity and the authorities are trying to clamp down in these areas.   China's Caixin magazine reports on the problems emerging in the steel sector: "The largest private steel manufacturer in the northern province of Shanxi has become ensnared in deep debt troubles as the whole industry struggles with overcapacity.   "Highsee Iron and Steel Group Co. Ltd. has seen its capital chain broken and creditors including banks line up to try to get their money back, sources with knowledge of the situation said. Highsee's problems are typical in a sector where a huge debt problem is only beginning to reveal itself, an industry observer said..." Beijing wants to get rid of excess steel capacity. This means it must allow steel firms to go under. And judging from the news, they are well on their way. But because most have high debt levels, it also means the banks will take a hit via rising bad debts.   So does the government stimulate to prevent the firms from going under? Or does it allow the restructuring to take place and focus on containing the fallout in the financial sector? If it's serious about rebalancing, we'd guess it will focus on the latter. But Aussie investors think it will focus on the former. That's why the miners and the AUD have rallied yesterday in the face of bad news.   On top of that you have the Reserve Bank of Australia mulling interest rate rises, which is why the Dollar remains stubbornly over 90 US cents. The prospect of higher interest rates and a stronger Dollar, at the same time that our most important trading partner slows down, is not a pleasant one.   But we think it's only a prospect. The RBA won't increase interest rates anytime soon. If it does, it would push Australia towards recession.

China Stimulus: Hope Against Hope? Posted: 26 Mar 2014 12:03 PM PDT Beijing did it before. Stock and FX traders seem to think it will repeat big stimulus...   THIS WEEK we got further confirmation that China's economy is slowing, writes Greg Canavan in The Daily Reckoning Australia.   Yet the Aussie Dollar and stock market jumped higher. How does that make sense? Well, it doesn't really, but here's the logic...   HSBC released preliminary Chinese manufacturing data for March, showing activity in China's manufacturing sector slowed to an eight-month low. Bad news, right?   Wrong. It's good news. Apparently, it means China is closer to announcing a large stimulus program. (Because the last stimulus program was so successful.) Once this little rumour swirled through the market, the Aussie Dollar and stock market pushed higher.   Ahhh stimulus, is there anything you can't do?   Of course, the bubbliest sectors panic first. New York Nasdaq's biotech sub-index has now doubled from the start of 2013. It's in the process of taking some of those gains back right now.   Why? Hot money – a euphemism for short term, speculative, leveraged funds – is getting out of the 'hottest' sectors as the prospect of tighter monetary conditions in the US takes hold. Recent data releases support this view.   US manufacturing is humming along. This week's release of preliminary PMI data for March showed a strong reading of 55.5, down from February's 57.1, which was the strongest month in over 3.5 years. Anything over 50 signifies expansion.   So the US economy continues to show signs of health, which means the Fed's trajectory of QE reductions and 'normalisation' of interest rates (whatever that means when you have a US$4 trillion balance sheet) continues.   Meanwhile, over in China momentum is definitely slowing, driving the calls for more stimulus. As the Wall Street Journal reports: "Some analysts expect the People's Bank of China to cut banks' reserve requirements, freeing up funds that can be used for lending. Others think authorities will rely on the type of stimulus spending they've used in the past." Our feeling is that the authorities in China, under the leadership of President Xi Jinping, have a higher tolerance for pain than they did in the past. Previous efforts to provide stimulus only exacerbated economic imbalances and made the task of trying to normalise the economy even harder.   We don't know how the mind of a central planner works, but we're thinking that pushing the stimulus button now would not send the signal needed to help reform the Chinese economy. Having said that, the authorities are playing a very dangerous game in trying to gently deflate the credit bubble.   Part of the focus is on ridding Chinese industry of overcapacity. An industry with too much capacity generates sub-standard returns and must implicitly be subsidised by other parts of the economy. Steel and cement are two sectors with chronic overcapacity and the authorities are trying to clamp down in these areas.   China's Caixin magazine reports on the problems emerging in the steel sector: "The largest private steel manufacturer in the northern province of Shanxi has become ensnared in deep debt troubles as the whole industry struggles with overcapacity.   "Highsee Iron and Steel Group Co. Ltd. has seen its capital chain broken and creditors including banks line up to try to get their money back, sources with knowledge of the situation said. Highsee's problems are typical in a sector where a huge debt problem is only beginning to reveal itself, an industry observer said..." Beijing wants to get rid of excess steel capacity. This means it must allow steel firms to go under. And judging from the news, they are well on their way. But because most have high debt levels, it also means the banks will take a hit via rising bad debts.   So does the government stimulate to prevent the firms from going under? Or does it allow the restructuring to take place and focus on containing the fallout in the financial sector? If it's serious about rebalancing, we'd guess it will focus on the latter. But Aussie investors think it will focus on the former. That's why the miners and the AUD have rallied yesterday in the face of bad news.   On top of that you have the Reserve Bank of Australia mulling interest rate rises, which is why the Dollar remains stubbornly over 90 US cents. The prospect of higher interest rates and a stronger Dollar, at the same time that our most important trading partner slows down, is not a pleasant one.   But we think it's only a prospect. The RBA won't increase interest rates anytime soon. If it does, it would push Australia towards recession.

