Gold World News Flash

The US Atlantic Coastline Goes On High Alert To Cover Up The Economic Collapse
Gerald Celente : A Front Row Seat to Economic Hell
Ferguson: We’re Past the Point of NO RETURN — Inflationary Collapse Ahead
Alasdair McLeod – The US Blew It In The Ukraine
Doug Casey & Chris Waltzek
Gold market manipulation update, March 2014
Preparing for Economic Instability: Six Ways to Ready Yourself For the Inevitable
Economic Inequality In The USA (In One Comprehensive Chart)
The Gold Price Reached $1,286.10, 50 Percent Correction Target
The Gold Price Reached $1,286.10, 50 Percent Correction Target
Gold Daily And Silver Weekly Charts - Here Comes April
Gold Daily And Silver Weekly Charts - Here Comes April
The Real Reason the U.S. Dollar Has Value
People Have No Idea A Terrifying Global Meltdown Is Coming
Study Will Show That Gold Is Being Manipulated on the Comex
Gold as a Currency in Your Portfolio
Gold as a Currency in Your Portfolio
Gold Mid-Tier Stocks Set for Growth
Man Who Made Legendary Call In Silver Tells KWN What’s Next
Jim Rickards: Study Will Show That Gold Is Being Manipulated on the Comex (Again)
Jim Rickards: Study Will Show That Gold Is Being Manipulated on the Comex (Again)
Is Putin Quietly Dumping Russia’s US Treasuries?
Gold, Debt and Gold Reserves
The Accidental End to Silver Price Manipulation
Gold Bullion Drops for 2nd Week After Near-Record Run, Shanghai Discount "Says China Demand Slowing"
Golden Opportunity Coming in Silver
Silver, Buffett & the Hunt Brothers
Max Keiser: The Dollar is Done!
3 Pieces to China’s Gold Puzzle
Silver, Buffett & the Hunt Brothers
Silver, Buffett & the Hunt Brothers
Silver, Buffett & the Hunt Brothers
Market Needs a Hero
Market Needs a Hero
China's New Electricity Grid
China's New Electricity Grid
Silver Prices Heading Lower As the Bears Tighten Their Grip
Stocks and Gold Simply Cannot Get it Up!
JPMorgan defeats appeal in U.S. silver price-fixing lawsuit

The US Atlantic Coastline Goes On High Alert To Cover Up The Economic Collapse

Posted: 29 Mar 2014 12:04 AM PDT

Cyprus has voted to remove the capital controls for the people of Cyprus. The Greek government has voted confiscation of deposits are unconstitutional. Countries are worried about the economy and are now buying more gold. Obama is considering sending advanced weapons to Syria to help the paid...

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Gerald Celente : A Front Row Seat to Economic Hell

Posted: 28 Mar 2014 11:03 PM PDT

David Knight and financial trend analyst Gerald Celente finish the Friday broadcast covering the Japanese rush on physical gold, banker suicides across the world and why the banking system is aging that there is nothing to the bankers deaths.

[[ 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! ]]

Ferguson: We’re Past the Point of NO RETURN — Inflationary Collapse Ahead

Posted: 28 Mar 2014 09:00 PM PDT

from FinanceAndLiberty.com:

Alasdair McLeod – The US Blew It In The Ukraine

Posted: 28 Mar 2014 08:00 PM PDT

from FinancialSurvivalNetwork.com:

We connected with our old friend Alasdair McLeod of GoldMoney. As he sees it, the US has blown it big time in the Ukraine. Putin is nothing, if not a smart intelligence operative. He knows a CIA operation when he sees one. Now the chickens are coming home to roost for the dollar and they're not going to be pretty. On to China, a big crash is coming there, and the results are going to be felt around the world. Eventually, it's all going to be good for gold and precious metals.

Click Here to Listen

Doug Casey & Chris Waltzek

Posted: 28 Mar 2014 07:20 PM PDT

from GoldSeekRadiodotcom:

Amid a gold share revival, the head of Casey Research says that select PMs companies will provide investors with 100 to 1000 fold returns (a $10 investment grows to $1 million). When asked if inflation or deflation will reign supreme, his answer is yes, either way financial chaos will ensue as the great recession of 2008-2009 resumes with gusto. Forget the ETFs as a safe haven, he doesn’t trust them one iota. With less than one ounce of gold available for each global inhabitant, investors must own physical gold at home and abroad, via services such as GoldMoney.com.

Click Here to Listen

Gold market manipulation update, March 2014

Posted: 28 Mar 2014 07:00 PM PDT

by Chris Powell, GATA:

Dear Friend of GATA and Gold:

For 15 years the Gold Anti-Trust Action Committee has been documenting and publicizing the largely surreptitious manipulation of the gold market by Western central banks, a longstanding policy of gold price suppression aimed at controlling the currency markets and interest rates. While GATA is a research, educational, and civil rights organization, those who object to examination of our topic call us a “conspiracy theory” organization.

There is much conspiracy here, but it is easily ascertainable as fact rather than mere theory, conspiracy occurring whenever people gather in secret to plan or implement some undertaking or policy. Meeting in secret to plan or implement policy is, of course, the very definition of modern central banking.

After all, when is the last time you were invited to a meeting of the G-10 Committee on Gold and Foreign Exchange or were even told that such a committee exists and meets secretly? When is the last time you were allowed to learn the results of the committee’s work without having to bring a lawsuit against the participants, as GATA did a few years ago?

Read More @ Gata.com

Preparing for Economic Instability: Six Ways to Ready Yourself For the Inevitable

Posted: 28 Mar 2014 06:40 PM PDT

by Tess Pennington, Ready Nutrition:

For several years now, many economic forecasters and trenders have warned the general public of a looming economic collapse – all we needed was a catalyst as a kick start. It seems that this year's active winter season coupled with the west coast's extreme droughts could be the straw that will break the camel's back.

According to www.zerohedge.com, 2014 food prices are up 19%. In fact, "U.S. foodstuffs is the best performing asset this year." Due to the crippling drought that swept the west coast, a significant amount of our food supply could not be grown. Consequently, our food prices are increasing because of the demand for food. The more events that cause instability in our economy, the harder it will be for households to provide for themselves.

Start Insulating Yourself from an Unstable Economy

Those who have taken steps to insulate themselves from the instability of the markets have made prudent choices to invest in their future through lucrative investments. Dry goods, precious metals, land and skills are some of the hard assets that many economist such as Gerald Celente and Marc Faber stress.

Read More @ readynutrition.com

Economic Inequality In The USA (In One Comprehensive Chart)

Posted: 28 Mar 2014 03:59 PM PDT

Inequality – long ignored – is now centre stage in debate about economic policy around the globe. As Tony Atkinson and Salvatore Morelli note, the 2007-2008 collapse of the global financial system and the subsequent economic downturn/debt crises have acted as a catalyst for growing anxiety around the increasing dispersion of incomes within most advanced economies. In an effort to show that "we are not 'all in it together'", the two professors have created The Chartbook of Income Inequality.

As the chart below shows, the acute loss of job prospects, especially among the young, the credit crunch and the austerity measures implemented by governments to contain the sovereign debt crisis have all put extra burden on the shoulders of the lower and middle classes.

Income Inequality In The US...

Summed up

And the huge interactive version...