Go Gold! Got Gold? Posted: 26 Mar 2014 11:56 AM PDT A strange market inhabited by strange people. But sadly necessary with rates at zero...   LAST WEEK'S spike in short-term US bond yields is what harpooned gold prices and finally got then under control, writes Gary Tanashian in his Notes from the Rabbit Hole.   Here's the move in 2-year US Treasury yields...     More importantly, this spike in the 2-year yield vs. the 30-year yield really hurt gold...     These spikes predictably came as the Federal Reserve successfully managed to get the market thinking about an end to the damaging Zero Interest Rate Policy, ZIRP.   Long-time subscribers have heard this before. But for newer readers I feel a point needs to be made so that your expectations are well in line.   This is not a 'Go gold!', 'Got gold?' style pump house. Simply stated, I would rather live in a world where I do not feel gold is a necessary asset class. I would rather live in a world where bureaucrats were not in control of interest rate functions and hence, to some degree in control of financial markets.   Under this interest-rate manipulation, the concept of saving has been utterly torn apart in the United States via the now 5-year old ZIRP. If you do not speculate, you do not profit. The problem is that the risks in speculation are rising with every lurch higher in the stock market and junk bonds, to name two of the primary beneficiaries.   So it's everybody into the (risk) pool and everyone foolish enough to depend on savings...screw you. So I continue to unwaveringly believe that this big macro operation, going in one form and degree of intensity or another since 2001, is little more than a racket to be unwound.   But if the moment were to come when I feel we really are on the right track – and folks, withdrawing ZIRP could theoretically at least be considered one component of 'on the right track' – this market report would simply move on from the precious metals sector because frankly, I find it a strange place inhabited by some strange people.   The problem though is partially represented by the distortion built into this chart...     Something is just not right here. Long into an economic recovery and even longer into a bull market in stocks, the Fed Funds rate (FFR) is still pinning T-bill yields to the mat.   Now, the Fed chief babbles about a rate hike out in 2015, "that type of thing". Gold then reverses its ascent (it was ripe, given the Ukraine hype coming out of the gold "community") on the implications of rising short-term yields.   Using the 2003-2007 bull market as a template, the FFR should have begun to rise in 2010. Now it is 4 years later than that and the Fed is talking about a rate hike out in 2015, "that type of thing". Please. They are playing poker against the market and for now the market is not calling any bluffs.   So last week we had a group of interest rate manipulators meet for 2 days and then a press conference by the group's leader. She "you know" intimated that the ideal timing to begin phasing out ZIRP would be approximately "you know" sort of like maybe 6 months after QE3 is entirely tapered. "You know", if the economy is still strengthening then; that sort of thing.   Okay tell me now, who knows what the economy will be doing then? As things stand now, last week was a negative for gold prices, which were in need of a correction. But the key question going forward will be whether or not these negatives will endure or go back to business as usual as FOMC day fades to background?     Fundamentally, the spread between long-term and short-term US interest rates last week got knocked to its lowest point of the gold bear market so far.   What can we conclude from that? Gold's fundamental underpinning took a hit.   When measuring the length of the sideways channel on the yield spread, we note that gold may have already discounted this drop as its price is much lower than it was in summer of 2012 when the spread first declined to 80.   The yield spread, driven down by a jawbone and a lot of market emotion and media hype last week is at a potential bounce point.   So fundamentally speaking, gold bugs want to see last week's hysterics fade pretty quickly and by extension, the spread hold the support area (notwithstanding a day or two of down spiking for good measure).   If the market comes to believe that the Fed means business on the Funds Rate and 2, 3, 5 year yields continue to rise relative to long-term yields, it would be bearish for the price of gold. I make the distinction between "bearish for the price of gold" and 'bearish for gold'because price is a reflection of the value assigned to gold at any given time.   For as long as it lasts, a phase where the market perceives itself to be under the sound monetary stewardship of the Fed – regardless of sustainability – would be gold pricebearish.   Of course last week may have been a flash in the pan, as the Fed got the respect it always seems to get from the market during the ongoing phase of stock mini mania and economic mini revival. There are other phases you know, when the market gives them the finger. That is out in the future.   Let's watch the dust settle on the interest rate front and evaluate in due course. But meantime, tell me:   What was China doing late last week and early this week as gold got harpooned? Did gold suddenly decline because of the much hyped 'China demand drop'? Did supposedly massive physical demand suddenly dry up on the spur of a moment? There's always a seller on the other end of that demand you know.   Ukraine hyperbole unwound and that was expected to take something off the top. But chasing funnymentals like China, physical demand (vs. Comex shortages) and Ukraine around is what got the gold community in trouble in the first place.   There is no debate. Real interest rates jumped last week and gold got clobbered. There are other key fundamentals as well. Unfortunately with the media just pumping out story after story it is no wonder people get so confused.

Go Gold! Got Gold? Posted: 26 Mar 2014 11:56 AM PDT A strange market inhabited by strange people. But sadly necessary with rates at zero...   LAST WEEK'S spike in short-term US bond yields is what harpooned gold prices and finally got then under control, writes Gary Tanashian in his Notes from the Rabbit Hole.   Here's the move in 2-year US Treasury yields...     More importantly, this spike in the 2-year yield vs. the 30-year yield really hurt gold...     These spikes predictably came as the Federal Reserve successfully managed to get the market thinking about an end to the damaging Zero Interest Rate Policy, ZIRP.   Long-time subscribers have heard this before. But for newer readers I feel a point needs to be made so that your expectations are well in line.   This is not a 'Go gold!', 'Got gold?' style pump house. Simply stated, I would rather live in a world where I do not feel gold is a necessary asset class. I would rather live in a world where bureaucrats were not in control of interest rate functions and hence, to some degree in control of financial markets.   Under this interest-rate manipulation, the concept of saving has been utterly torn apart in the United States via the now 5-year old ZIRP. If you do not speculate, you do not profit. The problem is that the risks in speculation are rising with every lurch higher in the stock market and junk bonds, to name two of the primary beneficiaries.   So it's everybody into the (risk) pool and everyone foolish enough to depend on savings...screw you. So I continue to unwaveringly believe that this big macro operation, going in one form and degree of intensity or another since 2001, is little more than a racket to be unwound.   But if the moment were to come when I feel we really are on the right track – and folks, withdrawing ZIRP could theoretically at least be considered one component of 'on the right track' – this market report would simply move on from the precious metals sector because frankly, I find it a strange place inhabited by some strange people.   The problem though is partially represented by the distortion built into this chart...     Something is just not right here. Long into an economic recovery and even longer into a bull market in stocks, the Fed Funds rate (FFR) is still pinning T-bill yields to the mat.   Now, the Fed chief babbles about a rate hike out in 2015, "that type of thing". Gold then reverses its ascent (it was ripe, given the Ukraine hype coming out of the gold "community") on the implications of rising short-term yields.   