The Gold Price Reached $1,286.10, 50 Percent Correction Target

Posted: 28 Mar 2014 03:05 PM PDT

Gold Price Close Today : 1,293.80
Gold Price Close 21-Mar-14 : 1,336.00
Change : -42.20 or -3.2%

Silver Price Close Today : 19.772
Silver Price Close 21-Mar-14 : 20.286
Change : -0.514 or -2.5%

Gold Silver Ratio Today : 65.436
Gold Silver Ratio 21-Mar-14 : 65.858
Change : -0.422 or -0.6%

Silver Gold Ratio : 0.01528
Silver Gold Ratio 21-Mar-14 : 0.01518
Change : 0.00010 or 0.6%

Dow in Gold Dollars : $ 260.80
Dow in Gold Dollars 21-Mar-14 : $ 252.25
Change : 8.55 or 3.4%

Dow in Gold Ounces : 12.616
Dow in Gold Ounces 21-Mar-14 : 12.203
Change : 0.41 or 3.4%

Dow in Silver Ounces : 825.56
Dow in Silver Ounces 21-Mar-14 : 803.65
Change : 21.92 or 2.7%

Dow Industrial : 16,323.06
Dow Industrial 21-Mar-14 : 16,302.77
Change : 20.29 or 0.1%

S&P 500 : 1,857.32
S&P 500 21-Mar-14 : 1,866.72
Change : -9.40 or -0.5%

US Dollar Index : 80.330
US Dollar Index 21-Mar-14 : 80.250
Change : 0.08 or 0.1%

Platinum Price Close Today : 1,404.70
Platinum Price Close 21-Mar-14 : 1,435.50
Change : -30.80 or -2.1%

Palladium Price Close Today : 774.10
Palladium Price Close 21-Mar-14 : 788.75
Change : -14.65 or -1.9%

Silver and GOLD PRICES argued with each other today. Gold lost 90 cents to $1,293.80 on Comex. Silver rose 8.2 cents to 1977.2 cents. Ratio fell to 65.436 from yesterday's 65.754.

Both metals are riding their bottom Bollinger Bands, which increases likelihood of a turnaround. The GOLD PRICE today reached $1,286.10, my target for this move and a 50% correction. The SILVER PRICE hit 1958c yesterday and 1962c today, close enough to call my 1950c target met. After Monday both should turn up and leave y'all scratching your heads and twisting your necks around 180 degrees for that perfect hindsight and saying to yourselves, "I KNEW I should have bought some last week."

Bad week for metals, middlin' mediocre week for stocks, might have been a good week for the US dollar.

Stocks have been treading water this week, up and down in the same spot, over and under the 20 DMA without being above to make up their mind. S&P500 broke the bottom boundary of an even-sided triangle yesterday, but that breakdown proved false when it reversed today and closed up within the triangle.

Dow added 58.83 (0.36%) to close 16,323.06. S&P500 rose 8.58 (0.46%) to 1,857.62.

Dow in metals has that feeling of a fly ball reaching the height of its arc. Dow in Gold rose 0.13% to 12.61 oz ($260.67 gold dollars) but leveled off. I am anticipating a turn, since it stands above its 50 DMA (12.36) which means momentum is up. Dow in silver dipped barely down, down 0.09% to 824.81 oz (S$1,066.42 silver dollars. I may be no better than that ox on his way to slaughter who don't know enough to be afraid, but for some reason these rallying Dow in metals don't disturb me. I expected a sharp rally after that long fall, but don't expect this will last much longer.

Nasty, filthy, noxious, vile, beastly, foul, loathsome, lousy, mephitic, noisome, odious, scrofulous, scurvy, parasitic -- yea, all these describe fiat dollars, yen, and euros. And I'm just warming up my thesaurus here.

US Dollar index is glacially trying to rise. It did manage to stand up off the floor this week, and rose six basis points (0.07%) to 80.33 today. Technically it's trending up, but without any enthusiasm.

Euro broke down sure enough this week. Bounced 0.08% today to $1.3753, but it's plumb broken. Next week should cross below its bunched 20, 50, and 62 day moving averages.

Yen busted its 50 DMA today, falling to 97.27 cents/y100. Still range-bound, trending sideways.

Y'all enjoy your weekend!

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

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

WARNING AND DISCLAIMER. Be advised and warned:

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

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

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

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

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

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

The Gold Price Reached $1,286.10, 50 Percent Correction Target

Posted: 28 Mar 2014 03:05 PM PDT

Gold Daily And Silver Weekly Charts - Here Comes April

Posted: 28 Mar 2014 01:24 PM PDT

Gold Daily And Silver Weekly Charts - Here Comes April

Posted: 28 Mar 2014 01:24 PM PDT

The Real Reason the U.S. Dollar Has Value

Posted: 28 Mar 2014 12:48 PM PDT

I was at a conference when I took out a dollar bill and waved it in front of the audience. I asked, "Why does this piece of paper have value?" It's interesting the range of answers I got.

One person said "gold," which has nothing to do with it. There was a time when you could demand a fixed weight in gold in exchange for a dollar, but those days are gone. Another said, "You can buy things with it" — an answer that only begs the question why that it so. "Faith," said yet a third. Not quite.

The answer is one that (some) economists have known about for a long time. I'll tell you about it below along with three other counterintuitive and seemingly bizarre conclusions about the twisted world of modern money. I don't think you would draw it up this way if you had the chance — but it's the way the system works.

Government debt… is a form of savings for the private sector.

Tax liabilities give otherwise worthless paper value. The U.S. dollar has value because the government levies $3 trillion in tax liabilities annually and accepts only U.S. dollars in payment — which only it issues. And there is the credible threat of penalties if you don't settle up with dollars. In so doing, the government turns all of us into dollar chasers. It's how a state, any state, can turn worthless pieces of paper into valued currency.

"The modern state can make anything it chooses generally acceptable as money," economist Abba Lerner wrote in 1947. "If the state is willing to accept the proposed money in the payment of taxes and other obligations to itself, the trick is done." Brilliantly devious, isn't it?

A dollar is, essentially, a tax credit. Economists call this the tax-driven view of money, and it is at least as old as Adam Smith. It is also one of the core principles of Modern Monetary Theory, or MMT. (This is a macroeconomic school of thought that has taken the deep dive into the plumbing of how modern money works.)

The principles of MMT have a certain forceful logic. And they can lead to some shocking and uncomfortable conclusions…

One example is that government deficits increase financial savings. It sounds outrageous. How can government deficits increase savings? Well, how else is the nongovernment sector supposed to get dollars? The only way is for the government to spend more than it collects — thereby leaving money in the economy.

Or think of it this way, as economist Warren Mosler puts it: "When the government spends, only two things can happen to that money… the money can be used to pay taxes, or it isn't used to pay taxes. In which case, somebody out there still has it." So deficit spending equals financial savings at the macro level.

Government debt, then, is a form of savings for the private sector. Everywhere there is a Treasury security there is someone who owns it. For that holder, it is a part of his financial wealth, or savings.

But aren't government deficits and debt too large? They can be too large, which then causes the dollar to lose value. However, in a fiat currency system, it is natural for the government to be in deficit, because the private sector usually wants to save something.

In fact, there is a good argument that any attempt to balance the budget is futile. It will simply lead people to cut spending in an effort to get back to a desired savings level. This also has the effect of contracting the economy and driving tax receipts lower, thereby putting the government back into deficit.

The trouble with budget surpluses is they take money out of the economy. That puts pressure on private-sector balance sheets. It may not be so surprising to learn, then, that economic depressions have followed every major surplus in U.S. history.

Another conclusion is that Government doesn't need taxes and bond sales to finance spending. Most people think that the government collects taxes and sells bonds to finance its spending. But remember, the government issues dollars. It can't run out. This sounds scary, but it's the naked truth of a fiat currency system. The U.S. government faces zero solvency risk. It can always meet all of its bills.

Of course, there are consequences when government spends. If it spends "too much" relative to what dollars can buy and the desire to save, then the dollar can lose value. (Which is what's happened over the last century. I see no reason why this trend will end.) But the government clearly doesn't need to borrow or collect something it issues in order to spend. That's the point.

Further, think about it from the beginning: What must a government do before it collects its own money in taxes? It has to spend the money first. That's how people get the dollars to meet the tax. So logically, spending precedes tax collection.

There is a classic paper by Stephanie Bell (now Kelton) that demonstrates that "proceeds from taxation and bond sales are technically incapable of financing government spending" and that governments actually finance their spending by creating money directly. (See "Can Taxes and Bonds Finance Government Spending?"). It's a bit technical, but I believe it is correct and I mention it here in case you want to hunt it down. It's free online.

There is another key insight that follows from this.

The U.S. government never borrows from the Chinese to "finance" its budget deficit.

The U.S. government is not at the mercy of foreign creditors. You've surely heard that the U.S. is in debt to China, because China holds some large amount of U.S. Treasury debt. Politicians even used this rhetoric around election time, saying how we are borrowing from the thrifty Chinese to pay for our lavish lifestyle.