Using the 2003-2007 bull market as a template, the FFR should have begun to rise in 2010. Now it is 4 years later than that and the Fed is talking about a rate hike out in 2015, "that type of thing". Please. They are playing poker against the market and for now the market is not calling any bluffs.   So last week we had a group of interest rate manipulators meet for 2 days and then a press conference by the group's leader. She "you know" intimated that the ideal timing to begin phasing out ZIRP would be approximately "you know" sort of like maybe 6 months after QE3 is entirely tapered. "You know", if the economy is still strengthening then; that sort of thing.   Okay tell me now, who knows what the economy will be doing then? As things stand now, last week was a negative for gold prices, which were in need of a correction. But the key question going forward will be whether or not these negatives will endure or go back to business as usual as FOMC day fades to background?     Fundamentally, the spread between long-term and short-term US interest rates last week got knocked to its lowest point of the gold bear market so far.   What can we conclude from that? Gold's fundamental underpinning took a hit.   When measuring the length of the sideways channel on the yield spread, we note that gold may have already discounted this drop as its price is much lower than it was in summer of 2012 when the spread first declined to 80.   The yield spread, driven down by a jawbone and a lot of market emotion and media hype last week is at a potential bounce point.   So fundamentally speaking, gold bugs want to see last week's hysterics fade pretty quickly and by extension, the spread hold the support area (notwithstanding a day or two of down spiking for good measure).   If the market comes to believe that the Fed means business on the Funds Rate and 2, 3, 5 year yields continue to rise relative to long-term yields, it would be bearish for the price of gold. I make the distinction between "bearish for the price of gold" and 'bearish for gold'because price is a reflection of the value assigned to gold at any given time.   For as long as it lasts, a phase where the market perceives itself to be under the sound monetary stewardship of the Fed – regardless of sustainability – would be gold pricebearish.   Of course last week may have been a flash in the pan, as the Fed got the respect it always seems to get from the market during the ongoing phase of stock mini mania and economic mini revival. There are other phases you know, when the market gives them the finger. That is out in the future.   Let's watch the dust settle on the interest rate front and evaluate in due course. But meantime, tell me:   What was China doing late last week and early this week as gold got harpooned? Did gold suddenly decline because of the much hyped 'China demand drop'? Did supposedly massive physical demand suddenly dry up on the spur of a moment? There's always a seller on the other end of that demand you know.   Ukraine hyperbole unwound and that was expected to take something off the top. But chasing funnymentals like China, physical demand (vs. Comex shortages) and Ukraine around is what got the gold community in trouble in the first place.   There is no debate. Real interest rates jumped last week and gold got clobbered. There are other key fundamentals as well. Unfortunately with the media just pumping out story after story it is no wonder people get so confused.

Welcome to the Currency War, Part 14: Russia, China, India Bypass the Petrodollar Posted: 26 Mar 2014 10:58 AM PDT As it tries to punish Russia for the latter’s dismemberment of Ukraine, the West is discovering that the balance of power isn’t what it used to be. Russia is a huge supplier of oil and gas — traded in US dollars — which gives it both leverage over near-term energy flows and, far more ominous for the US, the ability to threaten the dollar’s rein as the world’s reserve currency. And it’s taking some big, active steps towards that goal. As Zero Hedge noted on Tuesday: Russia Prepares Mega-Deal With India After Locking Up China With “Holy Grail” Gas Deal Last week we reported that while the West was busy alienating Russia in every diplomatic way possible, without of course exposing its crushing overreliance on Russian energy exports to keep European industries alive, Russia was just as busy cementing its ties with China, in this case courtesy of Europe’s most important company, Gazprom, which is preparing to announce the completion of a “holy grail” natural gas supply deal to Beijing. We also noted the following: “And as if pushing Russia into the warm embrace of the world’s most populous nation was not enough, there is also the second most populated country in the world, India.” Today we learn just how prescient this particular comment also was, when Reuters reported that Rosneft, the world’s top listed oil producer by output, may join forces with Indian state-run Oil and Natural Gas Corp to supply oil to India over the long term, the Russian state-controlled company said on Tuesday. Rosneft CEO Igor Sechin, an ally of President Vladimir Putin, travelled to India on Sunday, part of a wider Asian trip to shore up ties with eastern allies at a time when Moscow is being shunned by the West over its annexation of Crimea. Rosneft said it had also agreed with ONGC they may join forces in Rosneft’s yet-to-be built liquefied natural gas plant in the far east of Russia to the benefit of Indian consumers. We just have one question: will payment for crude and LNG be made in Rubles or Rupees? Or in gold. Because it certainly won’t be in dollars. Rosneft, which is increasing oil flows to Asia to diversify away from Europe, did not provide any additional details but said it had discussed potential cooperation with Reliance Industries and Indian Oil. It did not have to: it is quite clear what is going on. While the US is bumbling every possible foreign policy move in Ukraine (and how could it not with John Kerry at the helm), and certainly in the middle east, where it is alienating Israel and Saudi just to get closer to Iran, Russia is aggressively cementing the next, biggest (certainly in terms of population and natural resources), and most important New Normal geopolitical Eurasian axis: China – Russia – India. There is only one country missing – Germany. Because while diplomatically Germany is ideologically as close to the US as can be, its economy is far more reliant on China and Russia, something the two nations realize all too well. The second the German industrialists make it clear they are shifting their allegiance to the Eurasian Axis and away from the Group of 6 (ex Germany) most insolvent countries in the world, that will be the moment the days of the current reserve petrocurrency will be numbered. To understand why trade deals between Russia, China and India are potentially huge, a little history is useful: Back in the 1970s, the US cut a deal with Saudi Arabia — at the time the world’s biggest oil producer — calling for the US to prop up the kingdom’s corrupt monarchy in return for a Saudi pledge that it would accept only dollars in return for oil. The “petrodollar” became the currency in which oil and most other goods were traded internationally, requiring every central bank and major corporation to hold a lot of dollars and cementing the greenback’s status as the world’s reserve currency. This in turn has allowed the US to build a global military empire, a cradle-to-grave entitlement system, and a credit-based consumer culture, without having to worry about where to find the funds. We just borrow from a world voracious for dollars. But if Russia, China and India decide to start trading oil in their own currencies — or, as Zero Hedge speculates, in gold — then the petrodollar becomes just one of several major currencies. Central banks and trading firms that now hold 60% of their reserves in dollar-denominated bonds would have to rebalance by converting dollars to those other currencies. Trillions of dollars would be dumped on the global market in a very short time, which would lower the dollar’s foreign exchange value in a disruptive rather than advantageous way, raise domestic US interest rates and make it vastly harder for us to bully the rest of the world economically or militarily. For Russia, China and India this looks like a win/win. Their own currencies gain prestige, giving their governments more political and military muscle. The US, their nemesis in the Great Game, is diminished. And the gold and silver they’ve vacuumed up in recent years rise in value more than enough to offset their depreciating Treasury bonds. The West seems not to have grasped just how vulnerable it was when it got involved in this latest backyard squabble. But it may be about to find out.