It's not true. And in fact, it can't be true. Let me cite economist L. Randall Wray, who put it in no uncertain terms:

Those who claim that the U.S. government must borrow dollars from thrifty Chinese don't understand basic accounting. The Chinese do not issue dollars — the United States does. Every dollar the Chinese "lend" to the United States came from the United States…. The U.S. government never borrows from the Chinese to "finance" its budget deficit.

Again, think through how the Chinese got the dollars. They sold stuff to Americans. Presumably, they did this because they wanted to acquire dollars. That can change, and the foreign exchange value of the dollar will change, too, to reflect the desire of foreigners to hold dollars. But the point I want to make is simply that the U.S. issues dollars; China and other foreign governments do not. Therefore, the U.S. doesn't rely on foreign creditors to finance its spending.

As I told you, the world of modern money is a seemingly bizarre world, but it does have its own logic and principles. I've only touched on a few of the most surprising conclusions here. (I would humbly suggest that the best introductory guide to this monetary maze is Wray's Modern Money Theory: A Primer on Macroeconomics for Sovereign Money Systems.)

At least you have a good answer why the U.S. dollar has value — albeit, a value that bleeds out over time. It's a currency, not an investment vehicle.

Regards,

Chris Mayer
for The Daily Reckoning

Ed. Note: As it stands, the US dollar is still incredibly valuable within global financial system. But eventually, that value will drop to zero. It might be 10, 100 or 1,000 years from now. But eventually, the dollar’s dominance will come to an end. Sign up for the FREE Daily Reckoning email edition, right here, to learn how to combat any future decline in the almighty dollar… and what to do in the meantime.

People Have No Idea A Terrifying Global Meltdown Is Coming

Posted: 28 Mar 2014 12:33 PM PDT

Today Egon von Greyerz told King World News that unsuspecting people around the world have no idea that a terrifying global meltdown is coming, because if they did, there would be panic like we are seeing right now in Japan. Below is what Egon von Greyerz, who is founder of Matterhorn Asset Management out of Switzerland, had to say in this extraordinary interview.

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

Study Will Show That Gold Is Being Manipulated on the Comex

Posted: 28 Mar 2014 09:48 AM PDT

"If I were running the manipulation I would be embarrassed at this point, it is so blatant...The regulators have been asleep at the switch." Jim Rickards As an aside, and in case you wondered, I do not take Rickards at face value. I sift what he says, carefully. And that is enough said about that, except that it is good advice in general especially when it comes to money and investments.

Gold as a Currency in Your Portfolio

Posted: 28 Mar 2014 09:45 AM PDT

Director of Investment Research for World Gold Council speaks on gold as currency...

JUAN-CARLOS ARTIGAS manages the Global Investment Research team at the World Gold Council, the global authority on gold-related research.

Providing oversight of research initiatives related to investor portfolios, he is a regular presenter at industry conferences and is a sought-after speaker for institutional and private investors who seek his expertise on the strategic case for gold.

Speaking with me this week in my regular podcast interview, Juan-Carlos and I discussed:

Where does gold fit in the investment portfolio – its purpose and allocation?
Should gold be considered as a currency or commodity?
How big is the gold market – what is the importance of liquidity?

Looking at the size and liquidity of the gold market, "Understanding gold as a currency is easier," said Juan Carlos Artigas.

Discover Business Internet Radio with New York Markets Live on BlogTalkRadio

"It makes more sense in portfolios when you consider it a currency. We do think that gold stands completely apart from commodities. The gold market is extremely liquid. According to the London Bullion Market Association, gold trades $240 billion a day. To put it in perspective, all of the Dow Jones combined trades at $20 billion a day. Gold trades more than 10 x the Dow in a day. It is not officially a currency but it is treated as such in many cases."

Going on, Juan Carlos Artigas of the World Gold Council said that "We don't look at gold in isolation, rather we look at the benefits that gold brings to all investments, stocks, bonds, real estate or other alternatives. We have found through our research that holding 2-10% of gold in a portfolio reduces volatility and losses in times of systemic failure of equity and fixed income markets.

"We found that investors holding gold in times of systemic losses alone reduced losses 7.5%..."

Gold as a Currency in Your Portfolio

Posted: 28 Mar 2014 09:45 AM PDT

Director of Investment Research for World Gold Council speaks on gold as currency...

JUAN-CARLOS ARTIGAS manages the Global Investment Research team at the World Gold Council, the global authority on gold-related research.

Speaking with me this week in my regular podcast interview, Juan-Carlos and I discussed:

Where does gold fit in the investment portfolio – its purpose and allocation?
Should gold be considered as a currency or commodity?
How big is the gold market – what is the importance of liquidity?

Looking at the size and liquidity of the gold market, "Understanding gold as a currency is easier," said Juan Carlos Artigas.

Discover Business Internet Radio with New York Markets Live on BlogTalkRadio

"We found that investors holding gold in times of systemic losses alone reduced losses 7.5%..."

Gold Mid-Tier Stocks Set for Growth

Posted: 28 Mar 2014 09:31 AM PDT

In 2014 B2Gold is targeting gold production of 410k ounces from three different mines. This would be record output for this new mid-tier, a whopping 159% increase in volume over just a couple years ago. And with its fourth mine on schedule to pour its first gold in Q4, B2Gold is looking at an annual production rate of 550k+ ounces by this time next year.

Man Who Made Legendary Call In Silver Tells KWN What’s Next

Posted: 28 Mar 2014 09:17 AM PDT

Two days ago KWN published a piece titled One Of The Greatest Market Calls In History Happened In Silver. This piece received a great deal of attention from readers around the world because it featured the astonishing market calls made by the CEO of Hinde Capital, Ben Davies, in the silver market. The first call was for an upside explosion in the price of silver in August of 2010. The price of silver then soared $32 in a matter of months.

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

Jim Rickards: Study Will Show That Gold Is Being Manipulated on the Comex (Again)

Posted: 28 Mar 2014 09:09 AM PDT

Jim Rickards: Study Will Show That Gold Is Being Manipulated on the Comex (Again)

Posted: 28 Mar 2014 09:09 AM PDT

Is Putin Quietly Dumping Russia’s US Treasuries?

Posted: 28 Mar 2014 08:20 AM PDT

Dear Reader,

Because this edition of The Room is bursting at its digital seams, I’ll quickly introduce my three coauthors, then step out of the way.

First up is Doug French with a brief history of how Putin has been outmaneuvering the US for longer than you think.

Then, Kevin Brekke does some impressive sleuthing to figure out which country just dumped over $100 billion in US debt in one week. Might it be Putin’s doing?

And last but not least, I’m happy to announce that Gerald Simmons of California is the winner of the Casey Research Storytelling Contest. You’ll find his winning story—a fine piece of short fiction—below.

And don’t forget to check out the Friday Funnies.

Let’s get to it…

Putin and Obama Play Chess

Doug French, Contributing Editor

President Obama may have just turned the G8 into the G7 and dismissed Russia as a “regional power,” but this is no Bobby Fischer vs. Boris Spassky. In this geopolitical chess match, the Russian is outmaneuvering the American at every turn.

Putin’s antics are nothing new—he’s been quietly undermining the US for over a decade. Let’s examine some of his more successful gambits from the past, and see what they can tell us about the present.

Dropping Financial Bombs

In 1998, Russia defaulted on $40 billion of domestic debt, forcing the Federal Reserve to engineer a bailout of hedge fund Long Term Capital Management.

Three years later, Putin used the distraction of the Olympics to invade US ally Georgia. While the world was focused on the Beijing games, the Russian leader told George W. Bush, “War has started.”

But the Georgia invasion was nothing compared to the bomb Russia was dropping on US markets. Treasury Secretary Hank Paulson was in Beijing for a family trip to see the games, but he worried about Fannie and Freddie the whole time, as he was told the Russians had approached the Chinese to work together to dump their Fannie Mae and Freddie Mac shares.

In his book On the Brink, Paulson wrote the motivation was “to force the US to use its emergency authorities to prop up these companies.” He went on, “The report was deeply troubling—heavy selling could create a sudden loss of confidence in the GSEs and shake the capital markets. I waited till I was back home and in a secure environment to inform the president.”

Of course, Putin spokesman Dmitry Peskov denied the bear raid conspiracy. To this day, the former Treasury secretary claims the two countries never carried out the plan. However, Russia did unload all $65.6 billion of its Fannie and Freddie debt that year.

As for the Chinese, Aaron Back reported for the Wall Street Journal in 2011, “China’s selloff of Fannie and Freddie securities in 2008 was widely credited with pushing up mortgage rates in the US at a time Washington was struggling to revive housing sales.”

He cited US Treasury data, writing, “China has been steadily selling its holdings of agency securities since mid-2008. It sold a net $24.67 billion worth of agency securities in 2009, and $27.35 billion in the first 11 months of 2010, according to the data.”

In the end, less than a month after Paulson was given that information in Beijing, the US government took over Fannie and Freddie and placed them into conservatorship.

Putin the Loan Shark

How many of the world’s leaders would have the foresight to structure a loan as a private-sector eurobond? One sovereign-debt expert called the structure of Russia’s $3 billion loan to Ukraine “clever.”

Here’s why: instead of handing aid money directly to Ukraine, Russia had the Ukrainian government float $3 billion in bonds denominated in euros. Russia then bought the bonds. But that’s not all—the Russians had a provision written into the bond that if the Ukraine’s debt-to-GDP level reached 60%, Russia could call the bonds for immediate payment.

Such a qualification in government bonds is very unusual. Mitu Gulati, a sovereign-bond expert, says he has never seen a government bond with a similar debt-to-GDP provision. Most sovereign debt is ‘covenant-lite.’”

Today, Ukraine has eurobonds outstanding to several countries, so stiffing only Russia isn’t an option, because it would hurt the price of all their debt. America’s beltway pundits agitating for a large aid package to Ukraine should realize that Putin’s foresight ensures that any US aid money will find its way to Moscow.

More Smart Than Lucky

After being out of office four years, Putin took over again in 2012. A year later, the Russian president didn’t just say the US was endangering the global economy with its dollar monopoly—he put Russia’s money where his mouth was. Putin made sure the world’s largest oil producer would become the biggest gold buyer as well, adding 570 tonnes in the last ten years, much of it on his watch.

“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound, or any other reserve currency,” Evgeny Fedorov, a lawmaker for Putin’s United Russia, said in a telephone interview with Bloomberg.

Putin had his central bank start loading up on the yellow metal when the price was just $495 an ounce. This makes him either smarter or luckier than, say, former UK finance minister Gordon Brown, who sold 400 tonnes of the metal when gold traded under $300.

It’s safe to say Putin is smarter than your average politician. For instance, Saudi Arabia’s influential intelligence chief, Prince Bandar bin Sultan, met with Putin last year and offered to buy $15 billion worth of arms from Russia in return for Putin abandoning his support of Syria. Bandar even assured Putin that the Saudis would never sign an agreement allowing a gulf state to ship gas through Syria.

Putin just laughed. He knows a pipeline through Syria would mean Russia’s Gazprom would lose its European gas business to Qatar.

Zero Hedge pointed out last August, “What is shocking in all of this is that Saudi Arabia was so stupid and/or naïve to believe that Putin would voluntarily cede geopolitical control over the insolvent Eurozone, where he has more influence, according to some, than even the ECB or Bernanke. Especially in the winter.”

Saudi promises or not, Putin’s no dummy. Europe obtains 30% of its natural gas from Russia and half of that runs through Ukrainian pipelines. Putin’s energy stranglehold is strongest in Eastern Europe, where several individual countries are at Russia’s mercy: Slovakia relies on Russia for 93% of its gas; Poland (83%), Hungary (81%), the Czech Republic (66%), and Austria (61%) are captive customers of Russia, too.

Ukraine’s prime minister, Arse Yatsenyuk, says Russia could use energy as a “new nuclear weapon.” As it is, Ukraine is $1.89 billion behind in payments to Russian company Gazprom for gas.

Shunned by the West, Putin Looks East

Putin has been a laughingstock in the West for spending a reported $60 billion on the Sochi winter games. But while the world was focusing on curling and ice dancing, he was amassing troops at the Crimea border and managed to engineer a bloodless annexation before the Paralympics were over.

In response, the most powerful country in the world sanctioned a few Russian individuals and a mid-size bank Putin does business with. This toothless action gave Putin another laugh, and he responded by imposing some sanctions of his own on John Boehner, Harry Reid, and others, as well as 13 Canadians.

While Obama and Angela Merkel make nasty noises in Russia’s direction, Reuters reports, “The Holy Grail for Moscow is a natural gas supply deal with China that is apparently now close after years of negotiations. If it can be signed when Putin visits China in May, he will be able to hold it up to show that global power has shifted eastwards and he does not need the West.”

“The worse Russia’s relations are with the West, the closer Russia will want to be to China. If China supports you, no one can say you’re isolated,” said Vasily Kashin, a China expert at the Analysis of Strategies and Technologies (CAST) think tank.

Russia is also looking to redirect the flow of its oil. “Russia is trying to diversify its energy flows away from its core European markets,” according to Reuters, “with Rosneft leading the race with plans to triple oil flows to China to over 1 million barrels per day in coming years.”

Rosneft is the top oil producer in the world and is run by Putin ally Igor Sechin. Sechin wrapped up a recent Asian trip by meeting with the folks at India’s state-run Oil and Natural Gas Corp ONGC, Reliance Industries, an Indian conglomerate, and India’s biggest refiner Indian Oil Corporation. China and India’s combined population is over 2.5 billion. That’s a lot of potential customers.

Experience Matters

Vladimir Putin worked as a KGB officer stationed in East Germany from 1975 to 1989. While the future Russian president worked the front lines of the Cold War, the future US president was going to high school in Hawaii, followed by college in Los Angeles and New York, before heading to Chicago to become a community organizer.

When Putin was instructing his central bank to buy gold, Barack Obama was learning to navigate Capitol Hill as a freshly minted US senator. Obama was on the presidential campaign trail spouting empty campaign slogans when Russia orchestrated the meltdown of Fannie and Freddie.

Today, Obama is waging multiple wars around the globe while gumming up the US economy with increased regulation and the highest corporate taxes in the world. Putin? He’s busy selling oil and gas and buying gold. It doesn’t seem like a fair fight.

Besides having gold, oil, natural gas, palladium, and any number of other critical natural assets, Russia has improved its government’s finances manyfold while the United States has been borrowing its way to insolvency. Russia’s current debt-to-GDP ratio is 8.4%, after being a reported 57% when it defaulted on its debt. Uncle Sam is going in the opposite direction. US debt to GDP was 60% when Russia defaulted in 1998—now it is over 100%.

The bottom line is that Russia is anything but “regional.” Obama should realize Putin’s ground troops are the least of America’s worries. The Russian president’s financial moves are what affect us all. And he’s running circles around Obama in the places it counts—from forging relationships with China and India to his accumulation of gold.

You’re probably wondering how to make money while Putin schools the teleprompter-in-chief. Casey Research Chief Economist Bud Conrad penned an excellent piece on Ukraine and Putin in last week’s Dispatch, and it was just an appetizer for his in-depth report coming in the April Casey Report.

Click here to take The Casey Report for a risk-free spin, and to get Bud’s upcoming in-depth analysis hot off the digital press.

A Few Bumps on the Way to the Dump

Kevin Brekke, Managing Editor

“Fed-watching.” With the emergence of hyper-interventionist US Federal Reserve monetary policy, keeping watch over the Fed’s every move has become a spectator sport within much of the financial community. The vast data universe of statistics published by the Fed is now monitored with near Sherlock Holmes-like scrutiny.

The Fed’s menagerie of asset purchases and bond buying programs has launched its balance sheet on a moon shot. By now, most of us are familiar with the story, but to save a thousand words, here’s the picture:

In December 2002, the Fed’s holdings totaled US$719 billion. By March 2014, they have grown to US$4.18 trillion. That’s an increase of 480%, the bulk of which has occurred since 2008. The value of the Fed’s assets now exceeds the annual budget of the US federal government.

As the balance sheet has continued to balloon, so has unease about how the Fed will eventually unwind and exit its holdings.