Gold Prices Drop Near $1300, Seen "Struggling" as US Rates Slip After Data, Options Expire Posted: 26 Mar 2014 10:41 AM PDT GOLD PRICES fell to their lowest level since 13 February in London trade Wednesday, diving to $1302 per ounce after stronger-than-expected US economic data.   Annual growth in durable goods orders was more than twice Wall Street forecasts for Feb. at 2.2%, led by the sharpest rise in US automobile demand in a year.   The US services sector as a whole was seen rebounding sharply on the Markit PMI index, despite a slowdown for new business, plus a continued lull in new hiring.   Gold prices "[are] seeing light support," says the New York office of German refinery group Heraeus, "but the overall sentiment is bearish amid expectations of rising rates."   "We continue to believe that gold prices will struggle," says today's note from Standard Bank's commodities analysts, also pointing to "weak demand and rising real interest rates in the US."   US bond yields slipped Wednesday however, even as the US Dollar rose versus the Euro ahead and after the new data.   Ten-year US interest rates edged down to 2.71%, sharply below the New Year's level of 3.04% when gold prices again hit last June's 3-year low of $1182 per ounce.   US rate-rises are "state, not date, contingent," said St.Louis Federal Reserve president James Bullard in a speech Tuesday night, qualifying last week's comments from new Fed chair Janet Yellen that zero rates – now in place for more than 5 years – could end 6 months after the current QE tapering is complete.   Back in gold prices, "The [precious metals] markets are quiet, physical demand is fairly non existent and business is pretty scarce at these levels," said London broker Marex Spectron in a note.   But with April gold options due to expire Wednesday on the US Comex futures market, "[Gold prices] often have an uncanny knack on expiry days of heading to the main strike," Marex's David Govett told Reuters.   Data showed April options interest was heaviest in $1290 and $1300 puts, giving the bearers the right to sell gold futures at that price – a right only profitable if prices ended Wednesday below those levels.   Silver meantime followed gold prices lower, hitting near 7-week lows beneath $19.80 per ounce.

In The News Today Posted: 26 Mar 2014 10:27 AM PDT Jim Sinclair’s Commentary The most interesting part of GEAB #83′s report is note 10 where they talk about Europe’s political elite. Europe has no political elite (though politicians might disagree). Their elite is a mix of old nobility and banksters whose primary goal is the collapse of the current sovereign states to implement a true... Read more » The post In The News Today appeared first on Jim Sinclair's Mineset.

The West’s War On Gold Is Raging & There Are New Casualties Posted: 26 Mar 2014 09:03 AM PDT As the Western central planners continue their obsessive war against gold, today James Turk told King World News there are fresh casualties. As he exposes the West's war against gold, Turk discusses the end game, and also tells investors and traders exactly to profit from the fierce battles. This posting includes an audio/video/photo media file: Download Now

Evil Entrepreneurs: How the Feds Spin Price Inflation Posted: 26 Mar 2014 08:55 AM PDT What is happening in Argentina provides a valuable lesson in why governments in every country on earth control the education of the nation's children. Argentina is suffering the ravages of government debasement of the currency — i.e., inflation, the process by which government pays for its ever-increasing debts and bills by simply printing more paper currency. The expanded money supply results in a lower value of everyone's money, which is reflected in the rising prices of the things that money buys. According to The New York Times, last year prices in Argentina rose nearly 30%. This year, they're expected to increase by 45%. Not surprisingly, the government's inflation of the money supply is causing economic chaos within Argentine society. From butchers who are now posting price increases on scraps of paper, to women filing for increases in alimony payments, to café owners who are selling less, to wholesalers who are having trouble pricing imported goods, the government's monetary debauchery spares virtually no one. So, what does all this have to do with government schools? Inflation is one of the greatest government scams in history. Well, ask yourself: Why do governments finance their expenditures with inflation rather than simply by raising taxes? The answer is a simple one: With taxes, everyone knows that the government's the culprit because people can see that it's a government agency that is collecting the taxes. With inflation, government can blame what is happening on the private sector, where prices are rising in response to the government's continued debasement of the currency. And that's precisely what they teach children in public (i.e., government) schools. They teach them that it is greedy, rapacious people in the private sector, not the government, who are to blame for the rising prices brought on by inflation. They teach them that it is the job of the government to protect people from the greed and rapaciousness of the private sector by doing such things as imposing price controls on businessmen, sellers, and producers. Inflation is one of the greatest government scams in history. The government inflates the money supply to pay for ever-increasing debts and expenditures. Prices of most everything naturally begin to rise in response to the debased value of the money. The government blames the rising prices on the private sector. Public-school graduates are taught to support the government and castigate the private sector. Through it all, government officials know exactly what they are doing. They know that it's their central bank that is producing the problem by expanding the money supply. But they also know that most of the citizens are graduates of public schools, which teach that inflation is caused by private-sector people who are greedily raising their prices. The officials know that all they have to do is focus the blame on the private sector and the citizenry will immediately fall into line and