Even Ben Bernanke expressed concern. “As the balance sheet of the Federal Reserve gets large, managing that balance sheet, exiting from that balance sheet become more difficult,” he said at a Washington press conference last December.

Treasury Ownership: Who’s Buying and Selling

Aside from the size and fate of the assets on the Fed’s balance sheet, unease also grows about another issue: who will continue to buy all that government paper?

The central cog in the series of quantitative easing machinery is the outright purchase of bonds by the Federal Reserve. The purchases were made with the intent to drive down, and keep down, interest rates. That, in turn, meant rates on US Treasury bonds would be suppressed and lower the finance cost of US borrowing.

Seemed fine and dandy.

But someone has to buy the US debt, and a large slice of debt is held by foreign investors. More to the point, trillions of dollars of US debt is in the hands of foreign governments.

The US’s reliance on the kindness of strangers to finance its deficits has alarmed Fed watchers for years. If foreign buyers begin to buy less US debt—commonly referred to as the “dumping” of US debt—that could drive up yields on Treasury paper and seriously impact the US budget and the government’s ability to finance chronic deficit spending. So, investors pay particular attention to the Federal Reserve’s custody holdings.

The Federal Reserve summarizes its balance sheet in weekly Statistical Release H.4.1. Within the release is a line item labeled “Marketable US Treasury securities held in custody for foreign official and international accounts.” These are basically US Treasury securities held at the Fed on behalf of foreign central banks.

The Statistical Release for the week ending March 12, 2014 sent Fed watchers into speculation overdrive. The release showed that custody holdings fell US$104.5 billion from the prior week. This was the largest weekly decline on record by a wide margin:

Speculation is that Russia sold, or “dumped,” billions of dollars in Treasury holdings in response to the sanctions imposed by Western governments over Russian actions in Crimea.

Although the wholesale dumping of US debt is possible, it does not look likely on this scale. For one thing, the repatriation of billions of US dollars would require the Central Bank of Russia (CBR) to enter the foreign exchange markets and buy rubles. Not much point for Russia to sell its US bonds, then keep the proceeds in US dollars.

The CBR releases its foreign exchange activity with only a two-day lag. For the week prior to the Fed’s Statistical Release that revealed the big drop in foreign holdings, the CBR only bought US$11.1 billion of rubles. That doesn’t even come close to smoking-gun type of evidence.

We’ll Gladly Pay You Tuesday for Custodial Services Today

Another line of inquiry leads us to the Treasury International Capital (TIC) statistics. Here, too, like the custody holdings stats from the Fed, we can find data on foreign holders of US Treasury securities. The bonus is that the TIC data is further sorted into Treasury holdings by country. The downside is that TIC data is published with a six-week lag.

Nevertheless, the TIC data are instructive. And by that, I mean they will reveal the hazards in an attempt to use either the Fed’s custody holdings or TIC data to draw conclusions about who’s dumping or accumulating US debt. Let’s take a look.

The latest TIC data is for the period that ends January 2014. Of particular interest is that it shows a US$30.7 billion month-on-month rise in foreign holdings of Treasury securities from December 2013 to January 2014. In contrast, the Fed’s custody holdings data show a fall of US34.5 billion over the same time frame.

That is a not-so-insignificant discrepancy of US$65.2 billion that roughly equals the total Treasury holdings of Germany. There are two simple explanations for this.

The first is that the two data sets use different criteria to calculate the holdings. The Treasury website explains the difference quite well, and you can explore the details here. The express version is summed up nicely in this excerpt under Questions on foreign holdings of US Treasury Securities and Foreign Official holdings:

“Differences in coverage: The most important reason for differences between holdings reported in the TIC and the FRBNY custody accounts is that reporting coverage differs. First, not all foreign official holdings of Treasury securities as reported by the TIC system are held at FRBNY. In particular, Treasury securities held by private custodians on behalf of foreign official institutions are included in the TIC but not in the FRBNY figures. In this sense, the coverage of the TIC system is broader than that of the FRBNY custody holdings. Second, the custody holdings at FRBNY include securities held for some international organizations as well as for foreign official institutions. In this sense, the coverage of the FRBNY custody holdings is broader than the foreign official designation in the TIC system.”

The Putin Punt

The second and most probable cause of a discrepancy is the nature of the custody system. Both the TIC and Fed custody holdings only measure Treasuries held in US custody.

A foreign government can opt to hold its US Treasury securities with the central bank of a foreign government other than the US. An arrangement like this can mean that the foreign holding may not appear on either the TIC or Fed custody holdings.

Further, a foreign government can acquire Treasury securities from a private foreign entity where the transaction occurs on a foreign securities exchange, and the security is held outside the US. Here again, the foreign holding may not appear in US data, or it could appear as a holding by the custodial government. Either way, it skews or corrupts the US data.

The first example is what might have happened with any presumed Russia “selling.” Russia could have moved its Treasury holdings out of the US and into foreign custody. This would account for the large drop in the March US data. And there is evidence that suggests where the securities may have gone.

Belgium is a small country. Its GDP and foreign-currency reserves are about US$420 billion and US$29 billion, respectively. Yet, its Treasury holdings are reported at US$310 billion as of January 2014—and the size of its holdings has nearly doubled since August 2013. That positions it as the world’s third-largest holder of US debt, right behind China and Japan. This lopsided Treasury-holdings-to-GDP ratio strongly suggests that Belgium is in the custodial business.

Again, this is a “may have” scenario. But what we do know for sure is that wherever the Russian securities may be, Russia had ample incentive to move its stash out of the US.

Coincidentally, the US Department of the Treasury also houses the Office of Foreign Assets Control that administers the

Gold, Debt and Gold Reserves

Posted: 28 Mar 2014 08:04 AM PDT

SafeHaven

The Accidental End to Silver Price Manipulation

Posted: 28 Mar 2014 07:15 AM PDT

It should be clear now to most precious metals observers that gold and silver price manipulation is just as common to the metals as it is to every other asset class. And equally evident should be the realization that resolution will not come from organized efforts. Be it regulation or legal class action, market forces will more than likely assert themselves. With silver (and gold to less of a degree), it's strictly "look the other way" from a regulatory stand point. The greater market and public don’t seem to care, and are not at all aware that they should.

Gold Bullion Drops for 2nd Week After Near-Record Run, Shanghai Discount "Says China Demand Slowing"

Posted: 28 Mar 2014 07:15 AM PDT

GOLD BULLION prices bounced from new 6-week lows beneath $1290 per ounce Friday lunchtime in London, heading for a second weekly drop after rising 6 weeks running – a feat seen only 65 times since 1968.

The Dollar price of gold has beaten that stretch of week-on-week gains only 10 times in the last 46 years.

US Treasury bonds also fell for a second week Friday, nearing as did gold bullion the first monthly loss of 2014.

World stock markets ticked higher together with crude oil and copper prices.

A near-record UK current account deficit for end-2013 failed to dent the British Pound on the currency markets, helping the Sterling price of gold bullion drop to last June's crash low of £774 per ounce.

Silver prices meantime whipped around $19.80 per ounce, losing some 2.5% for the week.

"We may be looking at extended consolidation above $1274" in gold bullion, Reuters quotes Phillip Futures analyst Joyce Liu.

Calling it "a key technical level that offered strong resistance when prices were on the ascent in January," that $1274 level "may prove strong support now as prices decline" Liu says.

But the gap between London and Shanghai gold prices – "an important indicator" according to ANZ analyst Victor Thianpiriya of demand in China, the world's heaviest consumer market – held at a discount for the fourth day running.

Closing $4.50 per ounce below the international benchmark of London settlement, spot prices on the Shanghai Gold Exchange "suggest that the demand in China is slowing," says Thianpiriya, "and we have certainly see that through our physical volumes as well.''

New data meantime showed fresh deflationary pressures across the 18-nation Eurozone, with import prices to Germany falling in February and consumer inflation turning negative in Spain this month

But consumer confidence on the European Central Bank's survey has jumped to its strongest level since mid-2011, separate data showed Friday, "strengthen[ing] the hands of the hawks," reckons ING Bank analyst Martin van Vliet, ahead of next week's ECB policy vote.