see the government as their savior rather than the entity that is actually the cause of the problem. By imposing price controls on the private sector, the government makes it a criminal or civil offense to raise prices. Then, officials encourage citizens to become snitches, exhorting them to report unlawful price increases to the authorities. The price controls inevitably mean shortages. That's because producers can't make a profit if they are forced to sell at a price below their costs. The citizenry then get angry over the shortages and condemn the greedy, rapacious businessmen for being "hoarders." Of course, government officials love to see the process working. You'll recall that this was what happened in the United States during the 1970s, when price controls were imposed on gasoline. The result? Shortages and long lines at the gasoline stations, which public school graduates, not surprisingly, blamed on the oil companies and gas station owners. Through it all, the U.S. government played the innocent. It even had a Whip Inflation Now campaign, acting as if inflation was caused by someone other than the government. The citizenry loved the WIN campaign and participated in it enthusiastically. It's no different in Argentina. As part of its campaign to blame inflation on the private sector, the government has imposed a wide range of price controls, leading to shortages and even more economic chaos. Government billboards exhort people to snitch on businesses that are unlawfully raising their prices. Playing her important role in the scam, Argentine President Christina Kirchner tells the citizens, "We have to monitor prices. Don't let them rob you." Not suspecting that government is the cause of the chaos, the citizenry love the price controls and their newfound role as snitches for the government. According to the Times, two engineering students even devised an app that enables shoppers to see whether grocery stores are complying. However, there are some Argentinians who see through the scam, just as libertarians saw through the Whip Inflation Now scam here in the United States in the 1970s. A retired 77-year-old accountant named Jose, who declined to give his last name, no doubt out of fear of government retaliation, showed that he had somehow broken through the government's indoctrination: "The campaign is useless. It's a rule that's older than the world. If you print money, there's inflation." How is it that Jose sees the truth behind the government's inflation scam while others continue to fall for it? Who knows? Why is it that American libertarians see through the inflation scam here at home while so many others continue to fall for it? Public schooling works well but it's not foolproof. Regards, Jacob G. Hornberger for The Daily Reckoning Ed. Note: Whatever causes it, the fact is price inflation affects everyone. After all, on some level we are all consumers. And when it gets going in earnest in the U.S., and the dollar begins to collapse, you’ll want to be prepared. That’s why, in today’s issue of Laissez Faire Today, readers were given a chance to grab a playbook that shows specifically how to safeguard and grow your wealth in the face of government-induced inflation. Just a small benefit of being a reader of the Laissez Faire Today email edition. Find out how you can sign up for free, right here. This article originally appeared here on the Future of Freedom Foundation website. This article was also prominently featured in Laissez Faire Today.

Gold Prices Test $1308 Again as China Bank Run Hits Headlines, Bundesbank Says Euro QE "Not Out of Question" Posted: 26 Mar 2014 06:46 AM PDT GOLD PRICES fell back to yesterday's 5-week low at $1308 per ounce lunchtime Wednesday in London, dropping hard from a tight overnight range as Western stock markets rose.   Gold prices in China – now the world's No.1 consumer as well as mining nation – ended the day slightly higher, but only trimmed their discount to international prices to $3 per ounce.   Eastern Chinese city Yancheng meantime saw a third day of "anxious" depositor withdrawals from the small Jiangsu Sheyang Rural Commercial Bank, with 1,000 customers cueing since Monday according to the South China Morning Post.   "Rumours about our solvency triggered the chaos," the paper quotes an official at the bank, which reportedly put cash on show behind teller windows to reassure depositors but without success.   "The situation is serious and we will probably ask the police to find out the origin of the rumours."   China's so-called "gold trade financing" poses a threat to prices, according to analysis by US investment bank Goldman Sachs, as loans collateralized by physical bullion are unwound quickly amid the country's tightening credit crunch.    Here in London on Wednesday, wholesale silver bullion bars again tracked gold prices lower, dropping beneath $20 per ounce – a 6-week low when first breached on Monday.   Trading more than 6% beneath last week's 6-month high, gold prices hit a new 4-week low for UK investors at £790.   Euro gold prices held steadier, however, as the single currency dropped near 2-week lows to the Dollar after Germany's Bundesbank president Wiedmann – a key member of the Eurozone central bank – said a QE money-printing program to avoid deflation "is not out of the question."   Struggling to hit its 2.0% target for consumer price inflation, the Bank of Japan may increase its aggressive QE program this spring, a government advisor is quoted by Bloomberg.   US rate-rises are "state, not date, contingent," said St.Louis Federal Reserve president James Bullard in a speech Tuesday night, stressing the need for stronger economic data to qualify last week's comments from new Fed chair Janet Yellen that zero rates – now in place for more than 5 years – could end 6 months after the current QE tapering is complete.   "The [precious metals] markets are quiet, physical demand is fairly non existent and business is pretty scarce at these levels," says London broker Marex Spectron in a note.   Dropping to $1307, "We look for a basing effort here" says new technical analysis of gold prices from Swiss bank and London market maket Credit Suisse, "[followed by] an attempt to turn higher again."