US central bank policymaker Charles Evans of the Chicago Fed said in a speech in Hong Kong Friday that low inflation and high unemployment should delay any Dollar rate-rise until mid-2015

But St.Louis Fed president James Bullard calls for rates as high as 4.25% by end-2016 speaking to Reuters.

"You have to keep in mind I tend to be a more optimistic member of the committee," Bullard told Reuters Insider TV.

Meantime in Ankara, the government of Turkey – the world's 4th heaviest gold bullion buying nation – called yesterday's leak of video showing senior officials discussing possible military action in neighboring Syria "villainous" and a "declaration of war" by opposition politicians, and added YouTube to its block on Twitter.

Golden Opportunity Coming in Silver

Posted: 28 Mar 2014 07:02 AM PDT

Silver has been in a bear market for almost three years and the recent lack of strength suggests the metal could be headed for new lows. New lows are always bearish until the last one. Our technical work suggests that we should watch for a final low and end to the bear market in the coming months.

Silver, Buffett & the Hunt Brothers

Posted: 28 Mar 2014 06:46 AM PDT

Bullion Vault

Max Keiser: The Dollar is Done!

Posted: 28 Mar 2014 06:39 AM PDT

Max Keiser breaks down the days of the american dollar and how bad it will get when it does fully collapse. The banks need money to fund their covert wars - after all, these wars are all about making more money on their Beast stockless market - which they seem to live for. The dead bankers either...

[[ 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! ]]

3 Pieces to China’s Gold Puzzle

Posted: 28 Mar 2014 06:00 AM PDT

5,430.48…

That's the number you should concentrate on today, and for the next nine months.

It's a specific number, to be sure. But it's as important a number as you'll see in today's gold market.

And if you've been waiting for the next leg higher in precious metals, you'll want to keep an eye on those all-important digits — especially in the next nine months. Here's why…

"China's gold imports from Hong Kong rose in February," Bloomberg reported this week.

Net imports calculated by Bloomberg are a roundabout way of following the gold trail to China. Since the Middle Kingdom doesn't report its gold total officially, the Hong Kong numbers are our best guess of the gold flowing into China's borders.

According to the most recent monthly data, "Net imports totaled 109.2 metric tons [in February], compared with 83.6 tons in January and 60.9 tons a year earlier."

The big takeaway here is that China is continuing to steadily accumulate gold. It's something we've covered in these pages a bunch — in fact, I'm on record telling you that this will be the biggest gold story of the decade.

Simply put, if you're interested in gold, you MUST be interested in the story developing out of China.

The numbers revealed in the chart above are huge. Just in that graphic alone — a two-year snapshot — China has more than doubled its gold holdings.

But the more important number is 5,430.48.

By my calculation, China is now "officially" holding 5,430.48 metric tons of gold.

Beyond the 1,054 metric tons that China owns up to holding, that's an added 4,376 metric tons! That total easily places China as the second largest gold holder in the world (second only to the U.S. — if you believe Fort Knox has gold and not a stack of IOUs).

China isn't slowing down, either. And as I'll show you in a moment, this could be the next big catalyst to spur gold prices higher.

How soon? I believe we're going to see this come to a point less than nine months from today.

First, though, let's clear up some math — because we know the Chinese won't do it for us!

Imports. Over the past few years China has ramped up its imports: from a mere 60 metric tons in 2009 to a whopping 1,108 in 2013. Add it all up and via imports alone, China could be holding an EXTRA 2,436 metric tons.
Production. Quietly, China has also become the world's largest producer of gold. Move over South Africa and the U.S.! Since 2009, the Middle Kingdom has produced nearly 2,000 metric tons of gold (1,940.06, to be exact).
Stealth Gold. Besides the two rather calculable stats above, there's another way that China may be stocking up on precious metals. I've written before about the idea of China claim-jumping in far-off lands like Ghana as well as the potential for the same in the rest of Africa and South America. But believe me, if we "caught" China claim jumping in Ghana, just think about all the other places they've amassed ounces. This "stealth gold" isn't part of the 5,430.48 but might as well be!

So there you have it:

"But Matt, why do you keep referencing 2009?" you may ask.

Good question!

The last time China announced its official gold holding was back in 2009 (April, I believe).

And the time before that was 2003, when they announced they had 600 metric tons.

If you follow the pattern, the next six-year gold announcement is due in 2015. Coincidentally, that's the same year that China wants to have its currency (the yuan) fully convertible. (Fully convertible in this sense means their currency will be liquid and tradable just like all other major currencies, including the dollar.)

So 2015 is your huckleberry. That's the year I believe China will splash the gold world with a huge announcement. An announcement that could light a fire under gold prices.

And regardless of the precise date we think they'll announce their holdings, the real importance is the fact that the Chinese are HOARDING GOLD in a strategic concerted effort to strengthen their currency and put it on the world market to compete with other major currencies, including the U.S. dollar.

To sum it up, here's a great comment I received from David H. on a past article about China's gold:

"The Chinese have a 100-year plan; the U.S. has a 100-day plan."

I couldn't have said it better.

China is a strategic nation, much like Russia. Only instead of getting into a "hot" war with the U.S., they may go for a currency war.

While the U.S. continues to rack up debt and print U.S. dollars, keep an eye out for China's big announcement. And in the next nine months, keep any eye on your favorite gold investments.

Keep your boots muddy,

Matt Insley
for The Daily Reckoning

P.S. Now may be a good time to check out your favorite gold investments — the big miners and some of the small guys. For a look back at some of our favorites, simply sign up for the FREE Daily Resource Hunter, right here.

This article originally appeared in Daily Resource Hunter.

Silver, Buffett & the Hunt Brothers

Posted: 28 Mar 2014 03:36 AM PDT

Warren Buffett took a shine to silver. So did the Hunt brother oil barons...

WHY have there been two major corners of the silver market in recent history? asks Miguel Perez-Santalla at BullionVault.

In 1980, the year I started working in the marketplace, the price of silver had reached $50 per ounce, only to collapse a few days later. The Hunt brothers, two oil baron brothers with powerful financial means, were behind much of the rise in the market at that time. In a book by Stephen Fay, entitled Beyond Greed, the author writes the story of this incident.

According to the evidence, Nelson Bunker led his brother Herbert Hunt – along with friends from the Middle East – in conspiring to make the price of silver rise by purchasing over 280 million ounces, estimated by Fay as 80% of 1979's entire global mine output, worth some $14 billion at that peak price. The Hunts made business arrangements to hide their activity under other names. They believed in the value of silver, and they desired to accumulate as much as possible and by any means. In my eyes they did so without regard of others.

Yet this was at a significant risk to them, because they were buying both the futures and physicals. So was their attempted corner unjust? After all, they were trading within the market rules of the time. But they got greedy and used any resources to extend their reach.

Once the gig was up, and it was known that the Hunts were heavily leveraged through their structured business alliances, the bankers joined forces with the commodities exchange, the Comex, and the Federal Reserve to change the rules. Once the rules were changed the calamitous collapse of the silver price and the destruction of the Hunt brother's' corner ensued.

Since every loser on a futures contract must be matched by a winner, Bunker Hunt was convinced that the bankers and regulators involved with ending the corner profited greatly. But whatever the truth there, the Hunts would have been much more successful had they taken their profit sooner, before the price they demanded reached levels that affected industry and the average consumer. At that point authorities get involved to correct the distortion.

Because the silver market is much smaller than the gold market, the corner is a temptation that is almost irresistible to a big player. Even if cornering the silver market is not the intent.

In the late 1990s renewed buying of physical silver ensued. It began through a large trading firm by a major investor, Warren Buffett's Berkshire Hathaway (ticker: BRK), which accumulated nearly 130 million ounces from 1997 to early 1998. The market price rose sharply as this news broke, however it did not make the kind of price moves that would shock the public as the Hunts corner had.

Though the quantity purchased was large, silver production had increased since 1980 and the price had not reacted to the same extent. Additionally, the economic reality at that time was of a booming US economy, where people felt less need of silver as a safe haven investment.

In general, market participants were surprised by the price moves in silver. It did not break any records; it just broke other investor's trades. Silver moved from slightly above the $4 level to nearly a $7 price tag. Bad for industries that use silver, and because it did have an adverse effect on other investment manager's financial positions, this price rise was brought to the attention of the authorities.

One of these investment managers was Martin Armstrong of Princeton Economics International, who apparently had been selling short the silver market. His business became unraveled by the constant buying and rising price that he did not foresee. At the request of investigators the large participants were asked to reveal their intentions. It became clear that no crime was committed unless buying silver was made illegal. But unfortunately for Mr. Armstrong he had opened a can of worms.

In the process of the investigation it was discovered that the money he used to sell short leveraged silver futures was from an alleged Ponzi scheme, perpetrated through his company's business. Armstrong was convicted for fraud and imprisoned for many years. He is currently a free man, and claims his innocence and that bigger fish who should have been prosecuted were left unscathed.

Did Berkshire Hathaway manipulate the silver market, or were they just investors looking for a long term stake in this hard asset? A common point given to prove the benign intent of their position was its small size compared to the rest of BRK's portfolio – only 2% of the company's entire holdings. It was said that if the price of Coca Cola shares had dropped $5 at the time, it would have been a more significant loss to them than if silver went to zero dollar value.

The point is that silver is more at risk of volatility, and attempted corners or squeezes, than its big brother gold. The principal reason is the volume of money ordinarily in the market place. Latest data from the London bullion market, where Warren Buffett took delivery of physical silver bars for Berkshire Hathaway's late 1990s' investment, says gold trading outdoes silver trading more than 9-fold by Dollar value on average. In the US Comex futures market, where the Hunt brothers got burnt having leveraged their position with borrowed money, the value of open interest – the amount of outstanding contracts – ended February 3 times greater in gold than in silver.

Liquidity is a reference to this actual market size. The more people or businesses putting more money through a market, the easier and faster it is to buy and sell larger volumes without affecting the market price. Because the silver market is so small there are participants that will take the risk that they can make a big win in this game by taking a rather large stake whether by selling it short or buying the metal.

Some win and some lose and some are big enough to cause the move. But in the end the real reason we see someone take a big shot in the silver market every so often is because they think they can make money doing it.

Silver, Buffett & the Hunt Brothers

Posted: 28 Mar 2014 03:36 AM PDT

Warren Buffett took a shine to silver. So did the Hunt brother oil barons...

WHY have there been two major corners of the silver market in recent history? asks Miguel Perez-Santalla at BullionVault.

Because the silver market is much smaller than the gold market, the corner is a temptation that is almost irresistible to a big player. Even if cornering the silver market is not the intent.

Silver, Buffett & the Hunt Brothers

Posted: 28 Mar 2014 03:36 AM PDT

Warren Buffett took a shine to silver. So did the Hunt brother oil barons...

WHY have there been two major corners of the silver market in recent history? asks Miguel Perez-Santalla at BullionVault.

Because the silver market is much smaller than the gold market, the corner is a temptation that is almost irresistible to a big player. Even if cornering the silver market is not the intent.

Market Needs a Hero

Posted: 28 Mar 2014 02:43 AM PDT

And gold needs more time yet to reload for a bull market...

SCOTTY GEORGE is chief investment strategist at Alexander Capital. Here he speaks to Mike Norman at Hard Assets Investor about how the 5-year old US bull market in stocks needs a new "big idea" to keep running...

Hard Assets Investor: The Ukraine situation, sanctions imposed by the US and Europe, the possibility of another cold war – it's creating a lot of volatility and cross-currents in the markets. What's your big picture of what's going on?

Scotty George: If we could solve that issue in five minutes, we'd be heroes. The way these political events are affecting the markets is creating more uncertainty. The less certainty there is, domestically and overseas, the more the markets will roil at the top. That's exactly what we have.

We have foaming. We have upside/downside days. We have no consistency in market patterns. As a quantitative strategist, I'm used to seeing cycles, parabolas that move in an orderly fashion across the page. This reminds me, in terms of valuation, of how the market looked before the dot-com crash in 1999, 2000.

HAI: Really? That extended, that extreme?

Scotty George: Yes. Let's talk methodology. If markets move in cycles, and you can quantify those cycles, both for duration and magnitude, we reached the pinnacle of the magnitude of the market's five-year cycle about a year and a half ago. What we have now is a combination of froth, and a kind of linear expansion of the parabola. At the top, instead of turning over and nominally creating a recalibration that would enable us to go up, we're continuing to go straight up, or to the side.

Typically, definitionally, what would happen in that type of a configuration is that a linear upswing would be met by a linear downswing. And that's where I think there's danger in the market. There are stocks to be owned in here. But there are really no asset classes, nor categories that you can find, that are going to maintain an upswing at these valuations.

HAI: But if you look at the S&P's rally over a five-year period, from 2009, where it effectively, what, doubled on an annualized basis...in 2000 we had a huge move up. I think this is why a lot of people have not been involved in this move, because it's been kind of slow and gradual. And it's been the proverbial wall of worry where people thought it can't last. And it's overdone. And the economy is not that strong. And unemployment's still high. And then it seems like every phase, there's a new worry. Now it's about the Fed and taper.

Scotty George: That's not exactly how I see it. I think, from a configurative standpoint, what you've described is exactly what you would see if you looked at the market on paper. When this new rally began after the credit crunch in '07-08, we were at valuation levels where the only way to go would be up. There were no downsides left to the market, either in fixed income or in equities. So I don't think we've climbed a wall of worry. We've climbed a wall of uncertainty.

The issue now is that, after having climbed that wall, you only know you've climbed it when you look backward and you see where you've come from – at these levels here, the issue is, how long can corporations sustain pricing against their earnings dissipation? How long can we sustain momentum and consumer confidence in the wake of the kind of crises you're talking about, that affects not only the US but Europe and our trading partners?

I don't want to be negative, what I'd like to be is methodological. And from that standpoint, I had a lot more money invested at the crash of '08 than I do now. We're raising cash, we're not committing cash.

HAI: So what would change your view? Do you just stay in cash until, at some point, the market corrects?

Scotty George: That's the question our clients keep asking us. Last year, the S&P went up 30%- plus. Our balanced accounts were increasing at about 14%. That represented a market exposure of about 30-40% in equities and about 30-40% in cash. So the calls I got at the end of last year were, "Why did the market do so well and we did nominally well?"

I said, "Look back over the five years that we've been invested. We didn't experience a crash when the crash occurred, because we were smart enough not to be at the top. We were fully invested when the market was rising off of the bottom." What we perceive now is that, as we approach valuation expansion, it's good to take some money off the table.

So what do you do? What do we think is going to happen? I think a hero has to come in. I think we're going to have to see a kind of demographic theme that catches the imagination of the investment marketplace, whether it's in alternative energy, bio care and health and life sciences, even infrastructure redevelopment...

HAI: Isn't life sciences and health care that theme? You have Obamacare, the whole demographic aging population, the need for more healthcare services...

Scotty George: It is, but you've got opponents on every side of that issue. The kind of hero I'm looking for...we remember the space program. If you can galvanize capital toward a mission statement, what you do is you begin to bring leaders into the equation, and coincidentals begin to follow and the laggards begin to pick up. At this point in the market, everything is a leader, everything is expensive. There really are no hero focuses, no hero sectors that can pull this market up.

HAI: Moving into the commodity area, which is what we like to talk about, why wouldn't you be looking at that now, as a countercyclical play, as a contrarian play?

Scotty George: The question then would be, Where would you be invested? What are those countercyclical sectors in which to invest? Tangible assets, and the potential for price pressure and inflation in those assets – which already exists in agriculture, milk, beef, corn, grain – is where the pricing pressure is. So, tangible assets is one sector we favor right now.

HAI: And they're not the hot sectors anymore.

Scotty George: Well, it's a good thing for investors. It's a bad thing from a methodology standpoint. Because everyone is focusing at the apex and wondering, What do we do here at the peak? Where do we go? Well, you've got to revert back to those countercyclical sectors that have not yet pushed up in the market. And that would be an example of some of those heroics that we're looking for.

HAI: Let me ask you about gold prices. Because I went back and watched one of your appearances in 2011, when you said it was overvalued. That was an amazingly correct call. What's your view now on gold?