Extrapolation Fever Posted: 26 Mar 2014 06:03 AM PDT There’s an old story about a trucker driving north on the Montreal highway in Vermont. Seeing an average of three gas stations per mile, he concludes that there must be plenty of gas all the way to the North Pole. Urban legend doesn’t say what became of him (or why he thought he could drive to the North Pole), but I’m guessing he ended up stranded on a desolate stretch of highway somewhere in northern Manitoba. Our trucker’s mistake is an admittedly extreme example of what statisticians call extrapolation error, which occurs when you wrongly assume that current conditions will continue into the future. It happens in investment markets all the time, only instead of a frigid night alone in a truck, the markets will punish your bad judgment with a deluge of red ink in your brokerage account. As today’s guest author David Hunter will explain, extrapolation is all the rage right now—as it often is when markets are hot. He says that those who assume the stock market will rise in 2014 just because it rose in each of the five years prior are suffering from an acute case of Extrapolation Fever—a wealth-threatening disease whose symptoms include over-confidence, loss of judgment, and ultimately, a lighter wallet. As some background, David Hunter has been in the investment business for 36 years, working his way up to Chief Investment Officer of a billion dollar money management firm. Today, he’s Chief Investment Strategist of KCCI, where he uses cycle analysis to predict where major investment markets are headed for readers of his newsletter The Contrarian Value Investor. As the name of his newsletter implies, David is a contrarian to the core. You’ll read his take on precious metals, stocks, bonds, and much more in his 2014 forecast below. Be warned: you won’t agree with everything you’re about to read. But David’s analysis is sound and well-reasoned, so take heed nonetheless. Dan Steinhart Managing Editor of The Casey Report 2014 Outlook By David A. Hunter, CFA Investors entered the new year in a very positive frame of mind. The consensus view on the Street is for another good year for the equity markets, albeit not as strong as what we witnessed in 2013. Most forecasts have the US markets up somewhere between high single digits and low double digits. The current conventional view is that the economy is finally reaching escape velocity and moving into a more normalized phase. The expectation of many investors is that this stronger economic growth will fuel better top- and bottom-line growth and propel the equity markets to ever-higher levels. The belief is that with this improved growth, the markets can move higher, even if interest rates move gradually higher and even if the Fed continues to taper. Generally, investors believe that the bull market is nowhere near a top, given that valuations are not stretched, at least by some measures, and that inflation and interest rates are still historically low. Over and over, one hears that a correction could come at any time, but that such a correction would be healthy and would not likely exceed five to ten percent. “Buy the dip” remains a common theme, but now we are hearing more and more pundits advise that investors buy now and not wait for a dip. The justification for buying now, rather than waiting for a pullback, is that prices could move even higher before any pullback were to occur. It is very clear that the Street is now as bullish as it has been in many years. In fact, the Investors Intelligence Survey is indicating a level of bullishness that is typically seen at tops. In the history of the Survey, the recorded level of bearishness has never been lower than it is today. This is just one of many reasons why this contrarian believes a major top is near at hand, with a historically significant bear market to follow. Between 1973 and today, we have had five cycle tops: 1973, 1980, 1991, 2000, and 2007. Each of those cycles was driven by a different sector that went parabolic in the later stages of the cycle, indicating that the end of the cycle was drawing near. In 1973, it was the so-called “nifty 50,” a group of 50 stocks that represented the dominant companies of that time. Valuations were driven up to irrational levels as the pension fund managers bought into the idea that these companies were so dominant that their returns would remain superior to the rest of the market for years to come. They became known as “one decision” stocks because portfolio managers considered them buy and hold stocks. These stocks got bid up to unheard-of valuations. The problem was that institutional portfolios became so concentrated in these stocks that when the economy and fundamentals turned negative, the stocks came under severe selling pressure as everyone headed for the exits at once. In 1980, it was the energy and other commodity stocks that captured the fancy of Wall Street. Inflation was soaring, propelled by oil and commodity prices that were rising to levels never seen before. As a result, investors piled into these stocks, and they went straight up. The assumption was that commodity price inflation was going to allow these companies to produce above average returns for many years. Then recession came, and the stocks plunged. In 1991, the big-name consumer growth stocks went parabolic. They had appreciated many-fold during the disinflation of the ‘80s, as their steady growth rates were capitalized at ever lower rates. At the height of their popularity, their valuations relative to capital goods stocks were at 60-year highs, a clear sign of excess. The ‘90s were all about technology and capital goods stocks rising from that 60-year relative low and ultimately ending in a speculative valuation bubble unlike any that had preceded it. As everyone is well aware, a tech bust soon followed. After that came the credit bubble that drove financials and other credit-related stocks to unsustainable levels, only to see these same stocks collapse when the bubble burst. The point to all this history is that at cycle tops, investors get caught up in the momentum and develop a rationale to explain why that momentum will continue despite historically full valuations. It is interesting that this time around there does not seem to be one dominant sector. Rather it is the market in general, along with various unrelated groups. Among the popular groups in potentially unsustainable uptrends are social media, biotechnology, private equity, REITs, consumer staples, and health care. Other groups could probably be listed as well. The theme this time around is not as clearly defined as we saw in the other five cycles. I think that is because this cycle is very different from previous cycles. We have had a subpar recovery driven by unprecedented levels of QE and historically low interest rates. This cycle, investors flocked to areas that could provide growth that was not dependent on a robust economy, as well as to stocks that could provide superior income. Another defining characteristic of this cycle is the substantial flows into exchange-traded funds (ETFs). When the market does begin a major reversal, ETFs will undoubtedly accelerate the decline, as the funds are forced to unload stock positions to meet liquidations. This cycle differs from all of the other cycles in the post WWII era. Not only have we experienced subpar growth, the economy is very close to deflation. I think these differences are causing many analysts to misjudge the risks and timing of a cycle turn. I keep hearing analysts say interest rates are still so historically low that despite the sharp rise last year, rates are not at levels that will hurt the economy. In previous cycles, that would likely have proven true. However, in this subpar recovery, where inflation is almost nonexistent, the 150 basis-point rise in rates last summer may be enough to put the economy in reverse. It certainly has already had a significant impact on mortgage refinancing and housing. In addition, general merchandise sales are slowing. On the other hand, autos sales are being propped up by the same kind of loose financing that led to the credit crisis five short years ago. Some lessons are never learned, I guess. Personal disposable income has gone negative for the first time since 2008. I expect overall retail sales will soon follow. Some economists are forecasting a pickup in capital expenditures, but with end demand slowing, there is little chance that we’ll see that. Exports can also be expected to weaken given the problems in the emerging markets as well as China and Europe. The consensus may believe the economy is gaining strength, but more likely, we are about to see economic weakness. Recession, not normalized growth, will be the story of 2014, and that’s certainly not on most investors’ radar screens. A US recession would be bad enough, but add in the potential for some major global problems and there is the real possibility of a downturn that is worse than the credit crisis of 2008-‘09. I recognize that many analysts are making the case that Europe is on the mend and will see recovery this year. Of course that is possible, but I think it is more likely that global weakness triggers a sharp reversal there, accompanied by a banking crisis and an involuntary liquidation cycle. The ECB has done little more than move debt around. The banks are loaded with risky sovereign debt, particularly the banks in Spain and Italy. It is difficult to understand why we are not yet seeing the Italian and Spanish sovereign debt spreads widen, given the state of their finances. Perhaps it is because the banks there have loaded up on that debt, as has Japan. The ECB shovels out the money, and the banks load up on their own country debt. Despite the current relative calm, no one should doubt that Europe is a house of cards. China is another accident waiting to happen. I know most investors assume China will successfully manage its transition from an export-based manufacturing economy to one that relies more on domestic consumption, and do so without growth slipping below seven percent. I think that is unlikely, particularly given the huge credit imbalances that are plaguing the country. In the past five years, credit there has grown from $9 trillion to $24 trillion. The Chinese credit bubble is far bigger than was the 2008 bubble here in the US. If it bursts this year, as I think is quite possible, it will send China’s economy, as well as the global economy, into a tailspin. There have been a few signs of late, indicating that China is finding it difficult to contain the problem. Whenever the authorities have attempted to rein in the shadow banking credit, they have been forced to quickly reverse themselves. More and more non-accruing loans are piling up on bank balance sheets. The Chinese authorities have a very difficult balancing act which they are trying to execute. The odds are very much stacked against them pulling it off successfully. The emerging-market economies are also coming under pressure and facing some significant capital outflows. These countries, as well as Japan, are accidents waiting to happen. We may not know precisely what the catalyst will be or when a crisis will be triggered, but we do know that the risks of a global deflationary bust are quite high, and contrary to current consensus opinion, I think those risks are rising, not falling. As bullish as Wall Street is toward equities, they are even more bearish of long-duration Treasury securities. Rarely do we see the kind of unanimity of opinion that we have now regarding the direction of interest rates. It is a foregone conclusion in most investors’ minds that the 30-year bull market in bonds has ended, and that interest rates are going up from here. The fact that the Fed has begun to taper, along with the current consensus view that the economy is accelerating, has solidified in investors’ minds that the path of least resistance for rates is up. The forecasts vary as to how sharply rates will rise from here, but most forecasters are projecting 10-year rates to rise to 3% this year, with some analysts suggesting they might rise to 4% or higher. Throughout my career, my most successful calls have come when virtually nobody agrees with me, and that is certainly the situation now regarding interest rates. I continue to forecast rates falling to new lows. I think 10-year rates could fall below 1% and 30-year rates to as low as 1%. For many, perhaps most investors, this forecast will be seen as highly improbable, if not outlandish, but let me assure you, there is logic behind this forecast. If my prediction of a sharp global deflationary contraction proves accurate, we will see US Treasuries bid up aggressively in a “flight to safety” trade. If we are experiencing a financial crisis equal to or greater than the 2008 crisis, something akin to “2008 on steroids,” investors everywhere will be seeking shelter from the storm. Treasuries are still viewed by most as the safest security in the world. If we do see the economy go into steep decline, there is no doubt the Fed will ramp up QE to even higher levels. In fact, I believe we are likely to see QE expand by $10-$15 trillion in the next two years, as panicked policymakers do all they can to prevent a global economic and financial collapse. With the Fed buying trillions of Treasury securities at the same time that investors are also looking to buy, it is easy to see how rates could fall to 1%. Some might find it hard to believe that anyone would consider investing for 30 years at 1%, but remember we are likely to be looking at deflation of 3% or more. Thus, even at 1%, these bonds would be yielding at least 4% in real terms, and this at a time when most assets are delivering sharply negative returns. I am not nearly as sanguine about the rest of the bond market. In a bust, spreads will widen dramatically. I would focus on the highest quality bonds and fight the urge to trade down the risk curve to pick up yield. I would stay far away from the high-yield area, as there is great potential for this market to implode were a bust to occur. I also think there is a lot of potential trouble ahead in the municipal market. If we see a sharp reversal in the residential real estate market, it is likely to have a major impact on municipalities, which rely so heavily on property taxes to fund their operations. The US dollar will be another beneficiary of the “flight to safety” trade. I know that a lot of investors are concerned about the long-term prospects for the dollar, given the lack of fiscal discipline in our government and the seemingly reckless expansion of QE in this cycle. There is also talk that the dollar could lose its reserve-currency status or at least see it greatly diminished. While that may happen, it is not going to happen anytime soon. World investors will still flock to the dollar in a crisis. I am forecasting the dollar index to rise by 20-25% in 2014. I think we may see the dollar and the euro trade at parity at some point later this year. I am also near-term bearish on the commodity currencies, such as the Australian and Canadian dollars. I expect their economies to be hit particularly hard, as commodities take it on the chin during the bust. The Japanese yen has declined by over 25% versus the dollar in the past 15 months. There is undoubtedly more downside ahead, but I am not sure I would want to be short the yen here, given the nearly universal view that it will continue to trade lower. There are far too many traders short the yen right now for me to be comfortable with that trade. It wouldn’t take much to trigger a short-covering rally here. I don’t think I want to be either long or short the yen right now. I continue to be a bear on precious metals and commodities. I turned bearish on gold in September of 2012, when it hit $1,800 and have had a target of $1,000 ever since. This is still my target, although I believe it could spike as low as $800 in a washout trade before reversing. I believe gold is likely to put in a major bottom in the first half of this year, but right now there are still far too many people trying to call a bottom every time we get an uptick. We need to see more capitulation