Scotty George: I think gold is not yet ready to take off. There's nibbling in precious metals in the silvers, the coppers, and the golds. I don't think it's quite ready to go. But that gives us an accumulation period in which we could probably put some money to work for future use.

Your question, and the fact that you brought up one of those previous interviews, really highlights the nature of what it is I do for my clients. There's the analysis part, which is pure empirical data. But there's the application of that. There's having the guts to be able to go out and put that money to work.

And that highlights the notion, Mike, that money is always traversing cycles – you're either in an upcycle, on the left side of the parabola, you're in a down-cycle on the right. Therefore, you've got to know how to rebalance risk. So, if gold was expensive at its apex two or three or four years ago, and now having come down, that makes it an opportunity now. So you've always got to be aware of the fluidity and the nature of cycles, and to know where you are.

HAI: I agree. A little bit like surfing. Always great to have you, Scotty.

Market Needs a Hero

Posted: 28 Mar 2014 02:43 AM PDT

And gold needs more time yet to reload for a bull market...

HAI: Really? That extended, that extreme?

HAI: So what would change your view? Do you just stay in cash until, at some point, the market corrects?

HAI: Isn't life sciences and health care that theme? You have Obamacare, the whole demographic aging population, the need for more healthcare services...

HAI: Moving into the commodity area, which is what we like to talk about, why wouldn't you be looking at that now, as a countercyclical play, as a contrarian play?

HAI: And they're not the hot sectors anymore.

HAI: I agree. A little bit like surfing. Always great to have you, Scotty.

China's New Electricity Grid

Posted: 28 Mar 2014 02:38 AM PDT

Lots of copper needed as China, South Korea, India & Brazil build infrastructure...

MARK LACKEY, executive vice president of CHF Investor Relations (Cavalcanti Hume Funfer Inc.), has 30 years of experience in energy, mining, banking and investment research.

Here he tells The Gold Report's sister title, The Mining Report, about mineral investors shouldn't over-react to the apparent "slowdown" in China's economic data, and the bullishness for prices in massive new electricity grid and infrastructure builds in fast-emerging economies...

The Mining Report: Mark, the price of copper recently dipped to its lowest level since 2010. Are we going to end the year below $3 per pound?

Mark Lackey: We don't think so. We believe that the price of copper will actually recover as we progress through the year. In fact, we actually are still calling for the price of copper to trade in the $3.60-3.70 per pound range by year-end. We really haven't changed our view because if we look at supply and demand conditions, we think there's definitely been an overreaction to some of the recent Chinese economic data. Investors are losing sight of the fact that there are reasons for demand to pick up later in the year, and that the postponed production projects will impact the supply side.

TMR: Are weaker Chinese economic data the only reason behind this shortsightedness?

Mark Lackey: It's certainly a major factor. It's seems that the export data in particular got the market concerned, because if you look at retail sales and industrial production, they've been only a little bit weaker than analysts had expected. We're really talking about just two months of trade data here, so this is not necessarily a long-term trend. We would also point out that the Russian situation with Crimea has caused some concerns about European growth.

TMR: In other words, prices will remain weak in the short term, but investors should be long copper.

Mark Lackey: That's right. If you look at the new infrastructure programs planned in China, South Korea, India and Brazil, they all are scheduled to kick off this year, so we should start to see more spending later this year. That's one positive for copper.

Don't forget that China is by far the biggest consumer of copper in the world, and half the copper goes into the wire and cable business, which is growing at about 15-20% per year. We see China ending up with one of the biggest and best electrical grids in the world, but this growth should go on for the next five or six years. So there is a fairly significant built-in amount of copper consumption that's already in place. Whether the country grows at 8%, 7.5% or maybe 7% isn't nearly as relevant as some people think.

TMR: Most of the copper heavy miners have been sold off. What's happening with the juniors?

Mark Lackey: Across the board, I'd say most junior companies have lower share prices than they had three or four months ago, although some have gone sideways. You'd be hard pressed to find a copper company that's actually up.

TMR: Moving on to iron ore, some market experts believe the steep drop in the price for iron ore in early March was based on poor economic data from China, while others believe it was largely caused by a speculative play gone wrong, likely at a Chinese brokerage. What's your perspective?

Mark Lackey: First of all, some of the economic data in China in the past two months clearly affected the iron ore price. But there was also a slight buildup in inventories before the trade numbers came out, so there had already been a little bit of weakness in the market.

China also announced that it wants to shut down some small marginal steel plants that are not particularly positive for the environment, and that announcement got some analysts concerned about potentially less demand for iron ore. I think that concern is overblown. I expect bigger steel producers in China to make up for this modest drop in steel production. So we don't see a loss in demand for iron ore as a result of the consolidation that is taking place.

As far as a speculative play gone wrong, there have been a few rumors of that out there. It's hard to know if that's true. We would suggest that if it is true, it's one of those factors that is not going to have any significant impact on the medium or long-term iron ore market.

TMR: What's your forecast range for iron prices over the course of 2014? Is it above $120 per ton?

Mark Lackey: We expect prices to get back above $120 per ton, closer to the $125-130 per ton range by the end of this year. Again, like copper, we do see this increase in infrastructure spending in China, South Korea, India and Brazil as a bullish signal for steel demand. We also expect China to produce over 20 million (20M) vehicles this year, so we see steel demand rising out of the consumer sector. Meanwhile, China is also trying to increase the quality of its steel. This generally means that there will be increased demand for iron ore. Finally, supply, which increased significantly last year, should level off this year since Australia is producing at close to full capacity given the infrastructure constraints currently being experienced in the country.

TMR: Big iron miners produce iron at $30 per ton or even $20 per ton at some operations, but smaller miners generally have much higher production costs. Midtier producers are already experiencing a shareholder revolt over poor share price performance. What does all this mean for investors in this space?

Mark Lackey: If you looked around the world, the cost production for the majority of iron ore mines is considerably higher. Some Chinese production has costs of around $100 per ton. So the question becomes, will companies produce at a small profit, or will they take some of that iron ore out of the market? Our expectation is that the Chinese will take some of those smaller inefficient mines out of operation.

On a more general note, there are a number of factors that look good for the Labrador Trough, including the fact that the deepening of the Panama Canal will be finished by the end of the year. This will allow larger ships to leave Quebec and then go through the Panama Canal, thus cutting time and costs. The other recent development is the South Korean-Canada free trade agreement, which is actually very positive for Canadian iron ore producers because it eliminates the iron ore tariff. Canadian iron ore companies have a competitive disadvantage vis-à-vis some other producers who already had these trade agreements with the South Koreans.

TMR: Let's move from metals to minerals and potash. Like most mined commodities, potash had a turbulent 2013. What do investors need to know about what's happening in the potash space in 2014?

Mark Lackey: The basic underlying supply-demand scenario has not changed. In fact, we continue to see less arable land in the world per capita every year. As a consequence, there is a need for higher crop yields, and thus a continually growing market and demand for potash, particularly the muriate of potash (MOP), which is 90% of the potash market. We believe that potash prices actually will start to recover this year. There is also some other positive news on the demand side. It looks like this will be the best soybean-planting season in Brazil in history, and it looks like a strong year in the Midwestern US Plus there's been less potash used in the last few years in India, and you cannot go more than a couple of years if you want to continue to have enough nutrients in your fields. So we see this as a bounce-back year for potash and the MOP market as we go through the year.

TMR: What are your parting thoughts for us?

Mark Lackey: Don't overreact to every data point that comes out of China such that your medium- or long-term view of the world changes. Clearly, one has to recognize that there are going to be ups and downs in the commodity markets. I would suggest we're still in a long-run bull market for commodities because at least 4 billion people in the world are trying to become middle class, whereas in the 1970s, it only took about 400 million people to create enough demand to give us a very strong commodity cycle. Finally, in many commodities like copper and iron ore, we're seeing more and more deferred projects. So over the next five years, there is not going to be the supply that some people may anticipate. If you have no exposure to equities in the commodity markets, then you could very well miss an excellent opportunity over the next couple of years to enhance your portfolio return.

TMR: Thanks for joining us today.

Mark Lackey: Happy to be here.