and more panic selling before any kind of major bottom can be called. By the time we get to a true bottom, I expect to see some of the so-called gold bugs and many of the inflationists throw in the towel. We’re getting closer, but I think that bottom is still months away. I continue to expect silver to track gold. My downside target for silver remains at $13. Copper, on the other hand, is not nearly as far along in its downtrend. I think copper prices could drop in half this year. China is still overproducing, and demand for copper is likely to be hit hard in the upcoming global contraction. I see a lot of analysts promoting the copper producers, particularly Freeport McMoran, suggesting these stocks offer great value here. I would just caution that a sharp drop in copper prices would cause earnings to disappear. Under this scenario, the dividend would likely be cut or eliminated. From both a technical and fundamental perspective, I can see these stocks falling 50-70% from here. Energy is another area where prices could come under severe pressure in 2014. I am looking for WTI crude to fall below $50 and natural gas to decline to $2. We may be on the verge of the first global deflationary cycle in some 80 years. That is not likely to be an environment where commodities thrive. I would caution investors against evaluating commodity stocks here using normalized earnings. The environment these producers will be operating in will be far from normal. Weak earnings and questions about future demand will take a toll on these stocks. Conclusion It is not often that we see such unanimity on Wall Street. As the market has marched higher, more and more investors have joined the ranks of the bulls. As a 40-year observer of the markets, I have seen the same thing happen at each market top. Essentially, the momentum of the tape begets more momentum and causes perception to change from glass half-empty to glass half-full. Lots of fundamental rationale is provided to explain a bullish viewpoint, but more often than not, it is the momentum of the market that is driving the crowd’s bullishness at or near a top. What I have also observed over the years is that the sentiment can quickly shift into glass half-empty if and when momentum shifts decidedly to the downside. In other words, momentum works both ways. Shifts from bullish to bearish can lead to dramatic declines when coming off a major top. I think this might be even more the case this time around. More than ever before, we have investors all watching for the same technicals on their computers in an effort to spot a reversal. This means that more than ever before, we will likely have investors all acting on those signals at essentially the same time, creating a stampede for the exits. This long market run, without so much as a 10% correction, has conditioned investors to make every effort to stay fully invested until there are clear signs of a momentum break. My guess is that we will see a high-volume reversal once the market definitively crosses under the 200-day moving average. For the S&P, the 200-day moving average is around 1,695. Until the market breaks that level, weakness will be bought. However, once that line is penetrated in a decisive manner, we are likely to see the sell-off accelerate. The setup is such that a reversal this time around could be faster and steeper than what we witnessed in 2008. Investors hoping to have their cake and eat it too by staying fully invested until the momentum reverses are likely to learn an age-old lesson: the market rarely accommodates. Extrapolation fever is alive and well on Wall Street, and most pundits are forecasting another positive year, fueled by accelerating economic growth and another good year of corporate profit growth. This contrarian obviously disagrees. I think 2014 may well turn out worse than 2008-‘09 from both an economic and market perspective, with corporate profits cut in half. If that proves to be the case, 2014 will go down as the worst year in the post WWII era. My targets remain 500 on the S&P and 5,000 on the Dow. This is certainly an outlier forecast, one that most investors will consider highly unlikely. I have been here before. At every major cycle

One Match that Reliably Sparks a Rising Gold Price Posted: 26 Mar 2014 06:00 AM PDT Gold seems to be sparking more attention these days, as investors have seen the precious metal steadily rise from its December low of around $1,200, to a new high of $1,350 just three months later. What's driving gold? The media has been focusing on the conflict in Ukraine and Russia as the main driver for gold, but I think an equally important driver relates to real interest rates… For gold, the real fuel lies in negative-to-low real rates of return. Historically, the gold price rises when the inflationary rate (CPI) is greater than the current interest rate. Similarly, when real interest rates go above the positive 2-percent mark, you can expect the gold price to drop. Investors can watch out for two factors. See if the embers still spark for gold. Take a look at what happened over the past year with real interest rates and gold. A year ago in March 2013, the five-year Treasury yield was offering investors 0.88 percent, while inflation was 1.5 percent. This equaled a real rate of return of -0.62 percent, so investors were losing money. That month we saw gold reach as high as $1,614. The five-year Treasury yield rose to 1.74 percent in December of that year, as inflation lowered to 1.20 percent, returning a positive rate of 0.54 percent. What happened to gold? The price dropped to a staggering $1,187. Today inflation has gone up 40 basis points to 1.60 percent while the five-year Treasury yield is at 1.53 percent. A negative real rate of return has resurfaced. Meanwhile, gold rose to $1,350. Inflation has been off the radar for most people in the U.S., but Macquarie Research made an interesting observation as wage growth experienced the largest monthly increase in more than three years. Going back more than 15 years, you can see the six-month annualized change of 3.3 percent is "the highest pace of wage growth in over five years," says Macquarie. Usually, wage growth leads to an increase in the cost of goods, which translates to higher inflation. And, with the Federal Reserve expected to keep rates low for a period of time to allow the economy to continue growing, it looks like real interest rates will remain low-to-negative, which should keep investors hot for gold. Regards, Frank Holmes for The Daily Reckoning Ed. Note: No matter what happens in the gold market, readers of the Daily Resource Hunter have unfettered access to the world’s best commentary on precious metals investments. They know, better than anyone, just how to profit from the yellow metal whether the price goes up, down or sideways. Not only that, they’re also given regular opportunities to discover real actionable stock picks that are tailor-made to the resource and energy sector. And it’s all completely FREE. So don’t wait. Sign up for the Daily Resource Hunter, right here. Article posted on Daily Resource Hunter

Gold Price Projection by the Golden Ratio Posted: 26 Mar 2014 02:25 AM PDT This article shows how Gold has been following the Golden Ratio which predicted all the major turning points with a high degree of accuracy for the past thirty years, and reveals the next possible major turning points. The Golden Ratio 1.618034… (also called the Golden Number, the Golden Section or the Golden Mean) can be found everywhere around us from mathematics to architecture, from nature to our own anatomy. But as you can see in the following analysis, it can also be found in the Gold Metal Charts.

U.S. Dollar Bottom - Third Time’s a Charm? Posted: 26 Mar 2014 02:08 AM PDT The US Dollar index bottomed on Monday’s 21-day cycle and then rallied over 1% last week (after the previous week’s big cycle convergence). In doing so it printed an engulfing bullish candlestick on the weekly chart (not shown).

You are subscribed to email updates from Save Your ASSets First To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610